SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
                  For the quarterly period ended March 31, 1999

                                       OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
              For the transition period from _________ to ________.

                           COPLEY PHARMACEUTICAL, INC.
             (Exact name of registrant as specified in its charter)

               Delaware                               04-2514637
    (State or other jurisdiction of        (IRS Employer Identification No.)
     incorporation or organization)

             25 John Road                                02021
         Canton, Massachusetts                        (Zip Code)
      (Address of principal executive offices)

                         Commission file number: 0-20126

       Registrant's telephone number, including area code: (781) 821-6111


         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_______

The number of shares  outstanding of the registrant's only class of common stock
as of April 30, 1999 was 19,217,658 shares.


<PAGE>



                           COPLEY PHARMACEUTICAL, INC.
                                      INDEX
                    For the Three Months Ended March 31, 1999

                                                                PAGE NO.
PART I.              FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

        Condensed Consolidated Balance Sheets as of March 31,
          1999 and December 31, 1998                               3

        Condensed Consolidated Statements of Operations
          for the three months ended March 31, 1999 and            4
          1998

        Condensed Consolidated Statements of Cash Flows
          for the three months ended March 31, 1999 and 1998       5

        Notes to Condensed Consolidated Financial Statements    6 - 10

Item 2. Management's Discussion and Analysis of Results of
          Operations and Changes in Financial Condition         11 - 15

Item 3. Quantatative and Qualitative Disclosures about            15
          Market Risk

PART II.                            OTHER INFORMATION

Item 1. Legal Proceedings                                         16

Item 6. Exhibits and Reports on Form 8-K                          16

        Signature                                                 17




                                       -2-

<PAGE>


                          PART 1. FINANCIAL INFORMATION

Item 1.  Condensed Consolidated Financial Statements

                           COPLEY PHARMACEUTICAL, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
 <S>                                                                   <C>             <C>
                                                                           March 31,        December 31,
 (In thousands, except share data)                                            1999              1998
 ----------------------------------------------------------------------------------------------------------
 ASSETS                                                                  (Unaudited)
 Current assets:
     Cash and cash equivalents                                         $       13,102  $         13,016
     Available-for-sale securities                                             30,248            30,206
     Accounts receivable, trade, net                                           26,308            33,945
     Inventories:
         Raw materials                                                         12,576            10,771
         Work in process                                                        3,928             3,207
         Finished goods                                                         7,365             8,463
                                                                          ------------   ---------------
     Total inventories                                                         23,869            22,441
     Current deferred tax assets                                                5,546             5,528
     Other current assets                                                       5,214             4,742
                                                                          ------------   ---------------
         Total current assets                                                 104,287           109,878

 Property, plant and equipment, net                                            42,096            42,800
 Due from related party                                                         2,107             2,107
 Other assets                                                                     564               580
                                                                          ------------   ---------------
 Total assets                                                          $      149,054  $        155,365
                                                                          ------------   ---------------

 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities:
     Accounts payable, trade                                           $        5,025  $          3,703
     Accounts payable, related party                                            9,784            12,382
     Current portion of long-term debt                                            300               300
     Accrued compensation and benefits                                          1,202             2,175
     Accrued rebates                                                            6,582             8,037
     Accrued income taxes                                                         277             3,527
     Accrued recall related and litigation expenses                             8,239             8,010
     Accrued expenses                                                             472               618
                                                                          ------------   ---------------
         Total current liabilities                                             31,881            38,752

 Accrued compensation and benefits                                                100                98
 Deferred tax liabilities                                                       3,615             3,711
 Long-term debt                                                                 4,500             4,500
 Litigation and Contingencies (Note C)
                                                                          ------------   ---------------
 Total liabilities                                                             40,096            47,061

 Shareholders' equity:
     Preferred stock, $.01 par value; authorized 3,000,000 shares;
         none issued                                                              ---               ---
     Common stock, $.01 par value; authorized 60,000,000 shares;
         issued 25,370,745 shares                                                 254               254
     Additional paid-in capital                                                78,459            78,340
     Unrealized holding gain on available-for-sale securities                      22                35
     Retained earnings                                                         42,738            42,201
     Treasury stock, at cost, 6,153,763 and 6,178,168 shares
         respectively                                                         (12,515)          (12,526)
                                                                          ------------    --------------
         Total shareholders' equity                                           108,958           108,304
                                                                          ------------    --------------
 Total liabilities and shareholders' equity                            $      149,054   $       155,365
                                                                          ------------    --------------
</TABLE>
     The accompanying  notes are an integral part of the Condensed  Consolidated
Financial Statements.
                                       -3-
<PAGE>




                           COPLEY PHARMACEUTICAL, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
     <S>                                                  <C>                     <C>            
                                                                               (Unaudited)
                                                                       For the three months ended
                                                                                March 31,
     (In thousands, except per share data)                       1999                   1998
                                                             --------------         --------------

     Net sales:
         Manufactured products                            $         19,284          $      16,194
         Distributed products                                        7,006                 12,014
                                                             --------------         --------------
             Net sales                                              26,290                 28,208

     Cost of goods sold:
         Manufactured products                                      13,718                 13,028
         Distributed products                                        5,598                  9,439
                                                             --------------         --------------
             Cost of goods sold                                     19,316                 22,467
                                                             --------------         --------------
                 Gross profit                                        6,974                  5,741

     Operating expenses:
        Research and development                                     2,881                  2,622
        Selling, marketing and distribution                          1,000                  1,261
        General and administrative                                   2,410                  1,283
        Recall related and litigation                                   92                    179
                                                             --------------         --------------
              Income from operations                                   591                    396

