DURAMED PHARMACEUTICALS INC, 10-Q, 1995-11-14

DURAMED PHARMACEUTICALS INC
10-Q, 1995-11-14
PHARMACEUTICAL PREPARATIONS

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<PAGE> 1

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

/X/ QUARTERLY REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 1995

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

For the transition period from to
---------- ----------

Commission File NO. 0-15242

DURAMED PHARMACEUTICALS, INC.

State of Incorporation - Delaware

IRS Employer I.D. No. 11-2590026

7155 East Kemper Road

Cincinnati, Ohio 45249

(513) 731-9900

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, and (2) has been subject to such filing
requirements for the past 90 days.

YES X NO
--------- ---------

Common Stock, $.01 par value per share:

Shares Outstanding as of September 30, 1995 8,054,209

Page 1 of 19 pages

<PAGE> 2

DURAMED PHARMACEUTICALS, INC.

INDEX

<TABLE>
<CAPTION>
Page
<S> <C>
PART I. Financial Information

ITEM 1. Financial Statements (Unaudited)

Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . 3 - 4
Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . . . 5
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . 6
Consolidated Statements of Stockholders'
Equity (Capital Deficiency) . . . . . . . . . . . . . . . . . . . . . . . . 7
Notes to Consolidated Financial
Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 - 11

ITEM 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 - 17

PART II. Other Information

ITEM 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . 18

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
</TABLE>

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<PAGE> 3

DURAMED PHARMACEUTICALS, INC.

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- ------------
(Unaudited)
<S> <C> <C>
ASSETS

Current Assets:
Cash $ 2,600 $ 2,900
Trade accounts receivable,
less allowance for doubtful
accounts: 1995 - $537,603
1994 - $504,850 9,674,146 5,249,101
Inventories 9,856,539 8,423,687
Prepaid expenses and other assets 1,100,795 1,318,573
Deferred taxes 2,463,000 2,463,000
----------- -----------

Total current assets 23,097,080 17,457,261
----------- -----------

Property, Plant and Equipment:
Land 1,000,000 1,000,000
Building and improvements 15,559,718 6,587,005
Equipment, furniture and
fixtures 14,693,275 12,177,615
Construction in progress -- 6,394,406
----------- -----------
Total 31,252,993 26,159,026

Less accumulated depreciation
and amortization 11,238,089 9,972,348
----------- -----------
Property, plant and
equipment - net 20,014,904 16,186,678
----------- -----------

Other Assets:
Deposits and other assets 484,583 764,300
Product agreement
marketing rights 997,200 997,200
Goodwill 99,556 158,401
Deferred taxes 1,438,000 1,438,000
----------- -----------
Total other assets 3,019,339 3,357,901
----------- -----------

Total Assets $46,131,323 $37,001,840
=========== ===========
</TABLE>

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<PAGE> 4

DURAMED PHARMACEUTICALS, INC.

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- ------------
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
(CAPITAL DEFICIENCY)

Current Liabilities:
Accounts payable $ 5,026,938 $ 3,840,069
Accrued liabilities 5,038,917 5,209,179
Current portion of long-term debt and
other liabilities 10,641,423 10,916,074
------------ ------------
Total current liabilities 20,707,278 19,965,322

Long-term debt, less current portion 23,126,926 16,188,411
Other long-term liabilities 1,190,166 2,079,007
------------ ------------
Total liabilities 45,024,370 38,232,740
------------ ------------

Commitments and contingent liabilities -- --

Stockholders' Equity (Capital Deficiency)
Preferred stock Series B - authorized
500,000 shares, par value $.001;
74,659 shares issued and outstanding; 75 75
Common stock - authorized 50,000,000
shares, par value $.01; issued and
outstanding 8,054,209 and 7,968,108
shares in 1995 and 1994, respectively 80,541 79,680
Additional paid-in capital 25,946,720 25,567,765
Accumulated deficit (24,920,383) (26,878,420)
------------ ------------
Total Stockholders' Equity
(Net Capital Deficiency) 1,106,953 (1,230,900)
------------ ------------

Total Liabilities and Stockholders' Equity
(Net Capital Deficiency) $ 46,131,323 $37,001,840
============ ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

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<PAGE> 5

DURAMED PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $13,153,352 $11,585,356 $38,767,746 $33,896,447

Cost of goods sold 7,502,238 5,955,369 22,220,189 18,582,623
----------- ----------- ----------- -----------

Gross profit 5,651,114 5,629,987 16,547,557 15,313,824
----------- ----------- ----------- -----------

Operating expenses:
Product development 1,270,016 517,433 3,253,950 1,267,062
Selling 1,063,665 752,743 2,892,274 2,086,843
General and administrative 2,239,904 2,042,413 6,423,515 5,744,580
----------- ----------- ----------- -----------

Total operating expenses 4,573,585 3,312,589 12,569,739 9,098,485
----------- ----------- ----------- -----------

Operating income 1,077,529 2,317,398 3,977,818 6,215,339

Interest expense 750,322 579,235 1,968,031 1,713,449
----------- ----------- ----------- -----------

Income before income taxes 327,207 1,738,163 2,009,787 4,501,890

Provision for income taxes 10,000 26,000 51,750 95,000
----------- ----------- ----------- -----------

Net income $ 317,207 $ 1,712,163 $ 1,958,037 $ 4,406,890
=========== =========== =========== ===========

Earnings per average
common and common
equivalent share outstanding:

Primary $ .03 $ .16 $ .18 $ .43
=========== =========== =========== ===========

Fully Diluted $ .03 $ .16 $ .18 $ .42
=========== =========== =========== ===========

Weighted average number
of common and common
equivalent share outstanding:

Primary 10,682,257 10,405,731 10,696,225 10,209,396
=========== =========== =========== ===========

Fully Diluted 10,682,257 10,612,431 10,696,225 10,598,099
=========== =========== =========== ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

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<PAGE> 6

DURAMED PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

<TABLE>
<CAPTION>
Nine months ended September 30,
1995 1994
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,958,037 $ 4,406,890
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,324,586 1,428,965
Recognition of deferred revenue (750,000) --
Provision for bad debts 46,079 99,509
Common stock contributed to employee benefits plan 142,929 112,449
Changes in operating assets and liabilities:
(Increase) decrease in trade accounts receivable (4,457,798) (284,083)
(Increase) decrease in inventories (1,432,852) (1,889,188)
(Increase) decrease in prepaid expenses 217,778 124,910
Increase (decrease) in accounts payable 1,186,869 (1,375,510)
Increase (decrease) in other accrued liabilities (407,324) (614,172)
Other, net 9,790 (3,212)
----------- -----------

Net cash provided by (used for) operating activities (2,161,906) 2,006,558

Cash flows from investing activities:
Capital expenditures (4,346,659) (2,459,821)
Deposits (46,822) (259,529)
----------- -----------
Net cash (used for) investing activities (4,393,481) (2,719,350)

Cash flows from financing activities:
Net borrowings (repayments) under revolving lines of credit 6,270,230 (1,587,742)
Payments of long-term debt, including current maturities (5,408,148) (424,763)
Proceeds from long-term borrowings 5,456,118 2,512,103
Issuance of common stock 236,887 213,094
----------- -----------
Net cash provided by financing activities 6,555,087 712,692

Net increase (decrease) in cash and cash equivalents (300) (100)
Cash and cash equivalents at beginning of period 2,900 1,800
----------- -----------
Cash and cash equivalents at end of period $ 2,600 $ 1,700
=========== ===========

Supplemental cash flow disclosures:
Interest paid $ 2,006,169 $ 1,280,809
Income taxes paid $ 100,000 $ 42,000
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

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<PAGE> 7

DURAMED PHARMACEUTICALS, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(CAPITAL DEFICIENCY)
(UNAUDITED)

Preferred Stock Common Stock Additional
---------------- -------------------- Paid-In Accumulated
Shares Amount Shares Amount Capital Deficit Total
---------------- --------- ------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994 74,659 $75 7,968,108 $79,680 $25,567,765 $(26,878,420) $(1,230,900)

Issuance of stock in connection
with the Company's 401(k)
Plan -- -- 8,559 86 142,843 -- 142,929

Stock options exercised net of
shares surrendered -- -- 77,542 775 236,112 -- 236,887

Net income for 1995 -- -- -- -- -- 1,958,037 1,958,037
------ --- --------- ------- ----------- ------------ ----------

Balance at September 30, 1995 74,659 $75 8,054,209 $80,541 $25,946,720 $(24,920,383) $ 1,106,953
====== === ========= ======= =========== ============ ===========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

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<PAGE> 8

DURAMED PHARMACEUTICALS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1: Interim Financial Data

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three month and nine month periods
ended September 30, 1995 are not necessarily indicative of the results that may
be expected for the year ended December 31, 1995. For further information,
refer to the consolidated financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1994.

Note 2: Earnings Per Share

The fully diluted and primary earnings per share calculations are computed using
weighted average common shares outstanding and common equivalent shares, which
include dilutive options, warrants and convertible preferred stock.

Note 3: Inventories

Components of inventories include:

<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- ------------
<S> <C> <C>
Raw materials $4,006,218 $1,939,890
Work-in-process 379,139 498,975
Finished goods 5,471,182 5,984,822
---------- ----------

Total $9,856,539 $8,423,687
========== ==========
</TABLE>

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<PAGE> 9

DURAMED PHARMACEUTICALS, INC.

