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Mylan Laboratories Inc · 10-K · For 3/31/00 · EX-13

Filed On 6/23/00 2:27pm ET · SEC File 1-09114 · Accession Number 69499-0-500019

  As Of               Filer                 Filing     As/For/On Docs:Pgs

 6/23/00  Mylan Laboratories Inc            10-K        3/31/00    7:77

Annual Report · Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Mylan Laboratories Inc. 1999 10-K                     15±    54K 
 2: EX-10       Material Contract                                      5     35K 
 3: EX-13       Annual or Quarterly Report to Security Holders        40    146K 
 4: EX-21       Subsidiaries of the Registrant                         1      5K 
 5: EX-23       Consent of Experts or Counsel                          2      6K 
 6: EX-27       Financial Data Schedule                                2±     6K 
 7: EX-99       Miscellaneous Exhibit                                 12     33K

EX-13 · Annual or Quarterly Report to Security Holders
Exhibit Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (RTF, XML, et al.) Forward Looking Statements Overview Results of Operations
1	1st Page
12	Overview
13	Results of Operations
17	Forward Looking Statements

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Mylan Laboratories Inc. 2000 Annual Report                                      

Building a Stronger Mylan                                                       

Description of Business                                                         

------------------------                                                        
Mylan  Laboratories  Inc.  is a  diversied  pharmaceutical  company  with a core
generic   business,   a  growing  branded  presence  and  varied  drug  delivery
capabilities.  Our product portfolio consists of numerous  prescription  generic
and proprietary nished pharmaceutical,  wound care and dermatological  products.
These products include solid oral dosage forms, as well as suspensions, liquids,
injectables,   transdermals  and  topicals,   many  of  which  are  packaged  in
specialized systems.                                                            

Milan Puskar                                                                    

Chairman and Chief Executive Officer                                            

Letter To Shareholders                                                          

-----------------------                                                         
Mylan Laboratories Inc.                                                         

It's about having the right tools and the right blueprint.                      

Dear Shareholder,                                                               

     In 1998, I set an aggressive  financial  target for net sales of $1 billion
by March 2001 with a 35% contribution  from our brand product  division,  Bertek
Pharmaceuticals.  At that time, the brand business  represented 11% of net sales
and 14% gross margin  contribution.  I am pleased to report that as of the close
of fiscal 2000, Mylan reported net sales of $790 million and record net earnings
of $154 million with 15% net sales and 19% gross  margin  contribution  from our
brand products.                                                                 

     Total brand sales increased 47% to $122 million in fiscal 2000, compared to
$83 million the previous  year.  This  increase is largely  attributable  to our
acquisition of Penederm,  in fiscal 1999. In fiscal 2000,  Bertek's portfolio of
dermatology products grew to $46 million in net sales.                          

     Penederm has now been integrated in the Mylan family of companies and as of
August  1999,  it has become the Bertek  Pharmaceuticals  Inc.  Dermatology  R&D
division.                                                                       

     Research  is the  foundation  upon which  every  pharmaceutical  company is
built.   Through  the  dedicated   professional  efforts  of  our  research  and
development  team,  Mylan  has laid the  groundwork  to  remain a leader  in the
generic  pharmaceutical  marketplace  and it is this same foundation of strength
and  expertise  upon which we intend to  aggressively  build our presence in the
brand  pharmaceutical  business to balance our portfolio and reduce our earnings
variability.                                                                    

     I am confident in our ability to increase the growth in our brand division.
However,  the  development  curve  of  achieving  a 35%  brand  and 65%  generic
contribution may take longer than we had originally  anticipated.  Presently, we
are conducting a complete  strategic review whereby we can identify any weakness
and take the necessary steps to further implement our brand strategy.           

     We  have  been  aggressively  exploring  opportunities  to grow  the  brand
division in three specific therapeutic categories:  dermatology,  cardiology and
neurology.                                                                      

     We continue to proceed with our in-house research and development  projects
while also pursuing product  licensing  and/or product and company  acquisitions
for opportunities.                                                              

     This past year, Bertek signed an exclusive  marketing  agreement with Amide
Pharmaceuticals  Inc.  whereby  Amide will supply AB rated Digoxin to Bertek for
sales and marketing under the brand name  Digitektrademark.  Digitektrademark is
the  generic  equivalent  to  Glaxo  Wellcome's  LanoxinRegistration  Mark.  Our
office-based  sales force will be detailing  the product to the primary care and
institutional arena.                                                            

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     Although  we are  committed  to our brand  strategy,  we intend to remain a
leader in the generic industry.  As we enter the twenty-first  century,  generic
pharmaceuticals  will play an  increasingly  important  role in our health  care
system by making safe and effective  drugs more  affordable  for all  Americans.
Throughout  the next five  years,  patents  on  products  representing  over $25
billion dollars will be expiring;  and where applicable,  we are well positioned
to participate in these  markets.  We are highly focused on these  opportunities
and we are uniquely  positioned to take advantage of the positive  growth trends
in the generic pharmaceutical industry.                                         

     We intend to leverage our  traditional  strengths,  which are  development,
manufacturing  and  distribution to take advantage of these  opportunities.  The
brand  pharmaceutical  companies  use  drug  delivery  technology  as a means of
extending patent life and differentiating  their products and thereby increasing
market share.  Mylan  development has been successful in achieving various forms
of  extended-release  technology.  We have made a  commitment  to  complex  drug
formulation and technology and we have the manufacturing  capabilities for these
sophisticated  dosage forms.  Some examples that were  introduced this past year
include Extended Phenytoin Sodium Capsules, Verapamil HCl ER Capsules, Carbidopa
and Levodopa ER Tablets and the Estradiol Transdermal System.                   

     We are investing more than ever to accelerate the flow of new products into
our pipeline,  which was evident in our strong generic approval record in fiscal
2000.  We received  final or  tentative  approval  for 23  Abbreviated  New Drug
Applications   (ANDAs)  and  two  supplemental   ANDAs  for  additional  product
strengths.  These 25  approvals  encompass  21  different  products  or chemical
entities.                                                                       

     In  addition  to our  in-house  product  development,  we also  added  five
products  to  our  generic   portfolio  via  strategic   alliances   with  other
pharmaceutical companies. Mylan's alliance with Pfizer Inc. is indicative of the
importance of planning, timing and opportunity.  This agreement enabled Mylan to
receive all three dosage strengths of Nifedipine,  generic ProcardiaRegistration
Mark XL,  from  Pfizer  for  entry  into the  market.  Mylan now sells all three
strengths  in the generic  market and the consumer  benefits  from a lower cost,
drug alternative.                                                               

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     At the  close  of our  fiscal  year,  Mylan  Pharmaceuticals,  the  generic
division,  was marketing 115 products in over 410 sizes and/or dosage  strengths
to  wholesalers,  pharmacies,  HMO's and national  accounts  throughout the U.S.
Presently,  we have  approximately  24 ANDAs filed  awaiting FDA approval and we
have  targeted an additional 20 products to be filed with the agency this fiscal
year.                                                                           

     Throughout  this  past  year,  we have  seen many  mergers  in the  generic
pharmaceutical  industry.  We expect there will be others.  Despite the changing
landscape in our industry,  the generic  division of Mylan continues to maintain
its leadership  position.  Our new product  introductions,  10% increase in unit
volume,  and prior pricing  increases have all  contributed to the growth of our
generic segment.                                                                

     Two products for which Mylan increased  prices,  Lorazepam and Clorazepate,
were a catalyst for an  investigation  by the Federal  Trade  Commission  (FTC).
Mylan  has  devoted  significant  resources  over  the past  year to  vigorously
defending  the  unprecedented  lawsuit  brought by the FTC in December  1998 and
related suits. Several of the related suits were dismissed during the past year.
Additional  motions are  pending.  We  continue,  along with our  attorneys,  to
concentrate our efforts in developing  further  support for our defenses.  Mylan
has  taken  testimony  from  many  industry  participants  and  state  agencies.
Thousands of documents  have been collected and  scrutinized.  We believe we are
well positioned  going into the next stages of the litigation - expert discovery
and summary judgment.                                                           

     We face  challenges  unrelated  to  developing  and  manufacturing  quality
pharmaceutical  products.  Poorly conceived statutory and regulatory policies of
federal  and state  governments  create  barriers  to market  entry for  generic
medicines and restrict  consumer  access to our more  affordable  products.  The
policies result from a comprehensive strategy by multinational drug companies to
protect their monopolies by ensuring market  exclusivity for products even after
their  patents  have  expired.  Efforts to  unfairly  extend  patents,  restrict
formularies  to  preclude  generic  medications,  challenge  generic  safety and
efficacy with bogus claims, and litigate against generic  manufacturers to delay
market entry by approved generic products are just a few of the tactics employed
by these multi-national drug giants.                                            

     Mylan has committed to its  shareholders  and  customers  that we will also
vigorously  compete  in the  statutory  and  regulatory  arenas  to  defend  the
principles of an open and competitive  marketplace,  and to ensure that consumer
access to affordable medicine is protected.                                     

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     To keep that commitment,  we have made important investments in programs to
ensure that elected  officials  understand  the impact of policies that restrict
consumer access to generic medicines.  I am pleased to report to you that we are
making significant  progress in our battle to preserve and protect fair and open
competitive markets for generic medicines.                                      

     In fact,  Mylan has  significantly  improved the perceptions of federal and
state policy makers of the importance of a strengthened  generic  pharmaceutical
industry.  As a result,  there is increasing  awareness that government policies
aimed at helping generic drug manufacturers ultimately benefit consumers.  There
also is growing  appreciation  for the fact that our  industry is  exceptionally
price  competitive,  in stark contrast to the market of the  multinational  drug
company  monopolies.  Mylan is also  committed to working with  consumer  groups
across  America to ensure that they are armed with facts about the  economic and
health  benefits  of generic  medicine.  Our network is  expanding,  providing a
louder voice for the generic industry before federal and state policy makers. We
will  continue  our  commitment  to make sure that  members of  Congress,  state
legislators,  regulators,  the  media,  and  consumers  join our  crusade  for a
stronger,  more robust  pharmaceutical  market  where  generic  drugs can play a
bigger role as the best solution to contain runaway prescription drug costs.    

(picture)                                                                       
Richard F. Moldin                                                               
President and Chief Operating Officer                                           

(picture)                                                                       
Douglas J. Leech                                                                
Director                                                                        

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     On March 24, 2000, I announced the  appointment of Richard F. Moldin as our
new President and Chief Operating Officer.  Richard knows the business, he knows
the issues and he knows a lot of people in our  industry.  He is  respected as a
businessman and leader and has been involved in the  pharmaceutical  field since
1971.  I feel  Richard is the right  person at the right  time,  and we are very
pleased that he has joined the Mylan team.                                      

     During  this past  year,  Mylan also  experienced  a change to the Board of
Directors. Robert Smiley, a Director since 1972, decided to step aside effective
December 31, 1999. Bob's long years of service have been a great asset to Mylan.
He has been  conscientious and diligent in carrying out his duties as a Director
with his ultimate  concern  always being this company and its  shareholders.  We
will miss his  expertise  and his candor,  but we are very pleased that Bob will
continue to serve Mylan as Corporate Secretary.                                 

     Douglas J. Leech comes to the board with 25 years of  experience  in public
accounting and banking to fill the void created by Bob's resignation. Currently,
Douglas is Chairman,  President and CEO of Centra Bank, Inc. of Morgantown, West
Virginia.  His  financial  expertise  makes him a perfect  candidate to serve as
Chairman of the Audit  Committee of the Board of Directors.  We are very pleased
that Douglas has agreed to become a member of the Mylan board.                  

I believe we have what it takes to build a stronger Mylan:                      

    - We have the foundation - our exceptional research and development program,
 - The right blueprints - our strategy of continued generic leadership and

expanded  brand growth,                                             
    - The right tools - our operational expertise and unsurpassed quality, - The
right resources - our dedicated team of employees that now exceeds      

2,300 talented men and women.                                       

     I am  extremely  proud of the  Mylan  team  whose  hard  work  assures  the
continued  growth and  success of Mylan and I thank  them for their  efforts.  I
would also like to thank you, our shareholders. This year was difficult. We also
believe the future will be difficult but we remain positioned for success in the
ever-changing  environment  in which we  operate.  Thank you for your  continued
support.                                                                        

Milan Puskar                                                                    

Chairman and Chief Executive Officer                                            

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Mylan Pharmaceuticals Inc. Generic Product Line                                 

Generic Name                        Trade Name                          

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

Ace Inhibitor                                                                   

(UDL)   Captopril                       Capoten&reg;            
Adrenal Cortical Steroid                                                
*       Prednisolone Syrup              Prelone&reg; Syrup      
Analgesic                                                               
Propoxyphene Compound           Darvon&reg;     
                           Compound-65
Propoxyphene HCl                Darvon&reg;     
(UDL)   Propoxyphene HCl                                        
and Acetaminophen               Wygesic&reg;    

(UDL)   Propoxyphene Napsylate                                  

   and Acetaminophen               Darvocet-N&reg; 100
Anti-Inflammatory                                                       
*       Diclofenac Potassium            Cataflam&reg;           
Etodolac (Capsules)             Lodine&reg;     
Etodolac (Tablets)              Lodine&reg;     
(UDL)   Fenoprofen Calcium              Nalfon&reg;             
(UDL)   Flurbiprofen                    Ansaid&reg;             
Ibuprofen                       Motrin&reg;     
                          Rufen&reg;
(UDL)   Indomethacin                    Indocin&reg;            
Ketoprofen                      Orudis&reg;     
Ketorolac Tromethamine          Toradol&reg;    
Meclofenamate Sodium            Meclomen&reg;   
(UDL)   Naproxen                        Naprosyn&reg;           
Naproxen Sodium                 Anaprox&reg;    
(UDL)   Piroxicam                       Feldene&reg;            
(UDL)   Sulindac                        Clinoril&reg;           
Tolmetin Sodium (Capsules)      Tolectin&reg; DS
 Tolmetin Sodium (Tablets)       Tolectin&reg; 600

Antiangina                                                              

Nitroglycerin Transdermal System                
    (Patches)                       Transderm Nitro&reg;
(UDL)   Verapamil HCl                   Isoptin&reg;            
Antianxiety                                                             
(UDL)   Alprazolam                      Xanax&reg;              
Clorazepate Dipotassium         Tranxene&reg;   
(UDL)   Diazepam                        Valium&reg;             
(UDL)   Lorazepam                       Ativan&reg;             
Antibiotic                                                              