     Interest and other investment income                              422                    430
     Interest expense                                                 (106)                  (162)
     Other income (expenses), net                                      (20)                   (91)
                                                             --------------         --------------
             Income before income taxes                                887                    573
     Provision for income taxes                                        350                    170
                                                             --------------         --------------
     Net income                                           $            537          $         403
                                                             --------------         --------------
     Other comprehensive income (loss), net of taxes
           Unrealized gains (loss) on securities                       (13)                     6
           Less: reclassification adjustment for gains
                    included in net income                             ---                     (2)
                                                             --------------         --------------
     Comprehensive income                                 $            524          $         407
                                                             --------------         --------------

     Weighted average common shares outstanding:
           Basic                                                    19,215                 19,153
           Diluted                                                  19,488                 19,251

     Earnings per share:
           Basic                                                     $0.03                  $0.02
           Diluted                                                   $0.03                  $0.02
</TABLE>
            The  accompanying  notes  are an  integral  part  of  the  Condensed
Consolidated Financial Statements.
                                       -4-
<PAGE>



                           COPLEY PHARMACEUTICAL, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
 <S>                                                                     <C>                  <C>  
                                                                                     (Unaudited)
                                                                              For the three months ended
                                                                                      March 31,
  (In thousands)                                                               1999                1998
                                                                           --------------      -------------

 Cash flows from operating activities:
     Net income                                                          $          537       $         403
     Adjustments to reconcile net income to net cash provided by
         (used in) operating activities:
         Depreciation and amortization                                            1,578               1,755
         Losses (gains) on sales of assets                                          (20)                 (2)
         Change in deferred taxes                                                  (114)                771
     Changes in operating assets and liabilities:
        Decreases (increases) in assets:
           Accounts receivable                                                    7,637               2,088
           Inventories                                                           (1,428)             (3,284)
           Other current assets                                                    (472)             (3,753)
           Other assets, net of amortization                                        (20)                (17)
        Increases (decreases) in liabilities:
           Accounts payable                                                      (1,276)              5,160
           Accrued income taxes                                                  (3,250)              1,099
           Accrued expenses                                                      (2,343)             (3,442)
                                                                            ------------        ------------
              Net cash provided by (used in) operating activities                   829                 778
                                                                            ------------        ------------

 Cash flows from investing activities:
     Capital expenditures                                                          (750)               (931)
     Purchases of available-for-sale securities                                  (5,525)             (6,784)

     Proceeds from sales of available-for sale securities                           ---               1,910
     Proceeds from maturities of available-for-sale securities                    5,382               2,190
     Proceeds from sales of property, plant and equipment                            20                 ---
                                                                            ------------        ------------
              Net cash provided by (used in) investing activities                  (873)             (3,615)
                                                                            ------------        ------------

 Cash flows from financing activities:
    Stock option exercise                                                            19                 ---
    Proceeds from issuance of common stock to Employee Stock Purchase Plan          111                  90
                                                                            ------------        ------------
             Net cash provided by (used in) financing activities                    130                  90
                                                                            ------------        ------------

 Net increase (decrease) in cash and cash equivalents                                86              (2,747)
 Cash and cash equivalents at beginning of period                                13,016              13,847
                                                                            ------------        ------------
 Cash and cash equivalents at end of period                              $       13,102       $      11,100
                                                                            ------------        ------------
</TABLE>

         The   accompanying   notes  are  an  integral  part  of  the  Condensed
Consolidated Financial Statements.
                                       -5-
<PAGE>


                           COPLEY PHARMACEUTICAL, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                    For the three months ended March 31, 1999


 Note A - General

In the opinion of Copley Pharmaceutical,  Inc. ("the Company"), the accompanying
condensed  consolidated  financial  statements  contain all normal and recurring
adjustments necessary to present fairly the financial position of the Company as
of March 31, 1999 and December 31, 1998,  the results of its  operations and its
cash flows for the three months ended March 31, 1999 and 1998. While the Company
believes that the disclosures presented are adequate to make the information not
misleading,   these  consolidated   financial   statements  should  be  read  in
conjunction  with the Notes  included  in the  Company's  Form 10-K for the year
ended December 31, 1998. The results for the three-month  period ended March 31,
1999 are not necessarily  indicative of the results that may be expected for any
future period.

The  Company's  quarterly  and annual  operating  results are affected by a wide
variety of factors that could have a material  adverse  effect on the  Company's
business, financial condition, results of operations and stock price. Statements
in  this  Report  on  Form  10-Q  which  are  not  historical  facts,  so-called
"forward-looking statements", are made pursuant to the safe harbor provisions of
the Private  Securities  Litigation Reform Act of 1995.  Investors are cautioned
that all forward-looking  statements involve risks and uncertainties,  including
those  detailed  in the  Company's  filings  with the  Securities  and  Exchange
Commission.  See, for example, "Item 7. Management's  Discussion and Analysis of
Financial  Condition and Results of Operations - Risk Factors and Future Trends"
contained  in the  Company's  Annual  Report  or Form  10-K for the  year  ended
December 31, 1998.

There were 196,154 and 497,589  options  outstanding at March 31, 1999 and 1998,
respectively,  that were not included in the  computation of diluted EPS because
the options'  exercise  price was greater  than the average  market price of the
common shares and their inclusion would be antidilutive.

Note B - Related Party Transactions


On July 18, 1995,  HC completed its purchase of Marion  Merrell Dow  Inc.("MMD")
and changed MMD's name to Hoechst Marion Roussel, Inc.("HMRI").

