SECURITIES AND EXCHANGE COMMISSION
                              Wasington, DC 20549
                                   FORM 10-K

                Annual Report pursuant to Section 13 or 15(d)
                   of the Securities Exchange Act of 1934

For the fiscal year ended March 31, 1998             Commission File No. 1-9114



            Pennsylvania                              25-1211621
    (State or other jurisdiction
  of incorporation or organization)       (IRS Employer Identification No.)
       130 Seventh Street
     1030 Century Building
   Pittsburgh, Pennsylvania                             15222
(Address of principal executive offices)              (Zip Code)


Registrant's telephone number, including area code:  412-232-0100
Securities registered pursuant to Section 12(b) of the Act:

                                                       Name of Each Exchange
         Title of Each Class                           on Which Registered
Common Stock, par value $.50 per share              New York Stock Exchange

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

         Indicate by checkmark  whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

Yes         X                                 No
         .......                                  .......

         Indicate by checkmark if disclosure of  delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of  registrant's  knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K.[ ]
         The aggregate  market value of voting stock held by  non-affiliates  of
the  registrant,  computed by reference to the closing price of such stock as of
May 29, 1998:
                                                                 $3,554,321,160
The number of shares of Common Stock of the  registrant  outstanding as of
        May 31, 1998:
                                                                    122,341,004

Documents incorporated by reference into this Report are:
  Annual Report to Shareholders for year ended
                                March 31, 1998...       Parts I and II,

                                                        Items 1, 5-8
  Proxy Statement for 1998 Annual Meeting of
                                Shareholders...         Partrt III, Items 10-13




<PAGE>






     ITEM 1. Business

     Mylan Laboratories Inc., a Pennsylvania  corporation  incorporated in 1970,
and its  subsidiaries  (herein  referred to  collectively  as "the Company") are
engaged in developing, licensing,  manufacturing,  marketing and distributing of
generic  and  proprietary  pharmaceutical  and wound care  products.  References
herein to fiscal 1998, 1997 and 1996 mean the fiscal years ended March 31, 1998,
1997 and 1996, respectively.

     Through  its  subsidiary,   Mylan  Pharmaceuticals  Inc.,  the  Company  is
recognized  as one of  the  leaders  in  the  generic  pharmaceutical  industry.
Pharmaceutical  products  initially sold on an exclusive  basis are known in the
industry as proprietary or branded products.  Generic drugs are  therapeutically
equivalent to their brand name  counterparts  and are  generally  sold at prices
significantly less than branded products. Accordingly,  generics provide a safe,
effective and cost efficient alternative to users of these products.

     The Company manufactures oral dose products in Mylan Pharmaceuticals Inc.'s
Morgantown,  West  Virginia  facility or Mylan Inc.'s  facilities  in Caguas and
Cidra,  Puerto Rico. To facilitate  timely  delivery of products to customers in
all fifty states the Company operates distribution centers in Greensboro,  North
Carolina and Reno, Nevada.

     Due to the non-exclusive  nature of generic products,  the generic industry
is comprised of numerous competitors  including  manufacturers that market their
products under their own names,  distributors that market products  manufactured
by others and brand name  companies,  that market their  products under both the
brand name and as the generic  substitute.  This diversity provides  significant
price  competition  within the generic  pharmaceutical  industry which generally
results in decreasing  prices of generic  products over time to those who supply
such products to the retail market.

     The  Company  has   entered   into   strategic   alliances   with   several
pharmaceutical  companies.  These alliances  through  distribution and licensing
agreements  provide the Company with additional  products to further broaden the
Company's  product  line.  In  addition,  the Company has entered  into  product
development  and  licensing  agreements,  whereby the Company has  obtained,  in
exchange  for  funding of drug  development  activities,  rights to  manufacture
and/or distribute additional pharmaceutical products.

     The Company  entered into an alliance  with VivoRx,  Inc., a  biotechnology
company that is  developing  pancreatic  islet cell implant  technology  for the
management of diabetes.  VivoRx has  successfully  implanted three patients with
human  islets in the United  States and two  patients  with  porcine  (pancreas)
islets  in  New   Zealand.   One   patient  in  New   Zealand   was  not  taking
immunosuppressant  drugs and has not  rejected  the  porcine  islets  implanted.
Rejection  of the implant is a major  hurdle to overcome in all types of implant
operations.   In   addition,   VivoRx  has  amended  its   previously   accepted
Investigational  New Drug  Application  ("IND") with the United  States Food and
Drug Administration




<PAGE>




("FDA") for the use of porcine  islets to permit the use of  proliferated  human
islet cells.  These proliferated human islets have already been implanted in one
patient in the United  States  with the same  progress  profile as the  original
transplant  patients.  VivoRx expects to begin Phase I/II clinical trials by the
end of this calendar year. The Company continues to examine other alliances as a
way to grow and react in the rapidly changing health care arena.

     In  June  1989,   the   Company   acquired  a  50%   interest  in  Somerset
Pharmaceuticals,  Inc.  ("Somerset").  Pursuant  to a license  agreement  with a
Hungarian pharmaceutical company, Somerset had exclusive marketing rights to the
product Eldepryl(R) in the United States and certain other countries.

     Somerset's marketing  exclusivity under the Orphan Drug Act relating to the
chemical compound  Eldepryl(R) for use as a treatment for late stage Parkinson's
disease expired on June 6, 1996. In May 1996,  Somerset received FDA approval to
market an easy to identify  capsule which was launched  immediately by Somerset.
In August  1996,  the FDA  granted  approval  to several  companies  to market a
generic tablet form of Eldepryl(R).  Following this action,  Somerset filed suit
against the FDA seeking  injunctive  and  declaratory  relief  relating to these
approvals. On June 18, 1997, the Court dismissed Somerset's suit.

     Somerset is actively  involved in research  projects  regarding  additional
uses of this and other chemical compounds. The impact of generic competition and
research and  development  expenditures  by Somerset  relating to these research
projects  will  continue to  adversely  affect  Somerset's  contribution  to the
Company's net earnings.

     In October 1991, a  wholly-owned  subsidiary of the Company merged with Dow
Hickam Pharmaceuticals,  Inc. ("Hickam"),  an established branded pharmaceutical
company located in Sugar Land, Texas. Through an internal  restructuring Hickam,
which is dedicated  to  manufacturing  and  marketing  specialty  pharmaceutical
products and devices used principally as wound care treatments,  now operates as
a division of Bertek  Pharmaceuticals Inc. Bertek  Pharmaceuticals Inc. operates
as the branded pharmaceutical  division of the Company with its foundation built
on  selling   the   antihypertensive   drug   Maxzide(R)   and   Maxzide(R)-25MG
("Maxzide(R)") and the nitroglycerin transdermal patch Nitrek(TM). Maxzide(R) is
manufactured by Mylan Inc. while Nitrek(TM) is manufactured by Bertek, Inc.

     On February 25, 1993,  the Company  acquired  substantially  all of the net
assets of Bertek, Inc. ("Bertek"). Bertek, headquartered in St. Albans, Vermont,
is principally a manufacturer of transdermal  drug delivery  systems.  In August
1996,  Bertek  received  its first  Abbreviated  New Drug  Application  ("ANDA")
approval  to  market a  nitroglycerin  transdermal  patch.  Bertek  is  actively
involved in other development projects to provide new transdermal  products.  In
addition,  Bertek provides components using internally  developed technology for
transdermal  patches marketed by other companies.  In February 1997, Bertek sold
certain  assets related to its custom label and printing  operations  which were
unrelated to the Company's core pharmaceutical business.






<PAGE>




     On February 28, 1996, a  wholly-owned  subsidiary  of the Company  acquired
100% of the outstanding  stock of UDL  Laboratories,  Inc.  ("UDL").  UDL is the
premier supplier of unit dose generic  pharmaceuticals  to the institutional and
long-term care markets. UDL maintains manufacturing and research and development
facilities in Rockford, Illinois as well as Largo, Florida.

     On June 14, 1996, the Company executed a series of agreements with American
Home Products  Corporation  ("AHP") relating to the Maxzide(R)  products.  Since
1984 these products,  which were developed and manufactured by the Company, were
marketed  by AHP's  Lederle  Laboratories  Division  under a  worldwide  license
arrangement.

     As a result of the AHP agreements, Bertek Pharmaceuticals Inc. is marketing
the products in the United States.  AHP retained ownership of certain trademarks
and  tradedress  which have been  licensed  to the  Company for a period of five
years. At the end of the five year period ownership of these intangibles will be
transferred to the Company.


     Products The  information on the Company's  product line set forth on pages
48-55 of the accompanying Annual Report to Shareholders for the year ended March
31,  1998 is  incorporated  herein by  reference.  All  pharmaceutical  products
presently  manufactured  by the  Company  have  been  previously  developed  and
marketed  by other  firms with the  exception  of the  Maxzide(R)  products  and
Cystagon(TM).

     The Company is required to secure and  maintain  approval  from the FDA for
the products and dosage forms which it manufactures.  The number of products and
dosage forms for which the Company is an approved  manufacturer  has expanded in
recent years. See "New Product Approvals".

     During fiscal 1998, 1997 and 1996, approximately  $46,278,000,  $42,633,000
and $38,913,000 were expensed by the Company for the development of formulations
and  procedures  for  products  which it desires to  produce,  use or sell.  The
Company's  research and development  efforts are conducted  primarily to qualify
the Company to  manufacture  ethical  pharmaceuticals  under FDA  standards  and
approval. Recently this has included increased spending for transdermal delivery
system  technology  and  innovator  compounds  including  pancreatic  islet cell
implant  technology.  As these products continue to move through the development
process, expenses related to their development will continue to increase.






<PAGE>




New Product Approvals

     During  fiscal 1998,  13 approvals  were received from the FDA. The Company
presently  has requests  for approval  pending  before the FDA  representing  28
products  of  varying  strengths.  Subsequent  to March 31,  1998,  the  Company
received two additional ANDA approvals and a New Drug  Application  approval for
its wound care  product,  Sulfamylon(R).  In  addition  the Company has five IND
applications filed with the FDA for new innovator compounds.

Customers and Markets

     The Company sells its products to  proprietary  and ethical  pharmaceutical
wholesalers and distributors,  drug store chains,  drug manufacturers and public
and  governmental  agencies.  In fiscal  1998,  three  customers  accounted  for
approximately 13%, 12%, and 11% of net sales,  respectively.  Although no single
customer  represented  more than 10% of net sales in fiscal  1997 or 1996,  four
customers in 1997 represented 36% of net sales.

     A majority of the  Company's  products  are marketed to food and drug store
chains and to pharmaceutical  distributors and wholesalers,  that in turn market
to retailers,  managed care entities, hospitals and government agencies. Certain
other  products are marketed to  institutional  accounts that in turn obtain the
products from pharmaceutical  distributors and wholesalers.  The Company's sales
activities  involve limited public promotion of its products.  Approximately 205
employees of the Company are engaged full-time in selling products and servicing
customers.

Competition

     The Company sells to various markets and classes of customers. With respect
to each of the products it sells,  the Company  believes it is subject to active
competition  from  numerous  firms.  The four primary means of  competition  are
service, product quality, FDA approval and price. The competition experienced by
the Company  varies among the markets and classes of customers.  The Company has
experienced additional competition from brand-name competitors that have entered
the generic pharmaceutical industry by creating generic subsidiaries, purchasing
generic  companies  or licensing  their  products  prior to or as their  patents
expire.

     In addition to the increase in the number of competitors, the consolidation
of the  Company's  customers  through  mergers and  acquisitions  along with the
emergence of large buying groups representing  independent pharmacies and health
maintenance organizations has also contributed to the severe price deterioration
for the Company's generic products.  While the Company has increased unit volume
of its generic products through  specialized  marketing  programs,  this has not
fully offset the price declines the Company has experienced.






<PAGE>




     The severe price declines the Company has experienced over the last several
years,  along with the increased  costs in bringing new products to market,  has
led  to an  extensive  evaluation  of its  operation.  This  ongoing  evaluation
includes assessing the Company's  relationship with key customers and suppliers,
production capacity and product level contributions.  One of the key conclusions
of this  evaluation  has been the  determination  that changes in the  Company's
generic pricing practices were needed.

     In November 1997,  the Company raised prices on three generic  products and
in January 1998  announced  that it was raising  prices in the fourth quarter of
fiscal 1998 on four additional  products out of its nearly 100 generic products.
While the price  increases  initiated  in the second  half of fiscal  1998 had a
favorable  impact on net earnings,  such impact,  if any in the future,  will be
affected by many  factors  including  customer  acceptance,  and the response by
competitors and suppliers.  The Company intends to continue to work closely with
its  customers  and  suppliers to ensure that its full line of generic  products
continues to be  available  as a cost  effective  alternative  to the  innovator
products.

Product Liability

     Product  liability suits by consumers  represent a continuing risk to firms
in the  pharmaceutical  industry.  The Company strives to minimize such risks by
stringent quality control procedures. Although the Company carries insurance, it
believes that no reasonable amount of insurance can fully protect it against all
such risks  because of the  potential  liability  inherent  in the  business  of
producing pharmaceuticals for human consumption.

Raw Materials

     The chemical  ingredients  and other  materials  and  supplies  used in the
Company's  pharmaceutical  manufacturing  operations are generally available and
purchased from many different foreign and domestic  suppliers.  However, in many
cases,  the raw materials  needed by the Company to  manufacture  pharmaceutical
products are available from a single FDA-approved supplier. Even where more than
one supplier  exists,  a single supplier may be listed in the Company's  ANDA's.
New  suppliers of the active  ingredients  in drugs must be approved by the FDA.
Accordingly,  any change in a supplier  requires  FDA  approval,  which may take
several months.  Any interruption of supply could have a material adverse effect
on the  Company's  ability to  manufacture a product or obtain FDA approval of a
new product,  or could result in the Company being required to pay higher prices
to a supplier.  Conversely,  in instances  where  limitations  on raw  materials
supply lessen  competition in specified  drugs and permit higher pricing levels,
the  availability of new sources of supply will likely increase  competition and
result in lower pricing.

     In  addition,  recent  and  pending  regulatory  actions  may  make it more
difficult  for the Company and other  generic  pharmaceutical  manufacturers  to
obtain  from  foreign  suppliers  commitments  for raw  materials  prior  to the
expiration  of patents  on  branded  products.  The  unavailability  of such raw
materials  could also impede the Company in its efforts to develop,  manufacture
and obtain FDA approval to market new generic pharmaceutical products.




<PAGE>





Regulation

     The Company's  operations are subject to regulation under the Federal Food,
Drug and  Cosmetic  Act,  pursuant  to which  government  standards  as to "good
manufacturing practice",  product content,  purity, labeling,  effectiveness and
recordkeeping (among other things) must be observed. In this regard, the FDA has
extensive regulatory powers over the activities of pharmaceutical  manufacturers
including the power to seize and prohibit the sale of noncomplying  products and
to halt operations of noncomplying manufacturers.

     In addition to the extensive regulation the Company faces under the Federal
Food,  Drug and Cosmetic Act other  regulations  have also  affected the generic
approval  process.  In June 1995, the Uruguay Round Agreements Act ("URAA") took
effect which extended patent terms pursuant to the General Agreements on Tariffs
and Trade.  The  extension  of patent  terms has  delayed and is expected in the
future to continue to delay the introduction of products by the Company.

     While URAA has already  extended  patent terms,  the brand  companies  have
further  delayed  the  approval  of  new  generic   products  by  filing  patent
infringement  suits under the Hatch-Waxman  Act. The Company upon filing an ANDA
application  with the FDA must make one of five  certifications  with respect to
patents.  If the company  certifies that its product is not infringing or that a
patent is invalid,  the patentee  can file suit.  Brand  companies  now use this
certification  process to prevent generic  companies from introducing  competing
generic products by bringing suit for alleged patent  infringement.  Once a suit
is filed, no matter how frivolous, the FDA is prohibited from approving the ANDA
for  thirty  months or until the suit is  litigated.  Along  with  delaying  the
approval,  the cost of bringing a new product to market has risen  substantially
as the  number  of these  suits  and the cost of  defending  them  continues  to
increase.  All such suits  settled to date have been on terms  favorable  to the
Company.  However,  until the laws are changed, the Company expects this type of
suit will continue since it has proven a very effective way for brand  companies
to delay generic competition.

     The Company is subject to inspection and regulation under other federal and
state  legislation  relating  to  drugs,  narcotics  and  alcohol.  Many  of its
suppliers and customers, as well as the drug industry in general, are subject to
the same or similar  governmental  regulations.  The Company  also is subject to
various federal, state, and local environmental protection laws and regulations.
Compliance  with current  environmental  protection laws and regulations has not
had a material effect on the earnings,  cash flow or competitive position of the
Company.

     It is  impossible  for the  Company  to  predict  the  extent  to which its
operations  will be affected under the  regulations  discussed  above or any new
regulations which may be adopted by regulatory agencies.







<PAGE>




Employees

     The Company employs approximately 1,946 persons,  approximately 959 of whom
serve in clerical, sales and management capacities. The remainder are engaged in
production and maintenance activities.

     The production  and  maintenance  employees at the Company's  manufacturing
facilities in Morgantown,  West Virginia,  are represented by the Oil,  Chemical
and Atomic Workers International Union (AFL-CIO) and its Local Union 8-957 under
a contract which expires April 5, 2002.

Backlog

     At March 31, 1998,  the  uncompleted  portions of the Company's  backlog of
orders was approximately $19,899,000 as compared to approximately $10,410,000 at
March 31, 1997 and $9,747,000 at March 31, 1996. Because of the relatively short
lead time  required in filling  orders for its  products,  the Company  does not
believe these interim backlog  amounts bear a significant  relationship to sales
or income for any full twelve-month period.


 
    ITEM 2. Properties

     The Company  operates  from  various  facilities  in the United  States and
Puerto Rico having an aggregate of approximately 1,200,000 square feet.

     Mylan  Pharmaceuticals  owns production,  warehouse,  laboratory and office
facilities in three buildings in Morgantown,  West Virginia  containing  432,000
square feet.  Mylan  Pharmaceuticals  operates two distribution  centers:  a new
center in  Greensboro,  North Carolina  containing  166,000 square feet which it
owns and a 38,000 square foot center in Reno,  Nevada which it operates  under a
lease  expiring in 2002.  Additional  production  area of  approximately  44,000
square feet is currently under construction in Morgantown, West Virginia.

