<PAGE>

                                                                EXHIBIT 10.203
                                                        CONFIDENTIAL TREATMENT
                                          
                                          
                                          
                                          
                                          
                                 REGULATORY FILING,
                                          
                          DEVELOPMENT AND SUPPLY AGREEMENT
                                          
                                          
                                          
                                          

* Confidential portions of material have been omitted and filed separately
  with the Securities and Exchange Commission.
                                          
                                          
<PAGE>

                                 TABLE OF CONTENTS
                                          
PARTIES                                                                   1

BACKGROUND                                                                1

ARTICLE I-DEFINITIONS                                                     1

ARTICLE II-PRODUCT DEVELOPMENT COMMITTEE                                  7

ARTICLE III-NEW DEVELOPMENTS                                              9

ARTICLE IV-EXPANSION OF PRODUCTION CAPACITY                              11

ARTICLE V-NON-CHIRON SUPPLY OF BETASERON                                 12

ARTICLE VI-CLINICAL AND REGULATORY DEVELOPMENT                           12

ARTICLE VII-SUPPLY OF PRODUCT                                            14

ARTICLE VIII-PROCESSING AND MANUFACTURING                                21

ARTICLE IX-PAYMENTS                                                      25

ARTICLE X-REPORTS AND BOOKS                                              30

ARTICLE XI-RIGHTS IN PRODUCT TECHNOLOGY                                  31

ARTICLE XII-THIRD-PARTY PATENTS                                          33

ARTICLE XIII-INDEMNIFICATION AND WARRANTIES                              35

ARTICLE XIV-TERM, TERMINATION, AND EXPIRATION                            38

ARTICLE XV-PRODUCT RECALL                                                42

ARTICLE XVI-CONFIDENTIALITY                                              43

ARTICLE XVII-MISCELLANEOUS                                               44

EXHIBIT 4.1-TARGET CAPACITIES AND 
               DEVELOPMENT AND MARKETING PLAN                            49

EXHIBIT 7.10-NON-BINDING FORECAST                                        51

EXHIBIT 7.11-INITIAL PURCHASE ORDER                                      52

EXHIBIT 10.4-CHIRON COST OF GOODS                                        53

EXHIBIT 1.7.3-RELEASE SPECIFICATIONS                           (Attachment)



<PAGE>

THIS AGREEMENT is made and entered into as of the 10th day of May, 1993
(hereinafter the "Effective Date") by and between the below-named Parties.

                                      PARTIES
                                          
     A.   Chiron Corporation ("Chiron") is a Delaware corporation having a
principal place of business at 4560 Horton Street, Emeryville, California 94608.
Cetus Oncology Corporation ("Cetus") is a Delaware corporation wholly owned by
Chiron. Prior to its acquisition by Chiron, Cetus Oncology Corporation was named
Cetus Corporation.

     B.   Schering AG ("Schering") is a German company having a principal place
of business at Mullerstrasse 170-178, W-1000 Berlin 65, Germany.

     C.   Each of Chiron and Cetus, on the one hand, and Schering, on the other
hand, is referred to herein as a "Party", and collectively as the "Parties".

                                     BACKGROUND
                                          
     A.   Pursuant to that certain Technology Ownership and Royalty Agreement
between Cetus and Berlex Laboratories, Inc. ("Berlex"), a Delaware corporation
and a wholly-owned subsidiary of Schering, dated as of August 9, 1991, as
amended (the "Ownership Agreement"), Cetus conveyed Technology and Patents and
certain other assets and rights of the former Tritus Partnership to Berlex and
granted licenses to Berlex concerning Mixed Patents and Mixed Technology.

     B.   Pursuant to that certain Betaseron Regulatory Filing, Supply 
Agreement and Lease (the "Old Supply Agreement") between Cetus and Berlex 
dated August 9, 1991, Cetus and Berlex agreed, among other things, that Cetus 
would supply quantities of Betaseron exclusively to Berlex in order for 
Berlex to sponsor the clinical testing and commercialization of Betaseron.

     C.   Based upon the mutual expectation of Chiron and Schering as to the
expanded market demand for Betaseron, Cetus and Berlex have agreed to terminate
the Old Supply Agreement as of the date hereof, and Chiron, Cetus and Schering
have agreed to enter into this Agreement.

NOW THEREFORE, in consideration of the premises and the mutual promises
contained herein, the Parties hereby agree as follows:

                              ARTICLE I - DEFINITIONS

The following capitalized terms shall have the following meanings. The
definitions set out in the Ownership Agreement are incorporated herein by
reference and shall apply to capitalized terms not elsewhere defined herein
unless the context clearly requires otherwise.

1.1  "Acid Paste" shall mean IFN Acid Precipitate, as further defined in and
     produced according to the Beta Specifications.


                                                                          Page 1

<PAGE>

1.2  "Acts" shall mean the Federal Food, Drug and Cosmetic Act (21 U.S.C.
     301-392) and the Public Health Service Act (42 U.S.C. 262-263) and the
     regulations and policies developed by the FDA pursuant thereto and, to the
     extent applicable, any equivalent foreign laws.

1.3  "Affiliate" shall mean any person or entity which directly or indirectly
     controls, is controlled by or is under common control with a specified
     person. Control shall be deemed present where an entity owns at least fifty
     percent (or such lesser percentage which is the maximum allowed to be owned
     by an entity in a particular jurisdiction) of the voting stock or equity
     interest in another entity.