In connection with HC's acquisition of its majority interest in the Company, the
Company is a party to a Product  Agreement with HC pursuant to which the Company
is afforded the opportunity under specified  conditions to distribute and market
the generic  version of products sold by  Hoechst-Roussel  Pharmaceuticals  Inc.
("HRPI"),  which was an indirect  majority-owned  subsidiary of HC. This Product
Agreement  will  expire June 1, 1999.  On January 1, 1996,  HRPI was merged into
HMRI.  HMRI agreed to be bound by the Product  Agreement to the extent that HRPI
was bound; that is, the Product Agreement continues to be in effect for products
manufactured by the former HRPI but not for products  manufactured by HMRI prior
to the merger  with HRPI nor for  products  developed  by HMRI after  January 1,
1996. In furtherance of the Product Agreement, the Company and HMRI entered into
separate  contracts  relating to  specific  products  as these  products  became
available for generic  distribution and these separate contracts now continue in
effect  beyond the  expiration  of the Product  Agreement.  For the three months
ended  March 31, 1999 and 1998,  approximately  $5.8  million and $9.0  million,
respectively,  of generic  versions of products were  purchased  from HMRI under
this Product Agreement.

The Company obtains its  comprehensive  general  liability,  product  liability,
umbrella  liability  and  all  risks  property  insurance  coverage  through  an
insurance and risk-sharing  arrangement with HC and its parent,  Hoechst AG, and
its various  subsidiaries.  Insurance  coverage  is provided by HC,  through its
wholly-owned insurance subsidiary, as well as by external parties. The Company's
total insurance  expense for these  insurance  policies was  approximately  $1.1
million for each of the three month periods ended March 31, 1999 and 1998.
                                       -6-
<PAGE>
                           COPLEY PHARMACEUTICAL, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                    For the three months ended March 31, 1999

Note C - Litigation and Contingencies

Albuterol Class Action Lawsuits
In connection  with the Company's  December 1993 and January 1994 product recall
of albuterol sulfate inhalation  solution,  0.5% ("albuterol"),  the Company has
been served with  complaints  in numerous  lawsuits in federal and state  court,
some of which are on behalf of numerous  claimants.  The plaintiffs  principally
seek  compensatory and punitive damages and allege that injuries and deaths were
caused  by  inhalation  of  allegedly   contaminated  product  manufactured  and
distributed by the Company.

The federal court lawsuits were consolidated in the United States District Court
for the  District  of  Wyoming  as a  multi-district  litigation  for  pre-trial
purposes  under the  caption  In Re:  Copley  Pharmaceutical,  Inc.  "Albuterol"
Products  Liability  Litigation.  The District  Court  certified a partial class
action for  determination  of liability  only and commenced a jury trial in June
1995. In August 1995,  prior to the  conclusion  of the jury trial,  the Company
entered into a settlement  agreement with the  representative  plaintiffs in the
class action lawsuit.  The settlement calls for the Company to receive a general
release of all non-death  claims in return for  contributions by the Company and
its insurers of a minimum of $65 million and a maximum of $130 million to settle
all non-death claims relating to the Company's  manufacture,  sale and recall of
albuterol.  An  additional  $20  million  is  allocated  under  the terms of the
settlement  as an estimate of the cost of  settling  claims by persons  alleging
wrongful  death,  which  claims are limited by the  settlement  to  compensatory
damages only and are subject to non-binding negotiation and arbitration.  Within
the Company's  minimum and maximum  contributions,  the amount to be paid by the
Company is subject to the number and seriousness of individual claims eventually
filed.  On November 15, 1995,  the District Court entered its Order giving final
approval of the settlement. This Order has become final and nonappealable.

The settlement  agreement  requires the $150 million maximum  contribution to be
funded by a  non-refundable  $65 million cash deposit and issuance of letters of
credit for the remaining balance,  to be held by the Albuterol  Settlement Trust
Fund  as  security  for  potential  future  payments.   The  Company  negotiated
agreements with its insurers pursuant to which the Company and its insurers have
agreed to pay defined  percentages of required  settlement  payments and related
expenses. The minimum contribution of $65 million to the class action settlement
has been funded by cash  contributions  from the Company ($7.35 million) and its
insurers  ($57.65  million).  Most of the remaining  balance of the $150 million
maximum  contribution has been secured either by a $21 million cash deposit made
pursuant to court order by the Company  ($3.15  million) and one of its insurers
($17.85  million) in a separate  account  (which also is  available to pay other
litigation expenses, judgments and settlements) or by letters of credit or other
security  totaling  $64 million,  $11.7  million of which has been posted by the
Company and $52.3 million of which has been provided by the Company's insurers.

Approximately  6,650  proofs of claim have been filed  with the  Special  Master
appointed  by the Court to oversee the  Albuterol  Settlement  Trust  Fund.  The
Special  Master has approved  approximately  5,240 class action claims  totaling
approximately  $75  million.  No awards  have been made to  approximately  1,000
rejected  class  action  claims.  Appeals  from some of these  decisions  of the
Special  Master are being  taken to the  Court.  The Court has  ordered  that no
further  claims may be  submitted.  (These  figures  include  approximately  850
clients of Jacoby & Meyers,  representing  nearly all of that firm's clients who
are not  alleging a death  caused by  albuterol,  who agreed to be treated as if
they were class members and class counsel have agreed that these  claimants will
be paid out of the Albuterol  Settlement  Trust Fund.) In addition,  the Company
has reached settlement  agreements with approximately 135 class members alleging
wrongful  death;  approximately  100 claims of class members  alleging  wrongful
death remain unresolved.
                                       -7-
<PAGE>
                           COPLEY PHARMACEUTICAL, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                    For the three months ended March 31, 1999

The settlement also is subject to certain other contingencies and does not cover
certain  individuals who previously opted out of the class action,  including 40
people who opted out and never  filed  suit,  some of whom now are  barred  from
bringing  suit by the  statute of  limitations.  The Company  continues  to be a
defendant in lawsuits that were brought by or on behalf of  approximately  three
people who properly  opted out of the class action while the Company has settled
with 81 litigants who had opted out. There also are two active lawsuits  brought
by class members alleging  wrongful death who are pursuing  litigation under the
terms of the class action settlement agreement.

