2001 Highlights

• Q4 Sales Increase 47% to $44,013,000
• Q4 Gross Profit Increases 58% to $28,459,000
• Q4 Net Income Increases 180% to $9,826,000, or $0.34 per Diluted Share
• 2001 Sales Increase 45% to $150,134,000
• 2001 Net Income Increases 159% to $25,994,000, or $0.99 per Diluted Share
• Taro Closed Public Offering of 5,750,000 Ordinary Shares in Q4 2001

Hawthorne, New York, February 21, 2002 - Taro Pharmaceutical Industries Ltd. (NASDAQ/NMS: TARO) today reported record fourth quarter and year end results.

Fourth Quarter Results
The Company’s 2001 financial performance reflects profitability from both the introduction of new products and growth of its baseline business. Sales for the fourth quarter of 2001 increased 47% to $44,013,000, compared with sales of $29,951,000 for the fourth quarter of 2000.

Net income for the fourth quarter of 2001 increased 180% to $9,826,000, or $0.34 per diluted share, based on 29,252,457 weighted average shares outstanding, compared with $3,514,000, or $0.14 per diluted share, based on 24,578,564 weighted average shares outstanding, for the fourth quarter of 2000. Per share data are adjusted to reflect a two-for-one stock split in the form of a stock dividend paid on July 26, 2001.

Taro’s gross profit in the fourth quarter of 2001 increased 58% to $28,459,000, or 65% of sales, from $18,014,000, or 60% of sales, for the fourth quarter of 2000. Operating income before R&D expenses increased 88% to $17,007,000, or 39% of sales, up from $9,034,000, or 30% of sales, for the fourth quarter of 2000.

Selling, general and administrative expenses for the fourth quarter of 2001 were $11,452,000, or 26% of sales, compared with $8,980,000, or 30% of sales, in the fourth quarter of 2000. R&D expenses for the fourth quarter of 2001 were $5,811,000, compared with $3,866,000, or 13% of sales, for both periods.

Year End Results
"Taro’s performance results from our long-term strategy of investment in R&D and infrastructure," said Barrie Levitt, M.D., Chairman of the Company. "This strategy is the basis for the operational leverage we achieved in 2001, during which a 45% increase in sales produced a 159% increase in earnings."

Net sales for the year ended December 31, 2001 increased 45% to $150,134,000, compared with sales of $103,797,000 in 2000. Net income for 2001 increased 159% to $25,994,000, or $0.99 per diluted share, based on 26,301,929 weighted average shares outstanding, compared with net income of $10,027,000, or $0.42 per diluted share, based on 23,864,020 weighted average shares outstanding, in 2000.

Gross profit for the year ended December 31, 2001 was $95,398,000, or 64% of sales, compared with $62,591,000, or 60% of sales for the prior year. Operating income before R&D expenses was $52,408,000, or 35% of sales, compared with $30,689,000, or 30% of sales, for the prior year.

Selling, general and administrative expenses for the year ended December 31, 2001 were $42,990,000, or 29% of sales, compared with $31,902,000, or 31% of sales, in 2000. R&D expenses for 2001 were $19,633,000, or 13% of sales, compared with $14,593,000, or 14% of sales, in the prior year.

Strong Balance Sheet
On October 5, 2001, Taro completed a public offering which resulted in net proceeds to the Company in excess of $126,000,000.

At December 31, 2001, total assets were $307,762,000, compared with $120,446,000 at the end of 2000. Cash and cash equivalents were $150,732,000, compared with $7,245,000 at the end of 2000. Total liabilities were $88,622,000, compared with $70,064,000 at the end of the prior year. Shareholders’ equity was $218,364,000, compared with $50,214,000 at December 31, 2000.

"The public offering we completed in 2001 put Taro in an excellent financial position to take advantage of new opportunities for growth," Dr. Levitt stated.

Approvals in 2001
In 2001 Taro received approval of several Abbreviated New Drug Applications from the U.S. Food and Drug Administration, including the first generic approval for Clotrimazole and Betamethasone Dipropionate Cream ("CB Cream"). CB Cream is bioequivalent to Schering Plough’s Lotrisone® Cream, a combination antifungal/corticosteroid used in the treatment of a variety of dermatological conditions.

