<PAGE>

Exhibit 10.40

                        INVESTMENT AND ROYALTY AGREEMENT

This Investment and Royalty Agreement (this "Agreement") is made as of March 5,
2003, by and between Columbia Laboratories, Inc., a Delaware corporation
("Columbia"), and PharmaBio Development Inc., a North Carolina corporation
("PharmaBio"). Columbia and PharmaBio may each be referred to herein
individually as a "Party" and collectively as the "Parties."

                             Background and Overview

Columbia has requested and PharmaBio is willing to provide certain funds to
Columbia, subject to and upon the terms and conditions below.

For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties agree as follows:

                                    ARTICLE I

                                   Definitions

1.1  "Adverse Marketing Event" shall mean the occurrence after the Product
     Launch Date of any of the following: (i) Columbia or its licensees shall
     withdraw, or be required by the FDA or other Governmental Authority to
     withdraw, the Product from the market in the Territory for any reason for a
     period that is greater than [***] days and that is, or is reasonably
     expected to be, not greater than [***] days; or (ii) Columbia or its
     licensees shall fail to have a supply of the Product, consistent with past
     quantities and practices, or shall fail to supply Product, in response to
     orders thereof, for a period of time that is, or is reasonably expected to
     be, greater than [***] days.

1.2  "Affiliate" shall mean, as to any person or entity, any corporation or
     business entity controlled by, controlling, or under common control with
     such person or entity. For this purpose, "control" shall mean direct or
     indirect beneficial ownership of at least fifty percent (50%) of the voting
     stock or income interest in such corporation or other business entity, or
     such other relationship as, in fact, constitutes actual control.

1.3  "Annual Period" shall mean a twelve-month period beginning on the first day
     of the month following the Product Launch Date and each anniversary
     thereof, subject to extension as described in Section 2.5, except the first
     Annual Period shall also include the period from the Product Launch Date to
     the first day of the month following the Product Launch Date.

1.4  "Approvable Letter" shall mean a letter from the FDA pursuant to 21 CFR
     314.110 with respect to the NDA for the Product with labeling substantially
     similar to the labeling requested by Columbia in the NDA as in effect on
     the date hereof.

    [***] A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED AND FILED
     SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

1.5  "Approval Letter" shall mean a letter from the FDA pursuant to 21 CFR
     314.105 with respect to the NDA for the Product with labeling substantially
     similar to the labeling requested by Columbia in the NDA as in effect on
     the date hereof.

1.6  "Business Day" shall mean any day other than a Saturday, Sunday or legal
     holiday on which banks in North Carolina and New York are open for the
     conduct of their banking business.

1.7  "Columbia SEC Reports" shall have the meaning specified in Section 3.3
     herein.

1.8  "Commission" means the United States Securities and Exchange Commission.

1.9  "Debt" shall mean (i) indebtedness for borrowed money, (ii) obligations
     evidenced by bonds, debentures, notes or other similar instruments, (iii)
     obligations to pay the deferred purchase price of property or services,
     (iv) obligations as lessee under leases which shall have been or should be,
     in accordance with generally accepted accounting principles, recorded as
     capital leases, and (v) obligations under direct or indirect guaranties in
     respect of, and obligations (contingent or otherwise) to purchase or
     otherwise acquire, or otherwise to assure a creditor against loss in
     respect of, indebtedness or obligations of others of the kinds referred to
     in clauses (i) through (iv) above. For the avoidance of doubt, Debt shall
     not include day-to-day obligations and payables incurred by Columbia in the
     ordinary course of business.

1.10 "Exchange Act" means the Securities Exchange Act of 1934, as from time to
     time amended, and the rules and regulations of the Commission promulgated
     thereunder.

1.11 "Existing Royalty Agreement" shall mean the Investment and Royalty
     Agreement between the Parties dated July 31, 2002 (regarding Advantage-S,
     Crinone, Prochieve and RepHresh).

1.12 "Event of Default" shall have the meaning set forth in Section 2.1.

1.13 "FDA" shall mean the United States Food and Drug Administration.

1.14 "GAAP" shall mean generally accepted accounting principles.

1.15 "Governmental Authority" means any foreign, Federal, state or local court
     or governmental or regulatory agency or authority.

1.16 "Innovex" shall mean Innovex LP, a New Jersey limited partnership, whose
     address is 10 Waterview Boulevard, Parsippany, NJ 07054, which is an
     Affiliate of PharmaBio.

1.17 "Law" means any United States Federal, state, local or foreign law,
     statute, rule, regulation, order, writ, injunction, judgment or decree of
     any Governmental Authority.

1.18 "Lien" shall mean any lien, security interest, mortgage, pledge,
     encumbrance, charge or claim.

                                       2

    [***] A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED AND FILED
     SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

1.19 "Market Withdrawal" shall mean the occurrence after the Product Launch Date
     of any of the following: (i) Columbia or its licensees shall withdraw, or
     be required by the FDA or other Governmental Authority to withdraw, the
     Product from the market in the Territory for any reason for a period that
     is, or is reasonably expected to be, greater than [***] days; or (ii)
     Columbia or its licensees shall fail to have a supply of the Product,
     consistent with past quantities and practices, for a period of time that
     is, or is reasonably expected to be, greater than [***] days.

1.20 "Master Services Agreement" shall mean the agreement dated July 31, 2002,
     between Columbia and Innovex, together with the Sales Force Work Order
     dated as of the date hereof under such agreement, pursuant to which Innovex
     agrees to provide contract sales services to Columbia, as well as any the
     work orders thereunder relating to the Product.

1.21 "Material Adverse Effect" shall mean a material adverse effect on the
     business, operations, properties or financial condition of Columbia and its
     Subsidiaries, taken as a whole, or a material adverse effect on the
     manufacture, marketing, distribution or sale of the Product in the
     Territory, taken as a whole; provided, however, that the following shall be
     excluded from any determination as to whether a Material Adverse Effect has
     occurred: (i) any effect resulting from or arising in connection with this
     Agreement or the transactions contemplated thereby, (ii) the effects of
     changes or conditions generally affecting the pharmaceutical industry, and
     (iii) changes in general economic, financial market, regulatory or
     political conditions.

1.22 "Minimum Sales Force Level" shall mean a Columbia sales force size of not
     less than [***] full-time Columbia sales representatives promoting the
     Product in the first detailing position, provided that any open sales
     territory for which Columbia or Innovex is actively recruiting a sales
     representative shall be counted as a Columbia sales representative for
     purposes of this definition.

1.23 "NDA" shall mean a "new drug application" as such term is used under the
     United States Federal Food, Drug and Cosmetic Act, as amended from time to
     time, and all regulations promulgated thereunder.

1.24 "Net Sales" shall mean the gross amount billed or invoiced by Columbia or
     an Affiliate or any licensee or sublicensee (or other transferee), or on
     behalf of or for the benefit of Columbia or an Affiliate or any licensee or
     sublicensee (or other transferee), for sales of the Product, to a third
     party in the Territory, less the following items, but only to the extent
     such items are included in such gross amount and without duplication:

          (i)  discounts, including cash and quantity discounts, charge-back
               payments, refunds and rebates granted to managed health care
               organizations or similar organizations or to federal, state and
               local governments (including, without limitation, Medicaid
               rebates), their agencies, and purchasers and reimbursers or to
               trade customers, including but not limited to, wholesalers and
               chain and pharmacy buying groups;

                                       3

    [***] A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED AND FILED
     SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

          (ii) actual credits or allowances resulting from customer claims,
               damaged goods, rejections or returns of the Product, including
               recalls, regardless of the party requesting such;

          (iii) freight, postage, shipping and insurance charges actually
               allowed or paid for delivery of the Product, to the extent
               billed;

          (iv) taxes, duties or other governmental charges levied on, absorbed
               or otherwise imposed on sale of the Product, including without
               limitation value-added taxes, or other governmental charges
               otherwise measured by the billing, when included in billing, as
               adjusted for rebates, charge-backs and refunds, but not including
               income or similar taxes; and

          (v)  actual write-offs of uncollectible customer accounts for recorded
               sales, provided that (x) any subsequent collection of such
               uncollectible accounts shall be restored as Net Sales at the time
               of collection and (y) Columbia shall follow commercially
               reasonable practices of collecting and otherwise administering
               such accounts.

1.25 "Not Approvable Letter" shall mean a letter from the FDA pursuant to 21 CFR
     314.120 with respect to the NDA for the Product.

1.26 "Product" shall mean (i) the controlled and sustained release bioadhesive
     buccal product containing testosterone for which Columbia has filed NDA #
     21-543, and which Columbia plans to market in the Territory under the
     trademark Striant, and shall also include such product in any and all
     dosages or strengths and for any and all indications in men and any and all
     "off-label" uses and (ii) any other controlled and sustained release
     bioadhesive buccal product with testosterone as the active ingredient
     either alone or in combination with another active ingredient in any and
     all dosages or strengths and for any and all indications in men and any and
     all "off-label" uses. For the avoidance of doubt, sales of the Product for
     "off-label" uses by women shall be included in Net Sales.

1.27 "Product Launch Date" shall mean the first date that commercial quantities
     of the Product are sold in the Territory.

1.28 "Royalty Term" shall mean the seven (7) consecutive Annual Periods
     beginning on the Product Launch Date.

