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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                    FORM 10-Q

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

              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998

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

                         Commission file number 0-28454

                                ANDRX CORPORATION
             (Exact name of registrant as specified in its charter)

                 FLORIDA                                       65-0366879
      (State or other jurisdiction of                       (I.R.S. Employer
      incorporation or organization)                       Identification No.)

      4001 SOUTHWEST 47TH AVENUE                                 33314
           FORT LAUDERDALE, FL                                 (Zip Code)
(Address of Principal Executive Offices)

                                  954-584-0300
              (Registrant's telephone number, including area code)

         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 twelve 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 2, 1998, 15,097,100 shares of the Registrant's only
class of common stock were issued and outstanding.

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                                       1
<PAGE>

                                ANDRX CORPORATION

                             INDEX TO THE FORM 10-Q
                    FOR THE QUARTER ENDED SEPTEMBER 30, 1998

                                                                     PAGE NUMBER
                                                                     -----------
INDEX TO FORM 10-Q                                                         2

PART I.  FINANCIAL INFORMATION

         Item 1.  Consolidated Financial Statements

                  Consolidated Balance Sheets
                    as of September 30, 1998 (Unaudited) and
                    December 31, 1997                                       3

                  Consolidated Statements of Operations - (Unaudited)
                   for the three and nine months ended
                   September 30, 1998 and 1997                              4

                  Consolidated Statements of Cash Flows - (Unaudited)
                    for the nine months ended
                    September 30, 1998 and 1997                             5

                  Notes to Consolidated Financial Statements - (Unaudited)  6

         Item 2.  Management's Discussion and Analysis of
                  Financial Condition and Results of Operations             14


PART II. OTHER INFORMATION

         Item 1.  Legal Proceedings                                         23

         Item 6.    Exhibits and Reports on Form 8-K                        23


SIGNATURES                                                                  24

                                       2
<PAGE>
                                ANDRX CORPORATION
                                     PART I
                              FINANCIAL INFORMATION

ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>

                       ANDRX CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
             (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)

                                                                                  SEPTEMBER 30,  DECEMBER 31,
                                                                                      1998           1997
                                                                                    --------       --------
                                          ASSETS                                   (UNAUDITED)
<S>                                                                                 <C>            <C>     
Current assets

   Cash and cash equivalents                                                        $  6,669       $  6,625
   Investments available-for-sale                                                      9,466         18,918
   Accounts receivable, net of allowances of $2,211(unaudited) and
      $1,589 as of September 30, 1998 and December 31, 1997, respectively             29,940         22,632
   Inventories                                                                        32,859         25,901
   Investment in and due from joint venture, net                                         371            416
   Prepaid and other current assets                                                      711            636
                                                                                    --------       --------

      Total current assets                                                            80,016         75,128

Property, plant and equipment, net                                                    17,928         15,403
Other assets                                                                             413            314
                                                                                    --------       --------

      Total assets                                                                  $ 98,357       $ 90,845
                                                                                    ========       ========

                           LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities
   Accounts payable                                                                 $ 20,995       $ 24,299
   Accrued liabilities                                                                 8,351          5,147
   Bank loan                                                                           3,933            538
                                                                                    --------       --------

      Total current liabilities                                                       33,279         29,984
                                                                                    --------       --------

Commitments and contingencies
Shareholders' equity

   Convertible preferred stock; $0.001 par value, 1,000,000 shares authorized;
      none issued and outstanding as of September 30, 1998
      (unaudited) and December 31, 1997                                                 --             --
   Common stock; $0.001 par value, 25,000,000 shares authorized;
      15,076,000 (unaudited) and 14,856,700 shares issued and
      outstanding as of September 30, 1998 and December 31, 1997, respectively            15             15
   Additional paid-in capital                                                         85,011         82,954
   Accumulated deficit                                                               (19,959)       (22,145)
   Unrealized gain on investments available-for-sale                                      11             37
                                                                                    --------       --------

      Total shareholders' equity                                                      65,078         60,861
                                                                                    --------       --------

      Total liabilities and shareholders' equity                                    $ 98,357       $ 90,845
                                                                                    ========       ========
</TABLE>
          See accompanying notes to consolidated financial statements.

                                       3
<PAGE>
<TABLE>
<CAPTION>
                       ANDRX CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
             (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS)

                                                       THREE MONTHS ENDED                     NINE MONTHS ENDED
                                                          SEPTEMBER 30,                         SEPTEMBER 30,        
                                                -------------------------------       -------------------------------
                                                    1998               1997               1998               1997
                                                ------------       ------------       ------------       ------------
<S>                                             <C>                <C>                <C>                <C>         
Revenues
   Distributed products, net                    $     55,312       $     42,573       $    156,247       $    105,794
   Manufactured products, net                          2,731               --                8,020               --
   Stipulation fees                                    9,130               --                9,130               --
   Licensing                                              93                 88                519                 88
                                                ------------       ------------       ------------       ------------
Total revenues                                        67,266             42,661            173,916            105,882
                                                ------------       ------------       ------------       ------------
Operating expenses
   Cost of  distributed products                      46,888             36,502            132,707             90,048
   Manufacturing costs                                 1,502                522              3,808                994
     (including idle facility costs)
   Selling, general and administrative                 8,321              4,915             20,796             13,094
   Research and development                            4,996              3,031             12,176              6,761
   Equity in losses of joint venture                     228                498                914              1,261
   Software development and administration               935                393              2,171                969
                                                ------------       ------------       ------------       ------------
Total operating expenses                              62,870             45,861            172,572            113,127
                                                ------------       ------------       ------------       ------------
Income (loss) from operations                          4,396             (3,200)             1,344             (7,245)

Other income (expense)
   Gain on sale of CyBear, Inc. shares                   500               --                  500               --
   Interest income                                       230                442                754              1,165
   Interest expense                                     (174)              (107)              (322)              (449)
                                                ------------       ------------       ------------       ------------

Income (loss) before income taxes                      4,952             (2,865)             2,276             (6,529)

Income taxes                                              90               --                   90               --
                                                ------------       ------------       ------------       ------------
Net income (loss)                               $      4,862       $     (2,865)      $      2,186       $     (6,529)
                                                ============       ============       ============       ============

Basic net income (loss) per share               $       0.32       $      (0.19)      $       0.15       $      (0.47)
                                                ============       ============       ============       ============
Diluted net income (loss) per share             $       0.31       $      (0.19)      $       0.14       $      (0.47)
                                                ============       ============       ============       ============

Basic weighted average shares of common
       stock outstanding                          15,064,800         14,736,300         14,991,100         14,006,200
                                                ============       ============       ============       ============
Diluted weighted average shares of common
       stock outstanding                          15,912,900         14,736,300         15,890,600         14,006,200
                                                ============       ============       ============       ============
</TABLE>
          See accompanying notes to consolidated financial statements.

