(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than Registrant)

ALPHARMA INC.

One Executive Drive

Fort Lee, New Jersey 07024

Notice of Annual Meeting of Stockholders

To Be Held on May 23, 2006

To the Stockholders of ALPHARMA INC.:

      NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Alpharma Inc., a Delaware corporation (the “Company”), will be held at the Company’s offices at One Executive Drive, Fort Lee, New Jersey on Tuesday, May 23, 2006, at 9:00 a.m., local time, to consider and act upon the following matters:

      The Board of Directors has fixed the close of business on March 30, 2006 as the record date for determining the Company’s stockholders entitled to notice of, and to vote at, the meeting or any adjournment thereof.

      Your representation at this meeting is important. Whether or not you expect to attend the Annual Meeting in person, please complete, date, sign and return the enclosed proxy. An envelope is enclosed for your convenience which, if mailed in the United States, requires no additional postage. If you attend the Annual Meeting, you may then withdraw your proxy and vote in person.

      A copy of the Company’s Annual Report to Stockholders for the year ended December 31, 2005 and a Proxy Statement accompany this notice.

April 27, 2006

ALPHARMA INC.

One Executive Drive

Fort Lee, New Jersey 07024

MAILING DATE

April 27, 2006

Proxy Statement for Annual Meeting of Stockholders

To Be Held on May 23, 2006

       This proxy statement (this “Proxy Statement”) is furnished in connection with the solicitation of proxies by the Board of Directors of Alpharma Inc., a Delaware corporation (the “Company”), for use at the Annual Meeting of Stockholders (the “Annual Meeting”) to be held on Tuesday, May 23, 2006 at the Company’s offices at One Executive Drive, Fort Lee, New Jersey at 9:00 a.m., local time, and at any adjournment or postponement thereof. The cost of solicitation of the Company’s stockholders (the “Stockholders”) will be paid by the Company. Such cost will include the reimbursement of banks, brokerage firms, nominees, fiduciaries and other custodians for expenses of forwarding solicitation materials to beneficial owners of shares. In addition to the solicitation of proxies by use of mail, the directors, officers and employees of the Company may solicit proxies personally or by telephone, e-mail or facsimile transmission. Such directors, officers and employees will not be additionally compensated for such solicitation but may be reimbursed for out-of-pocket expenses incurred in connection therewith.

      It is anticipated that this Proxy Statement and form of proxy will first be sent to the Stockholders on or about April 27, 2006.

THE ANNUAL MEETING

Purpose of Meeting

      At the Annual Meeting, the Stockholders will consider and act upon the following matters:

Record Date

      The close of business on March 30, 2006 (the “Record Date”) has been fixed as the record date for determining holders of outstanding shares of the Company’s Class A Common Stock, par value $.20 per share (“Class A Stock”), and Class B Common Stock, par value $.20 per share (“Class B Stock”), entitled to notice of, and to vote at, the Annual Meeting. As of the Record Date, 42,788,693 shares of Class A Stock and 11,872,897 shares of Class B Stock were outstanding and entitled to vote.

Quorum

      For each matter to be voted upon at the Annual Meeting, the presence in person or by proxy of holders of stock entitled to be voted with respect to such matter, representing a majority of the aggregate voting power of all shares of stock entitled to be voted with respect to such matter, is necessary to constitute a quorum with respect to such matter and to transact business with respect to such matter at the Annual Meeting. For purposes of determining whether a quorum exists with respect to the election of directors, shares as to which authority to vote in the election of directors has been withheld and broker non-votes (where a broker submits a proxy but does not have authority to vote a customer’s shares on one or more matters) with respect thereto will be considered present at the Annual Meeting. For the purpose of determining whether a quorum exists with respect to any other matter which may properly come before the Annual Meeting, shares abstaining on such matter and all broker non-votes with respect to such matter will be considered present at the Annual Meeting.

Required Vote

      Votes Entitled to be Cast by Each Class of Stock. Except for the election of directors (described below) and certain matters that require a class vote, the holders of Class A Stock and the holders of the Class B Stock vote together, with each share of Class A Stock entitling the holder thereof to one vote and each share of Class B Stock entitling the holder thereof to four votes.

      Election of Directors. To comport with the smaller size of the Company following the divestiture of its world-wide human generic pharmaceutical business (the “Generics Business”), the Company is reducing the size of the Board from ten to six directors, each of whom will be elected at the Annual Meeting. Under the Company’s Certificate of Incorporation, as amended, the holders of Class A Stock are entitled, voting as a separate class, to elect at least 33¹/3 % of the Board (rounded to the nearest whole number, but in no event less than two members of the Board), and the holders of the Class B Stock are entitled, voting separately as a class, to elect the remaining directors. Therefore, the holders of Class A Stock will elect two directors (directors to be elected by the holders of Class A Stock being referred to as “Class A Directors”) and the holders of Class B Stock will elect four directors (directors elected by the holders of Class B Stock being referred to as “Class B Directors”). The affirmative vote of a plurality of the votes cast at the Annual Meeting by the holders of Class A Stock, voting as a single class, is necessary to elect two Class A Directors, and the affirmative vote of a plurality of the votes cast at the Annual Meeting by the holders of Class B Stock, voting as a single class, is necessary to elect four Class B Directors. (A plurality of the votes cast means the greatest number of votes cast for a director.)

Proxies

      The enclosed proxy provides space for holders of Class A Stock to vote for, or withhold authority to vote for, both or either of the Company’s two nominees for Class A Directors. Shares of Class A Stock represented by properly executed proxies received at or prior to the Annual Meeting, which have not been revoked, will be voted in accordance with the instructions indicated therein. If no instructions are indicated, such proxies will be voted FOR (i) the election as directors of the two nominees for Class A Directors nominated by the Board (see “Election of Directors; Nominees for Directors; Nominees for Class A Directors” below), and (ii) in the discretion of the proxy holder, as to any other matter which may properly come before the Annual Meeting. With respect to the election of directors, neither shares as to which authority to vote has been withheld (to the extent withheld) nor broker non-votes will be considered affirmative votes. With respect to any other matter which may properly come before the meeting, abstentions and broker non-votes will be considered present and

entitled to vote but will not have been cast and therefore will not be counted in determining whether any matter received the requisite votes.

      YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, DATE, SIGN AND RETURN YOUR PROXY (OR COMPLETE YOUR VOTING TELEPHONICALLY OR BY EMAIL) IN ORDER TO ENSURE THAT YOUR SHARES WILL BE REPRESENTED AT THE ANNUAL MEETING. THE GIVING OF SUCH PROXY DOES NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IN THE EVENT YOU ATTEND THE ANNUAL MEETING.

      A holder of Class A Stock who has given a proxy may revoke such proxy at any time prior to its exercise at the Annual Meeting by (i) giving written notice of revocation to the Secretary of the Company, (ii) properly submitting to the Company a duly executed proxy bearing a later date, or (iii) attending the Annual Meeting and voting in person. Attendance at the Annual Meeting will not automatically revoke a proxy. All written notices of revocation and other communications with respect to revocation of proxies should be sent to the attention of the Secretary of the Company at the Company’s United States executive offices, located at One Executive Drive, Fort Lee, New Jersey 07024.

      If a quorum is not obtained, the Annual Meeting may be adjourned for the purpose of obtaining additional proxies or for any other purpose, and, at any subsequent reconvening of the Annual Meeting, all proxies will be voted in the same manner as such proxies would have been voted at the original convening of the meeting (except for any proxies which have been effectively revoked or withdrawn), notwithstanding that they may have been effectively voted on the same or any other matter at a previous meeting.