1.29 "Securities Act" means the Securities Act of 1933, as from time to time
     amended, and the rules and regulations of the Commission promulgated
     thereunder.

1.30 "Subsidiary" and "Subsidiaries" shall have the respective meanings
     specified in Section 3.5.

1.31 "Territory" shall mean the United States of America and all states thereof,
     the District of Columbia, and Puerto Rico.

                                       4

    [***] A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED AND FILED
     SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

1.32 "Transaction Agreements" shall mean, collectively, this Agreement and the
     Master Services Agreement.

1.33 "Transactions" shall mean, collectively, the transactions contemplated by
     the Transaction Documents.

1.34 "Warburg Note" shall mean that certain 7 1/8% Convertible Subordinated Note
     (No. R-1 $10,000,000) issued by Columbia to SBC Warburg Dillon Read Inc.
     dated March 16, 1998 (including any refinancing, replacement, substitution
     or restatement of such Note).

                                   ARTICLE II

                  Investment and Royalties; Related Agreements

2.1  PharmaBio will make the following payments to Columbia:

     Quarterly Payment Date     Amount
     ----------------------   ----------

     March 7, 2003            $3,000,000

     June 1, 2003             $3,000,000

     September 1, 2003        $3,000,000

     December 1, 2003         $3,000,000

     March 1, 2004            $3,000,000

     Notwithstanding the foregoing, if on or before a Quarterly Payment Date set
     forth above, (i) Columbia has received a Not Approvable Letter, or (ii)
     PharmaBio has made payments under this Section 2.1 of at least [***] and
     Columbia has not received an Approval Letter, then PharmaBio may, in its
     sole discretion, suspend making any additional payments under this Section
     2.1 until such time as Columbia receives an Approval Letter. If PharmaBio
     suspends one or more quarterly payments under the preceding sentence and
     Columbia subsequently receives an Approval Letter, promptly thereafter (and
     in any case within [***] PharmaBio shall pay Columbia any quarterly
     payments that PharmaBio had suspended. If PharmaBio suspends one or more
     payments under this Section 2.1 and Columbia has not received an Approval
     Letter, but Columbia has received an Approvable Letter, then PharmaBio
     agrees to discuss in good faith with Columbia mutually acceptable
     arrangements under which PharmaBio could continue payments or a portion
     thereof under this Section 2.1, prior to receipt of an Approval Letter.

     Notwithstanding the foregoing, upon the occurrence of an Event of Default,
     PharmaBio may at any time, if an Event of Default shall then be continuing,
     by written notice to Columbia, terminate all of its future funding
     obligations under this Section 2.1, so long as Innovex is not in default in
     any material respect of its performance of its material

                                       5

    [***] A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED AND FILED
     SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

     obligations under the Master Services Agreement and the work orders
     thereunder relating to the Product.

     "Event of Default" shall mean and include each of the following:

     (a)  Columbia shall fail to pay any royalties to PharmaBio when the same
          become due and payable to PharmaBio and [***] Business Days have
          elapsed following receipt of written notice of such non-payment from
          PharmaBio to Columbia;

     (b)  Any material representation or warranty made by Columbia under this
          Agreement shall prove to have been untrue or incorrect in any material
          respect when made;

     (c)  Columbia shall fail to perform or comply with any material agreement
          or covenant made by Columbia under this Agreement in any material
          respect;

     (d)  Columbia shall sell, assign, license, lease or otherwise transfer all
          or substantially all of its assets or properties owned (or otherwise
          held by it) relating to the Product, in one or a series of related
          transactions, without the prior written consent of PharmaBio;

     (e)  A Market Withdrawal shall occur;

     (f)  Columbia shall not have received an Approval Letter for the Product
          from the FDA by [***];

     (g)  Columbia shall receive a Not Approvable Letter, and does not receive
          an Approval Letter for the Product within 6 months thereafter;

     (h)  Columbia shall (i) commence a voluntary case under the federal
          bankruptcy laws (as now or hereafter in effect), (ii) file a petition
          seeking to take advantage of any other Laws relating to bankruptcy,
          insolvency, reorganization, winding up or composition for adjustment
          of debts, (iii) consent to or fail to contest in a timely and
          appropriate manner any petition filed against it in an involuntary
          case under such bankruptcy laws or other Laws, (iv) apply for or
          consent to, or fail to contest in a timely and appropriate manner, the
          appointment of, or the taking of possession by, a receiver, custodian,
          trustee, or liquidator of itself or of a substantial part of its
          property, (v) admit in writing its inability to pay its debts as they
          become due, (vi) make a general assignment for the benefit of
          creditors, or (vii) take any corporate action for the purpose of
          authorizing any of the foregoing;

     (i)  A case or other proceeding shall be commenced against Columbia in any
          court of competent jurisdiction seeking (i) relief under the federal
          bankruptcy laws (as now or hereafter in effect) or under any other
          Laws relating to bankruptcy, insolvency, reorganization, winding up or
          adjustment of debts, or (ii) the appointment of a trustee, receiver,
          custodian, liquidator or the like for Columbia or any of its
          subsidiaries or for all or any substantial part of their respective
          assets, and such case or proceeding shall continue without dismissal
          or stay for a period

                                       6

    [***] A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED AND FILED
     SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

          of sixty (60) consecutive days, or an order granting the relief
          requested in such case or proceeding (including, but not limited to,
          an order for relief under such federal bankruptcy laws) shall be
          entered; or

     (j)  Any indebtedness of Columbia or any of its subsidiaries in excess of
          $[***] shall be declared to be due and payable, or required to be
          prepaid, prior to the stated maturity thereof, and Columbia shall fail
          to pay the same within [***] days of such declaration.

     The Parties agree that an Event of Default under the terms of this
     Agreement shall constitute an Event of Default under the Existing Royalty
     Agreement. If an Event of Default occurs under Section 2.1(a) of the
     Existing Royalty Agreement because of Columbia's failure to pay royalties
     when due, PharmaBio may, in its sole discretion, suspend making any
     additional payments under Section 2.1 of this Agreement until such time as
     the Event of Default under Section 2.1(a) of the Existing Royalty Agreement
     no longer is continuing.

2.2  In the event that (i) PharmaBio terminates all of its future funding
     obligations under Section 2.1 upon an Event of Default, or (ii) Columbia
     terminates this Agreement under Section 8.1, then Columbia shall pay to
     PharmaBio the aggregate amount (the "Repayment Amount") by which the
     aggregate amount of payments by PharmaBio under this Agreement (the
     "Aggregate Payments") exceeds the aggregate amount of royalties, if any,
     paid by Columbia to PharmaBio under this Agreement, plus accrued interest,
     in full satisfaction of Columbia's obligations under this Agreement. For
     purposes of this calculation, interest shall (i) accrue on the Aggregate
     Payments at a rate equal to the greater of [***] or the Prime Rate as
     announced from time to time by Wachovia Bank, N.A. (or its successor) plus
     [***] and (ii) accrue from the date of the payment of funds by PharmaBio to
     Columbia until the Repayment Amount is paid by Columbia. The Repayment
     Amount shall be immediately due and payable in full, except that in the
     case of an Event of Default described in Sections 2.1(b), 2.1(c), 2.1(e),
     2.1(f) and 2.1(g), the Repayment Amount shall be paid over [***] years in
     [***] equal monthly installments beginning thirty (30) days after
     PharmaBio's termination of its funding obligations or Columbia's
     termination of the Agreement, as the case may be. PharmaBio shall have no
     obligation to terminate its funding obligations upon an Event of Default
     and in lieu thereof may exercise its remedies under the other provisions of
     this Agreement. In the event that the Repayment Amount becomes due and
     payable pursuant to this Section 2.2, Columbia acknowledges and agrees that
     the Repayment Amount shall constitute indebtedness of Columbia payable to
     the order of PharmaBio.

2.3  In consideration of PharmaBio's funding commitments set forth in Section
     2.1, with respect to each Annual Period of the Royalty Term, Columbia shall
     pay PharmaBio royalties equal to nine percent (9%) of Net Sales during an
     Annual Period up to the Net Sales Baseline applicable to such Annual Period
     as set forth in the table below and royalties equal to four and one-half
     percent (4 1/2 %) of Net Sales during an Annual Period in excess of such
     Net Sales Baseline.

                                       7

    [***] A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED AND FILED
     SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

     ----------------------------------
     Annual Period   Net Sales Baseline
     ----------------------------------
            1              [***]
     ----------------------------------
            2              [***]
     ----------------------------------
            3              [***]
     ----------------------------------
            4              [***]
     ----------------------------------
            5              [***]
     ----------------------------------
            6              [***]
     ----------------------------------
            7              [***]
     ----------------------------------

     Notwithstanding anything to the contrary contained in this Agreement, the
     total royalties payable to PharmaBio under this Section 2.3 shall not (i)
     exceed in the aggregate for all Annual Periods the amount of $55,000,000
     (the "Maximum Royalty Amount"), or (ii) be less than $30,000,000 in the
     aggregate for all Annual Periods (the "Minimum Royalty Amount"). With
     respect to the Minimum Royalty Amount: if by the end of the third Annual
     Period without regard to extension of any Annual Period under Section 2.5,
     PharmaBio has not received at least $[***] in aggregate royalties under
     this Section 2.3 (with respect to Net Sales for the first three Annual
     Periods without regard to extension of any Annual Period under Section
     2.5), then Columbia will pay PharmaBio the difference between the amount of
     royalties actually received and $[***]; and at the end of the seventh (7th)
     Annual Period, if PharmaBio has not received at least $30,000,000 in
     aggregate royalties under this Section 2.3, then Columbia will pay
     PharmaBio the difference between the amount of royalties actually received
     and $30,000,000, provided that the time for payments under this sentence
     shall be extended by the period of any extension of the Royalty Term under
     Section 2.5, provided further that in no event shall such extension for
     payments under this sentence be extended more than six (6) months beyond
     the original due date. The Minimum Royalty Amount shall be payable by
     Columbia to PharmaBio notwithstanding the actual sales of the Product or
     other Product-related events, including without limitation any Adverse
     Marketing Event or Market Withdrawal.

