<PAGE>   1


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K

(Mark One)

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

For the fiscal year ended June 30, 2001 or

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

For the transition period from __________ to __________

                          Commission file number 1-9860

                            BARR LABORATORIES, INC.
                            -----------------------
             (Exact name of Registrant as specified in its charter)

               NEW YORK                                      22-1927534
               ---------                                     ----------
    (State or Other Jurisdiction of                      (I.R.S. - Employer
     Incorporation or Organization)                       Identification No.)

           TWO QUAKER ROAD, P.O. BOX 2900, POMONA, NEW YORK 10970-0519
          ------------------------------------------------------------
                    (Address of principal executive offices)

                                  845-362-1100
                                  ------------
                         (Registrant's telephone number)

Securities registered pursuant to
    Section 12(b) of the Act:                     Name of each exchange on
      Title of each class                             which registered:
 Common Stock, Par Value $0.01
                                                   New York Stock Exchange

        Securities registered pursuant to Section 12(g) of the Act: None

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
    -----       ------

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

The aggregate market value of the voting stock of the Registrant held by
nonaffiliates was approximately $1,632,081,170 as of June 30, 2001 (assuming
solely for purposes of this calculation that all Directors and Officers of the
Registrant are "affiliates").

Number of shares of Common Stock, Par Value $.01, outstanding as of June 30,
2001: 35,404,437

                       DOCUMENTS INCORPORATED BY REFERENCE

PORTIONS OF THE REGISTRANT'S 2001 ANNUAL REPORT TO SHAREHOLDERS ARE INCORPORATED
BY REFERENCE IN PART II AND PART IV HEREOF. PORTIONS OF THE REGISTRANT'S 2001
PROXY STATEMENT ARE INCORPORATED BY REFERENCE IN PART III HEREOF.
<PAGE>   2
                                     PART I

ITEM 1. BUSINESS

SAFE HARBOR STATEMENT

To the extent that any statements made in this report contain information that
is not historical, these statements are essentially forward-looking. These
statements are subject to risks and uncertainties that cannot be predicted or
quantified and, consequently, actual results may differ materially from those
expressed or implied by such forward-looking statements. Such risks and
uncertainties include: the timing and outcome of legal proceedings, including
Eli Lilly & Company's, or Lilly's, appeal to the Supreme Court; the difficulty
of predicting the timing of U.S. Food and Drug Administration, or FDA,
approvals; the difficulty in predicting the timing and outcome of court
decisions on patent challenges; the court and FDA's decisions on exclusivity
periods; competitors ability to extend exclusivity periods past initial patent
terms; market and customer acceptance and demand for new pharmaceutical
products; ability to market proprietary products; the impact of competitive
products and pricing; timing and success of product development and launch;
availability of raw materials; the regulatory environment; fluctuations in
operating results; and, other risks detailed from time-to-time in the Company's
filings with the Securities and Exchange Commission, or SEC.

The Company wishes to caution each reader of this report to consider carefully
these factors as well as specific factors that may be discussed with each
forward-looking statement in this report or disclosed in the Company's filings
with the SEC as such factors, in some cases, could affect the ability of the
Company to implement its business strategy and may cause actual results to
differ materially from those contemplated by the statements expressed herein.

OVERVIEW

    We are a specialty pharmaceutical company engaged in the development,
manufacture and marketing of generic and proprietary prescription
pharmaceuticals. We currently market approximately 85 pharmaceutical products,
representing various dosage strengths and product forms of approximately 35
chemical entities. Our product line focuses principally on the development and
marketing of generic and proprietary products in the oncology and female
healthcare categories, including hormone replacement and oral contraceptives.

Merger with Duramed Pharmaceuticals, Inc.

On June 29, 2001, we announced a definitive agreement for a stock-for-stock
merger with Duramed Pharmaceuticals, Inc., or Duramed, a developer, manufacturer
and marketer of prescription drug products, focusing on women's health and the
hormone replacement therapy markets. Under the terms of the agreement, Duramed
common shareholders will receive a fixed exchange ratio of 0.2562 shares of our
common stock for each share of Duramed common stock. Duramed preferred stock
shareholders will receive 5.0632 shares of Barr common stock for each share of
Duramed preferred stock. The transaction is subject to customary approvals and
other conditions, and is expected to close late in our first fiscal quarter or
early in our second fiscal quarter. The transaction is expected to be a tax-free
exchange, and accounted for under the "pooling-of-interests" method.

One of the benefits of the merger with Duramed is the opportunity to bring
Duramed's sales force to the combined company. Since 1999, Duramed has been
using Cardinal Health Inc.'s contract sales organization to position one of its
proprietary products. Duramed has the right to bring this sales force in-house
in July 2002 by offering employment to the sales representatives. This
experienced sales team could allow the combined company to better position its
new products within the physician community and to pursue more aggressively
product-licensing opportunities.

BUSINESS STRATEGY

    We focus our resources on three core strategies:

    Developing and Marketing Selected Generic Pharmaceuticals. We develop and
market the generic equivalent of brand pharmaceuticals that are off-patent but
that have one or more barriers to entry. The characteristics of the products
that we pursue may include:

    -   the need for specialized manufacturing capabilities;

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    -   difficulty in raw material sourcing;

    -   complex formulation or development characteristics;

    -   regulatory or legal challenges; or

    -   sales and marketing challenges.

We believe products with such barriers will face limited competition and
therefore should produce higher profits for a longer period of time than
products that have no barriers, which many companies can develop.

    Developing and Introducing Proprietary Pharmaceuticals. We are also
developing proprietary pharmaceuticals that may have some period of exclusivity.
Although the time and cost to develop proprietary pharmaceuticals is usually
much higher than generic products, we believe that such products will produce
higher and more consistent profitability than the typical generic product. To
share the costs of these proprietary products and therefore increase the number
we work on, we often seek strategic partners to assist in the funding,
development and marketing of these products.

    Challenging Patents Protecting Certain Brand Pharmaceuticals. We also
develop generic equivalents of branded pharmaceuticals protected by patents that
we believe are either invalid, unenforceable or not infringed by our products.
This strategy is an extension of our first strategy because the patents we are
challenging present barriers to entry to companies that do not have the legal
and financial capabilities to assess and challenge such patents. We believe that
the successful development of pharmaceuticals that were perceived by competitors
to be patent protected may allow our products, if approved, to earn higher
profits for a longer period of time.

GENERIC PHARMACEUTICALS

    Our generic product line includes approximately 85 pharmaceutical products
representing various dosage strengths and product forms of approximately 35
chemical entities. Our products are manufactured in tablet, capsule and powder
form.

Key Generic Products

    The following are descriptions of the products that contribute significantly
to our sales and gross profit. Product data is derived from industry sources.

    Tamoxifen. Tamoxifen is the generic name for AstraZeneca's Nolvadex, which
is used to treat advanced breast cancer, impede the recurrence of tumors
following surgery, and reduce the incidence of breast cancer in women at high
risk for developing the disease. Statistics indicate that one in eight women
will get breast cancer during her lifetime, and each year, more than 180,000 new
cases of breast cancer are diagnosed.

    Tamoxifen accounted for approximately 65%, 68% and 66% of our product sales
during fiscal 2001, 2000 and 1999, respectively. Currently, we are the only
distributor of Tamoxifen in the United States other than its innovator,
AstraZeneca, whose product is sold under a brand name. We distribute Tamoxifen
under an agreement with AstraZeneca, and therefore our gross margins for
Tamoxifen are substantially lower than our gross margins for our manufactured
products.

    In 1993, as a result of a settlement of a patent challenge against
AstraZeneca, we entered into a non-exclusive supply and distribution agreement.
Under the terms of the Tamoxifen agreement, we purchase Tamoxifen directly from
AstraZeneca. Although we currently are the only non-exclusive distributor, the
Tamoxifen agreement provides that should an additional distributor or
distributors be selected by AstraZeneca, we will be granted terms no less
favorable than those granted to any subsequent distributor.

    We have a tentatively approved Abbreviated New Drug Application, or ANDA, to
manufacture the 10 mg tablet of Tamoxifen and are awaiting approval of our 20 mg
tablet application. After the patent expires in August 2002, we expect that we
will either continue to sell Tamoxifen as a distributed product or as our own
manufactured product. Our cost to manufacture Tamoxifen should be lower than our
cost to purchase it and, as a result, we believe our profit margins on Tamoxifen
will improve once we begin to sell our manufactured product. We expect that
additional competitors will enter the market upon patent expiry or six months
later if AstraZeneca obtains a pediatric extension. Whenever this occurs, we
believe that while our revenues and market share will be negatively affected,
our gross margins on the sales of Tamoxifen will exceed those we currently earn
as a distributor.

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    Warfarin Sodium. Warfarin Sodium is the generic equivalent of DuPont
Pharmaceutical's Coumadin, an anticoagulant that is given to patients with heart
disease and/or high risk of stroke. We launched Warfarin Sodium in July 1997 and
are one of three generic suppliers of the product. Warfarin Sodium accounted for
approximately 14%, 14% and 15% of our product sales during fiscal 2001, 2000 and
1999, respectively.

Generic Product Research and Development

    We are developing more than 60 pharmaceutical products, including 18 new
generic product ANDAs filed during fiscal 2001. Currently we have approximately
26 ANDAs pending at the FDA.

Generic Product Sales And Marketing

    We market our generic products to customers in the United States and Puerto
Rico through an integrated sales and marketing force that includes a five person
national sales force. The activities of the sales force are supplemented by two
customer service representatives who inform our customers of new products,
process orders and advise on order status and current pricing. All marketing
activities are developed, implemented and coordinated by a product marketing
group consisting of four employees.

    Our generic product customer base includes drug store chains, food chains,
mass merchandisers, wholesalers, distributors, managed care organizations, mail
order accounts, government/military and repackagers. Our products are primarily
sold under the Barr label.

    We sell our generic products primarily to approximately 140 direct
purchasing customers and approximately 105 indirect customers that purchase our
products from wholesalers. In fiscal 2001, 2000 and 1999, McKesson Drug Company,
the nation's largest pharmaceutical wholesaler, accounted for approximately 15%,
16% and 14%, respectively, of product sales. No other customer accounted for
greater than 10% of product sales in any of the last three fiscal years.

    During the past four years the number of companies we sell to has declined
due to industry consolidation. In addition, a number of customers have
instituted buying programs that limit the number of generic suppliers they buy
from. Having fewer customers and changes in customer buying patterns have
increased competition among generic drug marketers. Adding to these market
pressures, managed care organizations have in some cases limited the number of
authorized vendors. In addition, mail-order prescription services, which
typically purchase product from a limited number of suppliers, have continued to
grow. While we believe that we have excellent relationships with our key
customers, a continuation or expansion of the changes described above could
negatively impact our business.

PROPRIETARY PHARMACEUTICALS

    Our proprietary product development activities are not focused on
discovering new molecules. We pursue candidates in three primary categories:

    -   existing chemical compounds where the development of new forms (liquid
        vs. tablets or different dosages) offer therapeutic or marketing
        advantages;

    -   new chemical entities in selected therapeutic categories, including some
        that are marketed in other countries but not currently sold in the
        United States; and

    -   patent protected proprietary products in late stages of development.