Electronic and Telephonic Voting

      You may vote your proxies by touch-tone telephone from the U.S., using the toll-free telephone number on the proxy card, or via the Internet using the procedures and instructions described on the proxy card. Stockholders who own their common stock through a broker, also known as “street name” holders, may vote by telephone or via the Internet if their bank or broker makes those methods available, in which case the bank or broker will enclose instructions with the Proxy Statement. The telephone and Internet voting procedures, including the use of control numbers found on the proxy card, are designed to authenticate Stockholder identities, to allow Stockholders to vote their shares of common stock, and to confirm that their instructions have been properly recorded. Stockholders voting via the Internet should understand that there may be costs associated with electronic access, such as usage charges from Internet access providers and telephone companies, which must be paid by the Stockholder.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Ownership of Common Stock

      The following table sets forth, as of February 28, 2006 (unless otherwise noted), certain information regarding the beneficial ownership of Class A Stock and Class B Stock of (a) each person who is known to the Company to be the beneficial owner of more than 5% of the outstanding shares of either of such classes, (b) each director and each nominee for director of the Company, (c) the Chief Executive Officer (the “CEO”) and the four other most highly compensated executive officers, and (d) all directors and executive officers of the Company as a group. Unless otherwise indicated, (i) each beneficial owner possesses sole voting and dispositive power with respect to the shares listed for such beneficial owner in this table, and (ii) the address of such beneficial owner is the Company’s offices at One Executive Drive, Fort Lee, New Jersey 07024.

  *  Indicates ownership of less than 1%.

Section 16(a) Beneficial Ownership Reporting Compliance

      Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s executive officers and directors, and persons who own more than 10% of a registered class of the Company’s equity securities, to file reports of ownership and changes in ownership of the Company’s stock on Forms 3, 4 and 5 with the Commission and the New York Stock Exchange (the “NYSE”). Executive officers, directors and greater than 10% beneficial stockholders are required by Commission regulation to furnish the Company with copies of all Forms 3, 4 and 5 that they file. The Company is not aware of any late or missed filings (or other noncompliance), during the 2005 fiscal year, by any of its executive officers, directors and greater than 10% beneficial stockholders with the Section 16(a) filing requirements.

ELECTION OF DIRECTORS

Election of Directors

      The current terms of all of the Company’s directors expire at the Annual Meeting. As a result of the reduction in size of the Board from ten to six directors, Mr. William I. Jacobs, a Class A Director, Ms. Jill Kanin-Lovers, a Class B Director, Mr. Robert Thong, a Class B Director, and Ms. Farah M. Walters, a Class A Director, will not stand for re-election at the Annual Meeting and will retire from the Board at the end of their current terms.

      The Board intends to cause the nomination of the nominees listed below under “Nominees for Directors; Nominees for Class A Directors” and all proxies received from holders of Class A Stock will be voted FOR the election of such nominees as Class A Directors, except to the extent that persons giving such proxies withhold authority to vote for such nominees.

      A. L. Industrier, which beneficially owns 100% of the outstanding shares of Class B Stock, has advised the Company that it intends to vote its shares in favor of the nominees listed below under “Nominees for Directors; Nominees for Class B Directors,” which would assure their election as Class B Directors.

      Each director is to be elected to hold office until the next Annual Meeting of Stockholders and until his or her successor is elected and qualified.

Nominees for Directors

      The Company believes that each of the nominees for director will be able to serve. If any of the nominees for Class A Directors would be unable to serve, the enclosed proxy confers authority to vote in favor of such other person or persons as the Company’s Class A Directors at the time recommend to serve in place of the person or persons unable to serve. Similarly, if any of the nominees for Class B Directors would be unable to serve, the proxy provided to Class B Stockholders confers authority to vote in favor of such other person or persons as the Company’s Class B Directors at the time recommend to serve in place of the person or persons unable to serve.

      Nominees for Class A Directors. The name, age, principal business experience during the last five years, and certain other information regarding each of the persons proposed to be nominated for election as a Class A Director, are listed below.

      Nominees for Class B Directors. The name, age, principal business experience during the last five years, and certain other information regarding each of the persons proposed to be nominated for election as a Class B Director are listed below.

BOARD OF DIRECTORS AND COMMITTEES

Board Meetings, Annual Meeting and Attendance of Directors

      The Board held sixteen meetings in 2005. Each person who served as a director in 2005 attended at least 75% of the aggregate of (i) the total number of meetings of the Board held while such person was a member, and (ii) the total number of meetings held by all committees of the Board on which such person served while such person was a member of such committee. The Company does not have a policy requiring directors to attend its annual meeting of Stockholders; however, the Company encourages the attendance of all directors standing for reelection, and all of the current directors attended the 2005 Annual Meeting of Stockholders held on June 23, 2005.

Board and Committee Independence

      The Company complies with the corporate governance rules set forth in the NYSE listing standards, as approved by the Commission. Under these corporate governance rules, the Company is a “controlled company,” whose voting power is more than 50% held by A. L. Industrier ASA. As a “controlled company”, the Company is entitled to exemptions from the following three corporate governance requirements: (1) requirement to have a majority of independent directors, (2) requirement to have a nominating/corporate governance committee composed entirely of independent directors, and (3) requirement to have a compensation committee composed entirely of independent directors. Notwithstanding its exempt status, the Company has a majority of independent directors on its Board and has a fully independent Compensation Committee. Consistent with the NYSE requirements, the Company also has an audit committee (its Audit and Corporate Governance Committee) composed entirely of independent directors, and this committee performs the corporate governance functions required of a nominating/corporate governance committee. The Company does not have a separate nominating committee.

      In determining Board independence in compliance with the NYSE rules, the Board considers whether directors or director nominees have a material relationship with the Company. When assessing materiality, the Board weighs all relevant facts and circumstances, using the following categorical standards to determine director independence: (1) whether the director or nominee, or his or her immediate family member, is currently or has been within the last three years: (a) an employee or executive officer of the Company; (b) receiving more than $100,000 per year in direct compensation from the Company (other than director and committee fees and pension or other forms of deferred compensation for prior service — unless such compensation is contingent in any way on continued service); (c) affiliated with or employed in a professional capacity by a present or former internal or external auditor of the Company; (d) employed as an executive officer of another company where any of the Company’s present executive officers serves as a member of such other company’s compensation committee; or (e) an executive officer or an employee of another company that makes payments to, or receives payments from, the Company for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million or 2% of such other company’s consolidated gross revenues; and (2) whether certain other factors or circumstances external to the Company exist that would materially interfere with the director or nominee making decisions without regard to such factors or circumstances. Applying these standards, the Board determined in June 2005 that the following directors, constituting a majority of the Board, qualify as “independent” members of the Board: Messrs. Finn Berg Jacobsen, Glen E. Hess, William I. Jacobs, Ramon M. Perez, Robert Thong and Peter G. Tombros, Ms. Jill Kanin-Lovers, and Ms. Farah M. Walters.

      In determining Audit and Corporate Governance Committee independence, the Board first considers whether directors or director nominees qualify as “independent” to serve on the Board (as set forth above), and,

if answered affirmatively, whether they satisfy two additional independence requirements: (1) whether the director or nominee currently receives (or in the past has received), directly or indirectly, compensation of any kind (including salary, legal fees, consulting fees and auditing fees) from the Company, other than director’s compensation for prior service that is not contingent in any way on continued service, and (2) whether the director or nominee is an “affiliated person” of the Company, in that he or she is either (a) an executive officer or (b) a stockholder holding 10% or more of any class of Company securities. Applying these standards, the Board determined in June 2005 that the following directors, constituting the entire Audit and Corporate Governance Committee, qualify as “independent” to serve on the Board’s Audit and Corporate Governance Committee: Messrs. Finn Berg Jacobsen, William I. Jacobs (Chairman), and Peter G. Tombros, and Ms. Farah M. Walters.

      In determining Compensation Committee independence, the Board first considers whether directors or director nominees qualify as “independent” to serve on the Board (as set forth above), and, if answered affirmatively, whether they satisfy two additional independence requirements (these are not NYSE requirements, rather Company requirements): (1) whether the director or nominee is a “Non-Employee Director” under Rule 16b-3 of the Securities Exchange Act of 1934, which means a director or nominee who: (a) is not currently an officer or employee of the Company or its subsidiaries; (b) does not receive more than $60,000 in compensation annually from the Company or its subsidiaries for services rendered as a consultant; (c) does not possess a direct or indirect material interest in any transaction with the Company or its subsidiaries where the amount involved exceeds $60,000; and (d) is not engaged in a business relationship with the Company or its subsidiaries where the amount involved exceeds greater than 5% of the consolidated gross revenue of either company; and (2) whether the director or nominee is an “Outside Director” under Internal Revenue Service Code Section 162(m), in that he or she: (a) is not currently an officer or employee of the Company or its subsidiaries; (b) is not a former employee of the Company or its subsidiaries who is currently receiving remuneration from the Company or its subsidiaries for prior services; (c) has not been an officer of the Company or its subsidiaries; and (d) is not currently receiving, directly or indirectly, compensation of any kind from the Company other than director’s compensation. Applying these standards, the Board determined in June 2005 that the following directors, constituting the entire Compensation Committee, qualify as “independent” to serve on the Board’s Compensation Committee: Ms. Jill Kanin-Lovers (Chairman), Messrs. William I. Jacobs and Peter G. Tombros, and Ms. Farah M. Walters.