Grand Jury Investigation

On May 28, 1997, the Company announced that it had entered into a plea agreement
pursuant to which it agreed to waive  indictment and plead guilty to a one count
Information charging a violation of Title 18, United States Code, Section 371, a
conspiracy to defraud the United  States and one of its  agencies,  the Food and
Drug Administration ("FDA"). The Information alleged that Copley made changes in
the manufacturing processes for four drugs (only two of which,  procainamide 500
mg tablets and potassium  chloride tablets,  currently are being manufactured by
the  Company)  without  proper  notification  to the FDA and signed  false batch
records with respect to two of these drugs. As part of the plea  agreement,  the
Company agreed to pay a fine of $10.65  million,  $7.1 million of which has been
paid with the remaining $3.55 million due in June 1999. The plea was accepted by
the United States District Court for the District of  Massachusetts  on June 19,
1997.

The plea agreement  followed a nearly  three-year  investigation  and grand jury
subpoenas  from  the  United  States  Attorney's  Office  in  Massachusetts  for
documents focusing particularly on albuterol and Brompheril(R)  products,  which
were recalled by the Company in December 1993 and September 1994,  respectively,
but extending beyond these products. The Company complied with the subpoenas and
cooperated  with  federal   authorities   throughout  the   investigation.   The
investigation   continues  with  respect  to  individuals,   some  of  whom  are
indemnified by the Company for legal fees and related expenses.

Also on May 28, 1997 the Company announced that it had entered into an agreement
with the FDA providing for an  independent  audit of 20 of Copley's  ANDAs.  The
Company is cooperating  fully with the FDA, and the independent  audit commenced
in July,  1997 and has been  substantially  completed.  The FDA has agreed  that
during this audit it will continue to review the Company's pending ANDAs, accept
new ANDAs from the Company and, where appropriate, approve Copley's ANDAs.

SmithKline Beecham Lawsuit

In August 1997,  the Company filed an ANDA for nabumetone  which  certified that
SmithKline  Beecham  Corporation's  ("SB")  patent  relating to  nabumetone  was
invalid and  unenforceable  and that the Company was entitled to manufacture and
sell  nabumetone  prior to the December 13, 2002  expiration of SB's  nabumetone
patent.  As a result,  on October 31, 1997 the Company was served with a summons
and  complaint  in a patent  infringement  action  entitled  SmithKline  Beecham
Corporation  and Beecham  Group  p.l.c.  v. Copley  Pharmaceutical,  Inc. in the
United States District Court for the District of Massachusetts. In their action,
plaintiffs  allege that because the Company seeks approval of its ANDA to engage
in the  commercial  manufacture,  use and sale of nabumetone as claimed in their
patent  before  the  patent's  expiration,   the  Company  has  infringed  their
nabumetone patent. Plaintiffs seek damages and an injunction against approval of
the Company's  nabumetone ANDA and its sale of nabumetone  prior to December 13,
2002.  A trial  tentatively  has been  scheduled to begin in October  1999.  The
manufacturer  and supplier of the nabumetone that the Company has designated for
use in its ANDA has agreed to defend the Company in this action and to indemnify
the Company for any damages that might be assessed as a result of the  Company's
sale of nabumetone obtained from the manufacturer. Although the Company believes
that this complaint is without merit and the Company has meritorious defenses to
this  action,  there  can be no  assurance  that the  Company  will  prevail.  A
substantial  damages award in this suit could have a material  adverse effect on
the Company.
                                       -8-
<PAGE>
                           COPLEY PHARMACEUTICAL, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                    For the three months ended March 31, 1999

Shareholder Derivative Actions

On  September  2,  1998,  the  Company  was served as a nominal  defendant  in a
shareholder  derivative  action against six of its nine current  Directors.  The
lawsuit,  which  was  brought  by Great  Neck  Capital  Appreciation  Investment
Partnership,  the alleged owner of an unspecified  number of Company shares,  is
pending in Norfolk  County,  Massachusetts  Superior  Court. On October 2, 1998,
plaintiff filed a First Amended Shareholder Derivative Complaint that named HCCP
Acquisition Corporation,  Hoechst Corporation and Hoechst  Aktiengesellschaft as
additional  defendants.  The amended  complaint's  allegations include claims of
alleged breach of fiduciary duty and alleged waste of corporate assets and seeks
unspecified  money  damages  and  injunctive  relief.  According  to the amended
complaint,  "Copley  is named  as a  defendant  herein  solely  in a  derivative
capacity.  This  action is brought  on its  behalf,  and no claims are  asserted
against  it." The Company is  obligated  to defend and  indemnify  the  Director
defendants and has put its directors and officers insurance carrier on notice of
this claim.  The  Company  has been  served with  motions to dismiss the amended
complaint filed by the other defendants;  these motions remain pending as of the
date of this report.

