EXHIBIT 10.8.7

                             MANUFACTURING AGREEMENT

         AGREEMENT, made as of this 26th day of September, 1996, between
XXXXXXXXXXXX CORPORATION, a corporation organized and existing under the laws of
the State of Delaware, United States of America ("XXX"), and CHRONIMED, INC., a
corporation with a principal place of business at 13911 Ridgedale Drive, Suite
250, Minnetonka, Minnesota 55305 ("CHRONIMED").

         WHEREAS, CHRONIMED desires XXX to manufacture these certain blood
glucose meters known as the CHRONIMED Supreme II System (including subsequent
revisions of the Supreme II System) subject to the terms and conditions set
forth herein; and

         WHEREAS, XXX is in the business of manufacturing certain blood glucose
meters; and

         NOW THEREFORE, in consideration of the foregoing premises and the
mutual covenants set forth below, the parties hereto agree as follows:


SECTIONS 1: DEFINITIONS

When used in this Agreement, the following terms will have the respective
meanings stated below:

1.1 "Product(s)" means the CHRONIMED Supreme II System (including subsequent
revisions of the Supreme II System) designed to read certain strips and
determine blood glucose levels, to be manufactured by XXX or its subcontractors
in accordance with the design developed by XXX and CHRONIMED.

1.2      "Dollar or $" means U.S. dollars, unless specifically indicated
         otherwise.

1.3      "Specifications" are attached as Amendment II

         SECTION II: MANUFACTURE SALE AND DESIGN

2.1      CHRONIMED hereby retains XXX as its exclusive manufacturer of the
         Product during the Term of this agreement. During the term of this
         Agreement and subject to the terms and conditions hereof, XXX agrees to
         manufacture and sell to CHRONIMED and CHRONIMED agrees to purchase from
         XXX, such Products as CHRONIMED may order pursuant to this Agreement.

2.2      XXX shall manufacture all Products in a good and workmanlike manner in
         accordance with the Specifications, and consistent with all applicable
         guidelines, laws, ordinances, rules, and regulations including, without
         limitation, those relating to Good Manufacturing Practices by the
         United States Food and Drug Administration (FDA). CHRONIMED shall have
         the full right to review XXX compliance with such applicable
         guidelines, laws, ordinances, rules, and regulations.


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2.3      XXX shall maintain records in accordance with the applicable
         guidelines, laws, rules, and regulations of the FDA relative to the
         manufacture, storage, and shipping of the Product, and any batch
         processing of the Products or Product components for a period of not
         less than two (2) years after the date of manufacture of the applicable
         Product or component

2.4      XXX shall not implement any change in the Products, components
         therefor, processes for producing Products or components, or design
         thereof without the prior written consent of CHRONIMED. In the case of
         immaterial changes or the substitution of components with equivalent or
         better performance, CHRONIMED's consent shall not be unreasonably
         withheld or delayed. In all other cases, CHRONIMED can withhold its
         consent in its sole discretion. To implement this Section, XXX shall
         inform CHRONIMED in writing of any change it desires to make involving
         the Product. CHRONIMED accept or reject such change and shall notify
         XXX of its decision within thirty (30) days of receipt of such
         notification. Failure to so inform XXX within forty-five (45) days of
         request shall constitute a default approval on behalf of CHRONIMED.

2.5      XXX shall be responsible for procuring, purchasing, and inventorying
         all such raw material, components, and spare parts and for inventorying
         Products produced therefrom, provided however that XXX shall not be
         held responsible for shortages of components from XXX vendors
         occasioned by circumstances beyond XXX control.

2.6      The design of the Product is a derivative of a design by XXX of several
         commercially available blood glucose meters not exclusive to CHRONIMED
         but proprietary to XXX. The algorithms as they relate to the look up of
         CHRONIMED standard curves are exclusive to CHRONIMED and owned by
         CHRONIMED. The case design as embodied in the Supreme II System
         (including subsequent revisions of the Supreme II System) and as
         detailed in the case drawings is owned by CHRONIMED. The tools owned by
         CHRONIMED are on the attached Appendix I. CHRONIMED shall be entitled
         to obtain the tools that it owns upon CHRONIMED's written request. In
         the event that the tools are not delivered to CHRONIMED within thirty
         (30) days of such request, CHRONIMED shall have the right to withhold
         royalties as described in Section 11.2, unless both parties agree that
         best efforts have been made to secure the tools and have been
         unsuccessful, or if both parties mutually agree that the related wear
         of the tools make the retrieval of such, financially unnecessary. The
         algorithms, the case design and any other aspects of the Supreme II
         System which are proprietary to CHRONIMED, as well as CHRONIMED's
         tooling, shall not be provided to or disclosed to any third party or
         used on behalf of any third party without the consent of CHRONIMED.


