______________________________________________________________________________

                          SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C.  20549
______________________________________________________________________________


                                      FORM 10-KSB

[X]  Annual  Report  Pursuant  to  Section  13  or  15(d) of the Securities
     Exchange Act of 1934

                     For the fiscal year ended June 30, 1995

[ ]  Transition  Report Pursuant to Section 13 or 15(d)  of  the  Securities
     Exchange Act of 1934
                                  ____________________
                                  
                            Commission File Number:  0-13976
                                  ____________________
                               
                                       AKORN, INC.
               (Name of small business issuer as specified in its charter)

          LOUISIANA                                  72-0717400
  (State or other jurisdiction of         (I.R.S. Employer Identification No.)
  incorporation or organization)

                    100 Akorn Drive, Abita Springs, Louisiana 70420
                (Address of principal executive offices and zip code)
                      Issuer's telephone number:  (504) 893-9300
                                   ____________________

           SECURITIES  REGISTERED  UNDER  SECTION  12(b) OF THE EXCHANGE ACT:

                                         None

           SECURITIES  REGISTERED UNDER SECTION 12(g)  OF  THE  EXCHANGE ACT:

                               Common Stock, No Par Value
                                    (Title of Class)
                                   ____________________

     Check whether the Issuer (1)  has filed all reports required to be filed by
     Section 13 or 15(d) of the Exchange  Act during the preceding 12 months (or
     for  such shorter period that the Registrant  was  required  to  file  such
     reports), and (2) has been subject to such filing requirements for the past
     90 days.  Yes  X     No

     Check  if  disclosure  of  delinquent  filers  in  response  to Item 405 of
     Regulation S-B is not contained in this form, and will not be contained, to
     the  best  of  issuer's  knowledge,  in  definitive  proxy  or  information
     statements incorporated by reference in Part III of this Form 10-KSB or any
     amendment to this Form 10-KSB. [ ]

     Issuer's revenues for its fiscal year ended June 30, 1995 were $32,863,000.

     The  aggregate  market  value  of  the  voting  stock held by nonaffiliates
     (affiliates being, for these purposes only, directors,  executive  officers
     and holders of more than 5% of the Issuer's common stock) of the Issuer  as
     of September 8, 1995 was approximately $25,500,000.

     The  number of shares of the Issuer's common stock, no par value per share,
     outstanding as of September 8, 1995 was 14,904,653.
                                   ____________________

                          DOCUMENTS INCORPORATED BY REFERENCE

     Portions  of  Issuer's  Proxy  Statement to be submitted to shareholders in
     connection with their 1995 Annual  Meeting  are  incorporated  by reference
     into Parts II and III of this Form 10-KSB.

     Transitional Small Buisness Disclosure Format (check one):  Yes   No   X
                                        

<PAGE>                                        
                                        

                                        PART I



          Item 1.      Description of Business.

          General Development of Business

             Akorn,  Inc.  (Akorn or the Company) manufactures, markets and
          distributes an extensive  line  of  therapeutic,  diagnostic  and
          surgical pharmaceutical and over-the-counter ophthalmic products.
          In   addition,   through   its   wholly  owned  subsidiary  Akorn
          Manufacturing, Inc. (AMI), the Company  provides sterile contract
          manufacturing services to several large pharmaceutical companies.
          Akorn, a Louisiana corporation founded in  1971, is headquartered
          in Abita Springs, Louisiana, a suburb of New Orleans.

             Prior to the fiscal year beginning July 1,  1989,  the Company
          purchased its entire ophthalmic product line on a contract  basis
          from  several  suppliers,  who  packaged and labeled the products
          under the Company's name.  In September  1989,  in  order to more
          vertically  integrate  its  operations,  the  Company acquired  a
          manufacturing  facility  in  Los  Angeles,  California  that  was
          capable    of   manufacturing   sterile   ophthalmic   solutions,
          suspensions, and human injectable products, among other products.
          Until July 1991,  the  Company manufactured a substantial part of
          its ophthalmic pharmaceutical  product  line  at  the Los Angeles
          facility while continuing to have the balance supplied by outside
          manufacturers.  In September 1991, the Company decided to abandon
          that facility due to the cost of bringing the facility  into full
          compliance with current "Good Manufacturing Practice" regulations
          of  the United States Food and Drug Administration (the FDA)  and
          to  restructure  its  manufacturing  operations  by  acquiring  a
          larger,  more  modern  facility.   Supply arrangements with other
          manufacturers were renewed in order  to  maximize availability of
          the Company's ophthalmic product line.

             In January 1992, the Company acquired AMI,  which at that time
          was  named  Taylor  Pharmacal  Company,   of  Decatur,   Illinois
          (formerly  Taylor  Pharmacal  Company)  and began the process  of
          transferring to AMI the operations formerly  conducted at the Los
          Angeles   facility   while   maintaining  the  sterile   contract
          manufacturing business conducted by AMI.

          Ophthalmic Distribution Business

             The  Company  distributes  a  complete  line  of  therapeutic,
          diagnostic   and   over-the-counter   ophthalmic   pharmaceutical
          products  as  well  as  other  surgical  and   office-based  non-
          pharmaceutical  products.   The Company's therapeutic  ophthalmic
          pharmaceutical   product   line   is   extensive   and   includes
          antibiotics,  anti-infectives,  steroids,  steroid  combinations,
          glaucoma  medications,  decongestants/antihistamines,  and  anti-
          edema medications.  Diagnostic  products,  primarily  for  use in
          doctors'  offices,  include  a  complete  line  of mydriatics and
          cycloplegics, anesthetics, topical stains, gonioscopic  solutions
          and  others.   Surgical  products  available  from  Akorn include
          surgical  knives  and  other surgical instruments, balanced  salt
          solution, post-operative kits, surgical tapes, eye shields, anti-
          ultraviolet goggles, facial  drape  supports, and other supplies.
          Ophthalmic over-the-counter products  include  various artificial
          tear  solutions,  preservative-free  lubricating  ointments,  lid
          cleansers, vitamin supplements and contact lens accessories.

          Contract Manufacturing Business

             AMI  manufactures sterile products, on a contract  basis,  for
          third parties.   The  majority of AMI contracts are short-term in
          nature  and  operate on the  basis  of  signed  purchase  orders.
          However,  AMI  is   in  the  process  of  developing  longer-term
          contracts  with  minimum   quantity   requirements  in  order  to
          strengthen the commitments from its contract  customers.  Because
          of   the   present   nature   of   AMI  contracts,  its  contract
          manufacturing is more volatile than  the  ophthalmic distribution
          segment, and given that sales to contract customers  are large in
          relations to the distribution segment sharp reduction in contract
          manufacturing  sales  can occur should customers discontinue  the
          contract for any reason.



          Sales and Marketing

             While the Company's  ophthalmic  product  line  includes  some
          unique  products, the majority are non-proprietary.  As a result,
          the Company  relies  on its expertise in marketing, distribution,
          and support for products in order to maintain and increase market
          share.

             The Company maintains  an  efficient  three-pronged ophthalmic
          distribution sales effort.  This effort includes 23 outside sales
          representatives  who, together with two district  managers,  make
          personal calls on  customers in the Northeast, Southeast, Midwest
          and  West regions of  the  country.   In  addition,  the  Company
          maintains  an in-house telemarketing and a customer service sales
          group of 25  persons  who  operate at the Company's facilities in
          Abita Springs.  And finally, the Company also maintains a direct-
          mail marketing effort.

             The  Company's  ophthalmic   distribution   customers  consist
          primarily    of   ophthalmologists,   optometrists,   independent
          pharmacies, and  full-service wholesalers whose customers include
          hospitals and other institutions.

             The Company's sales  and  marketing  efforts  in  the contract
          manufacturing business have been limited to personal contact with
          major   pharmaceutical   companies   and  limited  trade  journal
          advertisements.  Attendance at manufacturing  trade shows will be
          implemented  in  fiscal  1996.  The Company's contract  customers
          include several large pharmaceutical companies.

             The Company stresses its  service  and  support  as  means  to
          attract and keep customers.

          Research and Development

             The  acquisition of AMI provided the Company with resources to
          begin its  research  and  development program, which began in the
          last quarter of fiscal 1992  and  has since expanded.  As of June
          30, 1995 the Company had 4  new ANDAs  on  file  with the FDA for
          products which the Company has not previously manufactured.   See
          "Government Regulation."  These products have a current aggregate
          brand  market of approximately $200 million.  No assurance can be
          given as  to whether the Company will develop marketable products
          based on these  filings  or  as to the size of the market for any
          such products.

             The Company has plans to target  its  research and development
          efforts on 20 to 30 additional products the patents on which have
          expired  or  will  expire  in  the near future.   Production  and
          marketing of any products developed  as a result of these efforts
          are expected to take several years.

             The  Company  also maintains an aggressive  product  licensing
          effort.   This effort  has  had  the  most  immediate  effect  on
          operating results  because  it  allows  the  Company  to  use its
          strength  in  marketing  ophthalmic  products.   The Company also
          anticipates manufacturing many of the licensed products.

             At June 30, 1995, 21 full-time employees of the  Company  were
          involved  in research and development and product licensing.  The
          Company's research and development expenditures for 1995 and 1994
          were $844,000 and $843,000, respectively.

             The Company  expects its research and development expenditures
          to increase significantly in fiscal 1996.

          Employee Relations

             The Company has  331  full-time  employees,  of  whom  65  are
          employed  in  the  Abita  Springs  facility,  241 are employed in
          Decatur,  Illinois  and  25  are in outside sales.   The  Company
          enjoys  good  relations with its  employees,  none  of  whom  are
          represented by a collective bargaining agent.

          Competition

             The manufacture  and distribution of ophthalmic pharmaceutical
          products   is   highly   competitive,   with   many   established
          manufacturers, suppliers and distributors actively engaged in all
          phases of the business.  Most  of  the Company's competitors have
          substantially larger financial and other  resources,  including a
          larger   volume   of  sales,  more  sales  personnel  and  larger
          facilities than the  Company.  The competitors which are dominant
          in the ophthalmic distribution  industry  are Alcon Laboratories,
          Inc., Allergan Pharmaceutical, Inc. and Bausch  & Lomb, Inc.  The
          Company  competes  primarily on the basis of price  and  service.
          The Company's principal  supplier,  Bausch  &  Lomb,  Inc., is in
          direct competition with the Company in several markets.

             The manufacturing of sterile products must be performed  under
          the  most  rigorous  FDA-mandated  Good  Manufacturing Practices.
          Therefore the barriers to entry in the contract  manufacturing of
          sterile  products  are  very  high.   The  number  of independent
          contract manufacturers of sterile products continues  to  decline
          as  a  result of these barriers.  AMI's competitors in this area,
          generally,  are larger companies with greater financial and other
          resources.

          Product Supply

             Since the  acquisition  of  AMI  in 1992, the Company has been
          steadily  regaining  control  of  the supply  of  its  ophthalmic
          pharmaceutical products, which had  been  impacted by the closure
          of  the  Los Angeles facility in 1991.  During  the  fiscal  year
          ended June  30,  1995,  approximately   52%  of the Company's net
          ophthalmic  distribution  sales  were accounted for  by  products
          manufactured  at  AMI  and  approximately   48%  by  unaffiliated
          suppliers, the largest of which are Steris Laboratories, Inc. and
          Bausch & Lomb, Inc.  These companies supplied products accounting
          for   15.1%  and  14.2%,  respectively,   of  the  Company's  net
          ophthalmic  distribution  sales  during fiscal  1995.   No  other
          supplier supplied products accounting  for  more  than 10% of the
          Company's net ophthalmic distribution sales during fiscal 1995.

          Government Regulation

             All pharmaceutical manufacturers and distributors  are subject
          to extensive regulation by the federal government, principally by
          the  FDA  and,  to  a  lesser extent, by state governments.   The
          federal Food, Drug and Cosmetic Act (the FDA Act), the Controlled
          Substance Act, and other  federal statutes and regulations govern
          or  influence  the  development,  testing,  manufacture,  safety,
          labeling, storage, recordkeeping, approval, pricing, advertising,
          and promotion of products  by  the  Company and its subsidiaries.
          Included among the requirements of these  statutes  is  that  the
          manufacturer's  methods  conform  to  current  Good Manufacturing
          Practices  provided  for  in  FDA regulations.  Pursuant  to  its
          powers under the FDA Act, the FDA inspects drug manufacturers and
          storage  facilities  to  determine   compliance   with  its  Good
          Manufacturing Practice regulations, non-compliance with which can
          result in fines, recall and seizure of products, total or partial
          suspension  of production, refusal of the government  to  approve
          new drug applications,  and  criminal  prosecution.  The FDA also
          has authority to revoke approval of drug products.

             Except in the case of drugs in common usage before the FDA Act
          became  effective  and  in  some  other cases,  FDA  approval  is
          required before any drug can be manufactured  and  marketed.  New
          drugs require the filing of a New Drug Application (NDA) with the
          FDA, which requires clinical studies demonstrating the safety and
          efficacy  of  the drug and compliance with additional  regulatory
          requirements.

             Abbreviated   procedures   are  available  for  obtaining  FDA
          approval  for  those  generic  drugs  which  are  equivalents  of
          existing brand name drugs, such  as  certain  drugs that had been
          manufactured at the Los Angeles facility and are  expected  to be
          manufactured  by  AMI.   In  order  to  obtain  approval of a new
          generic   drug,  the  Company  files  an  Abbreviated  New   Drug
          Application  (ANDA)  with  the FDA.  An ANDA is similar to a NDA,
          except that the FDA waives the requirement of conducting clinical
          studies of safety and efficacy.  Instead, for drugs which contain
          the same ingredients as drugs  already  approved  for  use in the
          United States, the FDA ordinarily requires data showing  that the
          generic drug formulation is equivalent to the brand name drug and
          that the product is stable in its formulation.

             Over  the  past  several  years,  the  FDA  has  increased its
          scrutiny of the operations of generic drug manufacturers like the
          Company, and has increased the time required for its  approval of
          ANDAs  and  NDAs  submitted by such companies.  In addition,  the
          Office of Generic Drugs  of  the FDA, the division which monitors
          and  approves  ANDAs,  has  increased   its   scrutiny  regarding
          concentrations  of  inactive  ingredients  for generic  drugs  as
          compared to the innovator drug.  This change  has  resulted in an
          increase in the time spent on formulating ANDA products.




 
         Item 1A.  Executive Officers of the Registrant.

             Certain information concerning each of the executive  officers
          of  the  Company  is given below.  Each executive officer of  the
          Company is a full time  employee of the Company and serves in his
          capacity at the pleasure of the Board of Directors.

          Barry D. LeBlanc   Mr. LeBlanc, age 40, was elected President, 
          Chief Executive Officer of the Company in December 1991.  From 
          August 1987 to December 1991, Mr. LeBlanc served as a President 
          and Chief Operating Officer of the Company.  He has also been a
          director  and  member  of the Executive Committee of the  Company
          since August 1987.  Prior  to  1987,  Mr. LeBlanc was principally
          employed as a practicing certified public  accountant  and served
          as a financial consultant to the Company.

