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

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

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

                                    FORM 10-Q

                   Quarterly Report Pursuant to Section 13 or
                        15(d) of the Securities Exchange
                          Act of 1934 For the quarterly
                           period ended March 31, 2001

                          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 May 7, 2001, there were 13,317,564 shares of the Registrant's  Common
Stock outstanding.


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


<PAGE>

                    FIRST HORIZON PHARMACEUTICAL CORPORATION
                                    FORM 10-Q
                                      INDEX

<TABLE>
<CAPTION>
<S>                                                                                                   <C>
PART I.  FINANCIAL INFORMATION (UNAUDITED)                                                            PAGE

         Item 1.     Balance Sheets at March 31, 2001 and                                               1
                       December 31, 2000

                     Statements of Operations for the three months ended                                2
                        March 31, 2001 and March 31, 2000

                     Statements of Cash Flows for the three months ended                                3
                        March 31, 2001 and March 31, 2000

                     Notes to Condensed Financial Statements                                            4

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

         Item 3.     Quantitative and Qualitative Disclosures about Market Risk                         9

PART II. OTHER INFORMATION

         Item 1.     Legal Proceedings                                                                 10

         Item 2.     Changes in Securities and Use of Proceeds                                         10

         Item 3.     Defaults Upon Senior Securities                                                   11

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

         Item 5.     Other Information                                                                 11

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

                     Signatures                                                                        12

</TABLE>


<PAGE>

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

ITEM 1. FINANCIAL STATEMENTS

                    First Horizon Pharmaceutical Corporation

                                 Balance Sheets
                                   (unaudited)
<TABLE>
<CAPTION>
<S>                                                                             <C>                     <C>
                                                                                      March 31,               December 31,
                                                                                         2001                    2000
                                                                                ---------------------   ----------------------
ASSETS
Current Assets:
   Cash and cash equivalents.............................................       $         16,157,749    $          14,228,067
   Accounts receivable, net of allowance for doubtful
       accounts, discounts and contractual adjustments
       of $391,393 and $283,929 at March 31, 2001 and
       December 31, 2000, respectively...................................                  7,017,876                6,710,237
   Inventories...........................................................                  2,160,865                2,648,104
   Samples and other prepaid expenses....................................                  1,530,659                1,341,126
   Taxes receivable......................................................                  1,752,914                        -
   Deferred tax assets...................................................                  1,322,010                1,203,309
                                                                                ---------------------   ----------------------
              Total current assets.......................................                 29,942,073               26,130,843
                                                                                ---------------------   ----------------------
Property and equipment, net..............................................                    822,306                  802,674
Other Assets:
     Intangibles, net....................................................                 25,942,480               23,150,025
                                                                                ---------------------   ----------------------
              Total other assets.........................................                 25,942,480               23,150,025
                                                                                ---------------------   ----------------------
              Total assets...............................................       $         56,706,859    $          50,083,542
                                                                                =====================   ======================
LIABILITIES AND STOCKHODERS' EQUITY
Current Liabilities:
    Accounts payable.....................................................       $          1,939,234    $           1,815,269
    Accrued expenses.....................................................                 11,489,466                8,986,168
    Current portion of long-term debt....................................                          -                  221,482
                                                                                ---------------------   ----------------------
                   Total current liabilities.............................                 13,428,700               11,022,919
Long -Term Liabilities:
   Deferred tax liabilities..............................................                    487,721                  487,721
                                                                                ---------------------   ----------------------
              Total liabilities..........................................                 13,916,421               11,510,640
Stockholders' Equity:
   Preferred stock, 1,000,000 shares authorized and none
       outstanding.......................................................                          -                        -
   Common stock, $0.001 par value; 40,000,000 shares
       authorized; 13,316,538 and 12,972,900 issued and outstanding
       at March 31, 2001 and December 31, 2000, respectively.............                     13,316                   12,973
    Additional paid-in capital...........................................                 40,699,932               37,792,147
    Deferred compensation................................................                   (760,582)                (842,566)
    Retained earnings....................................................                  2,837,772                1,610,348
                                                                                ---------------------   ----------------------
              Total stockholders' equity.................................                 42,790,438               38,572,902

              Total liabilities and stockholders' equity.................       $         56,706,859    $          50,083,542
                                                                                =====================   ======================
</TABLE>

                                       1
<PAGE>

                    FIRST HORIZON PHARMACEUTICAL CORPORATION

                            Statements of Operations
                                   (unaudited)