Note 4: Debt and Other Long-Term Liabilities

<TABLE>
<CAPTION>
September 30, December 31,
Debt 1995 1994
- ---- ------------- ------------
<S> <C> <C>
Revolving credit facility $11,985,399 $ 7,465,169
Term note 5,500,000 9,500,000
Term note (revolving) 1,750,000 --
Construction loan 5,500,000 4,504,671
Equipment loans 1,143,695 685,061
Note payable to State of Ohio 1,101,553 1,230,985
Industrial Revenue Bond -- 221,605
Convertible note 2,000,000 --
Installment notes payable 2,994,882 1,554,174
----------- -----------
31,975,529 25,161,665
Less amounts classified as current 8,848,603 8,973,254
----------- -----------
$23,126,926 $16,188,411
=========== ===========

Other Long-Term Liabilities

Abandoned facility obligation - net $ 1,732,986 $ 2,021,827
Deferred revenue 1,250,000 2,000,000
----------- -----------
2,982,986 4,021,827
Less amount classified as current 1,792,820 1,942,820
----------- -----------
$ 1,190,166 $ 2,079,007
=========== ===========
</TABLE>

Debt

During 1995 the funds used by the Company in its operation have been primarily
provided through borrowings against its revolving credit facility, additional
extensions of credit granted by the Company's bank and funds received from the
issuance of a convertible debt security. Under the terms of the amended and
restated bank agreement dated December 31, 1994 two facilities were established,
a revolving credit facility with a maximum borrowing limit of $10,500,000 and a
term note in the amount of $9,500,000. These facilities, and the amendments
thereto, are collateralized by substantially all assets of the Company including
inventory, receivables and a mortgage interest on the manufacturing facility.
During the third quarter of 1995 the Company reorganized the terms of certain
borrowing arrangements with its bank which resulted in expanded borrowing
capacity.

The amended terms of the revolving credit facility permit the Company to borrow
up to $12,500,000 based upon eligible collateral ($12,105,168 as of September
30, 1995). The expressed intention of the Company and its bank is to review
quarterly the Company's financial condition and, if appropriate, extend the due
date of its revolving credit facility in order to maintain a fifteen month term.
In accordance with this, the bank has extended the term of the

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<PAGE> 10

DURAMED PHARMACEUTICALS, INC.

revolving credit facility from September 30, 1996 to December 31, 1996. This
facility requires monthly interest payments at a rate of prime plus 1% (9.75% at
September 30, 1995).

The $9,500,000 term note, prior to the amendments finalized in the third quarter
of 1995, had required quarterly principal payments in the amount of $2,000,000
payable on the first day of March, June, September and December of 1995 with the
remaining balance due on March 31, 1996. Through June 30, 1995, two principal
payments totalling $4,000,000 had been made on the term note. The amendments to
the borrowing agreement extend the due date for the outstanding $5.5 million
balance of the term note to September 30, 1996. The bank also made available to
the Company an additional $3.0 million in new credit, in the form of a term note
which allows borrowings on a revolving basis and is also due on September 30,
1996. The Company, at its option, may choose to accelerate to December 31, 1995
repayment of the $4.0 million of term loan payments previously due in 1995 and
borrowings against the $3.0 million of new credit. The term note and the
$3.0 million in new credit both require monthly interest payments, and the
borrowings bear interest at the rates of prime plus 1% and prime plus 2%,
respectively. If the Company chooses not to accelerate repayment of these
borrowings, the amendment provides for additional monthly interest payments
commencing January 1, 1996 of $150,000 per month increasing to $250,000 per
month on July 1, 1996.

In consideration of the expanded borrowing arrangements, the Company granted to
the bank warrants to purchase 200,000 shares of common stock of the Company at
$18.125 per share.

The note payable to the State of Ohio is secured by the Company's manufacturing
facility. The loan bears interest at 7.5% and requires minimum monthly payments
of $20,394 and certain other payments as defined by the agreement. The final
payment of approximately $1,067,000, is due November 1, 1996. The State has
agreed to waive, through October 1, 1996, certain financial covenants which
require minimum levels of working capital and stockholders' equity. This debt
is personally guaranteed by a former officer and by a director.

During 1985, Hamilton County, Ohio issued Industrial Revenue Bonds in the amount
of $995,000, the proceeds of which were used by the Company to purchase new
machinery and equipment. The balance was paid in April 1995 with the proceeds
of a $185,000 bank note. The interest rate of the note is prime plus 1%. The
term of the note is three years and requires monthly payments of principal and
interest in the amount of $6,400.

The construction loan is a ten year $5.5 million facility which provided a
portion of the financing for the expansion of the Company's manufacturing
facility and is supported by a loan guaranty from Johnson & Johnson. Under the
terms of the construction loan, principal payments do not commence until the
occurrence of certain defined events or January 1, 1997, whichever occurs first.
Interest is payable monthly based upon the prime rate.

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<PAGE> 11

DURAMED PHARMACEUTICALS, INC.

The equipment line of credit is a $1.5 million facility provided by the
Company's bank for financing equipment which is collateralized by the assets
financed. The term of the facility is five years at an interest rate of prime
plus 1%.

The $2.0 million convertible note represents funds advanced from a joint
venture partner. The note bears interest at a variable rate approximating
prime rate + 3% (initially 12%), and matures on July 10, 1998. Upon the
occurrence of certain events, or at the option of the lender, the principal
amount of the note and accrued interest may be convertible to shares of Duramed
common stock.

Other long-term debt also includes facilities of varying amounts and terms which
are generally collateralized by the assets financed.

Other Long-Term Liabilities

The abandoned facility obligation represents the amounts due, net of sublease
income, under terms of a lease which extends through September 30, 1998. Due to
the Company's financial condition at the time, the Company was unable to meet
its commitments under the lease and vacated the facility in 1991. The facility
was sublet for a period of five years in 1992.

The $1,250,000 in deferred revenue represents the unamortized balance from the
$2.0 million cash received from Ortho-McNeil Pharmaceuticals Corporation
("Ortho-McNeil") pursuant to the terms of distribution and marketing agreements
entered into in 1994. This amount will be amortized over a period which matches
the performance of certain activities pursuant to the terms of the agreements.
As of September 30, 1995, $1.0 million of the deferred revenue is classified as
current.

- 11 -

<PAGE> 12

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

Results of Operations

Net sales increased $1,567,996 (14%) and $4,871,299 (14%) for the three month
and nine month periods ended September 30 as compared to the same periods in
1994. The increase in net sales was due primarily to increased sales volume for
certain of the Company's products and continued growth in sales of the
Ortho-McNeil products that the Company commenced marketing late in the fourth
quarter of 1994.

The gross margin percentage for the three and nine month periods ended
September 30, 1995 was 43%, compared to 49% and 45% for the same periods in
1994. The decrease in the gross margin percentage in 1995 is due primarily to
the product sales mix. There can be no assurance that, with the Company's
current product line, the present gross margin levels can be maintained if the
Company's products, particularly Methylprednisolone, should experience increased
competition.

The marketing agreement under which the Company distributed products
manufactured by Invamed Inc. ("Invamed") expired on December 31, 1994.
Invamed assumed responsibility for marketing its product line effective June
10, 1995. Subsequent to the termination of the agreement, the Company has
obtained most of the products previously supplied by Invamed from alternative
sources.

On September 12, 1995 the Company entered into a long-term product marketing
agreement with Royce Laboratories, Inc. ("Royce"). The agreement grants the
Company marketing rights to nine pharmaceutical products, which will be
distributed exclusively to a select group of warehousing drug chains under the
Duramed label and, non exclusively to the remaining trade classes. The Company
expects to begin marketing these products in the fourth quarter of 1995.

Product development expenditures are net of reimbursements received
from Schein Pharmaceutical, Inc. ("Schein") pursuant to the terms of a
contractual agreement in connection with the development of a new formulation
of conjugated estrogens tablets, the generic equivalent of the name brand
product Premarin(R). Product development expenses increased $752,583 (145%)
and $1,986,888 (157%) for the three and nine month periods ended September 30
as compared to the same periods in 1994. The increased product development
expenditures reflect the Company's expansion of its research and development
activities to pursue additional products. The Company plans to continue to
expand product development activities as its resources permit. Additionally,
product development expenditures during 1995 include pre-launch start up costs
associated with the Company's pending Abbreviated New Drug Application ("ANDA")
for conjugated estrogens. The Company continues to prepare for the launch of
conjugated estrogens; accordingly, as deemed appropriate, the Company will
increase spending levels throughout 1995.

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<PAGE> 13

DURAMED PHARMACEUTICALS, INC.

The Company's selling expense was primarily comprised of expenses of the sales
and marketing staff and related activities. The increase in 1995 compared to
1994 is a result of personnel additions and expanded sales and marketing
activities.

The increase in general and administrative expenses in 1995 compared to 1994 is
due primarily to increased compensation expense as a result of additional staff
positions, and increased expense levels necessary to provide the administrative
support required to execute the Company's business plan and support the
increased business level. Additionally, the Company has incurred legal and
consulting costs associated with responding to various issues in connection
with its pending ANDA for conjugated estrogens.

Interest expense increased in 1995 compared to 1994, due primarily to interest
expense associated with the $5.5 million construction loan which financed a
portion of the expansion of the Company's manufacturing facility. In the first
quarter of 1995, during the construction phase, interest of $94,000 was
capitalized. For the three and nine month periods ended September 30, 1995 the
Company recorded interest expense of $142,000 and $285,000, respectively,
related to these borrowings.