                                       4
<PAGE>
<TABLE>
<CAPTION>
                       ANDRX CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                 (IN THOUSANDS)

                                                                                   NINE MONTHS ENDED
                                                                                     SEPTEMBER 30,
                                                                               -----------------------
                                                                                 1998           1997
                                                                               --------       --------
<S>                                                                            <C>            <C>      
Cash flows from operating activities
    Net income (loss)                                                          $  2,186       $ (6,529)
    Adjustments to reconcile net income (loss) to
          net cash used in operating activities
          Depreciation and amortization                                           2,214          1,400
          Provision for accounts receivable, net                                    622            163
          Gain on sale of CyBear, Inc. shares                                      (500)          --
          Options granted to consultants                                            150           --
          Equity in losses of joint venture                                         914          1,261
          Contributions to joint venture                                         (1,200)        (1,200)
          Increase in accounts receivable                                        (7,930)        (8,625)
          (Increase) decrease in due from joint venture, net                        331            (22)
          Increase in inventories                                                (6,958)       (12,048)
          Increase in prepaid and other current assets                              (75)          (408)
          (Increase) decrease in other assets                                       (99)            13
          Increase (decrease) in accounts payable and accrued liabilities          (100)        14,247
                                                                               --------       --------

Net cash used in operating activities                                           (10,445)       (11,748)
                                                                               --------       --------

Cash flows from investing activities
  Maturity of investments available-for-sale                                      9,426            895
  Purchase of property, plant and equipment                                      (4,739)        (6,695)
                                                                               --------       --------

Net cash provided by (used in) investing activities                               4,687         (5,800)
                                                                               --------       --------

Cash flows from financing activities
  Net borrowings (repayments) under bank loan                                     3,395         (5,696)
  Proceeds from issuance of shares of common stock, net                            --           21,343
  Proceeds from exercises of stock options and warrants                           1,907          3,524
  Proceeds from sale of CyBear, Inc. shares                                         500           --
                                                                               --------       --------

Net cash provided by financing activities                                         5,802         19,171
                                                                               --------       --------

Net increase in cash and cash equivalents                                            44          1,623
Cash and cash equivalents, beginning of period                                    6,625          3,427
                                                                               --------       --------

Cash and cash equivalents, end of period                                       $  6,669       $  5,050
                                                                               ========       ========

Supplemental disclosure of cash paid during the period for:

Interest                                                                       $    322       $    449
                                                                               ========       ========

Income taxes                                                                   $   --         $   --
                                                                               ========       ========
</TABLE>
           See accompanying notes to consolidated financial statements

                                       5
<PAGE>
                       ANDRX CORPORATION AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1998
                                   (UNAUDITED)

1.       GENERAL

         In the opinion of management, the accompanying unaudited consolidated
financial statements have been prepared by Andrx Corporation ("Andrx" or the
"Company") pursuant to the rules and regulations of the Securities and Exchange
Commission ("SEC"). Certain information and footnote disclosures normally
included in annual financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to those
rules and regulations. However, management believes that the disclosures
contained herein are adequate to make the information presented not misleading.
The unaudited consolidated financial statements reflect, in the opinion of
management, all material adjustments (which include only normal recurring
adjustments) necessary to present fairly the Company's financial position and
results of operations. The results of operations for the three and nine months
ended September 30, 1998 and the cash flows for the nine months ended September
30, 1998, are not necessarily indicative of the results of operations or cash
flows which may be expected for the remainder of 1998. The unaudited
consolidated financial statements should be read in conjunction with the
consolidated financial statements and related notes for the year ended December
31, 1997, included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1997.

         Certain prior year amounts have been reclassified to conform to the
current year presentation.

2.       COMPREHENSIVE INCOME (LOSS)

         The Company adopted the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 130, "Reporting Comprehensive Income", effective January
1, 1998. SFAS No. 130, establishes standards for reporting and presentation of
comprehensive income or loss and its components in financial statements. The
components of the Company's comprehensive income (loss) are as follows (in
thousands):
<TABLE>
<CAPTION>
                                            THREE MONTHS ENDED          NINE MONTHS ENDED
                                               SEPTEMBER 30,              SEPTEMBER 30,
                                           --------------------       ---------------------
                                            1998          1997          1998          1997
                                           -------      -------       -------       -------
<S>                                        <C>          <C>           <C>           <C>     
Net income (loss)                          $ 4,862      $(2,865)      $ 2,186       $(6,529)
Unrealized gain (loss) on investments
  available-for-sale                             6           45           (26)           19
                                           -------      -------       -------       -------

Comprehensive income (loss)                $ 4,868      $(2,820)      $ 2,160       $(6,510)
                                           =======      =======       =======       =======
</TABLE>

                                       6
<PAGE>
                       ANDRX CORPORATION AND SUBSIDIARIES

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
                               SEPTEMBER 30, 1998
                                   (UNAUDITED)

3.        JOINT VENTURE

         In September 1998, upon receiving U.S. Food and Drug Administration
("FDA") approval, ANCIRC Pharmaceuticals ("ANCIRC"), the Company's 50/50 joint
venture with Watson Pharmaceuticals, Inc., launched its first product, a
bioequivalent version of Trental/registered trademark/. Condensed unaudited
balance sheets and statements of operations information for ANCIRC are as
follows (in thousands):

<TABLE>
<CAPTION>
                                 BALANCE SHEETS
                                                                    SEPTEMBER 30,       DECEMBER 31,
                                                                        1998                1997
                                                                    -------------       ------------
<S>                                                                    <C>                <C>    
                                ASSETS

Cash and cash equivalents                                              $   313            $   416
Accounts receivable, net                                                   118               --
Inventories                                                                180                312
Laboratory equipment, net                                                  196                237
                                                                       -------            -------

      Total assets                                                     $   807            $   965
                                                                       =======            =======

                 LIABILITIES AND PARTNERS' EQUITY (DEFICIT)

Current liabilities                                                    $   320            $ 1,050
Partners' equity (deficit)                                                 487                (85)
                                                                       -------            -------

      Total liabilities and partners' equity (deficit)                 $   807            $   965
                                                                       =======            =======
</TABLE>
<TABLE>
<CAPTION>
                            STATEMENTS OF OPERATIONS

                                        THREE MONTHS ENDED           NINE MONTHS ENDED
                                           SEPTEMBER 30,               SEPTEMBER 30,
                                       --------------------       --------------------- 
                                        1998          1997         1998          1997
                                       -------       ------       -------       ------- 
<S>                                    <C>           <C>          <C>           <C>     
Product sales, net                     $   118       $ --         $   118       $  --
                                       =======       ======       =======       =======
Gross profit                           $    71       $ --         $    71       $  --
                                       =======       ======       =======       =======
Research and development expenses      $   531       $  999       $ 1,909       $ 2,546
                                       =======       ======       =======       =======
Net loss                               $  (457)      $ (995)      $(1,828)      $(2,522)
                                       =======       ======       =======       =======
</TABLE>