          Harold O. Koch     Mr. Koch, age 46, has  served  as Senior Vice
          President  since  January  1995.   From January 1993 to  December
          1994, he served as Vice President -  Business  Development.  From
          July   1991   to   December   1992   Mr.  Koch  coordinated   the
          reorganization of the Company's manufacturing  operations.   From
          November 1988 to June 1991, he acted as an independent consultant
          in    the   area   of   biotechnology   formulation,   ophthalmic
          manufacturing  processes and ophthalmic marketing.  From May 1987
          to  October  1988,   he   served  as  Vice  President  -  Product
          Development for The Cooper  Company.   Prior  to  this  Mr.  Koch
          served  as  Director  of  Product  Development  for Cooper Vision
          Ophthalmics.

          Tim J. Toney     Mr. Toney, age 53, has served as Vice President-
          Manufacturing   Operations   since   February  1993.   Since  the
          Company's acquisition of AMI in January  1992  he has also served
          as  President  of  AMI.   Prior thereto Mr. Toney had  served  as
          Treasurer and Director of Sales and Marketing for AMI.

          Eric  M. Wingerter   Mr. Wingerter, age 33, has served  as  Vice
          President  -  Finance  and  Administration since July 1993 and as
          Vice President - Finance from  January  1993  through  June 1993.
          Since  September 1988 Mr. Wingerter has been the Company's  Chief
          Financial  Officer.   From  January  1984  to  September 1988, he
          practiced   as  a  certified  public  accountant  in  the   audit
          department at Ernst & Young.


          Item 2.Description of Property.

             The   Company's   executive   offices,   sales   and   primary
          distribution center are based in two adjacent buildings totalling
          approximately  30,000 square feet located on ten acres of land in
          Abita Springs, Louisiana.   These buildings are believed adequate
          for  Akorn's present executive  offices  and  sales  and  primary
          warehousing  and  distribution activities.  The land owned by the
          Company  in  Abita Springs  can  accommodate  growth  in  Company
          executive and  ophthalmic  sales  adn distribution operations for
          the foreseeable future.

             Through AMI, the Company owns a  76,000  square-foot  facility
          located  on 15 acres of land in Decatur, Illinois.  This facility
          is currently  used  for  packaging, distribution, warehousing and
          office  space.   In  addition,  AMI  owns  a  55,000  square-foot
          manufacturing facility,  also  in  Decatur, Illinois.  During the
          fiscal   year   1995,   the   Company   substantially   completed
          construction   related  to  the  expansion  of   its   ophthalmic
          production facilities  at  AMI.  The total cost of the expansion,
          including  capital  equipment   acquisitions,   approximated   $6
          million.


          Item 3.  Legal Proceedings.

             From  time  to  time  the  Company  becomes  involved,  in the
          ordinary  course  of  its  business, in legal actions and claims.
          The amount, if any, of ultimate  liability  with  respect to such
          matters cannot be determined.  Management believes, however, that
          any  such  liability  will  not  have  a material effect  on  the
          Company's consolidated financial statements.


          Item 4.  Submission of Matters to a Vote of Security Holders.

             The annual meeting of the Company's shareholders  was  held on
          October  29,  1994  (the  "Meeting").  At the Meeting, all of the
          nominees  listed were elected,  by  the  votes  indicated  below.
          There were  no  broker non-votes with respect to any nominee.  No
          other directors have  terms  of  office  that continued after the
          Meeting.

               Nominee                           For            Withheld
          ______________________              _____________    _____________
          Daniel E. Bruhl, M.D.                12,778,433         22,462
          J. Ed Campbell, M.D.                 12,777,033         23,862
          George S. Ellis, M.D.                12,777,033         23,862
          Doyle S. Gaw                         12,773,633         27,262
          John N. Kapoor, Ph.D.                12,775,015         25,880
          Barry D. LeBlanc                     12,774,633         26,262
          David H. Turner, M.D.                12,779,033         21,862
          Lawrence A. Yannuzzi, M.D.           12,780,433         20,462



                                             PART II


          Item 5.Market for Common Equity and Related Stockholder Matters.

             The  Company's  Common  Stock is traded on the NASDAQ National
          Market System under the symbol  AKRN.  On September 15, 1995, the
          Company estimated that the number of holders  of its Common Stock
          was approximately 3,100, including record holders  and individual
          participants in security position listings.

             High and low prices for the last two years were:


<TABLE>
<CAPTION>
                                            1995                           1994 
                           _______________________________________________________________
                             Market Price<F1>      Cash      Market Price<F1>     Cash                             
                           ___________________   Dividends  ________________   Dividends                      
                             Low      High       Declared      Low    High      Declared
                           _______________________________________________________________
          <S>              <C>       <C>        <C>           <C>      <C>        <C>
          Declared
          1st Quarter       $2.38    $3.19      $  -          $1.88    $2.75      $-
          2nd Quarter        2.94     4.00         -           2.13     3.88       -
          3rd Quarter        2.88     3.63         -           2.81     3.75       -
          4th Quarter        2.25     3.31         -           2.63     3.38       -
<FN>
<F1> Per NASDAQ
</FN>
</TABLE>

             
  The  Company's Board of Directors decided to suspend the payment of dividends
in the first  fiscal quarter of 1992. Any such future payments will be, in part,
contingent upon  the level of the Company's research and development efforts and
expansion of operations.  The  Company's loan agreement includes restrictions on
the payment of dividends.


<PAGE>


Item 6.  Management's Discussion and Analysis of Financial Condition and Results
          of Operations.

         The following table sets forth selected consolidated financial 
          information for Akorn, Inc. for the five years ended June 30, 1995.
                                                          

<TABLE>
<CAPTION>
                                                       Years Ended  June 30
                          
                                 1995<F1>        1994<F2>      1993<F3>      1992<F4>       1991<F5>
                             ________________________________________________________________________________
<S>                              <C>              <C>           <C>             <C>            <C>
PER SHARE

Equity                           $   0.97         $  0.81       $   0.48        $   0.36       $   0.86
Net income (loss)                $   0.15         $  0.18       $   0.14        $  (0.55)      $  (0.41)
Dividends                               -               -       $      -               -       $    .06
Price: High                      $   4.00         $  3.88       $   3.13        $   4.13       $   4.38
       Low                       $   2.25         $  1.88       $   1.50        $   1.25       $   1.13
P/E:   High                           27x             22x            22x              NM             NM
       Low                            15x             10x            11x              NM             NM
Dividend yield                         NM              NM             NM              NM           2.18%

INCOME DATA (000)
Net sales                          32,863          28,403         20,893          18,456         19,348
Gross profit                       13,220          11,853          8,065           6,611          7,622
Operating income (loss)             3,672           2,934          1,665          (7,276)        (7,741)
Interest expense                        -            (154)          (271)           (288)          (374)
Pretax income (loss)                3,512           2,887          1,502          (7,407)        (7,841)
Income taxes (benefit)              1,232             166           (259)           (540)        (2,739)
Net income (loss)                   2,280           2,721          1,761          (6,867)        (5,102)
Weighted average 
  shares outstanding               15,399          15,311         13,555          12,589         12,305

BALANCE SHEET (000)

Current assets                     14,303          14,172          8,516           9,474         10,209
Net fixed assets                   10,996           6,249          5,227           5,119          5,091
Total assets                       26,256          21,221         14,218          15,122         18,335
Current liabilities                 6,400           6,551          3,471           7,197          6,303
Long-term obligations               4,857           2,327          4,248           3,352          1,501
Shareholders' equity               14,998          12,343          6,499           4,573         10,531

FUNDS FLOW DATA (000)

From operations                       792           2,665           (685)           (333)          1,797
Dividends paid                          -               -              -                -           (965)
From investing                     (4,943)         (3,710)          (465)          2,239          (1,377)
From financing                      3,004           2,003            (17)         (1,012)         (1,215)
Change in cash & equivalents       (1,147)            958         (1,167)            894            (795)

RATIO ANALYSIS

Gross margin                         40.2%           41.7%          38.6%           35.8%           39.4%
Operating margin                     11.2%           10.3%           8.0%          (39.4)%        (40.0)%
Pretax margin                        10.7%           10.2%           7.2%          (40.1)%        (40.5)%
Effective tax rate                   35.1%            5.8%         (17.3)%             NM             NM
Net margin                            6.9%            9.6%           8.4%          (37.2)%         (26.4)%
Asset turnover                        1.38            1.60           1.42            1.10            0.96
Return on assets                      9.6%           15.4%          12.0%          (41.0)%         (25.2)%
Financial leverage                    1.74            1.88           2.65            2.22            1.54
Return on equity                     16.7%           28.9%          31.8%          (90.9)%         (38.9)%
Retention rate                      100.0%          100.0%         100.0%          100.0%          115.2%
Implied growth rate                  16.7%           28.9%          31.8%          (90.9)%         (44.8)%

All of the information shown in the table above for periods 1992 and prior has been restated to reflect the
combined operations of Akorn and Akorn Manufacturing, Inc. (AMI).
<FN>          
<F1>  Includes an unrealized loss on marketable equity securities ($.3 million) and  the  reduction in selling,
      general and administrative expenses ($.3 million) related to a change in accounting estimate for aged customer 
      credits.

<F2>  Includes the reversal of the valuation allowance  for deferred tax assets ($0.4 million).

<F3>  Includes the reversal of the provision for a litigation judgment ($0.7 million), the reduction of estimated
      costs of reorganizing manufacturing operations ($0.4 million), and income tax benefits ($0.3 million).

<F4>  Includes  charges for the reorganization of manufacturing operations ($5.3 million), acquisition  costs  of
      AMI ($1.3 million), and provision for a litigation judgment ($0.8 million).

<F5>  Includes charges  for the reorganization of manufacturing operations ($7.8 million) and other non-recurring
      expenses ($1.1 million).
</FN>
</TABLE>


<PAGE>
            
      Management's discussion and analysis of financial condition and results of
      operations should be read in conjunction with the accompanying financial
      statements.

Results of Operations

Net Sales

  The Company's consolidated net sales increased 16% to a record $32.9 million
in 1995 compared to the prior year.  This follows a 36% increase in the prior
year as compared with  1993. The following table sets forth, for the periods
indicated, net sales by segment, excluding intersegment sales:

                                                 Years Ended June 30

In millions                                    1995        1994       1993
                                            ________________________________


Ophthalmic distribution                    $    23.8     $  20.7    $  14.9
Contract manufacturing                           9.1         7.7        6.0
                                            ________________________________
Total net sales                            $    32.9     $  28.4    $  20.9
                                            ================================
     
     Ophthalmic  distribution  sales  include  a  broad  range of therapeutic,
   diagnostic,  surgical  and office-based products.  Ophthalmic  distribution
   sales increased 15% in 1995 as compared to 1994 and 39% in 1994 as compared
   to 1993.  Sales in 1995  were  enhanced  by the introduction of several new
   surgical products including new surgical instruments  and  surgical  packs.
   In  addition,  sales  of the Company's therapeutic products increased as  a
   result of the Company's  "Save With Akorn Therapeutics" (S.W.A.T.) program,
   which focuses on educating doctors on the cost of ophthalmic medications.

     Sales growth in this segment  declined  in  the  second half of 1995 as a
   result of the loss of sales for AK-Con-A, Akorn's leading  allergy product,
   in  October 1994.  As previously announced, this product was  converted  to
   over-the-counter  status  by  the  Food  and Drug Administration (FDA), who
   required the filing of a NDA.  The Company  is  presently awaiting approval
   of this NDA, which is presently anticipated for some time in fiscal 1996.

     Upon receiving approval of this NDA, the new OTC version will be marketed
   through a joint venture with Pfizer, Inc. (Pfizer),  which  should  restore
   profits  on  the  product  to  previous  levels.   Sales  of  AK-Con-A were
   approximately $2 million, $1.4 million, and $0.7 million for 1995, 1994 and
   1993, respectively.

     Sales  in  1994 versus 1993 were enhanced primarily by product  licensing
   activities which  accounted  for  approximately $4 million or nearly 70% of
   the growth in ophthalmic distribution  sales.    In addition, the Company's
   introduction of its S.W.A.T program contributed to sales growth in 1994.

     Contract manufacturing sales increased 18% in 1995  as  compared  to 1994
   and  28%  in  1994  as compared to 1993.  Both 1995 and 1994 contract sales
   were  enhanced  by  a  new   contract   customer   which   increased  sales
   significantly beginning in the second half of fiscal 1994.   This customer,
   which  accounted  for  13% of consolidated net sales in 1995, has  recently
   notified the Company that it will be transferring the production of certain
   products during fiscal 1996  and 1997 to its own facilities in Puerto Rico.
   Such products accounted for $1.4  million  in  contract manufacturing sales
   for 1995.

     In  addition,  this customer has notified the Company  that  it  will  be
   discontinuing the  sale  of  two other products previously produced by AMI.
   These products accounted for approximately $2.9 million in sales for AMI in
   1995.   The Company is presently  in  discussions  with  this  customer  to
   acquire these  injectable  products.  This  would  maintain  current  plant
   throughout  and provide an entre into the injectable distribution business,
   which would be  synergistic  with the ophthalmic distribution business.  It
   is antipated that these products  would  be  marketed through the Company's
   current distribution system.



   Income and Expenses
     
     The  following  table sets forth the relationship  to  sales  of  various
   income statement items:
                                                    
                                                 Years Ended June 30

                                         1995            1994          1993
                                      _______________________________________


          Net sales                     100.0%          100.0%         100.0%
          Cost of goods sold             59.8            58.3           61.4
                                      _______________________________________

          Gross margin                   40.2            41.7           38.6
          Selling, general and 
           administrative expenses       26.5            28.4           33.7
          Research and development        2.5             3.0            2.2
          Costs of reorganizing 
           manufacturing operations                                     (1.9)
          Provision for litigation 
           judgment                                                     (3.4)
                                      _______________________________________

          Operating income               11.2           10.3             8.0

          Interest and other income
            (expense), net                (.5)            (1)            (.8)
                                      _______________________________________
          Income before income taxes     10.7           10.2             7.2

          Income taxes (benefit)          3.8             .6            (1.2)
                                      _______________________________________
          Net income                      6.9%           9.6%            8.4%
                                      =======================================


   Gross Margins
     The  consolidated  gross  margin  percentage  declined  by 1.5 percentage
   points  from 41.7% in 1994 to 40.2% in 1995.  The decline in  gross  margin
   percentage  is  primarily  due  to  the  effects  of  price  increases from
   manufacturers (primarily in the second half of the fiscal year), which were
   not fully offset by price increases to customers.  In addition,  a shift in
   the  mix  of  lower  margin  catalog products added to the decline in gross
   margin.  The decline in gross  margin has been more prevalent in the second
   half of the fiscal year as a result  of  the  loss  of  sales from AK-Con-A
   discussed earlier.  This was the Company's highest margin product at nearly
   75%.

     The gross margin percentage increased 3.1 percentage points from 38.6% in
   1993  to  41.7% in 1994.  This increase was primarily associated  with  the
   shift  in business  to  a  larger  percentage  of  sales  to  higher-margin
   wholesalers  associated  with the Company's S.W.A.T. program.  In addition,
   sales of AK-Con-A were significantly greater in 1994 than 1993.