On May 10,  1999,  the Company  learned of the filing in the New Castle  County,
Delaware Court of Chancery of a shareholder derivative action entitled Parnes v.
Hoechst  Corp.  The Company is named as a nominal  defendant;  amongst the other
defendants  are five current  directors of the Company.  The  Complaint  alleges
various  breaches of duty by Hoechst and the named  individuals  defendants  and
seeks unspecified damages and equitable  remedies,  including an accounting from
Hoechst and the appointment of a custodian or receiver.

Schering Corporation Lawsuit

In December 1998, the Company filed an ANDA for loratadine syrup which certified
that two of Schering  Corporation's  patents  relating to loratadine  syrup were
invalid, unenforceable and/or not infringed and that the Company was entitled to
manufacture and sell loratadine  syrup in 2002,  following the expiration of one
patent  but  prior  to the  expiration  of two  other of  Schering's  loratadine
patents.  As a result, on March 19, 1999,  Schering filed a patent  infringement
action  entitled  Schering  Corporation  v. Copley  Pharmaceutical,  Inc. in the
United  States  District  Court for the  District  of  Delaware.  In its action,
Schering  alleges that because the Company seeks  approval of its ANDA to engage
in the  commercial  manufacture,  use and sale of loratadine  syrup prior to the
expiration of two patents  allegedly  relating to loratadine  syrup, the Company
has  infringed  at least  one of these  patents.  Schering  seeks an  injunction
against  approval  of the  Company's  loratadine  syrup  ANDA  and  its  sale of
loratadine syrup prior to at least April 21, 2004. Although the Company believes
that this complaint is without merit and the Company has meritorious defenses to
this  action,  there  can be no  assurance  that the  Company  will  prevail.  A
substantial  damages award in this suit could have a material  adverse effect on
the Company.

K-V Pharmaceutical Company Lawsuit

In January  1999 the Company  learned that it had been named as a defendant in a
lawsuit  entitled  K-V  Pharmaceutical   Company  v.  Johnson  H.  Lim,  Hoechst
Corporation, and Copley Pharmaceutical,  Inc. pending in the St. Louis, Missouri
Circuit  Court.  Plaintiff  alleges  that the  Company  hired one of its  former
employees in contravention of an employment  agreement between plaintiff and the
individual  and seeks actual damages in excess of $1 million as well as punitive
damages and fees and expenses based on a variety of legal theories. Although the
Company believes that this suit is without merit and the Company has meritorious
defenses  to this  action,  there  can be no  assurance  that the  Company  will
prevail. A substantial  damages award in this suit could have a material adverse
effect on the Company.

Other Legal Proceedings

The Company has $8.2 million of estimated  recall related and legal  contingency
reserves  accrued  at March 31,  1999.  These  reserves  reflect  the  Company's
estimate of its  exposure at March 31,  1999 in its  various  legal  proceedings
described above. Actual settlement amounts may differ from amounts estimated. In
addition,  the  Company  from time to time is subject  to claims  arising in the
ordinary course of business. While the outcome of the claims cannot be predicted
with  certainty,  management  does not expect  these  matters to have a material
adverse  effect on the results of  operations  and  financial  condition  of the
Company.
                                       -9-
<PAGE>
                           COPLEY PHARMACEUTICAL, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                    For the three months ended March 31, 1999

Note D - Debt

At March 31, 1999,  the Company had $11.7 million in stand-by  letters of credit
related to the Albuterol  Settlement Trust Fund  outstanding  under this working
capital line of credit  agreement.  Refer to Note C of the Notes to Consolidated
Financial statements for further discussion of the Settlement Agreement.

                                       -10-
<PAGE>


                           COPLEY PHARMACEUTICAL, INC.
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
                         CHANGES IN FINANCIAL CONDITION

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

Results of Operations

Net Sales
--------------------------------------------------------------
                               Quarter ended
                                 March 31,
In thousands                   1999         1998      Change
--------------------------------------------------------------

Manufactured products       $19,284      $16,194        19.1%
Distributed products          7,006       12,014       (41.7)%
                         -----------  -----------
     Net sales              $26,290      $28,208        (6.8)%
--------------------------------------------------------------

Net sales for the first quarter of 1999 were $26.3  million,  a decrease of $1.9
million, or 6.8%, from the same period in 1998. Manufactured products net sales
increased  19.1% to $19.3  million as  compared  to $16.2 for the same period in
1998. The increase was due primarily to the launch of new manufactured  products
in the fourth quarter of 1998. Distributed products net sales decreased 41.7% to
$7.0  million as  compared to $12.0  million  for the same period in 1998.  This
decrease  resulted  mainly from continued  price erosion accross the distributed
product line.

Gross Profit
-------------------------------------------------------------
                                 Quarter ended
                                   March 31,
In thousands                   1999         1998      Change
-------------------------------------------------------------

Manufactured products        $5,566       $3,166        75.8%
   As a % of manufactured
   products net sales          28.9%        19.6%

Distributed products         $1,408       $2,575       (45.3)%
   As a % of distributed
   products net sales          20.1%        21.4%

Gross profit                 $6,974       $5,741        21.5%
   As a % of net sales         26.5%        20.4%
-------------------------------------------------------------

The Company's  gross profit was $7.0 million or 26.5% of net sales for the first
quarter  of 1999  compared  to $5.7  million  or 20.4% of net sales for the same
period of 1998.  The higher 1999 gross margin  resulted from the higher  margins
realized on the new manufactured products, a more favorable  manufacturing plant
utilization and a favorable mix of higher margin manufactured products.