Committees of the Board

      Pursuant to its by-laws, as amended, the Company has established standing Audit and Corporate Governance, Executive and Finance, and Compensation Committees (the Compensation Committee assumed the duties of the Company’s former Stock Option Committee in May 2003). The charters for each of these committees are available on the Company’s website at www.Alpharma.com by clicking first on the “About Alpharma” tab and then on the “Our Business Guidelines” tab, and in print, without charge, to any Stockholder requesting a copy in writing to “Investor Relations” at the Company’s offices in Fort Lee, New Jersey. In addition, the charter for the Audit and Corporate Governance Committee is annexed to this Proxy Statement as Appendix A.

      The Audit and Corporate Governance Committee provides assistance to the Board in fulfilling the Board’s oversight responsibility to the Stockholders, potential stockholders, the investment community, and others relating to the Company’s financial statements and the financial reporting process, the systems of internal accounting and financial controls, the annual independent audit of the Company’s financial statements, and the Company’s Corporate Governance Principles (See “Board of Directors and Committees; Corporate Governance

Principles, Business Conduct Guidelines and Code of Ethics” below). In so doing, it is the responsibility of the committee to maintain free and open communications between the committee, independent auditors, and management of the Company. In discharging its oversight role, the committee is empowered to investigate any matter brought to its attention with full access to all books, records, facilities, and personnel of the Company and has the power to retain outside counsel or other experts. (The Company shall provide funding necessary for the committee to retain such outside counsel and experts.) The committee is charged with taking the appropriate actions to set the overall corporate “tone” for quality financial reporting, sound business risk, corporate governance practices and ethical behavior. In furtherance of this mission, the Audit and Corporate Governance Committee ensured that the Board and the committees of the Board completed their annual performance evaluations at their March 2006 meetings, to evaluate their effectiveness. In addition, the Board has adopted a resolution requiring the Audit and Corporate Governance Committee to review transactions between the Company and A. L. Industrier (the beneficial owner of all of the outstanding Class B Stock) (or their respective subsidiaries) involving more than $50,000 and to report to the Board regarding whether such transactions are fair to the Company. Such resolution also requires prior approval of the Audit and Corporate Governance Committee for any transaction with A. L. Industrier which involves $500,000 or more, and prior approval of the Audit and Corporate Governance Committee is required for any sale or transfer of assets to or from A. L. Industrier other than inventory sold or transferred in the ordinary course of business. The Audit and Corporate Governance Committee also monitors the Company’s Business Conduct Guidelines. The committee charter governs the operations of the Audit and Corporate Governance Committee, and requires that the committee be comprised of at least three directors, each of whom are “independent” directors. (See “Board of Directors and Committees; Board and Committee Independence” above for a description of such independence criteria). All committee members shall be financially literate, or shall become financially literate within a reasonable period of time after appointment to the committee, and at least one member shall have accounting or related financial management expertise necessary to be considered a “financial expert” under Section 407 of the Sarbanes-Oxley Act of 2002 and the associated rules of the Commission. The Board determined, in June 2005, that Mr. William I. Jacobs, Chairman of the Audit and Corporate Governance Committee, qualifies as an “Audit Committee Financial Expert” pursuant to these rules, based on his attributes, education and experience. In addition, the Board also determined, in June 2005, that all of the members of the Audit and Corporate Governance Committee qualify as “financially literate.” The current members of the Audit and Corporate Governance Committee are Messrs. Finn Berg Jacobsen, William I. Jacobs (Chairman), and Peter G. Tombros and Ms. Farah M. Walters, none of whom serves on more than three audit committees of public companies. The Audit and Corporate Governance Committee held twenty-three meetings in 2005.

      The Executive and Finance Committee is generally empowered, to the fullest extent permitted by Delaware law, to exercise all power and authority vested in the Board. By resolution, the Board has specifically authorized and requested the Executive and Finance Committee to act on behalf of the Board in situations when the full Board is unable to meet, to discuss and consult with the CEO as requested by such officer and to act with respect to such matters as the Board may from time to time designate. Additionally, the Executive and Finance Committee reviews and has the authority to make recommendations to the Board with respect to raising funds required in the operation of the Company. The current members of the Executive and Finance Committee are Messrs. Glen E. Hess, Ramon M. Perez, Einar W. Sissener (Chairman), Robert Thong, and Peter G. Tombros. The Executive and Finance Committee held eleven meetings in 2005.

      The Compensation Committee has the authority of the Board with respect to the compensation, benefit and employment policies and arrangements for directors, the CEO, executive officers and other key employees of the Company. The committee leads the processes for CEO succession planning and CEO performance evaluation. The committee also has authority with respect to the compensation and benefit plans generally

applicable to the Company’s employees. The committee charter governs the operations of the Compensation Committee and requires that the committee be comprised of at least three directors, each of whom are “independent” directors. (See “Board of Directors and Committees; Board and Committee Independence” above for a description of such independence criteria.) The current members of the Compensation Committee are Ms. Jill Kanin-Lovers (Chairman), Messrs. William I. Jacobs and Peter G. Tombros, and Ms. Farah M. Walters. The Compensation Committee held thirty-nine meetings in 2005.

Compensation Committee Interlocks and Insider Participation

      During fiscal year 2005, Ms. Kanin-Lovers, Messrs. Jacobs and Tombros, and Ms. Walters served on the Compensation Committee. None of these directors have ever been an officer or employee of the Company or any of its subsidiaries or any other company for which an executive officer of the Company serves as a director, nor have they engaged during 2005 in any transaction, had any business relationship, or incurred any indebtedness that would require disclosure in this Proxy Statement.

Directors’ Compensation

      Pursuant to an agreement between the Company and Mr. Sissener dated July 1, 1999, as amended in March 2004, in 2005 Mr. Sissener received $200,000 for serving as Chairman of the Board (and as a director of certain of the Company’s subsidiaries).

      During 2005, each director (except Mr. Sissener and Ms. Wiik) received an annual directors’ fee of $30,000. Each director (except Ms. Wiik) also received a grant of 5,000 restricted stock units (Mr. Sissener received 7,500 restricted stock units) pursuant to the Company’s 2003 Omnibus Incentive Compensation Plan, which entitles each such director to receive one share of Class A Stock upon vesting of each restricted stock unit, one year following the director’s retirement from the Board, subject to acceleration, forfeiture and deferral as set forth in the grant agreements. In addition, each director (except Mr. Sissener and Ms. Wiik) received $1,200 for each Board meeting and $1,200 for each Committee meeting attended in person or by telephone. The Chairman of each of the Audit and Corporate Governance and Compensation Committees received an additional payment of $7,500.

      During 2005, directors had the ability to participate in the Company’s Deferred Compensation Plan, as amended and restated on January 1, 2005, through which they were able to defer receipt of cash compensation, and earn interest quarterly on such deferred amounts, at the rate of two percentage points below the prime rate (as published in the Wall Street Journal), provided such amount did not exceed 12% or be less than 4%. Effective January 1, 2006, the Company’s Deferred Compensation Plan was frozen, prohibiting participants from making future deferrals of cash compensation.

Corporate Governance Principles, Business Conduct Guidelines and Code of Ethics

      The Board has adopted Corporate Governance Principles (which are available on the Company’s website at www.Alpharma.com by clicking first on the “About Alpharma” tab and then on the “Our Business Guidelines” tab, and in print, without charge, to any Stockholder requesting a copy in writing to “Investor Relations” at the Company’s offices in Fort Lee, New Jersey) to provide the general framework for the governance of the Company. The Corporate Governance Principles specifically address the role of the Board and management, the functions of the Board, qualifications of directors, independence of directors and committees, the prohibition on making loans to directors and executive officers, size of the Board and selection process, Board committees, meetings of outside (non-management) directors, setting the Board agenda, ethics and conflicts of interest, reporting of concerns to the Audit and Corporate Governance Committee,

Board compensation, access to senior management and independent advisors, director orientation and continuing education, succession planning, and the Board’s annual performance evaluation.