    Pursuing products in these categories allows us to focus on products that
should take less time and cost to gain approval than if we pursued new
molecules. Our strategy focuses on products that we expect will have some period
of market exclusivity and generate higher gross margins and maintain
profitability longer than most generic products. In addition, we seek to license
or acquire patented products.

Currently Marketed Products

    Mylocel(TM). Mylocel is the trademark name for our 250 mg and 1000 mg
Hydroxyurea tablets. Hydroxyurea is an anti-cancer agent


                                       4
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used in the treatment of melanoma, resistant chronic myelocytic leukemia, and
recurrent, metastatic, or inoperable carcinoma of the ovary, as well as certain
head and neck cancers. We received FDA approval to market two new dosage
strengths of Hydroxyurea, a 1000 mg tablet and a 250 mg tablet in August 2000
and September 2000, respectively. Our new dosage strength products are designed
to simplify drug therapy and enhance patient compliance by eliminating the
larger number of doses that patients are currently required to ingest. In
addition, our tablets are scored to allow patients to adjust their dosage levels
more accurately. In January 2001, we signed a Licensing and Distribution
Agreement with MGI Pharma, Inc., under which we granted MGI the exclusive
distribution rights to market, sell and distribute Mylocel in the United States
for 10 years. MGI launched the product in March 2001.

    Trexall(TM). Trexall is the trademark name for our 5, 7.5, 10 and 15 mg
Methotrexate tablets. Methotrexate is used in the treatment of certain forms of
cancer, severe psoriasis and adult rheumatoid arthritis. We received FDA
approval to market four new dosage strengths of Methotrexate in March 2001. Our
new dosage strength products are designed to simplify drug therapy and increase
patient convenience and compliance. Prior to Trexall's approval, Methotrexate
tablets were only available in a 2.5 mg strength tablet. DuPont Pharmaceuticals
began detailing Trexall directly to target physicians in mid-May. We record the
sales from the product and pay a royalty to DuPont based on net sales. Our
agreement with DuPont has a term of 5 years, but may be cancelled earlier upon
notice.

    ViaSpan(R). In August 2000, we began to market ViaSpan. ViaSpan is a
solution used for hypothermic flushing and storage of organs including kidney,
liver and pancreas at the time of their removal from the donor in preparation
for storage, transportation and eventual transplantation into a recipient. We
acquired the marketing rights to ViaSpan in the United States and Canada from
DuPont Pharmaceuticals Company through December 2007 as part of a co-development
and marketing alliance. Under that agreement, we purchase finished product, sell
it under a Barr label, and pay a royalty to DuPont. We now exclusively market
the product in both the United States and Canada to approximately 175 customers,
primarily transplant centers and hospitals. Since ViaSpan is sold to a
relatively small number of customers, the costs and risks assumed by us to
market ViaSpan are not substantially different from the costs and risks assumed
by us to market any of our other products. ViaSpan is patent protected through
December 2007.

Proprietary Products under Development

    We have a number of other proprietary pharmaceutical products under
development including the five listed in the following chart. These five
products are expected to compete in therapeutic categories, such as oncology and
oral contraception.

                              PROPRIETARY PIPELINE
<TABLE>
<CAPTION>
                     PRODUCT                       CATEGORY         DOSAGES
                     -------                       --------         -------
                  <S>                         <C>                   <C>
                  BRL3                             Oncology            1

                  CyPat(TM)                        Oncology            1

                  SEASONALE(TM)               Oral Contraceptive       2

                  Japanese  Encephalits           Anti-Viral           1
                  Vaccine

                  DP3                          Female Healthcare       2
</TABLE>

Selected Proprietary Products

    CyPat(TM). Cyproterone Acetate, which we intend to market in the United
States under the name CyPat, is a steroid that blocks the action of
testosterone. Cyproterone Acetate is not currently approved for marketing in the
United States. Internationally, Cyproterone Acetate is mainly used in the
management of prostate cancer, both as a single agent and in combination with
other products. In addition, it is used as a component of oral contraceptives
and in the treatment of acne, seborrhea, hirsutism in women, precocious puberty
in children, and hypersexuality/deviant behavior in men. Currently, Cyproterone
Acetate is approved for use in over 80 countries throughout Europe, Asia, South
America, Australia, Japan and Canada.

    In July 1999, we submitted an Investigational New Drug, or IND, application
with the FDA for CyPat for the treatment of vasomotor symptoms associated with
prostate cancer therapies and its effects on the patients' quality of life. We
are developing CyPat to relieve the distressing hot flashes that typically
accompany surgical or chemical castration that is often used in the treatment of
prostate cancer. Of the more than 2.4 million patients in the United States who
have been diagnosed with prostate cancer, CyPat may prove suitable for treating
approximately 100,000 patients.

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    Among the most common symptoms associated with prostate cancer treatments
such as surgical or chemical castration are hot flashes and night sweats.
Approximately 3 out of 4 patients experience hot flashes and night sweats.
Patients report that hot flashes begin 1 to 12 months after treatment and can
last for up to 3 years or, in some cases, the rest of their lives. Patients
describe hot flashes as a sensation of warmth that spreads from the face, chest
and back and then to the rest of the body. Sweating, a higher pulse rate, and
feelings of anxiety, irritability, and queasiness usually go together with hot
flashes and night sweats. Hot flashes and night sweats affect the patients'
psychological equilibrium and adversely affect their quality of life.

    We have initiated a Phase III, randomized, multicenter, placebo-controlled,
double blind clinical trial to study the efficacy and safety of CyPat for the
treatment of hot flashes following surgical or chemical castration in prostate
cancer patients. The clinical studies are expected to include approximately 600
patients at approximately 60 sites across the country. We have enrolled
approximately 300 patients to date. We are working to complete enrollment of our
Phase III clinical trial by March 2002. Pending FDA approval, CyPat could reach
consumers as early as the second half of calendar 2004. We expect to receive a
five-year new chemical entity exclusivity and have a patent, which expires in
2018, that covers the use of CyPat in prostate cancer patients. We also have
additional patents pending and in development for CyPat.

    SEASONALE(TM). SEASONALE is a patent protected oral contraceptive regimen
which we are developing through an agreement with the Medical College of Hampton
Roads, Eastern Virginia Medical School. Under the proposed SEASONALE regimen,
women would take the product for up to 84 consecutive days, and then would have
a seven-day pill-free interval. By contrast, the majority of oral contraceptive
products currently available in the United States are based on a regimen of 21
treatment days and then seven pill-free days. The proposed SEASONALE regimen is
expected to result in only 4 menstrual cycles per year, or one per "season".
This type of oral contraceptive regimen is preferable to many women whose
lifestyle dictates the convenience of fewer menstrual cycles per year. Like all
oral contraceptives, we will seek SEASONALE approval for the indication of
prevention of pregnancy.

    Oral contraceptives are the most common method of reversible birth control,
used by up to 65% of women in the United States at some time during their
reproductive years. Oral contraceptives have a very long history with widespread
use attributed to many factors including efficacy in preventing pregnancy,
safety and simplicity in initiation and discontinuation, medical benefits and
relatively low incidence of side effects.

    As of January 2001, we completed enrollment and more than 1,300 patients
have been participating in our Phase III clinical study. The Phase III study is
a prospective, parallel, multicenter, open-label, randomized study evaluating
the use of two dose levels of SEASONALE in a 91-day cycle administered for
approximately 12 months and two dose levels of conventional oral contraceptive
therapy administered for approximately 12 months. We expect to complete our
Phase III clinical trial by the first quarter of calendar 2002. Pending FDA
approval, SEASONALE could reach consumers as early as the second half of
calendar 2003. The SEASONALE regimen is patent protected through 2017.

    DP3. In addition to CyPat and SEASONALE, we have also initiated Phase III
development of an undisclosed third DuPont-funded product. This product, in the
therapeutic category of female healthcare, is scheduled to begin in our first
quarter of fiscal 2002.

Barr/DuPont Pharmaceuticals Co-Development and Marketing Alliance

    In March 2000, we announced four agreements with the DuPont Pharmaceuticals
Company that resolved a legal dispute between our two companies. The first
agreement with DuPont provides up to $45 million to support the ongoing
development of three proprietary products: the CyPat prostate cancer therapy;
the SEASONALE oral contraceptive; and a third product, DP3, which we have
identified but not yet disclosed. We will be responsible for marketing these
three products, although DuPont may elect to play a role in product co-
promotion, and DuPont may receive royalties based on product sales. Under terms
of the second agreement, DuPont assumes sales and marketing responsibility for
Trexall, a proprietary product that we developed internally. We launched Trexall
in May 2001. The third agreement transferred the responsibility of marketing
DuPont's ViaSpan organ transplant preservation agent to us. Under the fourth
agreement, we granted DuPont warrants to purchase 1.5 million shares of our
common stock: 750,000 shares at $31.33 per share and 750,000 shares at $38.00
per share. The warrants expire in March 2004 and are exercisable at any time by
the warrant holder.

Proprietary Product Sales And Marketing

    We are evaluating various strategies for selling and marketing our
proprietary pharmaceuticals. These strategies include any


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combination of the following:

    -   licensing our proprietary products to other pharmaceutical companies
        with sales organizations sufficient to support our products,

    -   entering into co-promotion or contract sales arrangements with respect
        to the products,

    -   establishing our own sales organization and related infrastructure,
        and/or

    -   acquiring a company with an existing sales force (See Overview section
        regarding the pending merger with Duramed).

If we license our products or enter into co-promotional or contract sales
arrangements, we would not incur the significant upfront expenses associated
with building a sales organization. However, without our own sales force, we
would retain a lower portion of the profits from the sales of the products.

PATENT CHALLENGES

    We actively challenge the patents protecting branded pharmaceutical products
where we believe such patents are invalid, unenforceable or not infringed by our
products. Our activities in this area, including sourcing raw materials and
developing equivalent formulations, are designed to obtain FDA approval for our
product. Our legal activities, performed by outside counsel, are designed to
eliminate the barrier to market entry created by the patent. Our patent
challenges may also result in settlements. We have settled two cases and will
continue to evaluate settlements that we believe are reasonable, lawful, and in
our shareholders' best interests. Under the Hatch-Waxman Act, the developer of a
bioequivalent drug which is the first to have its ANDA accepted for filing by
the FDA, and whose filing includes a certification that the patent is invalid,
unenforceable or not infringed, a so-called "paragraph IV certification", may be
eligible to receive a 180-day period of generic market exclusivity. This period
of market exclusivity may provide the patent challenger with the opportunity to
earn a return on the risks taken and its legal and development costs and to
build its market share.

    Because of the potential value of the 180-day market exclusivity as the only
generic in the market for that period, our usual strategy or goal is to be the
first company to file a paragraph IV certification. We have initiated nine
patent challenges: two have been resolved through settlement, two have resulted
in favorable court decisions pending appeals, four are awaiting court decisions
and, in one case, the patent was upheld.

    Patent challenges are complex, costly and can take three to six years to
complete. They generally require an investment of $8-$10 million per challenge.
As a result, we have in the past and may elect in the future to have partners on
select patent challenges. These arrangements typically provide for a sharing of
the costs and risks, and generally provide for a sharing of the benefits of a
successful outcome.