     Mylan Inc.  owns a production  and office  facility in Caguas,  Puerto Rico
containing 115,000 square feet and a production  facility in Cidra,  Puerto Rico
containing 32,000 square feet.

     Bertek  Pharmaceuticals,   Inc.  owns  production,   warehouse  and  office
facilities in two buildings in Sugar Land, Texas containing 70,000 square feet.

     Bertek, Inc. owns production,  warehouse,  laboratory and office facilities
in three buildings in Swanton and St. Albans,  Vermont containing 118,000 square
feet. Bertek,  Inc. also operates a coating and extrusion facility in St. Albans
containing 71,000 square feet under a lease expiring in 2015.

     UDL owns production,  laboratory,  warehouse and office facilities in three
buildings in Rockford,  Illinois and Largo,  Florida  containing  123,000 square
feet. UDL also leases a warehouse




<PAGE>




facility in Rockford  containing  30,000  square feet under a lease  expiring in
1999.

     The Company's  production  equipment  includes that equipment  necessary to
produce and package tablet,  capsule,  aerosol,  liquid,  transdermal and powder
dosage forms.  The Company  maintains six analytical  testing  laboratories  for
quality control.

     The Company's  production  facilities are operated primarily on a two shift
basis.  Properties  and equipment are well  maintained  and adequate for present
operations.

     The  Company's  corporate  offices,  approximately  7,000 square feet,  are
located at 130 Seventh Street, 1030 Century Building, Pittsburgh,  Pennsylvania,
and are occupied under a lease expiring in 2000.


     ITEM 3. Legal Proceedings

     In  August  1997,  Key  Pharmaceuticals  filed  suit in the  United  States
District Court for the Western District of Pennsylvania  against the Company and
certain subsidiaries  alleging patent infringement  relating to the marketing of
its nitroglycerin  transdermal system. The Company received FDA approval for its
nitroglycerin  transdermal  system  in  September  1996  and  immediately  began
marketing the product.  The relief sought  includes a preliminary  and permanent
injunction, treble damages along with interest and attorney's fees and expenses.
The Company believes the suit is without merit and intends to vigorously  defend
its position.

     In November  1996,  Synthecon  Inc. filed suit in the Harris County Circuit
Court, Harris County,  Texas against the Company,  VivoRx Inc., et al., alleging
the Company had conspired with VivoRx Inc. to deprive Synthecon of its rights to
a product under a license agreement  acquired from the National  Aeronautics and
Space  Administration.  The suit seeks unspecified damages. The Company believes
the suit is without merit and intends to vigorously defend its position.

     The  Company  is  involved  in various  other  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
outcome of these suits will have no  material  adverse  effect on the  Company's
operation, financial position, or liquidity.


     ITEM 4. Submission of Matters to a Vote of Security Holders

               Not applicable.

EXECUTIVE OFFICERS OF THE REGISTRANT

The  names,  ages and  positions  of the  Company's  executive  officers  are as
follows:






<PAGE>




    Milan Puskar                  63      Chairman, Chief Executive Officer and
                                              President
    Dana G. Barnett               57      Executive Vice President
    Louis J. DeBone               52      Vice President-Operations
    Roger L. Foster               51      Vice President and General Counsel
    Roderick P. Jackson           58      Senior Vice President
    Dr. John P. O'Donnell         52      Vice President-Research and
                                              Quality Control
    Donald C. Schilling           48      Vice President-Finance
    Patricia Sunseri              58      Vice President-Investor and
                                              Public Relations
    C.B. Todd                     64      Senior Vice President
    Robert W. Smiley              76      Secretary

     Mr.  Puskar was  employed  by the  Company  from 1961 to 1972 and served in
various positions, including Secretary-Treasurer, Executive Vice President and a
member of the Board of Directors.  From 1972 to 1975,  Mr. Puskar served as Vice
President and General Manager of the Cincinnati  division of ICN Pharmaceuticals
Inc. In addition, he has served as a partner in several  pharmaceutical firms in
foreign  countries  and is currently a director of VivoRx,  Inc.,  Santa Monica,
California and Duquesne  University,  Pittsburgh,  Pennsylvania.  Mr. Puskar has
served as President of the Company  since 1976 and as Vice Chairman of the Board
from 1980 to 1993.  He was  elected  Chairman  of the Board and Chief  Executive
Officer on November 9, 1993.

     Mr. Barnett was employed by the Company in 1966. His responsibilities  have
covered production,  quality control and product development. Mr. Barnett became
Vice  President  in 1974,  Senior  Vice  President  in 1978 and  Executive  Vice
President  in 1987.  He was elected  President  and Chief  Executive  Officer of
Somerset in June 1991, and in August 1995, he was elevated to Chairman and Chief
Executive Officer.

     Mr. DeBone has been employed by the Company since September 1987.  Prior to
assuming his present position in November 1991 as Vice President-Operations,  he
served as Vice President-Quality Control. Since February 1997, he also serves as
President of Bertek Inc. He was previously  employed with the Company from March
1976 until June 1986 and served as Director of Manufacturing.

     Mr.  Foster  has been  employed  by the  Company  since May 1984.  Prior to
assuming his present position in June 1995 as Vice President and General Counsel
he served as Director of Legal Services and as Director of Governmental Affairs.

     Mr.  Jackson has been  employed by the Company  since March 1986.  Prior to
assuming  his present  position in October  1992 as Senior  Vice  President,  he
served as Vice President- Marketing and Sales.





<PAGE>





     Dr. John  O'Donnell has been  employed by the Company since 1983.  Prior to
assuming his present  position in November 1991 as Vice  President-Research  and
Quality Control,  he served as Vice  President-Research  and Product Development
and as Director of Chemistry and Product Development.

     Mr.  Donald C.  Schilling  has been  employed by the Company  since October
1997. Prior to assuming his present position as Vice  President-Finance,  he was
Vice President of Finance & Administration  for Plastics  Manufacturing  Inc. in
Harrisburg, NC from 1991 to 1997.

     Mrs.  Sunseri has served as a Director of the Company  since April 1997, as
Vice  President-Investor  and Public  Relations of the Company since 1989 and as
Director of Investor Relations of the Company from 1984 to 1989.

     Mr. Todd has been employed by the Company since 1970. Prior to assuming his
present  position in October 1987 as Senior Vice  President,  Mr. Todd served as
Vice   President-Quality   Control.   He  also  serves  as  President  of  Mylan
Pharmaceuticals Inc.

     Mr. Smiley has been the Secretary and a member of the Board of
Directors  of the Company  for over 22 years.  He joined the law firm of Doepken
Keevican & Weiss  Professional  Corporation  in  October,  1992,  which law firm
provided  legal  services to the Company in fiscal  1998.  Previously,  he was a
partner of Smiley, McGinty & Steger for more than five years

     There  is no  family  relationship  between  any  of  the  above  executive
officers.  Officers  of the  Company  serve  at the  pleasure  of the  Board  of
Directors.




     ITEM 5. Market for Registrant's Common Equity and

Related Stockholder Matters

     The information  required by item 5 is hereby  incorporated by reference to
pp. 21 and 47 of the  accompanying  Annual Report to  Shareholders  for the year
ended March 31, 1998.



     ITEM 6. Selected Financial Data

               The  information  required  by item 6 is hereby  incorporated  by
reference to p. 21 of the  accompanying  Annual Report to  Shareholders  for the
year ended March 31, 1998.








<PAGE>





     ITEM 7.  Management's  Discussion  and Analysis
              of Financial  Condition and Results of Operations

     The information required by item 7 is hereby incorporated by
reference to pp. 22-27 of the accompanying Annual Report to Shareholders for the
year ended March 31, 1998.


     ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk

               Not applicable.


     ITEM 8. Financial Statements and Supplementary Data

     The information  required by item 8 is hereby  incorporated by reference to
pp. 28-47 of the  accompanying  Annual Report to Shareholders for the year ended
March 31, 1998.


     ITEM 9. Changes in and  Disagreements  with
             Accountants  on Accounting and Financial Disclosure

               Not applicable.





     ITEM 10. Directors and Executive Officers of the Registrant

               The  information  as to  directors  required by item 10 is hereby
incorporated by reference to pp. 2 and 3 of the Company's 1998 Proxy  Statement.
Information  concerning  executive officers is provided in Part I of this report
under the caption "Executive Officers of the Registrant".



     ITEM 11. Executive Compensation

     The information  required by item 11 is hereby incorporated by reference to
pp. 6,8,9 and 10 of the Company's 1998 Proxy Statement.



     ITEM 12. Security Ownership of Certain Beneficial Owners and Management

     The information  required by item 12 is hereby incorporated by reference to
pp. 10 and 11 of the Company's 1998 Proxy Statement.






<PAGE>







     ITEM 13. Certain Relationships and Related Transactions

     The information  required by item 13 is hereby incorporated by reference to
p. 2 of the Company's 1998 Proxy Statement.





     ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

          (a)  1. List of Financial Statements

                                                                 Annual Report
                                                                     Page
                                                                    Number
       INCLUDED IN ANNUAL REPORT TO SHAREHOLDERS:
        Consolidated Balance Sheets................................  28-29
        Consolidated Statements of Earnings........................   30
        Consolidated Statements of Shareholders' Equity............   31
        Consolidated Statements of Cash Flows......................  32-33
        Notes to Consolidated Financial Statements.................  34-45

        Independent Auditors' Report...............................   46

     2.   Financial Statement Schedules

     The information  required by this item is incorporated  herein by reference
to Exhibit  99.  All other  schedules  have been  omitted  because  they are not
required.

     3.   Exhibits

          (3)(a)  Amended  and  Restated   Articles  of   Incorporation  of  the
               registrant,  filed by the  Company as Exhibit 4.2 to the Form S-8
               on  December  23,  1997   (registration   number  333-43081)  and
               incorporated herein by reference.

          (b)  By-laws  of the  registrant,  as  amended  to date,  filed by the
               Company  as  Exhibit  4.3 to the Form S-8 on  December  23,  1997
               (registration   number  333-43081)  and  incorporated  herein  by
               reference.

          (4)(a) Rights  Agreement  dated as of August  22,  1996,  between  the
               Company and American Stock Transfer & Trust Co., filed as Exhibit
               4.1 to Form 8-K dated August 30, 1996 and incorporated  herein by
               reference.




<PAGE>





          (10)(a) Mylan  Laboratories  Inc. 1986 Incentive Stock Option Plan, as
               amended to date,  filed as Exhibit  10(b) to Form 10-K for fiscal
               year ended March 31, 1993 and incorporated herein by reference.

          (b)  "Salary Continuation Plan" with Milan Puskar, Dana G. Barnett and
               C.B.  Todd each dated as of January 27, 1995 and filed as Exhibit
               10(b) to Form 10-K for  fiscal  year  ended  March  31,  1995 and
               incorporated herein by reference.

          (c)  "Salary  Continuation Plan" with Roderick P. Jackson and Louis J.
               DeBone each dated  March 14,  1995 and filed as Exhibit  10(c) to
               Form 10-K for fiscal year ended  March 31, 1995 and  incorporated
               herein by reference.

          (d)  Employment  contract  with Milan Puskar dated April 28, 1983,  as
               amended to date,  filed as Exhibit  10(e) to Form 10-K for fiscal
               year ended March 31, 1993 and incorporated herein by reference.

          (e)  Split Dollar Life Insurance Arrangement with McKnight Irrevocable
               Trust  filed as Exhibit  10(g) to Form 10-K for fiscal year ended
               March 31, 1994 and incorporated herein by reference.

          (f)  "Service  Benefit  Agreement"  with  Laurence S. DeLynn,  John C.
               Gaisford, M.D., and Robert W. Smiley, Esq. each dated January 27,
               1995 and  filed as  Exhibit  10(g) to Form 10-K for  fiscal  year
               ended March 31, 1995 and incorporated herein by reference.

          (g)  Split  Dollar  Life  Insurance   Arrangement  with  Milan  Puskar
               Irrevocable  Trust  filed as  Exhibit  10(h) to Form 10-K for the
               fiscal  year  ended  March 31,  1996 and  incorporated  herein by
               reference.

          (h)  Split  Dollar  Life  Insurance  Arrangement  with the Todd Family
               Irrevocable  Trust  filed as  Exhibit  10(i) to Form 10-K for the
               fiscal  year  ended  March 31,  1997 and  incorporated  herein by
               reference.

          (i)  Split Dollar Life Insurance  Arrangement with the Dana G. Barnett
               Irrevocable  Family Trust filed as Exhibit 10(j) to Form 10-K for
               the fiscal year ended March 31, 1997 and  incorporated  herein by
               reference.

          (j)  "Salary  Continuation Plan" with Patricia Sunseri dated March 14,
               1995  filed as  Exhibit  10(k) to Form 10-K for the  fiscal  year
               ended March 31, 1997 and incorporated herein by reference.





<PAGE>




          (k)  Mylan Laboratories Inc. 1997 Incentive Stock Option Plan filed as
               annex A to the 1998 Proxy  Statement and  incorporated  herein by
               reference.

          (l)  Mylan  Laboratories  Inc. 1992 Nonemployee  Director Stock Option
               Plan, as amended to date, filed herewith.



                             MYLAN LABORATORIES INC.
                   1992 NONEMPLOYEE DIRECTOR STOCK OPTION PLAN


1.  PURPOSE

     The purpose of this Plan is to provide a means whereby  MYLAN  LABORATORIES
INC.  ("Corporation")  may,  through  the grant of options to  purchase  Class A
Common  Stock,  par value $.50 per share  ("Common  Stock")  of the  Corporation
("Options") to nonemployee  directors of the Corporation  and its  subsidiaries,
attract and retain persons of ability as directors  (including directors who are
also  officers,  but excluding  directors who are also  employees)  and motivate
those directors to exert their best efforts on behalf of the Corporation and its
subsidiaries. Prior to this Plan's amendment on July 25, 1997 ("Amendment Date")
the Plan was solely a formula plan for purposes of Rule 16b-3  (defined  below);
however,  as amended,  the Plan now permits the Board of Directors,  acting as a
committee of the whole, to make  discretionary  grants of Options to nonemployee
directors from time to time.

2.  NUMBER OF SHARES AVAILABLE UNDER PLAN

     Options may be granted by the Corporation  from time to time to nonemployee
directors of the  Corporation  and its  subsidiaries to purchase an aggregate of
200,000 shares of Common Stock of the  Corporation  and 200,000 shares of Common
Stock  shall  be  reserved  for  Options  granted  under  the Plan  (subject  to
adjustment  as provided  in  paragraph  4(i)).  Shares  issued upon  exercise of
Options  granted under the Plan may be authorized and unissued  shares or shares
held by the  Corporation  in its treasury.  If any Option granted under the Plan
shall  terminate,  expire or be  canceled  as to any  shares,  new  Options  may
thereafter be granted covering those shares. After giving effect to stock splits
which occurred on August 1, 1992 and August 15, 1995, and after  considering the
grants of options that have occurred,  the aggregate  number of shares of Common
Stock available under this Plan as of the Amendment Date is 300,000 shares.

3.  ADMINISTRATION

     (a) STOCK  OPTION  COMMITTEE.  The Plan  shall be  administered  by a Stock
Option Committee  ("Committee")  consisting of at least two members of the Board
of Directors  of the  Corporation  who shall be  appointed  by, and serve at the
pleasure  of, the Board of  Directors.  Each member of the  Committee  must be a
"nonemployee  director"  within the meaning of Rule  16b-3,  as that Rule may be
amended from time to time ("Rule 16b-3"),  under the Securities  Exchange Act of
1934, as amended.

     (b)  COMMITTEE  ACTION.  A majority of the members of the  Committee  shall
constitute a quorum,  and the action (1) of a majority of the members present at
a meeting  at which a quorum is  present  or (2)  authorized  in  writing by all
members,  shall be the  action of the  Committee.  A member  participating  in a
meeting by telephone or similar communications equipment shall be deemed present
for this purpose if the member or members who are present in person can hear him
and he can hear them.



<PAGE>




     (c)  AUTHORITY OF THE  COMMITTEE.  Prior to the Amendment  Date,  this Plan
constituted  a formula  plan for  purposes of Rule 16b-3,  thus the  Committee's
authority was restricted as required to maintain that  classification.  Upon and
after the  Amendment  Date, to the extent  necessary to apply the  provisions of
subparagraph (a)(II) of Section 4, this Plan is deemed not to be a formula plan.

     Because only  nonemployee  directors  are eligible to receive a grant of an
Option under this Plan,  all Options  granted  under this Plan shall  constitute
options which are not incentive stock options as defined under Section 422(b) of
the Internal  Revenue Code of 1986, as amended.  (Options which shall be granted
hereunder are hereinafter referred to as "Nonqualified Stock Options".)

     The  Committee may  interpret  the Plan,  prescribe,  amend and rescind any
rules and  regulations  necessary or appropriate for the  administration  of the
Plan and make other  determinations  and take other action as it deems necessary
or advisable.  Without  limiting the  generality  of the foregoing  sentence the
Committee may, in its discretion,  treat all or any portion of any period during
which an  Optionee  is on  military  or an  approved  leave of absence  from the
Corporation as a period of employment of the Optionee by the Corporation, as the
case may be,  for  purpose  of  accrual  of his  rights  under  his  Option.  An
interpretation,  determination  or other  action made or taken by the  Committee
shall be final, binding and conclusive.

     (d) INDEMNIFICATION OF COMMITTEE. In addition to other rights that they may
have as Directors or as members of the  Committee,  the members of the Committee
shall  be  indemnified  by the  Corporation  against  the  reasonable  expenses,
including  attorney's fees actually and necessarily  incurred in connection with
the defense of any action, suit or proceeding,  or in connection with any appeal
therein,  to which  they or any of them may be a party by reason  of any  action
taken or  failure  to act  under or in  connection  with the Plan or any  Option
granted  thereunder,  and against all amounts paid by them in settlement thereof
or paid by them in  satisfaction  of a  judgment  in any  such  action,  suit or
proceeding,  except in  relation  to matters as to which it shall be adjudged in
the action,  suit or proceeding that the Committee member's action or failure to
act constituted self-dealing, willful misconduct or recklessness;  provided that
within sixty (60) days after  institution  of any action,  suit or  proceeding a
Committee member shall in writing offer the Corporation the opportunity,  at its
own expense, to handle and defend same.

