Third Quarter 2004 Conference Call

1. Third Quarter 2004 Conference Call November 2, 2004

2. Safe Harbor Statements made in this press release include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements, including those relating to future financial expectations, involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward looking statements. Information on other significant potential risks and uncertainties not discussed herein may be found in the Company’s filings with the Securities and Exchange Commission including its Form 10K/A for the year ended December 31, 2003. This presentation was prepared for the November 2, 2004 earnings conference call. Information contained within will not be updated. The following slides should be read and considered in connection with the information given orally during the conference call .

3. Agenda Overview Ingrid Wiik Vice Chairman, President & CEO FDA Compliance/ Dr. Ronald WarnerExecutive VP Human Research & Development Pharmaceutical Scientific Affairs & Global Compliance Gabapentin Fred Lynch President, Global Generic Pharmaceuticals Financials Matt Farrell Executive VP & CFOand Outlook Closing Comments Ingrid Wiik Vice Chairman, President & CEO

4. Third Quarter Overview • GAAP results: $(0.09) DLPS • Diluted loss per share (DLPS) includes a legal settlement, and inventory and fixed asset write-offs totaling $(0.07), all related to a U.S. generics product • Excluding these charges, DLPS of $(0.02) versus guidance of approximately breakeven • USHP • Generics: reduced sales due to wholesaler inventory reduction and pricing declines • Kadian® : expanded sales force in place; 29% ytd script growth • International Generics • Highly competitive markets • API • Continued strong margins • AHD • Solid quarter; revenue growth, margin gains • Other Income • Includes $5.2M income from settlement of litigation • R&D investment ramping up • Spending in Q3 2004 up 42% vs. year ago, year-to-date up 32%, in line with target of over 25% for the full year • Targeting major increase in filings (10 in 2004 vs. 4 in 2003), 7 filings to date • Outlook for year 2004 increased from $0.45 - $0.55 to $0.60 to 0.70 driven by gabapentin

5. FDA Compliance Status- USHP Sites • Elizabeth-solids • FDA concluded inspection in September • FDA has notified company the site is eligible for new product approvals • Received four new product approvals, including gabapentin tablets • Next inspection expected in 2005 • Baltimore-liquids • Continued remediation, next inspection expected in 2005 • Lincolnton-creams/ointments • General cGMP and new approval inspections in July 2004 – no observations All U.S sites, except Baltimore,eligible for new product approvals Compliance remains a top priority

6. Filings YTD ANDA Filing History and Target YTD R&D spending + 32% # of ANDAS Filed 7 Increased investment in pipeline development

7. Gabapentin • Capsule launch in October • Pricing competitive: Teva, Ivax, Greenstone, ALO • Pfizer’s preliminary injunction motion denied • Hearing on ALO summary judgment request in mid-November • FDA approval for tablets • Launch date to be announced • Teva agreement • ALO to receive a portion of Teva’s profits upon favorable outcome of Pfizer patent infringement litigation Despite pricing pressure, good market

8. Third Quarter: Financial Performance

9. USHP Revenue $ in millions • Revenues declined 26% • U.S. generic revenues decline of $38 million due to • volume/pricing • wholesaler inventory reduction • Kadian®revenues increased • continued sequential scriptgrowth • ytd script growth of 29% • Margins impacted by • reduced volume / pricing pressure • write-offs • increased R&D Operating 6.5% Margins (17.7)%

10. International Generics Revenue $ in millions • Revenue declined 6% ex-Fx • Increased competition and continuing pricing pressure • Increased R&D Operating 7.0% Margins 6.2%

11. API Revenue $ in millions • Revenues increased 44% ex-Fx • Increased U.S. volumes • Weak Q3 in 2003 due to customer inventory reductions • Increased R&D Operating 32.5% Margins 47.8% Continued strong margins

12. Animal Health Revenue $ in millions • 5% revenue growth, excluding Fx and aquatic divestiture • Strong sales of poultry products • Livestock: signs of stability • Improved margins • cost reduction • productivity initiatives • product mix Operating 9.6% Margins 11.1% Solid quarter

13. Effective Interest Rate 5.5% Current Debt Profile $ in millions Free cash flow of $102 million year-to-date

14. Key Financial Items $ in millions Free cash flow in Q3 of $53 million - influenced by timing of receivable collections

15. Other Financial Data $ in millions * Includes amortization of debt issuance costs of $0.8 million and $0.7 million for 2003 and 2004, respectively Full year Capex estimate: $45 to $50M

16. 2004 Outlook Outlook • Increased outlook driven by gabapentin launch • Impact offset in part by weaker U.S. Generics base business and disappointing contribution from new product launches in the U.S. • Other businesses on track Fourth Quarter • DEPS $0.47 to $0.57 • Approximately $0.50 DEPS related to gabapentin • No significant contribution from other new product launches Full Year 2004 • Outlook of $0.60-$0.70 DEPS • Full year free cash flow $75 - $90 million

17. Current Outlook

18. Summary • Significant progress • New product launches-gabapentin and citalopram • FDA – Elizabeth site eligible for new product approvals • Four U.S. generic product approvals • Kadian script growth • API – continued strong margins • Animal Health revenue and margin growth • Significant free cash flow generation and debt reduction • Intensifying challenges in the U.S. generic industry • Gabapentin continues to be a significant opportunity • Tablet launch to be announced • Share of Teva profits – receipt upon favorable outcome of Pfizer patent infringement litigation

19. QUESTIONS & ANSWERS