Cefaclor (Capsules)             Ceclor&reg;     
Cefaclor (Powders)              Ceclor&reg;     
Cephalexin                      Keflex&reg;     
(UDL)   Doxycycline Hyclate (Capsules)  Vibramycin&reg;         
(UDL)   Doxycycline Hyclate (Tablets)   Vibra-Tabs&reg;         
Erythromycin Ethylsuccinate     E.E.S. 400&reg; 
        Erythromycin Stearate           Erythrocin&reg; Stearate
 Tetracycline HCl                Achromycin V&reg;
                            Sumycin&reg;
Anticonvulsant                                                          

(UDL)   Clonazepam                      Klonopin&reg;           
   (UDL)   Extended Phenytoin Sodium       Dilantin&reg; Kapseals&reg;
Antidepressant                                                          

(UDL)   Amitriptyline HCl               Elavil&reg;             
Chlordiazepoxide and                            
Amitriptyline HCl               Limbitrol&reg;  
Clomipramine HCl                Anafranil&reg;  
(UDL)   Doxepin HCl                     Sinequan&reg;           
Maprotiline HCl                 Ludiomil&reg;   
(UDL)   Nortriptyline HCl               Pamelor&reg;            
Perphenazine and                                
Amitriptyline HCl               Triavil&reg;    

Antidiabetic                                                            

(UDL)   Chlorpropamide                  Diabinese&reg;          
(UDL)   Glipizide                       Glucotrol&reg;          
  *       Glyburide                       Glynase&reg; Pres-Tab&reg;
Tolazamide                      Tolinase&reg;   
(UDL)   Tolbutamide                     Orinase&reg;            
Antidiarrheal                                                           
(UDL)   Diphenoxylate HCl and                                   

Atropine Sulfate                Lomotil&reg;    
(UDL)   Loperamide HCl                  Imodium&reg;            
Antiemetic                                                              

(UDL)   Prochlorperazine Maleate        Compazine&reg;          
Antifungal                                                              
*       Ketoconazole                    Nizoral&reg;            
Antigout                                                                
(UDL)   Allopurinol                     Zyloprim&reg;           
Probenecid                      Benemid&reg;    
Antihypertensive                                                        
(UDL)   Amiloride HCl and                                       

Hydrochlorothiazide             Moduretic&reg;  
Atenolol and Chlorthalidone     Tenoretic&reg;  
Captopril and                                   
Hydrochlorothiazide             Capozide&reg;   
(UDL)   Clonidine HCl                   Catapres&reg;           
Guanfacine                      Tenex&reg;      
(UDL)   Methyldopa                      Aldomet&reg;            
Methyldopa and                                  
Hydrochlorothiazide             Aldoril&reg;    
(UDL)   Prazosin HCl                    Minipress&reg;          
Propranolol HCl and                             
Hydrochlorothiazide             Inderide&reg;   
(UDL)   Spironolactone and                                      

Hydrochlorothiazide             Aldactazide&reg;

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(UDL)   Triamterene and                                         
Hydrochlorothiazide                             

(Capsules)                      Dyazide&reg;    
(UDL)   Triamterene and                                         
Hydrochlorothiazide                             

 (Tablets)                       Maxzide&reg;-25MG
                            Maxzide&reg;
*       Terazosin HCl                   Hytrin&reg;             
Antihyperlipidemic                                                      
Gemfibrozil                     Lopid&reg;      
Antimalarial                                                            
Hydroxychloroquine Sulfate      Plaquenil&reg;  
Antineoplastic                                                          
(UDL)   Methotrexate                    Methotrexate&reg;       
Rheumatrex&reg;                                                                 
Antiparkinson                                                           

(UDL)*  Carbidopa and Levodopa ER       Sinemet&reg; CR         
Antipsychotic                                                           
(UDL)*  Clozapine                       Clozaril&reg;           
Fluphenazine HCl                Prolixin&reg;   
Haloperidol                     Haldol&reg;     
(UDL)   Thioridazine HCl                Mellaril&reg;           
(UDL)   Thiothixene                     Navane&reg;             
(UDL)   Trifluoperazine HCl             Stelazine&reg;          
Antiviral                                                               

Acyclovir (Capsules)            Zovirax&reg;    
Acyclovir (Tablets)             Zovirax&reg;    
Beta Blocker                                                            

Acebutolol HCl                  Sectral&reg;    
(UDL)*  Atenolol                        Tenormin&reg;           
(UDL)   Metoprolol Tartrate             Lopressor&reg;          
Pindolol                        Visken&reg;     

(UDL)   Nadolol                         Corgard&reg;            
(UDL)   Propranolol HCl                 Inderal&reg;            
Timolol Maleate                 Blocadren&reg;  
Bronchodilator                                                          
(UDL)*  Albuterol                       Proventil&reg;          
                             Ventolin&reg;
(UDL)   Albuterol Sulfate Syrup         Ventolin&reg; Syrup     
Calcium Channel Blocker                                                 

(UDL)   Diltiazem HCl                   Cardizem&reg;           
(UDL)   Diltiazem HCl ER                Cardizem SR&reg;        
(UDL)   Diltiazem HCl ER                Dilacor XR&reg;         
Nicardipine                     Cardene&reg;    
*       Nifedipine ER                   Procardia&reg; XL       
(UDL)   Verapamil HCl ER (Tablets)      Isoptin&reg; SR         
(UDL)*  Verapamil HCl ER (Capsules)     Verelan&reg;            
Diuretic                                                                

Bumetanide                      Bumex&reg;      
(UDL)   Chlorothiazide                  Diuril&reg;             
(UDL)   Chlorthalidone                  Hygroton&reg;           
*       Hydrochlorothiazide             Microzide&reg;          
(UDL)   Furosemide                      Lasix&reg;              
(UDL)   Indapamide                      Lozol&reg;              
Methyclothiazide                Enduron&reg;    
(UDL)   Spironolactone                  Aldactone&reg;          
Estrogen Replacement                                                    

*       Estradiol                       Estrace&reg;            
*       Estradiol Transdermal System    Climara&reg;            
*       Estropipate                     Ogen&reg;               
Gastrointestinal Antispadmodic                                          

(UDL)* Dicyclomine HCl                 Bentyl&reg;            
Hemorrheologic Agent                                                    
(UDL)   Pentoxifylline ER               Trental&reg;            
Histamine H2 Antagonist                                                 
(UDL)   Cimetidine                      Tagamet&reg;            
Ranitidine                      Zantac&reg;     
Hypnotic Agent                                                          

(UDL)   Flurazepam HCl                  Dalmane&reg;            
(UDL)   Temazepam                       Restoril&reg;           
Immunosuppresive                                                        

*       Azathioprine                    Imuran&reg;             
Laxative                                                                
(UDL)   Lactulose Solution              Chronulac&reg;          
Skeletal Muscle Relaxant                                                
(UDL)   Cyclobenzaprine HCl             Flexeril&reg;           
Orphenadrine Citrate ER         Norflex TM      
Orphenadrine Citrate,                           
Aspirin and Caffeine            Norgesic TM     
NorgesicTM Forte                                                                

Urinary Anti-infective                                                  

(UDL)   Nitrofurantoin                  Macrodantin&reg;        

Unit-dose packaging is available                                                

Select  products  are  available  in  convenient  unit-dose  packaging  from UDL
Laboratories,  Inc., a division of Mylan Laboratories Inc. UDL Laboratories is a
national manufacturer,  repackager and marketer of multisource and single-source
pharmaceutical  products in  unit-dose  form for the  institutional  health care
marketplace.                                                                    

The Mylan products  available in unit-dose are identified  with a UDL logo (UDL)
adjacent to the product listing.                                                

*Indicates fiscal 2000 introduction                                     

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Bertek Pharmaceuticals Inc. Brand Product Line                                  

Dermatology                                                                     

Bertek  Pharmaceuticals  Inc.  provides  dermatologic  products  targeted to the
treatment of acne vulgaris and for the topical treatment of fungal infections.  

Acticin&reg; is a topical scabicidal agent for the treatment of infestation with
Sarcoptes scabiei (scabies).  It offers proven permethrin safety and efficacy in
a smooth formula that makes it easy to apply. It also offers a cost savings.    

Treatment with permethrin cream may lead to generally mild and transient burning
and stinging, and pruritus following application,  and may exacerbate conditions
such as pruritus, edema, and erythema associated with scabies.                  

Avita&reg;  Cream and Gel are members of the new generation of retinoid products
indicated for the treatment of acne vulgaris. Avita is uniquely formulated using
the patented TopiCare  delivery system,  which consists of a portfolio of liquid
polymers  ("Polyolprepolymers")  that are  designed  to hold skin care agents at
targeted  levels on and in the upper layers of the skin.  These  compounds  have
been shown to enhance  delivery  of a variety of skin care agents  resulting  in
improved  efficacy,  longer  duration of action,  reduced  irritation,  or lower
percent of cosmetic  active  required.  Avita Cream 0.025%  demonstrated  a high
level of  efficacy  in a low  concentration  cream.  Avita  Gel  0.025% is for a
rapidly growing group of patients preferring gel forms of topical retinoids.  It
has been shown to cause low irritation.                                         

        As with all topical retinoids, the skin of certain sensitive individuals
may become excessively red, edematous, blistered, or crusted.                   

Mentax&reg;  is a  topical  antifungal  cream  indicated  for the  treatment  of
interdigital tinea pedis (athlete's foot), tinea corporis (ringworm),  and tinea
cruris (jock itch). Mentax contains butenafine HCl, a benzylamine,  the first of
this new class of antifungal agents.  Mentax is applied directly to the skin and
is  effective  with  once-a-day  dosing,   unlike  many  other  leading  topical
antifungal  drugs.  In clinical  studies with more than 1,300  patients,  Mentax
exhibited excellent results - high rates of cure with virtually no safety issues
or side effects. During U.S. clinical trials against tinea pedis, tinea corporis
and tinea cruris, no Mentax-treated patients discontinued therapy due to adverse
reactions.                                                                      

The  incidence  of local  adverse  reactions  was  approximately  1%,  primarily
mild-to-moderate burning/stinging.                                              

Cardiovascular                                                                  

Bertek   Pharmaceuticals  Inc.  offers  cardiovascular  care  products  for  the
treatment of hypertension, angina, and atrial fibrillation.                     

The newest addition to our cardiovascular line is Digitek&reg; (Digoxin Tablets,
USP),   the  first  proven,   bioequivalent,   cost-effective   alternative   to
Lanoxin&reg;*  for the  treatment  of chronic  atrial  fibrillation.  Digitek is
supplied in 0.125mg and 0.25mg Tablets.                                         

Digitalis   glycosides  are   contraindicated   in  patients  with   ventricular
fibrillation or in patients with a known hypersensitivity to digoxin.           

Bertek  offers  Maxzide&reg;  (Triamterine/Hydrochlorothiazide)  and  ClorpresTM
(Clonidine HCl and Chlorthalidone)  diuretics for the treatment of hypertension.
JNC VI recommends  diuretics as primary therapy for all  hypertensive  patients,
"..diuretics  should be  considered  the agent of first choice in the absence of
conditions that prohibit their use."                                            

Maxzide  adverse  reactions:  drowsiness,  insomnia,  muscle  cramps,  weakness,
headache, GI disturbances,  dizziness,  orthostatic  hypotension,  hyperurcemia,
impotence, renal stones, tachycardia,  dyspnea, dry mouth, depression,  anxiety,
urine discoloration and elevated liver enzymes.                                 

The most common  associated  reactions of Clorpres  are: dry mouth,  drowsiness,
dizziness,  sedation and constipation.  Headache and fatigue have been reported.
Generally these effects tend to diminish with the continued therapy.            

For   angina   patients   Bertek   Pharmaceuticals   Inc.   offers   Nitrek&reg;
(Nitroglycerin  Transdermal  System),  a small  translucent patch that is almost
imperceptible on any skin tone, providing reliable adhesion even while swimming,
exercising, or showering                                                        

Adverse reactions to nitroglycerin are generally  dose-related and almost all of
these  reactions are the result of  nitroglycerin's  activity as a  vasodilator.
Headache, which may be severe, is the most common side effect.                  

* Lanoxin&reg; is a registered trademark of Glaxo Wellcome, Inc.      

Antibacterial                                                                   

Bertek Pharmaceuticals Inc. offers antibacterial products for the treatment     
of lower respiratory infections, burn and chronic wounds.                       

Sulfamylon&reg;  Cream is a soft, white,  nonstaining,  water-miscible,  topical
antimicrobial  cream indicated for use as adjunctive  antimicrobial burn therapy
for patients with second and third degree burns.  Sulfamylon  Cream is effective
in combating P.  aeruginosa,  as well as other bacterial  organisms.  Sulfamylon
resistant  bacterial  strains are rare,  even after 30 years of use.  Sulfamylon
Cream has exceptional tissue and eschar penetrating characteristics.            

Sulfamylon for 5% Topical Solution is indicated for use as an adjunctive topical
antimicrobial  agent to  control  bacterial  infection  when  used  under  moist
dressings over meshed autografts on excised burn wounds.                        

Sulfamylon Cream and 5% Topical Solution are contraindicated in patients who are
hypersensitive  to  mafenide  acetate.  Mafenide  acetate  and  its  metabolite,
p-carboxybenzenesulfonamide,  inhibit  carbonic  anhydrase,  which may result in
metabolic acidosis,  usually compensated by  hyperventilation.  Fatal hemolyctic
anemia with  disseminated  intravascular  coagulation,  presumably  related to a
glucose-6-phosphate   dehydrogenase  deficiency,  has  been  reported  following
mafenide acetate therapy.                                                       

Zagam&reg; (Sparfloxacin), the first of the aminodifluroquinilones, is indicated
for the treatment of acute  exacerbations  of chronic  bronchitis  and community
acquired pneumonia. Zagam is a unique fluroquinilone that offers advantages with
difficult to treat patients, smokers, the elderly, alcoholics, and patients with
COPD. For the difficult to treat patient, "take your best shot with the power of
Zagam."                                                                         

The  most   common   adverse   events   occurring   in   clinical   trials  were
photosensitivity   reactions,   diarrhea,   nausea,  headache,   dyspepsia,  and
dizziness.   Sparfloxacin  should  not  be  used  in  patients  with  known  QTc
prolongation or in patients receiving QTc prolongation drugs.                   