1.4  "Allocated Supply Cost" shall mean the amount paid by Schering for
     Betaseron supplied to Schering by BI pursuant to the BI Agreement or by
     other parties (including Schering but excluding Chiron, its Affiliates, 
     and their subcontractors) pursuant to this Agreement, and shall only 
     include bona fide payments for supply of Betaseron; provided that to the 
     extent that Schering manufactures Betaseron, performs any Major Processing
     Step or provides any materials or services relating thereto, the 
     "Allocated Supply Cost" shall mean Schering's costs for such activities, 
     which shall be calculated in a manner consistent with Chiron's accounting 
     methodology (to the extent it is consistent with Schering's operations 
     and accounting practices). Where payments have been made in lump sum 
     amounts (rather than as transfer or royalty payments based on delivery or 
     sales of Betaseron), such as retainer or execution fees directly related 
     to the supply of Betaseron (including up-front payments for establishing 
     processes or capacity) such amounts shall be included in Allocated Supply 
     Cost and shall be amortized, based on a straight-line amortization 
     beginning with the first commercial sale over the remaining term of the 
     BI Agreement or other supply agreement.

1.5  "Beta Molecule" shall mean Betaseron, IFN-B    *

1.6  "Betaseron" shall mean interferon beta 1-b in a pharmaceutical formulation
     defined in the ELA/PLA and described in U.S. Patent No. 4,588,585 or
     4,737,462.

1.7  "Beta Specifications" shall mean the ELA/PLA Specifications, the
     Manufacturing Specifications, and the Release Specifications, and any
     specifications set forth in Section 1.7.4, as each of them may be amended
     from time to time.
     .1   "ELA/PLA Specifications" shall mean the written product specifications
          in the ELA/PLA.
     .2   "Manufacturing Specifications" shall mean the manufacturing processes
          and in-process specifications stated in the IND and the ELA/PLA.



*  Confidential portions of material have been omitted and filed separately
   with the Securities and Exchange Commission.


                                                                          Page 2


<PAGE>

       .3     "Release Specifications" shall mean the written release
              specifications dated March 8, 1993, and attached as Exhibit 1.7.3
              and which shall in no event be inconsistent with the ELA/PLA
              Specifications or Manufacturing Specifications.
       .4     With respect to jurisdictions other than the United States, the
              Beta Specifications shall be deemed to be the product
              specifications and manufacturing processes and in-process
              specifications established under applicable licenses or
              regulations in such jurisdictions, together with the release
              specifications for such jurisdictions as are reasonably agreed to
              by the Parties.

1.8    "BI" shall mean Boehringer Ingelheim GmbH, Ingelheim, a company formed
       under the laws of Germany, and each of its Affiliates, including without
       limitation Bender & Co. Ges.mbH, Wien and Dr. Karl Thomae GmbH,
       Biberbach, and any successor company.

1.9    "BI Agreement" shall mean that proposed agreement between BI and
       Schering, as further described in Article V expected to provide for BI to
       supply Schering with quantities of Betaseron through Phase I.

1.10   "Biologic Master File" shall mean the documents filed pursuant to 21 CFR
       601 by Cetus with the FDA on April 15, 1983, and as they may be amended
       from time to time.

1.11   "Capacity" shall mean the volume of Betaseron capable of being
       manufactured at the Chiron Sites, as measured by relevant factors
       including (i) actual yields based on batch production records, (ii) the
       size and capacity of equipment in place, (iii) projected yields from
       equipment and processes in place, (iv) availability of staff and
       equipment, and (v) throughput volumes of raw materials.

1.12   "Chiron Cost of Goods" is defined in Section 10.4.

1.13   "Chiron Credits" shall mean the total amount of Schering Credits that
       Schering has applied against payments otherwise due Chiron hereunder
       pursuant to Section 9.4.2, as such Chiron Credits may be reduced pursuant
       to the provisions of Section 9.4.3.

1.14   "Chiron Site" shall mean any location at which Chiron, or its Affiliates
       or subcontractors, produces or manufactures Betaseron.

1.15   "CMF" shall mean the Chiron manufacturing facility located at Chiron's
       campus at 4560 Horton Street, Building CMF, Emeryville, CA  94608.

1.16   "Development Committee" is defined in Section 2.1

1.17   "Diluent" shall mean sterile saline solution, or such other diluent as
       may be agreed upon by the Parties in writing, produced according to the
       Beta Specifications.


                                                                          Page 3

<PAGE>

1.18   "ELA/PLA" shall mean establishment license application number ELA92-0494
       ("ELA") and product license application number PLA92-0495 ("PLA"), which
       were filed with the FDA on July 17, 1992 and June 16, 1992, respectively,
       pursuant to 21 CFR 601.2, and any correspondence filed with the FDA
       relating thereto, for approval to manufacture and sell Betaseron.

1.19   "FDA" shall mean the United States Food and Drug Administration of the
       Department of Health and Human Services, and any successor entity.

1.20   "FDA Licensing" shall mean the grant of a license pursuant to the ELA/PLA
       by the FDA for the manufacture and sale of Betaseron in the treatment of
       relapsing/remitting multiple sclerosis.

1.21   "First Commercial Sale" shall mean the date Schering first sells
       commercially as a pharmaceutical, pursuant to regulatory approval,
       Betaseron in the United States, Germany, France, Great Britain or Italy.

