Taro Pharmaceutical Industries Reports Second Quarter, Six-Month Results.

HAWTHORNE, N.Y.--(BUSINESS WIRE)--July 29, 1997--Taro Pharmaceutical Industries Ltd. (NASDAQ/NMS:TAROF) Tuesday reported record sales for the second quarter and the first six months of 1997.

Second quarter 1997 net sales increased 10% to a record $15,570,000, from $14.1 million for the second quarter of 1996. Net income for the quarter decreased to $407,000, or $0.04 per share, from $550,000, or $0.05 per share, for the second quarter of the prior year.

For the six months ended June 30, 1997, sales were a record $28,253,000, a 6% increase over sales of $26,776,000 for the first half of 1996. Net income for the 1997 six-month period was $482,000, or $0.05 per share, down from $776,000, or $0.07 per share, for the same period in 1996.

The decrease in net income is largely attributable to a price reduction on one of the company's key products, Clotrimazole Cream USP, 1%. "Unit sales increased significantly on this product, while dollar sales decreased, reducing gross profit by approximately $1.5 million in the first half of 1997," stated Rebecca Pike, the company's group vice president, North America.

Controlled Expenses

The company's cost-control programs produced positive results during the second quarter of 1997. Selling, general and administrative expenses decreased to $4,416,000, or 28% of sales, in the second quarter of 1997, down from $4,510,000, or 32% of sales, for the same quarter of 1996. R&D expenses were $2,336,000, or 15% of sales, compared with $2,434,000, or 17% of sales, for the second quarter of 1996.

Strong Balance Sheet

The company maintains a strong balance sheet. As of June 30, 1997, shareholders' equity was $26,741,000, total assets were $66,290,000 and total liabilities were $39,477,000.

New Product Sales Growth

Several products approved in 1996 continue to gain market share. Solid dosage form products such as carbamazepine tablets, an epilepsy treatment, and clomipramine hydrochloride capsules, an antidepressant used to treat obsessive compulsive disorders, have increased their market penetration.

In addition, clobetasol topical cream and ointment, topical corticosteriod products, have experienced increased market acceptance. In the second quarter of 1997, the company successfully launched its newest approved Abbreviated New Drug Application (ANDA) product, acetazolamide tablets, with positive initial results.

"The company expects to gain increasing penetration of the solid dosage form market and continued success with the topical corticosteriod market. In addition, we expect our investments in R&D to result in additional ANDA approvals in the second half of 1997," stated Barrie Levitt, M.D., chairman of the company.

Approval of Australian "Non-Spill" Patent

The company is pleased to announce that it received notification from the Australian government that the patent for its proprietary non-spill delivery system has been approved in that country. This is the second market in which the company has received patent protection, following patent approval in South Africa.

This proprietary product is a novel, multi-purpose delivery system which allows for administering a wide variety of both prescription and over-the-counter products in a liquid vehicle that resists spilling and allows for accurate dosage.

Taro Pharmaceutical Industries is a multinational pharmaceutical company whose research and development program has resulted in the company being the first generic marketer of several branded drugs as well as the developer of several novel pharmaceutical compounds.

For further information on Taro Pharmaceutical Industries, visit the company's home page at http://www.taropharma.com .

To receive additional information on Taro, via fax at no charge, dial 800/PRO-INFO and enter company code TAROF.

Certain statements in this release regarding expected success in various markets by the company's products, with respect to the results expected from research and development, and as to expected approvals by the Food and Drug Administration are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Although Taro Pharmaceutical Industries Ltd. believes the expectations reflected in such forward-looking statements to be based on reasonable assumptions, it can give no assurance that its expectations will be attained.