     Notwithstanding the foregoing provisions of this Section 2.3 and provided
     Columbia has made all royalty payments with respect to all Annual Periods
     through the applicable "Calculation Date" in the table below, if, on the
     applicable Calculation Date, the aggregate royalties paid to PharmaBio for
     all Annual Periods, through and including the Annual Period that includes
     the Calculation Date, equals or exceeds the applicable Termination Amount
     in the table below, the obligation of Columbia to pay royalties to
     PharmaBio under this Section 2.3 with respect to Annual Periods after the
     Calculation Date shall terminate.

     ----------------------------------------------------
            Calculation Date           Termination Amount
     ----------------------------------------------------
     End of the Third Annual Period    [***]
     ----------------------------------------------------

                                       8

    [***] A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED AND FILED
     SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

     ----------------------------------------------------
     End of the Fourth Annual Period   [***]
     ----------------------------------------------------
     End of the Fifth Annual Period    [***]
     ----------------------------------------------------
     End of the Sixth Annual Period    [***]
     ----------------------------------------------------

     The royalty payments under this Section 2.3 shall be paid by Columbia on a
     quarterly basis as soon as reasonably practicable following the end of each
     calendar quarter (but not later than forty five (45) days following the end
     of each calendar quarter, except following the fourth calendar quarter, in
     which case Columbia shall have up to 60 days) during the seven (7) Annual
     Periods in the Royalty Term. Accompanying each of Columbia's payments to
     PharmaBio under this Section, Columbia will provide to PharmaBio a report
     showing the applicable Net Sales and the calculation of the resulting
     royalty payment. Columbia also shall provide PharmaBio with all sales data
     for the Product that are available to Columbia.

2.4  As further consideration for PharmaBio's funding commitments set forth in
     Section 2.1, Columbia shall reimburse PharmaBio for the fees and expenses
     of its outside legal counsel as counsel for Quintiles in connection with
     the negotiation, execution, and closing of this Agreement and the
     consummation of the transactions contemplated thereby, which attorneys'
     fees and expenses shall be offset by PharmaBio against the initial payment
     amount otherwise due to Columbia under Section 2.1.

2.5  Columbia shall use its commercially reasonable efforts to commercialize the
     Product in the Territory. Without limiting the foregoing, Columbia will
     provide a sales force of an average size, calculated on a quarterly basis,
     not less than the Minimum Sales Force Level during the Royalty Term. If, at
     any time during such period, (a) Columbia reduces the Product's average
     sales force below the Minimum Sales Force Level for a period of more than
     [***] days and Innovex is not in default in any material respect of its
     performance of its material obligations under the Master Services Agreement
     and the work orders thereunder relating to the Product, (b) an Adverse
     Marketing Event shall occur, or (c) a Market Withdrawal shall occur, then
     Columbia and PharmaBio will negotiate in good faith to restructure
     PharmaBio's commitments under Section 2.1 and the corresponding royalty
     amounts under Section 2.3, which negotiations will take into account the
     implications of the reduced sales force size or Adverse Marketing Event or
     Market Withdrawal, as the case may be, on future sales of the Product. If
     the Parties are unable to agree to such restructuring within [***] days
     after PharmaBio gives written notice to Columbia of its intent to pursue a
     remedy under this Section 2.5, then, provided Innovex is not in default in
     any material respect of its performance of its material obligations under
     the Master Services Agreement and the work orders thereunder relating to
     the Product, PharmaBio may, at its sole discretion by written notice to
     Columbia, elect to (i) suspend all future funding obligations under Section
     2.1; and (ii) extend the Royalty Term (including, without limitation, the
     then-current Annual Period). During the suspension and extension period,
     PharmaBio shall continue to receive royalties at the rate equal to the
     royalty amount applicable immediately prior to the effective date of such
     suspension and extension. If PharmaBio elects this remedy, the then-current
     Annual Period for royalty payments under Section 2.3, and the funding
     commitments under Section 2.1, shall be extended until the Minimum Sales
     Force Level is satisfied or the

                                        9

    [***] A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED AND FILED
     SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

     Adverse Marketing Event no longer exists or the Market Withdrawal no longer
     exists, as the case may be. The funding commitments under Section 2.1 shall
     resume as soon as Columbia achieves the Minimum Sales Force Level or the
     Adverse Marketing Event no longer exists or the Market Withdrawal no longer
     exists, as the case may be, and the end of the then current Annual Period
     shall be extended for the amount of such suspension and extension period,
     such that PharmaBio enjoys the full length of the seven (7) Annual Periods
     described in Section 2.3 with the benefit of the Minimum Sales Force Level
     or absence of the Adverse Marketing Event or absence of the Market
     Withdrawal, as the case may be, for seven (7) full twelve-month periods,
     and the term "Royalty Term" shall, for all purposes under this Agreement,
     be extended accordingly.

2.6  Each Party hereto shall keep or cause to be kept such records as are
     required to determine, in a manner consistent with GAAP, the sums or
     credits due under this Agreement. Each Party shall have the right, at such
     Party's expense, through a certified public accountant or like person
     reasonably acceptable to the other Party, upon execution of a customary
     confidentiality agreement, to examine such records during regular business
     hours upon reasonable notice during the term of this Agreement and for
     twelve (12) months after its termination; provided however, that (i) such
     examination shall not take place more than once a year and shall not cover
     such records for more than the preceding Annual Period, and (ii) such
     accountant shall report to both Parties only as to the accuracy of the
     reports or payments provided or made by the other Party under this
     Agreement. Any adjustments required as a result of overpayments or
     underpayments identified through a Party's exercise of examination rights,
     and any other adjustments that may be required from time to time in order
     to correct overpayments or underpayments under this Agreement, shall be
     made by subtracting or adding, as appropriate, amounts from or to the next
     royalty payment in accordance with Section 2.3. The Party requesting the
     examination shall bear the full cost of the examination unless such
     examination correctly discloses that the discrepancy for the Annual Period
     differs by more than five (5) percent from the amount the accountant
     determines is correct, in such case the owing Party shall pay the
     reasonable fees and expenses charged by the accountant. In the event that a
     Party disputes an invoice or other payment obligation under this Agreement,
     such Party shall timely pay the amount of the invoice or other payment
     obligation, and the Parties shall resolve such dispute in accordance with
     Article XIII.

2.7  Without the prior written approval of PharmaBio, Columbia shall not, nor
     shall it allow any Affiliate or third party acting on behalf of or for the
     benefit of Columbia or any Affiliate to, commercialize or promote a product
     that could reasonably be expected to compete with the Product in the
     Territory during the Royalty Term.

2.8  The Chief Financial Officers ("CFOs") of Columbia and PharmaBio shall
     coordinate the activities of the Parties under this Agreement. The CFOs
     shall meet or communicate (in person or by telephone conference) on a
     regular basis as may be reasonably requested by either of them, but no less
     frequently than semi-annually about the performance of the Parties under
     this Agreement. The Parties acknowledge that a Steering Committee will be
     established as described in the Master Services Agreement. The Parties
     agree that, in addition to the activities described in the Master Services
     Agreement, the Steering

                                       10

    [***] A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED AND FILED
     SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

     Committee will coordinate and facilitate the overall commercialization
     relationship among PharmaBio and its Affiliates and Columbia and its
     Affiliates, including with respect to this Agreement.

2.9  Columbia agrees not to sell, assign, license, lease or otherwise transfer
     all or any substantial portion of its assets or properties owned (or
     otherwise held) relating to the Product in one or a series of related
     transactions, without the prior written consent of PharmaBio, which consent
     shall not be unreasonably withheld or delayed.

2.10 Without the prior written consent of PharmaBio, which consent shall not be
     unreasonably withheld or delayed, Columbia shall not create or incur or
     allow to be created, incurred or exist any Debt, except Debt which is
     junior and subordinate in right of payment to the Minimum Royalty Amount
     and the Repayment Amount (such Debt being referred to herein as "Junior
     Debt"), so long as prior to the creation of such Junior Debt the holder
     thereof has agreed to subordination terms and conditions in form and
     substance reasonably satisfactory to PharmaBio providing for the
     subordination of the Junior Debt to the Minimum Royalty Amount and the
     Repayment Amount. Columbia and PharmaBio agree that Columbia's payment
     obligations under this Agreement, including the Minimum Royalty Amount and
     the Repayment Amount, shall be and constitute "Senior Indebtedness" as such
     term is used in the Warburg Note.