         SECTION III: PURCHASE PRICE

3.1      The purchase price for the first XXXXXX (XXX) Products will be built
         with OTP versions of the microprocessor and the purchase price will be
         XXX and XX/100 Dollars ($XXX) each. The next XXXXXX (XXX) Units
         purchased will have the purchase price of XXX and XX/100 ($XXX)
         provided that for these XXXXXX (XXX) units CHRONIMED orders at least
         XXXXXX (XXX) units per month.


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3.2      Provided that CHRONIMED gives orders sufficient to maintain an average
         monthly volume of at least XXXXX (XXX) Units per month, any units after
         the initial purchase of the aforementioned (Section 3.1) XXXXXX (XXX)
         units will be purchased at XXX and XX/100 Dollars ($XXX). If the Unit
         Volume is less than the XXXXXX (XXX) Units per month, then XXX and
         CHRONIMED will negotiate a price for applicable units above XXXXXXX
         (XXX) units based upon the estimated unit volume of the product to be
         manufactured. If the annual volume (using the calendar year) exceeds
         XXXXXX (XXX) Units per year, XXX and CHRONIMED will negotiate a new
         price reflecting a larger discount based upon the higher volume for
         future production forecasts and schedules.

3.3      In the event XXX and CHRONIMED are unable to reach an agreement in
         connection with any revised pricing, then the parties agree to be bound
         by arbitration as set forth in Section Twenty Two (XXII) of this
         agreement.

3.4      Notwithstanding the above, however, prices may be increased or
         decreased on a semi annual basis, based upon XXX or its subcontractors
         substantiated documentation of actual increase or decrease in
         materials, labor and overhead costs at the end of any given six months
         (6) period over the prices of the previous six months (6) period,
         provided, however, that in no event shall prices increase more than ten
         percent (10%) during any 12-month period. The parties will commence
         discussions for any such pricing increase or decrease within the thirty
         (30) day period preceding the end of the appropriate period.

SECTION IV: DELIVERY

4.1      XXX will deliver Products to a carrier on CHRONIMED's behalf, F.O.B.
         XXXXX, within thirty (30) days after the end of the month forecasted in
         CHRONIMED's relevant forecast set forth in Section VII. XXX will give
         CHRONIMED not less than twenty-four (24) hours prior notice of the date
         of each delivery of Products hereunder. XXX will also use its best
         commercially reasonable efforts to make weekly, or biweekly or monthly
         shipments of Products as requested by CHRONIMED.

4.2      XXX will, if requested by CHRONIMED, procure insurance on all shipments
         of Product to CHRONIMED and may, at its option, bill CHRONIMED
         separately or add the insurance to CHRONIMED's invoice. CHRONIMED shall
         pay all charges for shipping, freight, tariff, import duties, and
         delivery in the manner set forth in Section 6.1 a.


SECTION V: OUALITY ASSURANCE

5.1      XXX shall deliver to CHRONIMED, with each shipment of the Product,
         written certification that it has tested such shipment for Product
         compliance with Specifications and that each unit included in such
         shipment complies with such Specifications. CHRONIMED shall have thirty
         (30) calendar days from the date of receipt of each shipment of the
         Product to confirm conformity with the design and operating
         specifications. Any notice of rejection of any shipment of the Product
         or portion thereof must by given in writing and received by XXX within
         said thirty (30) day period or such shipment will be deemed to have
         been accepted.