Factors that could cause actual results to differ materially from the company's expectations include industry and market conditions, slower than anticipated penetration of new markets, changes in the company's financial position, regulatory actions, and other risks detailed from time to time in the company's SEC reports, including its Annual Report on Form 20-F for the last fiscal year, which ended on Dec. 31, 1996. -0-

                TARO PHARMACEUTICAL INDUSTRIES LTD.
             SUMMARY CONSOLIDATED STATEMENTS OF INCOME
         (U.S. dollars in thousands, except per-share data)

                                   Three Months Ended
                                         June 30,
                                  1997             1996

Sales                        $    15,570    $      14,100
Cost of sales                      7,819            5,699
                            -------------  ---------------
Gross profit                       7,751            8,401

Operating expenses:
 Research and development          2,336            2,434
 Selling and administrative        4,416            4,510
                            -------------  ---------------
                                   6,752            6,944
                            -------------  ---------------
Operating income                     999            1,457
Financial expenses
  - net                              445              493
                            -------------  ---------------
                                     554              964

Other income - net                     2                5
                            -------------  ---------------
                                     556              969

Taxes on income                      146              411
                            -------------  ---------------
                                     410              558
Minority share
  in profits (losses)
   of subsidiaries                     3                8
                            -------------  ---------------

Net income                        $  407           $  550
                            =============  ===============
Earnings per
 ordinary share/a                 $ 0.04           $ 0.05

Weighted average
  number of shares
  used in computation         10,395,027       10,399,508


                                    Six Months Ended
                                        June 30,
                                   1997          1996

Sales                        $     28,253  $     26,776
Cost of sales                      13,628        11,536
                            ----------------------------
Gross profit                       14,625        15,240

Operating expenses:
 Research and development           4,273         4,336
 Selling and administrative         8,865         8,707
                            ----------------------------
                                   13,138        13,043
                            ----------------------------
Operating income                    1,487         2,197
Financial expenses
  - net                               903           776
                            ----------------------------
                                      584         1,421

Other income - net                      9            12
                            ----------------------------
                                      593         1,433

Taxes on income                       121           645
                            ----------------------------
                                      472           788
Minority share
  in profits (losses) of
  subsidiaries                        (10)           12
                            ----------------------------
Net income                        $   482       $   776
                            ============================
Earnings per
 ordinary share/a                 $  0.05       $  0.07

Weighted average
  number of shares
  used in computation          10,604,729    10,352,233


Note (a) -- Earnings Per Ordinary Share

Earnings per share is based on the weighted average number of
outstanding ordinary (common) shares and common stock equivalents
(options).  The difference between primary and fully diluted
earnings per share is not significant.


                  TARO PHARMACEUTICAL INDUSTRIES LTD.
                  SUMMARY CONSOLIDATED BALANCE SHEETS
                      (U.S. dollars in thousands)

                                      June 30,       Dec. 31,
                                        1997           1996
                                    (Unaudited)     (Audited)
Assets

Current assets:
Cash and cash equivalents            $  2,492       $  2,422
Accounts receivable                    19,871         17,479
Inventories                            13,529         13,109
                                     ---------    -----------

Total current assets                   35,892         33,010

Property, plant
  and equipment, net                   25,327         23,672
Other assets                            5,071          5,198
                                     ---------    -----------

Total assets                         $ 66,290      $  61,880
                                     =========    ===========

Liabilities
  and Shareholders' Equity

Current liabilities:
Short-term bank credits              $ 10,489     $    7,883
Current maturities
  of long-term liabilities              1,408          1,131
Accounts payable
  and accrued expenses                 11,325         11,200
                                     ---------    -----------

Total current liabilities              23,222         20,214

Long-term liabilities                  15,775         14,740
Deferred taxes
  and other liabilities                   480            526
                                     ---------    -----------

Total liabilities                    $ 39,477      $  35,480

Minority interest                          72             82
Shareholders' equity                   26,741         26,318
                                     ---------    -----------
Total liabilities
  and shareholders' equity           $ 66,290      $  61,880
                                     =========    ===========

CONTACT: Taro Pharmaceutical Industries Ltd., Hawthorne

Kevin Connelly, 914/345-9001

or

The Financial Relations Board Inc.

Daniel Saks, 310/442-0599 (general info)

Kathy Brunson, 312/266-7800 (analysts)

Steven Seiler, 310/442-0599 (media)