      The Board has adopted Business Conduct Guidelines (which are available on the Company’s website at www.Alpharma.com by clicking first on the “About Alpharma” tab and then on the “Our Business Guidelines” tab, and in print, without charge, to any Stockholder requesting a copy in writing to “Investor Relations” at the Company’s offices in Fort Lee, New Jersey) that set forth principles and standards to guide the business behavior of members of the Board and Company employees worldwide. The Business Conduct Guidelines specifically address compliance with laws (including food and drug, environmental, copyright and competition laws), fairness in employment, safety and health, reporting to governmental agencies, confidentiality, the protection of Company assets, conflicts of interest, political contributions, the extended application of certain U.S. laws, relationships with medical professionals, and fair dealings with third parties.

      The Board has adopted a Code of Ethics (which is available on the Company’s website at www.Alpharma.com by clicking first on the “About Alpharma” tab and then on the “Our Business Guidelines” tab, and in print, without charge, to any Stockholder requesting a copy in writing to “Investor Relations” at the Company’s offices in Fort Lee, New Jersey) that, in addition to the Business Conduct Guidelines, applies to the Company’s CEO, Chief Financial Officer and Controller. The Code of Ethics requires such officers to engage in and promote honest and ethical conduct, protect the Company’s and its customers’ confidential information, produce full, fair, accurate, timely and understandable disclosure in reports to the Commission and other regulators and in other public communications, to comply with applicable laws, rules and regulations of governments and self-regulatory organizations, and to report promptly to the Audit and Corporate Governance Committee violations of the Code of Ethics.

Director Identification and Selection

      As set forth in “Board and Committee Independence” above, the Company is exempt from the NYSE requirement to have a nominating committee and does not have such a committee. The Company’s process for director selection and director qualifications are as set forth in the Company’s Corporate Governance Principles (which are available on the Company’s website at www.Alpharma.com by clicking first on the “About Alpharma” tab and then on the “Our Business Guidelines” tab, and in print, without change, to any Stockholder requesting a copy in writing to “Investor Relations” at the Company’s offices in Fort Lee, New Jersey). In summary, the Chairman of the Board proposes a slate of nominees to the Board for election by the stockholders in accordance with the procedures and rules established in the Company’s Certificate of Incorporation. Between annual Stockholder meetings, a vacancy on the Board shall be filled by a vote of the holders of the class of stock (Class A Stock or Class B Stock) that elected the former director or, in the absence of a Stockholder vote, the remaining director or directors elected by such Stockholders. In order to be selected, directors shall possess the highest personal and professional ethics, integrity and values, and be committed to representing the interests of the stockholders. They must also have an inquisitive and objective perspective, practical wisdom and mature judgment. The Company endeavors to have a Board representing diverse experience at policy-making levels in business, government, education and technology, and in other areas that are relevant to the Company’s global activities. The Board does not believe that arbitrary term limits on directors’ service are appropriate, nor does it believe that directors should expect to be routinely re-nominated on an annual basis.

Executive Sessions of Outsider (Non-Management) Directors

      The Chairman of the Board presides at executive sessions of outside (non-management) directors, held at regularly scheduled times throughout the year. Outside (non-management) directors are those who are not Company officers. Except for Ms. Wiik, all of the Company’s directors are outside (non-management) directors. In addition, the independent directors also meet periodically without the presence of non-independent directors.

Communications from Stockholders

      Stockholders may send communications to the Board (and to individual directors) through the Secretary of the Company, Mr. Robert F. Wrobel. The Secretary will forward to the directors all communications that, in his judgment, are appropriate for consideration by the directors. The Secretary will consider most commercial solicitations and other matters not relevant to the Company’s stockholders, the Board, or to the Company in general, to be inappropriate for consideration by the directors. You may communicate directly with the Chairman of the Company’s Audit and Corporate Governance Committee by sending an e-mail to auditchair@alpharma.com. You may communicate with outside (non-management) directors, individually or as a group, by sending an e-mail to outsidedirectors@alpharma.com.

AUDITORS

      Effective April 6, 2005, the Audit and Corporate Governance Committee of the Board engaged BDO Seidman, LLP to audit the financial statements of the Company for the fiscal year ending December 31, 2005. The Company intends to engage BDO Seidman, LLP as its independent accountants for the fiscal year ending December 31, 2006. Representatives from BDO Seidman, LLP will be present at the Annual Meeting to respond to any appropriate questions, and they will be given the opportunity to make a statement to the stockholders.

      PricewaterhouseCoopers LLP (“PwC”) served as the Company’s independent accountants for fiscal year ended December 31, 2004. On February 16, 2005, the Company was notified by PwC that it would decline to stand for re-appointment as the Company’s independent registered public accounting firm for the 2005 fiscal year. PwC issued its audit report on the Company’s financial statements as of and for the year ended December 31, 2004 on March 31, 2005, except for the restatement discussed in Note 2b to the consolidated financial statements appearing under Item 15 of the Company’s 2004 annual report on Form 10-K/A, as to which the date is May 5, 2005 and the effects of discontinued operations discussed in Note 3 to the consolidated financial statements appearing under Item 15 of the Company’s 2005 annual report on Form 10-K, as to which the date is March 16, 2006. Except with respect to such restatement and effects of discontinued operations, PwC ceased serving as the Company’s independent registered public accounting firm as of April 13, 2005.

      Neither the audit report of BDO Seidman, LLP on the Company’s financial statements as of and for the fiscal year ended December 31, 2005 nor the audit report of PwC on the Company’s financial statements as of and for the fiscal year ended December 31, 2004 contains an adverse opinion or a disclaimer of opinion, or was qualified or modified as to uncertainty, audit scope or accounting principles.

      In connection with the audit for the fiscal year ended December 31, 2004, there were no disagreements with PwC on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of PwC would have caused PwC to make reference to the subject matter of the disagreement in connection with its report on the financial statements for such period.

      During the fiscal year ended December 31, 2004 and the subsequent period through PwC’s resignation effective April 13, 2005, there were no “reportable events,” except for an adverse opinion that PwC issued related to the Company’s internal control over financial reporting as of December 31, 2004.

Audit & Non-Audit Services Pre-Approval Policy

      Pursuant to its charter (available on the Company’s website and in print — See “Board of Directors and Committees; Committees of the Board” above), the Audit and Corporate Governance Committee adopted its “Audit & Non-Audit Services Pre-Approval Policy” in May 2003 to establish procedures by which it pre-approves all audit and non-audit services provided by its independent auditor. Through this policy, the Audit and Corporate Governance Committee ensures that the audit and non-audit services provided by its independent auditor are compatible with maintaining the independence of such auditor and maximizing efficiency overall. The Company’s policy sets forth a list of those types of audit, audit-related and tax services that its independent auditor is permitted to provide, and therefore have the general pre-approval of the Audit and Corporate Governance Committee. If a type of service has not received such “general” pre-approval, it will require “specific” pre-approval by the Audit and Corporate Governance Committee, based on a review of facts and circumstances, before such service may be provided by the independent auditor. Any proposed services exceeding pre-approved cost levels or budgeted amounts will also require specific pre-approval by the committee. The policy also sets forth those non-audit services that the Company’s independent auditor is prohibited from providing, based upon legal requirements.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

      The following table sets forth the aggregate fees billed or expected to be billed by BDO Seidman, LLP, the Company’s independent accountants for fiscal year ended December 31, 2005, and by PwC, the Company’s independent accountants for the fiscal year ended December 31, 2004, for professional services rendered in connection with the audits of the Company’s financial statements and reports for fiscal years 2005 and 2004 and for other services rendered during fiscal years 2005 and 2004 on behalf of the Company and its subsidiaries, as well as all “out-of-pocket” costs incurred in connection with these services, which have been or will be billed to the Company:

EXECUTIVE COMPENSATION

Summary of Executive Compensation

      The following table (the “Summary Compensation Table”) sets forth annual and long-term compensation paid to, or accrued for, the executive officers named below (the “named executive officers”) by the Company or its subsidiaries during 2005, 2004 and 2003:

Summary Compensation Table

Employment Agreements

      The named executive officers are each employed by the Company on an “at-will” basis (with the exception of Ms. Wiik), and are parties to the following employment agreements:

      Ms. Wiik is a party to an employment agreement with the Company dated October 26, 2000. This agreement provides that the Company shall provide Ms. Wiik with, or reimburse her for, the use of an automobile in the United States and in Norway, plus reimbursement for garaging, insurance and auto maintenance. Ms. Wiik is also entitled to receive reimbursement for tax and financial services planning, and

she participates in all of the employee benefits available to executives of the Company (except as set forth below) including eligibility for participation in the Company’s Savings Plans, Employee Stock Purchase Plan, group health, dental, life and accidental death and dismemberment insurance programs, short-term disability program, tuition reimbursement program and the Severance and Change in Control Plans. (See below for a description of the Severance and Change in Control Plans.) Ms. Wiik does not receive an executive allowance separate from the reimbursements set forth above. Ms. Wiik also receives payment of certain living expenses while she is working from the Company’s Oslo, Norway office, in the form of a per diem allowance in an amount which is consistent with the Company’s business travel policies. Pursuant to her employment agreement, Ms. Wiik is entitled to receive an annual cash bonus award based on the Company’s overall performance and her achievement of individual objectives, in a target amount of 100% of her base salary (increased by the Compensation Committee from an initial 75%, starting with the 2003 fiscal year). Ms. Wiik also does not participate in the Company’s Pension Plans (defined below). Upon retirement, Ms. Wiik is entitled to receive a defined retirement benefit that is primarily based on a percentage of her base salary for the twelve months prior to her retirement. (See “Retirement Plans” below for further information.) In April 2005, Ms. Wiik informed the Company that, consistent with her employment agreement, it is her desire to retire as President and CEO of the Company (but not as Vice Chairman and a member of the Board).

      Mr. Farrell is a party to an employment agreement with the Company dated April 12, 2002, which, upon joining the Company, provided him with 100,000 options under the Company’s 1997 Incentive Stock Option and Stock Appreciation Right Plan and a minimum bonus guarantee of $150,000 for the 2002 performance year. The agreement also specifies that Mr. Farrell would be provided, in addition to his normal annual stock option grants, an additional 20,000 options in 2003 and 2004. Mr. Farrell participates in all of the employee benefits available to executives of the Company (except the Change in Control Plan), including the receipt of an executive allowance in the amount of $28,600 per year, and eligibility for participation in the Company’s Pension Plans, Savings Plans, Employee Stock Purchase Plan, group health, dental, life and accidental death and dismemberment insurance programs, short-term disability program, tuition reimbursement program and the Severance Plan. (See below for a description of the Severance Plan.) In addition, Mr. Farrell is party to a retention agreement with the Company. (See “Retention Agreements” below for further information.)

      Dr. Warner is a party to an employment agreement with the Company dated November 6, 2002, which is supplemented by an agreement dated February 26, 2003. These agreements provided him with a one-time sign-on bonus of $150,000, to be paid 50% immediately upon his start date in December 2002 and 50% upon his completion of 18 months of employment in 2004. Dr. Warner was also granted, upon his start date, 40,000 stock options under the Company’s 1997 Incentive Stock Option and Stock Appreciation Right Plan. Dr. Warner participates in all of the employee benefits available to executives of the Company (except the Change in Control Plan), including the receipt of an executive allowance in the amount of $28,600 per year, and eligibility for participation in the Company’s Pension Plans, Savings Plans, Employee Stock Purchase Plan, group health, dental, life and accidental death and dismemberment insurance programs, short-term disability program, tuition reimbursement program and the Severance Plan. (See below for a description of the Severance Plan.) In addition, Dr. Warner is party to a retention agreement with the Company. (See “Retention Agreements” below for further information.)

      Ms. Wrenn is a party to an employment agreement with the Company dated October 19, 2001, which is supplemented by agreements dated July 15, 2003 and February 11, 2004. Pursuant to these agreements, Ms. Wrenn received a sign-on bonus of $65,000 in October 2001. Ms. Wrenn was also granted 33,525 shares of restricted stock in July 2003 under the 2003 Omnibus Incentive Compensation Plan. 25% of these restricted shares vested on July 15, 2004, an additional 25% vested on July 15, 2005 and the remaining 50% shall vest on

July 15, 2006. Ms. Wrenn is required to provide the Company with 90 days’ notice in the event of her resignation. Ms. Wrenn participates in all of the employee benefits available to executives of the Company (except the Change in Control Plan), including the receipt of an executive allowance in the amount of $28,600 per year, and eligibility for participation in the Company’s Pension Plans, Savings Plans, Employee Stock Purchase Plan, group health, dental, life and accidental death and dismemberment insurance programs, short-term disability program, tuition reimbursement program and the Severance Plan. (See below for a description of the Severance Plan.) Ms. Wrenn is also party to a retention agreement with the Company. (See “Retention Agreements” below for further information.)

      Mr. Wrobel is a party to an employment agreement with the Company dated October 8, 1997, pursuant to which he received a sign-on bonus in October 1997 of $25,000 and 5,000 stock options under the Company’s 1997 Incentive Stock Option and Stock Appreciation Right Plan. Mr. Wrobel participates in all of the employee benefits available to executives of the Company (except the Change in Control Plan), including the receipt of an executive allowance in the amount of $28,600 per year, and eligibility for participation in the Company’s Pension Plans, Savings Plans, Employee Stock Purchase Plan, group health, dental, life and accidental death and dismemberment insurance programs, short-term disability program, tuition reimbursement program and the Severance Plan. (See below for a description of the Severance Plan.) In addition, Mr. Wrobel is party to a retention agreement with the Company. (See “Retention Agreements” below for further information.)

Retention Agreements

      In December 2005, the Company entered into retention agreements with Mr. Farrell, Dr. Warner, Ms. Wrenn and Mr. Wrobel providing for payments and other incentives and protections intended to encourage these executive officers to continue their employment with the Company after the significant changes in the Company anticipated as a result of the December 19, 2005 sale of the Generics Business to Actavis Group Hf. Pursuant to the retention agreements, each of these executive officers will receive a retention payment equal to his or her annual base salary and target annual bonus opportunity. One-third of this retention payment is payable on each of June 30, 2006, December 29, 2006, and June 29, 2007, provided the executive officer is employed by the Company on the applicable payment date. These payments will be made sooner upon (i) termination of the Executive’s employment as a result of death or by the Company without cause or due to disability, (ii) a “Change of Control” of the Company under the Company’s Change in Control Plan, or (iii) for Dr. Warner and Ms. Wrenn only, six months after a sale of the executive officer’s business segment.

      The retention agreements provide further that if a Change of Control occurs or, for Dr. Warner and Ms. Wrenn only, if there is a sale of his or her business segment (any such event, a “Qualifying Transaction”), then the executive officer will be entitled to the following benefits in lieu of benefits (equal to two times the sum of the executive officer’s annual rate of base salary and target bonus opportunity, as in effect immediately prior to the Qualifying Transaction) under the Company’s Severance or Change in Control Plans:

      The severance payments, insurance coverage and outplacement services are only available if the executive officers cease to be employed by the Company (or the buyer in a Qualifying Transaction), without cause or due to a constructive termination, subject to specified limitations described in the retention agreements.

      The retention agreements contain non-competition obligations, pursuant to which the executive officers agreed to not engage in specified business activities that compete with the Company for a one-year period following a Qualifying Transaction. The Company also agrees to pay certain tax obligations of the executive officers under Section 4999 of the Internal Revenue Code of 1986, as amended.

Severance and Change in Control Plans

      Mr. Farrell, Dr. Warner, Ms. Wiik, Ms. Wrenn, and Mr. Wrobel receive benefits pursuant to the Company’s Severance Plan, which was adopted by the Board in 2002 and amended in February and April 2004 (the “Severance Plan”). Additionally, Ms. Wiik receives benefits under the Company’s Change in Control Plan, which was adopted by the Board in 2002 and amended in February and April 2004 and September 2005 (the “Change in Control Plan”).