5.3      In the event that any Product supplied is determined by or on behalf of
         CHRONIMED to fail to conform to the design per specifications in
         Amendment II, or to be in breach of the



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         warranty of Section 8.1, XXX agrees to provide CHRONIMED, at its
         discretion, with the following options to resolve the breach of
         warranty: non-payment for portion of shipment determined to be
         non-conforming, a credit on the next invoice for such defective
         Product, or to replace an equal amount of Product in the next shipment.

5.4      CHRONIMED agrees to comply with the disposition of Product as described
         in Section 5.3 at the advise and expense of XXX.

SECTION VI: PAYMENT

6.1      The purchase price referred to herein shall be due and payable in U.S.
         dollars to XXX within thirty (30) days after receipt of the Product
         shipment at CHRONIMED's Eden Prairie, MN distribution center. All
         amounts due past the due date shall carry interest at the rate of one
         percent (1%) per month. Failure to pay amounts due within ninety (90)
         days after the first due date shall constitute a material breach of
         this Agreement. In the event CHRONIMED fails to make any payment in
         accordance with this agreement, then CHRONIMED shall be responsible for
         all collections costs, including reasonable attorney fees.


SECTION VII: FORECASTS AND PRODUCTION TERMINATION

7.1      CHRONIMED shall provide XXX monthly with a rolling six (6) month pro
         forma forecast of its expected orders of Product for purposes of XXX
         inventory control. It is understood, and agreed to by CHRONIMED that
         subsequent monthly forecasts may change previously stated six (6) month
         forecasts. The aforementioned six month pro forma forecasts shall
         constitute a firm purchase order. All pro forma forecasts will be
         formalized sixty (60) days prior to execution date of the purchase
         order.

7.2      CHRONIMED reserves the right to cancel or stop production for any
         reason during the term of this Agreement provided CHRONIMED shall be
         responsible for the actual cost of all inventory, including components
         and sub-assemblies, fully assembled units, and for parts on order that
         cannot be terminated, unless the reason for termination of the
         Agreement is a result of the incoming quality control (IQC) production
         quality level (not field returns) being received by CHRONIMED. The IQC
         production quality control is a measure of the quality of received new
         product from XXX.

SECTION VIII: WARRANTY

8.1      XXX warrants that all Products will strictly conform to the design
         specifications, be free of defects, be in compliance with all
         applicable legal requirements and approvals, and be in good operating
         condition for a period of fifteen (15) months from the date of product
         receipt at CHRONIMED's distribution facility, and that CHRONIMED will
         receive good title thereto, free of all liens and encumbrances of any
         kind. This warranty will survive any delivery, acceptance, inspection
         or payment by CHRONIMED.

         XXX will replace defective Products or credit CHRONIMED for units which
         are defective and returned within the warranty period. In addition, XXX
         warrants that the facility and processes and other aspects of the
         manufacture of the Products now meet FDA's Good Manufacturing Practices
         (GMP) and will continue to fulfill FDA's GMP throughout the



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         term of this Agreement.

         SUPPLIER HEREBY DISCLAIMS ANY OTHER WARRANTIES. EXPRESS OR IMPLIED,
         WITH RESPECT TO THE QUALITY OF PRODUCT, INCLUDING WARRANTIES AS TO ITS
         MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE. XXX SHALL NOT BE
         RESPONSIBLE FOR ANY CONSEQUENTIAL DAMAGES IN CONNECTION WITH THE USE OF
         THE PRODUCTS.


SECTION IX: RISK OF LOSS

9.1      CHRONIMED will bear the risk of damage or deterioration loss of
         Products from the time Products are properly delivered by XXX into the
         possession of a carrier on CHRONIMED's behalf, F.O.B. XXX.


SECTION X: TERM AND EFFECTIVE DATE

10.1     This agreement is effective as of the date first above written and
         shall apply only to Products manufactured and shipped to CHRONIMED
         after its effective date. Unless earlier terminated in accordance with
         Section VII or XI, this Agreement will continue in effect for a term of
         three (3) years from the date hereof, and will automatically renew
         annually, unless notification of termination is provided by either side
         not less than forty-five (45) days before this Agreement would
         otherwise expire. In the event CHRONIMED terminates production in
         accordance with Section VII hereof, XXX's rights as exclusive
         manufacturer shall continue for the balance of the three (3) year term
         should CHRONIMED desire to purchase or have manufactured additional
         products.


