Message to Stockholders
   
The strong operating performance of American Home Products in 2000 reflects AHP's successful evolution into a world leader in research-based pharmaceutical products. In June, we completed the divestiture of our agricultural products business. AHP now is completely focused on pharmaceuticals, consumer health care products and animal health products. Each of these businesses achieved excellent results during the year, enabling our Company to increase net revenue, on a pro forma basis, by 13 percent. With leading products in important market segments and strengths in product discovery, development, manufacturing and marketing, we anticipate solid growth for AHP well into the future.

AHP's revenue growth in 2000 underscores the strength of our global pharmaceutical business. Today, more than 81 percent of net revenues are from pharmaceuticals - up from 51 percent just 10 years ago.

AHP's stock price in 2000 benefited from the Company's operating performance, out-pacing major competitors in the pharmaceutical industry, as well as the Standard & Poor's 500, the Dow Jones Industrial Average and the NASDAQ, by a wide margin.

AHP's performance in new product launches was among the most impressive in the industry. Wyeth-Ayerst, our ethical pharma-ceutical division, received regulatory approval for seven major pharmaceutical and vaccine products from June 1999 to May 2000, the best new product approval record in the industry during that time period. These innovative new products reflect success from all three of our discovery and development platforms: small molecules, proteins and vaccines.

We took aggressive action during 2000 to move toward resolution of the diet drug litigation involving AHP. In August, AHP received trial court approval of the negotiated nationwide, class action settlement of the litigation, which covers the vast majority of the individuals who took AHP's diet drugs. Among patients who opted out of the settlement, approximately 80 percent of claims now have been settled or are subject to settlement agreements. In the fourth quarter of 2000, the Company recorded an additional charge of $7.5 billion related to the litigation, bringing the total charges for the diet drug litigation to $12.25 billion. We are confident that no further charges will be required. Although this total is more than originally expected, we believe it is in the best interest of AHP stockholders to resolve this litigation quickly. By working to put this matter behind us, our strong pipeline and accelerating operating momentum no longer will be overshadowed, and we can devote full attention to growing our pharmaceutical business and capitalizing on our many global opportunities.
.
Net Revenue and Results of Operations

AHP's worldwide net revenue for 2000 reached $13.3 billion, an increase of 13 percent over 1999 pro forma net revenue. Excluding the negative impact of foreign exchange, pro forma worldwide net revenue increased 16 percent for the year. This increase was due primarily to growth in pro forma global pharmaceutical net revenue of 15 percent in 2000.

Excluding the diet drug charge and other unusual items detailed in the financial section of this report and including the dilutive effect of common stock equivalents, both income and diluted earnings per share from continuing operations increased 18 percent - from $2.13 billion and $1.61, respectively, for 1999 to $2.51 billion and $1.90, respectively, for 2000.

Also in 2000, we reached an agreement with Immunex Corporation-in which AHP was the majority stockholder-to participate in a stock offering that would allow Immunex, our partner in the promotion of Enbrel, to raise funds for additional research and manufacturing capabilities while enabling AHP to realize a portion of the gain on its highly successful investment in the company. In November, we completed the sale of more than 60 million shares of Immunex stock in an underwritten public offering, reducing AHP's ownership of outstanding shares from 55 percent to approximately 41 percent at the end of 2000. The Company recorded an after-tax gain of $1.4 billion related to the sale. AHP continues to be a major participant in the future development and growth of Immunex. Importantly, our co-promotion partnership with Immunex for the break-through rheumatoid arthritis (RA) therapy, Enbrel, remains in full effect going forward.

Investing in the Future

AHP invested approximately $1.7 billion in research and development in 2000. This investment is focused on key therapeutic franchises that offer a strong foundation for growth and innovation.

We also are making major capital investments to provide AHP with a competitive edge in biotechnology and protein manufacturing. For example, we anticipate spending more than $2 billion over the next five years to expand our manufacturing capacity for recombinant protein and vaccine products at four locations - Andover, Massachusetts; St. Louis, Missouri; Sanford, North Carolina; and West Greenwich, Rhode Island-and to build a new state-of-the-art biopharmaceutical development and manufacturing facility in Grange Castle, Clondalkin, Ireland.

In addition to our own research programs, we have established key alliances with a number of other major pharmaceutical and biotechnology firms. Two important alliances were announced in July 2000, when we reached agreements with Celera Genomics Group and Incyte Genomics, Inc. Through these relationships, AHP will gain access to databases containing extensive information on human, animal and microbial genes, including Celera's complete sequence of chemical "letters" of DNA that make up the human genome.