2.11 Without the prior written consent of PharmaBio, which consent shall not be
     unreasonably withheld or delayed, Columbia shall not create or incur or
     allow to be created, incurred or exist any Lien upon or with respect to any
     of Columbia's assets or properties, except Liens securing Debt or other
     obligations which are junior and subordinate in right of payment to the
     Minimum Royalty Amount and the Repayment Amount (such Liens being referred
     to herein as "Junior Liens"), so long as prior to the creation of such
     Junior Liens the holder thereof has agreed to subordination terms and
     conditions in form and substance reasonably satisfactory to PharmaBio
     providing for the subordination of the Junior Liens to the Minimum Royalty
     Amount and the Repayment Amount.

2.12 Columbia shall have sole responsibility for all FDA and regulatory related
     obligations regarding the Product. Columbia shall also have responsibility
     for manufacturing, distribution and marketing of the Product, except as set
     forth in the Master Services Agreement.

                                   ARTICLE III

                   Representations and Warranties of Columbia

     Columbia hereby represents and warrants to PharmaBio as of the date hereof
     as follows:

3.1  Organization and Qualification. Columbia is a corporation duly organized,
     validly existing and in good standing under the Laws of the State of
     Delaware, and Columbia is qualified to do business as a foreign corporation
     in each jurisdiction in which such qualification is required, except where
     failure to so qualify would not have a Material Adverse Effect. Columbia
     has all requisite corporate power and authority to own, lease

                                       11

    [***] A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED AND FILED
     SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

     and operate its properties and to carry on its businesses as now conducted
     and as proposed to be conducted.

3.2  Authority and Consents. Columbia has all necessary corporate power and
     authority to execute and deliver the Transaction Agreements and to
     consummate the Transactions. The execution and delivery of the Transaction
     Agreements and consummation of the Transactions have been duly authorized
     by all necessary corporate action on the part of Columbia and no other
     corporate proceedings on the part of Columbia are necessary to authorize
     the Transaction Agreements or to consummate the Transactions. The
     Transaction Agreements have been duly and validly executed and delivered by
     Columbia and constitute valid, legal and binding agreements of Columbia,
     enforceable against Columbia in accordance with their respective terms. No
     consent, authorization or order of, or filing or registration with, any
     Governmental Authority is required to be obtained or made by Columbia for
     the execution, delivery and performance of the Transaction Agreements or
     the consummation of the Transactions. Neither the execution, delivery and
     performance of the Transaction Agreements by Columbia nor the consummation
     by Columbia of the Transactions will (i) conflict with or result in any
     breach of any provision of the certificate of incorporation or bylaws of
     Columbia; (ii) violate any Law applicable to Columbia or any of its
     Subsidiaries or the Transactions; or (iii) result in the creation of any
     Lien upon any assets of Columbia or any of its Subsidiaries pursuant to the
     terms or provisions of, or will not conflict with, result in the breach or
     violation of, or constitute, either by itself or upon notice or the passage
     of time or both, a default under any agreement, mortgage, deed of trust,
     lease, franchise, license, indenture, permit or other instrument to which
     Columbia or any of its Subsidiaries is a party or by which Columbia or any
     of its Subsidiaries or any of their respective properties may be bound,
     except in the case of clauses (ii) and (iii) for such violation, Lien or
     default which would not, individually or in the aggregate, have and which
     could not reasonably be expected to have a Material Adverse Effect.

3.3  Columbia SEC Reports; Financial Statements. Columbia has made available to
     PharmaBio (i) Columbia's Annual Reports on Form 10-K for each of the fiscal
     years ended December 31, 2000 and December 31, 2001; (ii) all definitive
     proxy statements relating to Columbia's meetings of stockholders (whether
     annual or special) held since January 1, 2001; and (iii) all other reports
     or registration statements filed by Columbia with the Commission since
     January 1, 2001 (all such filings at (i) through (iii), collectively, the
     "Columbia SEC Reports"). As of their respective filing dates, the Columbia
     SEC Reports were prepared in all material respects in accordance with the
     requirements of the Securities Act or the Exchange Act, as the case may be,
     applicable to the Columbia SEC Reports. None of such forms, reports or
     registration statements contained, when filed, any untrue statement of a
     material fact or omitted to state a material fact required to be stated or
     incorporated by reference therein or necessary in order to make the
     statements therein, in light of the circumstances under which they were
     made, not misleading. The consolidated financial statements of Columbia
     included in the Columbia SEC Reports complied as to form in all material
     respects with applicable accounting requirements and the published rules
     and regulations of the Commission with respect thereto when the same were
     filed and fairly presented, in conformity with GAAP

                                       12

    [***] A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED AND FILED
     SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

     applied on a consistent basis (except as may be indicated in the notes
     thereto), the consolidated financial position of Columbia and its
     consolidated Subsidiaries as of the dates thereof and their consolidated
     results of operations and changes in financial position for the periods
     then ended (subject, in the case of the unaudited interim financial
     statements, to normal year-end adjustments). Columbia has filed with the
     Commission on a timely basis, or received a valid extension of such time of
     filing, all forms, reports and documents required to be filed by it under
     the Exchange Act since January 2, 2001.

3.4  Absence of Undisclosed Liabilities. Except as and to the extent
     specifically reflected or reserved against on the consolidated balance
     sheets of Columbia as of December 31, 2001, included in Columbia's Annual
     Report on Form 10-K for the fiscal year ended December 31, 2001, or
     otherwise disclosed in the Columbia SEC Reports, neither Columbia nor any
     of its Subsidiaries have any material debts, liabilities or obligations of
     any nature, whether accrued, absolute, contingent or otherwise, and whether
     due or to become due, arising out of transactions entered into, or any
     state of facts existing on or prior to the date of this Agreement that
     would be required under GAAP to be reported on the balance sheet of
     Columbia, other than liabilities and obligations (1) arising in the
     ordinary course of business after December 31, 2001, which do not have a
     Material Adverse Effect, or (2) arising in connection with the
     Transactions, which do not have a Material Adverse Effect.

3.5  Subsidiaries. Schedule 3.5 attached hereto sets forth each subsidiary of
     Columbia as of the date hereof (each a "Subsidiary" and together its
     "Subsidiaries"), showing the jurisdiction of its incorporation or
     organization and showing the percentage of each person's ownership of the
     outstanding stock or other interests of such Subsidiary. Each Subsidiary is
     duly organized, validly existing and in good standing under the Laws of its
     jurisdiction of incorporation and is qualified to do business as a foreign
     corporation in each jurisdiction in which qualification is required, except
     where failure to so qualify would not have a Material Adverse Effect. Each
     Subsidiary has all requisite corporate power and authority to carry on its
     business as now conducted.

3.6  Absence of Changes. Except as disclosed by Columbia in the Columbia SEC
     Reports, since December 31, 2001, (a) Columbia and its Subsidiaries have
     not incurred any liabilities or obligations (indirect or contingent) or
     entered into any written or oral agreements or other transactions which are
     outside of the ordinary course of business which have had or which would
     reasonably be expected to have, and there have been no changes in the
     business or operations of Columbia or any of the Subsidiaries which have
     had or which would reasonably be expected to have, a Material Adverse
     Effect; (b) Columbia and its Subsidiaries have not sustained any material
     loss or interference with their respective businesses or properties from
     fire, flood, windstorm, accident or other calamity not covered by
     insurance; and (c) Columbia has not paid or declared any dividends or other
     distributions with respect to its common stock and Columbia is not in
     default in the payment of principal or interest on any outstanding debt
     obligations.

3.7  No Defaults. Except as to defaults, violations and breaches which
     individually or in the aggregate would not have a Material Adverse Effect
     on Columbia, neither Columbia nor

                                       13

    [***] A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED AND FILED
     SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

     any of its Subsidiaries is in violation or default of any provision of its
     certificate of incorporation or bylaws, or other organizational documents,
     or in breach of or default with respect to any provision of any agreement,
     judgment, decree, order, mortgage, deed of trust, lease, franchise,
     license, indenture, permit or other instrument to which it is a party or by
     which it or any of its properties are bound; and there does not exist any
     state of fact which, with notice or lapse of time or both, would constitute
     an event of default or default on the part of Columbia or any Subsidiary as
     defined in such documents or instruments, except such defaults which
     individually or in the aggregate would not have a Material Adverse Effect
     on Columbia.

3.8  Material Agreements.

     (a) Except as included or incorporated by reference in, or otherwise
     referred to in, the Columbia SEC Reports, or listed on Schedule 3.8(a),
     neither Columbia nor any of its Subsidiaries is a party to any written or
     oral contract, instrument, agreement, commitment, obligation, plan or
     arrangement, a copy of which would be required to be filed with the
     Commission as an exhibit to a registration statement on Form S-1
     (collectively, "Material Agreements") if Columbia was registering
     securities under the Securities Act. The Material Agreements are in full
     force and effect and Columbia or its Subsidiary, as the case may be, has in
     all material respects performed all the obligations required to be
     performed by it to date under such agreements, has received no notice of
     default and, to the best of Columbia's knowledge, neither Columbia nor any
     of its Subsidiaries nor any party obligated to Columbia or to any
     Subsidiary is in default under any Material Agreement now in effect, the
     result of which could reasonably be expected to cause a Material Adverse
     Effect. All Material Agreements constitute valid and binding obligations of
     Columbia or one or more of its Subsidiaries, as the case may be,
     enforceable against Columbia or such Subsidiaries in accordance with their
     respective terms.