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Wound Care                                                                      

Bertek Pharmaceuticals Inc. is a market leader and innovator in burn and chronic
wound care  products.  Our  Institutional  division  markets  these  products to
long-term  care  facilities,  hospitals,  and burn  centers,  in a  manner  that
emphasizes education-oriented product promotion and overall patient care. Bertek
has  a  longstanding  commitment  to  listening  to  our  customers'  needs  and
maintaining strong, loyal partnerships with the health-care providers we serve. 

Biobrane&reg;  (sheet  dressings and gloves) are  biosynthetic  wound  dressings
constructed  of a silicon film with a nylon fabric  partially  imbedded into the
film.  The  fabric  presents  to  the  wound  bed a  complex  3-D  structure  of
trifilament thread to which collagen has been chemically bound.  Blood/sera clot
in the nylon  matrix,  thereby  firmly  adhering the dressing to the wound until
epithelialization occurs.                                                       

        If in the rare instance a patient shows evidence of an allergic reaction
to the product,  it should be removed and its use discontinued.  Biobrane&reg;-L
is a dressing  with a less  complex  nylon  fabric  structure  for use when less
aggressive adherence is required.  The lower weight monofilament thread utilized
in Biobrane-L presents a shallow,  less complex matrix to the wound bed, thereby
reducing the degree of clot integration and adherence. If in the rare instance a
patient  shows  evidence of an allergic  reaction to the  product,  it should be
removed and its use discontinued.                                               

Flexzan&reg;  is  a  sterile,  ultra-thin,  highly  conformable,  semi-occlusive
polyurethane foam adhesive dressing which protects wounds from contamination and
trauma while maintaining a moist wound healing environment. It is constructed of
an open cell foam with a closed cell outer  surface.  Excess  wound  moisture is
absorbed  into the cells of the foam and allowed to evaporate  through the outer
surface,  helping prevent fluid accumulation under the dressing.  Flexzan should
not be used on  third  degree  burns  or on  wounds  showing  clinical  signs of
infection.                                                                      

Flexzan&reg;  Extra is light tan in color with the patterned  adhesive optimized
to adhere to very moist skin surfaces.                                          

Flexderm&reg;  is a sterile  hydrogel  polymer sheet  dressing  which protects a
wound against  dehydration and exogenous  contamination  while providing a moist
environment  conducive to optimal wound healing.  Flexderm  absorbs exudate from
the wound while providing cooling, pain relieving protection and does not adhere
to the wound bed upon removal.                                                  

Granulex&reg; is an aerosol topical wound spray used as an aid in the management
of pressure ulcers. Topical application stimulates the capillary beds of chronic
wounds and helps prevent the deterioration of Stage I ulcers into deeper stages.
Granulex also helps promote  tissue  granulation in deeper chronic ulcers (Stage
II, III, IV), and contains trypsin,  a mild debriding agent which helps keep the
wound site free of necrotic tissue once debrided. Granulex should not be sprayed
on fresh arterial clots or in the eyes.                                         

Hydrocol&reg;   is  a  sterile,  occlusive  hydrocolloid  wound  dressing  which
interacts with wound exudate to absorb excess drainage yet is able to be removed
without  damaging  newly formed  tissue.  The  dressing  protects the wound from
bacteria, urine and feces, and other exogenous  contamination.  A unique design,
tapered borders,  rounded corners,  and a low-friction film backing help prevent
edge roll-up and extend dressing wear time. Hydrocol is not indicated for use on
third degree burns or on individuals  with known sensi tivity to the dressing or
its components.                                                                 

Proderm&reg;  is a  non-prescription  topical wound spray which  stimulates  the
capillary beds of pressure ulcers to help prevent the  deterioration  of Stage I
ulcers to deeper stages. Proderm also helps promote tissue granulation in deeper
chronic ulcers. Avoid spraying in eyes or nostrils.                             

Sorbsan&reg;  is a unique calcium  alginate  dressing  which,  via ion exchange,
transforms into a highly absorbent, readily conformable, easy-to-use hydrophilic
sodium alginate gel when in contact with  sodium-rich  wound exudate.  Indicated
for use on all  infected  or  non-infected  wet  wounds,  Sorbsan  is  virtually
painless  upon  application  and  removal,  and is  easily  changed  by  medical
professionals  and  patients  alike.  Sorbsan is not  intended to be  surgically
implanted or used on third degree burns.                                        

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Contents                                                            
14    Selected Financial Data                                                   

15    Management's Discussion and Analysis of Operations and Financial Position 
22    Consolidated Balance Sheets                                               
24    Consolidated Statements of Earnings                                       
25    Consolidated Statements of Shareholders' Equity                           
26    Consolidated Statements of Cash Flows                                     
28    Notes to Consolidated Financial Statements                                
40    Independent Auditors' Report                                              
41    Market Information                                                        
42    Shareholder Information                                                   

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Selected Financial Data                                                         
Mylan Laboratories Inc.                                                         

                                                        [Enlarge/Download Table]
                                                                                                                                  
Year ended March 31, .............       2000        1999        1998        1997        1996        1995        1994        1993 
Total revenues ...................  $  790,145  $  721,123  $  555,423  $  440,192  $  392,860  $  396,120  $  251,773  $  211,964

Net earnings .....................  $  154,246  $  115,409  $  100,777  $   63,127  $  102,325  $  120,869  $   73,067  $   70,621

Earnings per common share-basic ..  $     1.19  $      .92  $      .83  $      .52  $      .86  $     1.02  $      .62  $      .61
Earnings per common share-diluted   $     1.18  $      .91  $      .82  $      .51  $      .85  $     1.01  $      .61  $      .60

Shares used in computation-basic .     129,220     125,584     122,094     121,926     119,530     118,963     118,423     115,651
Shares used in computation-diluted     130,224     127,156     123,043     122,727     120,706     119,912     119,502     116,986

March 31,                                                                                                                         
Working capital ..................  $  598,976  $  475,398  $  379,726  $  323,942  $  351,536  $  296,990  $  197,164  $  159,748

Total assets .....................  $1,341,230  $1,206,661  $  847,753  $  777,580  $  692,009  $  546,201  $  403,325  $  351,105

Long-term obligations ............  $   30,630  $   26,827  $   26,218  $   32,593  $   18,002  $    7,122  $    4,609  $    5,125

Shareholders' equity .............  $1,203,722  $1,059,905  $  744,465  $  659,740  $  616,441  $  482,728  $  379,969  $  295,972

Book value per share-diluted .....  $     9.24  $     8.34  $     6.05  $     5.38  $     5.11  $     4.03  $     3.18  $     2.53


Amounts in thousands except per share data.                                     

From April 1, 1992,  through  July 1992,  the Company  had a quarterly  dividend
program  totaling $.067 per share per year.  From October 1992 to July 1993, the
Company had a quarterly  dividend program totaling $.08 per share per year. From
October 1993 to July 1994, the Company had a quarterly dividend program totaling
$.107 per share per year.  From  October  1994 to July 1995,  the  Company had a
quarterly  dividend  program  totaling  $.133 per share per year.  Since October
1995, the Company has had a quarterly  dividend  program totaling $.16 per share
per year. In addition, the Company paid a special one-time dividend of $.067 per
share on January 13, 1995.                                                      

The above financial data gives  retroactive  effect to the  three-for-two  stock
split effective August 15, 1995.                                                

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Management's Discussion and Analysis of Operations and Financial Position       
Mylan Laboratories Inc.                                                         

Overview                                                                        

     Mylan  Laboratories  Inc.  (the  "Company")  posted  record net earnings of
$154.2 million for the year ended March 31, 2000,  compared to $115.4 million in
fiscal 1999 and $100.8 million in fiscal 1998. Net earnings for fiscal 1999 were
reduced  by  $29.0  million  as a  result  of a  one-time  charge  for  acquired
in-process research and development.                                            

     The favorable earnings trend realized over the past three years is a result
of  strategic  initiatives  undertaken  by the  Company.  The Company set out to
accelerate the expansion of its branded  operations.  While continuing  in-house
research  and  development  projects,  additional  expansion  would be  obtained
through  product  acquisitions,   with  the  acquisition  of  Penederm  and  its
dermatology product line in October 1998 being the most significant  acquisition
to date.  The branded  segment now  represents  15% of the  Company's  net sales
compared to 10% in fiscal 1998 and contributes 19% of the Company's gross margin
compared to 14% just two years ago.                                             

        The Company continues to examine additional  opportunities to expand the
branded  segment.  The  existing  product line alone will not be  sufficient  to
provide  continued annual sales growth  comparable to that which was realized in
the past two years.  However,  the newly  expanded  sales force provides a solid
foundation  capable of growing current market share and launching new innovative
health care products and product line extensions.                               

     The generic  segment  continues to maintain its leadership  role within the
industry. The 17 new product additions and prior pricing increases, as well as a
10% unit volume increase,  were the primary causes for growth in fiscal 2000 and
were the result of strategic  initiatives  taken in previous years.  The Company
expanded its ability to bring new products to market through strategic alliances
with other  pharmaceutical  companies.  Five of the new products added in fiscal
2000 were the result of such  alliances.  The  Company  also  determined,  after
extensive  evaluation,  that  changes  were  necessary  in its  generic  pricing
practices; therefore, a series of price increases was implemented.              

     Clorazepate  and  lorazepam  were among 29  products  for which the Company
raised prices  beginning in late fiscal 1998 and  continuing  throughout  fiscal
1999.  The  increases  on these two  specific  products  were a catalyst  for an
investigation by the Federal Trade Commission  ("FTC") which led to a suit filed
in December 1998 (See note S to the consolidated financial statements).         

     Despite record  financial  results,  obstacles  continuing to challenge the
generic segment  include  consumer  acceptance of generic  substitutes and price
deterioration.  In fiscal 2000, the Company  estimates that price  deterioration
reduced  net  earnings  by  approximately  $56.1  million  with  more  than half
attributable to two products,  clorazepate and lorazepam.  Patent  litigation by
branded  pharmaceutical  companies  and  an  increasingly  difficult  regulatory
environment present additional challenges in the generic industry.              

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Results of Operations                                                           
Net Sales and Gross Margin                                                      

The  following  table  outlines net sales,  gross margin (net sales less cost of
sales),  gross margin as a percentage of net sales and the corresponding  change
from the previous year: (dollars in millions)                                   

                                                                         Percent

Change                                                                          

Year ended March 31,     2000      1999      1998     2000  1999                
Generic Segment:                                                                
Net sales ......  $   667.8 $   638.1 $   474.5     5%   34%            
Gross margin ...      345.3     329.5     207.5     5%   59%            
% of net sales .       52%       52%       44%                          
Branded Segment:                                                                
Net sales ......  $   122.3 $    83.0 $    54.1    47%   53%            
Gross margin ...       83.0      54.8      32.8    51%   67%            
% of net sales .       68%       66%       61%                          
Company Totals:                                                                 
Net sales ......  $   790.1 $   721.1 $   528.6    10%   36%            
Gross margin ...      428.3     384.3     240.3    11%   60%            
% of net sales .       54%       53%       45%                          

     With regards to the Company's  generic product line, 13 products were added
in fiscal 1998 accounting for $61.5 million in net sales in fiscal 1998 and nine
products were added in fiscal 1999 with  aggregate net sales of $37.1 million in
fiscal 1999. In fiscal 2000, the Company added 17 new products which resulted in
aggregate  net  sales of $42.6  million.  Five of the 17 new  products  added in
fiscal 2000 accounted for over 90% of the aggregate net sales for new products. 

     In  fiscal  2000,  five  of the  products  added  resulted  from  strategic
alliances  with other  pharmaceutical  companies.  Due to royalty  arrangements,
these  products  typically  have lower gross margin  percentages  than  products
developed  internally and manufactured by the Company.  For both fiscal 1999 and
1998, two of the new products added were the result of strategic alliances.     

     During the second half of fiscal 1998,  the Company  raised prices on seven
generic  products.  Throughout  fiscal  1999,  the Company  raised  prices on 22
additional products.  These selective price increases increased net sales by $47
million and gross margin by $37 million in fiscal 1998 and  increased  net sales
by $130 million and gross margin by $109 million in fiscal 1999.                

     Two of the 29 products, clorazepate and lorazepam accounted for $49 million
of net  sales in fiscal  1998 and $151  million  in net  sales in  fiscal  1999.
Despite a marginal increase in volume for these two products in fiscal 2000, net
sales dropped to $104 million as a result of price deterioration.  The remaining
27 products  resulted in increased  net sales of $39 million and gross margin of
$34 million in fiscal 2000.                                                     

     In addition to the items previously  mentioned,  the Company estimates that
price  deterioration in the generic industry resulted in reductions in net sales
and gross margin of  approximately  $32 million in fiscal  1998,  $39 million in
fiscal 1999 and $41 million in fiscal 2000. Such  reductions were  substantially
offset by increased volume,  favorable mix variances and production efficiencies
which generally result from higher volumes. Total unit volume of generic product
shipments,  excluding unit dose shipments,  was 7.3 billion in 1998, 8.0 billion
in 1999 and 8.8 billion in fiscal 2000.                                         

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     The Company  expects  significant  price  deterioration  on clorazepate and
lorazepam during fiscal 2001. The Company also expects  increases in the cost of
raw materials for these  products.  Accordingly,  net sales and gross margin for
these products in the fiscal year ending March 31, 2001, are expected to be less
than that recognized by the Company in fiscal 2000.                             

     Net sales for the Company's  branded  segment  increased 47% in fiscal 2000
and 53% in fiscal 1999. The primary reason for the significant increases in each
of the last two years was the  acquisition  of  Penederm  in October  1998.  The
acquisition of Penederm  expanded the Company's  branded  presence in one of its
targeted markets, dermatology.  Dermatology products accounted for approximately
38% of net sales for the branded segment in fiscal 2000.                        

     As the Company has made a concerted effort to expand its branded segment in
fiscal 2000 and 1999, the emphasis within the branded segment continues to shift
from wound care  products to  dermatology  and other  physician-based  products.
Wound care products represented less than 8% of branded net sales in fiscal 2000
compared to 15% in the prior year.                                              

        The accounts  receivable  balance of the Company increased as of March 3
1, 2000, as compared to March 31, 1999, due to buying  patterns of its customers
and the associated payments.                                                    

Research and Development                                                        

Research and  development  expenditures  were $49.1  million,  $61.8 million and
$46.3 million in fiscal years 2000, 1999 and 1998.                              