                                       7
<PAGE>
                       ANDRX CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                               SEPTEMBER 30, 1998
                                   (UNAUDITED)

         As of September 30, 1998 and December 31, 1997, Andrx Pharmaceuticals,
Inc. ("Andrx Pharmaceuticals"), the Company's wholly owned subsidiary engaged in
the development, manufacture and sale of bioequivalent pharmaceuticals, was due
$245,000 and $458,000, respectively, from ANCIRC for research and development
services rendered. Anda Generics, Inc. ("Anda Generics"), the Company's wholly
owned subsidiary engaged in pharmaceutical distribution, is the distributor of
ANCIRC's products. Anda Generics recovers selling, marketing and administrative
costs from its sales of ANCIRC's products to customers. As of September 30,
1998, Anda Generics owed ANCIRC $118,000 for purchases of ANCIRC's products.
Amounts due to or from ANCIRC are included in "Investment in and due from joint
venture, net" in the accompanying consolidated balance sheets. The Company is
committed to the funding of ANCIRC's future operations.

4.       CYBEAR, INC.

         In July 1998, CyBear, Inc. ("CyBear"), the Company's subsidiary engaged
in the development of Internet based software applications for healthcare
providers, entered into a merger agreement with 1997 Corp. 1997 Corp. is a
"blank check" company that has a registration statement on file with the SEC to
seek a business combination with an operating entity. The merger is expected to
be consummated in November 1998. Upon consummation of the merger, CyBear will
become a wholly owned subsidiary of 1997 Corp., the current shareholders of
CyBear will own approximately 98% of the outstanding shares of common stock of
1997 Corp. and 1997 Corp. will change its name to CyBear.

         In September 1998, the Company recognized $500,000 in gain on the sale
of CyBear shares of common stock to CyBear's new Chairman. Such sale was at
$3.00 a share or approximately a $40 million valuation for CyBear.

5.       INCOME TAXES

         For the three and nine months ended September 30, 1998, the Company
provided $90,000 for federal alternative minimum income taxes. For the 1998
periods, the Company was not required to provide for federal or state income
taxes due to its net operating loss carryforwards. For the 1997 periods, the
Company was not required to provide for income or alternative minimum income
taxes due to its net losses. Under the provisions of SFAS No. 109, "Accounting
for Income Taxes", the Company has provided a valuation allowance to reserve
against 100% of its net operating loss carryforwards.

                                       8
<PAGE>
                       ANDRX CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                               SEPTEMBER 30, 1998
                                   (UNAUDITED)

6.       EARNINGS (LOSS) PER SHARE

         For the profitable three and nine months ended September 30, 1998,
diluted net income per share is based on the weighted average shares of common
stock outstanding including common stock equivalents. For the three and nine
months ended September 30, 1997 diluted net loss per share is based on the
weighted average shares of common stock outstanding. As the 1997 periods were 
unprofitable, all common stock equivalents were excluded from the
calculation of diluted net loss per share since the effect was antidilutive.

         The components of the diluted weighted average shares of common stock
outstanding, are as follows:
<TABLE>
<CAPTION>
                                               THREE MONTHS ENDED              NINE MONTHS ENDED
                                                 SEPTEMBER 30,                   SEPTEMBER 30,
                                          --------------------------      --------------------------
                                             1998            1997            1998            1997
                                          ----------      ----------      ----------      ----------
<S>                                       <C>             <C>             <C>             <C>       
Basic weighted average shares
of common stock outstanding               15,064,800      14,736,300      14,991,100      14,006,200

Impact of warrants after application
of the treasury method                       308,800            --           338,400            --

Impact of options after application
of the treasury method                       539,300            --           561,100            --
                                          ----------      ----------      ----------      ----------

Diluted weighted average shares of
common stock outstanding                  15,912,900      14,736,300      15,890,600      14,006,200
                                          ==========      ==========      ==========      ==========
</TABLE>

7.       STIPULATION FEES

         Andrx is party to a Stipulation and Agreement (the "Stipulation") with
Hoechst Marion Roussel, Inc. and Carderm Capital L.P. (collectively, "HMRI")
arising out of a patent infringement claim brought against the Company by HMRI
(the "HMRI Litigation") relating to the Company's bioequivalent version of
Cardizem/registered trademark/ CD. Andrx and HMRI entered into the Stipulation
in partial settlement of the HMRI Litigation in order to reduce the risks that
both parties face as the case is litigated to its conclusion. Andrx agreed to
maintain the status quo in connection with the marketing of its product and to
dismiss certain claims against HMRI. HMRI agreed to compensate Andrx for any
lost profits, which are stipulated to be $100 million per year, if Andrx
ultimately prevails in the HMRI Litigation. HMRI also agreed to make
non-refundable quarterly payments of $10 million to Andrx, beginning upon Andrx'
receipt of final FDA

                                       9
<PAGE>
                       ANDRX CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                               SEPTEMBER 30, 1998
                                   (UNAUDITED)

approval for its bioequivalent version of Cardizem/registered trademark/ CD and
continuing until either the HMRI Litigation is resolved or certain other events
occur. Such quarterly payments are to be credited against the payments of the
stipulated lost profits if Andrx prevails in the HMRI Litigation. In July 1998,
the Company received both final FDA marketing approval for its bioequivalent
version of Cardizem/registered trademark/ CD and its first quarterly payment for
$9.1 million (prorated from July 9, 1998). In October 1998, the Company received
the $10 million quarterly payment for the 1998 fourth quarter.

         The Company and Chih-Ming J. Chen, Ph.D., its Co-Chairman and Chief
Scientific Officer, a principal shareholder and director, are parties to a
royalty agreement originally dated February 26, 1993(and thereafter amended),
pursuant to which Dr. Chen was entitled to a royalty on any net operating
revenues derived by Andrx from the sale of its generic version of
Cardizem/registered trademark/ CD. In August 1998, the Company amended that
royalty agreement to account for the various contingencies presented by the
Stipulation. Royalties paid to Dr. Chen of $304,000 for the three months ended
September 30, 1998 were based on 3.33% of the Stipulation fees. Such royalty
expense is included in "Selling, General and Administrative Expenses" in the
accompanying consolidated statements of operations.

8.       CONTINGENCIES

         (a) In May 1998, Astra Aktiebolag, Aktiebolaget Hassle, Astra Merck
Enterprises Inc. and Astra Merck Inc. (collectively, "Astra") filed suit against
Andrx Pharmaceuticals claiming patent infringement because of an Abbreviated New
Drug Application ("ANDA") filed by Andrx Pharmaceuticals with the FDA for
Prilosec/registered trademark/ (omeprazole). In June 1998, Andrx Pharmaceuticals
responded to this claim by denying infringement, raising various affirmative
defenses and by filing certain counterclaims against Astra. In July 1998, Astra
filed a motion to strike or dismiss Andrx Pharmaceuticals' affirmative defenses
and counterclaims predicated on the invalidity or unenforceability of the
subject patents and in November 1998, the court dismissed this motion. In
October 1998, Andrx Pharmaceuticals filed two motions for summary judgment
regarding four of the seven patents in controversy. While Andrx Pharmaceuticals
believes its ANDA does not provide any basis for the alleged claim of
infringement, the ultimate resolution of this matter is not currently known and
may delay or prevent Andrx Pharmaceuticals from obtaining FDA approval to market
this ANDA product.