The 1995 tax provision represents alternative minimum tax; no regular income tax
provision is required due to the offset of taxable income by the carryforward of
net operating losses.

The Company expects that its product development and operating expenses during
the remainder of 1995 will continue to increase over 1994 levels. To the extent
that these increases are not offset by revenue increases, operating results will
be adversely affected. The Company is discussing several potential business
development opportunities which could provide additional product revenues.
However, it is not certain when these revenues would be available. Accordingly,
the Company's reported income for the remaining quarter of 1995 may be less than
for the comparable quarter of 1994.

Liquidity and Capital Resources

As explained in the 1994 10-K under "Item 1. Business -- Business and
Regulatory Environment Background," audits of the Company's ANDAs in 1990 and
1991 resulted in the withdrawal of all of the Company's ANDAs except those for
Methylprednisolone and Isoniazid. As a result of the substantially reduced
revenue levels and charges incurred due to product recalls and related
inventory write-offs, the Company's financial base was nearly exhausted.

From that time through much of 1993, the Company's efforts were focused on
three primary pursuits: (1) continued execution of a plan to, at a minimum,
generate sufficient cash flows to meet current obligations exclusive of bank
debt and related interest, (2) seeking other sources of

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<PAGE> 14

DURAMED PHARMACEUTICALS, INC.

revenue and (3) continuing discussions with potential sources of capital in an
effort to secure the resources needed to fund the Company's recovery.
Additionally, the Company's product development efforts were focused primarily
on development of a new formulation for conjugated estrogens products under the
agreement with Schein.

With improving sales and operating results commencing in 1993, the Company's
operating plan was modified to address the needs of the expanded product
development, sales and marketing, and general corporate activities required for
long-term success.

During 1995 the funds used by the Company in its operations have been primarily
provided through borrowings against its revolving credit facility and additional
extensions of credit granted by the Company's bank and funds received from the
issuance of a convertible debt security. Under the terms of the amended and
restated bank agreement dated December 31, 1994 two facilities were established,
a revolving credit facility and a term note in the amount of $9,500,000. The
expressed intention of the Company and its bank is to review quarterly the
Company's financial condition and, if appropriate, extend the due date of the
revolving credit facility in order to maintain a fifteen month term and the
long-term status of this facility. In accordance with this, the bank has
extended the term of the revolving credit facility from September 30, 1996 to
December 31, 1996. Through June 30, 1995, the Company made two principal
payments totalling $4.0 million on the term note. See Note F of Notes to
Consolidated Financial Statements in the 1994 10-K for additional information
related to the Company's obligations.

During the third quarter of 1995 the Company reorganized the terms of certain
borrowing arrangements with its bank which resulted in expanded borrowing
capacity. As part of this arrangement, the bank has agreed to extend the due
date to September 1996 on the $5.5 million in remaining term loan payments that
were scheduled for 1995 and March 31, 1996, and to increase the maximum limit
of the Company's revolving credit facility by $2,000,000 to $12,500,000 based
upon eligible collateral ($12,105,168 as of September 30, 1995). Additionally,
the bank has agreed to make an additional $3.0 million of credit available to
the Company on a short term basis. The additional $3.0 million bears an
interest rate of prime plus 2%. Commencing January 1, 1996 additional monthly
interest payments are required, initially at $150,000 per month and increasing
to $250,000 per month if the $3.0 million of new credit and the $4.0 million of
loan payments previously due in 1995 have not been repaid by that time. In

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<PAGE> 15

DURAMED PHARMACEUTICALS, INC.

consideration of this expanded borrowing arrangement, the Company granted the
bank warrants to purchase 200,000 shares of common stock of the Company at the
then current market price of $18.125.

An additional important element of the Company's plan has been the continued
support of its unsecured creditors. At September 30, 1995, the Company owed
approximately $1,855,193 to certain unsecured creditors relating to outstanding
balances prior to 1992. The Company has been making progress payments toward
the outstanding obligations to these unsecured creditors and intends to continue
periodic payments as the Company's resource level permits. At present, this
program is progressing successfully but there can be no assurance that creditor
support will continue.

The increase in inventories and trade payables as of September 30, 1995 results
primarily from product purchases from Ortho-McNeil, and procurement of raw
materials for the Company's conjugated estrogens products.

The increase in the accounts receivable balance as of September 30, 1995 is
attributable to higher overall sales and particularly strong sales in the latter
part of the quarter.

As discussed in Note B of Notes to Consolidated Financial Statements in the 1994
10-K, the Company's agreement with Schein for the development, manufacture and
marketing of a new formulation of conjugated estrogens tablets provides for
project financing by Schein and, if the project is successful, participation by
both firms in the marketing and distribution of the products.

FDA approval is required for Duramed to market conjugated estrogens. On
September 27, 1994, the Company filed with the FDA an ANDA for the .625 mg
strength of conjugated estrogens. This product is formulated and designed to
meet the conjugated estrogens product composition standards and bioequivalency
guidance established by the FDA in 1991.

Since 1991, Wyeth-Ayerst, a Division of American Home Products
("Wyeth-Ayerst"), the manufacturer of the brand name product Premarin(R), has
made several submissions to the FDA requesting changes in the FDA's 1991
conjugated estrogens product composition standards and bioequivalency guidance.
Among other things, Wyeth-Ayerst requested that the FDA change the product
composition standards for conjugated estrogens by requiring the generic version
to include a specific equine estrogenic substance, delta8,9 dehydroestrone
sulfate (Delta8,9 DHES). In response to each submission, the FDA determined
that the information submitted by Wyeth-Ayerst was insufficient to justify
changes in the standards or guidance. In so responding, the FDA let stand the
1991 product composition standards, which established Delta8,9 DHES as an
impurity and not a necessary ingredient.

- 15 -

<PAGE> 16

DURAMED PHARMACEUTICALS, INC.

On November 30, 1994, Wyeth-Ayerst filed a Citizen Petition with the FDA which
reiterates some of its earlier arguments and again requests that the FDA require
the inclusion of Delta8,9 DHES in generic conjugated estrogens. On July 27-28,
1995, the FDA's Fertility and Maternal Health Drugs and Generic Drugs Advisory
Committees met to address this issue. The outcome of this meeting was a
unanimous vote by the advisory committees that there is insufficient data to
assess whether any individual component (including Delta8,9 DHES) or combination
of components other than estrone sulfate and equilin sulfate need to be present
to achieve clinical safety and efficacy in conjugated estrogens.

Duramed believes that the conclusions of the Advisory Committees reaffirm
the product composition standards for conjugated estrogens established
by the FDA in 1991, and that the FDA review of the Company's ANDA is
continuing. In support of its position, on October 6, 1995 the Company filed
with the Food and Drug Administration (FDA) an extensive response to the
Citizen Petition filed late last year by Wyeth-Ayerst. Duramed 's filing
includes scientific and medical data, as well as the opinions of renowned
experts, who all conclude that Delta8,9 DHES has no impact on the safety or
efficacy of conjugated estrogens and should not be a required component in
generic pharmaceutical equivalent dosages to Premarin(R). Duramed further
believes that its conjugated estrogens product as filed meets the current
product composition standards and bioequivalency guidance established by the
FDA in 1991. At this time, the Company is unable to determine when or if it
will obtain FDA approval to market the .625 mg strength product. If approval
is obtained and the product is successfully manufactured and marketed, the
Company believes the product will have a substantial positive effect on the
Company's operating results and financial condition. Work on other conjugated
estrogens strengths is continuing and results to date are encouraging.

On October 10, 1995 the Company announced that it had signed a letter of intent
to acquire Hallmark Pharmaceuticals, Inc. ("Hallmark"), a privately held
pharmaceutical development company headquartered in Somerset, New Jersey. The
letter of intent calls for Duramed to issue shares of common stock in payment
for Hallmark. The exact number of shares will depend on the future market
price of Duramed's stock, but the resulting ownership dilution of current
shareholders on a fully diluted basis is not expected to exceed 10 percent. The
proposed acquisition is subject to the negotiation and execution of a
definitive merger agreement to contain customary representations, warranties
and conditions, including approval by the Boards of Directors of Hallmark and
Duramed as well as Hallmark's shareholders, the obtaining of any required
regulatory approvals or third party consents; and appropriate financing
Hallmark recently received FDA approval to market Captopril, the generic
equivalent to brand name product Capoten(R) after expiration of the patent
exclusivity period for that product. Hallmark has granted Duramed the
exclusive rights to market this product. The Company believes that the patent
exclusivity period will expire on February 13, 1996 and presently the Company
plans to introduce the product at that time.

- 16 -

<PAGE> 17

DURAMED PHARMACEUTICALS, INC.

While the products which are expected to be marketed under the Royce
and Hallmark agreements will increase the breath of the Company's product
line, the Company's current product line is limited and the Company's current
operating results are heavily dependent on the performance of its
Methylprednisolone product. If the Company receives approval of its ANDA for
the .625 mg strength of conjugated estrogens, and successfully manufactures and
markets the product, the resulting favorable financial impact is expected to be
significant. Additionally, the Company has an agreement with Invamed for the
marketing rights to Verapamil S.R.(R) which has been formulated and will be
manufactured by Invamed, if an ANDA is filed and FDA approval is obtained. The
availability of this product could also significantly improve the Company's
operating results. However, in the case of both conjugated estrogens and
Verapamil S.R.(R), FDA approval is not assured.