                            PATENT CHALLENGE HISTORY
<TABLE>
<CAPTION>
                           PRODUCT (BRAND NAME)            OUTCOME                       STATUS
                           --------------------            -------                       ------
                       <S>                            <C>                        <C>
                       Tamoxifen (Nolvadex)           - Resolved                 - Tentatively approved ANDA
                         10 mg tablet                                            - Non-exclusive distribution
                                                                                   agreement until August 2002
                                                                                 - Continue supply agreement or
                                                                                   launch manufactured version after
                                                                                   patent expiry



                       Ciprofloxacin (Cipro)          - Resolved                 - Tentatively approved ANDA
                                                                                 - Contingent non-exclusive supply
                                                                                   agreement until December 2003
                                                                                 - Right to distribute with partner
                                                                                   six months before patent expiry



                       Fluoxetine (Prozac)            - 2003 Patent Invalidated  - Launched product Aug. 2001
                         20 mg capsule                - Appeal to Supreme
                                                        Court expected
</TABLE>

                                       7
<PAGE>   8
<TABLE>
<CAPTION>
                       <S>                              <C>                         <C>
                       Norethindrone/ethinyl            - Pending                   - Tentatively approved ANDA
                         estradiol (Ortho-Novum 7/7/7)

                       Norgestimate/ethinyl             - Pending                   - ANDA filed
                         estradiol
                         (Ortho Tri-Cyclen)

                       Flecainide Acetate (Tambocor)    - Summary Judgment Granted  - ANDA filed
                                                        - Appeal Pending

                       Fexofenadine Hydrochloride       - Pending                   - ANDA filed
                         capsules (Allegra)

                       Norethindrone acetate/ethinyl    - Pending                   - ANDA filed
                         estradiol (Estrostep)

                       Zidovudine (Retrovir)            - Unsuccessful              - Tentatively approved ANDA
                                                                                    - Anticipated launch upon patent
                                                                                      expiry in 2005
</TABLE>


    Tamoxifen. In 1993, as a result of a settlement of a patent challenge
against AstraZeneca, we entered into a non-exclusive supply and distribution
agreement. Under the terms of the Tamoxifen agreement, we purchase Tamoxifen
directly from AstraZeneca. Although we are the only non-exclusive distributor,
the Tamoxifen agreement provides that should an additional distributor or
distributors be selected by AstraZeneca, we will be granted terms no less
favorable than those granted to any subsequent distributor. For the reasons
discussed under "Patent Challenge Process" below, unless recent court cases are
reversed on appeal, we may not be eligible for generic exclusivity.

    Ciprofloxacin. Ciprofloxacin is the generic equivalent of Bayer's Cipro and
is used to treat lower respiratory, skin, bone and joint, and urinary tract
infections. In October 1991, we filed an ANDA for Ciprofloxacin which included a
paragraph IV certification claiming that the patent covering Ciprofloxacin, the
so-called 444 patent, was invalid. We believe we were the first company to file
a paragraph IV ANDA for Ciprofloxacin. Shortly thereafter, Bayer sued us for
patent infringement. In January 1995, we received a tentative approval from the
FDA on our paragraph IV ANDA for Ciprofloxacin tablets. Such tentative approval
indicates that the product has met all regulatory specifications to be granted
final approval by the FDA. We expect that we will not be granted final FDA
approval to market our generic Ciprofloxacin product until after the expiration
of the 444 patent and any applicable marketing exclusivity awarded to Bayer or
others. For example, we anticipate Bayer will seek pediatric exclusivity which,
if granted, could delay generic competition for six months beyond the expiration
of the patent. For the reasons discussed under "Patent Challenge Process" below,
unless recent court cases are reversed on appeal, we may not be eligible for
generic exclusivity.

    In January 1997, Bayer AG, Bayer Corporation ("Bayer") and we agreed to
settle the then pending litigation regarding Bayer's patent protecting
ciprofloxacin hydrochloride. Under the settlement agreement, we withdrew our
patent challenge by amending our ANDA from a paragraph IV certification
(claiming invalidity) to a paragraph III certification (seeking approval upon
patent expiry) and acknowledged the validity and enforceability of the
Ciprofloxacin patent. In addition, we entered into a non-exclusive supply
agreement which ends at the date of patent expiry, currently December 2003. The
settlement agreement with Bayer does not prevent us from withdrawing our ANDA.
However, it is in our commercial interest to maintain our tentatively approved
ANDA so that after Bayer's patents do expire or are found invalid, we can
receive final FDA approval and begin to manufacture and sell a generic
Ciprofloxacin product manufactured under our ANDA. Under the supply agreement,
Bayer has the option to either make payments to Barr or allow Barr and Rugby
Laboratories, now owned by Watson Pharmaceuticals, Inc., to purchase
Ciprofloxacin from Bayer at a predetermined discount. If Bayer chooses not to
provide the product to Barr, we would recognize proceeds of approximately $31
million per year through the year ending June 30, 2003. If Bayer elects to
provide us product for resale, the amount we could earn would be dependent upon
numerous market factors.

    The supply agreement also provides that, six months prior to patent expiry,
if we are not already distributing the product, we and Rugby Laboratories will
have the right to begin distributing Ciprofloxacin product manufactured by
Bayer. The Bayer license is non-exclusive and Bayer may, at its option, provide
other non-exclusive licenses to others after Barr and Rugby Laboratories have
operated under the license for six months. If Bayer does not elect to license
any other parties and if no other party is successful in its challenge of the
patent, we expect that our product will be the only other Ciprofloxacin product
in the market during the six months prior to patent expiry.

    Fluoxetine.  See Item 3. Legal Proceedings

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    After a successful ruling by the U.S. Court of Appeals for the Federal
Circuit, located in Washington D.C. in favor of our challenge to Lilly's patent
protecting Prozac, Barr launched Fluoxetine, the generic equivalent to Lilly's
anti-depressent, Prozac. In addition, as the first to file an application for
the Prozac 20 mg capsule challenging Lilly's listed patents, we believe we are
entitled to the 180-day generic exclusivity granted under the Hatch-Waxman Act.
However, we can give no assurances that our position on the implementation of
the FDA's exclusivity rules will prevail. However, given the timing of the final
order in the patent infringement case, we believe that at a minimum, we will
enjoy approximately 175 days of marketing exclusivity.

    We have a partner in our challenge of Lilly's patents for Prozac, Apotex,
Inc., which is beneficially owned by Dr. Bernard C. Sherman, a director of Barr.
We will share the benefits of the launch of Fluoxetine with Apotex, Inc.

    Norethindrone/ethinyl estradiol.  See Item 3. Legal Proceedings

    Norgestimate/ethinyl estradiol.  See Item 3. Legal Proceedings

    Flecainide Acetate.  See Item 3. Legal Proceedings

    Fexofenadine Hydrochloride.  See Item 3. Legal Proceedings

    Norethindrone acetate/ethinyl estradiol.  See Item 3. Legal Proceedings

    Zidovudine. Zidovudine is the generic equivalent of Glaxo Wellcome's
Retrovir(R), also known as AZT, a treatment for AIDS. The patent challenge that
followed our filing was resolved unsuccessfully during 1996. However, we
received tentative approval of our ANDA for this product in February 1995, and
anticipate launching our generic equivalent when the patents expire in 2005.

Patent Challenge Process

    The Hatch-Waxman Act provides incentives for generic pharmaceutical
companies to challenge suspect patents on branded pharmaceutical products. The
legislation recognizes that there is a potential for the improper issuance of
patents by the United States Patent and Trade Office, or PTO, resulting from a
variety of technical, legal or scientific factors. The Hatch-Waxman legislation
places significant burdens on the challenger to ensure that such suits are not
frivolous, but also offers the opportunity for significant financial reward if
successful.

    All of the steps involved in the filing of an ANDA with the FDA, including
research and development, are identical with those steps taken in development of
any generic drug. At the time of filing with the FDA for approval of its version
of the branded product, the generic company files with its ANDA a certification
asserting that the patent is invalid, unenforceable and/or not infringed, a
so-called "paragraph IV certification". After receiving notice from the FDA that
its application is acceptable for filing, the generic company sends the patent
holder a notice explaining why it believes that the patents in question are
invalid, unenforceable or not infringed. Upon receipt of the notice from the
generic company, the patent holder has 45 days in which to bring suit in federal
district court against the generic company to establish the validity,
enforceability and/or infringement of the challenged patent. The discovery,
trial and appeals process can take several years.

    The Hatch-Waxman Act provides for an automatic stay on the time that the FDA
may grant final approval, which would otherwise give the ANDA holder/patent
challenger the option to market its generic product. This period is set at 30
months, or such shorter or longer period as may be ordered by the court. The 30
months may or may not and often do not coincide with the timing of a trial or
the expiration of a patent.

    Under the Hatch-Waxman Act, the developer of a bioequivalent drug which is
the first to have its ANDA accepted for filing by the FDA, and whose filing
includes a paragraph IV certification, may be eligible to receive a 180-day
period of market exclusivity. This period of market exclusivity may provide the
patent challenger with the opportunity to earn a return on the risks taken and
its legal and development costs and to build its market share.

    The FDA adopted regulations implementing the 180-day generic marketing
exclusivity provision of the Hatch-Waxman Act. However, over the years, courts
have found various provisions of the regulations to be in conflict with the
statute. For example, in Mova Pharmaceutical Corp. v. Shalala, 140 F.3d 1060
(D.C. Cir. 1998), the court of appeals held that the Hatch-Waxman Act


                                       9
<PAGE>   10
required generic exclusivity to be awarded to the first generic company to file
a new drug application containing a paragraph IV certification, regardless of
whether that company had prevailed in a court challenge to the relevant patent,
in contrast to FDA regulations requiring the first patent challenger to
successfully defend its challenge to the patent. And, in Mylan Pharmaceuticals
v. Shalala, 81 F.Supp.2d 30 (D.D.C. 2000), the district court found that the
statute requires the 180-day generic period to commence on the date of a
district court decision finding the challenged patent invalid, even if the
innovator company appealed the court's decision. The decision was in contrast to
the FDA's rule that the exclusivity period would not commence until the
appellate court affirmed the district court's decision, but also found that the
interests of applicants who had relied in good faith on the FDA's regulations
should be protected.

    These successful court challenges required the FDA to ignore portions of its
regulations in implementing the statute. Ultimately, the FDA decided to propose
a new regulatory scheme for implementing the 180-day market exclusivity
provision of the Hatch-Waxman Act in August 1999. The FDA further modified its
proposed new regulatory scheme in a March 2000 industry guidance.

    In general, the proposed rule and guidance would make a generic
manufacturer's ability to obtain and benefit from the Hatch-Waxman market
exclusivity provisions more uncertain. Under the guidance, the 180-day period
could begin to run when the federal district court enters a ruling finding the
challenged patent to be invalid or not infringed. This would require the patent
challenger to either begin marketing its generic product before the federal
appellate process is complete or risk losing some or all of its marketing
exclusivity waiting for the appellate process to conclude. In addition, the
proposed rule could put the patent challenger in the position of losing some or
all of its market exclusivity, if the 180-day period is deemed to have started
before the challenger's ANDA has been approved by the FDA or before the
challenger is willing to enter the market with its generic product.

    We have submitted comments on both the August 1999 proposed rule and the
March 2000 guidance. At least 20 other entities, including other generic
pharmaceutical companies, innovator companies and pharmaceutical industry
organizations, also submitted comments on these proposals.