1.22   "First European Commercial Sale" shall mean the date Schering first sells
       commercially as a pharmaceutical, pursuant to regulatory approval,
       Betaseron in Germany, France, Great Britain or Italy.

1.23   "Foreign Filing" shall mean any application or regulatory filing filed
       hereunder with any foreign counterpart of the FDA or other similar
       foreign health agency or authority for approval to manufacture or sell
       Products to be sold outside the U.S., and any correspondence and/or
       approvals or licenses relating thereto.

1.24   "G-75" shall mean purified protein IFN G-75, as defined in and produced
       according to the Beta Specifications.

1.25   "GMP" shall refer to the current Good Manufacturing Practice Regulations
       and General Biological Products Standards promulgated by the FDA and
       published at 21 CFR 210 and 610, as such regulations may be amended, and
       such equivalent foreign regulations or standards as may be applicable in
       respect of Products manufactured or sold outside the United States.

1.26   "IFN-B" shall mean any protein having a substantially similar amino acid
       structure and/or immunological identity to human interferon-beta (often
       referred to as "fibroblast interferon") or derivatives.  For the purpose
       of this definition.    *    

1.27   "IND" shall mean the documents filed pursuant to 21 CFR 312 by Cetus with
       the FDA on April 15, 1983 and identified by the Number    *    including
       any amendments thereto.

1.28   "Initial Sales Period" shall mean the period commencing with the First
       Commercial Sale and ending on the    *    , thereof.

*  Confidential portions of material have been omitted and filed separately
   with the Securities and Exchange Commission.


                                                                          Page 4


<PAGE>

1.29   "Know-how" shall mean all inventions, discoveries, trade secrets,
       information, experience, data, formulas, procedures and results, and
       improvements thereon, whether or not patentable, which are created or
       obtained by any Party or its Affiliates during the term of the Old Supply
       Agreement or during the term of this Agreement in connection with its
       activities relating to Beta Molecules, and which may be necessary or
       useful in the manufacture, use or sale of any Beta Molecule.

1.30   "LIBOR" shall mean the London Interbank Offering Rate for six-month
       deposits.

1.31   "Lot" shall mean the number of Vials which the Parties agree shall
       constitute a lot, consistent with GMP, the ELA/PLA and any Foreign
       Filing.

1.32   "Major Processing Step" shall mean each of the process steps of
       fermentation, recovery, purification, and fill-finish involved in the
       manufacture of Betaseron hereunder.

1.33   "Net Sales" shall mean the gross sales by any of Schering or its
       Affiliates or their sublicensees of Product hereunder as reflected in
       invoices to independent third parties, less any applicable taxes or
       duties, and any reasonable rebates or allowances (including but not 
       limited to rebates to public assistance programs, but not including
       allowances for bad debts), chargebacks, shipping or freight charges 
       prepaid or allowed, and less the value of returned trade goods and 
       reasonable trade cash discounts actually given. 

1.34   "Original Term" shall mean the period commencing on the Effective Date 
       and ending on the    *    anniversary of the First Commercial Sale.

1.35   "PDU" shall mean the Chiron pilot development unit located at Chiron's 
       campus at 4650 Horton Street, Emeryville, CA 94608, building PDU.

1.36   "Phase I" shall be the period commencing on the Effective Date and ending
       on the commencement of Phase II or at such time as written notice shall
       have been delivered pursuant to Section 7.3.4.

1.37   "Phase II" shall mean the period commencing as defined in Section 7.3 and
       ending on the expiration of this Agreement.

1.38   "Product" shall mean Betaseron, or any other pharmaceutical product
       containing any Beta Molecule, that is sold, distributed or promoted by or
       for Schering or its Affiliates or licensees.

1.39   "Program Patents" shall mean all patent applications and inventions 
       made or obtained by any Party or its Affiliates during the term of the
       Old Supply Agreement or during the term of this Agreement in connection
       with its activities relating to Beta Molecules and which may be 
       necessary or useful in the manufacture, use or sale of any Beta 
       Molecules, including any continuation or division or any substitute 
       application, any patent issued with

*  Confidential portions of material have been omitted and filed separately
   with the Securities and Exchange Commission.

                                                                          Page 5


<PAGE>

       respect to such patent application, any reissue, reexamination, renewal
       or extension of any such patent, and any confirmation patent or 
       registration patent or patent of addition based on any such patent, and 
       all foreign counterparts or any of the foregoing.

1.40   "Sales" Definitions:
       .1     "Chiron Sales" are Net Sales based on sales of Product which was
              manufactured by Chiron or its Affiliates or subcontractors
              hereunder.
              .1     "Domestic Chiron Sales" are Chiron Sales in the United
                     States and Canada.
              .2     "Foreign Chiron Sales" are Chiron Sales outside the United
                     States and Canada.

       .2     "Non-Chiron Sales" are Net Sales based on sales of Product which
              was manufactured by a party other than Chiron or its Affiliates
              or subcontractors hereunder.
              .1     "Domestic Non-Chiron Sales" are Non-Chiron Sales in the
                     United States and Canada.
              .2     "Foreign Non-Chiron Sales" are Non-Chiron Sales outside the
                     United States and Canada.