SECTION XI: BREACH

11.1     Either party may terminate this agreement upon written notice to the
         other party if such other party fails to cure a material breach hereof
         within thirty (30) days after written notice thereof. or if said breach
         cannot be reasonably cured within thirty (30) days in which event the
         defaulting party shall have commenced to cure within such thirty (30)
         day period and shall diligently pursue such cure thereafter, the
         defaulting party shall have such additional time as me be reasonably
         required to cure such default. If CHRONIMED terminates this Agreement
         pursuant to this Section, CHRONIMED will be entitled to cancel all
         other orders for Products outstanding as of the date of termination
         upon notice to XXX provided, however, CHRONIMED shall be responsible
         for the actual cost for all inventory, components and sub-assemblies,
         fully assembled units, components and for parts on order that cannot be
         terminated unless XXX has materially breached thisAgreement by
         providing CHRONIMED with Product that does not meet IQC production
         quality level, and fails to correct or resolve production performance
         issues in an appropriate period of time as agreed upon by both parties.


11.2     In the event of a termination of this Agreement, CHRONIMED may at its
         option, manufacture or have manufactured by a third party, the Supreme
         II product or a derivative thereof. In such event, CHRONIMED agrees to
         pay XXX a royalty of XXX Dollars ($XXX) per unit for the first XXX
         years after termination, and then XXX dollars ($XXX) in the XXX year,
         XXX dollars ($XXX) in the XXX year, XXX dollars ($XXX) in the XXX year,
         XXX dollars ($XXX) in the XXX year and XXX dollars ($XXX) per unit
         royalty thereafter.



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         Under the conditions expressed in Section 2.6, XXX will transfer all
         tool and assembly techniques to CHRONIMED.


SECTION XII: SUPPORT

12.1     XXX will provide CHRONIMED with XX (XX) Calibrations Stations free of
         charge. These Calibrations Stations will consist of a test platform and
         conditioning electronics. CHRONIMED must supply the personal computers
         to operate the calibrators. XXX will also supply calibration equipment
         as described above to large customers of CHRONIMED when agreed upon
         between XXX and CHRONIMED.


SECTION XIII: SURVIVAL OF OBLIGATIONS

13.1     The expiration or earlier termination of this agreement will not
         operate to release either party hereto from any liability which has
         already accrued to the other party as of the date of expiration or
         termination or which may thereafter accrue in respect of an act or
         omission occurring prior to expiration or termination.


SECTION XIV: INDEMNIFICATION

14.1     CHRONIMED agrees to indemnify, defend and hold harmless XXX, its
         successors, assigns, subcontractors, agents, employees, stockholders,
         officers, directors, affiliates and subsidiary corporations
         (collectively the "Indemnified Parties") from and against any and all
         claims, costs, demands, liabilities, judgments, losses, damages
         (including consequential damages) and expenses of whatever nature,
         whether brought against XXX, CHRONIMED or both, including reasonable
         attorney's fees arising out of CHRONIMED's sale, use manufacture,
         assembly, use or application of the Product, except in the event of
         litigation against CHRONIMED concerning the Product, then XXX will
         provide to CHRONIMED expert witness testimony, documentation and such
         support, as may be reasonably within XXX's control.

         Without limiting the foregoing, CHRONIMED's indemnity shall include any
         types of actions brought, whether against XXX or CHRONIMED, including
         any product liability claims, patent or similar type infringement
         claims or for violation of any Federal, State or local law, statute or
         regulation, including those yet to be enacted, relative to the Supreme
         II product or a derivative thereof.

14.2     XXX agrees to indemnify, defend and hold harmless CHRONIMED, its
         successors, subcontractors, agents, employees, officers and directors,
         from and against any and all claims, costs, demands, liabilities,
         losses, damages (including consequential damages) and expenses of
         whatever nature, including reasonable attorney's fees {collectively
         "Losses") arising out of or due to latent defects of the Product which
         XXX knowingly manufactured for financial gain, or other reasons.