         (b) In October 1998, Biovail Corporation International, Biovail
Laboratories Inc. and Galephar Puerto Rico, Inc. (collectively, "Biovail") filed
suit against Andrx Pharmaceuticals claiming patent infringement because of an
ANDA filed by Andrx Pharmaceuticals with the FDA for Tiazac/registered
trademark/ (diltiazem hydrochloride). Biovail seeks an injunction enjoining
Andrx Pharmaceuticals from further infringing the subject patent and an order
directing that the effective date of any FDA approval of Andrx Pharmaceuticals'
proposed generic version of

                                       10
<PAGE>
                       ANDRX CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                               SEPTEMBER 30, 1998
                                   (UNAUDITED)

Tiazac/registered trademark/ be no earlier that the expiration date of the
subject patent. While Andrx Pharmaceuticals believes its ANDA does not provide
any basis for the alleged claim of infringement, the ultimate resolution of this
matter is not currently known and may delay or prevent Andrx Pharmaceuticals
from obtaining FDA approval to market this ANDA product.

         (c) In October 1998, Elan Corporation, PLC ("Elan") filed suit against
Andrx Pharmaceuticals claiming patent infringement because of an ANDA filed by
Andrx Pharmaceuticals with the FDA for Naprelan/registered trademark/ (naproxen
sodium). Elan seeks a judgment enjoining Andrx Pharmaceuticals from further
infringing the subject patent and ordering that the effective date of any FDA
approval of Andrx Pharmaceuticals' proposed generics version of
Naprelan/registered trademark/ be no earlier than the expiration date of the
patent. While Andrx Pharmaceuticals believes its ANDA does not provide any basis
for the alleged claim of infringement, the ultimate resolution of this matter is
not currently known and may delay or prevent Andrx Pharmaceuticals from
obtaining FDA approval to market this ANDA product.

         Claims of the nature referred to in (a), (b) and (c) above and Note 7,
are made by pharmaceutical companies in connection with the Company's filing of
ANDAs with the FDA which claim either that the Andrx product does not infringe
such other companies' patents or that such patents are invalid. The Company
evaluates the probability of patent infringement litigation with respect to each
of its ANDA submissions on a case by case basis. Although the Company believes
it has adequately provided for these matters based on the current available
information, the Company may incur additional litigation and other costs in
future years which may be material to the Company's results of operations and
financial position.

         (d) In March 1998, Andrx received a letter from counsel for Medix
Resources, Inc. ("Medix") and its subsidiary Cymedix Lynx Corporation
("Cymedix") alleging the theft and unlawful appropriation by CyBear, Andrx and
certain directors, officers and employees of CyBear and Andrx, of certain
computer medical software and Internet medical communications technology
allegedly owned by Cymedix. The letter demands treble damages totaling $396.6
million pursuant to the civil theft provisions of Florida law, and also alleges
claims under Florida's Racketeer Influenced and Corrupt Organization Act and
certain other provisions of federal and state law. CyBear and Andrx believe that
Medix' and Cymedix' accusations and threatened claims have no basis in
substantial fact or legal support and in March 1998, filed a complaint against
Medix and Cymedix for libel and slander arising from the improper public
dissemination of the contents of the aforesaid demand letter with respect to
each of the matters set forth in that letter. CyBear and Andrx intend to
vigorously prosecute their complaints, which seek damages, costs, interest and
attorneys' fees. In June 1998, Medix, on behalf of Cymedix, filed a complaint
against CyBear, Andrx and certain directors, officers and employees of CyBear
and Andrx alleging the theft and unlawful appropriation of Cymedix' computer
medical software for remote online healthcare providers and Internet medical
communications technology allegedly owned by Cymedix. Medix is seeking treble
damages totaling $396.0 million. CyBear 

                                       11
<PAGE>

                       ANDRX CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                               SEPTEMBER 30, 1998
                                   (UNAUDITED)

and Andrx believe that Medix' suit has no basis in substantial fact or legal
support and is without merit, and intend to vigorously defend against these
claims.

         (e) In January 1998, Andrx Pharmaceuticals filed a complaint for an
injunction and declaratory judgment against the FDA, Faulding, Inc., Biovail and
later, Mylan Pharmaceuticals, Inc. ("Mylan"), seeking, inter alia, an order
directing the FDA to provide the Company with a 180 day period of marketing
exclusivity for its bioequivalent formulations of Dilacor XR/registered
trademark/ and Cardizem/registered trademark/ CD. In April 1998 the Company
prevailed in its claims against the FDA and Mylan with respect to its Dilacor
XR/registered trademark/ product. In May 1998, Biovail filed a counterclaim
against Andrx Pharmaceuticals for alleged violations of Sections 1 and 2 of the
Sherman Antitrust Act and a declaratory judgment as to federal law as well as
for alleged violations of state common law of unfair competition, tortious
interference with prospective advantage and tortious interference with contract.
Biovail seeks injunctive relief and treble the amount of its proved actual
damages in an unspecified amount, plus interest, with respect to its federal law
claims, and actual and punitive damages in unspecified amounts, plus interest,
with respect to its common law claims. The Company believes that Biovail's
claims have no merit and, in July 1998, filed a motion to dismiss the
counterclaim upon the ground that it fails to state a claim upon which relief
can be granted. That motion is still pending.

         Meanwhile, Andrx Pharmaceuticals and the FDA have filed a joint motion
for voluntary dismissal of the FDA from this lawsuit without prejudice on the
ground that the Guidance for Industry issued by the FDA in July 1998 granted
Andrx Pharmaceuticals the relief it seeks in the pending action. Biovail has
filed an objection to the voluntary dismissal and the joint motion is under
consideration by the court.

         (f) Putative class actions have been filed against Andrx
Pharmaceuticals in Alabama, California, Illinois, Michigan and Wisconsin. The
suits in Alabama and California were filed in August 1998, the suits in Michigan
and Wisconsin were filed in September 1998, the Illinois suit was filed in
October 1998. In all five suits Hoechst Aktiengesellschaft and Hoechst Marion
Roussel, Inc. (collectively "Hoechst") have been named as co-defendants. The
complaint in each action alleges that Andrx Pharmaceuticals and Hoechst, by way
of the Stipulation described in Note 7, have engaged in alleged state antitrust
and other statutory and common law violations which allegedly have given Hoechst
and Andrx Pharmaceuticals a near monopoly in the U.S. market for
Cardizem/registered trademark/ CD and a generic version of that pharmaceutical
product. According to the complaints, the monopoly possessed by the defendants
enable Hoechst to perpetuate its ability to fix the price of Cardizem/registered
trademark/ CD at an artificially high price, free from generic competition, with
the result that direct purchasers (such as pharmacies), as well as indirect
purchasers (such as medical patients who have been issued prescriptions for
Cardizem/registered trademark/ CD) are forced to overpay for the drug. Each
complaint seeks compensatory damages on behalf of each class member in an
unspecified amount and, in some cases, treble damages, as well as costs and
counsel fees, disgorgement, injunctive relief and other remedies. Andrx
Pharmaceuticals believes that these five actions have no merit and intends to
mount a vigorous defense against each action.