1.41   "Schering Credits" is defined in Section 9.4.1

1.42   "Supplier Site" shall mean any site at which a subcontractor of Chiron
       hereunder provides raw materials or services used in the manufacture of
       Betaseron. 

1.43   "United States" or "U.S." shall mean the United States of America, its
       territories and possessions, including the District of Columbia, the
       Commonwealth of Puerto Rico, the United States Virgin Islands, Guam and
       all other places under the jurisdiction of the United States.

1.44   "Vial" shall mean a unit of the final packaged form of Betaseron as
       defined in the ELA/PLA or any Foreign Filing, in a condition for sale to
       end users    *    or such other amount and size vial as may be agreed 
       upon by the Parties in writing.  Vial includes Betaseron, Diluent, 
       labels, labeling and package inserts packed or shipped with the Vials, 
       primary and secondary packaging, and trade shippers.

1.45   "Vial-Equivalent" shall mean the quantity of Acid Paste or G-75 which,
       under expected manufacturing techniques, will provide the active
       ingredient for one Vial.

1.46   "Worldwide Target" is defined in Section 7.6.


* Confidential portions of material have been omitted and filed separately
  with the Securities and Exchange Commission.

                                                                          Page 6


<PAGE>
                    ARTICLE II - PRODUCT DEVELOPMENT COMMITTEE


2.1    ESTABLISHMENT.  The Parties will form a joint product development
       committee (the "Development Committee") to coordinate certain activities
       under this Agreement as set forth below. Each Party shall appoint a
       delegation of two (or three if the Parties so agree) senior
       representatives to serve on the Development Committee, each of which
       shall be authorized by its principal to transact the business of the
       Development Committee. The Development Committee shall meet at least
       quarterly.

2.2    GENERAL FUNCTIONS.  The functions of the Development Committee shall be:

       .1     To prepare for and coordinate the efficient introduction of
              Betaseron in the periods prior to and after FDA Licensing
              including but not limited to coordinating supply requirements with
              marketing programs;
       .2     To coordinate manufacturing and supply activities under this
              Agreement, including the activities of suppliers of Products other
              than Chiron;
       .3     To provide for and optimize the exchange of information concerning
              the respective development activities relating to manufacturing
              processes, preclinical and clinical development, and further 
              indications for Betaseron and other Beta Molecules;
       .4     To coordinate and monitor such development activity;
       .5     To review and coordinate marketing and manufacturing strategies of
              each Party hereto; and 
       .6     To engage in such further exchanges of information and joint
              planning activities, and to appoint task forces or subcommittees,
              as the Parties shall find convenient.


2.3    COORDINATION OF MANUFACTURING PROCESSES.  Chiron shall have the primary
       responsibility for manufacturing Products and developing, proposing, and
       evaluating process improvements for the manufacture of Products under
       this Agreement as coordinated through the Development Committee. The
       Parties recognize that over time, various improvements to the process for
       making Products will be put in place which will enable Chiron to produce
       them less expensively or in greater quantities, even though such
       improvements may have no direct benefit for Schering. The Parties expect
       that, to timely meet the targets set forth in Exhibit 4.1, Chiron will
       need to put into place the improvements set forth in such Exhibit. The
       Parties further intend to coordinate the development of Betaseron so
       that each form marketed, sold or distributed by Schering or its
       Affiliates will be produced using substantially identical processes on a
       worldwide basis. Process changes shall be put in place in accordance with
       the terms of this Agreement, and Schering shall provide assistance and
       cooperation to Chiron in connection with such changes.

2.4    MARKETING AND SALES.  Schering shall have responsibility for marketing
       and selling Products under this Agreement and primary responsibility for
       developing, proposing and evaluating Beta Molecules and new indications
       for Betaseron as coordinated through the Development Committee. Through
       the 

                                                                         Page 7


<PAGE>

       Development Committee (or through such other channels as the Parties may
       designate) Chiron and Schering will consult on the progress of such
       marketing and sales efforts as well as any progress with respect to new
       indications or improvements to any Beta Molecule.

2.5    OTHER DEVELOPMENT PROPOSALS.  Chiron and Schering shall have an
       obligation to disclose to each other through the Development Committee
       each plan for research and development relating to any Beta Molecule, or
       an improvement or new indication therefor, that either of them desires to
       investigate or implement. Either Party may, but is not obligated to,
       propose for joint development or commercialization any such plan to the
       Development Committee and the Development Committee shall consider what
       assets and resources each Party should apply to such plan and shall
       coordinate the efforts of the Parties in that respect. Neither Party
       shall engage in research and development of, or manufacture, market, sell
       or otherwise commercialize, any Beta Molecule except with the approval of
       the Development Committee and in accordance withe the terms of this
       Agreement; PROVIDED that (a) Chiron shall not be prohibited by a lack of
       approval by the Development Committee from engaging in research relating
       to any Beta Molecule, including animal pharmacokinetic and animal
       pharmacodynamic studies; and (b) except as provided in Section 14.6,
       Chiron shall not, without the approval of the Development Committee, (i)
       commence any human clinical trial or any animal toxicity study regarding
       such Beta Molecule, or (ii) perform animal research regarding any Product
       (including Betaseron) or any Beta Molecule as to which the Development
       Committee has decided to file an IND if the results of such animal
       research must be reported to the FDA; and PROVIDED FURTHER that Schering
       shall not be prohibited by a lack of approval by the Development
       Committee from researching and developing any Beta Molecule it chooses to
       research and develop.