<TABLE>
<CAPTION>
<S>                                                        <C>                     <C>
                                                           For the Quarter Ended   For the Quarter Ended
                                                                 March 31,               December 31,
                                                                    2001                    2000
                                                           ---------------------   ----------------------
Net Revenues....................................           $         12,452,606    $         7,119,638
Operating costs and expenses
       Cost of revenues.........................                      1,770,864              1,061,737
       Selling, general and administrative
           expenses, excluding non-cash
           compensation expense.................                      7,819,118              5,491,653
       Non-cash compensation expense............                         81,984                 87,269
       Depreciation and amortization............                        395,839                 95,472
       Research and development expense                                 617,838                375,292
                                                           ---------------------   ----------------------
               Total operating costs and
                   expenses.....................                     10,685,643              7,111,423
                                                           ---------------------   ----------------------

Operating income................................                      1,766,963                  8,215
                                                           ---------------------   ----------------------
Other income (expense):
       Interest expense.........................                         (1,961)               (91,227)
       Interest income..........................                        241,460                  5,591
       Other....................................                            796                  9,822
                                                           ---------------------   ----------------------
               Total other income
                   (expense)....................                        240,295                (75,814)
                                                           ---------------------   ----------------------

Income (loss) before provision for
    income taxes................................                      2,007,258                (67,599)
(Provision) benefit for income taxes............                       (779,834)                29,068
                                                           ---------------------   ----------------------

Net income (loss)...............................           $          1,227,424    $           (38,531)
                                                           =====================   ======================
Net income per common share:
    Basic.......................................           $               0.09    $             (0.00)
                                                           =====================   ======================
    Diluted.....................................           $               0.09    $             (0.00)
                                                           =====================   ======================
Weighted average common shares outstanding:
    Basic.......................................                     13,034,561              8,539,643
    Diluted.....................................                     14,392,923              8,539,643

</TABLE>



                                       2
<PAGE>

                    First Horizon Pharmaceutical Corporation

                            Statements of Cash Flows
                                   (unaudited)

<TABLE>
<CAPTION>
<S>                                                             <C>                     <C>
                                                                For the Quarter Ended   For the Quarter Ended
                                                                       March 31,               March 31,
                                                                          2001                    2000
                                                                ---------------------   ----------------------
Cash flows from operating activities:
Net income (loss).............................................  $      1,227,424       $          (38,531)
Adjustments to reconcile net income (loss) to net cash
     provided by (used in) operating activities:
          Depreciation and amortization.......................           395,839                    95,472
          Deferred tax benefit ...............................          (118,701)                        -
          Non-cash compensation expense.......................            81,984                    87,269
          Reduction in taxes payable - stock option exercises             903,807                        -
          Changes in assets and liabilities, net of acquired
              assets and liabilities:
              Accounts receivable.............................          (307,639)                   39,126
              Inventories.....................................           487,239                  (996,849)
              Samples and other prepaid expenses..............          (189,533)               (1,138,112)
              Notes receivable from related party.............                 -                   (20,372)
              Accrued expenses and other......................          (633,054)                  719,659
              Accounts payable................................           123,965                   979,291
                                                                ---------------------   ----------------------

              Net cash (used in) provided by operating
                  activities..................................         1,971,331                  (273,047)
Cash flows from investing activities:
          Purchase of property and equipment..................           (71,574)                  (68,959)
                                                                ---------------------   ----------------------

              Net cash used in investing activities...........           (71,574)                  (68,959)

Cash flows from financing activities:
     Proceeds from revolving loan agreement...................                 -                 1,200,000
     Principal payments on long-term debt.....................          (221,482)                 (342,345)
     Proceeds from issuance of common stock, net..............           251,407                         -
                                                                ---------------------   ----------------------

              Net cash provided by financing activities.......            29,925                   857,655

Net change in cash and cash equivalents.......................         1,929,682                   515,649
Cash and cash equivalents, beginning of period................        14,228,067                   219,688
                                                                ---------------------   ----------------------
Cash and cash equivalents, end of period......................  $     16,157,749        $          735,337
                                                                =====================   ======================
</TABLE>

                                       3
<PAGE>

                    FIRST HORIZON PHARMACEUTICAL CORPORATION
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                 March 31, 2001
                                   (unaudited)

1.   Basis of Presentation

          The accompanying  unaudited interim financial  statements  reflect all
     adjustments  (consisting  solely of  normal  recurring  adjustments)  which
     management  considers  necessary  for fair  presentation  of the  financial
     position,  results  of  operations  and cash flows of the  Company  for the
     interim  periods.   Certain  footnote   disclosures  normally  included  in
     financial  statements  prepared according to generally accepted  accounting
     principles  have been  condensed  or  omitted  from the  interim  financial
     statements as permitted by the rules and  regulations of the Securities and
     Exchange  Commission.  Interim  results are not  necessarily  indicative of
     results  for  the  full  year.  The  interim  results  should  be  read  in
     conjunction with the financial statements and notes thereto included in the
     Company's  Annual Report on Form 10-K for the year ended  December 31, 2000
     (File No. 000-30123).