    No lawsuits have been filed against the FDA as a result of its proposed
rule. However, in light of the numerous lawsuits filed against the FDA in the
past on market exclusivity issues, such lawsuits may occur if the agency
promulgates a final rule similar to its proposal. As a result, there is
uncertainty as to what rule the FDA will eventually adopt, whether we or other
companies will challenge part or all of the final rule in court and, if so, how
the courts will rule in such lawsuits. In addition, given the scope of the
proposed rule, the number of comments and the complexity of the issues contained
therein, there is also uncertainty as to when, if ever, the FDA will adopt final
regulations.

    Recent court decisions have also complicated the generic exclusivity issue.
In one case, a federal district court held that we would not be entitled to
generic exclusivity on Tamoxifen, because our challenge to the tamoxifen patent
was settled after a district court had found the patent to be unenforceable and
because we changed our paragraph IV certification to a paragraph III
certification as part of the settlement of the patent challenge case. We have
appealed this decision. In another case, a federal district court in West
Virginia upheld the FDA's conclusion that a patent challenger's distribution of
a licensed product manufactured by the patent holder triggered the commencement
of the generic exclusivity period. Unless reversed or vacated on appeal, the
decisions in these cases could prevent us from obtaining generic exclusivity on
Tamoxifen and Ciprofloxacin, but would not prevent us from manufacturing and
marketing our generic tamoxifen or ciprofloxacin products.

    In 1997, Congress enacted a new provision designed to reward branded
pharmaceutical companies for conducting research in the pediatric population. If
a branded company has a patent protecting the product that is either
unchallenged or whose validity is upheld by a court, it is eligible to apply for
an additional six months of market exclusivity following the patent's
expiration. This is known as "pediatric exclusivity." Thus, where pediatric
exclusivity is requested by a branded company and granted by FDA, the
commencement of generic competition could possibly be delayed by six months. The
FDA has not issued regulations, or any formal guidance, as to how it believes
pediatric exclusivity and the 180-day marketing exclusivity period interact with
one another. It is possible that the FDA could interpret these provisions in a
way that prohibits the patent challenger from fully utilizing the 180-day
period, which would diminish its value.

    The facts and circumstances of each patent challenge differ significantly.
It is, therefore, impossible for us to provide a general conclusion as to the
ultimate effect the proposed rule and the guidance and effect of pediatric
exclusivity would have on the exclusivity status of our patent cases.
Nevertheless, if adopted, the proposed rule and guidance could diminish the
value of the 180-day marketing exclusivity period because, as discussed above,
they increase the likelihood that the first patent challenger would lose some or
all of the benefit of the marketing exclusivity period.

                                       10
<PAGE>   11
    Each patent challenge typically takes three to six years, and can cost
approximately $8 to 10 million in legal and product development costs. As a
result, we have in the past and may elect in the future to have partners on
selected patent challenges. These agreements typically provide for a sharing of
the costs and risks, and generally provide for a sharing of the benefits of a
successful outcome. The process for initiating a patent challenge begins with
the identification of a drug candidate and evaluation by qualified legal counsel
of the patents protecting that product. We have reviewed a number of challenges
and have pursued only those that we believe have merit. Generally, once we
receive a favorable opinion from our patent counsel, we begin the formulation
and development process. Patent challenge product candidates typically must have
several years of remaining patent protection to ensure that the legal process
can be completed prior to patent expiry.

    The federal antitrust authorities, including the FTC, have indicated they
intend to conduct a broad inquiry into alleged anti-competitive practices in the
entire pharmaceutical industry, including practices relating to patent
challenges and settlements. The FTC has indicated that the study will enable the
Commission to provide a more complete picture of how generic drug competition
has developed under the Hatch-Waxman Act. The FTC has already investigated
several cases in which manufacturers of pharmaceutical drug products and
potential generic competitors have allegedly entered into anti-competitive
agreements to delay generic entry, and has taken enforcement action against some
alleged anticompetitive agreements. The FTC has indicated that its broader study
is designed to shed light on matters such as whether the agreements the FTC has
found are isolated instances and whether particular provisions of the
Hatch-Waxman Act have operated appropriately to balance the legitimate interests
of pharmaceutical companies in protection of their intellectual property and the
legitimate interests of generic companies in providing competition. In the
spring of calendar 2001 the FTC issued special orders to approximately 100
pharmaceutical companies. Barr received its special order on April 30, 2001 and
has provided responses to the FTC. The FTC has stated that it plans to compile
the requested information to provide a factual description of how the 180-day
marketing exclusivity and 30-month stay provisions of the Hatch-Waxman Act have
influenced the development of generic drug competition.

    It is possible that the FTC may take no action, may make recommendations to
FDA or others, may adopt procedural notification devices, or may bring
enforcement actions as to specific agreements it concludes are anticompetitive.
Given the early stage of the inquiry, we cannot conclude whether and how this
inquiry will affect our long-range business. As discussed previously, any
limitations on the 180-day exclusivity provisions may decrease our opportunities
for generic exclusivity in the future.

GOVERNMENT REGULATION

    We are subject to extensive regulation by the federal government,
principally by the FDA, and, to a lesser extent, by the DEA and state
governments. The Federal Food, Drug and Cosmetic Act, the Controlled Substances
Act and other federal statutes and regulations govern or influence the testing,
manufacturing, safety, labeling, storage, record keeping, approval, pricing,
advertising and promotion of our products. Non-compliance with applicable
requirements can result in fines, recalls and seizure of products. The FDA has
the authority to revoke drug approvals previously granted.

ANDA Process

    FDA approval is required before a generic equivalent or a new dosage form of
an existing drug can be marketed. We usually receive approval for such products
by submitting an ANDA to the FDA. When processing an ANDA, the FDA waives the
requirement of conducting complete clinical studies, although it normally
requires bioavailability and/or bioequivalence studies. "Bioavailability"
indicates the rate and extent of absorption and levels of concentration of a
drug product in the blood stream needed to produce a therapeutic effect.
"Bioequivalence" compares the bioavailability of one drug product with another,
and when established, indicates that the rate of absorption and levels of
concentration of a generic drug in the body are the same as the previously
approved drug. An ANDA may be submitted for a drug on the basis that it is the
equivalent to a previously approved drug or, in the case of a new dosage form,
is suitable for use for the indications specified.

    Before approving a product, the FDA also requires that our procedures and
operations conform to cGMP regulations, as defined in the U.S. Code of Federal
Regulations. We must follow the cGMP regulations at all times during the
manufacture of our products. To help insure compliance with the cGMP
regulations, we must continue to spend time, money and effort in the areas of
production and quality control to ensure full technical compliance.

    If the FDA believes a company is not in compliance with cGMP, sanctions may
be imposed upon that company including:

                                       11
<PAGE>   12
    -   withholding from the company new drug approvals as well as approvals for
        supplemental changes to existing applications;

    -   preventing the company from receiving the necessary export licenses to
        export its products; and

    -   classifying the company as an "unacceptable supplier" and thereby
        disqualifying the company from selling products to federal agencies.

    We believe we are currently in compliance with cGMP.

    The timing of final FDA approval of ANDA applications depends on a variety
of factors, including whether the applicant challenges any listed patents for
the drug and whether the brand-name manufacturer is entitled to one or more
statutory exclusivity periods, during which the FDA is prohibited from accepting
applications for, or approving, generic products. In certain circumstances, a
regulatory exclusivity period can extend beyond the life of a patent, and thus
block ANDAs from being approved on the patent expiration date. For example, the
FDA may now extend the exclusivity of a product by six months past the date of
patent expiry if the manufacturer undertakes studies on the effect of their
product in children, a so-called pediatric extension.

    In May of 1992, the Generic Act was enacted. The Generic Act, a result of
the legislative hearings and investigations into the generic drug approval
process, allows the FDA to impose debarment and other penalties on individuals
and companies that commit certain illegal acts relating to the generic drug
approval process. In some situations, the Generic Act requires the FDA to not
accept or review ANDAs for a period of time from a company or an individual that
has committed certain violations. It also provides for temporary denial of
approval of applications during the investigation of certain violations that
could lead to debarment and also, in more limited circumstances, provides for
the suspension of the marketing of approved drugs by the affected company.
Lastly, the Generic Act allows for civil penalties and withdrawal of previously
approved applications. Neither we nor any of our employees have ever been
subject to debarment.

NDA Process

    FDA approval is required before any new drug can be marketed. An NDA is a
filing submitted to the FDA to obtain approval of a drug not eligible for an
ANDA and must contain complete pre-clinical and clinical safety and efficacy
data or a right of reference to such data. Before dosing a new drug in healthy
human subjects or patients may begin, stringent government requirements for
preclinical data must be satisfied. The pre-clinical data, typically obtained
from studies in animal species, as well as from laboratory studies, are
submitted in an Investigational New Drug, or IND, application, or its equivalent
in countries outside the United States, where clinical trials are to be
conducted. The preclinical data must provide an adequate basis for evaluating
both the safety and the scientific rationale for the initiation of clinical
trials.

    Clinical trials are typically conducted in three sequential phases, although
the phases may overlap.

    -   In Phase I, which frequently begins with the initial introduction of the
        compound into healthy human subjects prior to introduction into
        patients, the product is tested for safety, adverse effects, dosage,
        tolerance absorption, metabolism, excretion and other elements of
        clinical pharmacology.

    -   Phase II typically involves studies in a small sample of the intended
        patient population to assess the efficacy of the compound for a specific
        indication, to determine dose tolerance and the optimal dose range as
        well as to gather additional information relating to safety and
        potential adverse effects.

    -   Phase III trials are undertaken to further evaluate clinical safety and
        efficacy in an expanded patient population at typically dispersed study
        sites, in order to determine the overall risk-benefit ratio of the
        compound and to provide an adequate basis for product labeling.

    Each trial is conducted in accordance with certain standards under protocols
that detail the objectives of the study, the parameters to be used to monitor
safety and efficacy criteria to be evaluated. Each protocol must be submitted to
the FDA as part of the IND. In some cases, the FDA allows a company to rely on
data developed in foreign countries, or previously published data, which
eliminates the need to independently repeat some or all of the studies.

    Data from preclinical testing and clinical trials are submitted to the FDA
as an NDA for marketing approval and to other health


                                       12
<PAGE>   13
authorities as a marketing authorization application. The process of completing
clinical trials for a new drug may take several years and require the
expenditure of substantial resources. Preparing an NDA or marketing
authorization application involves considerable data collection, verification,
analysis and expense, and there can be no assurance that approval from the FDA
or any other health authority will be granted on a timely basis, if at all. The
approval process is affected by a number of factors, primarily the risks and
benefits demonstrated in clinical trials as well as the severity of the disease
and the availability of alternative treatments. The FDA or other health
authorities may deny an NDA or marketing authorization application if the
regulatory criteria are not satisfied, or such authorities may require
additional testing or information.

    Even after initial FDA or other health authority approval has been obtained,
further studies, including Phase IV post-marketing studies, may be required to
provide additional data on safety. The post marketing studies could be used to
gain approval for the use of a product as a treatment for clinical indications
other than those for which the product was initially tested. Also, the FDA or
other regulatory authorities require post-marketing reporting to monitor the
adverse effects of the drug. Results of post-marketing programs may limit or
expand the further marketing of the products.