     (b) Schedule 3.8(b) sets forth each of the material contracts related to
     the Product. Each of the contracts set forth on Schedule 3.8(b) is in full
     force and effect and Columbia and its Affiliates have in all material
     respects performed all their respective obligations required to be
     performed by them to date under such agreements, have received no notice of
     default and, to the best of Columbia's knowledge, neither Columbia nor its
     Affiliates nor any party obligated to Columbia is in default under such
     agreements, the result of which could reasonably be expected to cause a
     Material Adverse Effect on Columbia.

3.9  No Litigation or Other Actions. There are no legal or governmental actions,
     suits, proceedings or investigations pending or, to Columbia's knowledge,
     threatened to which Columbia or any of its Subsidiaries is or may be a
     party or of which property owned, licensed or leased by Columbia or any of
     its Subsidiaries is or may be the subject, which actions, suits,
     proceedings or investigations, individually or in the aggregate, might
     prevent or might reasonably be expected to have a material adverse affect
     on the Transactions or result in a Material Adverse Effect; and no labor
     disturbance by the employees of Columbia or any of its Subsidiaries exists
     or, to Columbia's knowledge, is imminent which might reasonably be expected
     to have a Material Adverse Effect, except

                                       14

    [***] A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED AND FILED
     SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

     as provided on Schedule 3.11. Neither Columbia nor any of its Subsidiaries
     is a party to or subject to the provisions of any material injunction,
     judgment, decree or order of any court, regulatory body administrative
     agency or other governmental body.

3.10 Properties (Other than Intellectual Property). Columbia and each of the
     Subsidiaries have valid title to all the properties and assets reflected as
     owned by such entities in the Columbia SEC Reports, subject to no lien,
     mortgage, pledge, charge or encumbrance of any kind except (i) those, if
     any, reflected in the Columbia SEC Reports, (ii) those which are not
     material in amount and do not adversely affect the use made and proposed to
     be made of such property by Columbia or its Subsidiaries, or (iii) those on
     Schedule 3.11. Columbia and each Subsidiary holds its leased properties
     under valid and binding leases. Columbia and each Subsidiary owns, leases
     or licenses all such properties necessary for the conduct of its respective
     business (as described in the Columbia SEC Reports).

3.11 Intellectual Property. Set forth on Schedule 3.11 are all of the patents,
     patent applications, trademark applications, and trademark registrations in
     the Territory used or held for use to develop, commercialize, market, make
     and distribute the Product. Columbia and each of its Subsidiaries owns or
     has valid and enforceable rights to use all Intellectual Property (as
     defined below) necessary to conduct their respective businesses as
     described in the Columbia SEC Reports including without limitation the
     Intellectual Property described on Schedule 3.11 and any other Intellectual
     Property used or held for use to develop, commercialize, market, make and
     distribute the Product in the Territory (collectively, the "Columbia
     Intellectual Property"). To the knowledge of Columbia, none of the Columbia
     Intellectual Property infringes, misappropriates or makes any unauthorized
     use of any Intellectual Property of any other person, except as provided on
     Schedule 3.11. Neither Columbia nor any of its Subsidiaries has received
     notice or other communication of any actual, alleged, or potential
     infringement, misappropriation or unauthorized use of Intellectual Property
     owned or used by any other person, except as provided on Schedule 3.11. To
     the knowledge of Columbia, no person is infringing, misappropriating or
     making any unauthorized use of any the Columbia Intellectual Property,
     except as would not reasonably be expected to have a Material Adverse
     Effect. Except as included or incorporated by reference in, or otherwise
     referred to in the Columbia SEC Reports, neither Columbia nor any of its
     Subsidiaries has entered into any agreement or arrangement, and neither
     Columbia nor any of its Subsidiaries is subject to any judgment, order or
     decree of any court or governmental or regulatory body limiting the ability
     of Columbia or its Subsidiaries, as applicable, to exploit freely the
     Columbia Intellectual Property or to transact business in any market with
     any person, except as provided on Schedule 3.11. There is no pending or, to
     the knowledge of Columbia, threatened action, claim, suit, proceeding or
     investigation before any court or any governmental or regulatory body
     challenging the validity, scope, ownership, or right to use the Columbia
     Intellectual Property, except as provided on Schedule 3.11. There are no
     actions, claims, suits or proceedings by Columbia or any of its
     Subsidiaries against any other person regarding the Columbia Intellectual
     Property or the Intellectual Property of such person. Columbia is not aware
     of any Intellectual Property owned or controlled by any other person, or of
     any facts, circumstances or events, that would materially impair or prevent
     Columbia or its Subsidiaries from developing, commercializing,

                                       15

    [***] A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED AND FILED
     SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

     marketing, making and distributing the Product as contemplated by the
     Columbia SEC Reports. "Intellectual Property" shall mean all: trade,
     business and product names; trademarks; service marks; copyrights; patents;
     inventions; discoveries; trade secrets; business and technical information;
     proprietary compilations of data or information; know-how; formulas and
     techniques; methods; regulatory filings and approvals; computer software;
     all intellectual property rights, registrations, licenses and applications
     pertaining to any of the foregoing; and all related documentation and
     goodwill.

3.12 Compliance. Each of Columbia and its Subsidiaries has been and is in
     compliance in all material respects with all applicable Laws in respect of
     the conduct of its respective business, the ownership of its respective
     properties and the Product, except where failure to so comply would not
     reasonably be expected to have a Material Adverse Effect. Each of Columbia
     and its Subsidiaries has all franchises, permits, licenses, consents and
     other governmental or regulatory authorizations and approvals necessary for
     the conduct of its respective business as now being conducted unless the
     failure to possess such franchises, permits, licenses, consents and other
     governmental or regulatory authorizations and approvals, individually or in
     the aggregate, would not reasonably be expected to have a Material Adverse
     Effect.

3.13 Taxes. Columbia has filed all federal, state, local and foreign income and
     other tax returns required to be filed by it and has paid or accrued all
     taxes shown as due thereon, except where failure to do so would not
     reasonably be expected have a Material Adverse Effect, and Columbia has no
     knowledge of a tax deficiency which has been or might be asserted or
     threatened against it or any of its Subsidiaries that would reasonably be
     expected to have a Material Adverse Effect.

3.14 Insurance. Columbia maintains insurance with sound and reputable insurance
     companies of the types and in the amounts that Columbia reasonably believes
     is adequate for its business, including, but not limited to, insurance
     covering all real and personal property owned, licensed or leased by
     Columbia and its Subsidiaries against all risks customarily insured against
     by similarly situated companies, all of which insurance is in full force
     and effect.

3.15 Employees. As of the date hereof, Columbia has no collective bargaining
     arrangements or agreements covering any of its employees. As of the date
     hereof, since January 1, 2001, no officer, consultant or key employee of
     Columbia whose termination, either individually or in the aggregate, could
     reasonably be expected to have a Material Adverse Effect, has terminated
     or, to the knowledge of Columbia, has any present intention of terminating
     his or her employment or engagement with Columbia.

3.16 Debt. No Debt is outstanding or owed by Columbia except the Debt listed on
     Schedule 3.16. Set forth on Schedule 3.16 is a list of all amounts of
     outstanding Debt of Columbia for borrowed money and the maturity dates
     thereof.

3.17 Liens. No Lien exists upon or with respect to any of Columbia's properties
     or assets.

                                       16

    [***] A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED AND FILED
     SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

3.18 FDA Matters. Columbia has (a) complied in all material respects with all
     applicable Laws in its preparation and submission of the NDA for the
     Product and in conducting the related clinical trials; and (b) not made to
     the FDA any untrue statement of a material fact regarding the Product
     (whether in any submission or otherwise) and not failed to disclose to the
     FDA any material fact required to be disclosed to it by the FDA regarding
     the Product.

3.19 Grant of Rights. Columbia has not granted any right to any Third Party
     which would conflict with the rights granted under the Transaction
     Agreements to PharmaBio or Innovex, as the case may be, nor entered into
     any agreement which would impair its ability to perform its obligations
     under the Transaction Agreements.

                                   ARTICLE IV

                              Additional Covenants

4.1  Compliance with Certain Material Agreements. Columbia shall perform and
     fulfill all of its obligations, and shall cause its Affiliates to perform
     and fulfill all of their respective obligations under each of the
     agreements listed on Schedule 3.8(b) as necessary to maintain Columbia's
     and its Affiliates' respective rights in such agreements in full force and
     effect in all material respects. Columbia shall provide written notice to
     PharmaBio within five (5) Business Days of Columbia's or any of its
     Affiliate's receipt of any notice from any other parties to any of the
     agreements listed on Schedule 3.8(b) proposing or threatening to terminate
     any such agreement.

4.2  Notice of Events of Default. Columbia agrees to provide prompt written
     notice of the occurrence of any Adverse Marketing Event or any Event of
     Default to PharmaBio but in any case not later than three Business Days
     after any such event.

4.3  FDA Correspondence. Columbia agrees to promptly (and in any case not later
     than three Business Days after receipt) provide to PharmaBio copies of
     material correspondence to or from the FDA related to the Product
     including, without limitation, any Not Approvable Letter or other FDA
     action letters.

4.4  Diligence. Columbia agrees to exercise commercially reasonable efforts to
     obtain FDA approval for and to launch the Product in the Territory.