The following table outlines the allocation of research and     
development expenditures: (dollars in millions)                                 
Year ended March 31,                   2000            1999          1998       
Generic related projects               $22.3           $25.7         $22.0      
Innovative compound projects            20.5            29.2          18.4      
Transdermal systems                      6.3             6.9           5.9      

     During  fiscal 1999,  the Company  entered into an agreement  with Genpharm
Inc. to develop 15 branded and generic  products.  The initial milestone payment
in fiscal 1999 for this agreement was allocated evenly to generic and innovative
compound projects.  This expenditure  represents the majority of the fluctuation
in expenditures for generic related projects between fiscal years.              

     In addition to the  Genpharm  agreement in fiscal  1999,  expenditures  for
innovative compound projects were affected by the arbitration award in which the
Company recorded  approximately  $10.0 million in funding obligations to VivoRx.
Charges  related to the Company's  funding of VivoRx were $6.3 million in fiscal
1998.  In addition to these  items,  the  increase in research  and  development
expenditures  in fiscal 1999 and fiscal 2000,  as compared to fiscal  1998,  are
principally due to the research and development expenses of Penederm,  which was
acquired in fiscal 1999.                                                        

        The Company is actively  pursuing  and is involved in joint  development
projects in an effort to broaden its scope of capabilities in bringing to market
both generic and innovative  products.  Some of these  arrangements  provide for
payments by the Company upon the  attainment of certain  milestones.  While such
arrangements  help to  reduce  the  Company's  financial  risk for  unsuccessful
projects,  fulfillment of milestones or other payment  obligations may result in
fluctuations in research and development  expense.                              

Acquired In-Process Research and  Development                                   

     In connection with its acquisition of Penederm in October 1998, the Company
allocated  $29.0  million  of the  purchase  price to  in-process  research  and
development  in  fiscal  1999  (See  note  B  to  the   consolidated   financial
statements).                                                                    

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Selling and Administrative                                                      

Selling and  administrative  expenses were $156.2 million in fiscal 2000, $125.0
million in fiscal 1999 and $96.7 million in fiscal 1998. These amounts represent
20%, 17% and 18% of net sales in fiscal years 2000, 1999 and 1998.              

  The following table identifies the major components of selling and
administrative expenses: (in millions)                                          
Year ended March 31,                   2000            1999          1998       
Sales and Marketing Expenses:                                                   
Generic:                                                                
Payroll and related             $ 5.0           $ 4.9          $ 4.5
Advertising and promotions        8.8            12.7           16.3
Branded:                                                                
Payroll and related              19.1            12.8            9.4
Advertising and promotions       19.4             9.2            4.7
Other sales and marketing          12.1             9.9            8.4  
Total Sales and Marketing Expenses    $64.4           $49.5          $43.3      
Administrative Expenses:                                                        
Payroll and related               $30.7           $27.5          $21.9  
Legal and professional fees        31.2            22.2           12.0  
Goodwill amortization               6.4             4.0            1.6  
Other administrative               23.5            21.8           17.9  
Total Administrative Expenses         $91.8           $75.5          $53.4      

Generic  advertising and promotions,  which for the most part represent the cost
of stocking fees to customers to assist in the  conversion  and promotion of new
generic  products,  decreased  from  fiscal 1998 to fiscal 1999 and again in the
current  year  as  such  costs  relate  to  the  launch  of  specific  products.
Promotional  costs  associated  with  products  launched in fiscal 2000 were not
significant.                                                                    

The increase in branded  sales and  marketing  expenses from fiscal 1999 to 2000
primarily  relates to a full year of expenses for Penederm  compared to only six
months of expenses  that were  recorded in fiscal  1999.  In  addition,  branded
payroll and related  expenses  increased  in fiscal 2000 due to the  addition of
direct sales representatives and customer support personnel. Branded advertising
and  promotions  increased  significantly  due to  promotion  expenses  for  two
dermatology products.                                                           

Administrative  expenses  increased  from  fiscal 1999 to fiscal 2000 due to the
additional six months of expenses for Penederm,  amortization expense related to
the  acquisition  of Penederm and increased  legal and  professional  fees.  The
increase in legal and professional  fees primarily relates to the FTC litigation
initiated in December  1998,  and was ongoing for all of fiscal 2000. The fiscal
1999  increase was also  impacted by  litigation  associated  with the Company's
investment in VivoRx.                                                           

Equity in Earnings of Somerset                                                  

In fiscal 2000, the Company incurred a loss of $4.2 million in its investment in
Somerset.  Equity in earnings of  Somerset  was $5.5  million in fiscal 1999 and
$10.3  million in fiscal 1998.  The loss in the current year resulted from lower
sales  due  to  generic  competition  and  increased  research  and  development
expenditures. Somerset continues its research and development efforts to develop
alternative  indications for its sole commercial  product,  EldeprylRegistration
Mark.   Unless  such  new   indications   are   developed   and   approved   for
commercialization, the Company's earnings will continue to be adversely affected
by  Somerset's  expected  losses  (See  note  E to  the  consolidated  financial
statements).                                                                    

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Other Income                                                                    

Other income was $24.0 million in fiscal 2000,  $18.3 million in fiscal 1999 and
$14.0 million in fiscal 1998. Other income was favorably  impacted by increasing
interest rates and significantly  higher cash and investment balances throughout
fiscal  2000.  The  Company  recorded  earnings on its  investment  in a limited
partnership  of $15.4  million,  $19.8  million and $6.6 million in fiscal years
2000, 1999 and 1998. In addition, the Company recorded a gain of $3.9 million on
the sale of an  investment  in fiscal  2000.  Provisions  to reduce the carrying
value of strategic alliances and non-publicly traded companies included in Other
assets  totaled  approximately  $9.4 million,  $12.5 million and $2.5 million in
fiscal years 2000, 1999 and 1998.                                               

Income Taxes                                                                    

The  effective  tax rate for fiscal  2000 was 36.5%  compared to 40.0% in fiscal
1999 and 32.1% in fiscal 1998.  Approximately  5% of the fiscal 1999 tax rate is
the result of the $29.0  million  charge for  acquired  in-process  research and
development  which is not  deductible  for tax  purposes.  Other factors for the
increased rates in fiscal 2000 and fiscal 1999 are an increase in  nondeductible
amortization expense and a reduction in tax favored dividends.  For fiscal 2001,
the  Company  anticipates  a slight  increase in its  effective  tax rate due to
Somerset's  expected  loss and  marginally  higher  state taxes.  Liquidity  and
Capital  Resources  Working capital increased from $475.4 million in fiscal 1999
to $599.0  million  in fiscal  2000 and the ratio of  current  assets to current
liabilities increased from 5.9 to 1 to 7.8 to 1 for this same time period.      

        Net cash provided from operating activities was $119.2 million in fiscal
2000,  $163.4  million in fiscal 1999 and $52.7  million in fiscal 1998.  Fiscal
2000 operating activities were positively affected by net earnings, depreciation
and  amortization and the increase in allowances on accounts  receivable.  These
increases were partially offset by changes in deferred taxes and the increase in
accounts receivable.                                                            

        The Company's  expenditures for property,  plant and equipment was $28.8
million in fiscal 2000, $16.7 million in fiscal 1999 and $28.9 million in fiscal
1998.  The funds in the current year were primarily used to complete an addition
to one of its  generic  manufacturing  facilities  and to  construct a sales and
administrative  building.  Capital  expenditures  have  been  paid  for with the
operating  funds  of the  Company.  Capital  expenditures  to  complete  current
projects  along with the other  planned  capital  projects  are  expected  to be
financed through the operating funds of the Company.                            

        Other  investing  activities  which used cash relate to investments  for
product  acquisitions,  equity investments in privately held companies and a net
increase in the purchase of investment securities.                              

        Payments  on  long-term  obligations  primarily  relate  to  installment
payments made on certain product  acquisitions.  The Company paid cash dividends
of $.16 per  share in fiscal  years  2000,  1999 and 1998  which  totaled  $60.0
million.                                                                        

        The Company is involved in litigation  with the FTC and various  parties
with related suits. While the Company believes that it has meritorious  defenses
to the claims in these  matters,  an adverse  result in these suits could have a
material  adverse  effect on the liquidity and capital  resources of the Company
(See note S to the consolidated financial statements).                          

        The Company's current cash position may not necessarily be indicative of
its position in future periods. As described in both the "Overview" and "Results
of  Operations,"  the Company has  experienced  price  deterioration  on certain
generic  products  on which it  increased  prices and  anticipates  that it will
experience  further  price  deterioration  on these  and other  products  in the
future.  In addition,  the Company continues to incur significant legal fees and
costs  defending  against  various  lawsuits  which will also impact future cash
flows (See "Forward Looking  Statements" for additional  information  concerning
future periods).                                                                

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Year 2000                                                                       
The Company to date has not  experienced  any major  disruptions  related to the
Year 2000 date change.  The Company will continue to monitor  critical  systems,
along  with  those of its  customers  and  suppliers,  to  ensure  uninterrupted
operations.   The  direct   incremental   cost  of  Year  2000  remediation  was
insignificant to the Company's operations.                                      

Other Matters                                                                   

In June 1998,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards  ("SFAS")  No.133,  "Accounting  for Derivative
Instruments  and Hedging  Activities."  SFAS No.133  establishes  accounting and
reporting  standards for derivative  instruments,  including certain derivatives
embedded in other contracts, and hedging activities.  It requires that an entity
recognize all  derivatives  as either assets or liabilities on the balance sheet
at fair  value.  As  amended,  this  statement  is  effective  for fiscal  years
beginning  after June 15, 2000.  The Company is currently  evaluating the impact
that  SFAS No. 13 3 will  have on its  financial  position  and its  results  of
operations.                                                                     

Market Risk                                                                     

The Company is exposed to market risk primarily from changes in market values on
its investments in marketable debt and equity securities,  including  marketable
securities owned indirectly through certain pooled asset funds. Market prices on
debt securities  generally bear an inverse relationship with changes in interest
rates. The Company also invests in overnight deposits and money market funds and
marketable   securities  with  maturities  of  less  than  three  months.  These
instruments are classified as cash equivalents for financial  reporting purposes
and have minimal or no interest  rate risk due to their short term  nature.  The
Company also  invests in nonpublic  securities,  often in  consideration  of its
strategic  interests.  The Company does not  consider  these  investments  to be
market risk sensitive.                                                          

The Company  attempts to mitigate its  exposure to market risk by assessing  the
relative  proportion of its  investments  in cash and cash  equivalents  and the
relatively  stable and risk  minimized  returns  available  on such  investments
withthe risks attendant to its investments in other debt and equity  securities.
The Company's  objective in managing its exposure to changes in the market value
of its  investments in debt and equity  securities is to balance the risk of the
impact  of  such  changes  on  earnings  and  cash  flows  with  the   Company's
expectations  for  investment  returns.  The  Company's  pooled  asset funds and
certain of its other  investments  in debt and equity  securities are managed by
professional  portfolio managers.  The Company was not a party to any forward or
derivative  option contract  related to interest rates or equity security prices
during fiscal 2000.                                                             

The fair market  value of the debt  securities  held by the Company at March 31,
2000, was $80.9 million,  of which $59.3 million had maturities of less than one
year (the market values of which are generally  less  sensitive to interest rate
fluctuations  than is the case  with  longer  term debt  instruments).  The fair
market value of equity  securities  held by the Company at March 31,  2000,  was
$71.8  million.  Such  investments  collectively  represent 11% of the Company's
total assets as of March 31, 2000,  and 42% of the  aggregate  value of debt and
equity  securities  and cash and cash  equivalents  held by the  Company at such
date.  Assuming  an  instantaneous  10%  decrease  in the  market  value  of the
Company's  debt and equity  securities,  the change in the aggregate fair market
value of these securities would be $15.3 million.                               

Forward Looking  Statements                                                     

Various  statements in this Report state or suggest that the Company  expects to
increase  revenues and to continue to be  profitable  in the future by employing
various  strategies  which include  continuing to seek,  among other things,  to
introduce new lines of generic equivalent products, to enter into alliances with
other  manufactures,  to strengthen the  development of branded  products and to
increase  prices on select generic  equivalent  products in its line.  These are
forward-looking statements. The Company's actual results could differ materially
from those  projected  or  suggested  in any  forward-looking  statement  due to
various important factors, including, but not limited to, the following:        

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        Although the Company is expanding its presence in the branded segment of
the pharmaceutical market, its results of operations have historically depended,
and continue to depend,  to a significant  extent, on its ability to develop and
bring to the market new generic equivalent  products.  Generally,  following the
expiration  of  patents  and  other  market  exclusivity   periods,   the  first
manufacturers  to  bring a  generic  equivalent  to the  market  achieve  higher
revenues and gross profits than competitors that subsequently  enter the market.
As competing products enter the market,  prices, sales volume and profit margins
of the first generic equivalents decline significantly.  Furthermore,  in recent
years,  the Company has increased  prices on selected  older generic  equivalent
products,  including  in some cases  generic  equivalents  that had been largely
abandoned by competitors. These price increases have provided incentive to other
generic  manufacturers  to reenter the market for many of these  products.  This
additional  competition has resulted in significant price  deterioration on many
of these  products,  which has  negatively  impacted the Company's  revenues and
margins. Additional price deterioration can be expected on these products in the
future (See "Results of OperationsNNet Sales and Gross Margin").                

        In addition to suffering price  deterioration on its generic  equivalent
products generally, the Company's results of operation for fiscal 2000 continued
to be  impacted  by delays in its ability to  introduce  new generic  equivalent
products  due  to  litigation  initiated  by  branded  manufacturers  under  the
Hatch-Waxman  Act to extend the  exclusivity  periods on drugs on which  patents
were  expiring.  The  failure of  Congress  or the courts to address the present
abuses of the  Hatch-Waxman  Act could  diminish the  commercial  success of new
products  introduced by the Company,  resulting in both lower revenues and gross
margins.                                                                        

     The Company is seeking to strengthen its  development of branded  products.
Obtaining approval from the FDA to market new (branded)  pharmaceutical products
in the United States is a lengthy, complex and expensive process.  Products that
appear to be  promising  in the  research  laboratories  may fail to survive the
testing phase due to  ineffectiveness or as a result of unforeseen side effects.
Even if the Company is  successful in obtaining  approval for new  products,  no
assurance  can be given  that such  products  will be  accepted  in the  medical
community as being as effective as alternative  forms of treatment for indicated
conditions.                                                                     

The Company's principal customers include wholesale drug distributors 
and major drug store chains. A continuation of the  consolidation  that has been
experienced  in these  pharmaceutical  distribution  networks in recent years is
likely  to  result  in  an  increase  in  pricing  pressures  on  pharmaceutical
manufacturers.                                                                  

     The  Company is involved in numerous  lawsuits,  including  anti-trust  and
anti-competition  litigation  brought by the Federal  Trade  Commission  and the
attorneys  general for 33 states,  as well as more than 25 putative class action
lawsuits alleging the same conduct.  An unfavorable outcome in these suits could
have a  potentially  adverse  effect on the  Company's  financial  position  and
results  of  operation  or, in  certain  circumstances,  the manner in which the
Company is permitted to conduct its future operations.                          