         (g) In October 1998, the Company was advised that the U.S. Federal
Trade Commission

                                       12
<PAGE>

                       ANDRX CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
                               SEPTEMBER 30, 1998
                                   (UNAUDITED)

("FTC") is conducting an investigation to determine whether Andrx, HMRI or any
other persons have engaged in unfair methods of competition. The Company is
cooperating with the FTC's investigation which the Company believes relates to
the Stipulation with HMRI.

         From time to time, the Company may be involved in litigation, claims
and other disputes arising out of its operations in the normal course of
business. Except for the matters disclosed above or in the Company's Form 10-K
for the year ended December 31, 1997, the Company believes that is not currently
a party to any other legal proceeding, the adverse outcome of which,
individually or in the aggregate, could reasonably be expected to have a
material adverse effect on the Company's business, operating results and
financial condition.

         The litigation process is inherently uncertain and it is possible that
the resolution of any of the matters disclosed above may adversely affect the
Company. Except as noted above, the Company believes there have been no material
developments in any legal matters since the Company's Form 10-K for the year
ended December 31, 1997.

                                       13
<PAGE>
                                ANDRX CORPORATION
                                     PART I
                              FINANCIAL INFORMATION

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

         ANDRX CORPORATION AND SUBSIDIARIES ("ANDRX" OR THE "COMPANY") CAUTIONS
READERS THAT CERTAIN IMPORTANT FACTORS MAY AFFECT THE COMPANY'S ACTUAL RESULTS
AND COULD CAUSE SUCH RESULTS TO DIFFER MATERIALLY FROM ANY FORWARD-LOOKING
STATEMENTS WHICH MAY BE DEEMED TO HAVE BEEN MADE IN THIS REPORT OR WHICH ARE
OTHERWISE MADE BY OR ON BEHALF OF THE COMPANY. FOR THIS PURPOSE, ANY STATEMENTS
CONTAINED IN THIS REPORT THAT ARE NOT STATEMENTS OF HISTORICAL FACT MAY BE
DEEMED TO BE FORWARD-LOOKING STATEMENTS. WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, WORDS SUCH AS "MAY," "WILL," "EXPECT," "BELIEVE," "ANTICIPATE,"
"INTEND," "COULD," "WOULD," "ESTIMATE," OR "CONTINUE" OR THE NEGATIVE OTHER
VARIATIONS THEREOF OR COMPARABLE TERMINOLOGY ARE INTENDED TO IDENTIFY
FORWARD-LOOKING STATEMENTS. FACTORS WHICH MAY AFFECT THE COMPANY'S RESULTS
INCLUDE, BUT ARE NOT LIMITED TO, THE RISKS AND UNCERTAINTIES ASSOCIATED WITH A
DRUG DELIVERY COMPANY WHICH HAS ONLY RECENTLY COMMERCIALIZED ITS FIRST PRODUCT,
INCLUDING, BUT NOT LIMITED TO, A HISTORY OF NET LOSSES, RELATIVELY UNPROVEN
TECHNOLOGIES, LIMITED MANUFACTURING EXPERIENCE, CURRENT AND POTENTIAL
COMPETITORS WITH SIGNIFICANT TECHNICAL AND MARKETING RESOURCES AND DEPENDENCE ON
COLLABORATIVE PARTNERS AND ON KEY PERSONNEL. ADDITIONALLY, THE COMPANY IS
SUBJECT TO THE RISKS AND UNCERTAINTIES ASSOCIATED WITH ALL DRUG DELIVERY AND
PHARMACEUTICAL DISTRIBUTION COMPANIES, INCLUDING, BUT NOT LIMITED TO, COMPLIANCE
WITH GOVERNMENT REGULATIONS AND THE POSSIBILITY OF PATENT INFRINGEMENT
LITIGATION. THE COMPANY IS ALSO SUBJECT TO OTHER RISKS DETAILED HEREIN OR
DETAILED FROM TIME TO TIME IN THIS REPORT AND THE COMPANY'S OTHER FILINGS WITH
THE SECURITIES AND EXCHANGE COMMISSION.

INTRODUCTION

         Andrx was organized in August 1992 and in November 1992 commenced
marketing and distributing generic pharmaceuticals manufactured by third
parties. In February 1993, the Company began to engage in the development of
bioequivalent versions of controlled-release pharmaceuticals utilizing its
proprietary drug delivery technologies. During 1996 the Company commenced its
efforts to develop brand name controlled-released products and Internet based
software applications for healthcare providers. Through October 9, 1997, the
Company's distribution operations had generated substantially all of its
revenues. On October 10, 1997, the U.S. Food and Drug Administration ("FDA")
granted final approval of the Abbreviated New Drug Application ("ANDA") for the
Company's bioequivalent version of Dilacor XR/registered trademark/, its first
manufactured product, which the Company immediately launched.

         Andrx is party to a Stipulation and Agreement (the "Stipulation") with
Hoechst Marion Roussel, Inc. and Carderm Capital L.P. (collectively "HMRI")
arising out of a patent infringement claim brought against the Company by HMRI
(the "HMRI Litigation") relating to the Company's bioequivalent version of
Cardizem/registered trademark/ CD. Andrx and HMRI entered into the Stipulation
in partial settlement of the HMRI Litigation in order to reduce the risks that
both 


                                       14
<PAGE>

parties face as the case is litigated to its conclusion. Andrx agreed to
maintain the status quo in connection with the marketing of its product and to
dismiss certain claims against HMRI. HMRI agreed to compensate Andrx for any
lost profits, which are stipulated to be $100 million per year, if Andrx
ultimately prevails in the HMRI Litigation. HMRI also agreed to make
non-refundable quarterly payments of $10 million to Andrx, beginning upon Andrx'
receipt of final FDA approval for its bioequivalent version of
Cardizem/registered trademark/ CD and continuing until the HMRI Litigation is
resolved or certain other events occur. Such quarterly payments are to be
credited against the payments of the stipulated lost profits if Andrx prevails
in the HMRI Litigation. In July 1998, the Company received both final FDA
marketing approval for its bioequivalent version of Cardizem/registered
trademark/ CD and its first quarterly payment for $9.1 million (prorated from
July 9, 1998). On October 1, 1998, the Company received the $10 million
quarterly payment for the 1998 fourth quarter.