    Further, if there are any modifications to the drug, including changes in
indication, manufacturing process or labeling or a change in the manufacturing
facility, an application seeking approval of such changes must be submitted to
the FDA or other regulatory authority. Additionally, the FDA regulates
post-approval promotional labeling and advertising activities to assure that
such activities are being conducted in conformity with statutory and regulatory
requirements. Failure to adhere to such requirements can result in regulatory
actions that could have a material adverse effect on our business, results of
operations and financial condition.

DEA

    Because we sell and develop products containing controlled substances, we
must meet the requirements and regulations of the Controlled Substances Act
which are administered by the DEA. These regulations include stringent
requirements for manufacturing controls and security to prevent diversion of or
unauthorized access to the drugs in each stage of the production and
distribution process. The DEA regulates allocation to us of raw materials used
in the production of controlled substances based on historical sales data. We
believe we are currently in compliance with all applicable DEA requirements.

Medicaid/Medicare

    In November 1990, a law regarding reimbursement for prescribed Medicaid
drugs was passed as part of the Congressional Omnibus Budget Reconciliation Act
of 1990. The law requires drug manufacturers to enter into a rebate contract
with the Federal Government. All generic pharmaceutical manufacturers, whose
products are covered by the Medicaid program, are required to rebate to each
state a percentage (currently 11% in the case of products manufactured by us and
15% for Tamoxifen sold by us) of their average net sales price for the products
in question. We accrue for future estimated rebates in our consolidated
financial statements.

    Over the last year, the extension of prescription drug coverage to all
Medicare recipients has gained support in Congress. The generic pharmaceutical
industry trade associations are actively involved in discussions regarding the
structure and scope of any proposed Medicare prescription drug benefit plans.
We, as an active member in the Generic Pharmaceutical Association, or the GPhA,
the leading trade association representing the generic pharmaceutical industry,
support the development of an industry-wide position on Medicare.

    We believe that federal and/or state governments may continue to enact
measures in the future aimed at reducing the costs of drugs to the public. We
cannot predict the nature of such measures or their impact on our profitability.

Other

    We are also governed by federal, state and local laws of general
applicability, such as laws regulating intellectual property, including patents
and trademarks; working conditions; equal employment opportunity; and
environmental protection.

EMPLOYEES

Our success depends on our ability to hire and retain highly qualified
scientific and management personnel. We face intense competition for personnel
from other companies, academic institutions, government entities and other
organizations. As of June 30,


                                       13
<PAGE>   14
2001, we had approximately 685 full-time employees including 111 in research and
development and 479 in production and quality assurance/control. Approximately
83 are represented by a union that has a collective bargaining agreement with
us. Our current collective bargaining agreement with our employees, who are
represented by Local 2-149 of the Paper, Allied, Chemical and Energy (PACE)
Union International, expires on April 1, 2005. We believe that our relations
with our employees are good and we have no history of work stoppages.

PRODUCT DEVELOPMENT

As discussed above, the Company's product development efforts are focused in two
principal product areas: unique generic products and a portfolio of proprietary
products.

For the fiscal years ended June 30, 2001, 2000 and 1999, total research and
development expenditures were approximately $53, $40 and $23 million,
respectively. The increase in research and development investment during the
past two fiscal years funded an enhanced commitment to both generic and
proprietary product development activities. Research and development
expenditures for generic development activities include personnel costs, costs
paid to third party contract research organizations for conducting
bioequivalence studies and costs for raw materials used in developing the
products. Proprietary development costs are paid primarily to third party
clinical research organizations who are responsible for conducting the clinical
trials required to support a product application with FDA. The Company
anticipates that research and development expenditures will increase 30-35%
during fiscal 2002, due to continued investment in new generic drug development,
continued progress on proprietary product development, and clinical studies
related to two IND applications. A portion of our proprietary research and
development costs are reimbursed by DuPont Pharmaceuticals in accordance with a
proprietary product development funding agreement. Such amount totaled $17,008
and $12,000 in 2001 and 2000, respectively.

COMPETITION

The Company competes in varying degrees with numerous other manufacturers of
pharmaceutical products, both branded and generic. These competitors include:

-   the generic divisions and subsidiaries of brand pharmaceutical companies,
    including Apothecon Inc. and Geneva Pharmaceuticals, Inc., subsidiaries of
    Novartis AG;

-   large independent generic manufacturers/distributors that seek to provide
    "one stop shopping" by offering a full line of products, including Mylan
    Laboratories and Teva Pharmaceuticals;

-   generic manufacturers that have targeted select therapeutic categories and
    market niches, including Watson Pharmaceuticals; and

-   brand pharmaceutical companies whose patent protected therapies compete with
    both generic and proprietary products marketed or being developed by the
    Company, including AstraZeneca, DuPont Pharmaceuticals, Johnson & Johnson,
    Bristol-Meyers Squibb and Eli Lilly & Company.

Many of the Company's competitors have greater financial and other resources,
and are therefore able to devote more resources than the Company in such areas
as marketing support and product development. In order to ensure its ability to
compete effectively, the Company has:

    -   focused its proprietary and generic product development in areas of
        historical strength or competitive advantage;

    -   targeted generic products for development that offer significant
        barriers to entry for competitors, including: difficulty in sourcing raw
        materials; difficulty in formulation or establishing bioequivalence;
        manufacturing that requires unique facilities, processes or expertise;
        and

    -   invested in plant and equipment to give it a competitive edge in
        manufacturing.

These factors, when combined with the Company's investment in new product
development and its focus on select therapeutic categories, provide the basis
for its belief that it will continue to remain a leading independent specialty
pharmaceutical company.

RAW MATERIALS

The active chemical raw materials, essential to the Company's business, are bulk
pharmaceutical chemicals, which are purchased from numerous manufacturers in the
U.S. and throughout the world. All purchases are made in United States dollars,
and while currency


                                       14
<PAGE>   15
fluctuations do not have an immediate impact on prices the Company pays, such
fluctuations may, over time, have an effect on prices to the Company. Certain
products that have historically accounted for a significant portion of Barr's
revenues are currently available only from sole or limited suppliers.
Arrangements with foreign suppliers are subject to certain additional risks,
including the availability of governmental clearances, export duties, political
instability, currency fluctuations and restrictions on the transfer of funds.
Any inability to obtain raw materials on a timely basis, or any significant
price increases that cannot be passed on to customers, could have a material
adverse effect on the Company. Because prior FDA approval of raw material
suppliers is required, if raw materials from an approved supplier were to become
unavailable, the required FDA approval of a new supplier could cause a
significant delay in the manufacture of the drug product affected.

To date, the Company has not experienced any significant delays from lack of raw
material availability. However, there can be no assurance that significant
delays will not occur in the future.

GOVERNMENT RELATIONS ACTIVITIES

As a record number of branded pharmaceutical products are scheduled to go off
patent over the next several years, the branded pharmaceutical industry has
increased efforts to utilize state and federal legislative and regulatory arenas
to delay generic competition, or limit the severe market erosion they can
experience once monopoly protection is lost for the branded product. Efforts to
achieve these goals include, but are not limited to, filing additional patents
in the Approved Drug Products with Therapeutic Equivalence Evaluations book in
an attempt to increase the period of patent protection for products, directly
petitioning the FDA to request amendments to FDA standards through the Citizen
Petition process, seeking changes in United States Pharmacopeia standards and
attempting to extend patents by attaching amendments to important federal
legislation. Federal legislation designed to extend the patents an additional
three years on several drugs, due to perceived delays in the FDA approval
process, has been introduced. State by state initiatives to enact legislation
opposing the substitution of equivalent generic drugs is an additional
anti-generic defense strategy.

Some companies have expressed interest over the last several years in reopening
the Hatch-Waxman Act and renegotiating some of the compromises reached between
the brand and generic pharmaceutical industries that resulted in the creation of
the modern generic pharmaceutical industry. Reopening the act could disturb the
delicate balance achieved in 1984 but may also offer the generic industry the
opportunity to expand the Hatch-Waxman Act to include drug products not
currently covered under the Act.

Because a balanced and fair legislative and regulatory arena is critical to the
generic pharmaceutical industry, the Company has and will continue to put a
major emphasis in terms of management time and financial resources on government
affairs activities. We currently maintain an office and staff a full-time
government affairs department in Washington, D.C., that maintains responsibility
for coordinating state and federal legislative activities and coordination with
the generic industry trade association.

ITEM 2.  PROPERTIES

We have facilities and operations in Pomona and Blauvelt, New York; Northvale,
New Jersey; Forest, Virginia; Bala Cynwyd, Pennsylvania; and Washington, D.C.
The following table presents the facilities owned or leased by us and indicates
the location and type of each of these facilities.
<TABLE>
<CAPTION>
                                  SQUARE
LOCATION                          FOOTAGE  STATUS         DESCRIPTION
--------                         --------- ------  ---------------------------
<S>                              <C>       <C>     <C>
NEW JERSEY
Northvale....................     27,500   Owned   Manufacturing

NEW YORK
Blauvelt.....................     38,600   Leased  Corporate Administration
Pomona 1.....................     34,000   Owned   R&D, Laboratories, Manufacturing
Pomona 2.....................     90,000   Owned   Laboratories, Administrative Offices,
                                                   Manufacturing, Warehouse

PENNSYLVANIA
Bala Cynwyd .................      2,900   Leased  Administration

VIRGINIA
Forest.......................    165,500   Owned   Administrative Offices, Manufacturing,
                                                   Warehouse,
</TABLE>


                                       15
<PAGE>   16
<TABLE>
<CAPTION>
<S>                                <C>     <C>     <C>
                                                   Packaging, Distribution

WASHINGTON D.C...............      1,800   Leased  Corporate Administration
</TABLE>

Over the past three fiscal years, the Company has spent approximately $42
million in capital expenditures primarily to expand manufacturing capacity,
extend research and development activities and strengthen certain competitive
advantages. The Company believes that its current facilities are in good
condition and are being used productively and are adequate to meet current
operating requirements.

ITEM 3.   LEGAL PROCEEDINGS

PATENT CHALLENGES

In February 1996, Barr filed an ANDA seeking approval from the FDA to market the
20 mg capsule of fluoxetine hydrochloride ("Fluoxetine"), the generic equivalent
of Eli Lilly & Company's ("Lilly") Prozac. The Company notified Lilly pursuant
to the provisions of the Hatch-Waxman Act, and on April 19, 1996, Lilly filed a
patent infringement action in the United States District Court for the Southern
District of Indiana - Indianapolis Division seeking to prevent Barr from
marketing its Fluoxetine until certain U.S. patents expire in 2003.

In rulings on pretrial motions on January 12, 1999, the U.S. District Court,
Southern District of Indiana, dismissed several of the claims that the Company
was to present at the trial. Prior to the trial beginning, Barr, two
co-defendants and Lilly reached an agreement pursuant to which Barr and Lilly
agreed to drop all the remaining claims in the litigation. In addition to
dropping their remaining claims, Lilly made a one-time payment of $4 million to
be shared between Barr and its co-defendants.