4.  TERMS AND CONDITIONS

     Each Option  granted under the Plan shall be evidenced by an agreement,  in
form  approved  by the  Committee,  which  shall  be  subject  to the  following
expressed  terms  and  conditions  and to  other  terms  and  conditions  as the
Committee may deem  appropriate,  including those imposed by Section 6 following
amendment of the Plan requiring shareholder approval.


                                       2.


<PAGE>



     (a) GRANT OF OPTION.

          (I) FORMULA  OPTIONS.  Subject to the limitations  provided under this
     subparagraph  (a)(I) of this  Section 4,  Options  shall be granted to each
     nonemployee  director as follows:  (i) an Option for 1,000 shares of Common
     Stock  upon  the  initial  election  of the  nonemployee  to the  Board  of
     Directors of the  Corporation and (ii) an Option for 2,000 shares of Common
     Stock  upon each  annual  re-election  of the  nonemployee  to the Board of
     Directors of the Corporation.  On the date this Plan is adopted, subject to
     restrictions provided at Section 6, each current nonemployee director shall
     be  granted  an  Option  for  shares  of  Common  Stock in an  amount to be
     determined  using the same formula as is provided  for under the  preceding
     sentence but based upon all election and  re-elections of that  nonemployee
     to the Board of Directors of the  Corporation  which  occurred prior to the
     adoption of this Plan.  Future  grants  shall be made  annually on the same
     date as the annual  meeting of the  shareholders  of the  Corporation.  The
     maximum  aggregate  number of shares of Common Stock which shall be granted
     under all Options granted under this subparagraph  (a)(I) of this Section 4
     to any individual nonemployee director is 20,000.  Further, no Option shall
     be  granted  after  June 22,  2002,  the tenth  (10th)  anniversary  of the
     effective date of this Plan.

          (II)  DISCRETIONARY  OPTIONS.  In  addition  to the  grants of options
     provided  for in  subparagraph  (a)(I)  of this  Section  4,  the  Board of
     Directors, acting as a committee of the whole, may from time to time act to
     grant options to  nonemployee  directors  upon the terms and  conditions of
     this Plan.  Subject to the total number of shares  available under the Plan
     pursuant to Section 2, the maximum number of options that can be granted to
     any  nonemployee  director  in any single  grant  shall not  exceed  20,000
     shares.  Further, no Option shall be granted after June 22, 2002, the tenth
     (10th) anniversary of the effective date of this Plan.

     (b) OPTION PERIOD.  Each Option agreement shall specify that the period for
which the  Option is  granted is Ten (10) years from the date of grant and shall
provide that the Option shall expire at the end of that period.

     (c) OPTION  PRICE.  The Option price per share of Common Stock shall be the
fair  market  value of that stock on the date the  Option is granted  (but in no
event less than the par value if any). For purposes of this paragraph 4(c), fair
market value shall be the closing  price per share of Common Stock (as listed on
the New York Stock Exchange) on the date that an Option is granted.

     (d)  EXERCISE  OF  OPTION.  Subject  in  each  case  to the  provisions  of
paragraphs  (b),  (c), (e) and (f) of this Section 4, an Option may be exercised
at any time, or from time to time (50 share  increments)  throughout  the Option
period applicable to the Option.

     (e) PAYMENT OF PURCHASE  PRICE UPON  EXERCISE.  The  purchase  price of the
Common  Stock as to  which an  Option  shall be  exercised  shall be paid to the
Corporation in cash or in stock of the Corporation at the time of exercise.

                                       3.


<PAGE>



     (f) EXERCISE IN THE EVENT OF DEATH OR TERMINATION OF EMPLOYMENT. (1) If any
Optionee  shall die (i) while a nonemployee  director of the  Corporation or its
subsidiaries (ii) within three (3) months of ceasing to be a member of the Board
of Directors of the  Corporation or its  subsidiaries  other than for cause,  or
(iii) within three (3) months after his  resignation or removal as a nonemployee
director of the  Corporation or its  subsidiaries  because he is permanently and
totally disabled (within the meaning of Section 22(e)(3) of the Internal Revenue
Code of 1986, as amended) ("Permanent Disability"),  his Option may be exercised
by the person or persons to whom the Optionee's  rights under the Option pass by
will or  applicable  law or if no person has that  right,  by his  executors  or
administrators,  at any time, or from time to time (50 share increments), within
one (1)  year  of the  date of his  death  if  (f)(1)(i)  of this  Section  4 is
applicable and within one (1) year of the date of his  resignation or removal if
(f)(1)(ii) or (iii) of this Section 4 is applicable,  but in no event later than
the  expiration  date  specified in  paragraph  (b) of this Section 4. (2) If an
Optionee  (i)  resigns  or is  removed by the  Corporation  or its  subsidiaries
because of his Permanent Disability,  or (ii) resigns because of retirement (the
Optionee  would be eligible  for  retirement  under any  federal  tax  qualified
employee  pension benefit plan of the Corporation or one of its  subsidiaries if
the Optionee were deemed to be an employee and a  participant  under the pension
plan),  he may exercise  his Option at any time,  or from time to time (50 share
increments),  within one (1) year of the date of his resignation or removal, but
in no event later than the  expiration  date  specified in paragraph (b) of this
Section  4. (3)  Except  as  provided  by (1) and (2) of this  paragraph  (f) of
Section 4, if an Optionee  voluntarily  resigns  without cause or is involuntary
removed  without cause,  he may exercise his Option at any time, or from time to
time  (50  share  increments),  within  three  (3)  months  of the  date  of his
resignation or removal, but in no event later than the expiration date specified
in paragraph (b) of this Section 4. (4) If an Optionee  voluntarily  resigns for
cause  or  is  involuntary   removed  for  cause,  his  Option  shall  terminate
immediately.

     (g)  NONTRANSFERABILITY.   No  Option  granted  under  the  Plan  shall  be
transferable  other  than by will or by the laws of  descent  and  distribution.
During the lifetime of the Optionee, an Option shall be exercisable only by him,
his guardian or legal representative.

     (h) INVESTMENT  REPRESENTATION.  Each Option  agreement  shall provide that
upon demand by the Committee, the Optionee (or any person acting under paragraph
4(f)) shall  deliver to the Committee at the time of any exercise of an Option a
written  representation  that the shares to be acquired upon the exercise are to
be acquired for investment and not for resale or with a view to the distribution
thereof.  Upon demand,  delivery of the representation  prior to the delivery of
any shares to be issued upon  exercise of an Option and prior to the  expiration
of the Option period shall be a condition precedent to the right of the Optionee
or other person to purchase any shares.

     (i)  ADJUSTMENTS.  In the event of any  change in the  Common  Stock of the
Corporation by reason of any stock dividend,  recapitalization,  reorganization,
merger, consolidation,  split-up,  combination, or exchange of shares, or rights
offering to purchase  Common  Stock at a price  substantially  below fair market
value, or any similar change affecting

                                       4.


<PAGE>



the Common Stock, the number and kind of shares which thereafter may be optioned
and sold under the Plan and the  number and kind of shares  subject to option in
outstanding  Option agreements and the purchase price per share thereof shall be
appropriately  adjusted  consistent with the change in a manner as the Committee
may deem equitable to prevent substantial  dilution or enlargement of the rights
granted to, or available for, participants in the Plan.

     (j) NO RIGHTS AS  SHAREHOLDERS.  No  Optionee  shall  have any  rights as a
shareholder  with respect to any shares  subject to his Option prior to the date
of issuance to him of a certificate or certificates for the shares.

     (k) NO ADDITIONAL  RIGHTS.  The Plan and any Option  granted under the Plan
shall  not  confer  upon any  Optionee  any  right  with  respect  to  continued
membership on the Board of Directors of the Corporation or any subsidiary of the
Corporation, nor any other position with the Corporation or its subsidiaries.

5.  COMPLIANCE WITH OTHER LAWS AND REGULATIONS

     The Plan, the grant and exercise of Options thereunder,  and the obligation
of the Corporation to sell and deliver shares under Options, shall be subject to
all applicable  Federal and state laws,  rules and  regulations  and to required
approvals of any government or regulatory  agency.  The Corporation shall not be
required to issue or deliver any  certificates  for shares of Common Stock prior
to the completion of any  registration or  qualification of the shares under any
Federal or state law, or any ruling or regulation of any  government  body which
the  Corporation  shall,  in its sole  discretion,  determine to be necessary or
advisable.

6.  ADOPTION, AMENDMENT AND DISCONTINUANCE

     Subject to the  limitations  provided  in this  Section 6 of the Plan,  the
Board of Directors of the  Corporation  may from time to time amend,  suspend or
discontinue  the  Plan.  Subject  to the  provisions  of  paragraph  4(i) or the
approval of the  Corporation's  shareholders no action of the Board of Directors
of the Corporation or of the Committee may (a) materially increase the number of
shares  reserved  for Options  pursuant to Section 2, (b) permit the granting of
any  Option at an Option  price less than that  determined  in  accordance  with
paragraph  4(c),  (c) permit the  granting of Options  which  expire  beyond the
period  provided for in paragraph  4(b),  (d)  materially  increase the benefits
accruing to participants in the Plan, (e) materially modify the requirements for
eligibility for  participation in the Plan, or (f) otherwise cause Rule 16b-3 to
become inapplicable. Without the written consent of an Optionee, no amendment or
suspension of the Plan shall diminish or impair any Option previously granted to
him under the Plan.  Notwithstanding  any  other  provision  of the Plan,  every
Option  (and the rights in every  share  issued  upon an exercise of the Option)
granted  after the initial  adoption of this Plan or following  any amendment of
this Plan which requires the approval of the Corporation's  shareholders,  shall
be  conditional   and  contingent   upon  the  approval  of  the   Corporation's
shareholders.  Further,  those Options (and shares  issued under those  options)
shall not be subject to sale or transfer unless and until

                                       5.


<PAGE>


shareholder  approval is obtained.  The Committee shall implement procedures for
compliance with these restrictions when applicable.

7.  EFFECTIVE DATE

     The effective  date of the Plan shall be June 23, 1992.  The effective date
of the amendment to the Plan is July 25, 1997.

8.  NAME

     The Plan shall be known as the "MYLAN  LABORATORIES  INC. 1992  NONEMPLOYEE
DIRECTOR STOCK OPTION PLAN."



                                       6.


     (13) Fiscal 1998 Annual  Report to the  Shareholders  (only those  portions
          which are  incorporated  in this Report by  reference  are being filed
          herewith).


Selected Financial Data MYLAN LABORATORIES INC.

<TABLE>
<S>                                   <C>        <C>       <C>        <C>         <C>        <C>        <C>        <C>
Year ended March 31                     1998       1997       1996       1995       1994        1993      1992       1991
- --------------------------            -------     ------     ------     ------      -----      ------     -----      -----

Total revenues ....................   $555,423   $440,192   $392,860   $396,120    $251,773   $211,964   $131,936   $104,524

Net earnings ......................   $100,777   $ 63,127   $102,325   $120,869    $ 73,067   $ 70,621   $ 40,114   $ 32,952

Earnings per common share-basic ...   $    .83   $   .52    $    .86   $   1.02    $    .62   $    .61   $    .35   $    .29
Earnings per common share-diluted .   $    .82   $   .51    $    .85   $   1.01    $    .61   $    .60   $    .35   $    .29

Shares used in computation-basic ..    122,094    121,926    119,530    118,963     118,423    115,651    114,726    114,552
Shares used in computation-diluted     123,043    122,727    120,706    119,912     119,502    116,986    115,927    115,332

At year end
Working capital ...................   $358,752   $300,274   $330,733   $275,032    $191,647   $154,000   $102,105   $ 81,571

Total assets ......................   $847,753   $777,580   $692,009   $546,201    $403,325   $351,105   $226,720   $186,955

Long-term obligations .............   $ 26,218   $ 32,593   $ 18,002   $  7,122    $  4,609   $  5,125   $  3,600   $  3,398

Shareholders' equity ..............   $744,465   $659,740   $616,441   $482,728    $379,969   $295,972   $203,452   $167,531

Book value per share-diluted ......   $   6.05   $   5.38   $   5.11   $   4.03    $   3.18   $  2.53    $   1.76   $   1.45
- -------------------------------------------------------------------------------------------------------------------------------
Numbers in thousands except per share amounts.
</TABLE>


From June of 1990  through  July of 1992 the Company  had a  quarterly  dividend
program  totaling $.067 per share per year. From October of 1992 to July of 1993
the Company had a quarterly  dividend  program totaling $.08 per share per year.
From  October  of 1993 to July of 1994  the  Company  had a  quarterly  dividend
program  totaling $.107 per share per year. From October of 1994 to July of 1995
the Company had a quarterly  dividend program totaling $.133 per share per year.
Since October of 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  October  30,  1991  business  combination  of Mylan
Laboratories  Inc. and Dow Hickam  Pharmaceuticals  Inc., the two-for-one  stock
split  effective  August 1, 1992 and the  three-for-two  stock  split  effective
August 15, 1995.


<PAGE>                              21


        Management's Discussion and Analysis of Operations and Financial
                        Position MYLAN LABORATORIES INC.

Overview

     Mylan Laboratories Inc. ("the Company" or "Mylan") recorded net earnings of
$100.8  million for the year ended March 31, 1998  compared to $63.1  million in
fiscal 1997 and $102.3  million in fiscal 1996. The results for the current year
reflect the Company's leadership roll in the generic pharmaceutical industry and
its  ability  to act  proactively  in the  face  of  ongoing  challenges  in the
marketplace.

     Historically,  earnings from new product  approvals and expansion of market
share  more  than  offset  the  loss  in  net  earnings   resulting  from  price
deterioration  in the  generic  market.  Beginning  in fiscal 1996  however,  an
increasingly  difficult  regulatory  environment was compounded by a new wave of
patent  litigation  by  branded  pharmaceutical  companies  under the Drug Price
Competition and Patent Term  Restoration Act of 1984 (the  "Hatch-Waxman  Act").
These two factors  significantly  increased the cost of bringing new products to
market and have in many cases diminished the eventual  commercial success of new
products by delaying their introduction.

     In  addition  to  the   uncertainty   of  new  product   approvals,   price
deterioration during fiscal 1996 and 1997 was more severe than at any other time
in the Company's history.  The Company estimates that price deterioration in the
generic  industry  reduced net earnings by  approximately  $55 million in fiscal
1996 and $75 million in fiscal 1997.

     Against this backdrop,  the Company was optimistic entering fiscal 1998 due
to its strong  history and extensive  list of products  pending  approval at the
FDA, but cautious because of obvious uncertainties of the marketplace.

     The frustration caused by regulatory and legal issues surrounding  generics
can best be illustrated by  ranitidine,  the most promising new generic  product
for fiscal 1998. Ranitidine is the generic version of  ZantacRegistration  Mark,
an anti-ulcer  medication developed by Glaxo Wellcome Inc. ("Glaxo") with annual
sales in excess of one  billion  dollars.  Initially  the  product  had a patent
expiration date of December 5, 1995.

     In 1995, an Act of Congress extended the patent protection for this product
until July 25, 1997.

     The  Company  received a  tentative  approval  for its  generic  version of
ZantacRegistration  Mark in January of 1997.  Glaxo  brought suit against  Mylan
alleging that the product  infringed a process  patent,  and accordingly the FDA
was prevented from approving Mylan's product until the suit was settled or until
May of 1999.

     In June of 1997 Mylan entered into a distribution arrangement with Genpharm
Inc.,  ("Genpharm"),  whereby the Company would  distribute  Genpharm's  generic
ranitidine in the United States.  The FDA determined  that Genpharm was entitled
to exclusivity on generic ranitidine through August 29, 1997, by virtue of being
the first to file an application for the product.  Genpharm,  however,  was also
sued by  Glaxo  relating  to a  process  patent,  thus  preventing  the FDA from
approving Genpharm's version of the product.

     On July 31, 1997,  Genpharm  waived its  exclusivity  in favor of Novopharm
Limited, and its United States subsidiary Granutec Inc.  ("Novopharm"),  who had
previously  settled its patent issues with Glaxo.  On August 1, 1997,  nearly 20
months after the product  patent was originally  scheduled to expire,  a generic
version of  ZantacRegistration  Mark was  offered to the  American  public.  The
profits  recognized by Novopharm during the exclusivity period were to be shared
among three companies, including Mylan.

     By  mid-September,  five  manufacturers  had received  approval to market a
generic version of the product,  including Genpharm, which had settled its legal
issues with Glaxo and whose product was being distributed by Mylan.

     According  to  independently  compiled  market  information,  by the end of
September the average selling price of generic  ranitidine had dropped by almost
30%.  Six  months  after  the  introduction  of  generic   ranitidine,   71%  of
prescriptions  written  were being  filled  with  generic  product.  The average
selling price for generic  ranitidine was now less than half of the introductory
price with some  product  being sold at 18% of the brand  product  price.  On an
annualized basis,  generic ranitidine was saving the American public almost $500
million.


<PAGE>                           22


        Management's Discussion and Analysis of Operations and Financial
                        Position MYLAN LABORATORIES INC.


     In March of 1998, the Company  resolved its legal issues with Glaxo opening
the door to FDA approval of the Company's generic product.

     Though the case of  ranitidine  was the most  dramatic,  other new  product
introductions experienced similar difficulties throughout fiscal 1998, including
rapid  price  deterioration  and the  introduction  of stocking  allowances  for
generic  products.  Accordingly,  while the Company  added more new  products in
fiscal 1998 than in any year in recent history,  the net sales and gross profits
derived from these products fell short of Company expectations.

     As a  result  of  the  continued  pricing  deterioration  the  Company  has
experienced  since  fiscal  1996,  and the  increase  in  litigation  under  the
Hatch-Waxman Act and in an effort to meet its corporate objectives,  the Company
began  an  extensive  evaluation  of its  operations.  This  ongoing  evaluation
includes assessing the Company's relationships with key customers and suppliers,
production capacity and product level  contribution.  One of the key conclusions
of this  evaluation has been the  determination  that changes in Mylan's generic
pricing practices were needed.