     Gross margins in 1995 and  1994  were  also positively affected by better
   overhead absorption in contract manufacturing  as  a  result  of  increased
   volumes  at  the  Decatur  facilities.   The Company anticipates that gross
   margins in the short term will be relatively  stable  to slightly declining
   as compared with 1995 given the current mix of products  in  its  portfolio
   and the loss of AK-Con-A sales.

   Selling, General and Administrative Expense
     Selling, general and administrative expense as a percentage of net  sales
   declined  1.9  percentage  points from 28.4% in 1994 to 26.5% in 1995.  The
   decline  in this percentage is  primarily  associated  with  the  Company's
   leveraging  of  its  sales  force efforts and the low amount of general and
   administrative additions in 1995.   In  addition,  during  fiscal 1995, the
   Company,  based  on  evaluations made by management, changed the  estimated
   liability related to aged customer credits. This resulted in a reduction in
   selling, general and administrative expense of approximately $330,000.

     In response to a slowing  in  sales  growth  during  the third quarter of
   fiscal 1995, the Company took steps to eliminate approximately  $1  million
   to  $1.5  million of selling, general and administrative expenses and other
   manufacturing  operating expenses.  The reductions, which were accomplished
   primarily through  downsizing  the  work  force, will be somewhat offset by
   increases  in  depreciation  and  interest  expense   associated  with  the
   Company's  expanded  manufacturing  facilities.   As  a  result   of  these
   reductions  and  the  operating  leverage of the Company, it is anticipated
   that selling, general and administrative  expense  as a percentage of sales
   will continue to decline.

     Selling, general and administrative expense as a percentage  of net sales
   declined  5.3  percentage  points  from  33.7%  in  1993  to  28.4% in 1994
   primarily  due  to  the  Company's  operating  leverage and the significant
   increase in sales from 1993 to 1994.

   Research and Development
     Research  and  development expense remained stable  from  1994  to  1995.
   These expenses increased significantly in 1994 versus the 1993 amounts as a
   result of expansion  in this area in 1994.  In 1995, the Company maintained
   a stable mix of new ophthalmic  Abbreviated  New  Drug Applications (ANDAs)
   and site-transfers from its previous manufacturing facility in Los Angeles.
   In addition, throughout 1995, the Company continued  to work on its NDA for
   the over-the-counter version of AK-Con-A in connection  with  the licensing
   arrangement  with  Pfizer.   Costs  associated  with  this  NDA  are  being
   capitalized in connection with the long-term contract for manufacturing and
   royalty  rights.   The  Company  also  began work in 1995 on an NDA for the
   ophthalmic non-steroidal anti-inflammatory  drug  Piroxicam  licensed  from
   Pfizer.   The first $1 million of costs associated with this NDA are offset
   by funds obtained  from  Pfizer.   Total cash expenditures for all research
   and development activities were approximately  $1,456,000,  $1,368,000  and
   $469,000 in 1995, 1994 and 1993, respectively.

     The  Company  anticipates that research and development expenditures will
   increase significantly  in  1996 as it focuses on a broader mix of ANDA and
   NDA steril pharmaceutical products.   The level of research and development
   expense will be dependent upon the relative  mix  of  products  in  the R&D
   portfolio  between  products  for  which costs have been previously accrued
   (such  as  site  transfer  products)  as  compared  to  other  new  product
   approvals.

   Operating Income
     Operating  income in 1995 of $3.7 million  or  11.1%  of  sales  was  25%
   greater than 1994 operating income of $2.9 million or 10.3% of sales.  This
   increase in 1995  operating  income  was  primarily the result of increased
   sales and operating leverage, coupled with  stable research and development
   expenses.  The sales increase was somewhat offset  by  the decline in gross
   margin  resulting  from  cost  increases  of products distributed  but  not
   manufactured  and continued price sensitivity  in  the  generic  ophthalmic
   pharmaceutical market.

     Operating income  in  1994 was $2.9 million or 10.3% of sales compared to
   the  1993  amount of $1.7 million  or  8.0%  of  sales.   The  increase  in
   operating income  in  1994 was due primarily to the significant increase in
   sales.  In addition, the increase in gross margins associated with AK-Con-A
   sales and sales to wholesalers  and reduction in the percentage of selling,
   general and administrative expenses  as  a percentage of sales enhanced the
   growth in operating income.  The increase  in  operating income in 1994 was
   offset  somewhat  by  the 1993 reversal of $400,000   in  costs  previously
   accrued for the reorganization  of manufacturing operations and $700,000 in
   costs previously accrued for a litigation  judgment  from which the Company
   was vindicated.

   Interest and Other Income (Expense)
     Net interest and other expense increased $113,000 from  1994  to  1995 in
   spite  of  the capitalization of all interest expense in 1995 in connection
   with construction  at  the  Company's facilities in Decatur, Illinois.  The
   increase in 1995 is primarily  due to a $308,000 decline in market value of
   an equity investment that was determined  to be other than temporary.  This
   determination was based on the significant  deterioration  in  the value of
   the investment since June 30, 1994 and the evaluation that a price recovery
   was not imminent.

     From  1993  to  1994 net interest and other expense declined $115,000  as
   interest expense was reduced by the conversion to equity of $1.6 million of
   debt in November 1993  in  connection with the exercise of certain warrants
   by the John N. Kapoor Trust,  an affiliate of John N. Kapoor, the Company's
   Chairman of the Board.

     The Company anticipates that interest expense will increase significantly
   in 1996 as a result of the new long-term debt and capital leases associated
   with  the  Company's  expansion.   A  portion  of  this  interest  will  be
   capitalized during 1996  until full validation and approval from the FDA is
   obtained.

   Income Taxes (Benefit)
     The Company's consolidated effective income tax (benefit) rate was 35.1%,
   5.8% and (17.3)% for 1995, 1994 and 1993, respectively.  The effective rate
   for 1994 varies from the statutory  rates  primarily  due to the effects of
   adoption of Statement of Financial Accounting Standards  Board  (SFAS)  No.
   109,  "Accounting  for  Income  Taxes," effective July 1, 1993.  Under SFAS
   109,  the  Company  was able to recognize  estimated  future  tax  benefits
   attributable to expenses  recorded  for  book  purposes  but  not currently
   deductible  for  tax  purposes.  In July 1993, the Company recorded  a  net
   deferred tax asset in the  amount  of  $896,000 along with a 100% valuation
   reserve to reflect the uncertainties surrounding  the  ultimate realization
   of the benefits.  In the fourth quarter of fiscal 1994, the Company decided
   to  reverse  the  entire remaining balance of the valuation  reserve  since
   uncertainties regarding  the  ultimate  realization of the benefits were no
   longer material.  This resulted in the recording  of a $384,000 ($.03 cents
   per share) benefit in the fourth quarter.  The effective  rate  varied from
   the  statutory  rate in 1993 due to the effects of recognized net operating
   losses.

     The Company has  been  in  discussions  with the Internal Revenue Service
   (IRS) regarding the examination of tax returns  for  the  periods  of  1988
   through  1993.   The  IRS has proposed adjustments to such returns, some of
   which the Company has agreed  to  and  some  which the Company will appeal.
   These adjustments primarily relate to the timing  of  deductions  taken for
   tax  purposes  in  connection  with the reorganization of its manufacturing
   operations in 1991 and 1992.  The  agreed  upon  proposed adjustments would
   result  in  additional interest and taxes currently  due  of  approximately
   $600,000.  The  Company  had  previously  accrued  the  financial statement
   effects  of  these  proposed  agreed  upon  adjustments;  accordingly,   no
   significant financial statement impact of these adjustments was recorded in
   1995.

   Net Income
     Net income declined $.4 million or $.03 cents per share from $2.7 million
   or  $.18 cents per share in 1994 to $2.3 million or $.15 cents per share in
   1995.   This  decline, in spite of an increase in operating income in 1995,
   is due to the significantly  lower effective tax rate incurred in 1994 as a
   result of the adoption of SFAS  109  and full realization of the benefit of
   deferred tax assets.

     Net income increased $.9 million or  $.04  cents per from $1.8 million in
   1993 or $.14 cents per share to $2.7 million or  $.18  cents  per  share in
   1994.  The significant growth in sales was the primary contributing  factor
   to  this  growth.   The  growth in earnings per share from 1993 to 1994 was
   somewhat offset by the increase of nearly 2 million weighted average shares
   in 1994 resulting from the exercise of warrants.

   Financial Condition and Liquidity

     Management assesses the  Company's  liquidity  by its ability to generate
   cash  to  fund  its  operations.   The significant components  in  managing
   liquidity are: funds generated by operations;  levels  of  working  capital
   items  including  accounts  receivable,  inventories  and accounts payable;
   capital expenditure and debt repayment requirements; adequacy  of available
   lines  of  credit;  and  availability  of  long-term capital at competitive
   prices.

     Exclusive of the payment of costs related  to  the  reorganization of its
   manufacturing operations in 1991, the Company traditionally  has  generated
   cash  from  operations in excess of working capital requirements.  The  net
   cash provided by operating activities was $792,000 in 1995 compared to $2.7
   million in 1994.  The decline in cash provided from operating activities in
   1995 is primarily related to the increase in inventory associated with new
   product additions  coupled  with a decrease in the average days outstanding
   for payables.  The decline in  average days outstanding for payables is due
   to  more timely payments to vendors  by  the  Company  resulting  from  the
   availability of working capital credit lines.

     In  1996,  the  Company  will  continue  to  fund  the payment of certain
   previously accrued research and development activities  including  the site
   transfer  of  ANDAs  from  the  Company's  Los  Angeles  facility  and  the
   development  of  the  NDA  for  Piroxicam discussed previously.  Management
   believes that cash flows from operations,  funds  received  from Pfizer and
   the available working capital line of credit are sufficient to handle these
   short-term needs.

     In  addition  to  these  short-term  needs,  the Company anticipates  the
   payment of additional interest and taxes in connection with the examination
   by  the  IRS  of  tax  returns for the periods of 1988  through  1993.  The
   proposed  adjustments  would   result  in  additional  interest  and  taxes
   currently due of approximately $1.5  million.  The agreed issues, resulting
   in  approximately  $600,000 of current net  taxes  and  interest  due,  are
   expected to be paid over the next 10 months under an agreement with the IRS
   or through arrangements  with  a commercial bank.  Payment of the remaining
   unsettled issues will be based on the timing of the appeals process and the
   success of the Company in arguing its position with the IRS.

     Under a previously announced cross-licensing  agreement  with Pfizer, the
   Company is required to pay a performance penalty of $1,020,000 should it be
   unsuccessful in obtaining approval, by December 31, 1996, of the NDA on the
   OTC version of AK-Con A, licensed to Phizer.  Given the current  status  of
   the  product,  management believes the likelihood that approval will not be
   obtained in this time frame is remote.  Accordingly, no financial statement
   reserves related to the potential penalty have been accrued.

     Net cash utilized  for  investing  activities  in  1995  of  $4.9 million
   includes $4.8 million of property plant and equipment additions  associated
   with the expansion of the Company's Decatur facilities.  In addition,  1995
   net  cash utilized for investing activities includes approximately $400,000
   related  to product licensing costs which were funded primarily through net
   sales of investments  of approximately $300,000.  The Company has plans for
   capital  improvements  of   $2  million  to  $3  million  in  1996.   These
   improvements are for both requirements  to  meet current FDA regulations as
   well   as  enhancement  and  expansion  of  the  injectable   manufacturing
   capabilities  at  AMI.   These  improvements are expected to be funded by a
   draw of approximately $900,000 available  under  the  bank  credit facility
   discussed   below,   operating   cash   flows  and  possibly  some  leasing
   arrangements.

     Net  cash  provided  by financing activities  of  $3.0  million  in  1995
   primarily consists of the  net  increase in long-term debt of approximately
   $3 million. On September 30, 1994,  the Company entered into a $6.3 million
   credit facility with a commercial bank.   The  credit facility includes the
   following:

     -a  $1.3  million  Term  loan  for  the  payout  of existing  debt  and
     reimbursement  for  the  early  payout of a capital lease  on  the  AMI
     manufacturing facility.

     -a $3.5 million Revolver/Term construction loan to finance expansion of
     the AMI facilities.

     -a $1.5 million Line of Credit for working capital purposes.

     The entire Term loan was drawn in  October 1994 and, as of June 30, 1995,
   $2.6  million has been drawn on the Revolver/Term  construction  loan.   Of
   these proceeds,  approximately $900,000 was used to pay down existing debt.
   As of June 30, 1995,  no  borrowings  were  outstanding  under  the Line of
   Credit.

   Fourth quarter 1995 Results

     Net income for the fourth quarter of 1995 was $660,000 or $.04  cents per
   share  compared  to  net income of $1.5 million or $.10 cents per share  in
   1994.   The  1994  net income  figures  include  a  one  time  tax  benefit
   adjustment of $384,000  ($.03  cents per share) as well as an effective tax
   rate, excluding this adjustment,  of 19% compared to 32% in 1995.  The loss
   of AK-Con-A sales also had a negative  impact  on net income for the fourth
   quarter of 1995.


<PAGE>


 
  Item 7.       Financial Statements.

   The following financial statements are included in Part II, Item 7 of this
   Form 10-KSB.

Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . 13
Consolidated Balance Sheets as of June 30, 1995 and 1994 . . . . . . . . 14
Consolidated  Statements  of  Operations for the years ended 
  June 30, 1995, 1994  and 1993. . . . . . . . . . . . . . . . . . . . . 15
Consolidated Statements of Shareholders' Equity for the years 
  ended June 30, 1995, 1994 and 1993 . . . . . . . . . . . . . . . . . . 16
Consolidated Statements of Cash Flows for the years ended 
  June  30, 1995, 1994 and 1993. . . . . . . . . . . . . . . . . . . . . 17
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . 18
          

<PAGE>
          
Report of Deloitte & Touche
LLP


Independent Auditors



   To the Board of Directors and Shareholders of

   Akorn, Inc.




   We have audited the accompanying consolidated balance sheets of Akorn, Inc.

   and subsidiaries as of June 30, 1995 and 1994, and the related consolidated

   statements of operations, shareholders' equity, and cash flows for each  of

   the  three  years  in  the  period  ended  June  30, 1995.  These financial

   statements  are  the  responsibility  of  the  Company's   management.  Our

   responsibility is to express an opinion on these financial statements based

   on our audits.


   We  conducted  our  audits  in accordance with generally accepted  auditing

   standards. Those standards require  that  we  plan and perform the audit to

   obtain reasonable assurance about whether the financial statements are free

   of material misstatement. An audit includes examining,  on  a  test  basis,

   evidence   supporting   the   amounts  and  disclosures  in  the  financial

   statements. An audit also includes assessing the accounting principles used

   and significant estimates made  by  management,  as  well as evaluating the

   overall  financial  statement  presentation.  We  believe that  our  audits

   provide a reasonable basis for our opinion.


   In our opinion, such consolidated financial statements  present  fairly, in

   all   material   aspects,   the  financial  position  of  Akorn,  Inc.  and

   subsidiaries at June 30, 1995 and 1994, and the results of their operations

   and their cash flows for each  of  the three years in the period ended June

   30, 1995 in conformity with generally accepted accounting principles.