2.   New Accounting Pronouncements

          In June 1998, the Financial Accounting Standards Board issued SFAS No.
     133 "Accounting for Derivative  Instruments  and Hedging  Activities."  The
     Company  adopted  SFAS No. 133 (as  amended by SFAS No.  138) on January 1,
     2001.  SFAS No.  133  established  methods  of  accounting  for  derivative
     financial  instruments and hedging  activities related to those instruments
     as well as other hedging activities.  Adoption of SFAS No. 133 did 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:

                                               Quarter Ended    Quarter Ended
                                                  March 31,         March 31,
                                                    2001              2000
                                               ---------------  ----------------

         Net income (loss)..............       $    1,227,424   $       (38,531)
         Weighted average shares
           outstanding - basic..........           13,034,561         8,539,643
         Dilutive effect of stock
           options......................            1,358,362               N/A
                                               ---------------  ----------------

         Weighted average shares
           outstanding - diluted........           14,392,923         8,539,643

         Basic earnings per share              $          .09   $         (0.00)

         Diluted earnings per share            $          .09   $         (0.00)



                                       4
<PAGE>

5.   Subsequent Events

          On May 9,  2001,  the  Company  completed  its follow on  offering  of
     4,000,000  shares of common  stock at $19.30 per share.  In  addition,  the
     underwriters  exercised  their option to purchase up to 600,000  additional
     shares of common stock from the Company to cover any  over-allotments.  The
     Company  estimates  that net proceeds from the offering will be $83,397,100
     after deducting  estimated offering  expenses.  Proceeds from the offering,
     which  is  expected  to  close on May 15,  2001,  will be used for  general
     corporate purposes.


<PAGE>

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

     The  following  should be read with the  financial  statements  and related
footnotes and Management's  Discussion and Analysis of Results of Operations and
Financial Condition included in the Company's Annual Report on Form 10-K for the
year ended December 31, 2000 (File No.  000-30123).  The results discussed below
are not  necessarily  indicative  of the  results to be  expected  in any future
periods. The following discussion contains  forward-looking  statements that are
subject to risks and  uncertainties  which could cause actual  results to differ
from the statements made.

Overview

     The Company is a specialty  pharmaceutical  company that currently  markets
and sells 13 brand name  prescription  drugs  through its  nationwide  sales and
marketing force of approximately 150  professionals.  The Company focuses on the
treatment  of  chronic  conditions,   including   cardiovascular   diseases  and
respiratory,  gastroenterological and gynecological disorders. The Company seeks
to acquire and obtain licenses for pharmaceutical  products that other companies
do  not   actively   market  that  have  high  sales   growth   potential,   are
promotion-sensitive and complement the Company's existing products. In addition,
the Company seeks to increase the value of existing  products by developing  new
formulations,  new  delivery  methods and seeking new  indications  for existing
products. The Company may also acquire companies with complementary products.

Results of Operations

     Net Revenues.  Net revenues increased $5,332,968,  or 75%, over the quarter
ended March 31, 2000, to $12,452,606 for the quarter ended March 31, 2001. Sales
of continuing products,  including Nitrolingual Pumpspray which we began selling
on February 1, 2000, for the quarter ended March 31, 2001 increased  $3,949,435,
or 55%,  compared to the quarter ending March 31, 2000. The increase in sales of
continuing  products for the quarter  ended March 31, 2001 was  primarily due to
increased  unit sales of the Company's  products.  Sales of the Company's  newly
acquired  and  licensed  products  Ponstel  and Cognex were  $1,383,533  for the
quarter  ended March 31,  2001.  The Company  began to sell Ponstel on April 14,
2000 and Cognex on June 22, 2000.

     Cost of Revenues. Cost of revenues increased $709,127 or 67%, to $1,770,864
for the  quarter  ended March 31, 2001  compared to  $1,061,737  for the quarter
ended March 31, 2000.