     In November of 1997,  the Company  raised prices on three generic  products
and in January of 1998 announced  that it was raising prices on four  additional
products out of its nearly 100 product generic line during the fourth quarter of
fiscal 1998.  Increases on four additional  products have been announced for the
first quarter of fiscal 1999,  and other  products are being reviewed as part of
the ongoing evaluation.

     The price  increases  initiated in the second half of the fiscal year had a
favorable  impact on the fourth  quarter net earnings.  While Mylan  anticipates
continued  benefits from price increases in the near future, the continuation of
this trend and any resulting  benefits depend on several factors,  some of which
are beyond the  Company's  control.  See "Forward  Looking  Statements"  in this
"Management's Discussion and Analysis of Operations and Financial Position." The
Company  intends to continue to work closely with its customers and suppliers to
ensure that  Mylan's full line of generic  products  continue to be available to
the American public as a cost effective alternative to the innovator products.

     The Company  remains  committed  to  expanding  its branded  pharmaceutical
operations,  by  bringing to market  products  that  satisfy  unmet needs in the
medical  community.  In February  1998,  the Company  added two  products to its
branded portfolio,  MentaxRegistration  Mark and  Clorprestrademark . While they
did not contribute  significantly to net earnings in the current year they along
with  MAXZIDERegistration  Mark and  NITREKtrademark  are  helping to  establish
Bertek  Pharmaceuticals Inc. as a recognized name in the branded  pharmaceutical
industry.  It is upon this platform that the Company  intends to launch  several
branded products, either developed internally or obtained by acquisition, in the
near and extended future.

Results of Operations

    Net Sales and Gross Margin

          The following  table outlines net sales,  gross margin (net sales less
cost of sales ) and the corresponding change from the previous year:

(dollars in millions)
Year Ended                      Net Sales        Gross Margin    Gross Margin
March 31,                   Dollars  Change    Dollars  Change     as % of Sales
- -----------------          --------  ------    -------  ------     ------------
1998                        $528.6      20%     $240.3   33%             45%
1997                         440.2      12%      180.5  - 8%             41%
1996                         392.9     - 1%      195.2  -14%             50%

     The changes in net sales,  gross  margins and gross margins as a percent of
net sales are  primarily  indicative  of the  highly  competitive  nature of the
generic pharmaceutical  industry, the Company's history of obtaining new product
approvals  and in  fiscal  1998 the  impact  of price  increases  and  strategic
alliances on certain products. Changes from fiscal 1996 to fiscal 1997 were also
impacted  by the  acquisition  of UDL in  February  of 1996  (See  note B to the
Financial  Statements)  and the termination of the Company's  license  agreement
with Lederle  Laboratories  relating to MAXZIDE(R) and MAXZIDE(R)-25MG in August
of 1996 (See note B to the Financial Statements).


<PAGE>                               23

        Management's Discussion and Analysis of Operations and Financial
                        Position MYLAN LABORATORIES INC.


     With regard to the Company's generic product line, four products were added
in fiscal 1996 accounting for $10.3 million in net sales in fiscal 1996 and nine
products were added in fiscal 1997  accounting for $34.1 million in net sales in
fiscal 1997.  In fiscal 1998 the Company  added 13 products  with  aggregate net
sales of $61.5 million.

     Two  of the  fiscal  1998  new  products,  ranitidine  and  acyclovir,  are
manufactured   by  other   companies  and   distributed  by  the  Company  under
distribution  arrangements.  Under the terms of the distribution  arrangement on
ranitidine, the Company also recognized $26.8 million recorded under the caption
"Other Revenues" (See note N to the Financial Statements).

     The Company  estimates  that price  deterioration  in the generic  industry
resulted  in  reductions  in net sales and gross  profits of  approximately  $77
million in fiscal  1996,  $104  million in fiscal 1997 and $32 million in fiscal
1998. The 1998 reduction was offset by pricing actions as previously discussed.

     Total  unit  volume  of  generic  product  shipments,  excluding  unit-dose
shipments,  increased by 8% in fiscal 1998, 18% in fiscal 1997 and 17% in fiscal
1996 over the respective  preceding  years.  The higher levels of volumes create
manufacturing  efficiencies  which were realized in all three of the past fiscal
years.

     Net sales and gross margin percentages  recognized in prior periods are not
necessarily indicative of the results to be expected in future periods.

Research and Development

     Research and development  expenses were $46.3 million in fiscal 1998, $42.6
million in fiscal 1997 and $38.9 million in fiscal 1996. These amounts represent
approximately 9% of net sales in fiscal 1998 and 10% of net sales in both fiscal
1997 and 1996.

     The following  table  outlines the  approximate  allocation of research and
development expenditures: (dollars in millions)

Year ended March 31,                     1998          1997           1996
- -------------------                    -------        -------        -------
Generic related projects               $  22.0        $  20.5        $  18.0
Innovative compound projects              18.4           16.1           14.5
Transdermal patch related                  5.9            6.0            6.4

     During fiscal 1997 the Company  completed  construction of a 150,000 square
foot  facility  in  Morgantown,   West  Virginia,  which  houses  the  Company's
state-of-the-art  research and development  facility.  The facility provides the
Company with the ability to perform research and development  activities of both
innovative and generic compounds including sustained release compounds.

Selling and Administrative

     Selling and  administrative  expenses  were $96.7  million in fiscal  1998,
$79.9  million  in fiscal  1997 and $56.1  million in fiscal  1996  representing
approximately  18% of net  sales in each of the past  two  years  and 14% of net
sales in fiscal 1996.

     Fiscal 1998 expense  includes  $12.8 million of costs  associated  with the
launch  of new  generic  products  including  ranitidine.  Such  costs  included
payments of stocking fees to customers to assist in the conversion and promotion
of the new generic products. In prior years such costs were insignificant. Costs
incurred  defending  patent  related  lawsuits in fiscal 1998 increased over the
previous year by approximately $5.5 million principally as a result of increased
litigation  under the  Hatch-Waxman  Act.  Increased  legal costs were partially
offset by reaching  favorable  settlements  on various  legal  matters in fiscal
1998.  Payroll and related expenses increased by approximately $4.7 million over
the previous year.


<PAGE>                           24

        Management's Discussion and Analysis of Operations and Financial
                        Position MYLAN LABORATORIES INC.


     Approximately  $12 million of the increase  from fiscal 1996 to fiscal 1997
was attributable to UDL,  including  amortization  expense of approximately $3.0
million which resulted from the acquisition of UDL in February of 1996.  Another
$4.5  million  of  the  increase  was  attributable  to  incremental  marketing,
promotion and interest  expense related to MAXZIDE(R)  products.  Also in fiscal
1997, the Company  recorded  provisions for certain legal matters as well as bad
debt expense relating to the Foxmeyer bankruptcy, which aggregated approximately
$8.0 million.

Equity in Earnings of Somerset

     Equity in earnings  of Somerset  was $10.3  million in fiscal  1998,  $18.8
million in fiscal 1997 and $25.0 million in fiscal 1996. Somerset's contribution
to the Company's net earnings per share (basic) was $.07 in fiscal 1998, $.14 in
fiscal 1997 and $.19 in fiscal 1996.

     Under the Orphan Drug Act,  Somerset had exclusivity  relating to marketing
the  chemical  compound  Eldepryl(R)  for  use as a  treatment  for  late  stage
Parkinson's disease through June of 1996. Somerset filed a complaint against the
FDA requesting injunctive and declaratory relief, review of agency action, and a
temporary  restraining  order in connection with three generic approvals granted
by the FDA in August 1996. All such actions have been denied.

     Somerset continues research efforts to discover alternative indications for
Eldepryl(R) and the development of other  compounds.  Unless such
new  indications or compounds are approved for  commercialization  the impact of
generic competition will continue to adversely affect Somerset's contribution to
the Company's net earnings. Other Income

     Other income,  derived  principally  from  investment  earnings,  was $14.0
million in fiscal 1998, $10.4 million in fiscal 1997 and $16.6 million in fiscal
1996.  The fiscal  1997  amount  includes a $1.2  million  loss  incurred by the
Company in  connection  with the sale of certain  assets  relating to the custom
label and printing  operations  of Bertek,  Inc.  which were sold in February of
1997.  Other year to year changes result primarily from changes in the levels of
assets available for investment and investment market conditions.

Income Taxes

     The  effective  tax rate for fiscal  1998 was 32%  compared to 28% for both
fiscal  1997  and  1996.  Approximately  half of the  increase  in the  rate was
attributable  to the  recognition  of "Other  Revenue" which was subject to full
Federal  and State  taxes.  The  remainder  of the change is  attributable  to a
decrease  in  income  from  Somerset,  a  change  in the  proportion  of  income
attributable  to Puerto Rican  operations  versus  domestic  operations  and the
utilization of state tax credits  resulting  primarily  from facility  expansion
projects.

     During fiscal 1998, the Company  reached a negotiated  settlement  with the
Internal  Revenue Service  regarding  audits of the Company's income tax returns
for the years 1992 through 1996.  The settlement of prior years had no impact on
the amount of income tax expense  recognized in the current year. As part of the
settlement,  the Company  agreed to change the method  employed for  determining
taxable  income of its Puerto Rican  operations  from the cost sharing method to
the profit-split method for all years after 1996.


<PAGE>                             25

        Management's Discussion and Analysis of Operations and Financial
                        Position MYLAN LABORATORIES INC.


     Changes  in the  Federal  Tax Code  enacted  in 1993  reduced  tax  credits
previously  available  from operating in Puerto Rico by up to 55% through fiscal
1998 with an  additional 5% reduction to occur in fiscal 1999.  Thereafter,  the
amount of income  subject to the Puerto  Rican tax credit  will be limited for a
period of four years before complete termination of the credits.

Liquidity and Capital Resources

     The  Company's  balance  sheet  remains  strong with total assets of $847.8
million at March 31, 1998  compared to $777.6  million at March 31,  1997.  As a
result of strong operating results working capital increased from $300.3 million
in 1997 to $358.8  million in 1998,  and the ratio of current  assets to current
liabilities also increased from 4.8 to 1 to 6.0 to 1.

     Net cash  provided  from  operating  activities  was $52.7 million in 1998,
$46.5 million in 1997 and $75.6 million in 1996.  The  improvement  in operating
results  from 1997 to 1998 was  partially  offset by the  increase  in  accounts
receivable and inventory  which  reflects the increased  demand and sales of the
Company's  products.  In  addition,  the Company had higher  income tax payments
which included the settlements of tax audits during the fiscal year.

     The Company continues to expend funds to increase  manufacturing  capacity,
upgrade  current  facilities  and  provide the latest  technologically  advanced
production  and research  equipment  available.  The Company's net investment in
property,  plant and equipment was $28.9 million in 1998,  $26.9 million in 1997
and $31.4 million in 1996.  Major  investments  during the current year included
expansion  of  additional  manufacturing  capacity  to its  present  facility in
Morgantown,  West Virginia,  completion of its  state-of-the-  art  distribution
facility in Greensboro,  North  Carolina and  completion of a sustained  release
facility also in Morgantown,  West Virginia.  All of these capital  expenditures
were made with the general funds of the Company and without any bank financing.

     Cash used to increase  intangible and other assets  relates  principally to
payments  made to  entities  with which the  Company is jointly  developing  new
products  and in  1997,  the  initial  payment  to  American  Home  Products  in
connection with the MAXZIDE(R) products.

     Payments on long-term obligations include obligations assumed in connection
with  the  acquisition  of UDL and  installment  payments  in 1998  and  1997 in
connection with the MAXZIDE(R) products. The Company paid cash dividends of $.16
per share in 1998 and 1997 totaling  $19.5  million and $.15 per share  totaling
$17.5 million in 1996. Year 2000

     The  Company  has  performed  a  review  of its  critical  information  and
operation  systems  for Year  2000  compliance.  A project  team has  identified
systems critical to our business and for systems non-Year 2000 compliant program
modifications  or replacement  programs are planned.  Contact has been initiated
with customers,  vendors,  service suppliers and banks to verify their Year 2000
readiness and testing is planned where appropriate.  External and internal costs
specifically  associated  with  modifying  internal  use  software for Year 2000
compliance are expensed when incurred.  The Company does not believe the cost of
such remedial  corrective  actions will be material to the  Company's  financial
position,  results of operations or cash flows.  While the Company  continues to
address  the Year  2000  compliance  issue  there can be no  guarantee  that all
problems  both  internal and external  will be foreseen and corrected or that no
material disruption of our business will occur.


<PAGE>                       26

        Management's Discussion and Analysis of Operations and Financial
                        Position MYLAN LABORATORIES INC.


Other Matters

     The  financial  Accounting  Standards  Board issued  Statement of Financial
Accounting  Standards  No. 130,  "Reporting  Comprehensive  Income" and No. 131,
"Disclosure  about Segments of an Enterprise and Related  Information."  Both of
these standards are effective for financial statements for years beginning after
December 15, 1997.  Management believes the adoption of these standards will not
have any effect on the Company's financial position or results of operations.

Forward Looking Statements

     Various  statements  in this Report  indicate  that the Company  expects to
increase  revenues and to continue to be  profitable  in the future by employing
various  strategies which include,  among other things,  entering into alliances
with other manufacturers, strengthening development of branded products, seeking
opportunities  for acquisitions and seeking to realize  operating  efficiencies.
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:

     The Company's results of operations  depend to a significant  extent on its
ability  to  develop  and bring to the  market  new  generic  equivalent  drugs.
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.  In
fiscal 1998,  the Company's  expectations  for revenues and gross margins on new
products  were not met,  principally  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.

     Many  of  the  raw   materials   needed  by  the  Company  to   manufacture
pharmaceutical  products are available from a single FDA-approved supplier. Even
where more than one  supplier  exists,  a single  supplier  may be listed in the
Company's  ANDAs.  New  suppliers  of the  active  ingredients  in drugs must be
approved  by the  FDA.  Accordingly,  any  change  in a  supplier  requires  FDA
approval, which may take several months. Any interruption of supply could have a
material  adverse  effect on the Company's  ability to  manufacture a product or
obtain FDA  approval of a new  product,  or could  result in the  Company  being
required to pay higher  prices to another  supplier.  Conversely,  in  instances
where  limitations on the  availability of raw materials  lessen  competition in
specified  drugs and permit  higher  pricing  levels,  the  availability  of new
sources of supply will likely increase competition and result in lower pricing.

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

     See also the discussion of the Company's business, including the regulatory
environment,  customers,  markets,  competitive  conditions  and  raw  materials
included in Item 1 of the Company's Annual Report on Form 10-K.



<PAGE>                        27



Consolidated Balance Sheets MYLAN LABORATORIES INC.

March 31                                           1998             1997
Assets
Current assets
Cash and cash equivalents                       $103,756,000    $126,156,000

Marketable securities                             20,967,000      13,876,000
Accounts receivable                              136,864,000     115,303,000
Inventories                                      146,041,000     100,890,000
Deferred income tax benefit                        7,845,000      13,532,000
Prepaid and refundable income tax                  7,946,000         --
Other current assetsn                              6,679,000       9,263,000
Total current assets                             430,098,000     379,020,000

Property, plant and equipment - 
          net of accumulated depreciation        151,412,000     135,829,000
Marketable securities, non-current                20,974,000      23,668,000
Intangible assets - 
          net of accumulated amortization        128,745,000     137,062,000
Other assets                                      86,803,000      76,888,000
Investment in and advances to Somerset            29,721,000      25,113,000

Total assets                                    $847,753,000    $777,580,000
See notes to consolidated financial statements.


<PAGE>                                    28

Consolidated Balance Sheets MYLAN LABORATORIES INC.

March 31                                            1998            1997
Liabilities and shareholders' equity
Current liabilities
Trade accounts payable                            $15,957,000    $18,039,000
Current portion of long-term debt                   8,477,000     17,453,000
Income taxes payable                                5,377,000     13,795,000
Other current liabilities                          36,635,000     24,566,000
Cash dividend payable                               4,900,000      4,893,000
Total current liabilities                          71,346,000     78,746,000

Long-term obligations                              26,218,000     32,593,000
Deferred income tax liability                       5,724,000      6,501,000

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
123,050,172 at March 31, 1998 and 122,814,956 
at March 31, 1997                                  61,525,000     61,407,000

Additional paid-in capital                         92,405,000     89,262,000
Retained earnings                                 594,847,000    513,750,000
Unrealized gain (loss) on investments               1,570,000       (947,000)
                                                  -----------    ------------
                                                  750,347,000    663,472,000

Less  treasury  stock at cost - 
849,858  shares at March 31, 1998 and  
752,950 shares at March 31, 1997                    5,882,000      3,732,000
Net worth                                         744,465,000    659,740,000

Total liabilities and shareholders' equity      $ 847,753,000  $ 777,580,000



<PAGE>                                 29

Consolidated Statements of Earnings MYLAN LABORATORIES INC.

Year ended March 31                      1998           1997           1996
                                        ------         ------         ------
Net sales                           $528,601,000   $440,192,000   $392,860,000
Other revenues                        26,822,000       --               --
total revenues                       555,423,000    440,192,000    392,860,000

Cost and expenses
Cost of sales                        288,290,000    259,666,000    197,697,000
Research and development              46,278,000     42,633,000     38,913,000
Selling and administrative            96,708,000     79,948,000     56,073,000
                                     431,276,000    382,247,000    292,683,000

Equity in earnings of Somerset        10,282,000     18,814,000     24,968,000
Other income                          13,960,000     10,436,000     16,612,000
Earnings before income taxes         148,389,000     87,195,000    141,757,000
Income taxes                          47,612,000     24,068,000     39,432,000
Net earnings                        $100,777,000   $ 63,127,000   $102,325,000

Earnings per common share
Basic                               $        .83   $        .52   $        .86
Diluted                             $        .82   $        .51   $        .85
Weighted average common shares
Basic                                122,094,000    121,926,000    119,530,000
Diluted                              123,043,000    122,727,000    120,706,000

See notes to consolidated financial statements


<PAGE>                            30
Consolidated Statements of Shareholders' Equity MYLAN LABORATORIES INC.