   As  discussed  in  Note  L to the consolidated  financial  statements,  the

   Company changed its method  of  accounting for income taxes in 1994.  Also,

   as  discussed  in  Note  C to the consolidated  financial  statements,  the

   Company changed its method  of  accounting  for certain investments in debt

   and equity securities in 1995.



   /s/ Deloitte & Touche LLP
   DELOITTE & TOUCHE LLP

   New Orleans, Louisiana
   September 1, 1995






                                        AKORN, INC.

                               CONSOLIDATED BALANCE SHEETS

                                                   June 30
                                            1995              1994
                                    ______________________________________

ASSETS
CURRENT ASSETS
Cash and cash equivalents           $      767,286          $ 1,914,735
Short-term investments                   1,568,793            1,735,040
Trade accounts receivable
  (less allowances for uncollectibles 
   of $266,329 and $247,296 in 1995
   and 1994, respectively)               4,918,753            4,793,522
Inventory                                5,979,707            4,721,637
Deferred income taxes                      708,963              550,715
Prepaid expenses and other assets          359,375              455,873
                                    ______________________________________
TOTAL CURRENT ASSETS                    14,302,877           14,171,522

OTHER ASSETS
Intangibles, net                           728,565              400,658
Other                                      228,534              399,709
                                    ______________________________________
TOTAL OTHER ASSETS                         957,099              800,367

PROPERTY, PLANT AND EQUIPMENT, NET      10,995,945            6,249,322
                                    ______________________________________
TOTAL ASSETS                        $   26,255,921          $21,221,211
                                    ======================================

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current installments of 
   long-term debt                   $      492,640          $     93,573
Current portion of capital 
   lease obligations                       149,354                25,429
Current portion of pre-funded 
   development costs                       667,000               100,000
Trade accounts payable                   1,718,893             2,516,629
Income taxes payable                       781,824               711,146
Accrued payroll and commissions            625,839               875,786
Accrued reorganization costs               727,423               933,836
Accrued royalties                          339,247               332,592
Accrued expenses and other liabilities     897,985               961,723
 
TOTAL CURRENT LIABILITIES                6,400,205             6,550,714

LONG-TERM DEBT                           3,320,688               746,764
CAPITAL LEASE OBLIGATIONS                  579,701                52,132
PRE-FUNDED DEVELOPMENT COSTS               303,988               900,000
DEFERRED INCOME TAXES                      327,218               166,417
OTHER LONG-TERM LIABILITIES                325,837               462,128

SHAREHOLDERS' EQUITY
Common stock, no par value--
  authorized 20,000,000 shares; 
  issued 15,115,673 shares in 1995 
  and 1994; outstanding 14,904,653 
  shares in 1995 and 14,798,217
  shares in 1994                        13,701,845            13,701,845
Treasury stock, at cost-- 211,020
  shares in 1995 and 317,456 shares 
  in 1994                                 (291,067)             (503,939)
Retained earnings (deficit)              1,500,109              (822,806)
Unrealized gain (loss) on marketable
  equity securities                         87,397               (32,044)
                                    _____________________________________
TOTAL SHAREHOLDERS' EQUITY              14,998,284            12,343,056
                                    ______________________________________
TOTAL LIABILITIES AND
  SHAREHOLDERS' EQUITY              $   26,255,921          $ 21,221,211
                                    ======================================
            
See notes to consolidated financial statements.
                                                     

<PAGE>
                                               AKORN, INC.

                                   CONSOLIDATED STATEMENTS OF OPERATIONS



                                            Years Ended June 30

                                   1995            1994           1993
                            ________________________________________________

Net sales                    $  32,862,630     $ 28,403,464   $ 20,893,459
Cost of goods sold              19,642,837       16,550,158     12,828,425
                            ________________________________________________
GROSS PROFIT                    13,219,793       11,853,306      8,065,034

Selling, general and
  administrative expenses        8,703,967        8,076,170      7,051,145
Research and development           843,590          842,695        453,011
Costs of reorganizing 
 manufacturing operations                -                -       (403,740)
Provision for litigation 
 judgment                                -                -       (700,000)
                            ________________________________________________
                                 9,547,557        8,918,865      6,400,416
                            ________________________________________________
OPERATING INCOME                 3,672,236        2,934,441      1,664,618

Interest and other 
  income (expense):
Interest income                     94,941           73,558         39,543
Interest expense                         -         (153,801)      (271,377)
Loss on marketable equity 
  securities                      (307,705)               -              -
Other income net                    52,099           32,802         69,036
                            ________________________________________________
                                  (160,665)         (47,441)      (162,798)
                            ________________________________________________
INCOME BEFORE INCOME TAXES       3,511,571        2,887,000      1,501,820

Income taxes (benefit)           1,231,790          166,303       (259,581)
                            ________________________________________________
NET INCOME                   $   2,279,781     $  2,720,697    $ 1,761,401
                            ================================================

NET INCOME PER SHARE         $         .15     $        .18    $       .14
                            ================================================

Weighted average shares 
  outstanding                   15,399,350       15,310,885     13,554,865
                            ================================================

See notes to consolidated financial statements.


<PAGE>


<TABLE>
<CAPTION>
                                                                           AKORN, INC.

                                                         CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

                                    Common Stock                                   Unrealized
                             _________________________    Retained                 Gain (Loss)
                                 Shares                   Earnings     Treasury    on  Marketable
                               Outstanding    Amount      (Deficit)     Stock     Equity Securities       Total
                            ______________________________________________________________________________________________
<S>                            <C>         <C>          <C>           <C>         <C>                  <C>
Balances at July 1, 1992       12,697,863  $10,701,845  $(5,325,239)  $(803,465)  $       -            $4,573,141

Net income for 1993                                       1,761,401                                     1,761,401
Shares issued as compensation      25,000                    11,266      44,984                            56,250
Exercise of stock options          25,000                                50,000                            50,000
Treasury stock reissued            33,454                    (9,196)     66,908                            57,712
                            _____________________________________________________________________________________________

Balances at June 30, 1993      12,781,317   10,701,845   (3,561,768)  (641,573)           -             6,498,504

Net income for 1994                                       2,720,697                                     2,720,697
Exercise of stock options 
  and warrants                  2,010,000    3,000,000         (700)    20,000                          3,019,300
Cancellation of shares due 
  to resolution of manufacturing 
  pre-acquisition                                                                                          
  contingencies                   (51,917)                                                                      -
Unrealized loss on 
  marketable equity
  securities                                                                           (32,044)           (32,044)
Treasury stock reissued            58,817                    18,965    117,634                            136,599
                            _____________________________________________________________________________________________

Balances at June 30, 1994      14,798,217   13,701,845     (822,806)  (503,939)        (32,044)        12,343,056

Net income for 1995                                       2,279,781                                     2,279,781
Exercise of stock options          34,917                     8,824     69,834                             78,658
Unrealized loss on 
  marketable equity
  securities                                                                         (275,661)           (275,661)
Reversal of unrealized 
  loss on marketable
  equity securities                                                                   307,705             307,705
Unrealized gain on 
  marketable equity 
  securities                                                                           87,397              87,397
Treasury stock reissued            71,519                    34,310    143,038                            177,348
                           ______________________________________________________________________________________________

Balances at June 30, 1995      14,904,653  $13,701,845   $1,500,109  $(291,067)      $ 87,397         $14,998,284
                           ==============================================================================================

See notes to consolidated financial statements.
</TABLE>



<PAGE>
                                                  AKORN, INC.

                                    CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                      Years Ended June 30

                                                            1995            1994             1993
                                                        _______________________________________________
<S>
OPERATING ACTIVITIES                                      <C>            <C>              <C>
Net income                                                $2,279,781     $2,720,697       $1,761,401
Adjustments to reconcile net income
 to net cash provided by
 (used in) operating activities:
Costs of reorganizing manufacturing operations                     -              -         (403,740)
Provision for litigation judgment                                  -              -         (700,000)
Depreciation and amortization                                947,453        726,155          631,257
Loss on marketable equity securities                         307,705              -                -
Provision for losses on accounts 
  receivable and inventory                                   160,000         35,676          118,368
Deferred income taxes                                          2,553       (384,298)               -
Other                                                        (30,277)        11,178           29,089
Changes in operating assets 
  and liabilities:
   Accounts receivable                                      (185,231)    (2,126,242)        (474,395)
   Inventory, prepaid expenses 
    and other assets                                      (1,313,420)      (702,898)        (606,420)
   Refundable income taxes                                         -        288,321          746,956
   Trade accounts payable and 
    accrued expenses                                      (1,447,470)     1,385,336       (1,787,311)
   Income taxes payable                                       70,678        711,146                -
                                                        _______________________________________________

NET CASH PROVIDED BY (USED IN) OPERATING
  ACTIVITIES                                                 791,772      2,665,071         (684,795)

INVESTING ACTIVITIES
Purchases of property, plant and equipment                (4,818,132)    (1,635,643)        (649,676)
Product licensing costs                                     (421,206)      (432,358)               -
Purchases of investments                                  (2,022,826)    (2,624,573)               -
Sales of investments                                       2,318,765        982,606          184,947
                                                        _______________________________________________

NET CASH USED IN INVESTING ACTIVITIES                     (4,943,399)    (3,709,968)        (464,729)

FINANCING ACTIVITIES
Proceeds from sale of stock                                  256,006      1,555,899          107,712
Repayments of long-term debt                                (927,009)       (89,857)      (1,685,416)
Proceeds from issuance of long-term debt                   3,900,000              -        1,600,000
Pre-funded development costs                                       -      1,000,000                -
Principal payments under capital 
  lease obligations                                          (54,483)      (463,518)        (39,367)
Debt acquisition costs                                      (170,336)             -               -
                                                        _______________________________________________

NET CASH PROVIDED BY (USED IN) FINANCING
  ACTIVITIES                                               3,004,178      2,002,524         (17,071)
                                                        _______________________________________________

INCREASE (DECREASE) IN CASH AND
  CASH EQUIVALENTS                                        (1,147,449)       957,627      (1,166,595)

Cash and cash equivalents 
  at beginning of year                                     1,914,735        957,108       2,123,703
                                                        _______________________________________________

CASH AND CASH EQUIVALENTS
  AT END OF YEAR                                          $  767,286     $1,914,735        $957,108
                                                        ===============================================

See notes to consolidated financial statements.
</TABLE>



<PAGE>


  Notes to Consolidated Financial Statements

  Akorn, Inc.
  June 30, 1995


   Note A - Summary of Significant Accounting Policies

      Consolidation:  The accompanying consolidated financial statements
   include the accounts  of  Akorn,  Inc.  (the  Company) and its wholly
   owned   subsidiaries,   Spectrum  Scientific  Pharmaceuticals,   Inc.
   (Spectrum),  Walnut  Pharmaceuticals,   Inc.   (Walnut)   and   Akorn
   Manufacturing,   Inc.   (AMI,  formerly  Taylor  Pharmacal  Company).
   Intercompany  transactions  and  balances  have  been  eliminated  in
   consolidation.
      Revenue  Recognition:   The  Company  recognizes  sales  upon  the
   shipment of goods.

      Cash  Equivalents:  The  Company   considers   all  highly  liquid
   investments with a maturity of three months or less,  when purchased,
   to be cash equivalents.

      Investments: Effective July 1, 1994, the Company adopted Statement
   of  Financial Standards No. 115 (SFAS 115), "Accounting  for  Certain
   Investments  in  Debt  and  Equity  Securities."  The Company records
   short-term  and  long-term investments under the provisions  of  this
   Statement (See Note C).

      Inventory: Inventory  is stated at the lower of cost (average cost
   method) or market (see Note  D).  Provision  is made for slow-moving,
   unsalable and obsolete items.

      Intangibles: Intangibles consist primarily  of  product  licensing
   costs  which  are  capitalized at cost and amortized on the straight-
   line  method over the  life  of  the  license  period.   Amortization
   expense for the three years ended June 30, 1995 was $144,820, $82,143
   and $67,862, respectively.

      Property,  Plant  and Equipment: Property, plant and equipment are
   stated  at  cost,  less  accumulated  depreciation.  Depreciation  is
   provided  using  the  straight-line   method  in  amounts  considered
   sufficient  to amortize the cost of the  assets  to  operations  over
   their estimated  service  lives.   The average estimated service life
   of buildings and leasehold improvements, furniture and equipment, and
   automobiles  are  approximately   30,   8,   and   5,   respectively.
   Depreciation  expense  for  the  three years ended June 30, 1995  was
   $776,182, $644,012 and $563,395, respectively.

      Under an agreement with Pfizer,  Inc. (See Note F) the Company has
   received reimbursement for the purchase  of certain equipment.  As of
   June  30,  1995,  the  total  amount  reimbursed   was  approximately
   $593,000.   The  Company  has  accounted for these reimbursements  by
   reducing its carrying value of the associated equipment.

      Interest Capitalization: The  Company  capitalizes interest during
   periods of construction of qualifying assets. For the year ended June
   30, 1995, the Company incurred interest costs  of  $282,007,  all  of
   which  was  capitalized.  No  interest was capitalized during 1994 or
   1993.

      Stock Options: The Company records  as  an expense the difference,
   if any, between the value of stock options granted  with  an exercise
   price  below  the  market  value of the Company's stock and the  then
   market value of the Company's  stock  on  the  date  the  options are
   granted.

      Income   Taxes:  Effective  July  1,  1993,  the  Company  adopted
   Statement of  Financial Accounting Standards No. 109, "Accounting for
   Income Taxes."  In  prior  fiscal  years,  provision  was made in the
   consolidated financial statements for federal and state  income taxes
   in  accordance  with  the  provisions  of  FASB Statement Number  96.
   Deferred  taxes are provided for the differences  in  the  accounting
   treatment for  certain  expense  items  for  financial  reporting and
   income  tax  purposes.  Deferred  taxes  result  primarily  from  the
   difference  between  depreciation  methods  used  for  book  and  tax
   purposes,  provisions for bad debt and inventory reserves and accrued
   costs associated with the reorganization of manufacturing operations,
   recall of products and litigation.




   Note B - Acquisition of Manufacturing Operations

      On January  15,  1992,  the  Company acquired Akorn Manufacturing,
   Inc., formerly Taylor Pharmacal Company,  in  a  business combination
   accounted  for  as  a  pooling  of  interests.  AMI  is  a   contract
   manufacturer  of  sterile  pharmaceuticals,  which  it  produces  and
   delivers  pursuant  to  contracts with third parties. Pursuant to the
   merger agreement, the Company  delivered 926,753 shares of its Common
   Stock in exchange for all of the outstanding stock of AMI.

      Of the total shares issued in the merger agreement, 922,500 shares
   were held in escrow pending the  settlement  of  a  default  judgment
   against  AMI  entered on November 8, 1991 (see Note R). During fiscal
   1993, a settlement  between  AMI's  insurer  and  the  plaintiffs was
   reached.  As a result, in 1993 the Company reduced its provision  for
   the judgment to $100,000, the approximate amount of expenses incurred
   in defending  the  judgment.  In accordance with the terms of the AMI
   acquisition agreement, 51,917 shares  valued  at  $2  per  share were
   forfeited  and returned as treasury stock by the escrow agent  during
   fiscal 1994 in order to cover these expenses and finally resolve this
   pre-acquisition  contingency.  The remaining shares held in escrow of
   870,583  were  distributed to the  former  AMI  shareholders  thereby
   terminating the escrow agreement.