4.5  Compliance. Columbia shall comply, and shall cause each of its Subsidiaries
     to comply, in all material respects with all applicable Laws in respect of
     the conduct of its respective business, the ownership of its respective
     properties and the Product, except where failure to so comply would not
     reasonably be expected to have a Material Adverse Effect. Columbia and its
     Subsidiaries shall maintain in full force and effect all franchises,
     permits, licenses, consents and other governmental or regulatory
     authorizations and approvals necessary for the conduct of their respective
     business as now being conducted unless the failure to possess such
     franchises, permits, licenses, consents and other

                                       17

    [***] A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED AND FILED
     SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

     governmental or regulatory authorizations and approvals, individually or in
     the aggregate, would not reasonably be expected to have a Material Adverse
     Effect.

4.6  Grant of Rights. During the term of this Agreement, Columbia will not
     grant, and shall ensure its Subsidiaries do not grant, any right to any
     third party which would conflict with the rights granted to the PharmaBio
     hereunder or enter into any agreement which would impair its ability to
     perform its obligations under this Agreement.

4.7  Maintenance of Insurance. Columbia shall at all times maintain insurance in
     full force and effect with sound and reputable insurance companies of the
     types and in the amounts that Columbia reasonably believes is adequate for
     its business, including, but not limited to, insurance covering all real
     and personal property owned, licensed or leased by Columbia and its
     Subsidiaries against all risks customarily insured against by similarly
     situated companies.

4.8  Subscription Right.

     (a) If at any time after the date hereof until the date on which PharmaBio
     (which for purposes of this Section 4.8 shall include its Affiliates) shall
     no longer own at least [***] of the shares of Columbia Common Stock
     purchased by PharmaBio under the Stock Purchase Agreement by and between
     PharmaBio and Columbia dated July 31, 2002, Columbia proposes to issue
     equity securities of Columbia of any kind, the primary purpose of which is
     to raise more than five million dollars ($5,000,000) in any six (6) month
     period in equity capital (the term "equity securities" shall include for
     these purposes any warrants, options or other rights to acquire equity
     securities and debt securities convertible into equity securities), other
     than (i) to the public in a firm commitment underwriting pursuant to a
     registration statement filed under the Securities Act, (ii) in connection
     with bona fide acquisitions, mergers, joint ventures or similar
     transactions, the terms of which are approved by Columbia's Board of
     Directors, (iii) pursuant to the Amended and Restated Common Stock Purchase
     Agreement by and between Columbia and Acqua Wellington North American
     Equities Fund, Ltd. effective as of February 6, 2001, or (iv) pursuant to
     any stock option, stock purchase or similar plan or arrangement for the
     benefit of the employees of Columbia or its Subsidiaries, adopted by the
     Board of Directors, then, Columbia shall:

          (i) give written notice to PharmaBio (no less than fifteen (15) days
     prior to the closing of such issuance) setting forth in reasonable detail
     (A) the material terms and provisions of the securities proposed to be
     issued (the "Proposed Securities"), (B) the price and other terms of the
     proposed sale of such securities; (C) the amount of such securities
     proposed to be issued; and (D) such other information as PharmaBio may
     reasonably request in order to evaluate the proposed issuance; and

          (ii) offer to issue and sell to PharmaBio, on such terms as the
     Proposed Securities are issued, upon full payment by PharmaBio, a portion
     of the Proposed Securities equal to a percentage determined by dividing (A)
     the number of shares of Common Stock of Columbia then held by PharmaBio, by
     (B) the total number of shares

                                       18

    [***]A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED AND FILED
     SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

     of Common Stock then outstanding, including for purposes of this
     calculation all shares of Common Stock issuable upon conversion or exercise
     in full of any convertible or exercisable securities (other than employee
     stock options) then outstanding (including shares of Common Stock issuable
     upon conversion of convertible securities or issuable upon exercise of
     outstanding warrants).

     (b) PharmaBio must exercise its purchase rights hereunder within ten (10)
     days after receipt of such notice from Columbia. The closing of the
     exercise of such subscription right shall take place simultaneously with
     the closing of the sale of the Proposed Securities giving rise to such
     subscription right.

     (c) Upon the expiration of the 10-day offering period described above,
     Columbia will be free to sell such Proposed Securities that PharmaBio has
     not elected to purchase during the ninety (90) days following such
     expiration on terms and conditions no more favorable to the purchasers
     thereof than those offered to PharmaBio. Any Proposed Securities offered or
     sold by Columbia after such 90-day period must be reoffered to PharmaBio
     pursuant to this Section 4.8. The election by PharmaBio not to exercise its
     subscription rights under this Section 4.8 in any one instance shall not
     affect its right as to any subsequent proposed issuance.

                                   ARTICLE V

                  Confidentiality and Ownership of Information

5.1  Columbia on the one part and PharmaBio on the other part each acknowledges
     that, in the course of discussions and negotiations leading to this
     Agreement and performing its obligations hereunder, it has received or may
     receive information from the other Party which is proprietary to the
     disclosing Party and which the disclosing Party wishes to protect from
     public disclosure ("Confidential Information"). Each receiving Party agrees
     to retain in confidence, during the Royalty Term, and thereafter for a
     period of five (5) years, all Confidential Information disclosed to it by
     or on behalf of the other Party, and that it will not, without the written
     consent of such other Party, use Confidential Information for any purpose
     other than the purposes indicated herein or disclose such information to a
     third party. These restrictions shall not apply to Confidential Information
     which: (i) is or becomes public knowledge (through no fault of the
     receiving Party); (ii) is made lawfully available to the receiving Party by
     an independent third party that, to the knowledge of the receiving Party,
     is under no duty of confidentiality to the disclosing Party; (iii) is
     already in the receiving Party's possession at the time of receipt from the
     disclosing Party (and such prior possession can be demonstrated by
     competent evidence by the receiving Party); (iv) is independently developed
     by the receiving Party and/or Affiliates (and such independent development
     can be demonstrated by competent evidence by the receiving Party); or (v)
     is required by Law to be disclosed by the receiving Party, provided,
     however, if reasonably possible, such receiving Party gives the disclosing
     Party sufficient advance written notice to permit it to seek a protective
     order or other similar order with respect to such Confidential Information
     and, thereafter, the receiving Party may disclose only the minimum
     Confidential Information required to be

                                       19

    [***]A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED AND FILED
     SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

     disclosed in order to comply with such and only to the government authority
     or agency or in the proceeding which is the subject of such order.

5.2  PharmaBio on the one hand and Columbia on the other hand shall limit
     disclosure of the other Party's Confidential Information to only those of
     their respective officers, representatives, agents and employees who are
     directly concerned with the performance of this Agreement and have a
     legitimate need to know such Confidential Information in the performance of
     their duties and shall ensure that their respective officers,
     representatives, agents and employees to whom Confidential Information is
     disclosed do not further disclose such Confidential Information to any
     third party except as otherwise permitted hereunder.

5.3  All Columbia inventions, processes, know-how, patents, trade secrets,
     copyrights, trade names, trademarks, service marks, marketing materials,
     proprietary materials or other intellectual property of any kind, and all
     improvements to any of the foregoing (collectively, "Columbia Property"),
     disclosed, used, improved, modified or developed in connection with the
     relationship contemplated by this Agreement shall remain the sole and
     exclusive property of Columbia.

5.4  Columbia acknowledges that PharmaBio (and its Affiliates) possess certain
     inventions, processes, know-how, trade secrets, improvements, other
     intellectual properties and other assets, including but not limited to
     analytical methods, procedures and techniques, computer technical expertise
     and software, and business practices, which have been independently
     developed by PharmaBio and/or its Affiliates (collectively "PharmaBio
     Property"). Any PharmaBio Property or improvements thereto which are
     disclosed, used, improved, modified or developed under or during the term
     of this Agreement shall remain the sole and exclusive property of PharmaBio
     or the respective Affiliate.

5.5  Neither PharmaBio nor Columbia or any of their Affiliates shall make any
     public announcements regarding this Agreement or the terms and conditions
     thereof without the prior written approval of the other Party, which
     approval shall not be unreasonably withheld or delayed, except to the
     extent such disclosure is required by Law.

                                   ARTICLE VI

           Grant of Certain Preferred Rights by Columbia to PharmaBio

For so long as Innovex is providing services related to the Product under the
Master Services Agreement or any replacement agreement, Columbia hereby grants
to PharmaBio (which for purposes of this Article VI shall mean and include its
Affiliates) a preferred provider relationship whereby PharmaBio shall have a
first and preferred opportunity to negotiate for a period of [***] with Columbia
(which for purposes of this Article VI shall mean and include its Affiliates) to
provide to Columbia any services which PharmaBio provides to customers, which
Columbia has decided to outsource or otherwise engage a service provider to
perform during the Royalty Term, and which involve payments individually or in
the aggregate of $500,000 or more, including without limitation clinical and
pre-clinical development, coordination and execution services,

                                       20

    [***]A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED AND FILED
     SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

sales and marketing services, commercialization services, and similar services.
Columbia shall allow and grant PharmaBio the right to provide such services if
PharmaBio agrees to provide such services on competitive terms and conditions.

                                       21

    [***]A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED AND FILED
     SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

                                   ARTICLE VII

                       Independent Contractor Relationship

For the purposes of this Agreement, Columbia and PharmaBio are independent
contractors and nothing contained in this Agreement shall be construed to place
them in the relationship of partners, principal and agent, employer and employee
or joint venturers. Neither Columbia nor PharmaBio shall have the power or right
to bind or obligate the other Party, nor shall either Party hold itself out as
having such authority.