2.6    DECISIONS.  All decisions regarding the ELA/PLA, any Foreign Filing,
       Betaseron and any other Beta Molecules (including but not limited to
       those matters which are expressly stated to be the responsibility of the
       Development Committee under Article II but excluding those matters which
       are expressly stated to be made other than the Development Committee
       hereunder) will be made by unanimous agreement of the Development
       Committee, and if the Development Committee cannot reach such agreement
       on any matter it shall be referred to the    *    , or their designees;
       PROVIDED, however, that if they cannot resolve the matter referred to
       them (a)    *     hereunder regarding    *    , including but not limited
       to the ELA/PLA and any Foreign Filing and the development, marketing and
       sale of Betaseron and any Beta Molecule, except as expressly set forth in
       subsection (b) below; and (b)    *     shall not, without Schering's
       consent not to be unreasonably withheld, institute material manufacturing
       process changes which in Schering's reasonable

*  Confidential portions of material have been omitted and filed separately
   with the Securities and Exchange Commission.

                                                                         Page 8

<PAGE>

       judgment would require an amendment to the ELA/PLA or any Foreign
       Filing, result in infringement of a third-party patent or materially harm
       the marketing and sale of any Product.  The decisions made pursuant to
       the forgoing sentence shall be deemed to be decisions of, and approved
       by, the Development Committee.  No decision or agreement made pursuant to
       this Section 2.6 shall be inconsistent with the express terms of this
       Agreement unless set forth in a written amendment pursuant to Section
       17.2.

2.7    FUTURE DISCUSSIONS.  The Parties may discuss at appropriate times during
       the term of this Agreement the possibility of broadening their
       relationship in the areas of Beta Molecules and/or treatments for
       multiple sclerosis.  If the Parties should have substantial differences
       of opinion as to the activities of the Parties under this Agreement, or
       if a Party should find that continued performance under this Agreement
       imposes substantial unforeseen burdens, the Parties shall meet and in
       good faith confer as to the desirability of revising or terminating this
       Agreement, giving due regard to each Party's expected rights and
       obligations hereunder.  This Section 2.7 shall not be deemed to require
       either Party to revise or terminate this Agreement.


                            ARTICLE III - NEW DEVELOPMENTS

3.1    PRELIMINARY DECISION.  On the presentation of animal data reasonably
       predictive of human safety and efficacy of a Beta Molecule (other than
       Betaseron), Schering may, by written notice, require Chiron to
       participate in the development of such Beta Molecule or forfeit its right
       to manufacture such Beta Molecule set forth in Section 3.2.  Chiron shall
       be entitled to review all data relating to such Beta Molecule and may
       perform additional animal studies or assays as it reasonably requires to
       evaluate the opportunity; PROVIDED that Chiron must notify Schering of
       its decision within three months after receipt of such notice and data
       from Schering.  If Chiron agrees to participate in such development, then
       Chiron shall collaborate with Schering in process development and in
       obtaining regulatory approval to commence human clinical trials, with the
       costs and expenses of the Parties to be shared as agreed by the Parties. 
       If Chiron does not agree to participate in the development activities,
       then Chiron shall be deemed to have forfeited its right pursuant to
       Section 3.2.

3.2    RIGHT TO MANUFACTURE.  During the term of this Agreement, Chiron shall,
       subject to the terms of this Agreement, have a right to manufacture all
       of the requirements of Schering or its Affiliates of any Beta Molecule
       (other than Betaseron, which is provided for elsewhere in this Agreement)
       which has been approved for commercialization by the Development
       Committee.  If Chiron does not elect to manufacture such Beta Molecule,
       then (a) Chiron's sole compensation in respect of such Beta Molecule
       shall be the Substituted Payment set forth in Section 3.5, and (b)
       Schering shall have the right to manufacture or have any third party
       manufacture such Beta Molecule, subject to Section 11.3.3.

                                                                          Page 9


<PAGE>

3.3    EXERCISE OF RIGHT.  As soon as practicable and unless Chiron has elected
       not to exercise (or has forfeited) its right to manufacture a Beta
       Molecule pursuant to Section 3.2, Schering shall (in addition to keeping
       Chiron informed as to its marketing and development plans regarding such
       Beta Molecule) notify Chiron of the proposed term during which Chiron
       would manufacture such Beta Molecule; PROVIDED that such term shall be no
       less than    *    nor more than    *    years, calculated from the first
       commercial sale of such Beta Molecule, and shall not expire prior   *   .
       After such notification, the Parties shall in good faith negotiate
       reasonable terms for Chiron's commercial manufacture of such Beta
       Molecule consistent with Section 3.4.  Chiron must exercise its right to
       manufacture, if at all, prior to the later of: (a)    *    after receipt
       of notice of the proposed term; or (b) the earlier of (i)    *    and
       (ii)    *    before the end of the Original Term. 

3.4    TERMS OF MANUFACTURE.  If Chiron elects to manufacture such Beta
       Molecule, then the Parties shall enter into a new supply agreement (the
       "New Agreement") for the term which was specified by Schering pursuant to
       Section 3.3, and (a) the provisions of this Agreement as to Betaseron
       shall, to the extent applicable and except as they may need to be amended
       in order to achieve the intent of Chiron and Schering, govern the
       relationship of the Parties under the New Agreement with respect to such
       Beta Molecule and (b) the New Agreement will provide that (i) prior to
       the end of the Original Term, Schering will pay to Chiron for Net Sales
       of such Beta Molecule, the Effective Percentage Rate then in effect
       pursuant to Section 9.6, as it may decrease measured from the First
       Commercial Sale of Betaseron, and (ii) after the Original Term, the
       Effective Percentage Rate shall be    *    .