The Company has an aggressive business plan that includes significant capital
requirements for equipment and facility which will be required if it is to
carry out the planned substantial expansion of its research and development
capabilities, and to pursue other planned corporate projects designed to foster
long-term growth. In the absence of sufficient internally generated funds, the
additional capital required to execute the Company's business plan must come
from other sources. The Company is currently exploring financing alternatives
with respect to its capital requirements. At this time, the Company cannot
determine the outcome of these discussions or whether it will result in a
substantial dilution of the ownership interest of the Company's current
stockholders. As a result, the Company's expanded future plans must remain
uncertain.

On September 16, 1994 the Company's common stock was approved for re-listing on
The Nasdaq Stock Market ("Nasdaq"). Although the Company does not currently
meet the tangible net assets requirement for Nasdaq listing, an exception has
been granted contingent upon the Company meeting the listing requirements as of
September 30, 1995. The Company did not meet the tangible net asset
requirement for Nasdaq listing as of September 30, 1995 and intends to petition
Nasdaq for an extension to its listing exception. While the Company believes
it will be successful with its petition, there is no assurance that Nasdaq will
grant the exception. If the Company's securities should cease to be quoted on
Nasdaq they should continue to be quoted in the over-the-counter market.

- 17 -

<PAGE> 18

DURAMED PHARMACEUTICALS, INC.

PART II - OTHER INFORMATION

Item 6. Exhibit and Reports on Form 8-K

(a) Exhibit:

10.1 First Amendment to Amended and Restated Loan and Security
Agreement dated August 22, 1995 between the Company and The
Provident Bank.

10.2 Second Amendment to Amended and Restated Loan and Security
Agreement dated September 30, 1995 between the Company and
The Provident Bank.

10.3 Promissory note of $3.0 million dated August 22, 1995
between the Company and The Provident Bank.

10.4 Promissory note of $2.0 million dated September 30, 1995
between the Company and The Provident Bank.

10.5 Warrant for the purchase of 200,000 shares of common stock
between the Company and The Provident Bank

(11) Statement re:Computation of Earnings Per Share
(27) Financial Data Schedule*

(b) Reports on Form 8-K:

On October 10, 1995 the Company filed a Current Report on Form 8-K
announcing the signing of a letter of intent to acquire Hallmark
Pharmaceuticals, Inc.

__________________

*Contained only in electronic filing with Securities and Exchange Commission.

- 18 -

<PAGE> 19

SIGNATURES

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

DURAMED PHARMACEUTICALS, INC.

Dated: November 14, 1995 by: /s/ E. Thomas Arington
----------------- --------------------------------
E. Thomas Arington
President, Chairman of the Board
Chief Executive Officer

Dated: November 14, 1995 by: /s/ Timothy J. Holt
----------------- --------------------------------
Timothy J. Holt
Senior Vice President - Finance,
Treasurer, Chief Financial Officer

- 19 -

<PAGE> 1

Exhibit 10.1
FIRST AMENDMENT TO AMENDED AND
RESTATED LOAN AND SECURITY AGREEMENT
------------------------------------

This First Amendment to Amended and Restated Loan and Security
Agreement, dated as of August 22, 1995, between DURAMED PHARMACEUTICALS, INC.,
a Delaware corporation (referred to herein as "Borrower") and THE PROVIDENT
BANK ("Bank"), an Ohio banking corporation.

WITNESSETH

WHEREAS, Borrower and Bank have previously entered into an Amended and
Restated Loan and Security Agreement dated December 31, 1994 (the "Loan and
Security Agreement");

WHEREAS, Borrower wishes to extend the maturity of the Loans, borrow
an additional $3,000,000 on a term loan basis and make certain other changes to
the terms of the Loans and the Loan and Security Agreement as set forth herein;

WHEREAS, Bank is willing to make such changes to the terms of the
Loans and lend such additional sums to Borrower under the terms of the Loan and
Security Agreement as amended hereby; and

WHEREAS, the terms used in this Agreement shall have the meanings as
defined in the Loan and Security Agreement.

NOW, THEREFORE, in consideration of the mutual undertakings herein
contained, the parties hereto desiring legally to be bound, hereby agree as
follows:

1. Section 2.2 of the Loan and Security Agreement is hereby
amended by the addition of the following sentence at the end of such Section:
"Subject to the terms and conditions of this Agreement, the Bank agrees to make
an additional loan to the Borrower in the principal amount of Three Million
Dollars ($3,000,000) (the "Additional Term Loan") on a term loan basis." Such
term loan shall be evidenced by a Note in the form attached as Exhibit "A"
hereto.

2. The Loan and Security Agreement is hereby amended to add a new
Section 2.5 to read in full as follows:

"Section 2.5 ADDITIONAL INTEREST. The Borrower shall pay
additional interest on the Loans to Bank in the amounts and on
the dates set forth below unless prior to the due date of such
additional interest (i) the $3,000,000 Additional Term Loan or
any modification, extension or renewal thereof has been paid
in full by the Borrower and (ii) the outstanding principal
amount of the $9,500,000 Amended and Restated Promissory Note
dated December 31, 1994, or any modification, extension or
renewal thereof has been reduced to $1,500,000.
<PAGE> 2
<TABLE>
The additional interest payable pursuant to this Section 2.5
shall be in addition to all other interest, fees, principal
and other charges otherwise payable pursuant to the terms of
the Notes or this Loan and Security Agreement.

<CAPTION>
Additional Interest Amount Date Due
-------------------------- --------
<S> <C>
$150,000 January 1, 1996
$150,000 February 1, 1996
$150,000 March 1, 1996
$200,000 April 1, 1996
$200,000 May 1, 1996
$200,000 June 1, 1996
$250,000 July 1, 1996
$250,000 August 1, 1996
$250,000 September 1, 1996
</TABLE>

3. Section 5.15 of the Loan and Security Agreement is hereby
amended by the deletion of clause (a) of the first sentence thereof and the
substitution of the following in the place thereof:

"(a) Stock Holder's Equity at all times not less than $1.00."

4. Section 10.1 of the Loan and Security Agreement is hereby
amended by the deletion of the period at the end of such Section and the
addition of the following in the place thereof:

"; and (l) the Borrower shall fail to cause a Registration
Statement on Form S-3 to be filed within ten (10) days of the
written request of the Holder pursuant to Section 1.1 of that
certain Amendment No. 1 to Registration Rights Agreement dated
August 22, 1995 between the Borrower, the Bank and Provident
Bancorp, Inc., or fail to take its best efforts to cause such
Registration Statement to become effective as soon as possible
thereafter, or fail to promptly inform Bank of the content of
all comments and communications from the Securities and
Exchange Commission, such obligation being absolute, with time
of the essence."

5. The terms of the Ten Million Five Hundred Thousand Dollar
($10,500,000) Amended and Restated Promissory Note dated December 31, 1994 are
hereby amended to provide that the maturity of the Note is extended to
September 30, 1996.

6. The terms of the Nine Million Five Hundred Thousand Dollar
($9,500,000) Amended and Restated Promissory Note dated December 31, 1994 are
hereby amended to provide that (i) the maturity of the Note is extended to
September 30, 1996 and (ii) the due date of the Two Million Dollar ($2,000,000)
principal instalments due under the terms of the Note on September 1 and
December 1, 1995 are hereby extended to be due at maturity on September 30,
1996.
<PAGE> 3
7. As partial consideration for the undertakings of Bank
hereunder, Borrower agrees (i) to issue Bank a warrant for the purchase of
200,000 shares of the common stock of Borrower, (ii) to enter into a
Registration Rights Agreement, (iii) to enter into Amendment No. 1 to
Registration Rights Agreement and (iv) to enter into a Second Amendment to
Forbearance Agreement.

8. Borrower hereby represents and warrants that no Event of
Default, or event which with the passage of time or the giving of notice, or
both, should become an Event of Default, has occurred and is continuing as of
the date hereof, except with respect to the breach of Section 5.15 of the Loan
and Security Agreement previously waived by Bank.

9. All of the terms and conditions of the Loan and Security
Agreement not amended hereby shall continue in full force and effect.

IN WITNESS WHEREOF, the parties have caused this First Amendment to
Amended and Restated Loan and Security Agreement to be executed and delivered
as of the date first above written.

DURAMED PHARMACEUTICALS, INC.

By: /s/ Timothy J. Holt
----------------------------------
Vice President

THE PROVIDENT BANK

By: /s/ Robert L. Hoverson
----------------------------------
Executive Vice President

<PAGE> 1

Exhibit 10.2

SECOND AMENDMENT TO AMENDED AND
RESTATED LOAN AND SECURITY AGREEMENT
------------------------------------

This Second Amendment to Amended and Restated Loan and Security
Agreement, dated as of September 30, 1995, between DURAMED PHARMACEUTICALS,
INC., a Delaware corporation (referred to herein as "Borrower") and THE
PROVIDENT BANK ("Bank"), an Ohio banking corporation.