     Gross  Margin.  Gross  margin for the quarter  ended March 31, 2001 was 86%
compared to 85% for the quarter  ended March 31, 2000.  This  increase  resulted
primarily from sales of the newly acquired  Cognex and Ponstel  products,  which
have higher margins than the Company's other products.

     Selling,  General  and  Administrative   Expenses.   Selling,  general  and
administrative  expenses  increased  $2,327,465,  or 42%, to $7,819,118  for the
quarter  ended March 31, 2001.  Selling  related  expenses  increased due to the
addition  of the  hospital  sales  force in the  second  quarter  of  2000,  the
expansion of the Company's  retail sales force in the third quarter of 2000, and
higher  commission and royalty expense due to increased sales.  Selling expenses
for the  quarter  ended  March  31,  2001,  include  costs  associated  with the
Company's national sales meeting held in March and marketing expenses related to
the launch of Ponstel to OB/GYNs in January 2001.

     General and  administrative  expenses  increased  due to  additions  to the
Company's  management  team and support  personnel  in the  Company's  corporate
office and higher insurance costs due to increased insurance coverage.

     Non-Cash  Compensation.  Non-cash  compensation expense was $81,984 for the
quarter ended March 31, 2001 compared to $87,269 for the quarter ended March 31,
2000. This non-cash  expense  resulted from the Company issuing stock options at
exercise  prices that were lower than the market value of the Company's stock at


                                       6
<PAGE>

the time the options were issued,  as  determined by an  independent  valuation.
Non-cash  compensation  expense will be recognized  over the vesting term of the
options.

     Depreciation  and  Amortization  Expense.   Depreciation  and  amortization
expense  increased  $300,367 or 315% to $395,839 for the quarter ended March 31,
2001.  This increase  resulted from higher  amortization  expense related to the
acquisition of 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  $242,546,  or 65%, to $617,838 for the quarter  ended March 31, 2001.
This increase  resulted  from  continued  development  of FHPC 01, the Company's
migraine product under  development,  the Robinul line extension,  and the costs
associated with  transferring  the  manufacturing  of Robinul and Ponstel to new
manufacturers.

     Interest Expense. Interest expense decreased $89,266, or 98%, to $1,961 for
the quarter ended March 31, 2001.  The Company  currently does not have any debt
outstanding.  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 $241,460 for the quarter ended March
31, 2001 compared to $5,591 for the quarter  ended March 31, 2000.  The increase
was the result of interest  earned on the remaining  proceeds from the Company's
initial  public  offering  as well  as  interest  earned  on  cash  provided  by
operations.

     Provision for Income Taxes. Income taxes were provided for at a rate of 39%
in 2001  compared to 43% in 2000.  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,   product   development   activities   and   funding  of
acquisitions.  The Company  has met these cash  requirements  through  cash from
operations,   proceeds  from  its  line  of  credit,   borrowings   for  product
acquisitions and the issuance of common stock.

     The Company's cash and cash equivalents were $16,157,749 at March 31, 2001.
Net cash provided by operating  activities  for the three months ended March 31,
2001 was $1,971,331.  This source of cash was primarily the result of net income
plus non-cash  depreciation,  amortization and compensation  expense,  increased
accounts payable and decreased inventories, offset by decreased accrued expenses
and increased prepaid expenses.  The purchase of inventory affects the Company's
liquidity.  The Company  estimates that supply agreements with its manufacturers
require that it purchase approximately $4.3 million of inventory during the last
three quarters of 2001.

     Net cash used in investing  activities for the three months ended March 31,
2001  was  $71,574.  This  use of cash  was for the  purchase  of  property  and
equipment.

     Net cash provided by financing  activities was $29,925 for the three months
ended  March 31,  2001.  This  source of cash was the result of the  exercise of
stock  options by employees  that  provided  net proceeds of $251,407  offset by
payment of long-term debt of $221,482.

     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, 2002. At March 31, 2001, the Company had no outstanding balance under
the revolving credit facility.


                                       7
<PAGE>


     On May 9, 2001,  the Company  completed its follow on offering of 4,000,000
shares of common stock at $19.30 per share. The  underwriters  have an option to
purchase  up to 600,000  additional  shares of common  stock from the Company to
cover any  over-allotments.  The Company  estimates  that net proceeds  from the
offering  will be  $83,397,100  after  deducting  estimated  offering  expenses.
Proceeds from the offering,  which is expected to close on May 15, 2001, will be
used for general corporate purposes.