On July 27, 2001 the Court of Appeals issued a mandate instructing the District
Court to vacate its earlier decision. The Court of Appeals decision upheld the
Company's "double-patenting" claim, finding that the invention claimed in
Lilly's patent had already been the subject of a previous patent, and thus could
not be patent-protected for a second time. On August 2, 2001, Barr launched its
generic version. Lilly has announced its intention to petition the U.S. Supreme
Court to review the Court of Appeals decision. The Supreme Court is not expected
to make a decision on the Prozac matter for several months. If the Supreme Court
overturns the Court of Appeals decision, which Barr believes is unlikely, and
reinstates the Prozac patent, Barr may be liable for substantial damages which
could have a material adverse effect on Barr's operations and financial
condition.

On August 1, 2001, aaiPharma Inc. ("AAI") filed a lawsuit in the United States
District Court for the Eastern District of North Carolina against Barr and
others claiming that the generic versions of Prozac manufactured by those
companies infringe AAI's patent. Barr launched its generic version of the 20 mg
Prozac capsule on August 2, 2001. If Barr is found to infringe the AAI patent,
Barr may be liable to AAI for damages that may reduce Barr's profits from its
generic Prozac product. The Company believes that the suit filed against it by
AAI is without merit and intends to defend its position vigorously.

In October 1998, Barr filed an ANDA seeking approval from the FDA to market the
three different tablet combinations of norethindrone and ethinyl estradiol, the
generic equivalent of Ortho-McNeil Pharmaceutical Inc.'s ("Ortho") Ortho-Novum
7/7/7 oral contraceptive regimen. The Company notified Ortho pursuant to the
provisions of the Hatch-Waxman Act and on January 15, 1999, Ortho filed a patent
infringement action in the United States District Court for the District of New
Jersey - Trenton Division, seeking to prevent Barr from marketing the three
different tablet combinations of norethindrone and ethinyl estradiol until
certain U.S. patents expire in 2003. In March 2001, the Company received
tentative approval for its ANDA. We expect the trial to begin before the end of
the calendar year.

In February 2000, Barr filed an ANDA seeking approval from the FDA to market
three different tablet combinations of norgestimate and ethinyl estradiol, the
generic equivalent of Ortho's Tri-Cyclen(R). The Company notified Ortho
pursuant to the provisions of the Hatch-Waxman Act and on June 9, 2000, Ortho
filed a patent infringement action in the United States District Court for the
District of New Jersey - Trenton Division, seeking to prevent Barr from
marketing the three different tablet combinations of norgestimate and ethinyl
estradiol until certain U.S. patents expire in 2003. The case is in the
discovery stage.

In May 2000, Barr filed an ANDA with the FDA for Flecainide Acetate tablets
which is sold under its brand name, Tambocor. The Company notified Minnesota
Mining and Manufacturing Company, or Minnesota Mining, pursuant to the
provisions of the Hatch-


                                       16
<PAGE>   17
Waxman Act and on August 25, 2000, Minnesota Mining filed a patent infringement
action in the United States District Court for the District of Minnesota,
seeking to prevent Barr from proceeding with the commercialization of the
product until certain U.S. patents expire. This case involves an alleged
infringement by Barr of raw material patents and not a challenge to the validity
of patents protecting the product. On April 18, 2001, the court granted the
Company's motion for summary judgement ruling that the Company did not infringe
Minnesota Mining's patents. On May 17, 2001, Minnesota Mining filed a notice of
appeal to the Federal Circuit.

In May 2001, Barr filed an ANDA seeking approval from the FDA to market
Fexofenadine Hydrochloride Capsules ("Fexofenadine") the generic equivalent of
Aventis Pharmaceuticals, Inc.'s ("Aventis") Allegra(R). The Company notified
Aventis pursuant to the provisions of the Hatch-Waxman Act and on August 1,
2001, Aventis filed a patent infringement action in the United States District
Court for the District of New Jersey-Newark Division, seeking to prevent Barr
from marketing Fexofenadine until after the expiration of various U.S. patents,
the last of which expires in 2018. Discovery in the case is expected to commence
in the near future.

In January 2001, Barr filed an ANDA seeking approval from the FDA to market
three different tablet combinations of norethindrone acetate and ethinyl
estradiol, the generic equivalent of Warner-Lambert Company's ("Warner-Lambert")
Estrostep(R) oral contraceptive regimen. The Company notified Warner-Lambert
pursuant to the provision of the Hatch-Waxman Act and on August 3, 2001, Warner-
Lambert filed a patent infringement action in the United States District Court
for the Southern District of New York-White Plains Division, seeking to prevent
Barr from marketing the three different tablet combinations of norethindrone
acetate and ethinyl estradiol until after the expiration of two U.S. patents,
the second of which expires in 2008. Discovery in the case is expected to
commence in the near future.

CLASS ACTION LAWSUITS

Ciprofloxacin (Cipro(R)) Class Action Suits

The Company has been named as a defendant in several actions related to its
settlement of the Cipro patent challenge. The following are class action
complaints on behalf of direct and/or indirect purchasers for Cipro from 1997 to
present against the Company along with Bayer corporation and the Rugby Group,
Inc. and others alleging violation of federal antitrust laws and/or state
antitrust and consumer protection laws. The following actions have been filed in
or removed to United States District Courts: Louisiana Wholesale Drug Co. (S.D.
NY 7/14/00); Maria Locurto (E.D. NY 8/1/00); Ann Stuart (D. NJ 8/4/00); Arkansas
Carpenters Health and Welfare Fund (E.D. NY 8/23/00); UFCW Tri-State Health and
Welfare Fund (E.D. NY 8/30/00); Elaine Ozarow (S.D. Fla. 8/29/00); Deborah
Pantane (N.D. Cal. 1/30/01); Linda McIntyre (E.D. Mich. 9/11/00); Theresa Meyers
(S.D. NY 9/15/00); Mark Aston (C.D. Cal. 10/10/00); Donna Franck (M.D. Fla.
10/13/00); Rebecca Sandhaus (D. Kan. 10/26/00); John Colman (S.D. Cal.
10/16/00); Caroline Loesch (S.D. Fla. 11/13/00); Charles McKenzie (D. Arizona
10/27/00); Ellen Relles et. al. (C.D. Cal. 10/24/00); Greg Amluxen, et. al.
(E.D. Penn. 10/24/00); Barry Garber, et. al. (N.D. Cal. 11/17/00); For Love &
Money, Inc. d/b/a Rx Jennifer's Pharmacy, et. al. (S.D. Ill. 10/27/00); CVS
Meridian, Inc., et. al. (S.D. NY 10/18/00); Adele Brody, et. al. (S.D. NY
10/18/00); Shoshana Samole, et. al. (N.D. Cal. 10/31/00); Peggy Lee, et. al.
(N.D. Cal. 11/14/00); John Irons, et. al. (C.D. Cal. 11/10/00); David Green, et.
al. (E.D. NY 10/16/00); Barbara Meyers, et. al. (E.D. Wisc. 11/16/00); Arthur's
Drug Store, Inc., et. al. (S.D. NY 12/4/00); Mary Ann Scott, et. al. (N.D. Cal.
11/22/00); Patricia Nelson, et. al. (D. Minn. 11/15/00); Maurice Stewart, et.
al. (D. D.C. 12/18/00); UFCW of Arizona Health & Welfare Trust, et. al. (D.
Ariz. 1/11/01); Madeline Eisenhauer, et. al. (E.D. NY 12/15/00); Kimberly
McCullar, et. al. (N.D. Cal. 12/12/00); Teamsters Local 237 Retirees' Benefit
Fund et. al. (E.D. NY 8/8/01). The following actions have been filed in state
court: Marcy Altman, et. al. (New York State Supreme Court 9/6/00); Karyn
McGaughey, et. al. (California Superior Court, San Diego County 8/2/00).

Tamoxifen Class Action Suits

The following complaints represent putative consumer or third-party payor class
action complaints, brought under federal and nineteen state antitrust and/or
consumer protection statutes, arising out of Zeneca's and Barr's 1993 settlement
of a patent infringement action. The complaints allege that the 1993 settlement
insulates Zeneca and the Company from generic competition and enables Zeneca and
Barr to charge artificially high prices for tamoxifen citrate. Plaintiffs seek
to recover both Barr's and Zeneca's profits and treble damages, where
appropriate, for the alleged antitrust violations. The following actions have
been filed in or removed to United States District Courts: Betty Joblove, et.
al. (E.D. NY 10/6/00); Allied Services Division Welfare Fund, et. al. (E.D. NY
11/01/00); Lynda Knee, et. al. (E.D. NY 11/8/00); Rebecca Bennish, et. al. (E.D.
Mich. 11/9/00); Karen Jo Koonan, et. al. (N.D. Cal. 12/8/00); Eugene DeJesus,
et. al. (E.D. NY 12/13/00); Maxine Blonstein, et. al. (S.D. Fla. 3/27/01); Leana
Noble, et. al. (E.D. Mich. 5/14/01); Great


                                       17
<PAGE>   18
Lakes Health Plan, Inc., et. al. (E.D. Mich. 4/26/01); Susan LaCava, et. al.
(W.D. Wisc. 4/30/01); New York Statewide Senior Action, et. al. (E.D. NY
5/9/01); Lyn Lovinger, et. al. (S.D. NY 5/9/01); Rita Smith, et. al. (D. NM
5/9/01); Connie Whiteside, et. al. (D. WV 5/10/01); Carolene Marks, et. al.
(N.D. Cal. 5/10/01); Gail Woollacott, et. al. (D. Maine 5/9/01); Carol Platt,
et. al. (D. Maine 7/29/01); Lynch, et. al. (E.D. NY 8/21/01). The following
actions have been filed in state courts: Helen Donega, et. al. (Commonwealth of
Massachusetts, Superior Court - County of Suffolk 6/10/01); Monica Underwood,
et. al. (Minnesota State Court, County of Hennerin 8/1/01).

The Company believes that each of its agreements with Bayer Corporation and
Zeneca, Inc., respectively, is a valid settlement to a patent suit and cannot
form the basis of an antitrust claim. Although it is not possible to forecast
the outcome of these matters, the Company intends to vigorously defend itself.
It is anticipated that these matters may take several years to be resolved but
an adverse judgment could have a material adverse impact on the Company's
financial statements.

OTHER LEGAL MATTERS

In February 1998, Invamed, Inc., which has since been acquired by Geneva
Pharmaceuticals, Inc., a subsidiary of Novartis AG, or Invamed, named the
Company and several others as defendants in a lawsuit filed in the United States
District Court for the Southern District of New York, charging that the Company
unlawfully blocked access to the raw material source for Warfarin Sodium. In May
1999, Apothecon, Inc., then a subsidiary of Bristol-Meyers Squibb, Inc. or
Apothecon, filed a similar lawsuit. The two actions have been consolidated.

The Company believes that the suits filed against it by Invamed and Apothecon
are without merit and intends to defend its position vigorously. These actions
are currently in the discovery stage. It is anticipated that this matter may
take several years to be resolved but an adverse judgment could have a material
adverse impact on the Company's business and consolidated financial statements.

In March 1999, civil action complaints filed separately by Mylan
Pharmaceuticals, Inc. and Pharmachemie, B.V. against the FDA were consolidated
in Mylan Pharmaceuticals, Inc. v. Henney in the U.S. District Court, District of
Columbia. These lawsuits challenged a March, 1999, FDA letter ruling that Barr
was eligible for generic exclusivity on Tamoxifen Citrate. In April 1999, Barr
intervened as a defendant in support of the FDA. On March 31, 2000, the U.S.
District Court for the District of Columbia issued a Memorandum Opinion vacating
FDA's letter ruling. The court found that Barr was not eligible for exclusivity
under the language of the Hatch-Waxman Act because Barr's challenge to the
Tamoxifen patent was settled after a district court had found the patent to be
unenforceable and because Barr changed its Paragraph IV certification to a
Paragraph III certification as part of the settlement of the patent challenge
case. Barr appealed the district court's decision to the U.S. Court of Appeals
for the District of Columbia Circuit. If upheld on appeal, this decision could
prevent Barr from obtaining generic market exclusivity for Tamoxifen.