         The Company is a 50% partner in ANCIRC Pharmaceuticals ("ANCIRC"), a
joint venture with Watson Pharmaceuticals, Inc. ("Watson"), for the development
of up to eight controlled-release pharmaceutical products. Capital contributions
to, distributions from, and net income or losses generated by ANCIRC are
allocated equally between the Company and Watson. In September 1998, upon
receiving FDA approval, ANCIRC launched its first product, a generic version of
Trental/registered trademark/.

          The Company is also party to domestic and international development
and licensing agreements for additional controlled-release bioequivalent and
brand products.

RESULTS OF OPERATIONS

         THREE MONTHS ENDED SEPTEMBER 30, 1998 ("1998 QUARTER"), AS COMPARED TO
THREE MONTHS ENDED SEPTEMBER 30, 1997 ("1997 QUARTER").

         For the 1998 Quarter, Andrx reported net income of $4.9 million or
$0.31 per diluted weighted average share of common stock outstanding as compared
to a net loss of $2.9 million or $0.19 per diluted weighted average share of
common stock outstanding for the 1997 Quarter. Although the Company continued to
increase its research and development spending, it became profitable in the 1998
Quarter for the first time as a result of fees generated by the Company pursuant
to the Stipulation, the continued growth in profitability of the Company's
distribution operation, profits realized from the sale of the Company's first
manufactured product and a gain on the sale of shares of CyBear, Inc.
("CyBear"), the Company's subsidiary engaged in the development of Internet
based software applications for healthcare providers.

         Total revenues increased by 57.7% to $67.3 million for the 1998 Quarter
as compared to $42.7 million for the 1997 Quarter.

         Net sales from distributed products were $55.3 million for the 1998
Quarter, an increase of $12.7 million or 29.9%, as compared to $42.6 million for
the 1997 Quarter. The increase in net sales from distributed products reflects
an increase in sales to customers, as well as an increase in the number of
customers.

                                       15
<PAGE>

         Net sales from manufactured products were $2.7 million for the 1998
Quarter. There were no comparable sales of manufactured products in the 1997
Quarter, as the Company launched its first manufactured product, a bioequivalent
version of Dilacor XR/trademark/ in October 1997.

         Following the FDA's final approval of the Company's ANDA for
Cardizem/registered trademark/ CD on July 9, 1998, Andrx received its first $10
million quarterly payment due under the Stipulation. The Stipulation fees for
the 1998 Quarter were $9.1 million, prorated from July 9, 1998.

         Licensing revenues of $93,000 were generated in the 1998 Quarter.

         Gross profits from net sales of distributed products were $8.4 million
or 15.2% in the 1998 Quarter, as compared to $6.1 million or 14.3% in the 1997
Quarter. The Company expects that continuing competition and pricing pressures
within the generic pharmaceutical industry may reduce the Company's gross profit
percentage on net sales from distributed products in future periods.

         Manufacturing costs for the 1998 Quarter of $1.5 million consist of
costs of manufactured products as well as idle manufacturing facility costs.
Manufacturing costs for the 1997 Quarter of $522,000 consist solely of idle
manufacturing facility costs, as the Company did not launch its first
manufactured product until October 1997. While the Company commenced its
commercial-scale manufacturing operation during 1997, the manufacturing facility
was not fully utilized for its commercial manufacturing operations during the
1998 Quarter and the 1997 Quarter. As the Company increases its production of
saleable products in future periods, manufacturing costs will be absorbed as
a component of the cost of inventory.

         Selling, general and administrative expenses were $8.3 million or 12.4%
of total revenues for the 1998 Quarter, as compared to $4.9 million or 11.5% of
total revenues for the 1997 Quarter. The increase in selling, general and
administrative expenses was primarily due to an increase in the activities
necessary to support the increase in net sales from both distributed products
and the Company's first manufactured product and includes a royalty to the
Company's Co-Chairman and Chief Scientific Officer, who is also a principal
shareholder and director, payable with respect to the Stipulation fees.

         Research and development expenses were $5.0 million in the 1998
Quarter, as compared to $3.0 million for the 1997 Quarter. The increase in
research and development expenses of $2.0 million or 64.8% reflects the progress
and expansion of the Company's development activities in its bioequivalent
(ANDA) and brand name (NDA) programs, including legal costs related to patent
infringement claims associated with the Company's ANDA filings.

         The Company's equity in losses of ANCIRC was $228,000 in the 1998
Quarter, as compared to $498,000 for the 1997 Quarter. In September 1998, upon
receiving FDA approval, ANCIRC launched its first product, a generic version of
Trental/registered trademark/. This product was formulated by Andrx, is being
manufactured by Watson and is being marketed by Andrx.

         In the 1998 Quarter, the Company incurred $935,000 of software
development and administration costs as compared to $393,000 in the 1997
Quarter. The increase in software 


                                       16
<PAGE>

development and administration costs primarily relates to the progress in the
development of CyBear's Internet based software application for healthcare
providers and the establishment of the related administrative infrastructure.

         In the 1998 Quarter, Andrx recognized $500,000 in gain on the sale of
CyBear shares of common stock to CyBear's new Chairman. Such sale was at $3.00 a
share or approximately a $40 million valuation for CyBear.

         Interest income was $230,000 in the 1998 Quarter, as compared to
$442,000 in the 1997 Quarter. The decrease in interest income is the result of
the lower average level of cash, cash equivalents and investments
available-for-sale maintained during the 1998 Quarter as compared to the 1997
Quarter. The Company invests in short-term investment grade interest bearing
securities.

         Interest expense increased to $174,000 in the 1998 Quarter from
$107,000 in the 1997 Quarter. The increase in interest expense was primarily the
result of a higher average level of borrowings under the Company's bank loan
during the 1998 Quarter as compared to the 1997 Quarter. Such borrowings are
utilized to fund the Company's distribution operations.

         In the 1998 Quarter, the Company provided $90,000 for federal
alternative minimum income taxes. For the 1998 Quarter, the Company was not
required to provide for federal or state income taxes due to its net operating
loss carryforwards. For the 1997 Quarter, the Company was not required to
provide for income or alternative minimum income taxes due to its net losses.
Under the provisions of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes", the Company has provided a valuation allowance to
reserve against 100% of its net operating loss carryforwards.

         The diluted weighted average shares of common stock outstanding were
15.9 million in the 1998 Quarter as compared to 14.7 million for the 1997
Quarter. Such increase resulted primarily from the inclusion of stock
equivalents in the profitable 1998 Quarter.

NINE MONTHS ENDED SEPTEMBER 30, 1998 ("1998 PERIOD"), AS COMPARED TO
THE NINE MONTHS ENDED SEPTEMBER 30, 1997("1997 PERIOD").