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Consolidated Balance Sheets                                                     
Mylan Laboratories Inc.                                                         

                                                        [Enlarge/Download Table]
                                                                                       

(dollars in thousands except per share data)                                           
March 31,                                                             2000        1999 

Assets                                                                                 
Current assets                                                                         

Cash and cash equivalents .....................................   $ 203,493  $  189,849
Marketable securities .........................................      99,557      69,872
Accounts receivable ...........................................     197,760     148,896
Inventories ...................................................     145,869     136,493
Deferred income tax benefit ...................................      30,792      18,199
Other current assets ..........................................       9,275       8,450
Total current assets ..........................................     686,746     571,759

Property, plant and equipment - net of accumulated depreciation     168,000     154,636
Intangible assets - net of accumulated amortization ...........     332,142     339,603
Other assets ..................................................     124,881     106,549
Investment in and advances to Somerset ........................      29,461      34,114

Total assets ..................................................  $1,341,230  $1,206,661


See notes to consolidated financial statements.                         

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(dollars in thousands except per share data)                                    
March 31,                                                                       

                                                                [Download Table]
                                                                                    

                                                                  2000        1999  

Liabilities and shareholders' equity                                                
Current liabilities                                                                 

Trade accounts payable                                        $   17,981  $   12,142
Current portion of long-term obligations                           9,874      16,941
Income taxes payable                                               7,858         821
Other current liabilities                                         46,863      61,279
Cash dividend payable                                              5,194       5,178
Total current liabilities                                         87,770      96,361

Long-term obligations                                             30,630      26,827
Deferred income tax liability                                     19,108      23,568

Shareholders' equity                                                                

Preferred stock, par value $.50 per share,                                          
authorized 5,000,000 shares,  issued                                                
and outstanding - none-                                             -            -  

Common stock, par value $.50 per share, authorized                                  
300,000,000 shares, issued 130,277,568 at March 31, 2000 and                        
129,968,514 at March 31, 1999                                     65,139      64,984

Additional paid-in capital                                       316,393     311,995
Retained earnings                                                823,570     690,003
Accumulated other comprehensive earnings                           6,936       1,105
                                                               1,212,038   1,068,087
Less treasury stock at cost - 893,498 shares at                                     
March 31, 2000 and 888,578 shares at March 31, 1999                8,316       8,182
Total shareholders' equity                                     1,203,722   1,059,905

Total liabilities and shareholders' equity                    $1,341,230  $1,206,661


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Consolidated Statements of Earnings                                             
Mylan Laboratories Inc.                                                         

(amounts in thousands except per share data)                                    
Year ended March 31,                              2000      1999       1998     
Net sales                                     $ 790,145   $721,123  $528,601    

Other revenues                                     --         --      26,822    

Total revenues                                  790,145    721,123   555,423    

Cost and expenses                                                               

Cost of sales                                   361,818    336,846   288,290    
Research and development                         49,121     61,843    46,278    
Acquired in-process research and development       --       29,000      --      
Selling and administrative                      156,247    124,964    96,708    
                                            567,186    552,653   431,276

Equity in (loss) earnings of Somerset            (4,193)     5,482    10,282    
Other income                                     23,977     18,342    13,960    
Earnings before income taxes                    242,743    192,294   148,389    
Income taxes                                     88,497     76,885    47,612    
Net earnings                                 $  154,246   $115,409   100,777    

Earnings per common share                                                       
Basic                                          $   1.19   $    .92  $     .83   
Diluted                                        $   1.18   $    .91  $     .82   
Weighted average common shares outstanding                                      
Basic                                           129,220    125,584    122,094   

Diluted                                         130,224    127,156    123,043   

See notes to consolidated financial statements.                         

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Consolidated Statements of Shareholders' Equity                                 
Mylan Laboratories Inc.                                                         

                                                        [Enlarge/Download Table]
                                                                                                                                    

                                                                                                  Accumulated                       
                                   Common Stock            Treasury Stock  Additional                Other       Total Comprehensive
(dollars in thousands except    --------------------     -----------------  Paid-In    Retained   Comprehensive Shareholders'       
per share data)                 Shares        Amount     Shares     Amount   Capital   Earnings  (Loss)Earnings   Equity   Earnings 
April 1, 1997                  122,814,956  $  61,407  (752,950) $ (3,732) $ 89,262   $513,750    $  (947)      $659,740        --  

Net earnings                       --              --      --        --        --      100,777        --         100,777   $100,777 
Net unrealized gain on                                                                                                              
marketable securities              --              --      --        --        --          --       2,517          2,517      2,517 
Stock options exercised            235,216        118      (513)      (12)    3,143       (141)       --           3,108        --  
Purchase of treasury stock         --              --  (144,900)    (2,459)   --           --         --          (2,459)       --  
Reissuance of treasury stock       --              --    48,505       321      --          --         --             321        --  
Cash dividend $.16 per share       --              --      --        --     (19,539)       --                    (19,539)       --  
March 31, 1998                 123,050,172     61,525  (849,858)   (5,882)   92,405    594,847      1,570        744,465    103,294 

Net earnings                       --              --      --        --        --      115,409         --         115,409   115,409 
Net unrealized loss on                                                                                                              
marketable securities              --              --      --         --       --          --        (465)           (465)     (465)
Stock options exercised          1,013,313        507   (85,270)   (2,642)   16,916       (141)       --           14,640       --  
Reissuance of treasury stock       --              --    46,550       342      --          --         --              342       --  
Cash dividend $.16 per share       --              --      --         --       --      (20,112)       --          (20,112)      --  
Penederm acquisition             5,905,029      2,952      --         --    202,674        --         --          205,626       --  
March 31, 1999                 129,968,514     64,984  (888,578)   (8,182)  311,995    690,003        1,105     1,059,905   114,944 

Net earnings                       --              --      --          --      --      154,246        --          154,246   154,246 
Net unrealized gain on                                                                                                              
marketable securities              --              --      --          --      --          --         5,831         5,831     5,831 
Stock options exercised            309,054        155    (4,920)     (134)    4,398        --         --            4,419       --  
Cash dividend $.16 per share       --              --      --          --      --      (20,679)       --          (20,679)      --  
March 31, 2000                 130,277,568  $  65,139  (893,498) $ (8,316) $316,393  $ 823,570    $   6,936    $1,203,722  $160,077 

    See notes to consolidated financial statements.                                                                                 

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Consolidated Statements of Cash Flows                                           
Mylan Laboratories Inc.                                                         

                                                        [Enlarge/Download Table]
                                                                                                            

(dollars in thousands except supplemental disclosure)                                                       
Year ended March 31,                                                           2000       1999        1998  
Cash flows from operating activities                                                                        
Net earnings ............................................................  $ 154,246   $115,409   $ 100,777 
Adjustments to reconcile net earnings to net cash provided from operating                                   
activities:                                                                                                 
    Depreciation and amortization .......................................     35,706     26,911      21,708 
    Deferred income tax benefit .........................................    (23,267)   (10,314)     (3,207)
    Equity in loss (earnings) of Somerset ...............................      4,193     (5,482)    (10,282)
    Cash received from Somerset .........................................        460      1,089       5,674 
    Allowances on accounts receivable ...................................     33,628     19,300       8,754 
    Acquired in-process research and development ........................       --       29,000        --   
    Other noncash items .................................................      6,226       (646)      1,574 
    Changes in operating assets and liabilities:                                                            
      Accounts receivable ...............................................    (82,092)   (30,411)    (30,565)
      Inventories .......................................................     (9,534)    11,328     (45,007)
      Trade accounts payable ............................................      5,839     (4,282)     (2,082)
      Income taxes ......................................................     11,389      8,549      (8,949)
      Other operating assets and liabilities ............................    (17,578)     2,998      14,255 
Net cash provided from operating activities .............................    119,216    163,449      52,650 
Cash flows from investing activities                                                                        
Additions to property, plant and equipment ..............................    (28,788)   (16,736)    (28,853)
Increase in intangible and other assets .................................    (23,779)    (7,915)     (7,984)
Purchase of investment securities .......................................   (200,939)   (79,816)    (16,785)
Proceeds from investment securities .....................................    180,706     50,151      17,309 
Cash acquired net of acquisition costs ..................................       --        1,396        --   
Net cash used in investing activities ...................................    (72,800)   (52,920)    (36,313)


See notes to consolidated financial statements.                         

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Consolidated Statements of Cash Flows                                           
Mylan Laboratories Inc.                                                         

                                                        [Enlarge/Download Table]
                                                                                        
(dollars in thousands except supplemental disclosure)                                   
Year ended March 31,                                      2000        1999        1998  
Cash flows from financing activities                                                    
Payments on long-term obligations                     $  (15,696)  $(14,740)  $ (19,198)
Cash dividends paid                                      (20,663)   (19,833)    (19,525)
Repurchase of common stock                                  --        --         (2,459)

Proceeds from exercise of stock options                    3,587     10,137       2,445 
Net cash used in financing activities                    (32,772)   (24,436)    (38,737)

Net increase (decrease) in cash and cash equivalents      13,644     86,093     (22,400)
Cash and cash equivalents - beginning of year            189,849    103,756     126,156 

Cash and cash equivalents - end of year               $  203,493   $189,849    $103,756 

Supplemental Disclosure                                                         

For purposes of  presentation  in the balance  sheets and the statements of cash
flows,  cash,   overnight  deposits  and  money  market  funds,  and  marketable
securities  with  original  maturities  of less  than  three  months  have  been
classified as cash and cash equivalents.                                        

        Cash payments for interest were $1,418,000 in 2000,  $1,800,000 in 1999,
and  $3,426,000  in 1998.  Cash payments for income taxes were  $100,374,000  in
2000, $78,650,000 in 1999, and $59,770,000 in 1998.                             

        Certain stock option  transactions result in a reduction of income taxes
payable and a corresponding  increase in additional paid-in capital. The amounts
for the years ended March 31, 2000,  1999, and 1998 were  $719,000,  $4,302,000,
and $652,000, respectively.                                                     

        In consideration for the exercise of stock options, the Company received
and recorded into treasury stock 4,920 shares valued at $134,000 in fiscal 2000,
85,270  shares  valued at  $2,642,000  in fiscal 1999,  and 513 shares valued at
$12,000 in fiscal 1998.                                                         

        During scal 1999, the Company  acquired all of the outstanding  stock of
Penederm (See note B). The purchase price of approximately $207,938,000 was     

satised principally through the issuance of the Company's common
stock.                                                                          
        In connection  with product  license  agreements,  the Company  recorded
intangible  assets and the related  obligations,  in excess of amounts  paid, of
$2,250,000 in fiscal 2000 and $22,300,000 in fiscal 1999.                       

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Notes to Consolidated Financial Statements                                      
Mylan Laboratories Inc.                                                         

note                                                                            

(A)                                                                             

Summary of Significant  Accounting  Policies                    

1) Nature of Operations and Principles of Consolidation                         

The consolidated financial statements include the accounts of Mylan Laboratories
Inc.  ("the  Company")  and  its  wholly-owned  subsidiaries.  All  intercompany
accounts and transactions have been eliminated in consolidation.  The Company is
engaged in the  development,  manufacture  and  distribution  of  pharmaceutical
products  for resale by others.  The  principal  markets for these  products are
proprietary and ethical pharmaceutical wholesalers and distributors,  drug store
chains,  drug  manufacturers,  and public and  governmental  agencies within the
United States.                                                                  

2) Marketable Securities                                                        

The  Company's  investments  are  classified  as  "available  for  sale" and are
recorded at market  value with net  unrealized  gains and losses,  net of income
taxes,  reflected in accumulated other  comprehensive  earnings in shareholders'
equity.  Net gains  and  losses on sales of  securities  available  for sale are
computed on a specific  security basis and included in other income.            

3) Accounts Receivable and Revenue Recognition                                  

The Company  recognizes  revenue from product  sales upon shipment to customers.
Provisions for estimated  discounts,  rebates,  price  adjustments,  returns and
other  adjustments  are provided for in the same period as the related sales are
recorded.                                                                       

     Accounts  receivable  are  presented net of  provisions  which  amounted to
$77,212,000  and  $43,584,000  at March 31,  2000,  and 1999,  respectively.    

4) Inventories                                                                  

Inventories are stated at the lower of cost (principally,  first-in,  first-out)
or market.                                                                      

5) Property, Plant and Equipment                                                

Property,  plant and equipment are stated at cost.  Depreciation  is provided in
amounts  sufficient to relate the cost of depreciable  assets to operations over
their  estimated  service  lives,  principally  on  a  straight-line  basis.    

6) Intangible Assets                                                            

Intangible  assets  are  stated  at  cost.  Amortization  is  provided  for on a
straight-line  basis over  estimated  useful  lives not to exceed  forty  years.
Intangible  assets are  periodically  reviewed to  determine  recoverability  by
comparing carrying value to expected future cash flows.                         

7) Research  and Development                                                    

Research and development expenses are charged to operations as incurred.        

8) Advertising  Costs                                                           

Advertising   costs  are  expensed  as  incurred  and  amounted  to  $6,063,000,
$5,683,000 and $3,526,000 in fiscal 2000, 1999, and 1998.                       

9) Income Taxes                                                                 

Income  taxes have been  provided for using an asset and  liability  approach in
which  deferred  income taxes  reflect the tax  consequences  on future years of
events  that have  already  been  recognized  by the  Company  in the  financial
statements  or tax returns.  Changes in enacted tax rates or laws will result in
adjustments to the recorded tax assets or liabilities in the period that the tax
law is enacted.                                                                 

10) Concentrations of Credit Risk                                               

Financial  instruments  that  potentially  subject  the  Company to credit  risk
consist principally of interest-bearing investments and accounts receivable. The
Company performs ongoing credit  evaluations of its customers and generally does
not require collateral.  Four of the Company's customers accounted for 15%, 15%,
11% and 10% of net  sales  in  fiscal  2000.  Three of the  Company's  customers
accounted  for 15%, 14% and 11% of net sales in fiscal 1999 and 13%, 12% and 11%
in fiscal 1998.  Approximately 62% and 56% of the accounts  receivable  balances
represent  amounts  due  from  four  customers  at March  31,  2000,  and  1999,
respectively.                                                                   

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        The Company  invests its excess  cash in deposits  primarily  with major
banks  and  other  high  quality  short-term  liquid  money  market  instruments
(commercial  paper,  government  and government  agency notes and bills,  etc.).
These investments  generally mature within twelve months.  The Company maintains
deposit balances at banks in excess of federally  insured  amounts,  including a
deposit in a newly  formed  regional  bank at March 31,  2000.                  