     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    concluding further product acquisitions;
     o    the Company's product  development efforts for FHPC 01 and the Robinul
          line extension;
     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. 333-56954)
under the headings "We currently depend on four key products for a large portion
of our sales, and substantial  declines in any of them would result in our being
unprofitable,"  "There is no assurance of continued commercial acceptance of our
products,"  "Our growth will suffer if we do not acquire  rights to new products
and  integrate  them  successfully,"  "We depend  entirely  on third  parties to
manufacture  our  products,"  "We  may  encounter  supply  shortages  or  excess
inventory for Robinul and Robinul Forte," "We may encounter interruptions in our
supply of Ponstel," "We have no written  agreements  for the  manufacture of our
Zoto-HC and Protuss-D products," "Our existing supply agreements may prohibit us
from entering into potentially more favorable supply relationships with others,"
"We face  competition  from  generic  products  that could lower prices and unit
sales,"  "Strong  competition  exists for our  products,  and  competitors  have
introduced new products and therapies that could make our products obsolete," "A
small number of customers  account for a large portion of our sales and the loss
of one of them,  or changes in their  purchasing  patterns,  could result in our
inability to successfully sell our products," "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," "We or third parties may
violate government  regulations and we may incur significant  expenses to comply
with such  regulations,"  "If  third-party  payors do not  adequately  reimburse
patients for our products,  doctors may not prescribe them," "Product  liability
claims and product recalls could limit our ability to sell products," "We expect
to require  additional  funding and if we cannot obtain it, our sales,  profits,
acquisitions  and  development  projects  could suffer,"  "Incurring  debt could
reduce  our  growth,"  "If we do not  secure or  enforce  our  patents  or other
intellectual  property  rights,  we could encounter  increased  competition that
could adversely affect our operating  results," "Our products could infringe the
intellectual  property  rights of third  parties,  which could require us to pay
license  fees or defend  litigation  that could be  expensive or prevent us from
selling  products," "The  regulatory  status of some of our products makes these
products  subject to increased  competition and other risks," and  "Pohl-Boskamp
can  terminate  our rights to  Nitrolingual."  We do not undertake to update our


                                       8
<PAGE>

forward-looking statements to reflect future events or circumstances. These risk
factors  along  with  the  others  may  cause  actual  results,  performance  or
achievements,   to  be  different   from  that   suggested   by  the   Company's
forward-looking   statements.   You  should   not  place   undue   reliance   on
forward-looking  statements.  The Company does not intend to update any of these
factors or to publicly  announce  the results of any  revisions  to any of these
forward-looking statements.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company's  operating results and cash flows are subject to fluctuations
from  changes  in  foreign  currency  exchange  rates and  interest  rates.  The
Company's   purchases  of  Nitrolingual   Pumpspray  under  its  agreement  with
Pohl-Boskamp  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.



                                       9
<PAGE>



                           PART II - OTHER INFORMATION


ITEM 1: LEGAL PROCEEDINGS

     None

ITEM 2: CHANGES IN SECURITIES AND USE OF PROCEEDS

     On March 13, 2001, the Company filed a  Registration  Statement on Form S-1
(Registration  No.  333-56954)  with the Securities  and Exchange  Commission to
register  under the  Securities  Act  4,000,000  shares of common  stock plus an
additional  600,000  shares subject to an  over-allotment  option granted to the
underwriters.   The  Registration   Statement  was  declared  effective  by  the
Securities  and Exchange  Commission on May 9, 2001, and is expected to close on
May 15, 2001.

     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  $1,393,450  in offering  expenses.  The Company  received  net
proceeds of  $26,878,550.  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 $31,119,350.

     Through  March 31, 2001,  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 general corporate purposes,  including equity investments in other
companies, 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 a 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 as of March
31,  2001,  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,


                                       10
<PAGE>

Ph.D.,  the  Company's  Chairman  and Chief  Executive  Officer  owns options to
purchase 25,000 shares of its common stock.

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

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

          10.22** Employment  Agreement  dated as of January 5, 2001 between the
                  Registrant and Christopher Offen

          10.23** Amendment  to  Employment  Agreement  dated  January 22, 2001
                  between  the  Registrant  and Certain of its  Executive
                  Officers

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

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

**Incorporated by Reference  from the Company's  Registration  Statement on Form
  S-1 (File No.  333-56954)

     (b)  The  Registrant  has not filed any reports on Form 8-K for the quarter
          ended March 31, 2001.




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<PAGE>



                                   SIGNATURES


     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized on May 14, 2001.


                        FIRST HORIZON PHARMACEUTICAL CORPORATION


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


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




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