Operating Expenses
-------------------------------------------------------------
                                 Quarter ended
                                   March 31,
In thousands                   1999         1998      Change
-------------------------------------------------------------

Research and
  development                $2,881       $2,622         9.9%
    As a % of manufactured
    products net sales         14.9%        16.2%
Selling, marketing and
   distribution              $1,000       $1,261      (20.7)%
     As a % of net sales        3.8%         4.5%
General and
   administrative            $2,410       $1,283        87.8%
     As a % of net sales        9.2%         4.5%
Recall related and
   litigation                  $ 92        $ 179      (48.6)%
     As a % of net sales        0.3%         0.6%
-------------------------------------------------------------

                                       -11-
<PAGE>
                           COPLEY PHARMACEUTICAL, INC.
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
                         CHANGES IN FINANCIAL CONDITION

General and  administrative  expenses  increased  87.8% to $2.4  million for the
first  quarter of 1999 as compared to $1.3  million for the same period of 1998.
Included in this  increase are costs  associated  with the  Company's  Year 2000
readiness  program,  higher  personnel  costs and legal  fees,  including  those
associated  with new patent  litigation  and a shareholder  derivative  lawsuit.
Refer to Note C of the Notes to Condensed  Consolidated Financial statements for
further discussion of these items.

On May 7,  1999,  Local  379 of the  Teamsters  Union  was  choosen  by  certain
employees  of  the  Company's  South  Boston  manufacturing  facility  to be the
representative for purposes of collective bargining.

Recall  related and  litigation  expenses for the first quarter of 1999 and 1998
were primarily comprised of uninsured legal expenses incurred by the Company for
representation in its various legal proceedings at this 15 employee location.

Interest and Other Income (Expenses)
------------------------------------------------------------
                                Quarter ended
                                  March 31,
In thousands                   1999         1998      Change
------------------------------------------------------------

Interest and other
   investment income           $422        $ 430        (1.9)%
Interest expense               (106)        (162)      (34.6)%
Other income (expenses)         (20)         (91)      (78.0)%
-------------------------------------------------------------
Interest and other investment income decreased to $422,000 for the first quarter
of 1999 as  compared to  $430,000  for the same period of 1998 due to  decreased
rates of return on investments.

Interest  expense  decreased  primarily due to the decrease of accrued  interest
relating to installments  payable under the Company's plea  agreement.  Refer to
Note C of the Notes to Condensed  Consolidated  Financial Statements for further
discussion of the plea agreement with the U.S. Attorney.


Tax Expense (Benefit) and Net Income (Loss)
------------------------------------------------------------
                               Quarter ended
                                 March 31,
In thousands                   1999         1998
-------------------------------------------------------------

Income tax expense
   (benefit)                   $350         $170
Effective tax rate             39.5 %       29.7%
Net income (loss)              $537         $403

-------------------------------------------------------------
The net income for the quarter was $0.5 million or $0.03 per share compared to a
net income of $0.4 million or $0.02 per share for the first quarter of 1998.

The  effective  tax rate  increased to 39.5% at March 31, 1998 from 29.7% in the
prior  year  comparable  period  due  primarily  to lower  forecasted  permanent
deductions during the current period.

Changes in Financial Condition

Capital Resources and Liquidity
----------------------------------------------------------
                              March 31,      December 31,
In thousands                       1999              1998
----------------------------------------------------------

Cash and short-term
   investments                  $43,350           $43,222
Working capital                  72,406            71,126
Long-term debt                    4,800             4,800
Shareholders' equity            108,958           108,304
----------------------------------------------------------
Working  capital  increased $1.3 million from $71.1 million at December 31, 1998
to $72.4 million at March 31, 1999  primarily due to net income from  operations
adjusted for non-cash expenditures.

The Company  has a working  capital  line of credit  agreement  that  provides a
maximum borrowing capacity of $30.0 million.  At March 31, 1999, the Company had
$11.7  million of stand-by  letters of credit  issued under this line of credit.
These  stand-by  letters of credit were obtained by the Company  pursuant to the
requirements  of the  Albuterol  Settlement  Trust  Fund to cover its  uninsured
obligation.  Recourse to the letters of credit are  contingent  on the number of
claims filed within  certain  categories and will not occur until all claims are
processed and settlement amounts are recommended by the Special Master. Refer to
Note C of the Notes to Condensed  Consolidated  Financial Statements for further
discussion of the plea agreement with the U.S. Attorney.
                                       -12-
<PAGE>
                           COPLEY PHARMACEUTICAL, INC.
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
                         CHANGES IN FINANCIAL CONDITION


Year 2000 Readiness
The Company has a Year 2000  Compliance  Program,  the  purposes of which are to
identify  important  systems  that are not yet Year 2000 ("Y2K")  compliant;  to
initiate replacement or remedial action to assure that key systems will continue
to  operate  in the Y2K and to test  the  replaced  or  remediated  systems;  to
identify and contact key suppliers,  vendors, customers and business partners to
evaluate their ability to maintain normal  operations in the Y2K; and to develop
appropriate  contingency  plans for dealing with foreseeable Y2K  complications.
The Company  has  appointed a Y2K  Project  Manager who is  responsible  for the
Company's  Y2K  Compliance  Program and who reports  directly to a member of the
Company's executive committee.

Information Technology Systems
The Company's critical internal information technology ("IT") systems consist of
its Prism  manufacturing and JD Edwards  financial  accounting and Harbinger EDI
400 software  packages.  The Company has  contacted the vendors of these systems
and  obtained  written  certification  that these IT systems  are  currently  in
material  Year 2000  compliance.  The  Company  also has  completed a pilot room
testing of these systems. In addition,  the Company is in the process of testing
the Y2K readiness of its other IT  applications.  The Company,  using an outside
consultant, also completed a focused status study on selected aspects of the Y2K
IT compliance testing program.

