Taro Pharmaceutical reports second-quarter, six-month results.

HAWTHORNE, N.Y.--(BUSINESS WIRE)--July 25, 1996--Taro Pharmaceutical Industries Ltd. (NASDAQ/NMS:TAROF) Thursday reported record sales for the second quarter and the first six months of 1996.

Significantly increased R&D expenditures resulted in decreased net income for both the company's second quarter and the six-month period ended June 30, 1996, compared with the same periods in 1995. The company expects its expanded R&D program, which has already resulted in three previously reported Abbreviated New Drug Application (ANDA) approvals in June and July 1996, to generate improved results in the second half of 1996 and during 1997.

Second-quarter 1996 net sales increased 8 percent to a record $14,100,000 from $13,082,000 for the second quarter of 1995. Net income for the quarter decreased to $550,000, or 5 cents per share, from $1,153,000, or 11 cents per share for the second quarter of the prior year. R&D expenditures increased $716,000, or 42 percent, to $2,434,000 during the second quarter of 1996, compared with $1,718,000 for the second quarter of 1995.

Continued Growth and Investments

"Taro's record second-quarter and six-month sales were based largely on our existing product line," stated Barrie Levitt, M.D., chairman of Taro Pharmaceutical Industries. "We expect new product introductions to improve results in the second half of 1996 and in 1997," Levitt continued. "Taro received three new ANDA approvals in the past two months, and anticipates more before the end of the year."

For the six months ended June 30, 1996, sales were a record $26,776,000, a 10 percent increase over sales of $24,282,000 for the first half of 1995. Net income for the 1996 six-month period was $776,000, or 7 cents per share, down from $1,869,000, or 18 cents per share, for the same period in 1995.

R&D expenditures increased significantly in the first half of 1996, up 40 percent to $4,336,000 from $3,092,000 in the first half of 1995. Taro also continued its capital investment program, having invested over $4,500,000 in property, plant and equipment since January of 1996.

Novel Product Research and Aggressive Generic Pipeline

The company is currently conducting extensive research on its novel patented anticonvulsant drug. In June 1996, the company reported that the National Institutes of Health (NIH) in the United States, as well as the Ministry of Commerce and Industry in Israel, will participate in testing and funding for this new drug. The company plans to start clinical testing of the drug in humans during the next 18 months.

Other R&D projects include the development of a one-day, over-the-counter topical treatment for vaginal yeast infections, and a unique delivery system in the form of a non-spill liquid. There can be no assurances with respect to the success of any of the novel drug or delivery systems studies currently being performed or with respect to any future testing.

In addition to novel research, the company maintains an extensive generic drug R&D program. Taro has multiple regulatory filings in Canada and Israel, with nine ANDAs currently submitted to the U.S. Food and Drug Administration. Six ANDAs are for dermatologic products, and three ANDAs are for solid dosage form central nervous system products.

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, please 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 104 or ticker symbol TAROF. -0-

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

                          Three Months Ended       Six Months Ended
                               June 30,                June 30,
                           1996        1995        1996        1995

Sales                   $ 14,100    $ 13,082    $ 26,776    $ 24,282
Cost of sales              5,699       5,381/a    11,536       9,927/a
Gross profit               8,401       7,701      15,240      14,355
Operating expenses:
Research and
 development               2,434       1,718       4,336       3,092
Selling and
 administrative            4,511       3,858/a     8,707       7,571/a
                           6,945       5,576      13,043      10,663
Operating income           1,456       2,125       2,197       3,692
Financial expenses
 -- net                      493         486         776         951
                             963       1,639       1,421       2,741
Other income -- net            6          21          12          20
Income before taxes
 on income                   969       1,660       1,433       2,761
Taxes on income              411         502         645         884
                             558       1,158         788       1,877
Minority share
 in profits of
 subsidiaries                  8           5          12           8
Net income              $    550    $  1,153    $    776    $  1,869
Earnings per
 ordinary share/b       $   0.05    $   0.11    $   0.07    $   0.18

Weighted average
 number of shares
 used in computation  10,399,508  10,454,991  10,352,233  10,465,704

(a)  Reclassified.

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

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

                                       June 30,     Dec. 31,
                                         1996         1995
                                      (Unaudited)   (Audited)
Assets
Current assets:
Cash and cash equivalents              $  2,401     $  2,551
Accounts receivable                      17,265       14,178
Inventories                              12,251       11,194
Total current assets                     31,917       27,923
Property, plant and equipment, net       19,673       16,241
Other assets                              5,244        5,368
Total assets                           $ 56,834     $ 49,532

Liabilities and Shareholders' Equity
Current liabilities:
Short-term bank credits                $  6,319     $  4,297
Current maturities of long-term
 liabilities                                725          727
Accounts payable and accrued expenses    10,322        8,569
Total current liabilities                17,366       13,593
Long-term liabilities                    14,173       11,352
Deferred taxes and other liabilities        368          385
Total liabilities                        31,907       25,330
Minority interest                            78           66
Shareholders' equity                     24,849       24,136
Total liabilities and
 shareholders' equity                  $ 56,834     $ 49,532

CONTACT: Taro Pharmaceutical Industries Ltd., Hawthorne

Peter Giallorenzo, 914/345-9001

or

Financial Relations Board

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

Kate Rajeck, 312/266-7800 (analyst info)

Steven Seiler, 310/442-0599 (media info)