<TABLE>

<S>                                         <C>              <C>              <C>               <C>         <C>
                                                                                                              Unrealized
                                               Common Stock    Common Stock         Additional    Retained    Gain/(Loss)       
                                                     Shares          Amount    Paid-In Capital    Earnings    Marketable Securities
- ---------------------------------------------------------------------------------------------------------------------------------
March 31, 1995                                   79,972,248    $39,986,000        $57,577,000   $386,212,000    $1,374,000
Stock options exercised                             206,708        104,000          3,103,000      --              --   
Cash dividend $.15 per share                          --             --                 --       (18,401,000)      --        
Net earnings                                          --             --                 --       102,325,000       --
Stock split (3 for 2)                            40,008,219     20,004,000        (20,010,000)     --              --
UDL acquisition                                   2,337,614      1,168,000         45,326,000      --              --
Unrealized gain on marketable securities              --             --                 --         --              201,000
- ---------------------------------------------------------------------------------------------------------------------------------
March 31, 1996                                  122,524,789    $61,262,000        $85,996,000   $470,136,000    $1,575,000
Stock options exercised                             290,167        145,000          3,266,000      --              --
Cash dividend $.16 per share                          --             --                 --       (19,513,000)      --
Net earnings                                          --             --            63,127,000      --
Unrealized loss on marketable securities              --             --                 --         --           (2,522,000)
- ---------------------------------------------------------------------------------------------------------------------------------
March 31, 1997                                  122,814,956    $61,407,000        $89,262,000   $513,750,000    $ (947,000)
Stock options exercised                             235,216          118,000        3,143,000       (141,000)      --
Cash dividend $.16 per share                          --             --                 --       (19,539,000)      --
Net earnings                                          --             --                 --       100,777,000       --
Unrealized gain on marketable securities              --             --                 --         --            2,517,000
- ---------------------------------------------------------------------------------------------------------------------------------
March 31, 1998                                  123,050,172    $61,525,000        $92,405,000   $594,847,000    $1,570,000
- ---------------------------------------------------------------------------------------------------------------------------------
See notes to consolidated financial statements
</TABLE>



<PAGE>                               31


Consolidated Statements of Cash Flows MYLAN LABORATORIES INC.

<TABLE>
<S>                                                  <C>                <C>            <C>
Year ended March 31                                          1998           1997             1996
- ---------------------------------------------------------------------------------------------------------------------------------
Cash flows from operating activities
Net earnings                                           $ 100,777,000      63,127,000     $ 102,325,000
Adjustments to reconcile net earnings to net cash 
provided from operating activities:
    Depreciation and amortization                         21,708,000      17,347,000        13,450,000
    Deferred income tax (benefit) expense                 (3,207,000)         47,000         1,236,000
    Equity in earnings of Somerset                       (10,282,000)    (18,814,000)      (24,968,000)
    Cash received from Somerset                            5,674,000      20,038,000        20,686,000
    Allowances on accounts receivable                      8,754,000       2,422,000        (4,141,000)
    Loss on sale of assets                                    --           1,171,000            --
    Other noncash expenses                                 1,574,000         290,000           516,000
    Changes in operating assets and liabilities:
      Accounts receivable                                (30,565,000)    (45,198,000)       (4,013,000)
      Inventories                                        (45,007,000)     (1,495,000)      (11,148,000)
      Trade accounts payable                              (2,082,000)      4,000,000        (2,463,000)
      Income taxes                                        (8,949,000)        773,000       (12,468,000)
      Other operating assets and liabilities              14,255,000       2,829,000        (3,442,000)
Net cash provided from operating activities               52,650,000      46,537,000        75,570,000
- ---------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities
    Additions to property, plant and equipment           (28,853,000)    (26,854,000)      (31,419,000)
    Increase in intangible and other assets               (7,984,000)    (30,674,000)      (16,970,000)
    Purchase of investment securities                    (16,785,000)    (23,221,000)      (27,169,000)
    Proceeds from investment securities                   17,309,000      18,060,000        68,753,000
    Proceeds from sale of assets                              --           3,500,000            --
    Acquisitions net of cash acquired                         --              --              (520,000)
Net cash used in investing activities                    (36,313,000)    (59,189,000)       (7,325,000)
- ---------------------------------------------------------------------------------------------------------------------------------
See notes to consolidated nancial statements.
</TABLE>



<PAGE>                             32

Consolidated Statements of Cash Flows MYLAN LABORATORIES INC.

<TABLE>
<S>                                                   <C>               <C>               <C>
Year ended March 31                                         1998               1997             1996
- --------------------------------------------------------------------------------------------------------------------------------- 
Cash flows from financing activities
    Payments on long-term obligations                   $ (19,198,000)    $ (19,788,000)    $ (2,879,000)
    Cash dividends paid                                   (19,525,000)      (19,491,000)     (17,502,000)
    Repurchase of common stock                             (2,459,000)          --                --
    Proceeds from exercise of stock options                 2,445,000         1,107,000        1,836,000
Net cash used in financing activities                     (38,737,000)      (38,172,000)     (18,545,000)

Net (decrease) increase in cash and cash equivalents      (22,400,000)      (50,824,000)      49,700,000
Cash and cash equivalents-beginning of year               126,156,000       176,980,000      127,280,000
- ---------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents-end of year                   $ 103,756,000     $ 126,156,000    $ 176,980,000
</TABLE>



     For purposes of presentation in 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. The carrying value of these items approximates fair value.

     Cash payments for interest were $3,426,000 in 1998,  $1,977,000 in 1997 and
$22,000 in 1996.  Cash  payments  for income  taxes  were  $59,770,000  in 1998,
$23,245,000 in 1997 and $50,665,000 in 1996.

     During fiscal 1996 the Company acquired all of the outstanding stock of UDL
(see note B). The purchase  price of  approximately  $47,500,000  was  satisfied
through the issuance of the Company's common stock.

     Certain  stock  option  transactions  result in a reduction of income taxes
payable and a corresponding  increase in additional paid in capital.  The amount
for the years ended March 31, 1998, 1997 and 1996 were $652,000,  $205,000,  and
$1,155,000 respectively. 

     During fiscal 1996 the Company  declared a 3 for 2 stock split  effected in
the form of a stock dividend (see note L).

     In  consideration  for the exercise of stock options,  the Company received
and recorded  into  treasury  stock 513 shares valued at $12,000 in fiscal 1998,
53,333  shares  valued at $900,000 in fiscal  1997 and 10,166  shares  valued at
$209,000 in fiscal 1996.


<PAGE>                             33





                   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  governmenta l agencies  within the
United States.

2. Marketable Securities

The Company accounts for investments in marketable securities in accordance with
Statement of Financial  Accounting  Standards No. 115,  "Accounting  for Certain
Investments  in Debt and  Equity  Securities."  The  Company's  investments  are
classified as  "available  for sale" and,  accordingly,  are recorded at current
market value with offsetting  adjustments to shareholders' equity, net of income
taxes.

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  such  provisions  which
amounted to $23,385,000 at March 31, 1998 and $14,631,000 at March 31, 1997.

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 cost of depreciable  assets to operations over the
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 their estimated useful lives not to exceed forty years.
Intangible  assets are  periodically  reviewed to  determine  recoverability  by
comparing their carrying value to expected future cash flows.

7. Research and Development

Research and development expenses are charged to operations as incurred.

8. Income Taxes

The Company  accounts for income taxes in accordance with Statement of Financial
Accounting  Standards No. 109,  "Accounting  for Income Taxes."  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.


<PAGE>                            34
9. Earnings per Share

During the year the Company adopted Statement of Financial Accounting 
Standards No. 128, "Earnings per Share." This statement establishes standards 
for computing and presenting basic and diluted earnings per share. Basic 
earnings per share is computed by dividing net earnings available to common 
shareholders by the weighted average common shares outstanding for the 
period. Diluted earnings per share is computed by dividing net earnings 
available to common shareholders by the weighted average common shares 
outstanding adjusted for the dilutive effect of options granted under the 
Company's stock option plans. Prior periods have been restated to reflect 
this new statement. The effect of dilutive stock options on the weighted 
average shares outstanding was 949,000, 801,000, and 1,176,000 for fiscal 
1998, 1997 and 1996.

10. Concentrations of Credit Risk

Financial  instruments  that  potentially  subject  the  Company to credit  risk
consist principally of interest-bearing  investments and trade receivables.  The
Company performs ongoing credit  evaluations of its customers and generally does
not require collateral.  Three of the Company's customers accounted for 13%, 12%
and 11% of net sales in fiscal 1998. No single  customer  represented  more than
10% of net sales in fiscal 1997 and 1996.
 
The Company  invests its excess cash in deposits 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.

11. Accounting Standards

The Financial Accounting Standards Board issued Statement of Financial 
Accounting Standards No. 130, "Reporting Comprehensive Income." This standard 
is effective for financial statements for years beginning after December 15, 
1997. The Financial Accounting Standards Board issued Statement of Financial 
Accounting Standards No. 131, "Disclosures about Segments of an Enterprise 
and Related Information." This standard is effective for financial statements 
for years beginning after December 15, 1997. The Company is currently 
evaluating the disclosure effects of these statements on its financial 
statements.
 
12. 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 reported  amounts of assets and  liabilities  and the  disclosures of
contingent  assets and liabilities at the date of the financial  statements,  as
well as the reported amounts of income and expenses during the reporting period.
Actual results could differ from those estimates.
 
13. Reclassification

Certain  prior  year  amounts  have been  reclassified  to  conform  to the 1998
presentation.



<PAGE>                             35

Note B. Business and Product Acquisitions

    UDL Laboratories, Inc.

On February 28, 1996, a wholly-owned  subsidiary of the Company acquired 100% of
the outstanding  stock of UDL  Laboratories,  Inc.  ("UDL").  UDL is the premier
supplier of unit-dose generic pharmaceuticals to the institutional and long term
care  markets.  UDL has its  corporate  headquarters  in Rockford,  Illinois and
maintains  manufacturing and research and development  facilities in Rockford as
well as Largo, Florida.
  
The business  combination  has been  accounted for under the purchase  method of
accounting.  Payment of approximately  $47,500,000 was made through the issuance
of 2,337,614 shares of newly registered common stock of the Company. Goodwill of
approximately $29,038,000 resulting from the acquisition is being amortized on a
straight-line basis over a 20 year period.

MAXZIDE(R) AND MAXZIDE(R)-25MG

On June 14, 1996 the Company  executed a series of agreements with American Home
Products   Corporation   ("AHP"),   relating  to  the  products  Maxzide(R)  and
Maxzide(R)-25MG.  These agreements were subject to regulatory approval which was
received on August 2, 1996. Since 1984, these products, which were developed and
manufactured  by Mylan,  were  marketed by AHP's Lederle  Laboratories  Division
under a worldwide license arrangement.
 
Under the terms of the new  agreements the Company is now marketing the products
in  the  United  States.  AHP  retained  ownership  of  certain  trademarks  and
tradedress  which have been  licensed to the Company for a period of five years.
At the end of the  five  year  period  ownership  of these  intangibles  will be
transferred to the Company.

As a result of the  transaction  the  Company  recorded an  intangible  asset of
approximately  $69,666,000  which  represent  the  present  value of the minimum
payments  due  to AHP  (see  note  J) and  recognized  amortization  expense  of
$2,786,000 and  $1,742,000 and interest  expense of $2,230,000 and $2,170,000 in
fiscal 1998 and 1997, respectively.

Note C. Inventories

Inventories consist of the following components: (in thousands)
March 31,                                         1998             1997
- ----------------                               ----------       -----------
Raw materials                                   $63,308          $51,796
Work in process                                  27,858           20,843
Finished goods                                   54,875           28,251
                                               $146,041         $100,890
Note D. Property, Plant and Equipment
Property, plant and equipment consists of the following components: 
(in thousands)
March 31,                               Useful Lives       1998      1997
- --------------------------              ------------     --------  --------
Land and land improvements                    --         $  6,909  $  6,734
Buildings and improvements                 20 - 40         72,893    66,530
Machinery and equipment                     5 - 10        122,572   104,566
Construction in progress                      --           23,945    19,636
                                                          226,319   197,466
Less accumulated depreciation                              74,907    61,637
                                                        ---------  ---------
                                                         $151,412  $135,829
Note E. Investment in and Advances to Somerset

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

Equity in Earnings of Somerset  includes the Company's 50% portion of Somerset's
net earnings 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 1998,  1997,  and
1996.  Additionally,  the Company's charges to Somerset for management  services
and  product  development  activities  are  included  in Equity in  Earnings  of
Somerset. These charges have been recorded by Somerset as a reduction of its net
earnings.

          Condensed audited balance sheet information of Somerset is as 
follows: (in thousands)


December 31,                                  1997         1996          1995
- ------------------                          --------      -------       -------
Current assets                               $53,973      $45,871       $43,993
Non-current assets                             3,466        7,006         7,127
Current liabilities                           15,660       19,075        17,057
Payable to owners                              1,433        1,621         2,075
Other liabilities                               --           --              63

          Condensed audited income statement information of Somerset is as 
follows: (in thousands)

Year ended December 31,                       1997         1996           1995
- ------------------                          --------      -------        -------
Net sales                                   $66,956     $101,512       $107,365
Cost and expenses                            30,055       46,895         42,812
Income taxes                                 12,924       18,815         20,200
Net earnings                                $23,977      $35,802        $44,353

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

Somerset's marketing exclusivity for EldeprylRegistration  Mark 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  United  States  Food and Drug  Administration
("FDA"). This has resulted in a decrease in sales and net earnings since 1996.

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,  1997,  the
proposed  adjustments  by the  IRS  amounted  to  approximately  $13,000,000  of
additional  income tax and interest charges over amounts accrued.  Management of
Somerset believes it has  appropriately  claimed the Code Section 936 credit and
intends to vigorously defend its position on this matter.


<PAGE>                            37

Note F. Marketable Securities

The amortized cost and estimated market values at March 31, 1998 and 1997 are 
as follows: (in thousands)
                                                        Gross       Gross
                             Amortized   Unrealized    Unrealize    Market
March 31, 1998                    Cost        Gains      Losses      Value
- ----------------------       ---------   ----------   ---------   ----------
Debt securities:
  U.S. Government obligations   $ 5,161     $   69     $   16     $ 5,214
  Municipal obligations .....    20,581        259       --        20,840
  Corporate bonds ...........     3,200         52         16       3,236
Total debt securities .......    28,942        380         32      29,290
Equity securities ...........    10,584      3,852      1,785      12,651
- ---------------------------------------------------------------------------
Total securities ............   $39,526     $4,232     $1,817     $41,941

                                                    Gross    Gross
                                     Amortized Unrealized  Unrealized  Market
March 31, 1997                            Cost      Gains   Losses      Value
- -----------------------               --------- ---------  --------  ---------
Debt securities:
  U.S. Government obligations .........$ 4,871   $      5   $   99   $  4,777
  Municipal obligations ............... 22,629        123       47     22,705
  Corporate bonds .....................  2,407         11       36      2,382
Total debt securities ................. 29,907        139      182     29,864
Equity securities .....................  9,095      1,112    2,527      7,680
- ---------------------------------------------------------------------------
Total securities ......................$39,002   $  1,251   $2,709   $ 37,544

  Maturities of debt securities at market value at March 31, 1998 are as
follows: (in thousands)
Mature in one year or less ........................$ 8,820
Mature after one year through five years .......... 10,590
Mature after five years ...........................  9,880
  Total ...........................................$29,290

     Proceeds from sales of marketable securities were $17,233,000,  $11,369,000
and $27,667,000 during 1998, 1997 and 1996 Gross gains of $767,000, $565,000 and
$617,000  and gross losses of $82,000,  $271,000  and $39,000  were  realized on
those  sales  during  1998,  1997  and  1996.  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      1998       1997
- ---------------------                     ------------    --------   --------
Patents and technologies                      10 - 20      $27,281    $27,165
License fees and agreements                    2 - 12        7,587      7,587
MaxzideRegistration Mark intangibles             25         69,666     69,666
Goodwill                                      20 - 40       31,732     31,732
Other                                          5 - 20       25,719     25,715
                                                         ---------  ---------
                                                           161,985    161,865
Less accumulated amortization                               33,240     24,803
                                                         ---------  ---------
                                                          $128,745   $137,062

<PAGE>                            38

     The Maxzide(R)  intangibles  relate to trademark,  tradedress and marketing
rights  acquired in the  transaction  described  in note B. The balance in Other
consists principally of non-compete agreements, an assembled workforce, customer
lists and contracts.

Note H. Other Assets

Other assets consist of the following components:  (in thousands) March 31, 1998
1997 ------------------ -------- ------- Pooled asset funds $25,368 $18,795 Cash
surrender value 26,569 23,342 Other  investments  34,866 34,751 -------- -------
$86,803  $76,888  Pooled asset funds include the  Company's  interest in various
limited  partnership funds which consist of common and preferred stocks,  bonds,
and money market funds. Earnings on these investments included under the caption
"Other  Income"  amounted  to  $6,572,000  in  1998,  $1,184,000  in  1997,  and
$3,888,000  in 1996.  At March 31, 1998 and 1997 the  carrying  amounts of these
investments approximated fair value.

Cash Surrender Value represents  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.

Note I. Other Current Liabilities

Other current liabilities includes payroll and employee benefit plan accruals 
which amounted to $16,726,000 and $10,300,000 and accruals for Medicaid 
reimbursements of $4,412,000 and $3,821,000 at March 31, 1998 and 1997. In 
addition $6,164,000 was accrued for product royalties at March 31, 1998.

Note J. Long-Term Obligations

Long-term obligations include accruals for post-retirement compensation pursuant
to  agreements  with  certain  key  employees  and  directors  of  approximately
$11,494,000 and $9,805,000 at March 31, 1998 and 1997.  Under these  agreements,
benefits are to be paid over periods of 10 to 15 years commencing at retirement.

The Company's  obligation on the 10.5% senior  promissory notes assumed with the
acquisition  of UDL is  $5,100,000  and  $6,500,000  at March 31, 1998 and 1997.
Future principal  payments on these notes are in amounts ranging from $1,000,000
to $2,000,000 per year through 2002. At March 31, 1998 and 1997, the Company was
in compliance with all of its debt covenants.