As a result of these investments and alliances, AHP now has one of the largest biotechnology research programs in the pharmaceutical industry. Using genomics, recombinant DNA and other technologies, AHP scientists are developing new strategies and innovative products in the fight against some of the most devastating diseases, including cancer, Alzheimer's, diabetes and hemophilia.

In October 2000, Wyeth-Ayerst entered into a consent decree with the U.S. Food and Drug Administration (FDA) focusing on the Company's compliance with current Good Manufacturing Practices at our facilities in Marietta, Pennsylvania, and Pearl River, New York. We are confident in the safety and efficacy of our products and feel certain that the investments we are making to improve our manufacturing processes and facilities will help us to consistently maintain the highest quality standards.

In 2001, we will begin the relocation of employees into the new Wyeth-Ayerst global headquarters in Collegeville, Pennsylvania, which we purchased in 2000. The Collegeville facility will provide a fully integrated campus environment that will enhance efficiency and communication.

Human Ethical Pharmaceuticals

The strong growth of AHP's human pharmaceutical business in 2000 reflected the impact of new product launches as well as the continuing strength of our cornerstone global products.

Sales of the Premarin family of hormone replacement therapy products approached $1.9 billion for the year. Worldwide sales of the Effexor family of antidepressants reached nearly $1.2 billion in 2000 - a 48 percent increase over 1999. Enbrel achieved $690 million in global sales. Wyeth-Ayerst continued to expand these key product lines in 2000 with new claims, indications and dosages: Effexor XR was approved in the United States for the long-term treatment of generalized anxiety disorder; Enbrel received FDA approval for inhibiting the progression of structural damage in the joints of early stage RA patients; and regulatory submissions were filed for new, lower dose formulations of Premarin and Premarin/MPA products.

AHP's new products also produced significant results in 2000. The launch of Meningitec, a meningococcal Group C conjugate vaccine, was advanced to reach the market in the United Kingdom in October 1999, enabling the U.K. Department of Health to initiate a vaccination program before the 1999-2000 winter season. Meningococcal disease is one of the most common causes of death in children and young people under the age of 20 in the United Kingdom. In January 2001, the U.K. Department of Health reported a 90 percent reduction in the number of meningococcal Group C cases in the age group at highest risk since the inception of the vaccination program.

Prevnar, the first vaccine to help prevent invasive pneumococcal disease in infants and young children, has been well-received in both the private and public health sectors following its recommendation for infant immunization. After FDA approval in February 2000, Wyeth-Ayerst shipped more than 9 million doses of Prevnar for a total of $461 million in sales in 2000. European Union approval of the vaccine - marketed as Prevenar internationally - was received in February 2001.

In February 2000, the FDA approved Protonix for short-term treatment in the healing and symptomatic relief of erosive esophagitis. Following a May 2000 launch, Protonix had a successful first year on the market with $145 million in sales.

In March 2000, ReFacto, for hemophilia A, was approved by the FDA, and the product was launched in the United States in January 2001.

In addition, Wyeth-Ayerst's novel oncology therapy, Mylotarg, was approved in the United States in May 2000 for the treatment of relapsed acute myeloid leukemia in patients over age 60.

Altace, an ACE inhibitor co-promoted in the United States by Wyeth-Ayerst and King Pharmaceuticals, Inc., received FDA approval in 2000 for an important new indication-to reduce the risk of stroke, heart attack and death from cardiovascular causes in patients over age 55 at risk for cardiovascular disease.

Additionally in 2000, a regulatory submission was accepted for review in the United States for FluMist, an intranasal flu vaccine. Regulatory review of rhBMP-2, a unique recombinant protein that stimulates bone growth to facilitate the healing of long-bone fractures that require open surgical management, began early in 2001.

Consumer Health Care

Whitehall-Robins Healthcare continues to be a leader in the global consumer health care market. Total sales in 2000 were nearly $2.5 billion, driven by increased sales in our three largest consumer health care categories - analgesics, cough/cold/allergy products and vitamins/nutritional supplements. Ten of the division's products rank number one or two in their category in the United States, and two global consumer health care brands - Advil and Centrum - are among the top 10 selling consumer health care brands in the world.

Animal Health Products

AHP's Fort Dodge is a global leader in the animal health industry. Fort Dodge sales in 2000 reached nearly $800 million, an increase of 20 percent over 1999. Fort Dodge has expanded recently through innovative product development, supplemented by a series of strategic acquisitions. Product introductions during the year included the launch in Australia of ProHeart SR12, a groundbreaking, once-a-year injectable for the prevention of heartworms in dogs, which is expected to enter the U.S. market in 2001.