Similarly, in the Ciprofloxacin patent challenge, Barr changed its Paragraph IV
certification to a Paragraph III certification as part of the settlement of the
patent challenge case. Therefore, if the decision in the Tamoxifen case
discussed above is upheld on appeal, it could effect Barr's ability to obtain
generic market exclusivity for Ciprofloxacin. However, such a decision would not
prevent Barr from manufacturing and marketing its Tamoxifen or Ciprofloxacin
products.

In 1998 and 1999, the Company was contacted by the Department of Justice, or
DOJ, regarding the March 1993 settlement of the Tamoxifen patent litigation.
Barr continues to cooperate with the DOJ in this ongoing examination, and
believes that the DOJ will ultimately determine that the settlement was
appropriate and a benefit to consumers. The DOJ has not contacted the Company
about this matter since June 1999.

On June 30, 1999, the Company received a civil investigative demand and a
subpoena from the Federal Trade Commission, or the FTC, that, although not
alleging any wrongdoing, sought documents and data relating to the January 1997
agreements resolving patent litigation involving Ciprofloxacin hydrochloride,
which had been pending in the U.S. District Court for the Southern District of
New York. The FTC is investigating whether the Company, through settlement and
supply agreements, has engaged or are engaging in activities in violation of the
antitrust laws. The Company continues to cooperate with the FTC in this
investigation. In the spring of calendar 2001 the FTC issued special orders to
approximately 100 pharmaceutical companies related to an inquiry into alleged
anti-competitive practices in the entire pharmaceutical industry, including
practices relating to patent challenge settlements. Barr received its special
order on April 30, 2001 and has provided responses to the FTC.

On May 1, 2001, the Texas Attorney General's Office, as liaison on behalf of a
group of state Attorney Generals, served the Company


                                       18
<PAGE>   19
with a civil investigation demand relating to the Company's settlement of its
Ciprofloxacin patent challenge with Bayer AG. At the Attorney General's request,
the Company entered into an agreement with the states to allow them to
investigate the Company's settlement of its Ciprofloxacin patent challenge with
Bayer AG. The Company has fully cooperated in this investigation.

On August 17, 2001, the Oregon Attorney General's Office, as liaison on behalf
of a group of state Attorney Generals, served the Company with a civil
investigation demand relating to its investigation of the Company's settlement
of its Tamoxifen patent challenge with AstraZeneca. The investigation demand
requests the production of certain information and documents that may assist the
Attorney General in its investigation. The Company is reviewing the demand and
intends to fully cooperate with the Attorney General's office in its
investigation.

The Company believes that the patent challenge process under the Hatch-Waxman
Act represents a pro-consumer and pro-competitive alternative to bringing
generic products to market more rapidly than might otherwise be possible. The
Company believes that once all the facts are considered, and the benefits to
consumers are assessed, that these DOJ and FTC investigations will be
satisfactorily resolved. However, consideration of these matters could take
considerable time, and while unlikely, any adverse judgment in either matter
could have a material adverse impact on the Company's consolidated financial
statements.

In May 2001, Barr received a subpoena, issued by the Commonwealth of
Massachusetts Office of the Attorney General, for the production of documents
related to pricing and Medicaid reimbursement of select products in
Massachusetts. Barr is one of a number of pharmaceutical companies that have
received such subpoenas. The Company is cooperating with the inquiry and
believes that all of its product agreements and pricing decisions have been
lawful and proper.

As of June 30, 2001, the Company was involved, as plaintiff and defendant, in
other lawsuits incidental to its business. Management of the Company, based on
the advice of legal counsel, believes that the disposition of such litigation
will not have any significant adverse effect on the Company's consolidated
financial statements.

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

None.



                                       19
<PAGE>   20
                                     PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

The information required by Item 5 is included on page 42 of the 2001 Annual
Report to Shareholders ("Annual Report") and is incorporated herein by
reference.

ITEM 6.  SELECTED FINANCIAL DATA

The information required by Item 6 is included on page 44 of the Annual Report
and is incorporated herein by reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The information required by Item 7 is included on pages 22 through 26 of the
Annual Report and is incorporated herein by reference.

ITEM 7a.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's exposure to market risk for a change in interest rates relates
primarily to the Company's investment portfolio of approximately $222 million
and debt instruments of approximately $28 million. The Company does not use
derivative financial instruments.

The Company's investment portfolio consists of cash and cash equivalents and
marketable securities classified as "available for sale." The primary objective
of the Company's investment activities is to preserve principal while at the
same time maximizing yields without significantly increasing risk. To achieve
this objective, the Company maintains its portfolio in a variety of high credit
quality securities, including U.S. government and corporate obligations,
certificates of deposit and money market funds. One hundred percent of the
Company's portfolio matures in less than three months. The carrying value of the
investment portfolio approximates the market value at June 30, 2001. Because the
Company's investments are diversified and are of relatively short maturity, a
hypothetical 1 or 2 percentage point change in interest rates would not have a
material effect on the Company's consolidated financial statements.

Approximately 92% of the Company's debt instruments at June 30, 2001, are
subject to fixed interest rates and principal payments. The related note
purchase agreements permit the Company to prepay these notes prior to their
scheduled maturity, but may require the Company to pay a prepayment fee based on
market rates at the time of prepayment and the note rates. The remaining 8% of
debt instruments are primarily subject to variable interest rates based on LIBOR
and have fixed principal payments. The fair value of all debt instruments is
approximately $28 million at June 30, 2001. Management does not believe that any
risk inherent in these instruments is likely to have a material effect on the
Company's consolidated financial statements.

The Company's $20 million Unsecured Revolving Credit Facility ("Revolver") has
an interest rate based on the prime rate or LIBOR plus 0.75%, at the Company's
option. The Company currently maintains a zero balance on the Revolver.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by Item 8 is included on pages 27 through 43 of the
Annual Report and is incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES

None.



                                       20
<PAGE>   21
                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The Company's executive officers are as follows:
<TABLE>
<CAPTION>
     NAME                      AGE             POSITION
     ----                      ---             --------
<S>                            <C>             <C>
Bruce L. Downey                 53             Chairman of the Board and Chief Executive Officer

Paul M. Bisaro                  40             Director, President and Chief Operating Officer, Barr
                                               Laboratories

Carole S. Ben-Maimon            42             Director, President and Chief Operating Officer, Barr
                                               Research

Salah U. Ahmed                  47             Senior Vice President, Product Development

Timothy P. Catlett              46             Senior Vice President, Sales and Marketing

William T. McKee                39             Senior Vice President, Chief Financial Officer, Treasurer
                                               and Secretary

Martin Zeiger                   64             Senior Vice President, Strategic Business Development and
                                               General Counsel
</TABLE>

    BRUCE L. DOWNEY became a member of the Board of Directors in January 1993
was elected Chairman of the Board and Chief Executive Officer in February 1994.
From January 1993 to December 1999 he served as President and Chief Operating
Officer. Prior to assuming these positions, from 1981 to 1993, Mr. Downey was a
partner in the law firm of Winston & Strawn and a predecessor firm of Bishop,
Cook, Purcell and Reynolds.

    PAUL M. BISARO was elected a Director in June 1998 and in December 1999 was
appointed to the position of President and Chief Operating Officer. Previously,
he served as Senior Vice President, Strategic Business Development and General
Counsel. Prior to joining the Company in 1992 as General Counsel, Mr. Bisaro was
associated with the law firm of Winston & Strawn and a predecessor firm, Bishop,
Cook, Purcell and Reynolds.

    CAROLE S. BEN-MAIMON was elected a Director in February 2001. Prior to
joining the Company in January 2001, Dr. Ben-Maimon was with Teva
Pharmaceuticals USA, where she most recently was Senior Vice President Science
and Public Policy, North America. From 1996 until 2000, Dr. Ben-Maimon served as
Senior Vice President, Research and Development. She is Board Certified in
Internal Medicine.

    SALAH U. AHMED was employed by the Company as Director of Research and
Development in 1993. Dr. Ahmed was named Vice President, Product Development in
September 1996 and Senior Vice President, Product Development in October 2000.
Before joining Barr, Dr. Ahmed was a Senior Scientist with Forest Laboratories
from 1989 to 1993.

    TIMOTHY P. CATLETT was employed by the Company in February 1995 as Vice
President, Sales and Marketing. In September 1997, Mr. Catlett was elected to
Senior Vice President, Sales and Marketing. From 1978 through 1993, Mr. Catlett
held a number of positions with the Lederle Laboratories division of American
Cyanamid including Vice President, Cardiovascular Marketing.

    WILLIAM T. MCKEE was employed by the Company in January 1995 as Director of
Finance and was appointed Treasurer in March 1995. In September 1996 he was
elected to the position of Chief Financial Officer, in December 1997 Mr. McKee
was elected Vice President and in December 1998 was elected Senior Vice
President. Mr. McKee also serves as Secretary. Prior to joining Barr, Mr. McKee
served as Vice President, Finance for a software development company


                                       21
<PAGE>   22
and held management positions in the accounting firms of Deloitte & Touche LLP
and Gramkow & Carnevale, CPAs. Mr. McKee is a C.P.A.

    MARTIN ZEIGER was employed by the Company in December 1999 as Senior Vice
President, Strategic Business Development and General Counsel. Mr. Zeiger joined
Barr from Hoechst Marion Roussel, where he served as a Vice President since the
1995 acquisition by Hoechst of Marion Merrill Dow.

    The Company's directors and executive officers are elected annually to serve
until the next annual meeting or until their successors have been elected and
qualified. The directors of the Company and their business experience are set
forth in the section headed "Information on Nominees" of the Company's Notice of
Annual Meeting of Shareholders, dated September 24, 2001 (the "Proxy Statement")
and are incorporated herein by reference.

ITEM 11.  EXECUTIVE COMPENSATION

A description of the compensation of the Company's executive officers is set
forth in the sections headed "Executive Compensation", "Option Grants", "Option
Exercises and Option Values" and "Executive Agreements" of the Proxy Statement
and is incorporated herein by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

A description of the security ownership of certain beneficial owners and
management is set forth in the sections headed "Ownership of Securities" of the
Proxy Statement and is incorporated herein by reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

A description of certain relationships and related transactions is set forth in
the section headed "Certain Relationships and Related Transactions" of the Proxy
Statement and is incorporated herein by reference.