         For the 1998 Period, Andrx reported net income of $2.2 million or $0.14
per diluted weighted average share of common stock outstanding as compared to a
net loss of $6.5 million or $0.47 per diluted weighted average share of common
stock outstanding for 1997 Period. Although the Company continued to increase
its research and development spending, it became profitable in the 1998 Period
for the first time as a result of fees generated by the Company pursuant to the
Stipulation, the continued growth in profitability of the Company's distribution
operation, profits realized from the sale of the Company's first manufactured
product and a gain on the sale of shares of CyBear.

         Total revenues increased by 64.3% to $173.9 million for the 1998 Period
as compared to $105.9 for the 1997 Period.

                                       17
<PAGE>

         Net sales from distributed products were $156.2 million for the 1998
Period, an increase of $50.5 million or 47.7%, as compared to $105.8 million for
the 1997 Period. The increase in net sales from distributed products reflects an
increase in sales to customers, as well as an increase in the number of
customers.

         Net sales from manufactured products were $8.0 million for the 1998
Period. There were no comparable sales from manufactured products in the 1997
Period.

         Following the FDA's final approval of the Company's ANDA for
Cardizem/registered trademark/ CD on July 9, 1998, Andrx received its first $10
million quarterly payment due under its status quo Stipulation with HMRI. The
stipulation fees for the 1998 Period were $9.1 million.

         Licensing revenues were $519,000 in the 1998 Period, as compared to
$88,000 in the 1997 Period.

         Gross profits from net sales of distributed products were $23.5 million
or 15.1% in the 1998 Period, as compared to $15.7 million or 14.9% in the 1997
Period.

         Manufacturing costs for the 1998 Period of $3.8 million consist of
costs of manufactured products as well as idle manufacturing facility costs.
Manufacturing costs for the 1997 Period of $994,000 consist solely of idle
manufacturing facility costs, as the Company did not launch its first
manufactured product until October 1997.

         Selling, general and administrative expenses were $20.8 million or
12.0% of total revenues for the 1998 Period, as compared to $13.1 million or
12.4% of total revenues for the 1997 Period. The increase in selling, general
and administrative expenses was primarily due to an increase in the activities
necessary to support the increase in net sales from both distributed products
and the Company's first manufactured product and includes a royalty to the
Company's Co-Chairman and Chief Scientific Officer, who is also a principal
shareholder and director, with respect to the Stipulation fees.

         Research and development expenses were $12.2 million in the 1998
Period, as compared to $6.8 million in the 1997 Period. The increase in research
and development expenses of $5.4 million or 80.1% reflects the progress and
expansion of the Company's development activities for its bioequivalent (ANDA)
and brand name (NDA) programs, including legal costs related to patent
infringement claims associated with the Company's ANDA filings.

         The Company's equity in losses of ANCIRC was $914,000 in the 1998
Period, as compared to $1.3 million in the 1997 Period. In September 1998, upon
receiving FDA approval, ANCIRC launched its first product, a generic version of
Trental/registered trademark/.

         In the 1998 Period, the Company incurred $2.2 million of software
development and administration costs as compared to $969,000 in the 1997 Period.
The increase in software development and administration costs primarily relates
to the progress in the development of CyBear's Internet based software
application for healthcare providers and the establishment of the related
administrative infrastructure.

                                       18
<PAGE>

         In the 1998 Period, Andrx recognized $500,000 in gain on the sale of
CyBear shares of common stock to CyBear's new Chairman.

         Interest income was $754,000 in the 1998 Period, as compared to $1.2
million in the 1997 Period. The decrease in interest income is the result of the
lower average level of cash, cash equivalents and investments available-for-sale
maintained during the 1998 Period, as compared to the 1997 Period.

         Interest expense decreased to $322,000 in the 1998 Period from $449,000
in the 1997 Period. The decrease in interest expense was primarily the result of
a lower average level of borrowings under the Company's bank loan during the
1998 Period, as compared to the 1997 Period.

         In the 1998 Period, the Company provided $90,000 for federal
alternative minimum income taxes. For the 1998 Period, the Company was not
required to provide for federal or state income taxes due to its net operating
loss carryforwards. In the 1997 Period, the Company was not required to provide
for income or alternative minimum income taxes due to its net losses.

         The diluted weighted average shares of common stock outstanding were
15.9 million in the 1998 Period as compared to 14.0 million in the 1997 Period.
Such increase resulted primarily from the inclusion of stock equivalents in the
profitable 1998 Period.

LIQUIDITY AND CAPITAL RESOURCES

         As of September 30, 1998, Andrx had $16.1 million in cash, cash
equivalents and investments available-for-sale and $46.7 million of working
capital.

         Net cash used in operating activities for the 1998 Period was $10.4
million, as compared to $11.7 million for the 1997 Period. In the 1998 Period
and the 1997 Period, the net cash used in operating activities was primarily
used to fund research and development efforts and increases in inventories and
accounts receivable. In the 1997 Period, such increases were offset by an
increase in accounts payable and accrued liabilities. The increase in
inventories in the 1998 Period include purchases of inventories for distribution
in anticipation of potential price increases by the generic drug manufacturers.

         Net cash provided by investing activities was $4.7 million in the 1998
Period, as compared to net cash used in investing activities of $5.8 million in
the 1997 Period. In the 1998 Period, $9.4 million of investments
available-for-sale matured and the Company purchased $4.7 million of property,
plant and equipment. In the 1997 Period, $895,000 of investments
available-for-sale matured and the Company purchased $6.7 million of property,
plant and equipment. In the 1998 Period, the capital expenditures were primarily
for the purchase of approximately 15 acres of land. In the 1997 Period, the
capital expenditures were primarily for the procurement of manufacturing
equipment.

         Net cash provided by financing activities was $5.8 million in the 1998
Period, as compared to $19.2 million in the 1997 Period. Net cash provided by
financing activities in the 1998 Period consisted of net borrowings of $3.4
million under the Company's bank loan, $1.9 


                                       19
<PAGE>

million in proceeds from the issuance of shares of common stock upon the
exercises of stock options and warrants and $500,000 in proceeds from the gain
on the sale of shares of CyBear. Net cash provided by financing activities for
the 1997 Period, consisted of $21.3 million from the issuance of shares of
common stock in private placement transactions, $3.5 million in proceeds from
the issuance of shares of common stock upon the exercises of stock options and
warrants offset by $5.7 million of net repayments on the Company's bank loan.

         The Company had an outstanding short-term borrowing balance under its
distribution subsidiary's bank loan of $3.9 million as of September 30, 1998, as
compared to $538,000 as of December 31, 1997. Such increase relates to the
financing of additional inventory for distribution. Borrowings under the bank
loan are secured by all of the assets of that operation, and are subject to a
borrowing base related to the value of that operation's accounts receivable and
inventories. The bank loan agreement requires compliance by the Company with
certain covenants including the maintenance of minimum working capital and net
worth levels by the distribution subsidiary. In April 1998, the Company amended
its bank loan whereby the total available borrowings were increased from $10.0
million to $30.0 million and, if the Company maintains certain levels of an
average outstanding balance, the interest rate may be decreased from the present
rate of prime (8.5% as of September 30, 1998) plus 0.5%.