      As part of the  acquisition, the Company paid a finder's fee to an
   affiliate  of  Dr.  John  N.  Kapoor,  Chairman  of  the  Board  (the
   affiliate). This finder's  fee  was  in the form of 250,000 shares of
   Company Common Stock valued at $3.50 per  share.  Of the total shares
   issued, 125,000 were subject to forfeiture if the market price of the
   Company's  Common Stock does not reach at least $5.00  per  share  by
   January 15,  1996. In August 1995, the Company, the affiliate and Dr.
   Kapoor entered  into  an  agreement  under  which  (i) the forfeiture
   period  was extended to January 15, 1998, (ii) forfeiture  would  not
   occur in  the event that persons unaffiliated with Dr. Kapoor acquire
   beneficial ownership of more than 50% of the outstanding common stock
   of the Company  and  (iii)  Dr.  Kapoor  waived  his right to receive
   $40,000  otherwise  payable  to  him  by the Company for  serving  as
   Chairman of the Board in fiscal 1996.

   Note C - Investments

      Effective July 1, 1994, the Company adopted Statement of Financial
   Standards No. 115 (SFAS 115), "Accounting  for Certain Investments in
   Debt  and  Equity  Securities".  This  Statement   requires   certain
   securities  to  be  classified into one of three reporting categories
   (held-to-maturity, available-for-sale  or  trading).  The Company has
   completed  a  review of its securities relative to SFAS 115  and  has
   classified its  investments  in debt securities (consisting primarily
   of U.S. Government securities  and  municipal  bonds  with a carrying
   value of $1,136,010 and $303,092, respectively, at June  30, 1995 and
   $1,718,483  and  $0,  respectively,  at  June  30,  1994) as held-to-
   maturity. Therefore, in accordance with SFAS 115, these  investments,
   all of which have contractual maturities within one year,  are  being
   reported at amortized cost, which approximates fair market value. The
   Company  has  classified  its  investment  in  equity  securities  as
   available-for-sale, requiring that they be carried at fair value with
   any unrealized gain or loss reflected as a component of shareholders'
   equity.   Such  investments  had a fair market value of approximately
   $130,000 at June 30, 1995.  Prior  to  adopting SFAS 115, the Company
   recorded investments at the lower of cost or market.

      At June 30, 1994, the cost of the Company's  noncurrent marketable
   equity securities exceeded the market value by $32,044.  Therefore, a
   valuation  allowance  was  established  by  a charge to shareholders'
   equity representing the net unrealized loss. During fiscal 1995, this
   allowance was increased by $275,661 due to the  continuous decline in
   market value. At March 31, 1995, management determined the loss to be
   permanent given the significant decline in market  value  since  June
   30, 1994 and the unlikelihood of a recovery in value.  Therefore, the
   $307,705  unrealized  loss previously charged to shareholders' equity
   was  accounted for as a  realized  loss  in  the  1995  statement  of
   operations.  At  June  30,  1995,  the market value of the marketable
   equity  securities  exceeded the adjusted  cost,  subsequent  to  the
   write-down noted above, by $87,397; therefore, an unrealized gain was
   recorded as a component  of  shareholders'  equity  to  reflect  this
   increase in value.


   Note D - Inventory

   The components of inventory are as follows:
                                                             June 30
                                                     1995              1994
                                                ______________________________


   Finished goods                                $  3,742,411     $  2,553,051
   Work in process                                  1,042,922          883,152
   Raw materials and supplies                       1,194,374        1,285,434
                                                ______________________________
                                                 $  5,979,707     $  4,721,637
                                                ==============================
    
       Inventory for 1995 and 1994 is reported net of reserves of $344,443 
   and $282,531, respectively, for slow-moving, unsalable and obsolete items.

       Note E - Property, Plant and Equipment

       Property, plant and equipment at June 30 consists of the following:
                                                                           
                                                             June 30
                                                     1995               1994
                                                ______________________________


   Land                                          $   478,757       $   478,757
   Buildings and leasehold improvements            5,514,182         4,388,816
   Furniture and equipment                         7,736,891         6,794,435
   Automobiles                                        90,305            90,305
                                                ______________________________
                                                  13,820,135        11,752,313
   Accumulated depreciation                       (6,750,743)       (5,982,874)
                                                ______________________________
                                                   7,069,392         5,769,439
   Construction in progress                        3,926,553           479,883
                                                ______________________________
                                                 $10,995,945       $ 6,249,322
                                                ==============================
      
      The balance included in construction in progress consists of costs
   related  to the expansion of ophthalmic production facilities at AMI,
   including  capital  equipment  acquisitions.   While construction was
   substantially  completed in fiscal 1995, certain  steps  required  to
   obtain FDA approval and allow for the commencement of production were
   not yet completed.   As  of  June 30, 1995, there were no significant
   construction costs related to the expansion yet to be incurred.

   Note F - Pre-Funded Development Costs

      In April 1994, the Company  entered  into  a  series of agreements
   with  Pfizer Inc. (Pfizer) regarding the cross-licensing  of  several
   ophthalmic  pharmaceutical  products.  The arrangement involves Akorn
   granting a license to Pfizer on an Akorn  product  under  development
   (the  licensed product), along with providing manufacturing  services
   and marketing assistance for the licensed product. In exchange, Akorn
   received  (1)  a royalty stream on sales of the licensed product, (2)
   an exclusive, royalty-free license to manufacture and market a Pfizer
   prescription ophthalmic non-steroidal anti-inflammatory drug (NSAID),
   and (3) non-exclusive  rights to market an existing Pfizer ophthalmic
   antibiotic.

      As part of this agreement,  in fiscal 1994 Pfizer paid the Company
   an advance of $1 million to be used  to  fund the costs of developing
   the NSAID, which are estimated at $1.8 million.  The  Company intends
   to recognize the pre-funded balance as an offset to development costs
   as  these  expenses  are  incurred.  During fiscal 1995, the  Company
   incurred $29,012 of development costs  which were charged against the
   pre-funded balance. The Company's current  projections  indicate that
   these  costs  will  be  paid  over  the  next 24 months. Accordingly,
   $667,000 of the pre-funded balance has been  classified  as a current
   liability at June 30, 1995.

      In  addition, the agreement stipulates that Pfizer will  reimburse
   Akorn for  one-half  of  the  costs  to  obtain  FDA  approval on the
   licensed product, including the cost of certain agreed upon equipment
   acquisitions required for the manufacturing of the licensed  product.
   In  the event that Akorn fails to obtain FDA approval on the licensed
   product  by  December  31,  1996,  the  Company  is required to pay a
   performance penalty of $1,020,000 to Pfizer.  A New  Drug Application
   (NDA) was filed for the licensed product on June 8, 1994.   Given the
   current status of the NDA, it is management's opinion that payment of
   the performance penalty is remote.

          Note G - Financing Arrangements

             Long-term debt at June 30 consists of:
                                                             
                                                             

<TABLE>                                                             
<CAPTION>
                                                                       1995           1994
                                                                  ____________________________
<S>                                                                 <C>            <C>
Note payable to First National Bank of Commerce; due 1999;
 interest at 3/4% over the bank's prime rate (10.75% at
 June 30, 1995), payable in monthly installments of $45,329
 commencing November 1995; secured by the Company's
 receivables, inventory and property, plant and equipment           $2,600,000     $        -
Note payable to First National Bank of Commerce; due 1999;
 interest at 10.25%, payable in monthly installments of
 $10,834 with a final installment of $649,960 due in 1999;
 secured by the Company's receivables, inventory and property,
 plant and equipment                                                 1,213,328              -
Note payable to the First National Bank of Decatur; due 1995;
 interest at 1% over prime rate (8% at June 30, 1994), payable
 in monthly installments of $9,800 including interest;
 secured by certain land, buildings and equipment of AMI                     -        749,965
Note payable to Decatur-Macon County Economic Development
 Foundation; due 1997; interest at 7%, payable in monthly
 installments of $3,019 including interest; secured by junior
 mortgage on building                                                        -          90,372
                                                                  ____________________________
                                                                     3,813,328         840,337
Deduct: Current installments payable within one year                  (492,640)        (93,573)
                                                                  ____________________________
Portion payable after one year                                     $ 3,320,688     $   746,764
                                                                  ============================
Maturities of long-term debt are as follows:

Years ending June 30:
  1996                                                                             $   492,640
  1997                                                                                 673,956
  1998                                                                                 673,956
  1999                                                                                 673,956
  2000                                                                               1,298,820
                                                                                   ____________
    Total                                                                          $ 3,813,328
                                                                                   ============
</TABLE>
               

               In  September 1992, the Company entered into an agreement
   to obtain up to $2.5  million  of  credit  financing from the John N.
   Kapoor Trust (the Trust), an affiliate of John N. Kapoor, Chairman of
   the Board. Under the terms of the agreement,  the  Trust,  which held
   warrants to purchase 2 million shares of stock at prices ranging from
   $1.50  to  $2.00  through November 15, 1995, was required to exercise
   1,666,667 of those  warrants  at  $1.50  per  share  on  or  prior to
   November  15, 1993. On that date, the Trust exercised the entire  two
   million warrants for a total of $3 million, of which $1.6 million was
   used to repay  bedt  to  the Trust and the remaining $1.4 million was
   received in cash. Interest  expense  related to this indebtedness was
   $61,334 and $129,540 in 1994 and 1993, respectively.

               As part of the September 1992  arrangement,  the  Company
   granted  a  new  warrant  to  the  Trust  to purchase an additional 1
   million shares at $2.00 per share, exercisable  for  five years. Upon
   the  issuance  of  this  warrant,  Dr.  Kapoor  because  entitled  to
   designate an additional individual as a Director of the Company.

               During  fiscal  1995,  the  Company  entered into a  $6.3
   million loan agreement with a commercial bank to obtain financing for
   the  expansion  of its manufacturing facilities in Decatur,  Illinois
   and to refinance existing debt.  This agreement made available to the
   Company financing  under  a  three-part  credit  facility:  (1)  $3.5
   million  Revolver/Term loan, (2) $1.3 million Term loan, and (3) $1.5
   million Line  of  Credit.  As of June 30, 1995, $2.6 million had been
   drawn on the Revolver/Term loan.   Borrowings  outstanding  under the
   Line of Credit bear interest at the bank's prime rate; there  were no
   borrowings  outstanding  under  the  Line  of Credit at year end.  In
   addition, at June 30, 1995 approximately $1.2 million was outstanding
   under the $1.3 million Term loan.

               Borrowings under the loan agreement are collateralized by
   substantially  all  of  the  Company's  receivables,   inventory  and
   property, plant and equipment. In addition, the Company  is  required
   to  comply  with specified loan covenants, including restrictions  on
   the payment of dividends.

   Note H - Leasing Arrangements

               Akorn   leases  certain  data  processing  and  telephone
   equipment under capital  leasing arrangements which expire during the
   next three years. In June  1995  AMI  began leasing certain equipment
   under a capital lease agreement expiring during 2000.  At fiscal year
   end, this equipment was in the process of being installed; therefore,
   the balance is included in construction in progress at June 30, 1995.

               During 1993, AMI leased a portion  of  its  manufacturing
   facilities from the former president and majority shareholder  of AMI
   under  a  capital  lease  arrangement  expiring  in January 2002. The
   Company paid out the balance of this capital lease during fiscal year
   1994.

               Property,  plant and equipment at June  30  includes  the
   following amounts relating to such capital leases:
     
                                                   June 30
                                          1995                  1994
                                   _______________________________________
                                                                         
Furniture  and equipment             $   100,002          $   100,002
Less accumulated
depreciation                             (52,996)             (27,174)
                                   _______________________________________ 
                                          47,006               72,828
Construction in progress                 705,977                    -
                                   _______________________________________
                                     $   752,983          $    72,828
                                   =======================================

     Depreciation expense provided on these assets was $25,822, $18,833, and
$52,381 during 1995, 1994 and 1993, respectively.

     The following is a schedule by years of future minimum lease payments 
under these capital leases together with the present value of the net minimum  
lease payments.

Years ending June 30:
1996                                                       $   203,271
1997                                                           194,455
1998                                                           177,271
1999                                                           172,701
2000                                                           129,526
                                                           ______________
   Total Minimum Lease Payments                                877,224
  Less: Amount Representing Interest                          (148,169)
   Present Value of Net Minimum                            ______________
  Lease Payments                                           $   729,055
                                                           ==============

               The  Company leases real property in the normal course of
   business under various operating leases, including non-cancelable and
   month-to-month agreements. Payments under these leases were $112,553,
   $140,800 and $186,873  in  1995,  1994 and 1993, respectively. Future
   minimum lease payments under non-cancelable  operating leases at June
   30, 1995 are not material.

               During fiscal 1993, the Company entered  into  a sublease
   agreement  for  one  of its leased facilities. Sublease rentals  were
   $113,326, $111,164 and  $68,552, respectively, for fiscal years ended
   June 30, 1995, 1994 and 1993.  This  agreement  expired effective May
   1995, in conjunction with the expiration of the primary lease.

   Note I - Stock Option and Stock Purchase Plans

               The  Company  has two stock option plans  and  one  stock
   purchase plan. The first stock  option  plan  is  the  1988 Incentive
   Compensation  Program  (the  Incentive Program). Under the  Incentive
   Program any officer or key employee  of  the  Company  is eligible to
   receive options when designated by the Company's Board of  Directors.
   The  number  of  shares  of  the Company's Common Stock which may  be
   issued under the Incentive Program  upon  the exercise of options may
   not  exceed  2,000,000  shares.  The exercise price  of  the  options
   granted under the Incentive Program  will  be determined by the Board
   of Directors but may not be less than 50% of the fair market value of
   the shares subject to the option on the date  of  grant.  All options
   granted under the Incentive Program during fiscal 1995, 1994 and 1993
   have exercise prices equivalent to the market value of the  Company's
   Common Stock on the date of grant.

               The  second  stock  option  plan is the Akorn, Inc. Stock
   Option Plan for Directors (the Directors'  Plan). The Directors' Plan
   provides for the grant of nonqualified options  to persons elected as
   directors  of  the  Company at the fair market value  of  the  shares
   subject to option on the date of grant. The total number of shares of
   the Company's Common  Stock  for  which  stock options may be granted
   under the Directors' Plan may not exceed 500,000 shares.

               All employees who have been employed  by  the Company for
   twelve  continuous months are eligible to participate in  the  Akorn,
   Inc. Employee  Stock Purchase Plan (the Purchase Plan). Participating
   employees  may  elect   to  contribute  up  to  15%  of  their  gross
   compensation towards the  purchase  of Company's Common Stock. At the
   end of each quarter, the amount contributed is applied to acquire, on
   behalf of the participating employees,  the Company's Common Stock at
   a purchase price equal to 85% of the current  market price. A maximum
   of  1,000,000 shares of the Company's Common Stock  may  be  acquired
   under  the  terms  of  the  Purchase Plan. Purchases were issued from
   treasury stock under this plan and were insignificant in fiscal 1995,
   1994 and 1993.