At March 31, 1998 and 1997 the net present  value of the  Company's  outstanding
obligation for the acquisition of Maxzide(R) and Max zide(R)-25MG is $16,316,000
and  $31,836,000  (see  note  B).  Required  payments  are as  follows:  1999 --
$6,000,000  and 2000 --  $5,000,000.  In addition  the Company will make minimum
annual royalty payments of $2,000,000 through 2001.


<PAGE>                             39

Note K. Income Taxes

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

Year ended March 31,                  1998        1997         1996
- ---------------------                ------      ------       ------
Federal
  Current                            $ 45,601   $19,176     $ 30,490
  Deferred                             (2,993)       68        1,323
                                       42,608    19,244       31,813
State
  Current                               5,218     4,845        7,706
  Deferred                               (214)      (21)         (87)
                                        5,004     4,824        7,619
Income taxes                         $ 47,612   $24,068     $ 39,432

Pre-tax earnings                     $148,389   $87,195     $141,757

Effective tax rate                      32.1%     27.6%        27.8%

The Company uses the asset and  liability  approach to account for income taxes.
Deferred income tax assets and liabilities  reflect the future tax  consequences
of events that have already been  recognized 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.


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

March 31,                                                 1998        1997
- ----------------------                                 --------      -------
Deferred Tax Assets:
  Employee benefits                                $     4,397     $     3,785
  Intangible assets                                      4,080           5,455
  Asset allowances                                       8,230           3,775
  Inventory                                                411           8,369
  Investments                                            4,188           2,660
  Other                                                    (69)            940
Total Deferred Tax Assets                               21,237          24,984
Deferred Tax Liabilities:
  Plant and equipment                                    8,702           8,127
  Intangible assets                                      6,829           7,621
  Investments                                            3,585           2,205
Total Deferred Tax Liabilities                          19,116          17,953
Deferred Tax Assets - Net                          $     2,121     $     7,031
Classification in the Consolidated Balance Sheet:
  Deferred Tax Benefit - Current                   $    7,845      $    13,532
  Deferred Tax Liability - Non-Current                  5,724            6,501
Deferred Tax Assets - Net                          $    2,121      $     7,031


<PAGE>                            40

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

Year Ended March 31,                           1998      1997      1996
 -----------------------                      ------    ------    ------ 
Statutory tax rate                            35.0%     35.0%      35.0%
State income taxes-net                         2.3%      4.8%       5.0%
Tax exempt earnings-primarily dividends       (2.4%)    (6.4%)     (6.6%)
Tax credits                                   (3.0%)    (5.9%)     (5.8%)
Other items                                    0.2%      0.1%       0.2%
Effective tax rate                            32.1%     27.6%      27.8%

Tax credits result principally from operations in Puerto Rico.

State income taxes include provisions for tollgate tax resulting from the future
repatriation  of funds from 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. As part of the recently  settled IRS audit, the Company has changed to the
profit-split  tax  accounting  method for the  computation  of tax credits  from
operations in Puerto Rico.

Note L. Common Stock

On April 5, 1997, the Company's Board of Directors authorized a Stock 
Repurchase Program under which the Company may repurchase up to five million 
shares of its outstanding common stock. The purchases will be made on the 
open market or in privately negotiated transactions using currently available 
funds. Repurchased shares will be held in treasury and available for general 
corporate purposes. Through March 31, 1998 the Company had repurchased 
144,900 shares for approximately $2,459,000.

On August 23,  1996,  the  Company's  Board of Directors  adopted a  Shareholder
Rights  Plan  ("the  Rights  Plan").   A  dividend   distribution  was  made  to
Shareholders  of record on September 5, 1996 of a Preferred Share Purchase Right
("the  Right") on each  outstanding  share of the Company's  common  stock.  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. The Company is entitled to redeem the Rights at $.001 per Right at any
time  prior to ten days after the time any  person  acquires  15% or more of the
Company's  common  stock.  The Rights  will expire on  September  5, 2006 unless
previously redeemed or exercised.

During  fiscal 1996 the Company  declared a 3 for 2 stock split  effected in the
form of a stock  dividend.  The par  value  of the  new  shares  issued  totaled
$20,004,000  and was transferred  from additional  paid-in capital to the common
stock  account.  Per share  amounts and stock options have been adjusted for the
stock split.


<PAGE>                            41

Note M. Commitments

The  Company  has  entered  into  various  contractual  agreements,  principally
licensing  arrangements,  whereby  the  Company has  obtained,  in exchange  for
funding of drug development activities,  rights to manufacture and/or distribute
certain  drugs,  which are presently in various  stages of  development.  In the
event that all projects are successful,  payments totaling  $25,625,000 would be
made over the next five years. Approximately ninety percent of this total is due
upon the filing and approval of an Abbreviated New Drug  Application or New Drug
Application with the FDA.

In addition,  under the Company's license agreement with VivoRx Inc. the Company
continues to fund research and  development  expenditures  related to pancreatic
islet cell implant technology for the treatment of diabetes.  This funding is at
the discretion of the Company.

Note N. License Agreement

In June 1997, the Company's  subsidiary  Mylan  Pharmaceuticals  Inc.  ("Mylan")
entered into an exclusive supply and  distribution  agreement with Genpharm Inc.
("Genpharm"),  a Canadian  corporation,  relating to the sale of ranitidine  HCL
tablets  ("ranitidine") in the United States.  Ranitidine is the generic version
of Glaxo Wellcome Inc.'s ("Glaxo") Zantac(R).

Under the terms of the  agreement  Mylan and Genpharm will share in the combined
profits resulting from the sale, by Mylan, of ranitidine tablets manufactured by
either Mylan or Genpharm.  In addition,  the agreement provides that Mylan shall
be entitled to share in any benefit received by Genpharm as a result of Genpharm
entering into any other third party  agreement  which would affect the marketing
of ranitidine.

Due to unresolved  legal matters with Glaxo, on July 31, 1997,  Genpharm entered
into an agreement with Novopharm Limited, a Canadian Corporation, and its United
States subsidiary Granutec Inc. ("Novopharm").  Under the terms of the agreement
between  Genpharm and  Novopharm,  Genpharm is entitled to receive  compensation
from Novopharm predicated upon Novopharm's sales of the product through December
31, 1997 and a profit allocation factor which is significantly reduced after the
exclusivity  period  which  expired on August 29,  1997.  Under the terms of the
agreement  between  Mylan  and  Genpharm,  Mylan  is  entitled  to  share in the
compensation received by Genpharm from Novopharm.

During the quarter  ended  September 30, 1997 the Company  recognized  income of
$26,822,000  related  to the  Genpharm  Novopharm  agreement.  Such  income  was
recorded under the caption  "Other  Revenues" and increased net earnings for the
quarter ended September 30, 1997 by approximately $16,388,000 or $.13 per share.
The Company  collected the entire  receivable  recorded as of September 30, 1997
during the quarter ended December 31, 1997.

As a result of a dispute  between  Genpharm and  Novopharm  relating to contract
interpretation,  the Company has not recognized any additional revenue. Separate
audits are being performed at the request of Genpharm and Novopharm to determine
the amount of sales and  expenses  incurred  by  Novopharm  during the  contract
period in accordance with the agreement.  The amount of revenue to be recognized
by the Company in the future will be  determined  by this final  accounting  and
resolution of the dispute between Genpharm and Novopharm.


<PAGE>                              42

Note O. Fair Value of Financial Instruments

The carrying values of cash and cash  equivalents,  accounts  receivable (net of
provisions)  and  trade  accounts  payable  approximate  fair  value  due to the
short-term  maturity of these  instruments.  Current and non-current  marketable
securities  are  recorded  at fair  value  based on quoted  market  prices.  The
carrying value of long-term  obligations  approximates their fair value based on
discounted  future cash flows using  interest rates  currently  available to the
Company.

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.

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, 1998, 348,000
shares have been granted pursuant to the Directors' Plan.

          A summary of the activity resulting from all plans adjusted for the 
stock split is as follows:
                                        Weighted average        
                                        Number of shares      exercise
                                         under option     price per share
Outstanding
- -----------------------------             -------------   ----------------
April 1, 1995                              2,656,011     $    10.72
  Options granted                            345,000          18.53
  Options exercised                         (229,142)          8.96
  Options cancelled or forfeited             (51,855)         10.50
Outstanding
March 31, 1996                            2,720,014      $    11.87
  Options granted                           217,000           14.75
  Options exercised                        (290,167)          11.05
  Options cancelled or forfeited            (75,970)          15.70
Outstanding
March 31, 1997                            2,570,877      $    12.10
  Options granted                         1,322,000           17.08
  Options exercised                        (235,216)          11.09
  Options cancelled or forfeited           (41,175)           14.17
Outstanding
- --------------------------               ------------    -------------
March 31, 1998                             3,616,486     $    13.96


<PAGE>                                   43


<TABLE>
<S>                <C>              <C>                <C>             <C>                     <C>              
                                         Options Outstanding                        Options Exercisable
                      -------------------------------------------------   ---------------------------------
                                       Weighted                                          
                                       Average           Weighted                                Weighted
Range of                     Number    Remaining         Average          Number                 Average
Exercise Price          Outstanding   Contractual Life   Exercise Price   Exercisable Exercise   Price
Per Share             As of 3/31/98     (years)          Per Share        As of 3/31/98          Per Share
- ---------------       -------------   ----------------   --------------   --------------------   -----------
$ 3.65-$ 4.67               215,733        2.06            $ 4.19           215,733               $ 4.19
$10.58-$14.87             1,789,378        5.00            $12.08         1,457,496               $11.98
$16.68-$20.41             1,611,375        9.09            $17.35           884,627               $17.39
$ 3.65-$20.41             3,616,486        6.65            $13.96         2,557,856               $13.20

</TABLE>


At March 31, 1998,  options were  exercisable for 2,557,856 shares at a weighted
average  exercise  price of $13.20 per share.  The  corresponding  amounts  were
1,831,061  shares at $11.06 per share at March 31, 1997 and 1,833,658  shares at
$10.92 per share at March 31, 1996.

In accordance  with the  provisions of Statement of Financial  Standards No. 123
("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  $6,489,000,  or $.04 per
share and $1,174,000, or $.01 per share at March 31, 1998 and 1997. There was no
effect on earnings per share for fiscal 1996. These  calculations only take into
account options issued since April 1, 1995.

          The average fair value of options granted during the years ended 
March 31, 1998, 1997 and 1996 was $6.47, $6.15 and $7.79. The fair value was 
estimated using the Black-Scholes option pricing model based on the following 
assumptions:

March 31,                                1998         1997           1996
- -----------------------                 -------      -------        --------
Volatility                               35%            35%          35%
Risk-free interest rate                   6.07%          6.73%        6.23%
Dividend yield                            1.0%           1.1%         1.0%
Expected term of options (in years)       5.4            6.1          6.2

Note Q. Profit Sharing and 401(k) Plans

The  Company  has  a  noncontributory  trusteed  profit  sharing  plan  covering
essentially  all employees who are not covered by 401(k) plans, a profit sharing
plan with a 401(k)  provision  covering all employees of Bertek Inc. and UDL and
401(k)  plans  covering  Bertek   Pharmaceuticals   Inc.  (formerly  Dow  Hickam
Pharmaceuticals) and all bargaining unit employees.

Contributions  to the profit  sharing  plans are made at the  discretion  of the
Board of Directors.  Contributions  to the Bertek  Pharmaceuticals  Inc. and UDL
plan  are  based  upon  a  formula   matching  the  employees  salary  deferral.
Contributions  to the bargaining  unit plan are based upon the union  agreement.
Total  contributions  to all plans for the years ended March 31, 1998,  1997 and
1996 were $3,889,000, $3,620,000 and $2,959,000 respectively.


<PAGE>                          44

Note R. Contingencies

The Company is involved in various legal proceedings that are considered 
normal to its business. The majority of these proceedings involve 
intellectual property rights related to products under development and prior 
to FDA approval. These proceedings are initiated by branded pharmaceutical 
companies and often result in delaying the introduction of generic products. 
As more of these suits have been initiated against the Company the cost to 
defend these suits in outside legal fees and internal resource commitments 
has risen dramatically. While it is not feasible to predict the ultimate 
outcome of such proceedings it is the opinion of management that the ultimate 
outcome will have no material adverse effect on the Company's operations or 
financial position.

During the year ended March 31, 1998, the Company  settled several legal matters
receiving   an   aggregate   amount  of   approximately   $5,000,000   including
reimbursement of certain legal fees.


In August 1997, Key  Pharmaceuticals  filed suit against the Company and certain
subsidiaries  claiming  patent  infringement  relating to the  marketing  of its
nitroglycerin  transdermal system. The Company had received FDA approval for its
nitroglycerin  transdermal  system  in  September  1996  and  immediately  began
marketing the product.  The relief sought  includes a preliminary  and permanent
injunction,  treble damages along with interest and attorneys fees and expenses.
The Company believes the suit is without merit and intends to vigorously  defend
its position.

Note S. Other Matters

On April 5, 1998,  the Company  entered into a four year  collective  bargaining
agreement with the Oil, Chemical and Atomic Workers  International Union and its
Local Union 8-957.  The agreement  provides  wage and benefit  increases for the
approximately  four hundred and eighty  production and maintenance  employees at
the  Company's  manufacturing  facilities  in  Morgantown,  West  Virginia.  The
agreement also provides for partial  reimbursement  of post  retirement  medical
benefits.


<PAGE>                           45




                          Independent Auditors' Report
                            MYLAN LABORATORIES INC.

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

We  have  audited  the  accompanying   consolidated   balance  sheets  of  Mylan
Laboratories  Inc.  and  subsidiaries  as of March 31,  1998 and  1997,  and the
related  consolidated  statements of earnings,  shareholders'  equity,  and cash
flows for each of the three years in the period ended March 31, 1998,  appearing
on pages 28 through 45. 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.  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 overal l 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, 1998 and 1997, and the results of their  operations
and their cash flows for each of the three  years in the period  ended March 31,
1998, in conformity with generally accepted accounting principles.


/s/  Deloitte & Touche LLP

Pittsburgh, Pennsylvania
May 7, 1998







<PAGE>                         46


                               Market Information

<TABLE>
<S>                                 <C>          <C>           <C>         <C>          <C>
Quarterly Financial Data
(Amounts in thousands,                   1st           2nd          3rd         4th
except per share amounts)              Quarter       Quarter       Quarter     Quarter      Year
- ---------------------------          ---------     ---------      ---------   ---------    ---------
Fiscal 1998
- ---------------------------
Total revenues                       $ 109,188     $ 153,955      $ 129,517   $ 162,763    $ 555,423
Gross profit                            47,809        55,932         54,440      82,130      240,311
Net earnings                            16,598        30,390         21,983      31,806      100,777
Earnings per share-basic                   .14           .25            .18         .26          .83
Earnings per share-diluted                 .13           .25            .18         .26          .82

Fiscal 1997
- ----------------------------
Total revenues                       $  98,543     $ 108,981      $ 113,981   $ 118,687    $ 440,192
Gross profit                            42,764       45,145          47,252      45,365      180,526
Net earnings                            14,011       17,348          18,081      13,687       63,127
Earnings per share-basic                   .12          .14             .15         .11          .52
Earnings per share-diluted                 .11          .14             .15         .11          .51

</TABLE>

        
Total  revenues  for fiscal  1998  includes  $26,822,000  recognized  in the 2nd
quarter relating to the Genpharm License  Agreement (see note N to the Financial
Statements).

During the latter  part of  calendar  1996,  the volume of sales by  wholesalers
exceeded the Company's estimates and resulted in the Company recording increased
provisions for price adjustment  credits for such sales in the fourth quarter of
fiscal 1997. The Company estimates that increased  provisions  relating to prior
quarters'  sales  reduced  fourth  quarter net  earnings by  approximately  $4.0
million.

The  fourth   quarter  of  fiscal  1997  also  includes  a  pre-tax   charge  of
approximately $1.2 million,  approximately  $800,000 after taxes, resulting from
the sale of certain assets  relating to the Company's  custom label and printing
operations in Vermont.  These  operations  were acquired in connection  with the
acquisition of Bertek,  Inc. and did not  contribute to the Company's  strategic
objectives.

Market Prices
                            1st            2nd            3rd           4th
                        Quarter        Quarter        Quarter        Quarter
Fiscal 1998
High                     16 7/8         24 3/4         25 1/4         24 5/16
Low                      11 1/2         14 5/8         17 7/16        17 1/16

Fiscal 1997
High                     21 5/8         17 1/2         17 1/2         18 1/4
Low                      16 1/4         14 1/4         14             14 3/8

New York Stock Exchange Symbol: MYL

On May 1, 1998 the Company had approximately 93,200 shareholders.

Stock Splits
Split Date               Amount          Split Price   Presplit Price
- ---------------         --------         -----------   --------------
July 20, 1979               5/4             103/4          131/2
Nov. 13, 1981               2/1             131/2          271/8
June 30, 1983               2/1             161/4          321/2
March 1, 1984               3/2             14             21
July 31, 1984               3/2             197/8          293/4
Feb. 15, 1985               2/1             177/8          353/4
Aug. 1, 1986                3/2             14             21
Aug. 1, 1992                2/1             213/4          431/2
Aug. 15, 1995               3/2             21             311/2



<PAGE>                              47



     (21) Subsidiaries of the registrant, filed herewith.

     (23) Consents of Independent Auditors, filed herewith.



INDEPENDENT AUDITORS' CONSENT

We consent to the  incorporation  by reference in  Registration  Statement  Nos.
333-35887,  333-43081,  33-65916 and 33-65918 of Mylan Laboratories Inc. on Form
S-8 of our report  dated May 7, 1998,  incorporated  by reference in this Annual
Report on Form 10-K of Mylan  Laboratories  Inc.  for the year  ended  March 31,
1998.