WITNESSETH

WHEREAS, Borrower and Bank have previously entered into an Amended and
Restated Loan and Security Agreement dated December 31, 1994 as previously
amended by a First Amendment to Amended and Restated Loan and Security
Agreement dated August 27, 1995 (the "Loan and Security Agreement");

WHEREAS, Borrower wishes to increase the revolving credit facility
under the Loan and Security Agreement by an additional $2,000,000 and change
the Additional Term Note to a revolving credit;

WHEREAS, Bank is willing to increase the revolving credit facility and
change the Additional Term Note to a revolving credit; and

WHEREAS, the terms used in this Agreement shall have the meanings as
defined in the Loan and Security Agreement.

NOW, THEREFORE, in consideration of the mutual undertakings herein
contained, the parties hereto desiring legally to be bound, hereby agree as
follows:

1. Section 2.1 of the Loan and Security Agreement is hereby
amended to delete "Ten Million Five Hundred Thousand Dollars ($10,500,000.00)"
and to substitute "Twelve Million Five Hundred Thousand Dollars
($12,500,000.00)" in the place thereof.

2. The terms of the Three Million Dollar ($3,000,000.00)
Promissory Note dated August 22, 1995 are hereby amended by the addition of the
following paragraph:

"Revolving Credit: This Note is a revolving credit subject to
the terms of this paragraph. Subject to the conditions hereof
and of any other agreements between the parties relating
hereto and until maturity (whether at scheduled or accelerated
maturity), the undersigned may borrow and reborrow from the
holder and the holder may, in its sole discretion, lend and
relend to the undersigned such amounts not to exceed the
Maximum Credit as the undersigned may at any time and from
time to time request upon satisfactory notice to the holder."

<PAGE> 2
3. Borrower hereby represents and warrants that no Event of
Default, or event which with the passage of time or the giving of notice, or
both, should become an Event of Default, has occurred and is continuing as of
the date hereof, except with respect to the breach of Section 5.15 of the Loan
and Security Agreement previously waived by Bank.

4. All of the terms and conditions of the Loan and Security
Agreement not amended hereby shall continue in full force and
effect.

IN WITNESS WHEREOF, the parties have caused this Second Amendment to
Amended and Restated Loan and Security Agreement to be executed and delivered
as of the date first above written.

DURAMED PHARMACEUTICALS, INC.

By: /s/ E. Thomas Arington
--------------------------------
President

THE PROVIDENT BANK

By: /s/ Robert L. Hoverson
---------------------------------
Executive Vice President

<PAGE> 1
Exhibit 10.3

COMMERCIAL LOAN

NOTE NO. ______________
PROMISSORY NOTE

$3,000,000.00 Cincinnati, Ohio August 22, 1995

The undersigned, for value received, promises to pay to the order of The
Provident Bank, at any of its offices, the sum of Three Million and no/100
Dollars ($3,000,000.00), (the "Maximum Credit") or so much thereof as is loaned
by the holder pursuant to the provisions hereof, together with interest until
demand or maturity at the rate of the prime rate plus 2% (P + 2%) per year
computed on the basis of a year of 360 days for the actual number of days
elapsed, and after default hereunder, demand or maturity, whether at stated
maturity or by acceleration, at a rate four (4) percentage points greater than
the stated rate (the "Default Rate"). Interest shall be due and payable on the
last day of each month, and at maturity. Principal shall be due and payable on
September 30, 1996. This Note is issued pursuant to and subject to the terms
and conditions of a certain Amended and Restated Loan and Security Agreement
dated December 31, 1994 (the "Loan and Security Agreement") between the
undersigned and The Provident Bank. The undersigned hereby state(s) that the
purpose of the loan evidenced by this Note is working capital.

[ ] REVOLVING CREDIT: If this box is checked, this Note is a revolving
credit subject to the terms of this paragraph. Subject to the conditions
hereof and of any other agreements between the parties relating hereto and
until demand, if the principal is payable on demand, or maturity (whether at
scheduled or accelerated maturity), if the principal is payable other than on
demand, the undersigned may borrow and reborrow from the holder and the holder
may, in its sole discretion, lend and relend to the undersigned such amounts
not to exceed the Maximum Credit as the undersigned may at any time and from
time to time request upon satisfactory notice to the holder.

Notwithstanding anything to the contrary contained herein or in any other
agreement between the undersigned and the holder, if this Note provides that
the principal hereof is payable on demand, then this Note is a demand Note due
and owing immediately, without prior demand of the holder and immediate action
to enforce its payment may be taken at any time, without notice and without
reason. If any payment of principal or interest is not paid when due, or if an
Event of Default has occurred and is continuing under the Loan and Security
Agreement, this Note shall, if payable other than on demand, at the option of
its holder, become immediately due and payable, without demand or notice. The
undersigned shall promptly provide such financial information as the holder
shall reasonably request from time to time.

As collateral security for the payment of the amounts from time to time
owing hereunder, Borrower and all indorsers hereby grants to the holder a
security interest in (i) all property in which the holder now or hereafter
holds a security interest pursuant to any and all assignments, pledges and
security agreements between the undersigned and the holder and (ii) all
accounts, securities and properties now or hereafter in the possession of the
holder and in which the undersigned or any indorsers have any interest. Upon
this Note becoming due under any of its terms and provisions, and not being
fully paid and satisfied, the total sum then due hereunder may, at any time and
from time to time, be charged against any account or accounts maintained with
the holder hereof by any of the undersigned or any indorser, without notice to
or further consent from any of them, and the undersigned and all indorsers
agree to be and remain jointly and severally liable for all remaining
indebtedness represented by this Note in excess of the amount or amounts so
applied. The undersigned and the holder intend that this indebtedness shall be
secured by any and all mortgages heretofore or hereafter granted by the
undersigned in favor of the holder.

There will be a minimum finance charge of $50.00 for each billing period.
Prime rate is that annual percentage rate of interest which is established by
The Provident Bank from time to time as its prime rate, whether or not such
rate is publicly announced, and which provides a base to which loan rates may
be referenced. Prime rate is not necessarily the lowest lending rate of The
Provident Bank. A rate based on the prime rate will change each time and as of
the date that the prime rate changes. If any payment of principal or interest
is not paid when due or if the undersigned shall otherwise default in the
performance of its obligations hereunder or under any other note or agreement
with the holder, the holder at its option, may charge and collect, or add to
the unpaid balance hereof, a late charge up to the greater of $250 or .1% of
the unpaid balance of this Note at the time of such delinquency for each such
delinquency to cover the extra expense incident to handling delinquent
accounts, and/or increase the interest rate on the unpaid balance to the
Default Rate. The holder may charge interest at the rate provided herein on
all interest and other amounts owing hereunder which are not paid when due.

The undersigned, all indorsers hereof, any other party hereto, and any
guarantor hereof (collectively "Obligors") each (i) waive(s) presentment,
demand, notice of demand, protest, notice of protest and notice of dishonor and
any other notice required to be given by law in connection with the delivery,
acceptance, performance, default or enforcement of this Note, of any
indorsement or guaranty of this Note or of any document or instrument
evidencing any security for payment of this Note; and (ii) consent(s) to any
and all delays, extensions, renewals or other modifications of this Note or
waivers of any term hereof or release or discharge by the holder of any of
Obligors or release, substitution or exchange of any security for the payment
hereof or the failure to act on the part of the holder or any indulgence shown
by the holder, from time to time and in one or more instances, (without notice
to or further
Page 1 of 2
<PAGE> 2
assent from any of Obligors) and agree(s) that no such action, failure to act
or failure to exercise any right or remedy, on the part of the holder shall in
any way affect or impair the obligations of any Obligors or be construed as a
waiver by the holder of, or otherwise affect, any of the holder's rights under
this Note, under any indorsement or guaranty of this Note or under any document
or instrument evidencing any security for payment of this Note. The
undersigned and all indorsers further agree to reimburse the holder for all
advances, charges, costs and expenses, including reasonable attorneys' fees,
incurred or paid in exercising any right, power or remedy conferred by this
Note, or in the enforcement thereof. If the undersigned are more than one (1),
the liability of the undersigned hereon is joint and several, and the term
"undersigned", as used herein, means any one or more of them.

The undersigned and all indorsers authorize any attorney at law, including
an attorney engaged by the holder, to appear in any court of record in the
State of Ohio or any other State or Territory of the United States, after the
indebtedness evidenced hereby, or any part thereof, becomes due and waive the
issuance and service of process and confess judgment against any one or more
than one of the undersigned and all indorsers in favor of the holder, for the
amount then appearing due, together with costs of suit and, thereupon, to
release all errors and waive all rights of appeal and stay of execution, but no
such judgment or judgments against any one of the undersigned shall be a bar to
a subsequent judgment or judgments against any one or more than one of such
persons against whom judgment has not been obtained hereon. This warrant of
attorney to confess judgment is a joint and several warrant of attorney. The
foregoing warrant of attorney shall survive any judgment; and if any judgment
be vacated for any reason, the holder hereof nevertheless may hereafter use the
foregoing warrant of attorney to obtain an additional judgment or judgments
against the undersigned and all indorsers or any one or more of them. The
undersigned and all indorsers hereby expressly waive any conflict of interest
that the holder's attorney may have in confessing such judgment against such
parties and expressly consent to the confessing attorney receiving a legal fee
from the holder for confessing such judgment against such parties.