11) Earnings per Common  Share                                                  

Basic  earnings  per common  share is computed by dividing  net  earnings by the
weighted average common shares outstanding for the period.  Diluted earnings per
common share is computed by dividing net earnings by the weighted average common
shares  outstanding  adjusted for the dilutive  effect of stock options  granted
under the Company's stock option plans,  unless they are antidilutive  (See note
P).                                                                             

    A reconciliation of diluted earnings per common share is as follows:
(in thousands except per share amounts)                                         

Year ended  March 31,                                   2000    1999     1998   
Net  earnings                                        $154,246 $115,409 $100,777 
Weighted  average common shares  outstanding          129,220  125,584  122,094 
Dilutive effect of stock options                        1,004    1,572      949 
Diluted  weighted  average common shares outstanding  130,224  127,156  123,043 
Diluted  earnings per common share                     $ 1.18     $.91     $.82 

12)  Accounting  Standards                                                      

In June 1998,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards  ("SFAS")  No.133,  "Accounting  for Derivative
Instruments  and Hedging  Activities."  SFAS No.133  establishes  accounting and
reporting  standards for derivative  instruments,  including certain derivatives
embedded in other contracts, and hedging activities.  It requires that an entity
recognize all  derivatives  as either assets or liabilities on the balance sheet
at fair  value.  As  amended,  this  statement  is  effective  for fiscal  years
beginning  after June 15, 2000.  The Company is currently  evaluating the impact
that  SFAS No. 13 3 will  have on its  financial  position  and its  results  of
operations.                                                                     

13) Use of Estimates in the Preparation of Financial  Statements                

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial  statements and accompanying notes.
Actual results could differ from those estimates.                               

14) Reclassification                                                            

Certain  prior  year  amounts  have been  reclassified  to  conform  to the 2000
presentation.                                                                   

note                                                                            
(B)                                                                             
Acquisitions                                                    

On October 2, 1998, a  wholly-owned  subsidiary of the Company  acquired 100% of
the outstanding stock of Penederm Inc. ("Penederm"). Penederm primarily develops
and  markets  patented  topical   prescription   products.   Penederm  maintains
administrative   and  research  and  development   facilities  in  Foster  City,
California.                                                                     

        The  business  combination  has been  accounted  for under the  purchase
method of accounting. Payment of approximately $207,938,000 was made principally
through the issuance of 5,905,029  shares of the Company's  common stock and the
assumption of 877,367 stock options granted prior to the  transaction.  Goodwill
and various  intangible assets acquired totaled  approximately  $193,000,000 and
are being  amortized  on a  straight-line  basis over  periods  not to exceed 20
years.                                                                          

        The Company  allocated  a portion of the  purchase  price to  in-process
research  and  development  ("IPR&D").  IPR&D  represents  ongoing  research and
development projects acquired by the Company which have not yet been approved by
the Food and Drug  Administration  ("FDA") and would have no alternative  future
use. The Company used independent  professional  valuation consultants to assess
and allocate values to IPR&D.                                                   

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        The Company  acquired five IPR&D projects of which two were  significant
to the  IPR&Dvaluation.  One project is for the treatment of inflammatory fungal
conditions  while  the  other  project  is for a  nail  antifungal  product.  In
assessing the value to be allocated to only these two projects, it was estimated
that they  were 42%  complete  and would  require  approximately  $9,100,000  of
additional  Company  funding to complete.  Estimated  future cash flows for each
project  were  discounted  to their  present  value  using a rate of 31%.  These
discounted cash flow projections were then adjusted by the estimated  completion
percentage for each project. The total value allocated to all IPR&D projects was
$29,000,000.                                                                    

     At the date of acquisition,  the Company believes that the assumptions used
in the valuaton  process were  reasonable.  No assurance can be given,  however,
that the underlying  assumptions used in the valuation of these projects will be
realized.   Pharmaceutical   product  development  has  inherent  risks  in  the
formulation,  manufacture,  approval process and marketplace  environment  which
could  affect  or  prevent  each of these  projects  from  achieving  commercial
success.                                                                        

     The results of  Penederm's  operations  have been included in the Company's
Consolidated Statements of Earnings from the date of acquisition.  Unaudited pro
forma information  assuming the acquisition had occurred on April 1, 1997, is as
follows,  excluding  the  one-time  charge of  $29,000,000  relating to acquired
IPR&D: (in thousands except per share amounts)                                  

Year ended March 31,                                     1999     1998          
Total revenues                                        $731,641  $565,378        
Net earnings                                          $140,948  $ 85,532        
Diluted earnings per common share                     $   1.08  $    .66        
Diluted weighted average common shares outstanding     130,241   129,075        

        The  pro  forma  financial  information  is  presented  for  comparative
purposes only and does not purport to be indicative of the operating  results or
financial position that would have occurred had the acquisition been consummated
at the beginning of the periods presented,  nor is such information  necessarily
indicative  of the future  operating  results of the combined  company after the
acquisition.                                                                    

        The  Company  purchased  various  product and  marketing  rights with an
aggregate purchase price of $12,250,000 and $30,300,000 in fiscal 2000 and 1999.
The purchase agreements require fixed payments and royalties on product sales in
future periods (See note J).                                                    

note                                                                            

(C)                                                                             

Inventories                                                     

Inventories consist of the following components: (in thousands)                 

March 31,                                     2000            1999              
Raw materials                             $  64,020         $ 57,414            
Work in process                              28,459           20,813            
Finished goods                               53,390           58,266            
                              $ 145,869         $136,493
note                                                                            

(D)                                                                             

Property, Plant and Equipment                                   

Property, plant and equipment consists of the following components:             
(in thousands)                                                                  

March 31,                                     Useful Lives     2000     1999    
Land and land improvements                         --          7,560   $6,583   
Buildings and improvements                      20 - 40       88,001   86,898   
Machinery and equipment                          5 - 10      151,308  137,716   
Construction in progress                           --         26,712   13,596   
                                                          273,581  244,793
Less accumulated depreciation                                105,581   90,157   
                                                        $ 168,000 $154,636

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note                                                                            

(E)                                                                             

        Investment  in and  Advances  to Somerset  The  Company  owns 50% of the
outstanding common stock of Somerset Pharmaceuticals, Inc. ("Somerset") and uses
the equity method of accounting for its investment.                             

Equity in loss/earnings of Somerset includes the Company's 50%  
portion                                                                         

        of  Somerset's   financial  results  and  expense  for  amortization  of
intangible  assets  resulting from the acquisition of Somerset.  Such intangible
assets are amortized  over a 15 year period.  Amortization  expense  amounted to
$924,000 in fiscal 2000, 1999, and 1998. Additionally,  the Company's charges to
Somerset for management services and product development activities are included
in Somerset's financial results.                                                

      Condensed audited balance sheet information of Somerset is as follows:

(in thousands)                                                  

December 31,                         1999            1998         1997          
Current assets                     $65,511        $70,929       $53,973         
Non-current assets                   1,509          2,040         3,466         
Current liabilities                 14,459         16,584        15,660         
Payable to owners                      527            595         1,433         

        Condensed  audited  income  statement  information  of  Somerset  is  as
follows:                                                                        

(in thousands)                                                  

Year ended December 31,                 1999            1998       1997         
Net sales                         $   18,403         $  43,557    $66,956       
Cost and expenses                     23,622            19,316     30,055       
Income taxes                          (1,395)            9,635     12,924       
Net (loss) earnings               $   (3,824)        $  14,606    $23,977       

The above  information  represents  100% of  Somerset's  operations of which the
Company has a 50% interest.                                                     

     Somerset's  marketing  exclusivity for Eldepryl&reg;  under the Orphan Drug
Act expired on June 6, 1996.  Somerset  has  experienced  increased  competition
since  August  1996 due to the  approval  of  several  generic  tablet  forms of
EldeprylRegistration  Mark by the FDA.  This has resulted in a decrease in sales
and net earnings.                                                               

     In 1997, Somerset was notified by the Internal Revenue Service ("IRS") that
it had  initiated  a  challenge  related to issues  concerning  Somerset's  Code
Section 936 credit for tax years 1993 through 1995. As of December 31, 1999, the
proposed  adjustments  by the  IRS  amounted  to  approximately  $34,000,000  of
additional income tax and interest charges over amounts accrued. The $20,000,000
increase over the prior year is primarily due to losses  incurred by Somerset in
1999 and the  anticipation  of losses in the near  future  which would not allow
Somerset to utilize Puerto Rican tax credits. Management of Somerset believes it
has appropriately  claimed the Code Section 936 credit and intends to vigorously
defend its position on this matter.                                             

note                                                                            

(F)                                                                             

Marketable Securities                                           

The amortized cost and estimated market values of marketable securities at      
March 31, 2000 and 1999 are as follows: (in thousands)                          

                  Gross          Gross
           Amortized    Unrealized      UnrealizedMarket
March 31, 2000          Cost           Gains          Losses         Value      
Debt securities      $81,133         $   168          $  405         $80,896    
Equity securities      7,753          11,508             600          18,661    
                  88,886          11,676           1,005          99,557

March 31, 1999                                                                  
Debt securities       60,071             303             187          60,187    
Equity securities      8,101           2,144             560           9,685    
                 $68,172         $ 2,447          $  747         $69,872

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Maturities  of debt  securities  at market  value as of March 31,  2000,  are as
follows:                                                                        

(in thousands)                                                                  

Mature in one year or less                           $59,253                    
Mature after one year through five years               7,207                    
Mature after five years                               14,436                    
                               $  80,896

Proceeds from sales of marketable securities were $183,633,000, $50,151,000, and
$17,233,000  during  fiscal  2000,  1999 and 1998.  Gross  gains of  $4,504,000,
$942,000, and $767,000 and gross losses of $1,414,000, $205,000 and $82,000 were
realized  during fiscal 2000,  1999 and 1998.  The cost of  investments  sold is
determined by the specific identification method.                               

note                                                                            

(G)                                                                             

Intangible Assets                                               

Intangible assets consist of the following components: (in thousands)           

March 31,                            Useful Lives        2000          1999     
Patents and technologies               10 - 20      $  123,052    $  122,985    
License fees and agreements             2 - 12          49,911        36,686    
MaxzideRegistration Mark intangibles       256           9,666        69,666    
Goodwill                               20 - 40         128,008       128,480    
Other                                   5 - 20          28,462        28,462    
                                                   399,099       386,279
Less accumulated amortization                           66,957        46,676    
                                              $    332,142    $  339,603

The  Maxzide&reg;  intangibles  relate to  trademark,  tradedress  and marketing
rights.  The balance in Other consists  principally  of an assembled  workforce,
non- compete  agreements,  customer lists and contracts.  Goodwill,  patents and
technologies and various other intangible  assets of approximately  $193,000,000
were acquired in the Penederm transaction in fiscal 1999 (See note B).          

note                                                                            

(H)                                                                             

Other Assets                                                    

Other assets consist of the following components: (in thousands)                

March 31,                                          2000      1999               
Pooled asset funds                             $  60,839  $ 46,611              
Cash surrender value                              33,773    29,742              
Other investments                                 30,269    30,196              
                                 $ 124,881  $106,549

        Pooled  asset  funds  primarily  include the  Company's  interest in one
limited  partnership fund which consists of common and preferred stocks,  bonds,
and money market funds.  Earnings on these investments  included in Other income
amounted to $15,378,000 in 2000, $19,530,000 in 1999, and $6,572,000 in 1998. At
March 31, 2000, and 1999, the carrying amounts of these investments approximated
fair value.                                                                     

        Cash  surrender  value is  related  to  insurance  policies  on  certain
officers  and key  employees  and the  value  of  split  dollar  life  insurance
agreements with certain current and former executive officers of the Company.   

        Other   investments   are  comprised   principally   of  investments  in
non-publicly  traded  equity  securities  and are  accounted  for under the cost
method.  Management periodically reviews the carrying value of these investments
for impairment.  Adjustments of $9,450,000 and  $12,525,000  were made in fiscal
2000 and 1999 to  reduce  the  carrying  value  of  these  investments  to their
estimated fair value and are recorded as reductions to Other income.            

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note                                                                            

I                                                                               

Other Current Liabilities                                       

Other current liabilities consist of the following components: (in thousands)   

March 31,                                               2000          1999      
Payroll and employee benefit plan accruals            $14,286      $  20,672    
VivoRx funding                                          1,545         10,302    
Medicaid                                                8,151          8,305    
Legal and professional                                  4,786          3,811    
Royalties                                               8,763          4,958    
Product license fees                                    4,165          8,802    
Other                                                   5,167          4,429    
                                                  $46,863      $  61,279

In fiscal 1999, the Company recorded an arbitration award for   
research and development funding which is identified here as VivoRx funding.    

note                                                                            
(J)                                                                             

Long-Term Obligations                                           

Long-term obligations include accruals for postretirement  compensation pursuant
to  agreements  with  certain  key  employees  and  directors  of  approximately
$15,400,000,   and  $13,463,000  at  March  31,  2000,  and  1999.  Under  these
agreements, benefits are to be paid over periods of 10 to 15 years commencing at
retirement.                                                                     

     The Company's obligation on 10.5% senior promissory notes is $3,000,000 and
$4,000,000 at March 31, 2000, and 1999. Future principal payments on these notes
are  $1,000,000 in fiscal 2001 and $2,000,000 in fiscal 2002. At March 31, 2000,
and 1999, the Company was in compliance with all of its debt covenants.         