Embedded Systems
The Company is continuing with its assessment of its mission  critical  embedded
systems such as production  equipment,  facility  control  systems,  and quality
control and research and development instrumentation. Specifically, working with
an outside  consultant in the first  quarter,   the  Company  completed  a pilot
program in which two products were selected for  evaluation of the equipment and
instruments  used in their  processes.  These  pilot  tests  included  inventory
assessment,  compliance  testing and, where indicated,  remediation  planning on
selected mission critical embedded  systems.  The Company is utilizing the pilot
design  methodology to complete its Y2K  compliance  program on the remainder of
the Company's mission critical embedded systems. The Company expects to complete
this embedded  systems  testing phase by the end of the second  quarter of 1999.
Remediation  steps  arising  from the Y2K  readiness  testing  program are being
initiated  as  appropriate.  The  Company's  strategy is to continue to focus on
mission  critical  systems first.  Beyond the embedded  system Y2K testing pilot
program and the testing program modeled after these pilots, the Company has sent
Y2K compliance  inquiries to the vendors of these embedded systems,  is tracking
responses  to its  inquiries  and,  depending  on vendor  response,  is securing
compliance  information  through direct contact with the manufacturer or through
research on the  manufacturer's  web page. The Company expects to have completed
its efforts to secure documented compliance information by the conclusion of its
testing program on mission  critical systems by the end of the second quarter of
1999. After the Company has completed its critical embedded systems testing,  it
plans to expand its inventory assessment and compliance testing to less critical
systems.

As a  pharmaceutical  manufacturer,  the Company's  research and development and
manufacturing  operations are subject to government  regulation.  Replacement of
equipment  for  products  subject to FDA approval  and  manufacturing  standards
cannot be accomplished  without filings and review by FDA. While the Company has
made significant  progress in assessment and compliance  testing of its critical
embedded  systems,  the Company  cannot  define the precise  nature or extent of
remediation  required at this time.  The failure of the Company to properly  and
timely identify equipment that will not function properly as a result of the Y2K
Issue  could  result in the  Company's  inability  to repair or  remediate  that
equipment before December 31, 1999. In addition,  equipment  failures due to the
Y2K issue could result not only in significant  replacement costs to the Company
but also in a significant  delay in product shipments while the Company seeks to
validate  replacement  equipment,  which could have a material adverse effect on
the Company.

Third-Party Suppliers, Vendors and Customers
The Company's Y2K Compliance  Program also includes an  investigation of the Y2K
compliance of its major suppliers, vendors, customers and business partners. For
example,  third parties  handle the payroll  function for the Company,  the vast
majority of the  Company's  product  orders are  received  by computer  over the
telecommunications  systems,  and the  Company  also  relies on the  services of
banks, utilities,  and commercial airlines,  among others. The Company continues
to seek and obtain  assurances from key service  providers that there will be no
interruption  of service as a result of Y2K. While the Company has contacted its
supply  chain  business  partners,  not all third- party  suppliers,  vendors or
customers  have  responded.  The Company will continue to make efforts to secure
Y2K  compliance  status from its supply  chain,  and is  addressing  contingency
planning in lieu of third party claimed  compliance.  There can be no assurances
that the contingency plans will adequately prevent a service interruption by one
or more of the Company's  third-party  suppliers from having a material  adverse
effect on the Company.
                                       -13-
<PAGE>
                           COPLEY PHARMACEUTICAL, INC.
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
                         CHANGES IN FINANCIAL CONDITION


The Company  continues to contact its key bulk chemical and packaging  suppliers
to determine their Y2K compliance status. As with certain of its equipment,  the
Company  cannot  change  suppliers  of  bulk  active   ingredients   unless  the
alternative supplier has been approved through the FDA regulatory process. Where
possible,  the Company tries to qualify two or more sources of supply.  However,
certain of the  Company's  current  and future  products  will  depend on a sole
source of raw material supply. Should one or more of these sole source suppliers
become unable to deliver  product in a timely  manner due to the Y2K Issue,  the
Company would need to identify and qualify a new source of supply.  This process
would likely  involve  significant  delays  and cost and could  have a  material
adverse  effect on the Company.  In addition,  the Company  continues to contact
significant  customers to determine their progress towards Y2K compliance and to
identify issues, if any, which might develop because of customers' failure to be
prepared for Y2K. In the event issues are identified, the Company expects to try
to develop  procedures  to permit the Company to continue to supply the customer
despite Y2K. The Company has been assured by its key financial institutions that
they are currently Y2K compliant or will be Y2K compliant in early 1999.

Year 2000 Costs and Expenses
The  Company's  policy  continues  to be to  expense  all costs  related  to Y2K
compliance  unless the useful  life of the  technological  asset is  extended or
increased,  in which case the Company will  capitalize  that cost.  For 1999 the
Company  anticipates  expenses  relating to Y2K to include key personnel  costs,
consultant  engagements,  software and hardware  accommodations,  data entry and
business partner communications.  Based on currently available information,  the
Company believes that these expenses will not exceed $500,000 and will be funded
through  operations.  Until the testing is completed on mission critical systems
in the Company's IT and Embedded Systems operations, the potential costs for any
associated remediation cannot be calculated and is not included in the $500,000.
If unforeseen  compliance  efforts are required or if present compliance efforts
are not completed on time, or if the cost of any required updating, modification
or  replacement  of the  Company's  systems or equipment  exceeds the  Company's
estimates, Y2K could result in material costs and have a material adverse effect
on the Company.  For the quarter ended March 31, 1999,  the expenses  related to
Y2K were  approximately  $205,000 and consisted  mainly of  consulting  fees and
internal payroll costs.