SECTION XV: FORCE MAJEURE

15.1     No party hereto will be liable to any other party for any failure or
         delay of performance or other consequence which is due to any act of
         God, act of government, war, civil disturbance or other cause beyond
         such party's reasonable control and power to remedy, or any strike or
         labor dispute or disruption of transportation, whether or not such
         party is capable of resolving the problem by the payment of money.



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SECTION XVI: NON-WAIVER

16.1     The waiver, express or implied, by either party of any right hereunder,
         will not constitute a waiver of any other right.


SECTION XVII: AMENDMENT

17.1     No amendment of this agreement will be effective unless reduced to a
         writing executed by the duly authorized representatives of both parties
         hereto.


SECTION XVIIL ASSIGNMENT

18.1     The rights and liabilities of the parties shall bind and inure to the
         benefit of their respective successors and assigns provided, however,
         XXX may not assign its rights or delegate its obligations hereunder
         without the prior consent of CHRONIMED (which consent shall not be
         unreasonably withheld) and any such purported assignment or delegation,
         in the absence of such consent, will be void and without effect.
         CHRONIMED agrees, however, that the assembly or manufacture of the
         Product may be performed by subcontractors of XXX provided that any
         such subcontractors must meet all GMP standards, and design
         specifications as set forth in Amendment II.



SECTION IXX: SEVERABILITY

19.1     Any provision of this agreement which is finally determined by a
         competent court or governmental agency to be prohibited or
         unenforceable in any jurisdiction will, as to such provision and
         jurisdiction only, be deemed severed to the extent of such prohibition
         and unenforceability and, subject to such severance, this agreement
         will continue in effect in accordance with its other terms and
         conditions.


SECTION XX: NOTICES

20.1     Any notice or other communications required or permitted hereunder
         shall be sufficiently given if delivered in person or sent by facsimile
         transmission or telex (promptly confirmed by registered or certified
         mail as provided herein) or by registered or certified mail, postage
         prepaid, addressed as follows:

                  If to CHRONIMED:
                  ---------------
                  13911 Ridgedale Drive
                  Suite 250
                  Minnetonka, Minnesota 55305

                  Attention: Medical Products Division - Sr. Vice President
                  Fax No.: (612) 541-4969

                  If to XXX:
                  ---------
                  XXX
                  XXXXXXXXXX
                  XXXXXXXXXXXX


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                  Attention: President Fax No.: XXXXXXXX

                  or such address as shall be furnished in writing by any such
                  party, and such notice or communication shall be deemed to
                  have been given as of the date so delivered, sent by facsimile
                  transmission or telex and shall be deemed to have been given
                  on the date so mailed.


SECTION XXI: GOVERNING LAW

21.1     The validity, construction and performance of this agreement will be
         governed by and interpreted in accordance with the laws of the State of
         XXXXXXXXX, United States of America (excluding its law of conflict of
         laws).


SECTION XXII: ARBITRATION

22.1     Any controversy or claim arising out of or relating to this agreement
         or any claimed breach thereof shall be settled by arbitration in
         accordance with the rules of the American Arbitration Association, and
         judgment upon the award rendered by the arbitrators may be entered by
         any court having jurisdiction thereof. The arbitration proceedings
         shall take place in the State of XXXXXXXXXXX, United States of America.


SECTION XXIII: RELATIONSHIP OF PARTIES

23.1     XXX is an independent contractor and has and shall have no power to
         bind CHRONIMED or to assume or create any obligation or responsibility,
         express or implied, on behalf of CHRONIMED or in its name. Nothing
         herein contained shall be construed as constituting, either party the
         agent, partner or co-venturer of the other party.


SECTION XXIV: ENTIRE AGREEMENT

24.1     This agreement and its Exhibits incorporates all prior oral and written
         communications between the parties with respect to the subject matter
         hereof and, as such, supersedes all such prior oral and written
         communications concerning, and constitutes the sole and exclusive
         understanding between the parties with respect to, the subject matter
         hereof, except to the extent that the First Manufacturing Agreement
         applies to Products shipped before the effective date hereof.

         IN WITNESS WHEREOF, CHRONIMED and XXX have caused this agreement to be
         executed by their duly authorized representatives as of the date first
         above written.

         XXXXXXXXXXX                            CHRONIMED INC.


                  By                             By

                  Its                            Its

                  Date                           Date