   Note J - Stock Options and Warrants

               The summary of activity in stock options and warrants for
   each of the three years ended June 30, 1995 is as follows:


 Outstanding at July 1, 1992 (at prices ranging from $1.50 
   to $3.88 per share)                                              3,351,386
 Granted (at prices ranging from $2.00 to $2.25 per share)          1,215,000
 Exercised (at $2.00 per share)                                       (25,000)
 Expired (at $2.63 per share)                                        (300,000)
                                                                    __________
 Outstanding at June 30, 1993 (at prices ranging 
    from $1.50 to to $3.88 per share)                               4,241,386
 Granted (at prices ranging from $2.00 to $3.50 per share)            228,000
 Exercised (at prices ranging from $1.50 to $1.94 per share)       (2,010,000)
                                                                   ___________
 Outstanding at June 30, 1994 (at prices ranging from $1.50 to
    $3.88 per share)                                                2,459,386
 Granted (at prices ranging from $2.81 to $3.50 per share)            238,000
 Exercised (at prices ranging from $2.00 to $2.81 per share)          (73,000)
                                                                    __________
 Outstanding at June 30, 1995 (at prices ranging from $1.50 to
            $3.88 per share)                                        2,624,386
                                                                    ==========

               The  amount  of  options and warrants exercisable at year
   end was 2,368,843, 2,236,762 and  4,098,886  for 1995, 1994 and 1993,
   respectively. All of these options were exercisable at prices ranging
   from $1.50 to $3.88 per share.

   Note K - Earnings Per Share

               Earnings  per share is based upon  the  weighted  average
   number  of common shares outstanding. The computation of the weighted
   average number  of  shares  outstanding  for  fiscal  1995  and  1994
   includes  the effect of dilutive stock options and warrants using the
   treasury stock  method.  The computation for 1993 includes the effect
   of dilutive stock options  and  warrants  using the modified treasury
   stock  method.  Net income for 1993 has been  adjusted  for  interest
   expense (net of tax)  paid  on  debt  assumed  to be paid down by the
   proceeds received upon the exercise of options in  excess  of  20% of
   shares  outstanding on June 30, 1993. The weighted average number  of
   shares outstanding  used in the per share computations was 15,399,350
   shares in 1995, 15,310,885  shares  in  1994 and 13,554,865 shares in
   1993.

   Note L - Income Taxes

               Effective July 1, 1993, the Company  adopted Statement of
   Financial  Accounting  Standards  No.  109,  "Accounting  for  Income
   Taxes." This standard requires recognition of  future  tax  benefits,
   attributable   to   deductible   temporary  differences  between  the
   financial statement and income tax  bases  of assets and liabilities,
   to the extent that realization of such benefits  is  more likely than
   not. Financial statements of prior years have not been  restated  and
   the  cumulative  effect of the accounting change was not material due
   to the uncertainties  that  existed  at  July  1, 1993 concerning the
   ultimate realization of future tax benefits. As  indicated at Note T,
   uncertainties  regarding  the  ultimate  realization  of  future  tax
   benefits were reduced to a relatively low level by the fourth quarter
   of fiscal 1994, thereby justifying removal of the valuation allowance
   applicable to the deferred tax asset.

   The components of income tax expense (benefit) are as follows:

                           1995             1994               1993
                       _________________________________________________
Current:
  Federal               $1,049,834        $489,051       $  (253,937)
  State                     37,537          61,550            (5,644)
                       _________________________________________________
                         1,087,371         550,601          (259,581)
                       _________________________________________________
Deferred:
  Federal                  128,806        (342,752)                -
  State                     15,613         (41,546)                -
                       _________________________________________________
                           144,419        (384,298)                - 
                       _________________________________________________
                        $1,231,790        $166,303       $  (259,581)
                       =================================================

    The following represents the composition of deferred tax expense as a 
  result of temporary differences arising in 1993:
                                                              1993
                                                           ____________
  Excess tax depreciation over book                        $    46,665
  Reorganization and other costs paid (accrued)                753,902
  Excess book bad debt deduction over tax                       38,774
  Operating loss carryforward utilized                        (815,182)
  Other, net                                                   (24,159)
                                                           ____________
  Deferred tax expense, net                                $         -
                                                           ============

    A reconciliation of income tax expense (benefit) at the federal statutory
  rate to income tax expense (benefit) at the Company's effective rate is as
  follows:

<TABLE>
<CAPTION>

                                             1995               1994            1993
                                        __________________________________________________
<S>                                     <C>                 <C>              <C>
Computed tax expense  (benefit) at
  expected statutory rate               $ 1,187,134         $   981,580      $   510,619
State income tax expense (benefit),
  net of federal tax benefits                31,879              40,623           (3,725)
Change in valuation allowance
  applicable to deferred tax assets               -            (896,000)               -
Recognition of net operating  loss                -                   -         (769,894)
Other                                        12,777              40,100            3,419
                                        __________________________________________________
Income tax expense (benefit)             $1,231,790         $   166,303      $  (259,581)
                                        __________________________________________________
Effective tax (benefit) rate                   35.1%               5.8%            (17.3)%
                                        ==================================================
</TABLE>


    Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components 
of the Company's deferred tax assets and liabilities as of June 30, 1995 and 
1994 are as follows:

                                                  1995                 1994
                                              ________________________________

Deferred Tax Assets:
Reserves for reorganization costs 
  not currently deductible                    $   375,746          $   648,855
Other reserves not currently deductible           379,901              185,703
Difference between book and taxes bases 
  of intangible assets                             43,119                    -
Other                                             103,121               61,720
                                              ________________________________
Total                                             901,887              896,278

Deferred Tax Liabilities:
Difference between book and tax bases 
  of property, plant and equipment                367,542              473,515
Other                                             152,600               38,465
                                              ________________________________
Total                                             520,142              511,980
                                              ________________________________
Net deferred tax asset                         $  381,745           $  384,298
                                              ================================

The net deferred tax asset is classified 
  in the accompanying balance sheet 
  as follows:

Deferred income
  tax asset-current                            $   708,963         $   550,715
Deferred income tax liability
  non-current                                     (327,218)           (166,417)
                                              ________________________________
                                               $   381,745          $  384,298
                                              ================================
  
     Income taxes refunded during 1994 and 1993 were $282,641, and $1,003,090,
  respectively.

               The Company is currently in discussions with the Internal
   Revenue  Service  (IRS)  regarding the examination of tax returns for
   years 1988 through 1993. The  IRS  has  proposed  adjustments to such
   returns which would result in additional taxes and  interest  due  of
   approximately  $1.5  million.  Although  the  Company does agree with
   approximately $600,000 of the proposed adjustments,  the Company does
   intend  to appeal the remainder of the assessment. The  Company  does
   not currently  anticipate any adverse financial statement effect from
   this proposed assessment  as  accruals  for  the  financial statement
   effects of these proposed adjustments have been previously recorded.
   
   Note M - Change in Accounting Estimate

               During the quarter ended March 31, 1995, an evaluation by
   the  Company resulted in a change in the estimated liability  related
   to aged  customer  credits.  This  change  resulted in a reduction of
   selling,  general  and  administrative  expenses   of   approximately
   $330,000 ($.02 cent per share, net of tax).

   Note N - Supplemental Disclosures of Cash Flow Information

               The following is a summary of supplemental cash  flow and
   noncash investing and financing information for the years ended  June
   30:


                                              1995         1994         1993
                                         _____________________________________

Cash paid for:

Interest, net of amount capitalized      $        -    $  148,649   $ 267,448
Income taxes                              1,149,750        91,000           -

Noncash investing and financing
  activities:

Conversion of debt to common stock                -     1,600,000           -
Issuance of capital lease obligation        705,977             -           -

   Note O - Industry Segment Information

               The  Company  classifies  its  operations  into  two core
   business  segments:  (1)  ophthalmic  distribution  and  (2) contract
   manufacturing.   The  ophthalmic  distribution  segment includes  the
   market and distribution of an extensive line of ophthalmic  products,
   including   diagnostic  and  therapeutic  pharmaceuticals,  over-the-
   counter products  and surgical instruments and supplies. The contract
   manufacturing  segment   consists   of  the  manufacture  of  sterile
   pharmaceuticals, including human injectable  products  and ophthalmic
   solutions.

               Selected  financial  information by industry segment  for
   fiscal years ended June 30 is presented as follows:


<TABLE>
<CAPTION>

                                           1995                1994                1993
                                    _________________________________________________________

<S>                                     <C>                 <C>                  <C>
NET SALES
Ophthalmic distribution                 $23,791,120         $20,694,134          $14,916,510
Contract manufacturing:
  Sales to unaffiliated 
   customers                              9,071,510           7,709,330            5,976,949
  Sales to affiliated customer            2,521,392           1,666,263              885,132
                                    _________________________________________________________                           
                                         35,384,022          30,069,727           21,778,591
Eliminations                             (2,521,392)         (1,666,263)            (885,132)
                                    _________________________________________________________
  Total net sales                       $32,862,630         $28,403,464          $20,893,459
                                    =========================================================
OPERATING INCOME
Ophthalmic distribution                 $ 3,775,332         $ 3,009,815          $ 1,349,672
Contract manufacturing                    1,228,127           1,155,308            1,369,513
General corporate                        (1,331,223)         (1,230,682)          (1,054,567)
                                    _________________________________________________________
  Total operating income                  3,672,236           2,934,441            1,664,618
Interest and other income
  (expense), net                           (160,665)            (47,441)            (162,798)
                                    _________________________________________________________
Income before income taxes              $ 3,511,571         $ 2,887,000           $1,501,820
                                    =========================================================


                                           1995                1994                 1993
                                    _________________________________________________________


IDENTIFIABLE ASSETS
Ophthalmic distribution               $12,881,150         $12,816,638          $ 7,686,291
Contract manufacturing                 13,085,202           8,296,048            6,441,516
General corporate                         127,428             108,525               89,882
                                    _________________________________________________________
  Total identifiable assets           $26,093,780         $21,221,211          $14,217,689
                                    =========================================================
DEPRECIATION AND
   AMORTIZATION
Ophthalmic distribution               $   338,698         $   286,575          $   219,764
Contract manufacturing                    552,083             432,635              406,911
General corporate                          56,672               6,945                4,582
                                    _________________________________________________________
  Total depreciation 
    and amortization                     $947,453         $   726,155          $   631,257
                                    ==========================================================
CAPITAL ADDITIONS
Ophthalmic distribution               $   354,262         $   465,341          $   516,802
Contract manufacturing                  5,162,177           1,215,633              175,540
General corporate                           7,670               4,115                7,890
                                    _________________________________________________________
  Total capital additions             $ 5,524,109         $ 1,685,089          $   700,232
                                    =========================================================

</TABLE>



               Fiscal   1995   operating   income   for  the  ophthalmic
   distribution  segment includes a reduction in selling,  general   and
   administrative  expense of approximately $330,000 related to a change
   in accounting estimate  for  aged customer credits.  Operating income
   for 1993 includes a reduction  in costs of reorganizing manufacturing
   operations of approximately $400,000  in  the ophthalmic distribution
   segment  and  a  $700,000  reversal of the provision  for  litigation
   judgment in the contract manufacturing segment.

               During fiscal 1995,  the  Company  reported  sales to one
   customer  which  accounted for approximately 13% of consolidated  net
   sales. The net sales attributable to this customer were accounted for
   in the contract manufacturing segment. This customer has notified the
   Company  that it will  be  transferring  the  production  of  certain
   products to  its own facilities in Puerto Rico during fiscal 1996 and
   1997.   Such  products   accounted   for  $1.4  million  in  contract
   manufacturing  sales  for  1995.   In  addition,  this  customer  has
   notified the Company that it will be discontinuing  the  sale  of two
   other  products  previously  produced  by  the contract manufacturing
   segment.  These products accounted for approximately  $2.9 million in
   sales during 1995.  The Company is presently in discussions with this
   customer  to  obtain  a  license  to  distribute these two injectable
   products.  During  1994  and 1993, the Company  did  not  derive  ten
   percent or more of its revenues from any single customer.

               The Company records  sales  between the segments at fully
   absorbed cost.

   Note P - Concentration of Credit Risk

               The Company specializes in the  manufacturing,  marketing
   and  distribution of ophthalmic products to companies and doctors  in
   the  healthcare   industry.  The  Company  performs  periodic  credit
   evaluations of its  customers' financial condition and generally does
   not require collateral. Receivables are generally due within 60 days.
   Credit   losses   have   consistently    been   within   management's
   expectations.

   Note Q - Defined Contribution Plan

               The  Company  sponsors a qualified  defined  contribution
   plan which was established  under  the provisions of Internal Revenue
   Code Section 401(k). The plan covers all employees with six months of
   employment and who are 21 years of age  or  older.  The employees can
   defer  a portion of their compensation up to the maximum  allowed  by
   the  Internal   Revenue  Code  regulations.  The  plan  provides  for
   discretionary  contributions   by   the  Company  on  behalf  of  the
   employees.  Beginning  January  1994,  the   Company   has   made   a
   discretionary  matching  contribution  on  a  quarterly basis. During
   fiscal  years  1995,  1994  and  1993, the Company recorded  expenses
   related to the plan of  $86,296, $12,274 and $63,366, respectively.



    Note R - Litigation

               On November 8, 1991, prior  to  the effective date of the
   acquisition by Akorn, a default judgment was  entered  against AMI in
   El  Paso  County, Colorado for approximately $1.8 million,  including
   accrued interest  of  $685,000,  in a product liability suit that had
   been pending since October 1985. This default judgment was the result
   of AMI being improperly defended in  the lawsuit. AMI received notice
   of this default judgment in February 1992  and recorded a reserve for
   this judgment of $1.8 million as of December  31,  1991.  The reserve
   was  increased  to  $2.1  million as of March 31, 1992 for additional
   accrued interest and accrued litigation costs.

               AMI's insurer subsequently  acknowledged  coverage in the
   amount  of  $1  million,  plus  post-judgment interest and reasonable
   attorneys' fees. As a result, during  the  fourth  quarter  of fiscal
   1992, the Company recorded a change in estimate of approximately $1.3
   million  ($0.10  per  share,  net  of  tax),  reducing  its estimated
   liability for the judgment to $800,000.

               During  fiscal  1993,  AMI's  insurer  and the plaintiffs
   agreed  to  a  settlement  within  the limits of insurance  coverage.
   Accordingly, during the quarter ended  March  31,  1993,  the Company
   reduced  the provision for the judgment by $700,000 ($.05 per  share,
   net of tax)  to  $100,000,  the approximate amount of actual expenses
   incurred by AMI in defending the judgment.

               The Company is a party in legal proceedings and potential
   claims arising in the ordinary  course  of  its  business. Management
   does not believe these matters will materially effect  the  Company's
   financial statements.

    Note S - Reorganization of Manufacturing Operations

               For the fiscal year ended June 30, 1991, the Company  had
   recorded  $7.8 million in expenses associated with the reorganization
   of its manufacturing operations, including the costs of discontinuing
   operations  at  Walnut,  then  the Company's  then only manufacturing
   subsidiary, and estimated costs of product recalls then in progress.