3.5    SUBSTITUTED PAYMENT FOR BETA MOLECULE.  If, during the Original Term and
       to the extent permitted under this Agreement, Schering or its Affiliates
       or their licensees make, have made, use, or sell Beta Molecules (other
       than Betaseron), which are not manufactured or supplied by Chiron in a
       particular jurisdiction, Chiron shall receive, as a "Substituted Payment"
       (in lieu of any other payment to be made by Schering for such Beta
       Molecule under this Agreement), payment under one of the following
       provisions:

       .1     For a Beta Molecule (other than Betaseron) which Chiron, at the
              time of Chiron's election not to exercise its right to manufacture
              hereunder, is not Legally Blocked from making, Chiron shall
              receive    *    of Net Sales in the applicable jurisdiction
              occurring prior to the end of the Original Term as its sole
              compensation in respect of such Beta Molecule, subject to Section
              11.3.3; or

       .2     For a Beta Molecule (other than Betaseron) as to which, at the
              time of Chiron's election not to exercise its right to manufacture
              hereunder, Chiron was Legally Blocked, Chiron shall receive a fair
              and reasonable royalty on Net Sales occurring prior to the end of
              the Original Term in each jurisdiction in which Chiron is Legally
              Blocked.  The rate of the royalty shall be based on at least the
              following factors: the revenue


* Confidential portions of material have been omitted and filed separately
  with the Securities and Exchange Commission.

                                                                         Page 10

<PAGE>

          Chiron would have received had Chiron not been so Legally Blocked 
          (less Chiron Cost of Goods), the costs to Schering to obtain such 
          Beta Molecule from an alternate source, the relative size of the 
          markets from which Chiron is Legally Blocked and such other factors 
          as may reasonably compensate Chiron for its inability to supply 
          such Beta Molecule, without unfairly impacting Schering. If 
          Chiron's manufacture of a Beta Molecule (other than Betaseron) 
          would reasonably appear to infringe a patent or a substantially 
          equivalent right of a third party in any jurisdiction and Schering 
          declines to accept Sole Responsibility as to such rights in the 
          manner set forth in Section 12.4.4, Chiron shall be deemed "Legally 
          Blocked" from manufacturing such Beta Molecule in such 
          jurisdiction; or

     .3   If the national law of any jurisdiction would prohibit Schering 
          from selling in such jurisdiction a Beta Molecule (other than 
          Betaseron) manufactured by Chiron based on Chiron's status as a 
          foreign corporation or foreign manufacturer in respect of such 
          jurisdiction, and Chiron has used its best efforts to prevent such 
          prohibition, then Chiron shall receive    *    of the Net Sales of 
          such Beta Molecule in such jurisdiction occurring prior to the end 
          of the Original Term as its sole compensation in respect of the 
          sales in such jurisdiction of such Beta Molecule, subject to 
          Section 11.3.3.

3.6  JOINT PATENTS. If, pursuant to the terms hereof, Schering commercializes 
     a Beta Molecule which is covered by a patent jointly owned by Chiron and 
     Schering (or their Affiliates), and Chiron does not manufacture such 
     Beta Molecule, then Chiron and Schering shall meet and confer as to 
     whether, and on what terms, Chiron and Schering may desire to transfer 
     exclusive rights to make, use, and sell such Beta Molecule under such 
     patent to Schering.

                ARTICLE IV -- EXPANSION OF PRODUCTION CAPACITY

4.1  EXPANSION OF CAPACITY. Chiron shall invest in the expansion of its 
     manufacturing capacity and in making process improvements to increase 
     its ability to supply Betaseron in such amounts and in such manner as 
     Chiron believes appropriate, and consistent with Chiron's obligations 
     under this Agreement. Chiron will use its best efforts to expand its 
     Capacity for the manufacture of Betaseron consistent with the targets 
     set forth in Exhibit 4.1. Except for those items Schering has expressly 
     agreed to pay for under Section 4.2, Chiron will make such investments 
     in an expanded capacity at its own cost and expense.

4.2  QUALIFICATION CLINICAL TRIALS. Schering shall, at Chiron's reasonable 
     request, perform such human clinical trials as are needed to obtain FDA 
     Licensing to manufacture Betaseron at each Chiron Site. Chiron shall, 
     without charge, provide the Betaseron and/or Vials as required for use 
     in such trials and, for sites other than the PDU and CMF, shall pay 
         *    of Schering's costs according to budgets agreed upon in advance 
     with Chiron.

* Confidential portions of material have been omitted and filed separately
  with the Securities and Exchange Commission.

                                                                       Page 11

<PAGE>

4.3  PROCESS IMPROVEMENTS. Chiron shall perform feasibility studies on all 
     process improvements reasonably proposed by Chiron or by Schering and 
     which it deems desirable, and shall coordinate all development efforts 
     among the Parties and BI. Chiron shall bear the cost of all process 
     development work performed by its employees. Chiron and Schering shall 
     exchange process technology with each other and with certain third 
     parties pursuant to Section 11.4 for the purpose of ensuring consistent 
     manufacturing processes.