                                  ARTICLE VIII

                        Additional Termination Provisions

8.1  Columbia may terminate this Agreement for material breach upon sixty (60)
     days written notice specifying the nature of the breach, if such breach (i)
     has not been substantially cured within the sixty (60) day period or (ii)
     is not curable within such 60-day period and the breaching Party has not
     commenced and diligently continued during such 60-day period reasonable
     actions to cure such breach. During the 60-day cure period for termination
     due to breach, each Party will continue to perform its obligations under
     this Agreement. Any termination under this Section 8.1 shall be without
     prejudice to any claims for damages or other relief by Columbia.

8.2  This Agreement shall terminate upon the payment by Columbia to PharmaBio of
     either (i) the Maximum Royalty Amount or (ii) the applicable Termination
     Amount.

                                   ARTICLE IX

                      Indemnification and Liability Limits

9.1  PharmaBio shall indemnify, defend and hold harmless Columbia, its
     Affiliates and its and their respective directors, officers, employees and
     agents from and against any and all losses, claims, actions, damages,
     liabilities, penalties, costs and expenses (including reasonable attorneys'
     fees and court costs) (collectively, "Losses"), resulting from any: (i)
     breach by PharmaBio (or its employees) of its obligations hereunder; (ii)
     willful misconduct or grossly negligent acts or omissions of PharmaBio or
     its employees; and (iii) violation by PharmaBio or its employees of any
     Laws applicable to the performance of PharmaBio's obligations under this
     Agreement; except, in each case, to the extent such Losses are determined
     to have resulted from the gross negligence or willful misconduct of
     Columbia or its employees.

9.2  Columbia shall indemnify, defend and hold harmless PharmaBio, its
     Affiliates and its and their respective directors, officers, employees and
     agents from and against any and all Losses resulting from any: (i) third
     party claim arising from the manufacture, storage, handling, packaging,
     labeling, production, transportation, distribution, marketing, testing,

                                       22

    [***]A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED AND FILED
     SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

     use, sale or other disposition of the Product; (ii) breach by Columbia (or
     its employees) of its obligations hereunder; (iii) willful misconduct or
     grossly negligent acts or omissions of Columbia or its employees; and (iv)
     violation by Columbia or its employees of any Laws applicable to the
     performance of Columbia' obligations under this Agreement; except, in each
     case, to the extent such Losses are determined to have resulted from the
     gross negligence or willful misconduct of PharmaBio or its employees.

9.3  In the event of a third party claim or lawsuit, the Party seeking
     indemnification hereunder (the "Indemnified Party") shall give the Party
     obligated to indemnify (the "Indemnifying Party") prompt written notice of
     any claim or lawsuit (including a copy thereof), provided that the failure
     of an Indemnified Party to notify the Indemnifying Party on a timely basis
     will not relieve the Indemnifying Party of any liability that it may have
     to the Indemnified Party unless the Indemnifying Party demonstrates that
     the defense of such action is materially prejudiced by the Indemnified
     Party's failure to give such notice. The Indemnified Party and its
     employees shall fully cooperate with Indemnifying Party and its legal
     representatives in the investigation and defense of any matter the subject
     of indemnification, which defense shall be managed by the Indemnifying
     Party in a manner, including the selection of legal counsel, reasonably
     acceptable to the Indemnified Party. The Indemnified Party shall not
     unreasonably withhold its approval of the settlement of any such claim,
     liability, or action by Indemnifying Party covered by this indemnification
     provision; provided that such settlement does not include an admission or
     acknowledgement of liability or fault of the Indemnified Party.

9.4  Neither PharmaBio nor Columbia, nor any of such Party's Affiliates,
     directors, officers, employees, subcontractors or agents shall have, under
     any legal theory (including, but not limited to, contract, negligence and
     tort liability), any liability to any other Party hereto for any loss of
     profits, opportunity or goodwill, or any type of special, incidental,
     indirect or consequential damage or loss, in connection with or arising out
     of this Agreement. For the avoidance of doubt, a claim by PharmaBio for
     royalties on Net Sales payable by Columbia hereunder or a claim by Columbia
     for payments pursuant to Section 2.1 shall not be limited in any way
     pursuant to the provisions set forth in the preceding sentence.

                                   ARTICLE X

                                    Notices

Any notice required to be given by either Party shall be in writing. All notices
shall be to the Parties and addresses listed below, and shall be deemed
sufficiently given (i) when received, if delivered personally or sent by
facsimile transmission with confirmed receipt, or (ii) one Business Day after
the date mailed by first class mail or sent by an internationally recognized
overnight delivery service with charges prepaid.

                                       23

    [***]A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED AND FILED
     SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

     If to PharmaBio:   PharmaBio Development Inc.
                        4709 Creekstone Drive
                        Suite 200, Riverbirch Building
                        Durham, NC  27703
                        Attention:  President
                        Fax: 919-998-2090

     With a copy to:    PharmaBio Development Inc.
                        4709 Creekstone Drive
                        Suite 200, Riverbirch Building
                        Durham, NC  27703
                        Attention: General Counsel
                        Fax: 919-998-2090

     If to Columbia:    Columbia Laboratories, Inc.
                        354 Eisenhower Parkway
                        Livingston, NJ 07039
                        Attention: President
                        Fax 973-994-3001

     With a copy to:    Columbia Laboratories, Inc.
                        354 Eisenhower Parkway
                        Livingston, NJ 07039
                        Attention: General Counsel
                        Fax 973-994-3001

                                   ARTICLE XI

                                   Assignment

No Party may assign any of its rights or obligations under this Agreement to any
third party other than an Affiliate without the written consent of the other
Party, which consent shall not be unreasonably withheld or delayed, but no such
assignment shall relieve the assigning Party of any of its obligations
hereunder. Any permitted assignee of rights or obligations hereunder shall, in a
writing to the other Party, expressly assume performance of such rights or
obligations. Nothing in this Article XI shall preclude the transfer of a Party's
rights and obligations under this Agreement in conjunction with a merger in
which such Party is not the surviving entity. Any attempted assignment in
violation of this Section shall be null and void.

                                   ARTICLE XII

                               General Provisions

12.1 Sections 2.1, 2.2, 2.3 and 2.6 and Articles V, IX, XI, XII and XIII shall
     survive the termination of this Agreement for any reason.

                                       24

    [***]A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED AND FILED
     SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

12.2 This Agreement contains the entire understanding of the Parties with
     respect to the subject matter herein and cancels all previous agreements
     (oral and written), negotiations and discussions dealing with the same
     subject matter. The Parties, from time to time during the term of this
     Agreement, may modify any of the provisions hereof only by an instrument in
     writing duly executed by the Parties.

12.3 No failure or delay on the part of a Party in either exercising or
     enforcing any right under this Agreement will operate as a waiver of, or
     impair, any such right. No single or partial exercise or enforcement of any
     such right will preclude any other or further exercise or enforcement
     thereof or the exercise or enforcement of any other right. No waiver of any
     such right will have effect unless given in a signed writing. No waiver of
     any such right will be deemed a waiver of any other right. The rights and
     remedies set forth in this Agreement are cumulative and not exclusive of
     any rights or remedies provided by Law or otherwise. Termination of this
     Agreement by a Party shall not affect any other rights or remedies which
     may be available to such Party against a defaulting Party.

12.4 If any part or parts of this Agreement are held to be illegal, void or
     ineffective, the remaining portions of this Agreement shall remain in full
     force and effect. If any of the terms or provisions are in conflict with
     any applicable Laws, then such term(s) or provision(s) shall be deemed
     inoperative to the extent that they may conflict therewith, and shall be
     deemed to be modified or conformed with such Laws. In the event of any
     ambiguity respecting any term or terms hereof, the Parties agree to
     construe and interpret such ambiguity in good faith in such a way as is
     appropriate to ensure its enforceability and viability.

12.5 The headings contained in this Agreement are used only as a matter of
     convenience, and in no way define, limit, construe or describe the scope or
     intent of any section of this Agreement.

12.6 Each Party represents and warrants to the other that the individual signing
     below for such Party is authorized and empowered to bind such Party to the
     terms of this Agreement.

12.7 Neither Party shall be liable to the other for delay or failure in the
     performance of the obligations on its part contained in this Agreement
     (other than payment obligations) if and to the extent that such failure or
     deal is due to circumstances beyond its control ("Force Majeure") which it
     could not have avoided by the exercise of reasonable diligence including
     but not limited to: act of God; war or insurrection; civil commotion;
     destruction of essential facilities or materials by earthquake, fire, flood
     or storm; labor disturbance (whether or not any such labor disturbance is
     within the power of the affected Party to settle); epidemic; or other
     similar event; provided, however, that the Party so affected shall notify
     the other Party promptly should such circumstances arise, giving an
     indication of the likely extent and duration thereof, and shall use all
     commercially reasonable efforts to avoid, remove or alleviate such causes
     of non-performance and shall resume performance of its obligations
     hereunder with the utmost dispatch whenever such causes are removed. In the
     event of Force Majeure lasting more than three (3) months,

                                       25

    [***]A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED AND FILED
     SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

     the Parties agree to meet and discuss how this Agreement can be justly and
     fairly implemented under the circumstances.

