Alpharma updates impact of business and industry trends on second half results.

FORT LEE, N.J.--(BUSINESS WIRE)--Oct. 4, 1996--Alpharma Inc. (NYSE:ALO) today issued an update on business and industry trends that are expected to negatively impact second half results.

The generic pharmaceutical market in which the Company's U.S. Pharmaceuticals Division competes,

is experiencing a rapidly emerging fundamental shift in industry distribution, purchasing and stocking patterns. This shift is resulting in accelerated price erosion and significant volume swings as inventories are adjusted. Programs recently initiated by national wholesalers in the United States have fueled the trend of lower prices. At the same time, these programs, along with a number of other industry related dynamics, are rapidly reducing the market share of distributors. Distributors have represented an important but declining part of our U.S. Pharmaceutical customer base but we are now seeing a sharper drop in this class of business, in large part as a result of the new wholesaler programs. The overall trend of aggressive trade inventory reductions has also continued and has resulted in lower levels of stocking in advance of the cough and cold season.

As a direct result of these industry trends, the Company's U.S. Pharmaceuticals Division is experiencing lower sales volume and lower pricing compared to last year. The Company now expects lower sales volume to continue at least through the end of this year and will adjust production accordingly, resulting in higher unit production costs. The Company cannot predict when pricing will stabilize. U.S. Pharmaceutical results will also be affected by a continued delay in the receipt of FDA approval for Albuterol MDI as well as a loss of approximately $2 million (pre-tax) resulting from the bankruptcy of a major pharmaceutical wholesaler.

For the second half of 1996, the Company now believes it will be difficult for its other operating units to achieve earnings in excess of those recorded last year. In particular, its Animal Health Division continues to be impacted by the difficult conditions in the U.S. market directly and indirectly related to historically high grain prices. While the impact on revenue and operating profit is lessening compared to earlier this year, the Company expects some continuing impact for at least the remainder of 1996. Results in its International Pharmaceuticals and Fine Chemicals Divisions may not be as strong as in the first half of 1996.

Results for the third quarter ended September 30, 1996 are not yet available and will be reported in the normal course around the end of October. However, the Company now estimates that as a result of the above factors, third quarter net income from operations may be break even or possibly a slight loss and that net income for the fourth quarter may be significantly below that reported in 1995.

Commenting on the release, Einar W. Sissener, Chief Executive Officer of Alpharma Inc. said, "Alpharma will experience some disruption in profitability due to these trends. However, in the U.S. generic pharmaceutical market, the breadth and specialized nature of our product line, our commitment to concluding manufacturing rationalizations in progress to reduce manufacturing costs and our strength within those segments of the pharmaceutical distribution channels that are expected to increase in importance should lead to higher sales volume for our U.S. Pharmaceuticals Division in the future. Additionally, with our unique diversity, market leadership positions and considerable business in animal health products and international pharmaceuticals, we remain confident in our future."

Alpharma has approximately 2800 employees worldwide and is a multinational pharmaceutical company developing, manufacturing and marketing specialty generic and proprietary human pharmaceutical and animal health products. Alpharma is the largest manufacturer of generic liquid and topical pharmaceuticals in the U. S., has an established and growing market position in finished pharmaceuticals in Europe and the Far East, is a basic manufacturer of important specialty antibiotics, and is recognized worldwide as a leading provider of animal health feed additives for poultry and livestock, and vaccines for farmed fish.

Note:

This press release includes forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward looking statements. Information on other significant potential risks and uncertainties not discussed herein may be found in the Company's filings with the Securities and Exchange Commission including its Form 10Q for the quarter ended June 30, 1996 and Form 10K for the year ended December 31, 1995.

CONTACT: Alpharma Inc., Fort Lee

Iris D. Daniels, 201/947-7774

or

Morgen-Walke Associates, New York

Donna N. Stein, 212/850-5600