            ARTICLE V -- NON-CHIRON SUPPLY OF BETASERON

5.1  BI. Schering may negotiate and conclude an agreement with BI for the 
     supply of Betaseron in Europe during Phase I (the "BI Agreement"). In 
     negotiating the BI Agreement and in implementing and performing such 
     agreement, Schering shall use its best efforts to: (i) minimize the 
     amount of any Allocated Supply Cost; (ii) provide maximum opportunity 
     for Chiron to supply Betaseron for sale outside the United States as 
     Chiron creates capacity; (iii) except as provided in Section 7.14, limit 
     BIs right to supply Betaseron to the lesser of the amount necessary to 
     satisfy European demand or     *    per year; and (iv) maximize the 
     sharing of technical and other related information between BI and Chiron 
     concerning the manufacture of Betaseron. In connection with such best 
     efforts obligation, Schering shall keep Chiron reasonably informed as to 
     the status of such negotiations relevant to Chiron's interests. If and 
     when the BI Agreement is executed, Schering shall fully disclose to 
     Chiron the BF Agreement and the terms of any other agreement or agreements 
     that result from those discussions or which relate in any way to the 
     supply of Betaseron. Schering has separately provided Chiron with a letter 
     accurately setting forth the status of the proposed BI Agreement.

5.2  PRODUCTION TECHNOLOGY. Schering shall use its best efforts to cause BI 
     to disclose promptly to Chiron any process improvements which BI 
     proposes to implement in its manufacture of Betaseron, and the Parties 
     may invite BI to participate in the discussion of process improvements 
     if they so desire.

         ARTICLE VI -- CLINICAL AND REGULATORY DEVELOPMENT

6.1  CLINICAL AND COMMERCIAL DEVELOPMENT. Schering shall be responsible for 
     maximizing the commercial opportunities for Betaseron as follows: 
     Schering shall use its best efforts to (i) continue the development of 
     Betaseron for the treatment of multiple sclerosis; (ii) obtain 
     regulatory approval of Betaseron for multiple sclerosis in a timely 
     manner in the United States, Canada and Germany, Italy, France and Great 
     Britain and in any other countries where Schering reasonably proposes to 
     sell Betaseron; and (iii) promote, sell, distribute and otherwise 
     maximize the Net Sales of Betaseron for multiple sclerosis in those 
     countries in which regulatory approval has been received. Schering shall 
     also use reasonable efforts to evaluate additional indications for 
     Betaseron and will develop such indications if Schering believes, in its 
     judgment, that such indications are commercially viable applications of 
     Betaseron.

* Confidential portions of material have been omitted and filed separately
  with the Securities and Exchange Commission.

                                                                       Page 12
<PAGE>

6.2   ELA/PLA FILING. Pursuant to the Acts, the FDA has required that 
      the ELA/PLA be filed by and in the names of Chiron and Cetus. The 
      Parties agree that Schering owns the PLA, to the full extent permitted
      by the law, and Schering owns the ELA to the extent that it relates 
      specifically to the manufacture of Betaseron.

6.3   COORDINATION OF INFORMATION. The Development Committee shall 
      coordinate the exchange of information relating to the ELA/PLA and any 
      other Foreign Filings. If at all practical, Schering shall have the 
      right of prior review and participation in all communications with the 
      FDA and any other regulatory authority concerning Betaseron. If either 
      Party in good faith disagrees with the content of any proposed 
      communications with the FDA or such other regulatory authority, then the 
      Parties shall discuss that disagreement with each other. Chiron and 
      Schering shall then meet to settle their disagreement, which shall not 
      be subject to Section 2.6.
      
6.4   CLINICAL DATA. Schering acknowledges that Chiron does not have 
      first-hand knowledge of the Betaseron clinical trials and acknowledges 
      that, in the case of Betaseron, Chiron is not expected to assist in the 
      preparation of information relating to the clinical sections of the 
      ELA/PLA; PROVIDED HOWEVER, if Chiron in its good faith opinion believes 
      it must audit and obtain first hand knowledge of such Betaseron clinical 
      trials, Schering shall cooperate with Chiron in such audit.

6.5   RESPONSES TO FDA. Chiron shall continue to use its best efforts, 
      in cooperation with Schering, in the preparation of responses to the FDA 
      concerning the ELA/PLA. Schering shall pay the reasonable costs of 
      Chiron, pursuant to budgets agreed in advance, which have been or shall 
      be incurred in connection with the preparation and filing of the 
      ELA/PLA, obtaining the approval thereof, and in maintaining the ELA/PLA.
      
6.6   REGULATORY COSTS. Any costs associated with preparing, filing, 
      prosecuting and maintaining Foreign Filings and with responding to any 
      requests of regulatory agencies shall be borne by Schering, including 
      costs incurred by Chiron pursuant to budgets agreed in advance, PROVIDED 
      THAT (a) Schering, upon receipt of Chiron's cost budget, may elect to 
      have its own personnel perform the activities necessary to respond to 
      such regulatory requests; (b) Chiron shall bear its own costs, including 
      costs of regulatory filings, to the extent such costs arise from 
      activities initiated by Chiron beyond the initial approval of Betaseron 
      pursuant to the ELA/PLA, including (by way of example) implementation of 
      process improvements; and (c) except as provided in Section 4.2, Chiron 
      shall pay for all regulatory costs associated with any Chiron Site 
      (other than the PDU and CMF) being approved or validated by any 
      regulatory agency for manufacture of Betaseron within or without the 
      United States.