Deloitte & Touche LLP

Pittsburgh, Pennsylvania
June 18, 1998



<PAGE>


INDEPENDENT AUDITORS' CONSENT

We consent to the  incorporation  by reference in  Registration  Statement  Nos.
333-35887,  333-43081,  33-65916 and 33-65918 of Mylan Laboratories Inc. on Form
S-8 of our report dated February 4, 1998 relating to the consolidated  financial
statements of Somerset  Pharmaceuticals,  Inc. and  subsidiaries for each of the
three years in the period ended December 31, 1997, included in the Annual Report
on Form 10-K of Mylan Laboratories Inc. for the year ended March 31, 1998.




Deloitte & Touche LLP

Pittsburgh, Pennsylvania
June 18, 1998





     (27) (a)Financial Data Schedule, filed herewith.

          (b-d) Restated Financial Data Schedules, filed herewith.

     (99) Consolidated  financial statements of Somerset  Pharmaceuticals,  Inc.
          for years ended December 31, 1997, 1996 and 1995, filed herewith.



SOMERSET PHARMACEUTICALS, INC. AND SUBSIDIARIES


Consolidated Financial Statements for the
Years Ended December 31, 1997, 1996 and 1995, and
Independent Auditors' Report



<PAGE>


INDEPENDENT AUDITORS' REPORT


To the Board of Directors of
   Somerset Pharmaceuticals, Inc.:

We have  audited  the  accompanying  consolidated  balance  sheets  of  Somerset
Pharmaceuticals, Inc. and subsidiaries as of December 31, 1997 and 1996, and the
related consolidated statements of income,  stockholders' equity, and cash flows
for each of the  three  years in the  period  ended  December  31,  1997.  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.  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 Somerset Pharmaceuticals,  Inc. and
subsidiaries  as of  December  31,  1997  and  1996,  and the  results  of their
operations  and their cash flows for each of the three years in the period ended
December 31, 1997 in conformity with generally accepted accounting principles.





February 4, 1998






<PAGE>
SOMERSET PHARMACEUTICALS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
- ------------------------------------------------------------------------------

ASSETS                                               1997          1996

CURRENT ASSETS:
  Cash and cash equivalents                       $ 32,141,000  $ 33,477,000
  Investment securities                             15,963,000     1,008,000
  Accounts receivable (net of allowance for doubtful
   accounts of $250,000 and $100,000, respectively)  3,526,000     6,172,000
  Inventories                                        1,077,000     1,704,000
  Prepaid expenses and other current assets          1,266,000     3,510,000

     Total current assets                           53,973,000    45,871,000


PROPERTY AND EQUIPMENT - Net                           752,000     4,891,000

INTANGIBLE ASSETS - Net                              1,066,000     1,259,000

OTHER ASSETS                                         1,648,000       856,000
                                                     ----------      -------



LIABILITIES AND STOCKHOLDERS' EQUITY                   1997          1996

CURRENT LIABILITIES:
  Accounts payable                                  $ 516,000     $ 651,000
  Royalty payable                                   1,172,000     1,626,000
  Medicaid payable                                    687,000     1,039,000
  Other accrued expenses                              853,000     1,454,000
  Accrued research and development                  4,394,000     4,578,000
  Income taxes payable                              5,099,000     6,032,000
  Accrued sales returns                               906,000       580,000
  Accrued compensation                                600,000     1,494,000
  Amounts due to related parties                    1,433,000     1,621,000

     Total current liabilities                     15,660,000    19,075,000


STOCKHOLDERS' EQUITY:
  Common stock, $.01 par value; 13,719
    shares authorized, 11,297 shares issued           -              -
  Retained earnings                                42,231,000    34,254,000
  Less treasury stock, 644 shares at cost            (452,000)     (452,000)

     Total stockholders' equity                    41,779,000    33,802,000
                                                  ------------  -------------
                                                  $57,439,000   $52,877,000


<PAGE>                                  2



SOMERSET PHARMACEUTICALS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
- ------------------------------------------------------------------------------

                                   1997             1996             1995

NET SALES                      $ 66,956,000    $ 101,512,000    $ 107,365,000
                               -------------   --------------   -------------

COSTS AND EXPENSES:
  Cost of sales                   6,622,000       12,672,000       13,617,000
  Marketing                       5,757,000        6,263,000        4,862,000
  Research and development       13,073,000       20,118,000       17,904,000
  Administrative                  7,338,000        9,574,000        8,601,000
                                  ----------       ----------       ---------

                                 32,790,000       48,627,000       44,984,000
                                 -----------      -----------      ----------

                                 34,166,000       52,885,000       62,381,000

OTHER INCOME - Net                2,735,000        1,732,000        2,172,000
                                  ----------       ----------       ---------

INCOME BEFORE INCOME TAXES       36,901,000       54,617,000       64,553,000

PROVISION FOR INCOME TAXES       12,924,000       18,815,000       20,200,000
                                 -----------      -----------      ----------

NET INCOME                     $ 23,977,000     $ 35,802,000     $ 44,353,000
                               =============    =============    ============


<PAGE>                                      3


SOMERSET PHARMACEUTICALS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<TABLE>
<S>                                 <C>            <C>                <C>           <C>            <C>              <C>
- ----------------------------------------------------------------------------------------------------------------------------------
                                                      Common Stock             Treasury Stock         Retained       Stockholders'
                                      ------------------------------  ----------------------------
                                        Shares           Amount           Shares           Amount    Earnings           Equity

BALANCE, DECEMBER 31, 1994              11,297         $    -               644      $ (452,000)   $ 26,099,000      $ 25,647,000

  Net income                              -                 -                -             -         44,353,000        44,353,000

  Dividends                               -                 -                -             -        (36,000,000)      (36,000,000)
                                      -----------  ----------------  -------------- ------------   -------------     ------------

BALANCE, DECEMBER 31, 1995              11,297              -               644        (452,000)     34,452,000        34,000,000

  Net income                              -                 -                -             -         35,802,000        35,802,000

  Dividends                               -                 -                -             -        (36,000,000)      (36,000,000)
                                      -----------  ----------------  -------------- -------------  -------------

BALANCE, DECEMBER 31, 1996              11,297              -               644        (452,000)     34,254,000        33,802,000

  Net income                              -                 -                -             -         23,977,000        23,977,000

  Dividends                               -                 -                -             -        (16,000,000)      (16,000,000)
                                      -----------  ----------------  -------------- -------------  -------------     ------------

BALANCE, DECEMBER 31, 1997              11,297         $    -               644      $ (452,000)   $ 42,231,000      $ 41,779,000
                                      ===========  ================  ============== =============  =============     ============

See notes to consolidated financial statements.
</TABLE>


    


<PAGE>                                  4

SOMERSET PHARMACEUTICALS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<TABLE>
<S>                                                         <C>                    <C>               <C>
- -----------------------------------------------------------------------------------------------------------------------

                                                                     1997                1996                1995

CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                      $ 23,977,000        $ 35,802,000        $ 44,353,000
  Adjustments to reconcile net income to net cash
     provided by operating activities:
       Depreciation and amortization                                   952,000           1,048,000             847,000
       Deferred tax expense (benefit)                                   (8,000)           (736,000)            283,000
       Loss on sale of property and equipment                          422,000                   -                   -
       Deferred revenue                                                      -             (63,000)           (229,000)
       Changes in operating assets and liabilities:
         Accounts receivable                                         2,646,000           7,703,000           6,778,000
         Inventories                                                   627,000           4,847,000          (1,258,000)
         Prepaid expenses and other current assets                   2,415,000          (1,438,000)           (398,000)
         Accounts payable                                             (135,000)           (861,000)          1,220,000
         Royalty payable                                              (454,000)         (3,050,000)         (1,174,000)
         Accrued marketing costs                                             -                   -         (11,000,000)
         Accrued research and development                             (184,000)          2,657,000              20,000
         Other accrued expenses                                     (1,521,000)          2,084,000            (350,000)
         Income taxes payable                                         (933,000)          1,642,000            (627,000)
         Amounts due to related parties                               (188,000)           (454,000)           (243,000)
                                                                      ----------          ----------          ---------

     Net cash provided by operating activities                      27,616,000          49,181,000          38,222,000
                                                                    -----------         -----------         ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Net (increase) decrease in investment securities                 (14,955,000)           (828,000)          3,158,000
  Purchases of property and equipment                                  (42,000)           (251,000)         (1,884,000)
  Proceeds from sale of property and equipment                       2,000,000                   -                   -
  Decrease in other assets                                              45,000              60,000             290,000
                                                                        -------             -------            -------

     Net cash (used in) provided by investing activities           (12,952,000)         (1,019,000)          1,564,000
                                                                   -------------        ------------         ---------


                                                                                                           (Continued)

</TABLE>



<PAGE>                             5

SOMERSET PHARMACEUTICALS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995

<TABLE>
<S>                                           <C>                  <C>                <C>
- --------------------------------------------------------------------------------------------------------

                                                       1997                1996                1995

CASH FLOWS FROM FINANCING ACTIVITIES -
  Dividends paid on common stock                  $ (16,000,000)      $ (36,000,000)      $ (36,000,000)
                                                  ---------------     ---------------     --------------

     Cash used in financing activities              (16,000,000)        (36,000,000)        (36,000,000)
                                                    -------------       -------------       ------------

NET (DECREASE) INCREASE IN CASH AND
  CASH EQUIVALENTS                                   (1,336,000)         12,162,000           3,786,000

CASH AND CASH EQUIVALENTS,
  BEGINNING OF YEAR                                  33,477,000          21,315,000          17,529,000
                                                     -----------         -----------         ----------

CASH AND CASH EQUIVALENTS,
  END OF YEAR                                      $ 32,141,000        $ 33,477,000        $ 21,315,000
                                                   =============       =============       ============

SUPPLEMENTAL DISCLOSURES OF
  CASH FLOW INFORMATION -
    Cash paid during the year for income taxes     $ 12,092,000        $ 20,409,000        $ 22,074,000
                                                   =============       =============       ============

See notes to consolidated financial statements.

</TABLE>



<PAGE>                              6




SOMERSET PHARMACEUTICALS, INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995


1. PRINCIPLES OF CONSOLIDATION AND OPERATIONS

     The  consolidated  financial  statements  include the  accounts of Somerset
     Pharmaceuticals,  Inc. (the  "Company") and its wholly owned  subsidiaries,
     Somerset  Pharmaceuticals  Holding  Company and Somerset  Caribe,  Inc. The
     Company  is  jointly   owned  by  Mylan   Laboratories,   Inc.  and  Watson
     Pharmaceuticals,  Inc. ("Watson"),  with each owning 50% of the outstanding
     common  stock of the Company.  All  significant  intercompany  accounts and
     transactions   have  been   eliminated  in   consolidation.   The  Company,
     incorporate  in February 1986, is engaged in the  development,  testing and
     marketing of drugs to be used in the treatment of various human  disorders.
     Currently,  the Company  manufactures  (at its  facility  in Puerto  Rico),
     markets and sells  Eldepryl,  which is used as a treatment for  Parkinson's
     Disease.  The Company had  exclusivity  relating to the  chemical  compound
     Eldepryl for use as a treatment for late stage Parkinson's  Disease through
     June of 1996. In May 1996, the Company received  approval from the Food and
     Drug Administration for Eldepryl capsules and withdrew the tablet form from
     the marketplace. Competitors entered the marketplace with a generic version
     of the tablet in August 1996. The loss of exclusivity and the  introduction
     of  competitive  products  could  have a material  impact on the  Company's
     future operating results.

     The Company is party to an exclusive  14-year  agreement  (through November
     22,  2003) with Chinoin  Pharmaceutical  Company  ("Chinoin")  of Budapest,
     Hungary under which Eldepryl and other new potential  drugs  resulting from
     Chinoin  research are made  available  for  licensing  by the Company.  The
     license agreement  required the Company to pay royalties equal to 7% of net
     sales of Eldepryl including sub-license revenues.  During 1996, the license
     agreement was amended to reduce the Eldepryl  royalties to 3.5% o net sales
     subsequent  to May 31,  1996.  The  Company  incurred  royalty  expense  of
     approximately  $2,716,000,  $5,917,000,  and $8,473,000 for the years ended
     December 31, 1997, 1996 and 1995, respectively.  The license agreement also
     requires  the  Company  to  purchase  the  main  raw  material  used in the
     manufacture of Eldepryl from Chinoin through 1999.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     a.   Cash and Cash  Equivalents  - The  Company  generally  considers  debt
          instruments  purchased  with a  maturity  of three  months or less and
          investments in money market accounts to be cash equivalents.

     b.   Investment Securities - The Company accounts for investment securities
          in  accordance  with  Statement  of  Financial   Accounting  Standards
          ("SFAS")  No. 115,  "Accounting  for Certain  Investments  in Debt and
          Equity  Securities."  At December  31, 1997 and 1996,  the  investment
          securities  were  available-for-sale,   and  there  were  no  material
          unrealized  gains or losses.  Proceeds  from sales and  maturities  of
          investments were $44,973,000 and $4,968,000, respectively, in 1997 and
          1995 and  realized  gains or losses were not  material.  There were no
          sales or maturities of  investments  in 1996. The gain or loss on sale
          is based on the specific identification method.

     c.   Inventories - Inventories are stated at the  lower-of-cost  or market,
          with cost determined on a first-in, first-out basis.








<PAGE>                             7



     d.   Property and  Equipment - Property and  equipment  are stated at cost.
          Depreciation is provided over the estimated useful lives of the assets
          by the straight-line method.  Estimated useful lives are five to seven
          years for  machinery  and equipment and furniture and fixtures and was
          35 years for the building.

     e.   Intangible Assets - Intangible assets are amortized on a straight-line
          basis over 14 years.

     f.   Research and Development - Research and development costs are expensed
          as incurred.

     g.   Concentration  of  Credit  Risk  -  The  Company's   product  is  sold
          throughout  the  United  States   principally  to   distributors   and
          wholesalers  in the  pharmaceutical  industry.  The  Company  performs
          ongoing credit  evaluation of its customers'  financial  condition and
          generally requires no collateral from its customers.

     h.   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  reported  amounts  of assets  and
          liabilities and the disclosure of contingent assets and liabilities at
          the date of the financial statements,  as well as the reported amounts
          of income and expenses  during the reporting  period.  Actual  results
          could differ from those estimates.

     i.   Reclassifications  - Certain  reclassifications  have been made to the
          1996 financial statements to conform to the 1997 presentation.

3. INVENTORIES

     Inventories consist of the following at December 31, 1997 and 1996:


                             1997          1998

Raw material            $  461,000     $ 1,083,000
Work in Process              1,000         373,000
Finished goods             615,000         248,000
                        ----------     -----------
Total                    1,077,000       1,704,000
                        ==========     ===========





4. PROPERTY AND EQUIPMENT


Property and equipment consist of the following at December 31, 1997 and 1996:


                                        1997               1996

Land                                $    -            $   300,000
Building                                 -              2,255,000
Machinery and equipment              1,263,000          4,281,000
Furniture and fixtures                  97,000            153,000
                                        -------           -------

                                     1,360,000          6,989,000
Less accumulated depreciation          608,000          2,098,000
                                       --------         ---------

Property and equipment - net         $ 752,000        $ 4,891,000
                                     ==========       ===========



<PAGE>                              8


5. SUB-LICENSE OF RIGHTS





     On February 9, 1988,  the Company  granted a  sub-license  to its exclusive
     right and license to use its  technology  to Draxis  Health Inc.  (formerly
     Deprenyl Research Limited) to commercialize  certain drugs in Canada for 15
     years.  The Company  receives a royalty of 11% of Draxis  Health Inc.'s net
     sales over the license period.

     Royalty income, net of related royalty expense payable to Chinoin, included
     in other income for the years ended  December  31, 1997,  1996 and 1995 was
     approximately $261,000, $175,000 and $197,000, respectively.

6. INTANGIBLE ASSETS

     Intangible  assets  primarily  represent the cost of a modification  to the
     terms  of  the  Chinoin   Agreement,   less  accumulated   amortization  of
     $1,639,000, and $1,446,000 at December 31, 1997 and 1996, respectively.

7. CO-PROMOTIONAL AGREEMENT

     In 1990, the Company entered into an agreement with Sandoz  Pharmaceuticals
     Corporation  ("Sandoz") to co-promote the product  Eldepryl.  The agreement
     required  Sandoz,   among  other  things,  to  expend,  at  a  minimum,   a
     predetermined amount for advertising during each year of the agreement.  In
     December  1994,  the Company  amended  its  co-promotional  agreement  with
     Sandoz.  The amended agreement  eliminated certain residual period payments
     to Sandoz,  shortened the term to March 31, 1996,  eliminated certain sales
     force detail  requirements  and required certain payments to be made to the
     Company if a predetermined level of sales was not achieved.


     During 1995 the Company  entered  into an  agreement  with  CoCensys,  Inc.
     ("CoCensys")  for the promotion of  Elderpryl.  The agreement was effective
     January  1, 1996 and had an initial  term of two years.  Under the terms of
     the original agreement,  the Company would have compensated CoCensys, based
     on  a  predetermined  formula  that  considered  both  the  number  of  new
     prescriptions  written and the net sales dollars  achieved in each quarter.
     During 1996 and 1997,  the agreement was modified with respect to term, new
     prescriptions  and detail  calls.  During  1997,  CoCensys  was acquired by
     Watson.  In January  1998,  the Company  entered  into an  agreement to pay
     Watson $4.8 million for the  promotion  and  marketing of Elderpryl  during
     1998.

     During  1997,  1996 and 1995,  the Company  expensed  (net of any  payments
     required  to be  made  to  the  Company  by  Sandoz  in  1995)  $3,800,000,
     $1,230,000  and  $5,304,000,  respectively,  pursuant to these  agreements.
     Additionally,   certain   co-promotional   fees   paid  by  Sandoz  at  the
     commencement of the 1990 agreement were  recognized  ratably by the Company
     during the term of the agreement  (six years,  expiring on March 31, 1996),
     and  certain  costs  associated  with  the  procurement,   negotiating  and
     execution of the  agreement  by the owners of the Company were  incurred by
     the Company in approximately the same amount.

8. OTHER INCOME

     In November  1994, the Company  prevailed in litigation it brought  against
     foreign  defendants  who were  selling  and  marketing  chemical  compounds
     similar to Eldepryl  without FDA approval.  In late 1997, a final  judgment
     was rendered by the United States Federal District Court. In November 1997,
     the Company received and recorded as other income approximately  $1,225,000
     for settlement of the litigation and reimbursement of related costs.