Taro received additional approvals for the cardiovascular products Amiodarone Hydrochloride Tablets, 200 mg (bioequivalent to Wyeth-Ayerst Laboratories’ Cordarone® ), Enalapril Maleate Tablets in four strengths (bioequivalent to Merck’s Vasotec® ), as well as Enalapril Maleate and Hydrochlorothiazide Tablets in two strengths (bioequivalent to Merck’s Vaseretic® Tablets).

Acquisition of DermovateÒ Brand in Canada
In October 2001, Taro announced that its Canadian subsidiary, Taro Pharmaceuticals Inc., acquired the Canadian rights to Dermovate® (clobetasol propionate 0.05%) Cream, Ointment and Topical Solution from GlaxoSmithKline. Dermovate® is an ultra-high potency topical corticosteroid used in treating dermatological conditions such as psoriasis and eczema.

The Canadian market size of Dermovate® and generic clobetasol propionate products is estimated to be approximately U.S. $3.8 million according to industry sources. The Dermovate® line is currently being detailed by Taro’s professional dermatology field sales force in Canada.

Warfarin Approved in the UK
Early in the first quarter of 2002, Taro announced that it received approval in the UK for Warfarin Tablets in the four strengths currently in use in that country. The annual market in the UK for Warfarin Tablets is estimated by industry sources to be approximately U.S. $30 million.

Warfarin is an anticoagulant indicated for the prevention and treatment of blood clotting disorders and in the prevention of thromboembolic complications associated with heart attacks and certain rhythm disorders of the heart such as atrial fibrillation.

Taro currently markets Warfarin Tablets in nine strengths in the U.S., Canada, and Israel. The Company has manufactured Warfarin Tablets in Israel for more than 40 years under the brand name Coumadin®* and will market Warfarin Tablets in the UK under the generic name.

Proprietary Research
The Company’s proprietary research program includes NonSpil™ , a patented, spill-resistant liquid delivery system which has potential applications in a wide variety of both prescription and over-the-counter pharmaceutical products. The Company holds several patents relating to this unique delivery system and has additional patents pending in the U.S. and worldwide.

Taro also continues development of T2000, the first of a class of patented, non-sedating barbiturates. Taro is currently nearing the end of Phase I clinical testing for the product. While there can be no assurances of successful development or commercialization of any member of this new class of barbiturates, T2000 has not produced significant toxicity in humans during testing conducted to date.

Outlook
"Taro’s growing base business and new products approved in the U.S., Israel, Canada and the UK have produced continued improvement in the Company’s financial results," said Dr. Levitt. "Taro’s successful research programs, the strength of our marketing and manufacturing organization, and the business development opportunities afforded by our public offering, provide the basis for our confidence in Taro’s future."

The Company currently has 12 filings with the U.S. Food and Drug Administration and multiple filings with regulatory agencies around the world.

Conference Call
The Company will conduct a conference call to discuss fourth quarter and year end results on Thursday, February 21 at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time).

The call will be available live via the Internet by accessing www.taro.com. For those who cannot listen to the live broadcast, an online replay will be available through February 27, 2002, on www.taro.com. A telephone replay will also be available through February 27, 2002, by dialing 800-428-6051 (domestic U.S.) or 973-709-2089 (international) and entering the passcode 231333 when prompted.

Taro is a multinational, science-based pharmaceutical company, dedicated to meeting the needs of its customers through the discovery, development, manufacturing and marketing of the highest quality healthcare products.

For further information on Taro Pharmaceutical Industries Ltd., please visit the Company’s website at www.taro.com.

Certain statements in this release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, comments regarding Taro’s expectations regarding operational leverage and profitability, business development and other growth opportunities, use of proceeds from the Company’s 2001 public offering, research programs, the growth of the Company’s base business, contribution of new products, and international operations. Although Taro believes the expectations reflected in such forward-looking statements to be based on reasonable assumptions, it can give no assurance that its expectations will be attained. Factors that could cause actual results to differ include industry and market conditions, slower than anticipated regulatory approval of new generic products, other regulatory actions, slower than anticipated penetration of new markets, changes in the Company’s financial position, and other risks detailed from time to time in the Company’s SEC reports, including its Prospectus dated October 1, 2001, and its 2000 Annual Report on Form 20-F.

* In Israel, Coumadin® is a registered trademark of Taro Pharmaceuticals U.S.A., Inc. Elsewhere in the world, Coumadin® is a registered trademark of the DuPont Pharmaceuticals Company. There is no affiliation between the two companies.