If the undersigned or any indorser or guarantor hereof would have the
right to rescind the loan evidenced by this Note pursuant to a right so to do
under the Truth-in-Lending Act because one or more mortgages now exist in favor
of the holder hereof covering the principal home or homes of the undersigned or
any indorser or guarantor hereof, the holder's acceptance of this Note shall
constitute a waiver of its right under any such mortgage to treat such
principal home or homes as security for the repayment or guaranty of this Note
except for the principal home or homes described in the Mortgage dated N/A.

THE PROVISIONS OF THIS NOTE SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE
WITH THE LAWS OF OHIO. AS A SPECIFICALLY BARGAINED INDUCEMENT FOR THE HOLDER
TO EXTEND CREDIT TO BORROWER, AND AFTER HAVING THE OPPORTUNITY TO CONSULT
COUNSEL, THE UNDERSIGNED AND ALL INDORSERS HEREBY EXPRESSLY WAIVE THE RIGHT TO
TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATED TO THIS NOTE OR ARISING IN
ANY WAY FROM ANY INDEBTEDNESS OR OTHER TRANSACTIONS INVOLVING THE HOLDER AND
THE UNDERSIGNED. THE UNDERSIGNED HEREBY DESIGNATE(S) ALL COURTS OF RECORD
SITTING IN CINCINNATI, OHIO AND HAVING JURISDICTION OVER THE SUBJECT MATTER,
STATE AND FEDERAL, AS FORUMS WHERE ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF
OR ARISING FROM OR OUT OF THIS NOTE, ITS MAKING, VALIDITY OR PERFORMANCE, MAY
BE PROSECUTED AS TO ALL PARTIES, THEIR SUCCESSORS AND ASSIGNS, AND BY THE
FOREGOING DESIGNATION THE UNDERSIGNED CONSENT(S) TO THE JURISDICTION AND VENUE
OF SUCH COURTS.

WARNING - BY SIGNING THIS PAPER, YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME, A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE, AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT
OR ANY OTHER CAUSE.

DURAMED PHARMACEUTICALS, INC.

By: /s/ E. Thomas Arington

President

Address: 7155 East Kemper Road /s/ Timothy J. Holt

Cincinnati, Ohio 45249 Senior Vice President

Page 2 of 2

<PAGE> 1
Exhibit 10.4

COMMERCIAL LOAN

NOTE NO. 57
PROMISSORY NOTE

$2,000,000.00 Cincinnati, Ohio September 30, 1995

The undersigned, for value received, promises to pay to the order of The
Provident Bank, at any of its offices, the sum of Two Million and no/100
Dollars ($2,000,000.00), (the "Maximum Credit") or so much thereof as is loaned
by the holder pursuant to the provisions hereof, together with interest until
demand or maturity at the rate of the prime rate plus 1% (P + 1%) per year
computed on the basis of a year of 360 days for the actual number of days
elapsed, and after default hereunder, demand or maturity, whether at stated
maturity or by acceleration, at a rate four (4) percentage points greater than
the stated rate (the "Default Rate"). Interest shall be due and payable on the
last day of each month, and at maturity. Principal shall be due and payable on
September 30, 1996. This Note is one of the Notes issued pursuant to Section
2.1 of, and subject to the terms and conditions of, a certain Amended and
Restated Loan and Security Agreement dated December 31, 1994 (the "Loan and
Security Agreement") between the undersigned and The Provident Bank. The
undersigned hereby state(s) that the purpose of the loan evidenced by this Note
is for working capital.

[X] REVOLVING CREDIT: If this box is checked, this Note is a revolving credit
subject to the terms of this paragraph. Subject to the conditions hereof and
of any other agreements between the parties relating hereto and until demand,
if the principal is payable on demand, or maturity (whether at scheduled or
accelerated maturity), if the principal is payable other than on demand, the
undersigned may borrow and reborrow from the holder and the holder may, in its
sole discretion, lend and relend to the undersigned such amounts not to exceed
the Maximum Credit as the undersigned may at any time and from time to time
request upon satisfactory notice to the holder.

The undersigned, all indorsers hereof, any other party hereto, and any
guarantor hereof (collectively "Obligors") each (i) waive(s) presentment,
demand, notice of demand, protest, notice of protest and notice of dishonor and
any other notice required to be given by law in connection with the delivery,
acceptance, performance, default or enforcement of this Note, of any
indorsement or guaranty of this Note or of any document or instrument
evidencing any security for payment of this Note; and (ii) consent(s) to any
and all delays, extensions, renewals or other modifications of this Note or
waivers of any term hereof or release or discharge by the holder of any of
Obligors or
Page 1 of 2
<PAGE> 2
release, substitution or exchange of any security for the payment hereof or the
failure to act on the part of the holder or any indulgence shown by the holder,
from time to time and in one or more instances, (without notice to or further
assent from any of Obligors) and agree(s) that no such action, failure to act
or failure to exercise any right or remedy, on the part of the holder shall in
any way affect or impair the obligations of any Obligors or be construed as a
waiver by the holder of, or otherwise affect, any of the holder's rights under
this Note, under any indorsement or guaranty of this Note or under any document
or instrument evidencing any security for payment of this Note. The
undersigned and all indorsers further agree to reimburse the holder for all
advances, charges, costs and expenses, including reasonable attorneys' fees,
incurred or paid in exercising any right, power or remedy conferred by this
Note, or in the enforcement thereof. If the undersigned are more than one (1),
the liability of the undersigned hereon is joint and several, and the term
"undersigned", as used herein, means any one or more of them.

DURAMED PHARMACEUTICALS, INC.

By: /s/ E. Thomas Arington

President

Address: 7155 East Kemper Road

Cincinnati, Ohio 45249

Page 2 of 2

<PAGE> 1

Exhibit 10.5

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 AND MAY BE OFFERED OR SOLD ONLY PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT THEREUNDER OR AN APPLICABLE EXEMPTION FROM SUCH REGISTRATION AND IN
COMPLIANCE WITH ALL APPLICABLE STATE SECURITIES LAWS.

DURAMED PHARMACEUTICALS, INC.

Warrant for the Purchase of Shares of Common Stock
--------------------------------------------------

No. W-2 200,000 Shares

FOR VALUE RECEIVED, Duramed Pharmaceuticals, Inc. (the
"Corporation"), a Delaware corporation, hereby certifies that The Provident
Bank, an Ohio banking corporation ("Provident") or its assignee is entitled to
purchase from the Corporation, on or before December 31, 2005 (the "Termination
Date"), Two Hundred Thousand (200,000) fully paid and non-assessable shares of
the Common Stock, $.01 par value per share, of the Corporation, for a purchase
price of Eighteen Dollars and Twelve and One-Half Cents ($18.125) per share.
Hereinafter, (i) said common stock, together with any other equity securities
which may be issued by the Corporation in addition thereto or in substitution
therefor, is referred to as "Common Stock", (ii) the shares of Common Stock
purchasable hereunder are referred to as the "Warrant Shares", (iii) the
aggregate purchase price payable hereunder for the Warrant Shares is referred
to as the "Aggregate Warrant Price" and (iv) the price payable hereunder for
each of the Warrant Shares is referred to as the "Per Share Warrant Price".
The Per Share Warrant Price and the number of Warrant Shares are subject to
adjustment as hereinafter provided.

1. EXERCISE OF WARRANT. This Warrant may be exercised
in whole or in part on or before the Termination Date by the Holder (as defined
in Section 5 below) of this Warrant by the surrender of this Warrant (with the
subscription form at the end hereof duly executed) at the principal office of
the Corporation, together with payment of the Aggregate Warrant Price for the
Warrant Shares being purchased. Payment for Warrant Shares shall be made by
check payable to the order of the Corporation.

Alternatively, all or any part of such payment may be made by
the surrender by such holder to the Corporation of any instrument evidencing
preferred stock or indebtedness of the Corporation, or any other corporation of
which the Corporation owns at least 50% of the voting stock, which at the date
of issue

<PAGE> 2
thereof had a maturity of one year or more. All preferred stock or
indebtedness so surrendered shall be credited against such purchase price in an
amount equal to the liquidation value or outstanding principal amount
respectively thereof plus accrued but unpaid dividends or interest respectively
to the date of surrender.

The exercise price may also be paid by surrendering the right
to a number of shares issuable upon exercise of the Warrant that have a fair
market value equal to or greater than the required exercise price. The fair
market value shall be the last reported price on the most recent date of
trading in the Common Stock or successor class of common stock of the
Corporation. If the Common Stock or a successor class of common stock of the
Corporation is not traded, fair market value shall be as determined by the
Board of Directors of the Corporation.

Upon such surrender of this Warrant the Corporation will issue
a certificate or certificates in the name of the Holder for the largest number
of whole shares of Common Stock to which the Holder shall be entitled and, in
lieu of any fractional share of Common Stock to which the Holder shall be
entitled, cash equal to the fair value of such fractional share (determined in
such manner as the Board of Directors of the Corporation shall reasonably
determine).

2. RESERVATION OF WARRANT SHARES. The Corporation will
at all times reserve and keep available, solely for issuance or delivery upon
the exercise of this Warrant, the shares of Common Stock and Other Securities
(as defined below) receivable upon the exercise of this Warrant, free and clear
of all restrictions on sale or transfer and free and clear of all pre-emptive
rights.