<PAGE>                             9



     During  November  1997,  the  Company  sold its  research  and  development
     facility  and  related  equipment  with a net book  value of  approximately
     $3,422,000 for $3,000,000.  The resulting loss of $422,000 is recorded as a
     reduction  in other  income.  The  Company  financed  in the form of a note
     $1,000,000 of the sales price. The note receivable is collateralized by the
     facility and will be collected in 60 monthly  installments bearing interest
     at 8%. Current and non-current  portions are included with prepaid expenses
     and  other  current   assets  and  other  assets,   respectively,   in  the
     consolidated balance sheet at December 31, 1997.

      9.    INCOME TAXES

          The income tax provision consists of the following for the years ended
          December 31, 1997, 1996 and 1995:


                                    1997             1996           1995

Current tax expense:
  Federal                          $ 10,283,000     $ 15,257,000   $ 15,625,000
  State                               2,549,000        4,194,000      4,177,000
  Foreign                               100,000          100,000        115,000
                                       --------         --------       --------

                                     12,932,000       19,551,000     19,917,000
                                     -----------     -----------     ----------

Deferred tax expense (benefit):
  Federal                                (7,000)        (669,000)       256,000
  State                                  (1,000)         (67,000)        27,000
                                         -------       ---------         ------

                                         (8,000)        (736,000)       283,000
                                         -------      ----------        -------

Total provision for income taxes   $ 12,924,000     $ 18,815,000   $ 20,200,000
                                   ============     ============   ============






     Deferred income taxes reflect the net tax effects of temporary  differences
     between  the  carrying  amounts of assets  and  liabilities  for  financial
     reporting  purposes and the amounts used for income tax  purposes.  The tax
     effects of significant items comprising the Company's deferred taxes (which
     are included in "Other  Assets" in the balance  sheet) at December 31, 1997
     and 1996 are as follows:



                                                   1997               1996

Deferred tax assets:
  Deferred compensation                         $ 223,000          $ 557,000
  Inventory valuation allowance                   243,000            230,000
  Chargeback and rebate allowances                593,000            216,000
  Other                                            95,000             37,000
                                                   -------            ------

                                                1,154,000          1,040,000

Deferred tax liabilities - different methods
of accounting between financial and income
tax reporting for amortization                    326,000            220,000

    Net deferred tax assets                     $ 828,000          $ 820,000
                                                ==========         =========






<PAGE>                               10



     The  statutory  federal  income tax rate is reconciled to the effective tax
     rate as follows for the years ended December 31, 1997, 1996 and 1995:


                                              1997           1996        1995

Tax at statutory rate                          35.0 %       35.0 %      35.0 %
State income tax (net of federal benefit)       3.8          3.6         2.8
Tax credits                                    (7.9)        (9.5)       (9.4)
Tollgate tax                                    3.4          4.0         3.9
Other                                           0.7          1.3        (1.0)
                                           ----------    ----------    ---------

Effective tax rate                             35.0 %       34.4 %      31.3 %
                                               ======       ======      ======

Tax credits result principally from operations in Puerto Rico. See Note 13.


10. RELATED PARTY TRANSACTIONS


     The Company  incurs  expenses  for ongoing  management  services and over a
     six-year period (which ended March 31, 1996) for specific  services related
     to the procurement,  negotiation and execution of the original co-promotion
     agreement  by the  owners  of the  Company.  The  Company  also  has  other
     transactions with one or both of its owners as detailed below for the years
     ended December 31, 1997, 1996 and 1995:

                                             1997          1996         1995

Management fees                           $ 3,348,000  $ 5,076,000  $ 5,370,000
Marketing and advertising                     775,000        -            -
Research and development                       90,000    1,250,000        -
Inventory handling and distribution fees      465,000      519,000      415,000
Rent - equipment and facilities               640,000    1,217,000    1,416,000


11. SIGNIFICANT CUSTOMERS

     The Company had sales to certain customers which individually  exceeded 10%
     of  sales.  In  1997  sales  to  five  major  customers  were  $15,878,000,
     $13,498,000,  $11,427,000, $8,658,000 and $7,746,000, respectively. In 1996
     sales  to  three  major   customers  were   $23,200,000,   $21,259,000  and
     $18,692,000,  respectively.  In 1995 sales to four major  customers were of
     $23,986,000, $23,467,000, $15,733,000 and $13,111,000, respectively.

12. EMPLOYEE BENEFIT PLANS

     The  Company  has a  defined  contribution  profit  sharing  plan  covering
     substantially  all employees.  Contributions  are made at the discretion of
     the Board of Directors.  Additionally, during 1994, the Company initiated a
     deferred  compensation  plan for certain key  employees.  During 1997,  the
     Company  terminated the deferred  compensation  plan. During 1997, 1996 and
     1995,  the  Company  recorded  expense  of  $-0-,   $954,000  and  $83,000,
     respectively,  under these  plans.  The Company  expects to  terminate  the
     defined  contribution  profit sharing plan during 1998 without  significant
     impact on 1998 operating results.


<PAGE>                             12


13. CONTINGENCY

     In connection with an examination of the Company's  Federal tax returns for
     the three years ended  December 31, 1995,  representatives  of the Internal
     Revenue  Service  (the  "Service"),  in June 1997,  issued to the Company a
     report that  contains  proposed  adjustments  to the  Company's  use of tax
     credits under Internal Revenue Code section 936.

     Under  the  proposed   adjustments,   the  Company   could  be  subject  to
     approximately  $13 million of  additional  income tax and interest  charges
     that have not been accrued at December 31, 1997.

     Management  believes  that the Company has met all of the  requirements  to
     qualify for the tax credits  available under Internal  Revenue Code section
     936, and intends to vigorously defend its position on this matter.





                             * * * * * *



          (b)  Reports on Form 8-K The Company was not required to file a report
               on Form 8-K during the quarter ended March 31, 1998.






<PAGE>





 
                                   SIGNATURES

     Pursuant  to the  requirements  of  section  13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Date:    June 19, 1998


                                    by  /S/ MILAN PUSKAR
                                            Milan Puskar
                 Chairman, Chief Executive Officer and President


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  Report has been  signed  below by the  following  persons on behalf of the
registrant and in the capacities and on the dates indicated.


/S/ MILAN PUSKAR        June 19, 1998    /S/ DANA G. BARNETT       June 19, 1998
Milan Puskar                             Dana G. Barnett
Chairman, Chief Executive Officer and    Executive Vice President and Director
President
(Principal executive officer)

/S/ LAURENCE S. DELYNN  June 19, 1998    /S/ ROBERT W. SMILEY      June 19, 1998
Laurence S. DeLynn                           Robert W. Smiley
Director                                     Secretary and Director


/S/ PATRICIA A. SUNSERI June 19, 1998   /S/ JOHN C. GAISFORD, M.D. June 19, 1998
Patricia A Sunseri                          John C. Gaisford, M.D.
Vice President and Director                 Director


/S/ C.B. TODD           June 19, 1998  /S/ DONALD C. SCHILLING
C.B. Todd                                  Donald C. Schilling
Senior Vice President and Director         Vice President-Finance
                                           (Principal financial officer)




                                      /S/ FRANK DEGEORGE           June 19, 1998

                                          Frank DeGeorge
                                          Director of Corporate Finance
                                          (Principal accounting officer)




<PAGE>

                             EXHIBIT 21



                               Subsidiaries

Name                                                 State of Incorporation
- ----                                                 ----------------------
Milan Holding, Inc.                                     Delaware
Mylan Inc.                                              Delaware
Mylan Pharmaceuticals Inc.                              West Virginia
Mylan Caribe Inc.                                       Vermont
Bertek Pharmaceuticals, Inc.                            Texas
Bertek, Inc.                                            West Virginia
American Triumvirate Insurance Company                  Vermont
Roderick Corporation                                    Delaware
UDL Laboratories, Inc.                                  Illinois







<TABLE> <S> <C>


<ARTICLE>             5

<LEGEND>
Exhibit 27(a)
                             Financial Data Schedule
                    Mylan Laboratories Inc. and Subsidiaries
                           Article 5 of Regulation S-X

The  schedule  contains  summary  financial   information   extracted  from  the
Consolidated Balance Sheets at March 31, 1998 and the Consolidated  Statement of
Earnings  for the twelve  months  ended March 31, 1998 and is  qualified  in its
entirety by reference to such financial statements.

</LEGEND>
<CIK>                         0000069499
<NAME>                        Exhibit 27(a)
<MULTIPLIER>                  1,000
       
<S>                                 <C>
<PERIOD-TYPE>                          12-MOS
<FISCAL-YEAR-END>                     MAR-31-1998

<PERIOD-END>                          MAR-31-1998

<CASH>                                   103,756
<SECURITIES>                              20,967
<RECEIVABLES>                            160,249
<ALLOWANCES>                              23,385
<INVENTORY>                              146,041
<CURRENT-ASSETS>                         430,098
<PP&E>                                   226,319
<DEPRECIATION>                            74,907
<TOTAL-ASSETS>                           847,753
<CURRENT-LIABILITIES>                     71,346
<BONDS>                                        0
<PREFERRED-MANDATORY>                          0
<PREFERRED>                                    0
<COMMON>                                  61,525
<OTHER-SE>                               682,940
<TOTAL-LIABILITY-AND-EQUITY>             847,753
<SALES>                                  528,601
<TOTAL-REVENUES>                         555,423
<CGS>                                    288,290
<TOTAL-COSTS>                            288,290
<OTHER-EXPENSES>                         142,986
<LOSS-PROVISION>                               0
<INTEREST-EXPENSE>                         2,665
<INCOME-PRETAX>                          148,389
<INCOME-TAX>                              47,612
<INCOME-CONTINUING>                      100,777
<DISCONTINUED>                                 0
<EXTRAORDINARY>                                0
<CHANGES>                                      0
<NET-INCOME>                             100,777
<EPS-PRIMARY>                               0.83
<EPS-DILUTED>                               0.82

        


</TABLE>






<TABLE> <S> <C>


<ARTICLE>             5

<LEGEND>
Exhibit 27(b)
                        Restated Financial Data Schedule
                    Mylan Laboratories Inc. and Subsidiaries
                           Article 5 of Regulation S-X

The  schedule  contains  summary  financial   information   extracted  from  the
Consolidated  Balance  Sheets at March 31, 1997 and 1996,  and the  Consolidated
Statement of Earnings for the twelve  months ended March 31, 1997 and 1996,  and
is qualified in its entirety by reference to such financial statements.


</LEGEND>
<CIK>                         0000069499
<NAME>                        Exhibit 27(b)
<MULTIPLIER>                  1,000
       
<S>                                 <C>             <C>
<PERIOD-TYPE>                          12-MOS         12-mos
<FISCAL-YEAR-END>                     MAR-31-1997     Mar-31-1996

<PERIOD-END>                          MAR-31-1997     Mar-31-1996

<CASH>                                126,156         176,980
<SECURITIES>                           13,876          12,460
<RECEIVABLES>                         129,934          84,556
<ALLOWANCES>                           14,631          12,559
<INVENTORY>                           100,890         100,616
<CURRENT-ASSETS>                      379,020         379,328
<PP&E>                                197,467         173,445
<DEPRECIATION>                         61,638          51,652
<TOTAL-ASSETS>                        777,580         692,009
<CURRENT-LIABILITIES>                  78,746          48,595
<BONDS>                                     0               0
<PREFERRED-MANDATORY>                       0               0
<PREFERRED>                                 0               0
<COMMON>                               61,407          61,262
<OTHER-SE>                            598,333         555,179
<TOTAL-LIABILITY-AND-EQUITY>          777,580         692,009
<SALES>                               440,192         392,860
<TOTAL-REVENUES>                      440,192         392,860
<CGS>                                 259,666         197,697
<TOTAL-COSTS>                         259,666         197,697
<OTHER-EXPENSES>                      122,581          94,986
<LOSS-PROVISION>                            0               0
<INTEREST-EXPENSE>                      2,927              22
<INCOME-PRETAX>                        87,195         141,757
<INCOME-TAX>                           24,068          39,432
<INCOME-CONTINUING>                    63,127         102,325
<DISCONTINUED>                              0               0
<EXTRAORDINARY>                             0               0
<CHANGES>                                   0               0
<NET-INCOME>                           63,127         102,325
<EPS-PRIMARY>                            0.52            0.86
<EPS-DILUTED>                            0.51            0.85

        


</TABLE>






<TABLE> <S> <C>


<ARTICLE>             5

<LEGEND>
Exhibit 27(c)
                        Restated Financial Data Schedule
                    Mylan Laboratories Inc. and Subsidiaries
                           Article 5 of Regulation S-X

The  schedule  contains  summary  financial   information   extracted  from  the
Consolidated  Balance  Sheets at December 31, 1997,  September 30, 1997 and June
30,1997,  and the  Consolidated  Statement of Earnings for the nine months ended
December 31, 1997,  six months ended  September  30, 1997 and three months ended
June 30, 1997 is  qualified  in its  entirety  by  reference  to such  financial
statements.


</LEGEND>
<CIK>                         0000069499
<NAME>                        Exhibit 27(c)
<MULTIPLIER>                  1,000
       
<S>                                 <C>             <C>            <C>
<PERIOD-TYPE>                          9-MOS         6-mos          3-mos
<FISCAL-YEAR-END>                     MAR-31-1998     Mar-31-1998   Mar-31-1998

<PERIOD-END>                          Dec-31-1997     Sep-30-1997   Jun-30-1997

<CASH>                                 115,130          93,062       108,995
<SECURITIES>                            18,492          18,774        15,062
<RECEIVABLES>                          125,642         137,666       117,461
<ALLOWANCES>                            17,598          20,131        10,432
<INVENTORY>                            135,601         132,458       121,274
<CURRENT-ASSETS>                       398,961         408,361       380,301
<PP&E>                                 217,169         208,662       203,793
<DEPRECIATION>                          71,329          67,972        64,686
<TOTAL-ASSETS>                         814,983         815,759       787,492
<CURRENT-LIABILITIES>                   66,809          84,110        81,929
<BONDS>                                 36,767          38,929        39,744
<PREFERRED-MANDATORY>                        0               0             0
<PREFERRED>                                  0               0             0
<COMMON>                                61,511          61,467        61,412
<OTHER-SE>                             654,667         638,007       611,215
<TOTAL-LIABILITY-AND-EQUITY>           814,983         815,759       787,492
<SALES>                                365,838         236,321       109,188
<TOTAL-REVENUES>                       392,660         263,143       109,188
<CGS>                                  207,657         132,580        61,379
<TOTAL-COSTS>                          207,657         132,580        61,379
<OTHER-EXPENSES>                       104,167          75,036        31,429
<LOSS-PROVISION>                             0               0             0
<INTEREST-EXPENSE>                        2,243          1,508           758
<INCOME-PRETAX>                          99,453         68,382        22,341
<INCOME-TAX>                             30,482         21,393         5,743
<INCOME-CONTINUING>                      68,971         46,989        16,598
<DISCONTINUED>                               0               0             0
<EXTRAORDINARY>                              0               0             0
<CHANGES>                                    0               0             0
<NET-INCOME>                             68,971         46,989        16,598
<EPS-PRIMARY>                              0.57           0.39          0.14
<EPS-DILUTED>                              0.56           0.38          0.13

        


</TABLE>






<TABLE> <S> <C>


<ARTICLE>             5

<LEGEND>
Exhibit 27(d)
                             Financial Data Schedule
                    Mylan Laboratories Inc. and Subsidiaries
                          Article 5 of Regulations S-X

     The schedule  contains  summary  financial  information  extracted from the
Consolidated  Balance  Sheets at December 31, 1996,  September 30, 1996 and June
30, 1996, and the  Consolidated  Statement of Earnings for the nine months ended
December 31, 1996,  six months ended  September  30, 1996 and three months ended
June 30, 1996 is  qualified  in its  entirety  by  reference  to such  financial
statements.

</LEGEND>
<CIK>                         0000069499
<NAME>                        Exhibit 27(d)
<MULTIPLIER>                  1,000
       
<S>                                 <C>             <C>            <C>
<PERIOD-TYPE>                          9-MOS         6-mos          3-mos
<FISCAL-YEAR-END>                     MAR-31-1997     Mar-31-1997   Mar-31-1997

<PERIOD-END>                          Dec-31-1996     Sep-30-1996   Jun-30-1996

<CASH>                                154,723         148,979       186,710
<SECURITIES>                           12,069           9,985        10,633
<RECEIVABLES>                         108,835          98,059        77,009
<ALLOWANCES>                           11,754          10,506        12,545
<INVENTORY>                            97,268         100,422       102,777
<CURRENT-ASSETS>                      380,302         361,735       384,521
<PP&E>                                193,539         187,668       181,959
<DEPRECIATION>                         60,282          57,360        54,467
<TOTAL-ASSETS>                        780,464         764,888       711,741
<CURRENT-LIABILITIES>                  74,015          70,523        59,370
<BONDS>                                     0               0             0
<PREFERRED-MANDATORY>                       0               0             0
<PREFERRED>                                 0               0             0
<COMMON>                               61,321          61,295        61,289
<OTHER-SE>                            589,548         576,517       564,259
<TOTAL-LIABILITY-AND-EQUITY>          780,464         764,888       711,741
<SALES>                               321,505         207,524        98,543
<TOTAL-REVENUES>                      321,505         207,524        98,543
<CGS>                                 186,344         119,615        55,779
<TOTAL-COSTS>                         186,344         119,615        55,779
<OTHER-EXPENSES>                       91,843          61,502        31,782
<LOSS-PROVISION>                            0               0             0
<INTEREST-EXPENSE>                    433,000         425,000         5,000
<INCOME-PRETAX>                        68,091          44,213        20,017
<INCOME-TAX>                           18,651          12,854         6,006
<INCOME-CONTINUING>                    49,440          31,359        14,011
<DISCONTINUED>                              0               0             0
<EXTRAORDINARY>                             0               0             0
<CHANGES>                                   0               0             0
<NET-INCOME>                           49,440          31,359        14,011
<EPS-PRIMARY>                            0.41            0.26           .12
<EPS-DILUTED>                            0.40            0.25           .11

        


</TABLE>