Methylphenidate HCl Tablets are a leading product in the treatment of ADHD (Attention-Deficit/Hyperactivity Disorder), a disorder prevalent in school age children. Since 1990 there has been a significant increase in the diagnosis of ADHD and in the use of Methylphenidate as treatment. Combined brand and generic sales of this product during 1996 were estimated to be $281 million, representing 10% growth over the previous year.

Schein Pharmaceutical's Methylphenidate HCl tablets are the generic equivalent to Ritalin®*. The generic alternative has been available since 1985 and prescription data estimates that 72% of all prescriptions for this drug are dispensed using the generic product. As a leading manufacturer and marketer of prescription medications, Schein Pharmaceutical projects it will capture approximately one quarter of the generic market sales.

Available raw material is dependent upon allocation of Drug Enforcement Administration (DEA) quotas. As a new manufacturer of this product, Schein Pharmaceutical will increase its customer base and make its product available in gradual stages over the next few months to ensure continuity of supply. The first shipments will begin during the fourth quarter.

Methylphenidate HCl Tablets are the first controlled schedule II product (a US government designation with specified security requirements) to be produced at Schein Pharmaceutical's Danbury Pharmacal facility. Schedule II products are currently manufactured at other Schein Pharmaceutical facilities.

Schein Pharmaceutical will receive Methylphenidate raw material from Johnson Matthey's Pharmaceutical Materials business, based in West Deptford, New Jersey, USA, which manufactures a broad range of active ingredients for sale to pharmaceutical companies. Its major products include a range of generic and patent - protected drugs, including platinum anti-cancer drugs and substances regulated by the DEA.

Johnson Matthey Pharmaceutical Materials was granted registration by the DEA as a bulk manufacturer of Methylphenidate in May 1995.It received approval as a manufacturer from the FDA on 25th August 1997.

Commenting on the receipt of FDA approval, Dr Michael Cleare, Johnson Matthey's Managing Director with responsibility for the Pharmaceutical Materials business said:

"Johnson Matthey is very pleased to receive this approval, which is the culmination of a long and extremely close collaboration with Schein Pharmaceutical. Methylphenidate is an exciting extension to the range of controlled substances manufactured by our Pharmaceutical Materials business and FDA approval as a manufacturer of the product represents an important step forward in our growth strategy."

Martin Sperber, Chairman and CEO of Schein Pharmaceutical said:

"Methylphenidate is a significant product in health care and an important product for us. We are pleased to be able to offer a cost saving alternative for patients and their families. This product is a significant addition to our broad line of products and further strengthens our position as a leader in pharmaceutical manufacturing."