      Pursuant to the terms of the Severance Plan, in the event Ms. Wiik is terminated for any reason other than for cause, she is entitled to receive her base salary, bonus and certain benefits for twenty-four months, subject to certain tax limitations. Pursuant to the Change in Control Plan, if Ms. Wiik is terminated as a result of a change in control of the Company, she is entitled to receive her salary and certain benefits for a total of thirty-six months, subject to certain tax limitations, and her outstanding stock options shall immediately vest. Furthermore, pursuant to the Change in Control Plan, upon certain conditions following a “change in control”, Ms. Wiik’s outstanding shares of Restricted Stock and Performance Units, granted pursuant to the Company’s 2003 Omnibus Incentive Compensation Plan, shall also immediately vest.

      Additionally, the Severance Plan provides that in the event that an executive officer, including Mr. Farrell, Dr. Warner, Ms. Wrenn, or Mr. Wrobel, is terminated for any reason other than for cause, such executive officer is entitled to receive his or her base salary, bonus and certain benefits for eighteen months, subject to certain tax limitations.

      The Severance Plan also provides for payments to be made to certain other key employees of the Company in the event of termination for any reason other than for cause or as a result of a change in control of the Company.

Performance Cash Bonus Incentive Plan

      The Board has approved the performance goals underlying the Company’s Executive Bonus Plan that shall apply to the 2006 fiscal year. The Executive Bonus Plan provides that all executive officers (other than Ms. Wiik) and key employees performing services for the Company may be entitled to receive a cash bonus at a target level. Each of the named executive officers may receive more or less than his or her target level bonus, based upon the Company’s ability to achieve certain operating income and cash flow targets for 2006. In addition, for executive officers who are responsible for a specific business segment of the Company, a portion of his or her bonus will depend on such business segment’s achievement of certain operating income and cash flow targets for 2006. As provided in the Executive Bonus Plan, the Compensation Committee has the discretion to vary any individual bonus award from the amount derived by the application of the criteria described above. Ms. Wiik does not participate in the Executive Bonus Plan, but she is entitled to receive an annual cash bonus at a target level based on the Company’s overall performance and her achievement of

individual objectives as set forth in her employment agreement. (See “Employment Agreements” above for further information.) Ms. Wiik will have a target bonus for 2006 of 100% of base salary, and Mr. Farrell, Dr. Warner, Ms. Wrenn, and Mr. Wrobel will have target bonuses for 2006 of 50% of base salary.

Option Grants in Last Fiscal Year

      The following table discloses, for the CEO, certain information with respect to an option grant made during 2005. The listed grant was made pursuant to the Company’s 2003 Omnibus Incentive Compensation Plan.

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values

      The following table discloses, for the named executive officers, (a) the number of shares acquired upon the exercise of options or with respect to which such options were exercised, and the aggregate dollar value realized upon such exercise, and (b) the number and value of unexercised options, in each case as of December 31, 2005.

Long-Term Incentive Plans — Modification to Terms of Performance Units

      On March 8, 2004, pursuant to the 2003 Omnibus Incentive Compensation Plan, the Company granted 10,000 performance units to Ms. Wiik and 2,000 performance units to each of Mr. Farrell and Dr. Warner. Performance units shall become 100% vested on the last day of their three year performance period, i.e., December 31, 2006, at which time their value was to be determined based upon total shareholder return as

compared to a market index of peer companies and the satisfaction of a free cash flow threshold. Each performance unit had a potential value between zero and $200.

      In conjunction with the sale of the Generics Business, which made the peer group comparison no longer relevant, the Company, with the approval of the Board, terminated the Performance Unit Plan effective December 18, 2005. Prior to terminating the Performance Unit Plan, the Company fixed the final payout for each performance unit at $100 per unit. Payments in respect of the performance units identified above will be made on or about December 31, 2006, if the named executive officer is employed by the Company on such date. In the event of retirement, disability or death of a named executive officer, awards of performance units will be prorated up to the date of retirement, disability or death and paid at the end of the performance period.

Retirement Plans

      Ms. Wiik is not a participant in the Company’s Pension Plan (as defined below) pursuant to the terms of her employment agreement. (See “Employment Agreements” above for further information.) Upon Ms. Wiik’s retirement as President and CEO of the Company, she is entitled to receive from the Company an annual retirement benefit (the “Wiik Retirement Benefit”) for each calendar year following retirement equal to (i) 30% of her Base Compensation (defined below) plus (ii) inflationary adjustments (which shall be the same as the adjustment for inflation provided in the retirement plan for Alpharma AS for Norwegian employees) minus (iii) “Other Retirement Benefits” (defined below). “Base Compensation” means her annual base salary during the twelve month period ending on the last day of the month preceding retirement or disability (provided that, if base salary shall have changed during such twelve month period, Base Compensation shall mean the average annual base salary weighted to reflect the number of days during which each varying base salary was in effect). “Other Retirement Benefits” means amounts Ms. Wiik is entitled to receive as retirement benefits under Norwegian pension plans, but does not include (i) payments received under the Company Savings Plans or the deferred compensation plan maintained by the Company, or (ii) retirement benefits received under any governmental program or under any insurance program funded by the Company or any of its subsidiaries or their predecessors. The Wiik Retirement Benefit shall be payable to Ms. Wiik in Norwegian Kroner. Any amounts utilized in the formula to calculate the Wiik Retirement Benefit that are not payable in Norwegian Kroner shall be subject to a fixed currency conversion rate of one United States dollar equal to NOK 9.60. (As compared to the March 31, 2006 exchange rate of approximately NOK 6.55 per 1 USD.)

      Mr. Farrell, Dr. Warner, Ms. Wrenn, and Mr. Wrobel are participants in the Alpharma Inc. Pension Plan (a qualified defined benefit plan) (the “Pension Plan”). Under the Pension Plan, both salaried and hourly employees are eligible for benefits. Participants who have at least five years of vested service with the Company are entitled to receive their specified annual benefit, in the form of a life annuity or, at the election of participants, its actuarial equivalent in certain other forms, commencing within one month of their 65th birthday. The specified annual benefit is equal to (x) the sum of (i) 0.8% of the participant’s highest five-year Final Average Compensation (as defined below) up to “covered compensation” ($42,000 for 2005) plus (ii) 1.45% of the participant’s highest five-year Final Average Compensation in excess of “covered compensation”, multiplied by (y) the number of years of benefit service (up to a maximum of 30 years). The Pension Plan also provides for an early retirement benefit which is equal to the specified annual benefit described above, reduced actuarially for each year by which the early retirement date precedes the normal retirement date. Participants are eligible for early retirement upon attainment of age 55 and completion of at least five years of vested service with the Company.

      The following table sets forth the approximate annual retirement benefit under the Pension Plan based on years of service and Final Average Compensation.

Pension Plan Table

      For purposes of the Pension Plan, an employee’s “Final Average Compensation” generally is his or her regular cash salary (excluding bonuses) for the five consecutive years of service in which his or her compensation was highest during the ten years of service immediately preceding his or her retirement. In 2005, the amounts of the compensation of Mr. Farrell, Dr. Warner, Ms. Wrenn, and Mr. Wrobel would have been $418,299, $410,616, $363,062, and $342,180 respectively, under the Pension Plan if there were no limitations under Federal pension law. However, due to the Federal pension law, the respective amounts of compensation of Mr. Farrell, Dr. Warner, Ms. Wrenn, and Mr. Wrobel, under the Pension Plan in 2005 were limited to $210,000. Pursuant to the Company’s Supplemental Pension Plan, Mr. Farrell, Dr. Warner, Ms. Wrenn, and Mr. Wrobel are each entitled to receive a supplemental benefit, calculated above such $210,000 Federal limit, based upon a maximum base compensation of $235,840 per annum. The years of service credited under the Pension Plan as of December 31, 2005 to the named executive officers were as follows: Mr. Farrell — 4 years, Dr. Warner — 3 years, Ms. Wrenn — 4 years, and Mr. Wrobel — 8 years.

      Under the Pension Plan, in the event of the termination of employment prior to retirement, part of the employee’s benefit may be forfeited. A retirement benefit, payable in the form of a life annuity following the employee’s 55th birthday, is equal to an accrued percentage of the normal retirement benefit, actuarially

reduced to reflect commencement of payments prior to the normal retirement date. As to employees hired on or after January 1, 1989, pension benefits under the Pension Plan vest after five years of credited service with the Company. Benefits paid under the Pension Plan are not subject to deductions for Social Security.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

      The Compensation Committee of the Board consists of Ms. Jill Kanin-Lovers (who serves as its Chairman), Mr. William I. Jacobs, Mr. Peter G. Tombros, and Ms. Farah M. Walters.