3. FULLY PAID STOCK; TAXES. The Corporation agrees that
the Shares of Common Stock represented by each and every certificate for
Warrant Shares or Other Securities delivered on the exercise of this Warrant
shall, at the time of such delivery, be validly issued and outstanding, fully
paid and non-assessable, and the Corporation will take all such action as may
be necessary to assure that the par value or stated value per share of Common
Stock or other capital stock included in the Other Securities is at all times
equal to or less than the then Per Share Warrant Price. The Corporation
further covenants and agrees that it will pay, when due and payable, all
federal and state stamp, original issue or similar taxes, if any, which are
payable in respect of the issue of this Warrant and/or any Warrant Share or
certificates therefor but excluding any federal, state or local taxes based on
the income of the Holder.

4. ADJUSTMENTS OF PER SHARE WARRANT PRICE. (a) If at
any time after August 21, 1995 shares of Common Stock are issued

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<PAGE> 3
as a dividend or other distribution on Common Stock, the Per Share Warrant
Price in effect at the opening of business on the business day next succeeding
the date fixed for the determination of the shareholders entitled to receive
such dividend or other distribution shall be decreased to the Per Share Warrant
Price determined by multiplying said Per Share Warrant Price so in effect by a
fraction, the numerator of which shall be the number of shares of Common Stock
issued and outstanding at the close of business on the date fixed for such
determination and the denominator of which shall be the sum of said number of
shares issued and outstanding at the close of business on the date fixed for
such determination and the number of shares constituting such dividend or other
distribution, such decrease becoming effective immediately after the opening of
business on the business day next succeeding the date fixed for such
determination.

(b) If at any time after August 22, 1995 the outstanding
shares of Common Stock shall be subdivided into a greater number of shares or
outstanding shares shall be combined into a smaller number of shares, the per
Share Warrant Price in effect at the opening of business on the business day
next succeeding the day upon which such subdivision or combination becomes
effective shall be decreased or increased, as the case may be, to the Per Share
Warrant Price determined by multiplying said Per Share Warrant Price so in
effect by a fraction, the numerator of which shall be the number of shares of
Common Stock outstanding immediately before such subdivision or combination
becomes effective and the denominator of which shall be the number of such
shares outstanding at the opening of business on the business day next
succeeding the day upon which such subdivision or combination becomes
effective.

(c) If at any time after August 22, 1995 the Corporation
shall issue shares of Common Stock (other than pursuant to any right to
purchase such shares in existence as of August 22, 1995 or pursuant to any
stock option plan for employees or directors of the Corporation) or securities
convertible into shares of Common Stock or rights, options (other than pursuant
to any right to purchase such shares in existence as of August 22, 1995 or
pursuant to any stock option plan for employees or directors of the
Corporation) or warrants (other than this Warrant or a warrant which may be
issued to Schein Pharmaceutical, Inc. under an Agreement dated July 10, 1995)
containing the right to subscribe for or purchase shares of Common Stock or
securities convertible into shares of Common Stock for a price per share of
Common Stock, in the case of the issuance of Common Stock, or for a price per
share of Common Stock initially deliverable upon conversion, exchange or
exercise of such convertible securities or rights, options or warrants
(including all consideration paid to acquire such convertible securities or
rights, options or warrants) (the "Issue Price"), less than the then current
Per Share Warrant Price on the date

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<PAGE> 4
the Corporation fixed the offering, conversion, exchange or exercise price of
such shares (the "Record Date"), then the then applicable Per Share Warrant
Price shall be adjusted by multiplying it by a fraction, the numerator of which
is the number of shares of Common Stock outstanding immediately prior to the
Record Date plus the number derived by dividing (x) the product of the number
of shares of Common Stock to be issued upon such offering, conversion, exchange
or exercise and the Issue Price by (y) the then current Per Share Warrant Price
and the denominator of which is the number of shares of Common Stock
outstanding immediately prior to the Record Date plus the number of shares of
Common Stock to be issued upon such offering, conversion, exchange or exercise.
Such adjustment shall be made whenever such shares, convertible securities,
rights, options or warrants are issued, and shall become effective immediately
after the effective date of such event retroactive to the Record Date, if any,
for such event.

(d) If at any time after August 22, 1995 the Corporation
shall distribute to all or substantially all holders of Common Stock either (i)
evidences of indebtedness or assets (excluding cash dividends or distributions)
or (ii) any other securities of the Corporation or any rights, warrants,
options to subscribe for, purchase or otherwise acquire securities of the
Corporation in a transaction not covered by paragraph (c) above (any of which
are referred to herein as "Other Securities"), then and in any such case the
Corporation shall either distribute such Other Securities to the Holder of this
Warrant or reserve for the benefit of the Holder of this Warrant such amount of
such Other Securities as the Holder of this Warrant would have owned or been
entitled to receive immediately following such action had this Warrant been
exercised for shares of Common Stock immediately prior thereto. In addition,
the Corporation shall either distribute to, or reserve for the benefit of, the
Holder of this Warrant any principal, interest, dividends or other property
payable with respect to such Other Securities as and when such interest,
dividends or other property is distributed to the holders of Common Stock. If
such a reserve is made, as and when this Warrant is exercised, the Holder shall
be entitled to receive from the Corporation such Holder's share of such Other
Securities together with the principal, interest, dividends or other property
payable with respect thereto.

(e) Upon each adjustment of the Per Share Warrant price
pursuant to this Section 4, the Holder of this Warrant shall thereafter (until
another such adjustment) be entitled to purchase, at the adjusted Per Share
Warrant Price applicable at the date purchase rights hereunder are exercised,
the number of shares of Common Stock, calculated to the nearest full share,
obtained by:

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<PAGE> 5
(i) multiplying (A) the number of Warrant Shares
deliverable upon exercise of such Warrant at the close of
business on the business day next preceding the business day
on which the Per Share Warrant Price is so adjusted by (B) the
Per Share Warrant Price in effect at the close of business on
such next preceding business day; and

(ii) by dividing (C) the Per Share Warrant Price as
adjusted into (D) the amount determined pursuant to the
foregoing clause (e)(i).

Irrespective of any adjustment in the Per Share Warrant Price and the number of
Warrant Shares purchasable under this Warrant, any Warrant thereafter issued
shall continue to express the Per Share Warrant Price and the number of shares
purchasable in the same manner as the Per Share Warrant Price and the number of
shares purchasable were expressed in this Warrant when initially issued.

(f) Upon any adjustment of the Per Share Warrant Price
and/or an increase or decrease in the number of Warrant Shares purchasable upon
the exercise of this Warrant, then, and in each such case, the Corporation will
promptly obtain a certificate of a firm of independent public accountants of
recognized national standing selected by its Board of Directors (who may be the
regular auditors of the Corporation) setting forth the adjusted Per Share
Warrant Price and the increased or decreased number of Warrant Shares
purchasable upon the exercise of this Warrant, a brief statement of the facts
accounting for such adjustment and its opinion to the effect that such
adjustment has been made in accordance with the provisions of this Section 4.
Upon receipt of such option, the Corporation will promptly mail a copy thereof
to the Holder of this Warrant.

(g) If, on or prior to the Termination Date, the
Corporation shall consolidate with or merge into another corporation, or
another corporation shall merge into the Corporation in a merger in which
shares of Common Stock are converted into a right to receive cash, property or
other securities, or the Corporation shall sell or transfer all or
substantially all of the assets of the Corporation, or there shall be any
reclassification of Common Stock of the Corporation, other than a subdivision
or combination of the outstanding Common Stock, the Corporation shall take such
action so that the Holder of this Warrant will thereafter receive upon the
exercise hereof the securities or property to which a holder of the number of
shares of Common Stock then deliverable upon the exercise of such Warrant would
have been entitled to receive upon such consolidation, merger, sale, transfer
or reclassification if such

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<PAGE> 6
Warrant had been exercised in full immediately prior to such transaction.

(h) All calculations under this Section 4 shall be made
to the nearest one-hundredth of a cent or to the nearest one thousandth of a
share, as the case may be. No adjustment shall be required unless such
adjustment would result in an increase or decrease of at least one (1%) percent
of the Per Share Warrant Price; provided, however, that any adjustments which
by reason of this paragraph (h) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment.

(i) If at any time, as a result of an adjustment made
pursuant to paragraph (d) above, the Holder shall become entitled to purchase
any Other Securities, thereafter the number of such Other Securities
purchasable upon exercise of this Warrant and the price of the Other Securities
shall be subject to adjustment from time to time and in a manner and on terms
as nearly equivalent as practicable to the provisions with respect to this
Warrant contained in paragraphs (a) through (h), inclusive above.

(j) Upon the expiration of any rights, options, warrants
or conversion of exchange privileges which caused an adjustment to the Per
Share Warrant Price to be made, if any thereof shall not have been exercised,
the Per Share Warrant Price shall, upon such expiration, be readjusted and
shall thereafter be such as it would have been had it been originally adjusted
(or had the original adjustment not been required, as the case may be) as if
(i) the only shares of Common Stock so issued were the shares of Common Stock,
if any, actually issued or sold upon the exercise of such rights, options,
warrants or conversion or exchange privileges and (ii) such shares of Common
Stock, if any, were issued or sold for the consideration actually received by
the Corporation upon such exercise plus the aggregate consideration, if any,
actually received by the Corporation for the issuance, sale or grant of all
such rights, options, warrants or conversion or exchange privileges, whether or
not exercised; provided further, that no such readjustment shall have the
effect of decreasing the Per Share Warrant Price by an amount in excess of the
amount of the adjustment initially made in respect to the issuance, sale or
grant of such rights, options, warrants or conversion or exchange privileges.