Contingency Plans and Worst Case Scenario
At the present  time,  the  Company  has  formulated  a draft  contingency  plan
addressing system failures in its business processes due to Y2K. The Company has
received written certifications confirming that its critical internal IT systems
are  compliant,  and the Company  and its Y2K IT system  audit  supported  these
findings.  As the  Company  continues  its IT and  Embedded  Systems  compliance
testing  on its  mission  critical  operations,  it is  formulating  appropriate
contingency  planning.  The integrated  draft  contingency  plan encompasses all
functional  areas within the Company,  their  business  processes  and the tasks
associated  with each  process.  It addresses  alternate  strategies  to support
critical   business   functions   to  prevent,   wherever   possible,   business
interruptions.  It is expected that this draft  contingency plan will be revised
as the Company's  testing  program  concludes and  remediation  initiatives  are
completed.  Moreover,  it is  anticipated  that  as the  Company  receives  more
complete compliance information from its major suppliers, vendors, customers and
business  partners,  that additional  efforts  regarding  business  interruption
prevention and contingency  planning can move forward.  The Company expects that
its contingency  plan will be completed by May 31, 1999,  with certain  business
interruption prevention initiatives underway before that date.

One possible  worst case  scenario for the Company  resulting  from Y2K would be
that one or more of the  Company's  sole source bulk  chemical  suppliers  would
become temporarily unable to deliver raw materials to the Company as a result of
a system failure.  If this were to happen, the Company would not be permitted to
substitute  another  manufacturer's  raw  material  for that of its sole  source
supplier.  The Company would not be able  immediately to continue to manufacture
product  using that raw material once its  inventories  of the raw material were
expended.  The  Company's  contingency  planning  with  respect to an  important
product might include  pre-qualifying a second source for critical raw materials
when  possible  and/or  might  include  building up key sole source raw material
inventories in advance of December 31, 1999.
                                       -14-
<PAGE>
                           COPLEY PHARMACEUTICAL, INC.
        MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
                         CHANGES IN FINANCIAL CONDITION


Various  statements  in this  discussion of Y2K are  forward-looking  statements
(statements  which are not historical in fact) within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements include statements of
the Company's expectations, anticipated schedules and expected completion dates,
estimated  costs  and  statements  regarding  expected  Y2K  compliance.   These
forward-looking  statements  are subject to various  risks which may  materially
affect the Company's  efforts to achieve Y2K  compliance to accomplish its goals
and to meet its expectations with respect to Y2K issues. These risks include the
possibility  that  the  Company  will  not be able to  complete  the  plans  and
modifications  that  it has  identified,  on a  timely  basis,  if at  all,  the
availability  of skilled  consultants,  the difficulty of evaluating and testing
the wide  variety of  information  systems and  components,  both  hardware  and
software,  that  must be  evaluated,  the  variety,  number  and  complexity  of
equipment  used in the Company's  operations and the large number of vendors and
customers  with which the Company  interacts.  The  Company's  assessment of the
effects of Y2K on the Company are based, in part, upon information received from
third  parties  and the  Company's  reasonable  reliance  on  that  information.
Therefore,  the risk that  inaccurate  information  is supplied by third parties
upon which the Company  reasonably  relied must be  considered  as a risk factor
that might affect the  Company's Y2K efforts.  Further,  the delay or failure of
third  parties to respond to  inquiries  will  hinder the  Company's  ability to
evaluate and  remediate  the Year 2000 issue.  The Company has not yet completed
evaluating  certain  aspects of Y2K and expects that its  assessment of Y2K will
evolve as its Y2K  compliance  program  progresses and the evolution and testing
process continues.

       ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company  has three  forms of debt which are  subject to interest  rate risk.
They are the industrial  revenue bonds,  the working  capital line of credit and
the  outstanding  letters  of  credit.  The rates on all three  instruments  are
variable and fluctuate with the prime rate of interest charged by the respective
bank.  Carrying value of these instruments which approximates fair value is $4.8
million and principal is payable as follows;  $300,000 for each of the next five
years and $3.3  million  thereafter.  Interest is payable  monthly and  interest
expense  could be  substantially  higher if prime rate was to increase in future
periods. The bank's prime rate was 7.75% at March 31, 1999.

                                       -15-
<PAGE>


                     PART II. OTHER INFORMATION (Continued)

PART II.  OTHER INFORMATION

Item 1.                               Legal Proceedings

See  descriptions  of  legal  proceedings  in  Note  C  of  Notes  to  Condensed
Consolidated  Financial Statements in Part I of this Form 10-Q, which are hereby
incorporated by reference herein.

Item 6.       Exhibits and Reports on Form 8-K

                  (a) Exhibits
                       None

                  (b) Reports on Form 8-K
                        Form 8-K dated February 3, 1999 - Item 5: Other Events.
                        The Company announced that Charles T.Lay joined its 
                        Board of Directors on February 3, 1999.

                       No other  reports on Form 8-K were filed during the three
                        months ended March 31, 1999.

                                       -16-
<PAGE>





                                    SIGNATURE

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


          Signature                         Title                      Date


/s/  Daniel M.P. Caron          Vice President-Finance, Chief      May 17, 1999
-------------------------     Financial Officer and Treasurer
      Daniel M.P. Caron      (principal financial and principal
                                    accounting officer)




                                       -17-