      Pursuant to its charter, the Compensation Committee is responsible for reviewing the performance and total compensation of the Company’s CEO, reviewing and approving the compensation and benefits of other executive officers and highly paid personnel, reviewing the general compensation and employment policies for management personnel, reviewing management development and succession matters, and approving any material new benefit plan or material amendment to such plan.

      In general, the Compensation Committee has sought to meet the objectives of its compensation philosophy by making compensation decisions and recommendations for executive officers and other key personnel in a manner which: (1) provides overall compensation that is competitive in its ability to attract and retain highly qualified personnel; (2) relates compensation to the degree to which the Company (and/or the specific business unit in which an executive has responsibility) attains its annual financial performance targets; (3) rewards excellent individual performance and teamwork, with the consideration for specific projects completed or adverse conditions overcome to achieve results; and (4) provides an incentive to contribute to the long-term growth of the Company’s business and stockholder value. In making compensation recommendations, the Committee is mindful of Section 162(m) of the Internal Revenue Code of 1986, as amended and consults with tax advisors as necessary to minimize any nondeductible compensation under Section 162(m).

      During 2005, the Compensation Committee took the following actions: (1) monitored ongoing efforts to address various employment and benefits related issues; (2) approved compensation arrangements for various new executives; (3) approved and adopted amendments to the Change in Control Plan which (i) expand the authority of the Committee to make certain decisions under that plan and (ii) amend the time period during which that plan can be amended, modified or terminated to end upon the date upon which a change in control occurs; (4) approved modifications to the Company’s Short-Term Incentive Program design and executive retirement plan; (5) amended the Company’s Deferred Compensation Plan, 2005 Supplemental Savings Plan and Supplemental Pension Plan to freeze participation in and contributions to such plans; and (6) amended certain of the Company’s employee benefit plans to comply with Section 409A of the Internal Revenue Code of 1986.

      Ms. Wiik has confirmed to the Compensation Committee that it is her desire to retire as the President and CEO of the Company (but not as Vice Chairman and a member of the Company’s Board of Directors). The Committee continues its search for a new CEO and has had preliminary discussions regarding Ms. Wiik’s retirement package.

      The Compensation Committee took the following additional actions in connection with the Company’s sale of the Generics Business and ParMed Pharmaceuticals, Inc. (“ParMed”) and the CEO succession process: (1) took action to address retention concerns for executives on Ms. Wiik’s leadership team and for key executives involved in the sales of the Generics Business and ParMed; (2) determined compensation treatment for employees leaving the Company in connection with such sales; and (3) ended the Performance Unit Plan and “locked in” the payout thereunder at the “target” level of $100 (See “Long-Term Incentive Plans — Modification to Terms of Performance Units” above).

      In March 2005, the Compensation Committee set various company-wide and divisional targets for income from operations and cash flow from operations for 2005 under the Company’s Executive Bonus Plan (applicable to employees at the Vice President level and above other than Ms. Wiik) and Performance Incentive Plan (applicable to employees below the Vice President level). (See “Performance Cash Bonus Incentive Plan” above for a discussion of Ms. Wiik’s annual cash bonus award.) In addition, target awards for 2005 were established for each named executive officer (100% of base salary for Ms. Wiik and 50% of base salary for all other named executive officers.

      In May 2005, Ms. Wiik received an award under the 2003 Omnibus Incentive Compensation Plan, consisting of 50,000 stock options. The options have an exercise price equal to the market price of the Class A Stock on the date of grant, vest over four years and have a term of ten years (with the same vesting schedule and term in the event of retirement).

      The Compensation Committee determined in February 2006 that in light of her imminent retirement, Ms. Wiik’s base salary for 2006 shall remain the same as the 2005 level. In addition, it approved a bonus to Ms. Wiik for 2005 that was approximately 130% of her target for 2005, which reflects the Committee’s assessment of the overall achievement of the Company’s objectives and is consistent with bonuses received by Alpharma corporate executives generally.

      Also in February 2006, the Compensation Committee approved the annual base salaries for 2006 for the named executive officers (other than Ms. Wiik), based on the compensation philosophy discussed above and comparative executive salaries at similarly sized-companies. It was determined that each of the named executive officers shall receive the same salary in 2006 as in 2005.

AUDIT AND CORPORATE GOVERNANCE COMMITTEE REPORT

      The Audit and Corporate Governance Committee reviews and makes recommendations to the Board regarding internal accounting and financial controls and accounting principles and auditing practices, and it is responsible for the engagement of independent public accountants, the scope of the audits to be undertaken by such accountants, all transactions with the Company’s affiliates, internal auditing, and corporate governance activities, including the internal process for monitoring compliance with the Company’s Business Conduct Guidelines and Corporate Governance Principles. (See “Board of Directors and Committees; Committees of the Board” above for further information.) Each of the Audit and Corporate Governance Committee members satisfies the definition of an independent director as established in the NYSE listing standards on corporate governance, as approved by the Commission. The Board amended and restated its written charter for the Audit and Corporate Governance Committee effective July 15, 2005. Such charter is attached to this Proxy Statement as Appendix A (and is also available on the Company’s website and in print — See “Board of Directors and Committees; Committees of the Board” above). The Company operates with a January 1 to December 31 fiscal year. The Audit and Corporate Governance Committee met twenty-three times during the 2005 fiscal year.

      The Audit and Corporate Governance Committee has reviewed the Company’s audited consolidated financial statements and discussed such statements with management. The Audit and Corporate Governance Committee has discussed with BDO Seidman, LLP, the Company’s independent accountants during the 2005 fiscal year, the matters required to be discussed by Statement of Auditing Standards No. 61 (Codification of Statements on Auditing Standards AU Section 380), as amended.

      BDO Seidman, LLP also provided the Audit and Corporate Governance Committee with the written disclosures and a letter required by Independence Standards Board Standard No. 1 (Independence Standards Board Standard No. 1, Independence Discussions with Audit and Corporate Governance Committees), and the Audit and Corporate Governance Committee discussed with the independent accountants that firm’s independence. The Committee considered various non-audit services provided by the independent accountants and the fees and costs billed and expected to be billed by the independent accountants for those services (as shown on pages 16-17 of this Proxy Statement). The Committee has fully considered whether those services provided by the independent accountants are compatible with maintaining auditor independence.

      Based upon the review and discussions noted above, the Audit and Corporate Governance Committee recommended to the Board that the Company’s audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005, and be filed with the Commission.

      This report of the Audit and Corporate Governance Committee shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates this information by reference.

Performance Graph

      The following graph compares the Company’s cumulative total Stockholder return during the last five calendar years with a composite of the Hemscott, Inc. (formerly known as CoreData) indices for Drug Manufacturers — Other, Drug-Generic and Drug Delivery Industry Groups (which composite index includes 125 corporations that describe themselves as drug manufacturers and are publicly traded) and The New York Stock Exchange Market Index. The graph assumes $100 invested as of the end of the day on December 31, 2000 in the Company’s Class A Stock and $100 invested at that time in each of the selected indices. The comparison assumes that all dividends are reinvested.

Alpharma Inc.

5-year Cumulative Returns

versus Peer Group and NYSE Index

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      Mr. Sissener is Chairman of the Board of A. L. Industrier. Together with certain family-controlled private holding companies and certain of his relatives, Mr. Sissener beneficially owns approximately 54% of A. L. Industrier’s outstanding ordinary shares entitled to vote and, accordingly, may be deemed a controlling person of A. L. Industrier.

      A. L. Industrier and Alpharma AS, one of the Company’s Norwegian subsidiaries, are parties to two leases pursuant to which A. L. Industrier leases to Alpharma AS the land and facility in Oslo, Norway where Alpharma AS’ principal administrative offices and fermentation plant for its bulk antibiotics are located, and adjoining land for a parking facility for employees. Both leases have terms ending in 2014. The terms are renewable, at the option of Alpharma AS, for up to four additional consecutive five year terms. Basic rent during the initial terms are $1.00 per year under the office and plant lease and NOK 2,400,000 (approximately $372,000) per year under the parking facility lease and, during any renewal term thereafter, basic rent under the office and plant lease will be the then prevailing fair rental value of the premises and basic rent for the parking facility will remain at NOK 2,400,000. In addition to basic rent, Alpharma AS pays documented expenses of ownership and operation of such facilities, such as taxes and maintenance expenses. Alpharma AS has the right to terminate the office and plant lease at any time during its term upon twelve months’ written notice to A. L. Industrier and the parking facility lease at any time during its term upon twenty-four months’ written notice to A. L. Industrier. These leases were entered into on an arm’s length basis, and on terms as favorable as could have been obtained from unrelated third parties.