         In the 1998 Period, the Company purchased approximately 15 acres of
land on which it intends to construct a facility for its research and
development, manufacturing and corporate activities. The Company intends to
evaluate and possibly obtain external financing for such construction. The
Company has also leased two new premises which it intends to utilize for its
distribution, and software development and administration activities.

YEAR 2000

         The Year 2000 issue is the result of computer programs being written
using two digits rather than four to define the applicable year. The Company's
computer equipment and software and devices with embedded technology that are
time-sensitive may recognize a date using "00" as the year 1900 rather than the
year 2000. This could result in a system failure or a miscalculation, causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
activities.

         The Company has undertaken various initiatives intended to ensure that
its computer equipment and software will function properly with respect to dates
in the Year 2000 and thereafter. For this purpose, the term "computer equipment
and software" includes systems that are commonly thought of as IT systems,
including accounting, data processing, telephone/PBX systems, hand-held
terminals, scanning equipment, and other miscellaneous systems, as well as
systems that are not commonly thought of as IT systems, such as alarm systems,
fax machines, or other miscellaneous systems. Both IT and non-IT systems may
contain embedded technology and complicate the Company's Year 2000
identification, assessment, remediation, and testing efforts. Based upon its
identification and assessment efforts to date, the Company believes that certain
of the computer equipment and software it currently uses will require
replacement or modification. As such, when in the ordinary course of replacing
computer equipment and software, the Company will attempt to obtain
replacements that are Year 2000 compliant. Utilizing both internal and external
resources to identify and assess needed Year 2000 remediation, the Company
anticipates that its 


                                       20
<PAGE>

Year 2000 identification, assessment, remediation and testing efforts, which
began in the first quarter 1998, are expected to be completed by third quarter
1999, and that such efforts will be completed prior to any currently anticipated
impact on its computer equipment and software. The Company estimates that as of
November 2, 1998, it had completed approximately 30% of the initiatives that it
believes will be necessary to fully address potential Year 2000 issues relating
to its computer equipment and software. The projects comprising the remaining
70% of the initiatives are in process and expected to be completed on or about
the third quarter 1999.

         The Company has also mailed letters to its significant vendors,
customers and service providers to determine the extent to which interfaces with
such entities are vulnerable to Year 2000 issues and whether the products and
services purchased from or by such entities are Year 2000 compliant. As of
November 2, 1998 the Company had received responses from approximately 18% of
such third parties, and 46% of the Companies that have responded have provided
written assurance that they expect to address all their significant Year 2000
issues on a timely basis. A follow-up mailing to significant vendors and service
providers that did not initially respond, or whose responses were deemed
unsatisfactory by the Company, will be conducted in January 1999.

         The Company believes that the cost of its Year 2000 identification,
assessment, remediation and testing efforts, as well as currently anticipated
costs to be incurred by the Company with respect to Year 2000 issues of third
parties, will not exceed $1 million and will be funded from current existing
financial resources. As of November 2, 1998 the Company had incurred costs of
approximately $200,000 related to its Year 2000 identification, assessment,
remediation and testing efforts. These $200,000 in costs were for analysis,
repair or replacement of existing software, upgrades of existing software, or
evaluation of information received from significant vendors, service providers,
or customers. Other non-Year 2000 efforts have not been materially delayed and
Year 2000 issues will not pose significant operational problems for the Company.
However, if all Year 2000 issues are not properly identified, or assessment,
remediation and testing are not effected timely with respect to Year 2000
problems that are identified, there can be no assurance that the Year 2000 issue
will not materially adversely impact the Company's results of operations or
adversely affect the Company's relationships with customers, vendors, or others.
Additionally, there can be no assurance that the Year 2000 issues of other
entities will not have a material adverse impact on the Company's systems or
results of operations.

         The Company has not yet begun, a comprehensive analysis of the
operational problems and costs (including loss of revenues) that would be
reasonably likely to result from the failure by the Company and certain third
parties to complete efforts necessary to achieve Year 2000 compliance on a
timely basis. A contingency plan has not been developed for dealing with the
most reasonably likely worst case scenario, and such scenario has not yet been
clearly identified. The Company currently plans to complete such analysis and
contingency planning by December 31, 1999.

         The costs of the Company's Year 2000 identification, assessment,
remediation and testing efforts and the dates on which the Company believes it
will complete such efforts are based upon management's best estimates, which
were derived using numerous assumptions regarding future events, including the
continued availability of certain resources, third-party remediation plans, and
other factors. There can be no assurance that these estimates will prove to be
accurate, and actual results could differ materially from those currently
anticipated. Specific factors that could cause such material differences
include, but are not limited to, the availability and cost of personnel 


                                       21
<PAGE>

trained in Year 2000 issues, the ability to identify, assess, remediate and test
all relevant computer codes and embedded technology, and similar uncertainties.
In addition, variability of definitions of "compliance with Year 2000" and the
myriad of different products and services, and combinations thereof, sold by the
Company may lead to claims whose impact on the Company is not currently
estimable. No assurance can be given that the aggregate cost of defending and
resolving such claims, if any, will not materially adversely affect the
Company's results of operations.

                                       22
<PAGE>

                                ANDRX CORPORATION
                                     PART II
                                OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

See Note 8 to the "Notes to Consolidated Financial Statements" included in PART
I, Item 1 of this report.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:

10.34    Amendment to Royalty Agreement between the Registrant and 
         Chih-Ming J. Chen.

10.35    Lease Agreement relating to premises located at 500 Blue Lake Drive, 
         Boca Raton, Florida

10.36    Lease Agreement relating to premises located at 2915 Weston Road,
         Weston, Florida

27.1     Financial Data Schedule

(b) Reports on Form 8-K:

        None

                                       23
<PAGE>
                                ANDRX CORPORATION

                                   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.

                         By /s/ ALAN P. COHEN
                            -------------------------------------------------
                                Alan P. Cohen
                                Co-Chairman and Chief Executive Officer
                                (Principal Executive Officer)

                         By /s/ ANGELO C. MALAHIAS
                            -------------------------------------------------
                                Angelo C. Malahias
                                Vice President and Chief Financial Officer
                                (Principal Financial and Accounting Officer)

November 16, 1998

                                       24
<PAGE>
                                 EXHIBIT INDEX

EXHIBIT 
NUMBER                           DESCRIPTION
--------                         -----------     
10.34    Amendment to Royalty Agreement between the Registrant and 
         Chih-Ming J. Chen.

10.35    Lease Agreement relating to premises located at 500 Blue Lake Drive, 
         Boca Raton, Florida

10.36    Lease Agreement relating to premises located at 2915 Weston Road,
         Weston, Florida

27.1     Financial Data Schedule