                                       22
<PAGE>   23
                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)      Financial Statement Schedules:
         ------------------------------

         The consolidated balance sheets as of June 30, 2001 and 2000, and the
         related consolidated statements of operations, shareholders' equity and
         cash flows for each of the three years in the period ended June 30,
         2001 and the related notes to the consolidated financial statements,
         together with the Independent Auditors' Report, are incorporated herein
         by reference. With the exception of the aforementioned information and
         the information incorporated by reference in Items 5 through 8, the
         Annual Report is not deemed filed as part of this report. The following
         additional financial data should be read in conjunction with the
         financial statements in the Annual Report. All other schedules are
         omitted because they are not applicable or the required information is
         shown in the consolidated financial statements or notes.
<TABLE>
<CAPTION>
                                                                      Page
                                                                      ----
         <S>                                                          <C>
         Independent Auditors' Report                                  27
         Schedule II - Valuation and Qualifying Accounts               28
</TABLE>

<TABLE>
<CAPTION>
Exhibits
--------
<S>                  <C>
2.1                  Agreement and Plan of Merger, dated as of June 29, 2001, by and among
                     the Registrant, Beta Merger Sub I, Inc. and Duramed Pharmaceuticals,
                     Inc. (14)

3.1                  Composite Restated Certificate of Incorporation of the Registrant(2)

3.2                  Amended and Restated By-Laws of the Registrant(2)

4.1                  Loan and Security Agreement dated April 12, 1996 (9)

4.2                  Amended and Restated Loan Agreement dated November 18, 1997 (9)

4.3                  Note Purchase Agreements dated November 18, 1997 (1)

4.4                  Parent Stockholder Voting Agreement, dated as of May 29, 2001, between
                     Duramed Pharmaceuticals, Inc. and Sherman Delaware, Inc. (14)

4.5                  Company Stockholders Voting Agreement, dated as of May 29, 2001, among
                     the Registrant, Solvay Pharmaceuticals, Inc., Mr. E. Thomas Arington,
                     and certain other individuals (14)

10.1                 Stock Option Plan (3)

10.2                 Savings and Retirement Plan (8)

10.6                 Collective Bargaining Agreement, effective April 1, 1996 (11)

10.7                 Agreement with Bruce L. Downey (4)

10.8                 Agreement with Ezzeldin A. Hamza (4)

10.9                 Distribution and Supply Agreement for Tamoxifen Citrate dated March 8,
                     1993 (4)

10.10                1993 Stock Incentive Plan (5)
</TABLE>

                                       23
<PAGE>   24
<TABLE>
<CAPTION>
<S>                  <C>
10.11                1993 Employee Stock Purchase Plan (6)

10.12                1993 Stock Option Plan for Non-Employee Directors (7)

10.13                Agreement with Edwin A. Cohen and Amendment thereto (8)

10.14                Distribution and Supply Agreement for Ciprofloxacin Hydrochloride dated
                     January 1997 (10)

10.15                Proprietary Drug Development and Marketing Agreement dated March 20,
                     2000 (12)

10.16                Description of Excess Savings and Retirement Plan(13)

10.17                Agreement with Paul M. Bisaro(13)

10.18                Agreement with Carole S. Ben-Maimon

10.19                Agreement with Timothy P. Catlett

10.20                Agreement with William T. McKee

10.21                Agreement with Martin Zeiger

13.0                 2001 Annual Report to Shareholders

21.0                 Subsidiaries of the Company

23.0                 Consent of Deloitte & Touche LLP

(1)                  Previously filed with the Securities and Exchange Commission as an
                     Exhibit to the Registrant's Quarterly Report on Form 10-Q for the
                     quarter ended December 31, 1997 and incorporated herein by reference.

(2)                  Previously filed with the Securities and Exchange Commission as an
                     Exhibit to the Registrant's Annual Report on Form 10-K for the year
                     ended June 30, 1999 and incorporated herein by reference.

(3)                  Previously filed with the Securities and Exchange Commission as an
                     Exhibit to the Registrant's Registration Statement on Form S-1 No.
                     33-13472 and incorporated herein by reference.

(4)                  Previously filed with the Securities and Exchange Commission as an
                     Exhibit to the Registrant's Annual Report on Form 10-K for the year
                     ended June 30, 1993 and incorporated herein by reference.

(5)                  Previously filed with the Securities and Exchange Commission as an
                     Exhibit to the Registrant's Registration Statement on Form S-8 Nos.
                     33-73696 and 333-17349 and incorporated herein by reference.

(6)                  Previously filed with the Securities and Exchange Commission as an
                     Exhibit to the Registrant's Registration Statement on Form S-8 No.
                     33-73700 and incorporated herein by reference.

(7)                  Previously filed with the Securities and Exchange Commission as an
                     Exhibit to the Registrant's Registration Statement on Form S-8 Nos.
                     33-73698 and 333-17351 incorporated herein by reference.

(8)                  Previously filed with the Securities and Exchange Commission as an
                     Exhibit to the Registrant's Annual Report on Form 10-K for the year
                     ended June 30, 1995 and incorporated herein by reference.
</TABLE>

                                       24
<PAGE>   25
<TABLE>
<CAPTION>
<S>                  <C>
(9)                  The Registrant agrees to furnish to the Securities and Exchange
                     Commission, upon request, a copy of any instrument defining the rights
                     of the holders of its long-term debt wherein the total amount of
                     securities authorized thereunder does not exceed 10% of the total
                     assets of the Registrant and its subsidiaries on a consolidated basis.

(10)                 Previously filed with the Securities and Exchange Commission as an
                     Exhibit to the Registrant's Quarterly Report on Form 10-Q for the
                     quarter ended March 31, 1997 and incorporated herein by reference.

(11)                 Previously filed with the Securities and Exchange Commission as an
                     Exhibit to the Registrant's Annual Report on Form 10-K for the year
                     ended June 30, 1996 and incorporated herein by reference.

(12)                 Previously filed with the Securities and Exchange Commission as an
                     Exhibit to the Registrant's Quarterly Report on Form 10-Q for the
                     quarter ended March 31, 2000 and incorporated herein by reference.

(13)                 Previously filed with the Securities and Exchange Commission as an
                     Exhibit to the Registrant's Annual Report on Form 10-K for the year
                     ended June 30, 2000 and incorporated herein by reference.

(14)                 Previously filed with the Securities and Exchange Commission as an
                     Exhibit to the Registrant's Registration Statement No. 333-66986 on
                     Form S-4 on August 6, 2001 and incorporated herein by reference.
</TABLE>

(b)      Reports on Form 8-K

         The following reports were filed by the Company on Form 8-K in the
         quarter ended June 30, 2001:
<TABLE>
<CAPTION>
         Report Date       Item Reported
         -----------       -------------
      <S>                 <C>
       May 8, 2001         Press release announcing that the Company has
                           submitted Amendment No. 3 to its Registration
                           Statement on Form S-3 filed in connection with a
                           secondary stock offering in September 2000. The
                           filing includes the Company's financial statements
                           which have been adjusted to reflect previously
                           disclosed discussions with the Division of Corporate
                           Finance of the Securities and Exchange Commission.

       May 18, 2001        Press release announcing that the Company received a
                           subpoena, issued by the Commonwealth of Massachusetts
                           Office of the Attorney General, for the production of
                           documents related to pricing and reimbursement of
                           select products in Massachusetts.

       June 29, 2001       Press release announcing that the Company and Duramed
                           Pharmaceuticals, Inc.'s Boards of Directors have
                           unanimously approved, and both companies have signed,
                           a definitive agreement for a stock-for-stock merger
                           of the two companies.
</TABLE>


                                       25
<PAGE>   26
                                   SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) 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.

                             BARR LABORATORIES, INC.
<TABLE>
<CAPTION>
   Signature                                        Title                                               Date
   ---------                                        -----                                               ----
<S>                                      <C>                                                    <C>
BY BRUCE L. DOWNEY                       Chairman of the Board & Chief Executive                August 6, 2001
   ---------------                       Officer
  (Bruce L. Downey)

BY WILLIAM T. MCKEE                      Senior Vice President, Chief Financial                 August 6, 2001
   ----------------                      Officer, Treasurer & Secretary (Principal
  (William T. McKee)                     Financial Officer and Principal Accounting
                                         Officer)

</TABLE>


         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
  Signature                                      Title                                                     Date
  ---------                                      -----                                                     ----
<S>                                      <C>                                                    <C>
BRUCE L. DOWNEY                          Chairman of the Board                                  August 6, 2001
---------------
(Bruce L. Downey)

EDWIN A. COHEN                           Vice Chairman of the Board                             August 6, 2001
--------------
(Edwin A. Cohen)

CAROLE BEN-MAIMON                        Director                                               August 6, 2001
-----------------
(Carole Ben-Maimon)

PAUL M. BISARO                           Director                                               August 6, 2001
--------------
(Paul  M. Bisaro)

ROBERT J. BOLGER                         Director                                               August 6, 2001
----------------
(Robert J. Bolger)

HAROLD N. CHEFITZ                        Director                                               August 6, 2001
-----------------
(Harold N. Chefitz)

MICHAEL F. FLORENCE                      Director                                               August 6, 2001
-------------------
(Michael F. Florence)

JACK M. KAY                              Director                                               August 6, 2001
-----------
(Jack M. Kay)

BERNARD C. SHERMAN                       Director                                               August 6, 2001
------------------
(Bernard C. Sherman)

GEORGE P. STEPHAN                        Director                                               August 6, 2001
-----------------
(George P. Stephan)
</TABLE>



                                       26
<PAGE>   27
INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Shareholders of
  Barr Laboratories, Inc.:


We have audited the accompanying consolidated balance sheets of Barr
Laboratories, Inc. and subsidiaries (the "Company") as of June 30, 2001 and
2000, and the related consolidated statements of operations, shareholders'
equity, and cash flows for each of the three years in the period ended June 30,
2001. Our audits also included the financial statement schedule listed in the
Index at Item 14. These financial statements and financial statement schedule
are the responsibility of the Company's management. Our responsibility is to
express an opinion on the financial statements and financial statement schedule
based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Barr Laboratories, Inc. and
subsidiaries at June 30, 2001 and 2000, and the results of their operations and
their cash flows for each of the three years in the period ended June 30, 2001
in conformity with accounting principles generally accepted in the United States
of America. Also, in our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.

DELOITTE & TOUCHE LLP

Stamford, Connecticut
August 6, 2001



                                       27
<PAGE>   28
SCHEDULE II

BARR LABORATORIES, INC.
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED JUNE 30, 2001, 2000 AND 1999
(IN THOUSANDS OF DOLLARS)

<TABLE>
<CAPTION>
                                                BALANCE AT        ADDITIONS,       RECOVERY
                                                 BEGINNING        COSTS AND         AGAINST         DEDUCTIONS,      BALANCE AT
                                                  OF YEAR          EXPENSE         WRITE-OFFS       WRITE-OFFS       END OF YEAR
--------------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>               <C>              <C>              <C>              <C>
Allowance for doubtful accounts:
Year ended June 30, 1999                           $ 262            $ 180              $ 1              $ 44           $ 399
Year ended June 30, 2000                             399              155                4               221             337
Year ended June 30, 2001                             337               80               18               234             201

Reserve for returns and allowances:
Year ended June 30, 1999                           2,476            7,640                -             7,845           2,271
Year ended June 30, 2000                           2,271            9,895                -             8,363           3,803
Year ended June 30, 2001                           3,803           14,201                -             9,975           8,029

Inventory reserves:
Year ended June 30, 1999                           5,575            5,398                -             4,420           6,553
Year ended June 30, 2000                           6,553            4,317                -             5,300           5,570
Year ended June 30, 2001                           5,570            6,393                -             6,090           5,873
</TABLE>



                                       28