      During 2005, Alpharma AS was a party to an administrative services agreement with A. L. Industrier, effective January 1, 2005, pursuant to which A. L. Industrier paid to Alpharma AS a fixed yearly fee of NOK 400,000, or approximately $60,000, for certain, limited, administrative services. The parties have extended the term of this agreement to June 30, 2006, during which A. L. Industrier will pay to Alpharma AS an additional NOK 200,000, or approximately $30,000, in six equal monthly installments. The administrative service agreement described above was made on an arm’s length basis, and is on terms as favorable as could have been obtained from unrelated third parties.

      Substantially all transactions with A. L. Industrier are subject to review by, and in some circumstances prior approval of, the Company’s Audit and Corporate Governance Committee. (See “Board of Directors and Committees — Committees of the Board” above.)

Certain Other Relationships and Transactions

      Mr. Sissener, who as of June 30, 1999, ceased acting as President and CEO of the Company and as of March 31, 2006, ceased acting as Chairman of the Board, is party to an agreement with the Company, effective July 1, 1999, as amended March 23, 2004, pursuant to which he received an annual fee of $200,000 for serving as Chairman of the Board (and director of certain of the Company’s subsidiaries) during 2005. Mr. Sissener receives fringe benefits similar to those received by executive officers of the Company, in the form of an automobile allowance, telephone and travel reimbursements, and tax and financial planning and tax preparation reimbursements. In addition, the Company provides Mr. Sissener with a monthly allowance intended to cover the cost of certain living expenses he incurs while working out of the Company’s Fort Lee, New Jersey offices. Mr. Sissener has agreed to provide consulting services to the Company’s management for a ten year term commencing July 1, 1999 for an initial rate of $12,000 per month (in addition to the payment of reasonable expenses incurred in connection with the performance of such consulting services, as described above). The consulting fee rate is adjusted annually for inflation and is currently $12,390 per month. In

addition to the amounts described above, Mr. Sissener is entitled to all benefits available under applicable plans and policies in Norway arising from retirement from employment by Alpharma AS and is entitled to receive from Alpharma AS an amount which, when added to amounts he is entitled to receive under Norwegian Social Security, Alpharma AS’s pension plan and his individual retirement benefits, equals NOK 900,000 (approximately $140,000). The current annual retirement benefit that Mr. Sissener is receiving directly from the Company is NOK 432,544 (approximately $67,000).

      Mr. Hess’ professional corporation is a partner of Kirkland & Ellis LLP, a law firm that, since 1978, has performed and continues to perform significant legal services for the Company. In addition, Mr. Hess received, in January 2005, a distribution from the Company’s Amended and Restated Deferred Compensation Plan, dated October 14, 1994, in an amount of approximately $215,000. This distribution represented previous years’ payments of directors’ cash compensation to Mr. Hess that he had deferred pursuant to the plan. Together with additional distributions from the plan in similar amounts in January 2002, 2003 and 2004, this distribution represented a total distribution under the plan.

      Ms. Walters received, in January 2005, a distribution from the Company’s Deferred Compensation Plan in an amount of approximately $110,000. This distribution represented a total distribution of previous years’ payments of directors’ compensation deferred pursuant to the plan.

STOCKHOLDERS’ PROPOSALS FOR THE 2007 ANNUAL MEETING

      In order to be considered for inclusion in the proxy statement for the 2007 Annual Meeting of Stockholders, Stockholder proposals must be submitted to the Company on or before December 28, 2006. Such proposals will need to comply with Securities and Exchange regulations regarding the inclusion of Stockholder proposals in Company-sponsored proxy materials. Similarly, in order for a Stockholder proposal to be raised from the floor during next year’s annual meeting, written notice must be received by the Company no later than December 28, 2006.

OTHER BUSINESS

      As of the date hereof, the foregoing is the only business which management intends to present, or is aware that others will present, at the Annual Meeting. If any other proper business should be presented at the Annual Meeting, the proxies will be voted in respect thereof in accordance with the discretion and judgment of the person or persons voting the proxies.

      Stockholders sharing a common address may receive only one set of proxy materials to such address unless they have provided the Company with contrary instructions. Any such stockholder who wishes to receive a separate set of proxy materials now or in the future may write or call the Company by contacting: Secretary, Alpharma Inc., One Executive Drive, Fort Lee, New Jersey 07024, or (800) 645-4216. Similarly, Stockholders sharing a common address who have received multiple copies of the Company’s proxy materials may write or call the above address and phone number to request delivery of a single copy of these materials in the future.

YOUR VOTE IS IMPORTANT

PLEASE PROMPTLY COMPLETE AND SIGN THE ENCLOSED

FORM OF PROXY AND RETURN IT IN THE ENCLOSED ENVELOPE

Appendix A

ALPHARMA INC.

Audit and Corporate Governance Committee Charter

Organization

      This charter governs the operations of the Audit and Corporate Governance Committee. The committee shall be nominated by the Chairman of the Board and appointed by the Board of Directors and shall comprise at least three directors, each of whom are independent directors as that term is defined in the Alpharma Corporate Governance Principles. All committee members shall be financially literate, or shall become financially literate within a reasonable period of time after appointment to the committee, and at least one member shall have accounting or related financial management expertise necessary to be considered a “financial expert” under the rules of the Securities and Exchange Commission.

Statement of Policy

      The committee shall provide assistance to the Board of Directors in fulfilling the Board’s oversight responsibility to the stockholders, potential stockholders, the investment community, and others relating to the Company’s financial statements and the financial reporting process, the systems of internal accounting and financial controls, the annual independent audit of the Company’s financial statements, and Corporate Governance Principles. In so doing, it is the responsibility of the committee to maintain free and open communications between the committee, independent auditors, and management of the Company.

      In discharging its oversight role, the committee is empowered to investigate any matter brought to its attention with full access to all books, records, facilities, and personnel of the Company and the power to retain outside counsel, or other experts for this purpose. The Company shall provide funding necessary for the committee to retain outside counsel and experts.

      The committee should take the appropriate actions to set the overall corporate “tone” for quality financial reporting, sound business risk and corporate governance practices, and ethical behavior.

Responsibilities and Processes

      The following is a general expression of the responsibilities and processes to be employed by the committee. However, the committee believes its policies and procedures should remain flexible in carrying out these responsibilities, in order to react to changing conditions and circumstances.

The Financial Reporting Process

      It is the responsibility of the committee to oversee the Company’s financial reporting process on behalf of the Board and report the results of its activities to the Board. Management is responsible for preparing the Company’s financial statements, and the independent auditors are responsible for auditing those financial statements.

      The following shall be the principal recurring processes of the committee in carrying out its oversight responsibilities:

Corporate Governance

      It is the responsibility of the committee to oversee corporate governance issues relating to the Company. The following shall be the principal responsibilities of the committee in carrying out these oversight responsibilities:

Committee Operating Processes

Meetings

      Meetings may be called by the Chairman of the Audit and Corporate Governance Committee by oral or written notice, communicated to each member not less than twenty four hours before such meeting.

      Action may be taken without a meeting if all members of the Committee consent to such action and confirm such unanimous consent in writing either prior or subsequent to the taking of such action.

Reports

      The Audit and Corporate Governance Committee shall report to the Board at its next regularly scheduled meeting on any material actions taken by the Committee. Minutes of all meetings of the Committee shall be kept in the ordinary course of business and shall be open for inspection at all times upon the request of any member of the Board of Directors.

Quorum

      A majority of the Committee shall constitute a quorum for the transaction of business and an affirmative vote of the majority of the members who attend the meeting shall be required for approval of any action.

Use of Third Party Providers

      The Committee shall have the authority to use third party service providers in executing its duties. The Committee shall have the sole authority to approve retain, terminate and approve the fees and other retention terms of any such third party service providers.

— END —