               Thereafter, the Company  continued  discussions  with the
   United  States  Food  and  Drug  Administration  (FDA)  regarding the
   closure  of  the  facility  and continued its review of manufacturing
   practices which existed at the  facility  during its operations. As a
   result of further reviews by Company personnel,  consultants  and the
   FDA,  the  Company  revised  its  estimate of costs of closure of the
   facility and costs of potential product  recalls  in the third fiscal
   quarter of 1992.

               In  addition,  following the AMI acquisition  in  January
   1992, the Company began the  process  of transferring the manufacture
   of its product line to the AMI facility.  At  that  time, the Company
   determined the cost of completing the FDA approval process at AMI for
   products  previously  manufactured  at  Walnut.  The total  of  these
   transfer costs, along with the revised estimates for closure costs at
   Walnut and product recalls, was $5.3 million ($.38  per share, net of
   tax)   and  was  recorded  as  costs  of  reorganizing  manufacturing
   operations during the third quarter of fiscal 1992.

               As  a  result  of  additional  historical  experience and
   further  evaluation, the Company reduced its estimated liability  for
   remaining  reorganization  costs  during  fiscal 1993. This change in
   estimate totalled approximately $404,000 ($.03 per share, net of tax)
   and is included as a reduction to reorganization  costs.  As  of June
   30,  1995  and  1994, the balance remaining in accrued reorganization
   costs  consists  primarily  of  amounts  necessary  to  complete  the
   transfer of product approvals for products previously manufactured at
   the Walnut facility.   It  is anticipated that the filing of all such
   product approvals will be completed by fiscal 1997.

   Note T - Fourth Quarter Adjustments

               As  a  consequence  of  sustained  growth  in  sales  and
   profitability, in particular  during the latter part of the year, the
   Company recorded a reduction of $384,298 ($.03 per share, net of tax)
   to its valuation allowance for  deferred  tax  assets  in  the fourth
   quarter of fiscal 1994.



 
  Item  8.  Changes in and Disagreements with Accountants on Accounting
   and Financial Disclosure.

               There  was   no   change  in  the  principal  independent
   accountant  of  the  Company or any  significant  subsidiary  of  the
   Company during the Company's fiscal years ended June 30, 1995 or June
   30, 1994.



                                   PART III


   Item 9.  Directors, Executive  Officers, Promoters and Control Persons;
   Compliance with Section 16(a) of the Exchange Act.

               The information called  for by Item 9 will be included in
   the Company's definitive Proxy Statement  for its 1995 Annual Meeting
   of  Shareholders under the caption "Election  of  Directors"  and  is
   incorporated  herein  by reference.  In addition, certain information
   concerning the Company's  executive  officers  is included in Item 1A
   (Executive Officers of the Registrant) of Part I hereof.


   Item 10.  Executive Compensation.

               The information called for by Item 10 will be included in
   the Company's definitive Proxy Statement for its  1995 Annual Meeting
   of  Shareholders  under the caption "Executive Compensation"  and  is
   incorporated herein by reference.


   Item  11.  Security Ownership of Certain Beneficial Owners and Management.

               The information called for by Item 11 will be included in
   the Company's definitive Proxy Statement for its  1995 Annual Meeting
   of  Shareholders  under  the  captions  "Principal  Shareholder"  and
   "Election of Directors" and is incorporated herein by reference.


   Item 12.  Certain Relationships and Related Transactions.

               The information called for by Item 12 will be included in
   the Company's definitive Proxy Statement for its 1995  Annual Meeting
   of Shareholders under the caption "Transactions with Shareholders and
   Directors" and is incorporated herein by reference.


   Item 13.  Exhibits and Reports on Form 8-K.

                           (a)     Exhibits.

               Those  exhibits  marked  with  an  asterisk (*) refer  to
   exhibits filed herewith and listed in the Exhibit Index which appears
   immediately  before  the first such exhibit; the other  exhibits  are
   incorporated herein by reference, as indicated in the following list.

(2.0)  Agreement and Plan  of  Merger  dated December 17, 1991, by and
       among the Company, Aksub, Inc., Taylor Pharmacal Company ("Taylor,"
       an Illinois corporation and wholly-owned subsidiary of the Company),
       and certain shareholders of Taylor Pharmacal Company, incorporated by
       reference to the Company's report on Form 8-K dated January 15, 1992.

(3.1)  Restated  Articles  of  Incorporation  of  the  Company  dated
       September 6, 1991, incorporated by reference to Exhibit  3.1 to the
       Company's  report  on  Form  10-K  for the fiscal year ended June 30,
       1991.

(3.2)  By-laws of the Company as amended and restated through July 23,
       1993, incorporated herein by reference to Exhibit 3.2 to the
       Company's report on Form 10-KSB for the fiscal year ended June 30,
       1993.

(4.1)  Specimen Common Stock Certificate, incorporated by reference to
       Exhibit 4.1 to the Company's report on Form 10-K for the fiscal year
       ended June 30, 1988.
   
(10.1) Akorn, Inc. Savings and Retirement Plan effective July 1, 1984,
       incorporated by reference to Form 10-K for the fiscal year ended June
       30, 1987.

(10.2) Stock Purchase Agreement dated November 15, 1990 by and between
       the John N. Kapoor Trust dated September 20, 1989, and  the  Company,
       incorporated by reference to Exhibit 10.21 to the Company's report on
       Form 10-K for the fiscal year ended June 30, 1991.

(10.3) Common  Stock  Purchase Warrant dated November 15, 1990 between
       the John N. Kapoor Trust  dated  September  20, 1989 and the Company,
       incorporated by reference to Exhibit 10.22 to the Company's report on
       Form 10-K for the fiscal year ended June 30, 1991.

(10.4) Consulting Agreement dated November 15,  1990 by and between E.
       J. Financial Enterprises, Inc., a Delaware corporation,  and  the
       Company, incorporated by reference to  Exhibit 10.23 to the Company's
       report on Form 10-K for the fiscal year ended June 30, 1991.

(10.5) Stock Registration Rights Agreement dated November 15, 1990 by
       and between the John N. Kapoor Trust dated September 20, 1989 and the
       Company, incorporated by reference to Exhibit  10.24 to the Company's
       report on Form 10-K for the fiscal year ended June 30, 1991.

(10.6) Agreement  dated  February 15, 1991 amending  Stock  Purchase
       Agreement dated November 15,  1990  by and between the John N. Kapoor
       Trust  dated  September 20, 1989, and the  Company,  incorporated  by
       reference to Exhibit  10.25  to the Company's report on Form 10-K for
       the fiscal year ended June 30, 1991.

(10.7) Akorn, Inc. Stock Option  Plan  for Directors, incorporated by
       reference to Exhibit 4.4 to the Company's  registration  statement on
       Form S-8, registration number 33-24970.

(10.8) Form of Akorn, Inc. Letter Agreement between the Company  and
       its directors under the Stock Option Plan for Directors, incorporated
       by reference  to  Exhibit 4.5 to the Company's registration statement
       on Form S-8, registration number 33-24970.

(10.9) Akorn, Inc.  1988 Incentive Compensation Program, incorporated
       by reference to Exhibit  4.6  to the Company's registration statement
       on Form S-8, registration number 33-24970.

(10.10) Form of Akorn, Inc., Letter Agreement between the Company and
        its key employees and executives under the 1988 Incentive
        Compensation Program, incorporated by reference to Exhibit 4.7 to the
        Company's registration statement on Form S-8, registration number 33-
        24970.

(10.11) Amended and Restated Akorn, Inc. 1988 Incentive Compensation
        Program, incorporated  by reference to Exhibit 10.32 to the Company's
        report on Form 10-K for the fiscal year ended June 30, 1992.

(10.12) Amendment No. 1  to the Amended and Restated Akorn, Inc. 1988
        Incentive Compensation Program,  incorporated by reference to Exhibit
        10.33 to the Company's report on Form  10-K for the fiscal year ended
        June 30, 1992.

(10.13) Form  of  Stock  Option Agreement under  Amendment  No.  1  to
        Amended and Restated Incentive  Compensation  Program,  incorporated
        herein by reference to the Company's registration statement on Form
        S-8, registration number 33-70686.

(10.14) 1991  Akorn,  Inc.   Stock   Option   Plan   for  Directors,
        incorporated by reference to Exhibit 4.3 to the Company's
        registration statement on Form S-8, registration number 33-44785.

(10.15) Form  of  Pledge  Agreement between  the  Company  and  each
        shareholder of Taylor, incorporated  by  reference to Exhibit 10.1 of
        the Company's report on Form 8-K dated January 15, 1992.

(10.16) Form of Employment Agreement between  Taylor  and  five  key
        employees, incorporated by reference to Exhibit 10.2 of the Company's
        report on Form 8-K dated January 15, 1992.

(10.17) Agreement  dated January 15, 1992 among the Company, the John
        N. Kapoor Trust dated  September  20,  1989,  John  N.  Kapoor and EJ
        Financial  Enterprises,  Inc.,  incorporated by reference to  Exhibit
        10.37 of the Company's report on  Form 10-K for the fiscal year ended
        June 30, 1992.

(10.18) Business Promissory Note of  Taylor payable to First National
        Bank of Decatur and Loan Modification  Agreement  dated  January  15,
        1992  by  and  between  Taylor  and  First  National Bank of Decatur,
        incorporated by reference to Exhibit 10.4 of  the Company's report on
        Form 8-K dated January 15, 1992.

(10.19) Amendment and Restated Lease Agreement dated January 15, 1991
        between Taylor Building Corporation as Landlord and Taylor as tenant,
        incorporated by reference to Exhibit 10.5 of the  Company's report on
        Form 8-K dated January 15, 1992.

(10.20) Loan Agreement dated September 3, 1992, between  the  Company
        and  the  John N. Kapoor Trust dated September 20, 1989, incorporated
        by reference  to  Exhibit  No.  6  to Amendment No. 3 to Schedule 13D
        filed by John N. Kapoor and the John  N. Kapoor Trust dated September
        20, 1989, dated September 10, 1992.

(10.21) Common Stock Purchase Warrant dated September 3, 1992, issued
        by the Company to the John N. Kapoor Trust  dated September 20, 1989,
        incorporated  by reference to Exhibit No. 7 to  Amendment  No.  3  to
        Schedule 13D, dated  September  10, 1992, filed by John N. Kapoor and
        the John N. Kapoor Trust dated September 20, 1989.

(10.22)  Agreement,  Waiver and Release,  dated  September  3,  1992,
         between the Company and  the John N. Kapoor Trust dated September 20,
         1989, incorporated by reference  to  Exhibit  10.44  of the Company's
         report on Form 10-K for the fiscal year ended June 30, 1992.

(10.23)*  Amendment No. 1 to Agreement dated January 15,  1992  among
         the  Company, the John N. Kapoor Trust dated September 20, 1989, John
         N. Kapoor and EJ Financial Enterprises, Inc.

(11.1)*  Computation of Earnings Per Share.

(21.1)* Subsidiaries of the Company.

(23.1)* Consent of Deloitte & Touche LLP

(24.1)* Power of Attorney of Daniel E. Bruhl, M.D.

(24.2)* Power of Attorney of J. Ed Campbell, M.D.

(24.3)* Power of Attorney of George S. Ellis, M.D.

(24.4)* Power of Attorney of Doyle S. Gaw.

(24.5)* Power of Attorney of John N. Kapoor, Ph.D.

(24.6)* Power of Attorney of David H. Turner, M.D.

(24.7)* Power of Attorney of Lawrence A. Yannuzzi, M.D.

        (b)     Reports on Form 8-K.
     
     None


<PAGE>


                             SIGNATURES

     In accordance with Section 13 or 15(d) of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                      AKORN, INC.

                                      By:  /s/ Barry D. LeBlanc
                                          ____________________________
                                              Barry D. LeBlanc
                                                President and
                                          Chief Executive Officer

Date:  September 15, 1995

     In accordance with the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant,
and in the capacities and on the dates indicated.

     Signature                       Title                   Date
_________________________   ________________________  ______________________

/s/ Barry D. LeBlanc          President, Chief         September 15, 1995
________________________    Executive Officer and
  Barry D. LeBlanc           Director (Principal
                             Executive Officer)

/s/  Eric M. Wingerter       Vice President -          September 15, 1995 
________________________   Finance and Administration
  Eric M. Wingerter         (Principal Financial
                            Officer and Prinicpal
                             Acounting Officer
          
          *
________________________        Director                September 15, 1995
Daniel E. Bruhl, M.D.

          *
________________________        Director                September 15, 1995
J. Ed Campbell, M.D.


          *
________________________        Director                September 15, 1995
George S. Ellis, M.D.


          *
________________________        Director                September 15, 1995
Doyle S. Gaw


          *
_________________________       Director                September 15, 1995
John N. Kapoor, M.D.


          *
_________________________       Director                September 15, 1995
David H. Turner, M.D.


          *
_________________________       Director                September 15, 1995
Lawrence A. Yannuzzi, M.D.


*By: /s/ Barry D. LeBlanc
    _______________________
        Barry D. LeBlanc
        Attorney-in-fact







                    AMENDMENT NO. 1 TO JANUARY 15, 1992 AGREEMENT


               This  Agreement  dated  as  of  August 2,  1995 (this
          "Agreement")  is  entered  into  by  and  among  Akorn,  Inc.,  a
          Louisiana  corporation  ("Akorn"), the John N. Kapoor Trust dated
          September 20, 1989, as amended,  (the  "Trust"),  John  N. Kapoor
          ("Dr.  Kapoor"),  and  EJ Financial Enterprises, Inc., a Delaware
          corporation ("EJ Financial").


                                  W I T N E S S T H:


               WHEREAS, the parties  to  this Agreement are parties to that
          certain  Agreement  dated  as  of January  15,  1992  (the  "1992
          Agreement") and desire to amend  such Agreement to the extent set
          forth herein.

               NOW,  THEREFORE,  in  consideration  of  the  covenants  and
          agreements contained herein, the parties hereto agree as follows:

          Section 1.Definitions

               The  capitalized  terms  used   in  this  Agreement,  unless
          otherwise defined herein, have the meanings  assigned  to them in
          the 1992 Agreement.