(k) Upon any exercise of this Warrant at a time when
there are dividends or distributions unpaid (whether as to Common Stock or
Other Securities or other property payable with respect hereto) and as to which
the dividend date or other date fixed for payment has passed, then, (i) to the
fullest extent permitted by law, such unpaid dividends or distributions shall
be paid by the Corporation contemporaneously with the exercise of this Warrant,
and (ii) to the extent payment of such unpaid dividends or distributions is not
legally permitted, then the Per Share

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<PAGE> 7
Warrant Price shall be further adjusted by increasing the number of shares of
Common Stock or Other Securities or property issuable upon conversion to take
into account the value of such unpaid dividends or other distributions in
determining the amount of Common Stock or Other Securities to be issued upon
exercise of this Warrant.

5. LIMITED TRANSFERABILITY. (a) This Warrant and the
Warrant Shares have not been registered under the Securities Act of 1933 and
may be transferred only pursuant to an effective registration thereunder or an
exemption from registration thereunder and in compliance with applicable state
securities laws. This Warrant may not be transferred if such transfer would
require any registration or qualification under, or cause the loss of exemption
from registration or qualification under, such Act or any applicable state
securities law with respect to the Warrants or the Warrant Shares. This
Warrant and any Warrant Shares shall bear an appropriate legend with respect to
such restrictions on transfer. This Warrant is transferable only upon the
books which the Corporation shall cause to be maintained for such purpose. Any
assignment or transfer may be made by surrendering this Warrant to the
Corporation together with the attached assignment form properly executed by the
assignor or transferor. Upon such surrender the Corporation will execute and
deliver, in the case of an assignment or transfer in whole, a new Warrant in
the name of the assignee or transferee or, in the case of an assignment or
transfer in part, a new Warrant in the name of the assignee or transferee named
in such instrument of assignment or transfer and a new Warrant in the name of
the assignor or transferor covering the number of Warrant Shares in respect of
which this Warrant shall not be assigned or transferred to the assignee or
transferee.

(b) The Corporation may treat the registered holder of
this Warrant (the "Holder") as it appears on its books at any time as the owner
of this Warrant for all purposes. The Corporation shall permit the Holder of
this Warrant or his duly authorized attorney, upon written request during
ordinary business hours, to inspect and copy or make extracts from its books
showing the Holders of Warrants. All Warrants will be dated the same date as
this Warrant.

6. Notices to Holder. If at any time,
-----------------

(a) the Corporation shall take any action which
would require an adjustment in the Per Share Warrant Price or in the number of
shares issuable upon exercise of this Warrant; or

(b) the Corporation shall authorize the making to
the holders of its Common Stock of any non-cash distribution on such Common
Stock; or

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<PAGE> 8
(c) the Corporation shall declare any dividend (or
any other distribution) on its Common Stock; or

(d) there shall be any capital reorganization or
reclassification of the Common Stock, or any consolidation or merger to which
the Corporation is a party, or any sale or transfer of all or substantially all
of the assets of the Corporation; or

(e) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Corporation;

then, in any one or more of such cases, the Corporation shall give written
notice to the Holder, not less than twenty (20) days before any record date or
other date set for definitive action, or for any vote or action by consent by
stockholders with respect thereto, or of the date on which such reorganization,
reclassification, sale, consolidation, merger, dissolution, liquidation or
winding up shall take place, as the case may be. Such notice shall also set
forth such facts as shall indicate the effect of such action (to the extent
such effect may be known at the date of such notice) on the current Per Share
Warrant Price and the kind and amount of shares of Common Stock and other
securities and property deliverable upon exercise of this Warrant. Such notice
shall also specify the date as of which the holders of the Common Stock of
record shall be entitled to exchange their shares of Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, sale, consolidation, merger, dissolution, liquidation or
winding up, as the case may be. Notwithstanding the foregoing, failure to give
such notice shall not affect the validity of any such action.

7. LOSS, ETC. OF WARRANT. Upon receipt of evidence
satisfactory to the Corporation of the loss, theft, destruction or mutilation
of this Warrant, and of indemnity in form and amount reasonably satisfactory to
the Corporation, if lost, stolen or destroyed, and upon surrender and
cancellation of this Warrant, if mutilated, and upon reimbursement of the
Corporation's reasonable incidental expenses, the Corporation shall execute and
deliver to the Holder a new Warrant of like date, tenor and denomination.

8. WARRANT HOLDER NOT A SHAREHOLDER. This Warrant does
not confer upon the Holder any rights or liabilities as a shareholder prior to
the exercise hereof.

9. COMMUNICATION. No notice or other communication
under this Warrant shall be effective unless, but any notice or other
communication shall be effective and shall be deemed to have been given if, the
same is in writing and is delivered by hand or by facsimile to

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<PAGE> 9
(a) the Corporation at 7155 East Kemper Road,
Cincinnati, Ohio 45249, or such other address as the
Corporation has designated in writing to the Holder, or

(b) the Holder at One East Fourth Street,
Cincinnati, Ohio 45202, Attn: President, or such other address
as the Holder has designated in writing to the Corporation.

10. HEADINGS. The headings of this Warrant have been
inserted as a matter of convenience, and shall not affect the construction
hereof.

11. AMENDMENTS. This Warrant may be amended only by
written agreement of the Corporation and the Holder.

12. APPLICABLE LAW. This Warrant shall be governed by
and construed in accordance with the laws of the State of Ohio applicable to
agreements made and to be performed therein.

IN WITNESS WHEREOF, DURAMED PHARMACEUTICALS, INC. has executed
this Warrant as of the 22nd day of August, 1995.

DURAMED PHARMACEUTICALS, INC.

By /s/ Timothy J. Holt
-------------------------------
Vice President

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<PAGE> 10
SUBSCRIPTION

The undersigned, ____________________, pursuant to the
provisions of the foregoing Warrant, hereby agrees to subscribe for and
purchase ______ shares of Common Stock of DURAMED PHARMACEUTICALS, INC. covered
by said Warrant, and makes payment therefor in full at the price per share
provided by said Warrant.

Dated: Signature
---------------------- ------------------------------

Address
---------------------------------

o
---------------- ----------------

ASSIGNMENT

FOR VALUE RECEIVED ___________________ hereby sells, assigns
and transfers unto ______________________ the foregoing Warrant and all rights
evidenced thereby, and does irrevocably constitute and appoint
____________________, attorney, to transfer said Warrant on the books of
DURAMED PHARMACEUTICALS, INC. _________ hereby agrees to be bound by the terms
of the Warrant as defined therein.

o
--------------- ---------------

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<PAGE> 1
DURAMED PHARMACEUTICALS, INC.
EXHIBIT (11)
STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE

<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1995 1994 1995 1994
------------------------------ ------------------------------
<S> <C> <C> <C> <C>
Primary:
Weighted average common shares
outstanding 8,050,367 7,842,291 8,015,820 7,785,549
Net effect of preferred shares
converted to common shares -
based on the treasury stock
method using the average
market price 746,590 718,854 746,590 710,859
Net effect of dilutive stock
options and warrants - based
on the treasury stock method
using the average market price 1,885,300 1,844,586 1,933,815 1,712,988
----------- ----------- ----------- -----------

Totals 10,682,257 10,405,731 10,696,225 10,209,396
=========== =========== =========== ===========

Net income $ 317,207 $ 1,712,163 $ 1,958,038 $ 4,406,890
=========== =========== =========== ===========

Per share amount $ .03 $ .16 $ .18 $ .43
=========== =========== =========== ===========

Fully diluted:
Weighted average common
shares outstanding 8,050,367 7,842,291 8,015,820 7,785,549
Net effect of preferred shares
converted to common shares -
based on the treasury stock
method using the quarter-end
market price 746,590 727,968 746,590 727,968
Net effect of dilutive stock
options and warrants - based on
the treasury stock method using
the quarter-average market price 1,885,300 2,042,172 1,933,815 2,084,582
----------- ----------- ----------- -----------

Totals 10,682,257 10,612,431 10,696,225 10,598,099
=========== =========== =========== ===========

Net income $ 317,207 $ 1,712,163 $ 1,958,037 $ 4,406,890
=========== =========== =========== ===========

Per share amount $ .03 $ .16 $ .18 $ .42
=========== =========== =========== ===========
</TABLE>

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>

<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 2,600
<SECURITIES> 0
<RECEIVABLES> 10,211,749
<ALLOWANCES> 537,603
<INVENTORY> 9,856,539
<CURRENT-ASSETS> 23,097,080
<PP&E> 31,252,993
<DEPRECIATION> 11,238,089
<TOTAL-ASSETS> 46,131,323
<CURRENT-LIABILITIES> 20,707,278
<BONDS> 23,126,926
<COMMON> 80,541
0
75
<OTHER-SE> 1,026,337
<TOTAL-LIABILITY-AND-EQUITY> 46,131,323
<SALES> 13,153,352
<TOTAL-REVENUES> 38,767,746
<CGS> 22,220,189
<TOTAL-COSTS> 25,112,463
<OTHER-EXPENSES> 9,677,465
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,968,031
<INCOME-PRETAX> 2,009,787
<INCOME-TAX> 51,750
<INCOME-CONTINUING> 1,958,037
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,958,037
<EPS-PRIMARY> .18
<EPS-DILUTED> .18

</TABLE>