     The present value of the Company's obligations for product acquisitions was
$11,121,000  at March  31,  2000,  and  $24,605,000  at March 31,  1999.  Future
payments,  including  minimum  royalty  payments for these  agreements,  will be
approximately   $2,000,000  in  fiscal  2001,  $3,750,000  in  fiscal  2002  and
$2,000,000 in fiscal 2003.                                                      

        During fiscal 2000, the Company recorded  $9,238,000 in deferred revenue
relating to a license and supply agreement.  Revenue will be recognized  ratably
over the next five years.                                                       

note                                                                            

(K)                                                                             

Income Taxes                                                    

Income taxes consist of the following components: (in thousands)                

Year ended March 31,                    2000            1999      1998          
Federal:                                                                        
Current                         $   97,957         $77,546  $45,601     
Deferred                           (21,596)         (9,617)  (2,993)    
                               76,361          67,929   42,608
State:                                                                          
Current                             13,807           9,653    5,218     
Deferred                            (1,671)           (697)    (214)    
                               12,136           8,956    5,004
Income taxes                            88,497          76,885   47,612         
Pre-tax earnings                    $  242,743        $192,294 $148,389         
Effective tax rate                        36.5%           40.0%    32.1%        

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Temporary differences and carryforwards which give rise to the deferred tax     
assets and liabilities are as follows: (in thousands)                           

March 31,                                                2000          1999     
Deferred tax assets:                                                            
 Employee benefits                               $    6,651         $5,090
Contractual agreements                               7,964            - 
 Intangible assets                                    2,043          3,627
 Asset allowances                                    31,241         17,841
 Inventory                                            1,084          1,069
 Investments                                         10,481          5,411
 Tax loss carryforwards                              12,708         18,198
 Tax credit carryforwards                             5,596          3,683
 Other                                                -                266
Total deferred tax assets                               77,768         55,185   
Deferred tax liabilities:                                                       
 Plant and equipment                                 11,017         10,373
 Intangible assets                                   41,205         43,675
 Investments                                         13,862          6,506
Total deferred tax liabilities                          66,084         60,554   
Deferred tax asset (liability) - net                $   11,684       $ (5,369)  
Classification in the consolidated balance sheets:                              
 Deferred income tax benefit - current           $   30,792       $ 18,199
 Deferred income tax liability - non-current         19,108         23,568
Deferred tax asset (liability) - net                $   11,684       $ (5,369)  

        Deferred tax assets  relating to net operating  loss  carryforwards  and
research and  development tax credit  carryforwards  were acquired during fiscal
1999 upon the  acquisition  of Penederm.  Future  utilization of these assets is
subject to certain limitations set forth in the Internal Revenue Code. In fiscal
2000, the Company utilized acquired net operating loss  carryforwards and credit
carryforwards to reduce its current tax liability by  approximately  $4,800,000.
The  Company  has  approximately   $36,300,000  of  acquired  federal  tax  loss
carryforwards and $2,146,000 of acquired federal and state tax credits remaining
to offset future taxable income.  The loss  carryforwards and tax credits expire
in fiscal years 2007 through 2013.                                              

        The Company also has $1,650,000 of federal  research and development tax
credits that are  deferred  until fiscal 2001 based upon recent tax law changes.
A$1,800,000  tax credit  against Puerto Rican local income tax is also available
for future years.                                                               

        A reconciliation  of the statutory tax rate to the effective tax rate is
as follows:                                                                     

Year ended March 31,                         2000            1999          1998 
Statutory tax rate                          35.0%           35.0%        35.0%  
IPR&D                                         --             5.3%          --   
State income taxes-net                       3.1%            3.1%          2.3% 
Nondeductible amortization                   1.0%            0.8%          0.6% 
Tax exempt earnings-primarily dividends       --            (1.1%)        (2.4%)
Tax credits                                 (2.7%)          (2.6%)        (3.0%)
Other items                                  0.1%           (0.5%)        (0.4%)
Effective tax rate                          36.5%           40.0%         32.1% 

        Tax credits result  principally from the Company's  operations in Puerto
Rico and from qualified research and development expenditures.                  

        State income taxes include  provisions  for tollgate tax resulting  from
the future  repatriation of funds from the Company's operation in Puerto Rico to
the United States. Such provisions have been made to the minimum extent provided
under  Puerto  Rican tax law based on the  Company's  intent to reinvest  Puerto
Rican source earnings in qualifying investments within Puerto Rico.             

The Company's federal tax returns have been audited by the IRS  
through March 31, 1996.                                                         

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note                                                                            
(L)                                                                             
Common Stock                                                    

On August 23,  1996,  the  Company's  Board of Directors  adopted a  Shareholder
Rights  Plan ("the  Rights  Plan").  The Rights  Plan was adopted to provide the
Company's Directors with sufficient time to assess and evaluate any takeover bid
and explore and develop a reasonable  response.  Effective November 8, 1999, the
Rights  Plan was amended to  eliminate  the  special  rights held by  continuing
directors. The Rights Plan will expire on September 5, 2006, unless a triggering
event has occurred.                                                             

note                                                                            

(M)                                                                             

Commitments                                                     

The Company has entered into various product  licensing  agreements.  In some of
these  arrangements,  the Company  provides  funding for the  development of the
product,  through milestone payments, in exchange for marketing and distribution
rights to the  product.  In the event all  projects  are  successful,  milestone
payments totaling $18,800,000 would be paid over the next five years.           

note                                                                            

(N)                                                                             

Other Revenues                                                  

Under the terms of the Company's supply and distribution agreement with Genpharm
Inc.  ("Genpharm") relating to sales of ranitidine HCl tablets, the Company also
benefitted   from  an  agreement   between   Genpharm  and   Novopharm   Limited
("Novopharm").  The Company  recognized revenue of $26,822,000 in fiscal 1998 in
connection with the Genpharm Novopharm agreement (See note S). note O           

Fair Value of Financial Instruments                             

The carrying values of cash and cash  equivalents  approximate fair value due to
the short-term maturity of these instruments. Marketable securities are recorded
at fair  value  based on  quoted  market  prices.  The  carrying  value of other
financial  instruments  approximates their fair value based on other appropriate
valuation techniques.                                                           

note                                                                            

(P)                                                                             

Stock Option Plans                                              

On January 23, 1997, the Board of Directors adopted the "Mylan Laboratories Inc.
1997  Incentive  Stock  Option  Plan"  ("the  Plan")  which was  approved by the
shareholders  on July 24,  1997.  Under the Plan,  the  Company  may grant up to
10,000,000  shares of its common stock to officers,  employees,  and nonemployee
consultants and agents as either  incentive stock options or nonqualified  stock
options. Options, which may be granted at not less than fair market value on the
date of the  grant,  may be  exercised  within ten years from the date of grant.
Nonqualified  stock options  generally  vest on date of grant.  Incentive  stock
options granted have the following vesting schedule: 25% two years from the date
of grant,  25% at the end of year three and the remaining 50% at the end of year
four. As of March 31, 2000, 7,279,150 shares are available for future grants.   

        On June 23, 1992, the Board of Directors  adopted the "1992  Nonemployee
Director  Stock Option Plan" ("the  Directors'  Plan") which was approved by the
shareholders on April 7, 1993. A total of 600,000 shares of the Company's common
stock are reserved  for issuance  upon  exercise of stock  options  which may be
granted at not less than fair market value on the date of grant.  Options may be
exercised within ten years from the date of grant. As of March 31, 2000, 382,500
shares have been granted pursuant to the Directors' Plan.                       

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        Additional stock options are outstanding from the expired 1986 Incentive
Stock Option Plan and other plans acquired through              

acquisitions.                                                                   
 A summary of the activity resulting from all plans is as follows:

                                                          Weighted average
                                       Number of shares   exercise price
                                      under option     per share
Outstanding as of April 1, 1997                 2,570,877      $12.10           
Options granted                             1,322,000       17.08       
Options exercised                            (235,216)      11.09       
Options cancelled                             (41,175)      14.17       
Outstanding as of March 31, 1998                3,616,486      $13.96           
Options acquired - Penederm                   877,367       15.30       
Options granted                               186,500       19.74       
Options exercised                          (1,013,313)      12.16       
Options cancelled                            (117,886)      16.96       
Outstanding as of March 31, 1999                3,549,154      $15.11           
Options granted                             1,410,100       25.50       
Options exercised                            (309,054)      12.04       
Options cancelled                             (53,419)      18.34       
Outstanding as of March 31, 2000                4,596,781      $18.44           

                                                        [Enlarge/Download Table]
                                                                                                  

                                   Options outstanding             Options exercisable            
                               -----------------------------   --------------------------------   
                                  Weighted                                                        
                                 average         Weighted                            Weighted     
Range of           Number       remaining         average      Number                 average     
exercise price outstanding as contractual life exercise price  exercisable as       exercise price
per share        of 3/31/2000  (years)           per share     of 3/31/2000           per share   
$  0.81- $11.58     266,341      3.15             $ 7.77        266,341                $ 7.77     
  12.00- $12.00     976,653      2.23              12.00        976,653                 12.00     
  12.32- $16.69     949,971      7.05              16.19        577,972                 16.11     
  16.73- $21.14     728,091      7.03              17.95        672,591                 17.96     
  22.88- $25.00     474,671      8.59              23.18         65,571                 24.88     
  26.06- $30.15   1,201,054      9.91              26.25         64,054                 29.64     
$  0.81- $30.15   4,596,781      6.70             $18.44      2,623,182                $14.76     


        At March 31, 2000,  options were  exercisable for 2,623,182  shares at a
weighted average exercise price of $14.76 per share. The  corresponding  amounts
were  2,665,904  shares at $14.12  per share at March 31,  1999,  and  2,557,856
shares at $13.20 per share at March 31, 1998.                                   

        In  accordance  with the  provisions  of SFAS No.  123  "Accounting  for
Stock-Based  Compensation," the Company will continue to apply the provisions of
Accounting  Principles  Board  Opinion No. 25,  "Accounting  for Stock Issued to
Employees"  and,  accordingly,  does not  recognize  compensation  costs for its
existing   stock  option  plans.   If  the  Company  had  elected  to  recognize
compensation costs based on the alternative fair value method prescribed by SFAS
No. 123, net earnings and earnings per share (on both a basic and diluted basis)
would have been reduced by $1,430,000,  or $.01 per share,  $1,613,000,  or $.01
per share and $6,489,000,  or $.04 per share for the years ended March 31, 2000,
1999 and 1998.  These  calculations  only take into account options issued since
April 1, 1995.                                                                  

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        The  weighted  average  fair value of options  granted  during the years
ended March 31, 2000, 1999 and 1998 was $9.93,  $9.37 and $6.47.  The fair value
was  estimated  using  the  Black-Scholes  option  pricing  model  based  on the
following assumptions:                                                          

March 31,                                2000            1999          1998     
Volatility                                34%             42%           35%     
Risk-free interest rate                  6.2%            5.0%          6.1%     
Dividend yield                           0.6%            1.0%          1.0%     
Expected term of options (in years)      5.2             5.2           5.4      

note                                                                            
(Q)                                                                             

Employee Benefits                                               

The Company  maintains  profit  sharing  and 401(k)  retirement  plans  covering
essentially all of its employees.                                               

        Contributions  to the profit sharing plans are made at the discretion of
the Board of  Directors.  Contributions  to the  401(k)  plans  are  based  upon
employee  contributions or service hours.  Total  contributions to all plans for
the years                                                                       

        ended March 31,  2000,  1999 and 1998 were  $6,342,000,  $4,776,000  and
$3,889,000 respectively.                                                        

        In fiscal 1999, the Company adopted a plan covering substantially all of
its   employees   to  provide  for   limited   reimbursement   of   supplemental
postretirement  medical  coverage.  The  plan  provides  benefits  to  employees
retiring after April 5, 1998, who meet minimum age and service requirements. The
Company has provided for the costs of these  benefits,  which are not  material.
The future obligation related to these benefits is insignificant.               

        The Company  provides  supplemental  life insurance  benefits to certain
management level employees. Such benefits require annual funding and may require
accelerated funding in the event of a change in control of the Company.         

note                                                                            

(R)                                                                             

Segment Reporting                                               

The  Company  has  two  reportable  operating  segments,   Generic  and  Branded
Pharmaceuticals,  based on  differences  in products,  marketing and  regulatory
approval.                                                                       

        Generic    pharmaceutical    products   are    off-patented    products,
therapeutically equivalent to a branded name product, marketed to pharmaceutical
wholesalers  and  distributors,  drug store  chains and public and  governmental
agencies by multiple  suppliers.  These  products  have been approved by the FDA
through an Abbreviated New Drug Application process.                            

        Branded  pharmaceutical   products  are  generally,   when  new,  patent
protected  products marketed  directly to health care  professionals by a single
provider.  These products have been approved by the FDA primarily  through a New
Drug Application process.                                                       

        The accounting  policies of the operating segments are the same as those
described in note A. In the following table, segment revenues represent sales to
unrelated third parties with corresponding  corporate wide cost of sales used to
determine segment profits.  Segment profits  represent  earnings from continuing
operations before a provision for income taxes.                                 

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                                                                [Download Table]
                                                                                 
                                                         Corporate/              
March 31, (dollars in thousands)     Generic  Branded       Other    Consolidated
Total revenues              2000  $ 667,808   $ 122,337      --        $ 790,145 
                            1999    638,122    83,001        --          721,123 
                            1998    501,320    54,103        --          555,423 
Segment profit (1)          2000    261,238    15,630    $ (34,125)      242,743 
                            1999    226,153    14,941      (48,800)      192,294 
                            1998    143,309     6,728       (1,648)      148,389 
Segment assets (2)          2000    464,277   259,196      617,757     1,341,230 
                            1999    396,293   257,860      552,508     1,206,661 
                            1998    398,189   126,878      322,686       847,753 
Property, plant and                                                              

equipment additions         2000     23,376     5,157          255        28,788 
                            1999     11,646     3,991        1,099        16,736 
                            1998     24,843     3,925           85        28,853 
Deprecation and                                                                  

amortization (1)&(2)        2000     12,919    15,540        7,247        35,706 
                            1999     11,452    10,246        5,213        26,911 
                            1998     10,950     8,084        2,674        21,708 


(1)Segment  profit  represents  segment  gross  profit less direct  research and
     development,  sales and marketing, and administrative  expenses.  Corporate
     and Other Segment profit represents consolidated  non-operating income less
     corporate  expenses,  including  legal  expenditures,  IPR&D  and  goodwill
amortization.                                                         

(2)Generic and Branded  Segment  assets include  property,  plant and equipment,
     trade  accounts  receivable,  inventory  and  intangible  assets other than
     goodwill. Corporate and Other Segment assets includes consolidated cash and
     cash  equivalents,   marketable   securities,the  Company's  investment  in
Somerset and other assets, goodwill and all income tax related assets.

note                                                                            

(S)                                                                             

Contingencies                                                   

The Company is involved in various legal  proceedings that are considered normal
to its  business.  While it is not feasible to predict the  ultimate  outcome of
such proceedings, it is the opinion of management that the ultimate outcome will
not have a material adverse effect on the Company's  operations or its financial
position.                                                                       

        The Company had an agreement with Genpharm where it benefitted  from the
sale of ranitidine HCl tablets by Novopharm under a separate  agreement  between
Genpharm and Novopharm  (See note N). Based on an  independent  audit,  Genpharm
initiated a lawsuit against Novopharm to resolve contract  interpretation issues
and collect  additional  funds due. In response to  Genpharm's  suit,  Novopharm
filed counterclaims against both Genpharm and the Company claiming damages of up
to $60,000,000. The Company believes the counte rclaims against Genpharm and the
Company are without merit and will vigorously defend its position.              