          Section 2.  Amendment to Section 2(a)(ii) of 1992 Agreement

               Section  2(a)(ii) of the 1992 Agreement, which provides  for
          the forfeiture  by  EJ of 125,000 shares of Akorn common stock on
          the fourth anniversary  of  the Possible Transaction (January 15,
          1996) unless on or before such  date  the closing price per share
          of  the  common stock of Akorn on any business  day  during  such
          period is  $5.00 or greater, is hereby amended (a) to
 extend such
          forfeiture period  to  the close of business on January 15, 1998,
          the  sixth  anniversary  of  the  consummation  of  the  Possible
          Transaction, and (b) to provide  that  such  forfeiture shall not
          occur if prior to the end of the forfeiture period  (i)  a person
          or group of persons acting in concert, other than Dr. Kapoor or a
          person or persons with whom Dr. Kapoor is acting in concert, as a
          result of action taken by or on behalf of such person or persons,
          becomes  the beneficial owner of securities having more than  50%
          of the voting  power  of all of the outstanding voting securities
          of Akorn and (ii) no transaction  has  been approved by the Akorn
          Board  of  Directors  prior to or in anticipation  of  the  event
          described in clause (i)  as  a  result  of  which the outstanding
          shares  of  Akorn common stock have been or are  proposed  to  be
          converted into  or  exchanged for cash or other property having a
          value, in the reasonable judgment of the Akorn Board of Directors
          at the time of its approval  of such transaction, of less than $5
          per  share.   As  used  in  the  preceding   sentence   the  term
          "beneficial owner" has the meaning set forth in Rule 13d-3  under
          the   Securities   Exchange   Act   of   1934,  as  amended.   In
          consideration  of  such amendment Dr. Kapoor  does  hereby  waive
          payments in the aggregate  amount of $40,000 otherwise payable to
          him  by  Akorn  for  serving as  Chairman  of  Akorn's  Board  of
          Directors.

          Section 3.Survival of 1992 Agreement

               Except as set forth  expressly  in  this Agreement, the 1992
          Agreement remains in full force and effect and shall be deemed to
          include this Agreement as though set forth in full therein.

               IN WITNESS WHEREOF, each party has executed  or  has  caused
          this  Agreement  to  be  executed  by  its  respective officer or
          trustee,  thereunto duly authorized, as of the  day  first  above
          written.


                                             AKORN, INC.


                                             By: /s/ Barry D. LeBlanc
                                                __________________________
                                                Barry D. LeBlanc, President


                                             JOHN  N.  KAPOOR  TRUST, dated
                                             September 20, 1989



                                             By: /s/ John N. Kapoor
                                                ___________________________
                                                John N. Kapoor, not
                                                individually, but solely as
                                                trustee


                                             EJ FINANCIAL ENTERPRISES, INC.



                                             By: /s/ John N. Kapoor
                                                __________________________
                                                John N. Kapoor, President



                                              /s/ John N. Kapoor
                                             ____________________________
                                             John N. Kapoor




                                                               Exhibit 11.1

                               COMPUTATION OF NET INCOME PER SHARE

                              (In Thousands, Except Per Share Data)


                                                       Year Ended June 30,

                                                       1995           1994
                                                  ____________________________
 Earnings
   Income applicable to common stock              $     2,280        $  2,721
                                                  ============================
 Shares
   Weighted average number of shares outstanding       14,836          14,785
   Additional shares assuming conversion of options
   and warrants up to 20% of shares outstanding           563             526
                                                  ____________________________
            Pro forma shares                            15,399         15,311
                                                  ============================
          Net income per share                    $        .15       $    .18
                                                  ============================







                                                         Exhibit   21.1

                             SUBSIDIARIES OF AKORN, INC.



                      Name                           State of Incorporation
                  ______________                    ________________________

    1.    Akorn Manufacturing, Inc.                       Illinois

    2.    Spectrum Scientific Pharmaceuticals, Inc.      Louisiana

    3.    Walnut Pharmaceuticals, Inc.                   Louisiana

    4.    Compass Vision, Inc.                            Louisiana






                                                    Exhibit 23.1

INDEPENDENT AUDITORS CONSENT

We consent to the incorporation by refrence in Registration Statement Nos.
33-44785, 33-24970 and 33-70686 of Akorn, Inc. on Form S-8 of our report
dated September 1, 1995 (which expresses an unqualified opinion and includes
an explanatory paragraph relating to the Company's change in its method of
accounting for income taxes in 1994 and the Company's  change in its method
of accounting for certain investments in debt and equity securities in 1995),
appearing in this Annual Report on Form 10-KSB of Akorn, Inc. for the year
ended June 30, 1995.



/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP

New Orleans, Louisiana
September 22, 1995












                                                       EXHIBIT 25.1




                                  POWER OF ATTORNEY

                              (Form 10-KSB, FYE 6/30/95)

               KNOW  ALL  MEN  BY  THESE  PRESENTS,  that  the  undersigned
          director  of  Akorn,  Inc. (the "Company") does hereby constitute
          and appoint Barry D. LeBlanc,  and  Eric M. Wingerter, and anyone
          of them acting in the absence of the  others, his true and lawful
          attorney-in-fact and agent, with full power  of substitution, for
          him and in his name, place and stead, in any and  all capacities,
          to sign the Company's Annual Report on Form 10-KSB for the fiscal
          year ended June 30, 1995, to sign any and all amendments thereto,
          and  to  file  the  same  with  all  exhibits thereto, and  other
          documents  in  connection  therewith,  with  the  Securities  and
          Exchange  Commission,  granting  unto said  attorney-in-fact  and
          agent full power and authority to  do  and perform each and every
          act and thing requisite and necessary to be done, as fully to all
          intents and purposes as he might or could  do  in  person, hereby
          ratifying and confirming all that said attorney-in-fact and agent
          or his substitutes may lawfully do or cause to be done  by virtue
          hereof.

               This  instrument is executed by the undersigned on the  date
          indicated below.



                                         /s/ Daniel E. Bruhl, M.D.
                                        ____________________________
                                        Daniel E. Bruhl, M.D.


                                              July 26, 1995
                                        _____________________________
                                                 (Date)







                                                       EXHIBIT 25.2




                                  POWER OF ATTORNEY

                              (Form 10-KSB, FYE 6/30/95)

               KNOW  ALL  MEN  BY  THESE  PRESENTS,  that  the  undersigned
          director of  Akorn,  Inc.  (the "Company") does hereby constitute
          and appoint Barry D. LeBlanc,  and  Eric M. Wingerter, and anyone
          of them acting in the absence of the  others, his true and lawful
          attorney-in-fact and agent, with full power  of substitution, for
          him and in his name, place and stead, in any and  all capacities,
          to sign the Company's Annual Report on Form 10-KSB for the fiscal
          year ended June 30, 1995, to sign any and all amendments thereto,
          and  to  file  the  same  with  all  exhibits thereto, and  other
          documents  in  connection  therewith,  with  the  Securities  and
          Exchange  Commission,  granting  unto said  attorney-in-fact  and
          agent full power and authority to  do  and perform each and every
          act and thing requisite and necessary to be done, as fully to all
          intents and purposes as he might or could  do  in  person, hereby
          ratifying and confirming all that said attorney-in-fact and agent
          or his substitutes may lawfully do or cause to be done  by virtue
          hereof.

               This  instrument is executed by the undersigned on the  date
          indicated below.



                                        /s/ J. Ed Campbell, M.D.
                                        _____________________________
                                         J. Ed Campbell, M.D.

                                             July 26, 1995
                                        _____________________________
                                                 (Date)





                                                       EXHIBIT 25.3




                                  POWER OF ATTORNEY

                              (Form 10-KSB, FYE 6/30/95)

               KNOW  ALL  MEN  BY  THESE  PRESENTS,  that  the  undersigned
          director of  Akorn,  Inc.  (the "Company") does hereby constitute
          and appoint Barry D. LeBlanc,  and  Eric M. Wingerter, and anyone
          of them acting in the absence of the  others, his true and lawful
          attorney-in-fact and agent, with full power  of substitution, for
          him and in his name, place and stead, in any and  all capacities,
          to sign the Company's Annual Report on Form 10-KSB for the fiscal
          year ended June 30, 1995, to sign any and all amendments thereto,
          and  to  file  the  same  with  all  exhibits thereto, and  other
          documents  in  connection  therewith,  with  the  Securities  and
          Exchange  Commission,  granting  unto said  attorney-in-fact  and
          agent full power and authority to  do  and perform each and every
          act and thing requisite and necessary to be done, as fully to all
          intents and purposes as he might or could  do  in  person, hereby
          ratifying and confirming all that said attorney-in-fact and agent
          or his substitutes may lawfully do or cause to be done  by virtue
          hereof.

               This  instrument is executed by the undersigned on the  date
          indicated below.



                                        /s/ George S. Ellis, M.D.
                                        _____________________________
                                        George S. Ellis, M.D.


                                              July 25, 1995
                                        _____________________________
                                                (Date)








                                                       EXHIBIT 25.4




                                  POWER OF ATTORNEY

                              (Form 10-KSB, FYE 6/30/95)

               KNOW  ALL  MEN  BY  THESE  PRESENTS,  that  the  undersigned
          director of  Akorn,  Inc.  (the "Company") does hereby constitute
          and appoint Barry D. LeBlanc,  and  Eric M. Wingerter, and anyone
          of them acting in the absence of the  others, his true and lawful
          attorney-in-fact and agent, with full power  of substitution, for
          him and in his name, place and stead, in any and  all capacities,
          to sign the Company's Annual Report on Form 10-KSB for the fiscal
          year ended June 30, 1995, to sign any and all amendments thereto,
          and  to  file  the  same  with  all  exhibits thereto, and  other
          documents  in  connection  therewith,  with  the  Securities  and
          Exchange  Commission,  granting  unto said  attorney-in-fact  and
          agent full power and authority to  do  and perform each and every
          act and thing requisite and necessary to be done, as fully to all
          intents and purposes as he might or could  do  in  person, hereby
          ratifying and confirming all that said attorney-in-fact and agent
          or his substitutes may lawfully do or cause to be done  by virtue
          hereof.

               This  instrument is executed by the undersigned on the  date
          indicated below.



                                        /s/ Doyle S. Gaw
                                        __________________________
                                        Doyle S. Gaw

                                              July 25, 1995
                                        __________________________
                                               (Date)







                                                       EXHIBIT 25.5




                                  POWER OF ATTORNEY

                              (Form 10-KSB, FYE 6/30/95)

               KNOW  ALL  MEN  BY  THESE  PRESENTS,  that  the  undersigned
          director of  Akorn,  Inc.  (the "Company") does hereby constitute
          and appoint Barry D. LeBlanc,  and  Eric M. Wingerter, and anyone
          of them acting in the absence of the  others, his true and lawful
          attorney-in-fact and agent, with full power  of substitution, for
          him and in his name, place and stead, in any and  all capacities,
          to sign the Company's Annual Report on Form 10-KSB for the fiscal
          year ended June 30, 1995, to sign any and all amendments thereto,
          and  to  file  the  same  with  all  exhibits thereto, and  other
          documents  in  connection  therewith,  with  the  Securities  and
          Exchange  Commission,  granting  unto said  attorney-in-fact  and
          agent full power and authority to  do  and perform each and every
          act and thing requisite and necessary to be done, as fully to all
          intents and purposes as he might or could  do  in  person, hereby
          ratifying and confirming all that said attorney-in-fact and agent
          or his substitutes may lawfully do or cause to be done  by virtue
          hereof.

               This  instrument is executed by the undersigned on the  date
          indicated below.



                                        /s/ John N. Kapoor, Ph.D.
                                        _______________________________
                                        John N. Kapoor, Ph.D.

                                              August 3, 1995
                                        _______________________________
                                                  (Date)








                                                       EXHIBIT 25.6




                                  POWER OF ATTORNEY

                              (Form 10-KSB, FYE 6/30/95)

               KNOW  ALL  MEN  BY  THESE  PRESENTS,  that  the  undersigned
          director of  Akorn,  Inc.  (the "Company") does hereby constitute
          and appoint Barry D. LeBlanc,  and  Eric M. Wingerter, and anyone
          of them acting in the absence of the  others, his true and lawful
          attorney-in-fact and agent, with full power  of substitution, for
          him and in his name, place and stead, in any and  all capacities,
          to sign the Company's Annual Report on Form 10-KSB for the fiscal
          year ended June 30, 1995, to sign any and all amendments thereto,
          and  to  file  the  same  with  all  exhibits thereto, and  other
          documents  in  connection  therewith,  with  the  Securities  and
          Exchange  Commission,  granting  unto said  attorney-in-fact  and
          agent full power and authority to  do  and perform each and every
          act and thing requisite and necessary to be done, as fully to all
          intents and purposes as he might or could  do  in  person, hereby
          ratifying and confirming all that said attorney-in-fact and agent
          or his substitutes may lawfully do or cause to be done  by virtue
          hereof.

               This  instrument is executed by the undersigned on the  date
          indicated below.



                                        /s/ David H. Turner, M.D.
                                        ____________________________
                                        David H. Turner, M.D.

                                           July 25, 1995
                                        _____________________________
                                                (Date)






                                                       EXHIBIT 25.7




                                  POWER OF ATTORNEY

                              (Form 10-KSB, FYE 6/30/95)

               KNOW  ALL  MEN  BY  THESE  PRESENTS,  that  the  undersigned
          director of  Akorn,  Inc.  (the "Company") does hereby constitute
          and appoint Barry D. LeBlanc,  and  Eric M. Wingerter, and anyone
          of them acting in the absence of the  others, his true and lawful
          attorney-in-fact and agent, with full power  of substitution, for
          him and in his name, place and stead, in any and  all capacities,
          to sign the Company's Annual Report on Form 10-KSB for the fiscal
          year ended June 30, 1995, to sign any and all amendments thereto,
          and  to  file  the  same  with  all  exhibits thereto, and  other
          documents  in  connection  therewith,  with  the  Securities  and
          Exchange  Commission,  granting  unto said  attorney-in-fact  and
          agent full power and authority to  do  and perform each and every
          act and thing requisite and necessary to be done, as fully to all
          intents and purposes as he might or could  do  in  person, hereby
          ratifying and confirming all that said attorney-in-fact and agent
          or his substitutes may lawfully do or cause to be done  by virtue
          hereof.

               This  instrument is executed by the undersigned on the  date
          indicated below.



                                        /s/ Lawrence A. Yannuzzi, M.D.
                                        ________________________________
                                        Lawrence A. Yannuzzi, M.D.

                                               July 26, 1995
                                        _________________________________
                                                    (Date)









<TABLE> <S> <C>

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION FROM CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 1995 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
       
<S>                             <C>
<PERIOD-TYPE>                   YEAR
<FISCAL-YEAR-END>                          JUN-30-1995
<PERIOD-END>                               JUN-30-1995
<CASH>                                         767,286
<SECURITIES>                                 1,568,793
<RECEIVABLES>                                5,185,082
<ALLOWANCES>                                 (266,329)
<INVENTORY>                                  5,979,707
<CURRENT-ASSETS>                            14,302,877
<PP&E>                                      17,746,688
<DEPRECIATION>                             (6,750,743)
<TOTAL-ASSETS>                              26,255,921
<CURRENT-LIABILITIES>                        6,400,205
<BONDS>                                      3,900,389
<COMMON>                                    13,701,845
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<OTHER-SE>                                   1,296,439
<TOTAL-LIABILITY-AND-EQUITY>                26,255,921
<SALES>                                     32,862,630
<TOTAL-REVENUES>                            32,862,630
<CGS>                                       19,642,837
<TOTAL-COSTS>                               19,642,837
<OTHER-EXPENSES>                             9,547,557
<LOSS-PROVISION>                                60,000
<INTEREST-EXPENSE>                                   0
<INCOME-PRETAX>                              3,511,571
<INCOME-TAX>                                 1,231,790
<INCOME-CONTINUING>                          2,279,781
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                 2,279,781
<EPS-PRIMARY>                                      .15
<EPS-DILUTED>                                        0
        


</TABLE>