12.8 Each party shall, without further consideration, take such further action
     and execute and deliver such further documents as may be reasonably
     requested by the other party in order to carry out the provisions and
     purposes of this Agreement.

12.9 This Agreement and any amendment hereto may be executed in any number of
     counterparts and any party hereto may execute any such counterpart, each of
     which when executed and delivered shall be deemed to be an original and all
     of which counterparts taken together shall constitute but one and the same
     instrument. The execution of this Agreement and any such amendment by any
     party hereto will not become effective until counterparts hereof have been
     executed by both parties hereto. This Agreement may be executed by either
     party by delivery of such party's facsimile signature thereon.

12.10 The parties intend and agree that PharmaBio's payments under Section 2.1
     of this Agreement (i) shall not be an equity investment in Columbia; (ii)
     shall not give PharmaBio any rights or interest in the capital stock of
     Columbia; and (iii) shall not entitle PharmaBio to any rights of a
     stockholder of Columbia.

                                  ARTICLE XIII

                               Dispute Resolution

13.1 Governing Law. This Agreement, including, without limitation, the
     interpretation, performance, enforcement, breach or termination thereof and
     any remedies relating thereto, shall be governed by and construed in
     accordance with the Laws of the State of Delaware, United States of
     America, as applied to agreements executed and performed entirely in the
     State of Delaware, without regard to conflicts of law rules.

13.2 Internal Review. In the event that a dispute, difference, claim, action,
     demand, request, investigation, controversy, threat, or request for
     testimony or information or other question arises pertaining to any matters
     which arise under, out of, in connection with, or in relation to this
     Agreement (a "Dispute") and either Party so requests in writing, prior to
     the initiation of any formal legal action, the Dispute will be submitted to
     the Chief Executive Officers of Columbia and PharmaBio. For all Disputes
     referred to the Chief Executive Officers, the Chief Executive Officers
     shall use their good faith efforts to meet at least two times in person and
     to resolve the Dispute within ten (10) days after such referral.

13.3 Arbitration.

     (a)  If the Parties are unable to resolve any Dispute under Section 13.2,
          then either Party may by election within ten (10) days after the end
          of the period set forth in Section 13.2, require the matter to be
          settled by final and binding arbitration by sending written notice of
          such election to the other Party clearly marked "Arbitration Demand".
          Thereupon such Dispute shall be arbitrated in accordance

                                       26

    [***]A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED AND FILED
     SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

          with the terms and conditions of this Section 13.3. Notwithstanding
          the foregoing, either Party may apply to a court of competent
          jurisdiction for a temporary restraining order, a preliminary
          injunction, or other equitable relief to preserve the status quo or
          prevent irreparable harm.

     (b)  The arbitration panel will be composed of three arbitrators, one of
          whom will be chosen by Columbia, one by PharmaBio, and the third by
          the two so chosen. If both or either of Columbia or PharmaBio fails to
          choose an arbitrator or arbitrators within fourteen (14) days after
          receiving notice of commencement of arbitration, or if the two
          arbitrators fail to choose a third arbitrator within fourteen (14)
          days after their appointment, the American Arbitration Association
          shall, upon the request of both or either of the Parties to the
          arbitration, appoint the arbitrator or arbitrators required to
          complete the panel. The arbitrators shall have reasonable experience
          in the matter under dispute. The decision of the arbitrators shall be
          final and binding on the Parties, and specific performance giving
          effect to the decision of the arbitrators may be ordered by any court
          of competent jurisdiction.

     (c)  Nothing contained herein shall operate to prevent either Party from
          asserting counterclaim(s) in any arbitration commenced in accordance
          with this agreement, and any such Party need not comply with the
          procedural provisions of this Section 13.3 in order to assert such
          counterclaim(s).

     (d)  The arbitration shall be filed with the office of the American
          Arbitration Association ("AAA") located in Delaware or such other AAA
          office as the Parties may agree upon (without any obligation to so
          agree). The arbitration shall be conducted pursuant to the Commercial
          Arbitration Rules of AAA as in effect at the time of the arbitration
          hearing, such arbitration to be completed in a sixty (60) day period.
          In addition, the following rules and procedures shall apply to the
          arbitration:

               (i)  The arbitrators shall have the sole authority to decide
                    whether or not any Dispute between the Parties is arbitrable
                    and whether the Party presenting the issues to be arbitrated
                    has satisfied the conditions precedent to such Party's right
                    to commence arbitration as required by this Section 13.3.

               (ii) The decision of the arbitrators, which shall be in writing
                    and state the findings the facts and conclusions of law upon
                    which the decision is based, shall be final and binding upon
                    the Parties, who shall forthwith comply after receipt
                    thereof. Judgment upon the award rendered by the arbitrator
                    may be entered by any competent court. Each Party submits
                    itself to the jurisdiction of any such court, but only for
                    the entry and enforcement to judgment with respect to the
                    decision of the arbitrators hereunder.

                                       27

    [***]A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED AND FILED
     SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

               (iii) The arbitrators shall have the power to grant all legal and
                    equitable remedies (including, without limitation, specific
                    performance) and award compensatory damages provided by
                    applicable Law, but shall not have the power or authority to
                    award punitive damages. No Party shall seek punitive damages
                    in relation to any matter under, arising out of, or in
                    connection with or relating to this Agreement in any other
                    forum.

               (iv) The Parties shall bear their own costs in preparing for and
                    participating in the resolution of any Dispute pursuant to
                    this Section 13.3, and the costs of the arbitrator(s) shall
                    be equally divided between the Parties; provided, however,
                    that each Party shall bear the costs incurred in connection
                    with any Dispute brought by such Party that the arbitrators
                    determine to have been brought in bad faith.

                            [signature page follows]

                                       28

    [***]A CONFIDENTIAL PORTION OF THE MATERIAL HAS BEEN OMITTED AND FILED
     SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

<PAGE>

          [signature page to Striant Investment and Royalty Agreement]

     IN WITNESS WHEREOF, this Agreement has been executed by the Parties hereto
through their duly authorized officers as of the date first set forth above.

PHARMABIO DEVELOPMENT INC.                 COLUMBIA LABORATORIES, INC.


By:    /S/ William D. Robb                 By:    /S/ Fred Wilkinson
      ----------------------------------         -------------------------------
Name:  William D. Robb                     Name:  Fred Wilkinson
Title: Vice President, PharmaBio           Title: President & CEO
       Development, Inc.

<PAGE>

                                    SCHEDULES

Schedule   Description

3.5        Subsidiaries
3.8(a)     Material Agreements; Required to Be Filed with SEC
3.8(b)     Material Agreements; Material Contracts Related to the Product
3.11       No Litigation or Other Actions; Properties (Other than Intellectual
           Property); Intellectual Property
3.16       Debt

<PAGE>

                                  Schedule 3.5

                                  Subsidiaries

Subsidiaries of Columbia Laboratories, Inc., (all of which are wholly-owned)
are:

Columbia Laboratories (Bermuda) Ltd.   Incorporated in Bermuda
Columbia Laboratories (France) SA      Incorporated in France
Columbia Laboratories (UK) Limited     Incorporated in the United Kingdom
Columbia Research Laboratories, Inc.   Incorporated in Delaware

<PAGE>

                                 Schedule 3.8(a)

                   Material Agreements Not Yet Filed With SEC

1.   License and Supply Agreement between Ardana Bioscience Limited, Columbia
     Laboratories (Bermuda), Ltd., and Columbia Laboratories, Inc., dated as of
     October 16, 2002.

2.   Development and License Agreement between Ardana Bioscience Limited,
     Columbia Laboratories (Bermuda), Ltd., and Columbia Laboratories, Inc.,
     dated as of December 26, 2002.

3.   The Transaction Agreements.

<PAGE>

                                 Schedule 3.8(b)

                   Material Agreements Related to the Product

1.   Semi-exclusive Supply Agreement by and between Mipharm S.p.A., and Columbia
     Laboratories (Bermuda) Limited, dated as of May 7, 2002.

2.   License and Supply Agreement between Ardana Bioscience Limited, Columbia
     Laboratories (Bermuda), Ltd., and Columbia Laboratories, Inc., dated as of
     October 16, 2002.

3.   The Transaction Agreements.

<PAGE>

                                  Schedule 3.11

                              Intellectual Property

Product Intellectual Property:

1.   U.S. Patent No. 4,615,697

2.   U.S. Patent No. 6,248,358

3.   U.S. Patent Application Serial No. 09/596,073

4.   U.S. Patent Application Serial No. 09/877,218

5.   U.S. Trademark Application No. 76,442,855 for "Striant"

6.   U.S. Trademark Registrations - None

Interferences and Other Matters:

1.   [***]

2.   The Joint United Nations Program on HIV/AIDS (UNAIDS) issued a study report
     on June 13, 2000, that nonoxynol-9 in a gel form is not effective in
     protecting women from HIV infection. The gel form used in the study was the
     Company's Advantage-S product. The study results may affect the value of
     the Company's U.S. Patent No. 5,667,492, and related international patents
     and applications.

<PAGE>

                                  Schedule 3.16

                                      Debt

     7.125% Convertible Subordinated Note Due March 15, 2005.
     Payable to SBC Warburg Dillon Read Inc.                    $10,000,000

     Note to Ares Trading SA payable in monthly installments
     of $220,000 plus interest at 9% on the average balance
     outstanding during the month                                   146,667
                                                                -----------
                                                                $10,146,667