Inside AHP

On May 1, 2001, Robert Essner will become the Chief Executive Officer of the Company and will continue as President of the Company, a position he was elected to in July 2000. John R. Stafford will remain Chairman of the Board, and Mr. Essner will continue to serve on the Board. Mr. Essner has been instrumental for the past 11 years in leading our pharmaceutical business. We believe that his election as the next Chief Executive Officer provides for continuity of our strategic direction as a first-tier pharmaceutical company devoted to the development, manufacturing and marketing of a broad range of innovative products.

Several other significant appointments were made within the last 12 months. In July, Louis L. Hoynes, Jr., was elected Executive Vice President and General Counsel of AHP. He previously was Senior Vice President and General Counsel of AHP. Additionally at AHP, L. Patrick Gage, Ph.D., was elected Senior Vice President-Science and Technology; Bernard J. Poussot was elected Senior Vice President; Lawrence V. Stein was elected Vice President and Deputy General Counsel; and Justin R. Victoria was elected Vice President-Investor Relations.

Changes in AHP's Board of Directors during 2000 include the election in July of Richard L. Carrión, who serves as Chairman, President and Chief Executive Officer of Banco Popular de Puerto Rico -the leading banking institution in Puerto Rico -and of Popular, Inc., Banco Popular's holding company; and the election in October of Walter V. Shipley, retired Chairman of the Board of The Chase Manhattan Corporation.

In 2000, three officers of AHP-Joseph J. Carr, Gerald A. Jibilian and William J. Murray-retired after many years of dedicated service. We thank these gentlemen for their many contributions to the Company.

It is with great sadness that we note the passing of Robert I. Levy, M.D., Senior Vice President - Science and Technology for AHP, in October 2000. Dr. Levy was a giant in the field of medicine and in the pharmaceutical industry, and his leadership was invaluable in guiding AHP through its evolution into a leading research-based global pharmaceutical company.

Moving Forward

AHP is moving forward with confidence in its 75th anniversary year as a strong, independent company well-positioned for continued growth in the global pharmaceutical marketplace. We recently have launched a significant number of new pharmaceutical products, and we continue to invest in our research and manufacturing capabilities to sustain our growth in the future. More important, the drugs we produce are saving lives and improving the quality of life for people around the world.

In the pharmaceutical business, we recognize a special obligation to our customers. From molecule to market, we must produce medicines of the highest quality. This obligation is at the heart of AHP's commitment to continuous improvement. To realize our vision for quality, we are making substantial investments in plants, systems and people.

We thank our employees for their diligence and dedication, which were the keys to our success in 2000. Their hard work, innovative ideas and commitment to quality will maintain our momentum and help us achieve even greater results in the years ahead.

We also thank AHP's Board of Directors for their guidance and support.

Our future is exciting. We look forward to applying our growing knowledge of the human genome and the mechanisms of disease in the search for new cures and innovative therapies for life-threatening diseases and other challenging health problems on a global scale.


John R. Stafford
Chairman and Chief Executive Officer


Robert Essner
President and Chief Operating Officer

March 6, 2001

Pharmaceutical Net Revenue
$ millions



"Today, more than 81 percent of net revenues are from pharmaceuticals - up from 51 percent just 10 years ago."





Pharmaceutical and Consumer Health Care R&D Expenditures
$ millions



"AHP now has one of the largest biotechnology research programs in the pharmaceutical industry."




"AHP invested approximately $1.7 billion in research and development in 2000."









YEARS OF INNOVATION
American Home Products Corporation was formed in 1926 through the merger of a group of non-prescription medicine companies.

From its inception, the Corporation was successful in building stockholder value. To illustrate-assuming no dividend reinvestment -a $1,000 investment in AHP stock when it went public in 1926 would be worth nearly $2.5 million today. The same investment in the S&P 500 -without dividend reinvestment-would be worth approximately $0.1 million.

Over its 75-year history, AHP consistently has invested in its health care businesses, leading to significant accomplishments such as the mass production of penicillin during World War II and the development and man- ufacturing of vaccines that virtually have eliminated smallpox and polio globally.

In recent years, AHP has developed a leading expertise in biotechnology and substantially increased its pharmaceutical R&D spending, expanding its pipeline of high-tech pharmaceutical products and delivering many new, first-in-class therapies for serious, unmet medical needs to the global market.