        In June 1998,  the Company filed suit in the Los Angeles  Superior Court
against American Bioscience,  Inc. ("ABI"),  American  Pharmaceutical  Partners,
Inc.  ("APP") and certain of their  directors and officers.  The Company's  suit
seeks various  legal and  equitable  remedies.  The Los Angeles  Superior  Court
issued a preliminary  injunction order which, among other things,  prohibits the
defendants  from  transferring  or disposing  of funds,  assets,  technology  or
property  without  the  Company's  consent  or  commingling  as sets,  property,
technology  or  personnel  with those of  another  company.  In June  1999,  the
defendants  filed an answer to and  cross-complaint  against  the  Company.  The
cross-complaint  alleges violations of California state laws,  interference with
contractual relations and prospective economic advantage,  fraud, slander, libel
and other allegations.  The cross-complainants seek unspecified compensatory and
punitive damages.  The Company believes the  cross-complaints  are without merit
and intends to vigorously defend its position.                                  

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     A  subsidiary  of  the  Company  was  involved  in a  dispute  with  KaiGai
Pharmaceuticals,  Co., Ltd. ("KaiGai") relating to a license and supply contract
for nitroglycerin  transdermal  patches which both parties claim was breached by
the other.  KaiGai  sought  damages in excess of  $20,000,000.  The  dispute was
subject to binding  arbitration,  and, in November 1999, the  arbitration  panel
denied KaiGai's request for damages.  KaiGai filed an appeal and the Company has
filed a moton to dismiss the appeal due to the appeal not being filed within the
permitted time period.                                                          

        In  November  1999,  the  Company  and a  state  agency  entered  into a
settlement  concerning  certain  contract  pricing  matters.  The settlement was
satisfied without a significant  effect on the Company's  financial  position or
results of operations.                                                          

        On December 22, 1998, the Federal Trade Commission ("FTC") filed suit in
U.S.  District  Court for the  District of Columbia  (the  "Court")  against the
Company.  The FTC's complaint alleges the Company engaged in restraint of trade,
monopolization,  attempted monopolization and conspiracy to monopolize,  arising
out of  certain  agreements  involving  the  supply  of raw  materials  used  to
manufacture two drugs.  The FTC also sued in the same case the foreign  supplier
of the raw  materials,  the  supplier's  parent  company  and its United  States
distributor.  Under the terms of the agreements  related to these raw materials,
the Company has agreed to indemnify these parties.                              

        The Company is a party to other suits  involving the  Attorneys  General
from 33 states and more than 25  putative  class  actions  that  allege the same
conduct alleged in the FTC suit as well as alleged  violations of state consumer
protection  laws. A qui tam action was  commenced by a private party in the U.S.
District Court for the District of South Carolina,  purportedly on behalf of the
United States, alleging violations of the False Claims Act and other statutes.  

        The relief sought by the FTC includes an injunction  barring the Company
from engaging in the  challenged  conduct,  recision of certain  agreements  and
disgorgement  in excess of  $120,000,000.  The states and private  parties  seek
similar  relief,  treble damages and attorneys'  fees. The Company's  motions to
dismiss several of the private actions have been granted.                       

        A class action suit was filed alleging  violations of federal securities
laws by the Company and certain  directors and officers of the Company.  Without
specifying a dollar amount, the suit sought compensatory  damages. The Company's
motion to dismiss the federal  securities case was granted on December 22, 1999.
The case is on appeal.                                                          

        The  Company  had  filed  motions  to  dismiss  the  FTC  complaint  and
significant  portions of the State Attorneys General  complaints.  In July 1999,
the Court denied the Company's motion to dismiss the FTC complaint.  The Company
filed a motion  requesting  the Court to certify its ruling with  respect to the
jurisdictional  issue for expedited  appeal to the U.S. Court of Appeals for the
District of  Columbia.  This motion was  denied.  The Court  granted in part and
denied in part the Company's  motion to dismiss  portions of the State Attorneys
General complaints.  In so doing, the Court limited certain theories of recovery
asserted by the states.  Some  states  filed a motion with the Court  requesting
that it reconsider  certain claims that were  dismissed,  and, in December 1999,
the Court reinstated certain claims.                                            

        In February 2000, the Company  received notice of threatened  litigation
by another  generic  manufacturer.  The potential  complaint is based on similar
factors  alleged  in  the  FTC  litigation   relating  to  the  generic  product
clorazepate.                                                                    

        The Company  believes that it has meritorious  defenses to the claims in
these FTC matters and intends to  vigorously  defend them.  Although the Company
believes it has meritorious  defenses to the claims,  an adverse result in these
suits could have a material adverse effect on the Company's  financial  position
and results of its operations.                                                  

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Board of Directors and Shareholders                                             
Mylan Laboratories Inc.                                                         
Pittsburgh, Pennsylvania                                                        

Independent Auditors' Report                                                    
Mylan Laboratories Inc.                                                         
We  have  audited  the  accompanying   consolidated   balance  sheets  of  Mylan
Laboratories  Inc.  and  subsidiaries  as of March 31,  2000 and  1999,  and the
related consolidated statements of earnings, shareholders' equity and cash flows
for each of the three years in the period  ended March 31,  2000,  appearing  on
pages 22 through 39. These financial  statements are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.                                       

        We conducted our audits in accordance with generally  accepted  auditing
standards 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 Mylan  Laboratories Inc. and
subsidiaries as of March 31, 2000 and 1999, and the results of their  operations
and their cash flows for each of the three  years in the period  ended March 31,
2000, in conformity with generally accepted accounting  principles in the United
States of America.                                                              

Deloitte & Touche LLP                                                           
Pittsburgh, Pennsylvania                                                        

May 10, 2000                                                                    

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Market Information                                                              
Mylan Laboratories Inc.                                                         

                                                                [Download Table]
                                                                                  

Quarterly Financial Data                                                          
(Amounts in thousands          1st      2nd           3rd      4th                
except per share amounts)    Quarter  Quarter       Quarter  Quarter       Year   
Fiscal 2000                                                                       
Total revenues              $ 177,095  $ 194,489  $203,877   $  214,684   $790,145
Gross profit                   96,247    110,812   111,152      110,116    428,327
Net earnings                   31,953     37,066    40,434       44,793    154,246
Earnings per share-basic          .25        .29       .31          .35       1.19
Earnings per share-diluted        .25        .28       .31          .34       1.18

Fiscal 1999                                                                       
Total revenues              $ 166,718  $ 177,592  $186,195   $  190,618  $ 721,123
Gross profit                   85,154     92,044    99,716      107,363    384,277
Net earnings                   34,182     37,215     8,154       35,858    115,409
Earnings per share-basic          .28        .30       .06          .28        .92
Earnings per share-diluted        .28        .30       .06          .27        .91


Market Prices                                                                   
                1st             2nd            3rd           4th
             Quarter         Quarter        Quarter        Quarter
Fiscal 2000                                                                     
High                  28 3\8          30 5\16        25 5\8          30         
Low                   21 5\8          17 1\16        17 3\16         22 1\2     

Fiscal 1999                                                                     
High                  32 3\4          35 1\8         35 15\16        32         
Low                   22 1\16         22 1\8         24 5\16         26 1\4     

New York Stock Exchange Symbol: MYL                                             
On May 1, 2000, the Company had approximately 99,112 shareholders.              

Split Date                                                                      
                      Amount   Split Price      Presplit Price
July 20, 1979                     5/4    10 3\4           13 1\2                
November 13, 1981                 2/1    13 1\2           27 1\8                
June 30, 1983                     2/1    16 1\4           32 1\2                
March 1, 1984                     3/2    14               21                    
July 31, 1984                     3/2    19 7\8           29 3\4                
February 15, 1985                 2/1    17 7\8           35 3\4                
August 1, 1986                    3/2    14               21                    
August 1, 1992                    2/1    21 3\4           43 1\2                
August 15, 1995                   3/2    21              31  1\2                

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Shareholder Information                                                         
Mylan Laboratories Inc.                                                         

Notice of Annual Meeting                                                        

The annual meeting of the Company's shareholders will be held on Thursday,  July
27, 2000 at 10:00 a.m. at the David L. Lawrence  Convention Center,  South Hall,
1001 Penn Avenue,  Pittsburgh,  Pennsylvania.  A formal notice,  together with a
proxy statement and form of proxy,  will be mailed to  shareholders  entitled to
vote in advance of the meeting.                                                 

Stockholder Information                                                         

Questions  concerning  stock ownership may be directed to Investor  Relations at
Corporate headquarters.                                                         

Press Release Information                                                       

Press  releases and other  information  are available on the internet at Mylan's
homepage at www.mylan.com.                                                      

Form 10-K Annual Report                                                         

A copy of the  Mylan  Laboratories  Inc.  Annual  Report to the  Securities  and
Exchange  Commission on Form 10-K is available by contacting  Investor Relations
at the Company's headquarters.                                                  

Dividend Payments                                                               

Quarterly dividends on Mylan common stock are paid in January,  April, July, and
October.  The record date is  established  by the Company prior to each dividend
payment.  The Company also offers an Automatic  Dividend  Reinvestment and Stock
Purchase  Plan.  For further  information,  contact  Investor  Relations  at the
Company's headquarters.                                                         

Corporate Headquarters                                                          

Mylan Laboratories Inc.                                                         
1030 Century Building                                                           
130 Seventh Street                                                              
Pittsburgh, Pennsylvania 15222                                                  
(412) 232-0100                                                                  
http://www.mylan.com                                                            

Registrar and Transfer Agent                                                    

American Stock Transfer &                                                       
Trust Company                                                                   
40 Wall Street                                                                  
New York, New York 10005                                                        
Certied Public Accountants                                                      

Deloitte &Touche LLP                                                            
Pittsburgh, Pennsylvania                                                        

Financial Consultants                                                           
PDA Associates, Inc.                                                            
Ironia, New Jersey                                                              

Securities Traded                                                               
New York Stock Exchange                                                         
Mylan Laboratories Inc.                                                         

Common Stock Symbol: MYL                                                        

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Board of Directors and Corporate Officers                                       

-----------------------------------------                                       
Board of Directors                                                              

----------------------                                                          
Milan Puskar Chairman of the Board and C.E.O.                                   

Dana G. Barnett                                                                 

Executive Vice President of the Company                                         

Laurence S. DeLynn                                                              
Retail Consultant                                                               

Morgantown, West Virginia                                                       

John C. Gaisford, M.D.                                                          
Director of Burn Research                                                       
West Penn Hospital                                                              
Pittsburgh, Pennsylvania                                                        

Douglas J. Leech                                                                
Chairman, President and C.E.O.                                                  
Centra Bank, Inc. and                                                           
Centra Financial Holdings, Inc.                                                 
Morgantown, West Virginia                                                       

Patricia A. Sunseri                                                             
Vice President-Investor and                                                     
Public Relations of the Company                                                 

C.B. Todd                                                                       

Retired Pharmaceutical Executive                                                

Executive Officers                                                              

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

Milan Puskar                                                                    
Chairman and C.E.O.                                                             

Richard F. Moldin                                                               
President and C.O.O.                                                            

Dana G. Barnett                                                                 
Executive Vice President                                                        

Louis J. DeBone                                                                 
Senior Vice President                                                           

Roger L. Foster, Esq.                                                           
Vice President and General Counsel                                              

Roderick P. Jackson                                                             
Senior Vice President                                                           

Donald C. Schilling                                                             
Vice President-Finance and C.F.O.                                               

Robert W. Smiley, Esq.                                                          
Secretary                                                                       

Patricia A. Sunseri                                                             
Vice President-Investor and                                                     
Public Relations                                                                

Design:John Brady Design Consultants Inc., Pittsburgh, Pennsylvania             

For more information                                                            

I would like more information on:                                               

Dividend Reinvestment Stock Purchase Program                                    
Pharmaceutical Product Identification Guide                                     
Generic Development and Approval Brochure                                       

&reg;                                                                           

Name                                                                            
Address                                                                         

City/State/Zip                                                                  
Phone                                                                           

Mylan Laboratories Inc.                                                         
1030 Century Building                                                           
130 Seventh Street                                                              

Pittsburgh, Pennsylvania 15222                                                  
www.mylan.com

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Dates Referenced Herein and Documents Incorporated By Reference

		Referenced-On Page
This 10-K Filing	Date	First	Last	Other Filings

	4/1/92	11
	6/23/92	32
	4/7/93	32
	1/13/95	11
	4/1/95	33
	8/15/95	11
	3/31/96	31		10-K, DEF 14A
	6/6/96	28
	8/23/96	32
	1/23/97	32
	4/1/97	27
	7/24/97	32		DEF 14A
	3/31/98	24	34	DEF 14A, 10-K
	4/5/98	34
	10/2/98	26
	12/22/98	36
	3/31/99	14	37	10-K, DEF 14A
	11/8/99	32
	12/22/99	36
	12/31/99	5	28	10-Q
	3/24/00	5
For The Period Ended	3/31/00	12	37	DEF 14A, 8-A12B/A
	5/1/00	38
	5/10/00	37
	6/15/00	17	26
Filed On / Filed As Of	6/23/00
	7/27/00	39
	3/31/01	14		10-K, DEF 14A, PRE 14A
	9/5/06	32

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Mylan Laboratories Inc · 10-K · For 3/31/00 · EX-13

Filed On 6/23/00 2:27pm ET · SEC File 1-09114 · Accession Number 69499-0-500019

Annual Report · Form 10-KFiling Table of Contents

EX-13 · Annual or Quarterly Report to Security HoldersExhibit Table of Contents

Dates Referenced Herein and Documents Incorporated By Reference

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EX-13 · Annual or Quarterly Report to Security Holders
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