6.7   NON-U.S. REGULATORY FILINGS. Chiron shall cooperate with Schering 
      in making all Foreign Filings which, if permitted, shall be in 
      Schering's name. If it is required or appropriate as to any jurisdiction 
      to make such filings in the name of Chiron, the Parties shall 
      accommodate such need in a manner


                                                                        Page 13
<PAGE>

      consistent with the handling of the ELA/PLA, or as otherwise mutually 
      agreed. Schering shall cooperate with respect to each such Foreign 
      Filing to qualify the appropriate Chiron Sites to supply Product in each 
      jurisdiction. Chiron shall use its best efforts to obtain, by the    *   
      anniversary of the First European Commercial Sale, foreign regulatory 
      approvals or licenses necessary for the manufacture of Betaseron for 
      foreign sales as contemplated in Section 7.3.1(b)(iv), and to obtain in 
      a timely manner such approvals and licenses in such other jurisdictions 
      in which Schering reasonably proposes to sell Betaseron and so notifies 
      Chiron.

                        ARTICLE VII - SUPPLY OF PRODUCT

7.1   NON-COMMERCIAL CLINICAL SUPPLY. Prior to the First Commercial 
      Sale, Chiron will continue to manufacture the requirements of Schering 
      for clinical supplies of Betaseron as ordered by Schering at a price 
      equal to the Chiron Cost of Goods, but in no event greater than    *    
      per Vial ("Clinical Price"). The Clinical Price shall be deemed to 
      include Betaseron, Diluent, other raw material, direct labor, overhead, 
      quality control testing, stability testing, labels, package inserts, 
      cartons, labeling which accompanies the Vials, and primary and secondary 
      packaging, directly attributable to the Betaseron, and the Betaseron 
      shall be in finished form and final container as described in the IND.

7.2   PHASE I COMMERCIAL SUPPLY. Subject to the terms and conditions of 
      this Agreement (including Section 7.13), during Phase I, Chiron shall 
      supply to Schering, and Schering shall purchase from Chiron, all of the 
      worldwide requirements for Betaseron of Schering and its Affiliates and 
      licensees, except to the extent that Schering is required to purchase 
      Betaseron from BI for sale in Europe pursuant to the BI Agreement, and 
      except that if at any time Chiron is unable or otherwise fails to 
      provide Betaseron in the quantities ordered pursuant to Section 7.11, 
      Schering shall be entitled to obtain that shortfall amount of Betaseron 
      from any other supplier or manufacturer as set forth in Section 7.14.
      
7.3   TRANSITION TO PHASE II. If the conditions set forth in this 
      Section 7.3 have been satisfied, Phase II shall commence and Phase I 
      shall end as of the    *    of the First European Commercial Sale. The 
      conditions precedent to the commencement of Phase II hereunder are as 
      follows:

      .1   As of the    *    of the First European Commercial Sale:
         
           (a)   Chiron shall not be in breach of this Agreement in any material
                 respect (or if it is in breach it shall cure such breach within
                 sixty days of notice thereof);

           (b)   Chiron shall have established production facilities which: (i) 
                 in the aggregate shall be reasonably capable of meeting the 
                 Worldwide Target as of the commencement of Phase II; (ii) shall
                 comprise at least    *    
                                                   ), and in determining whether




* Confidential portions of material have been omitted and filed separately
  with the Securities and Exchange Commission.


                                                                         Page 14

<PAGE>

                 Chiron's Capacity meets the Worldwide Target, the Capacity 
                 to perform no more than    *    of the Worldwide Target (or  
                   *    if the Worldwide Target is less than    *    ) of any 
                 of the Major Processing Steps shall be attributed to any one 
                 such facility; (iii) are mechanically complete and (iv) are 
                 in the process of being validated for the purpose of being 
                 licensed by the FDA, or by one or more regulatory agencies 
                 or authorities in Canada, Germany, Italy, France and Great 
                 Britain such that approval to make Betaseron will be 
                 obtained for one or more Chiron Site(s) with respect to each 
                 such jurisdiction.

          (c)    Each Chiron Site used to supply Betaseron during Phase I 
                 shall have been validated and licensed by the FDA or other 
                 applicable regulatory agency or authority as required for 
                 such Phase I supply.

          (d)    Chiron shall have, (i) during the previous four calendar 
                 quarters, timely delivered substantially all amounts of 
                 Betaseron for commercial sale as to which orders timely 
                 placed pursuant hereto were accepted, and (ii) substantially 
                 achieved the delivery targets recited in Exhibit 4.1 for the 
                    *    , and after    *    such lesser or greater volume as 
                 is reasonably required to meet orders for Betaseron to be 
                 sold in the U.S. and Canada that have been placed pursuant 
                 to Section 7.11.

      .2   By the    *    anniversary of the First European Commercial Sale, 
           the conditions set forth in Section 7.3.1 shall all be fully 
           satisfied and Chiron, with the assistance of Schering as 
           contemplated herein, shall have filed applications and commenced 
           the process of obtaining FDA Licensing and such other regulatory 
           approvals set forth in Section 7.3.1(b)(iv) for the facilities 
           necessary to meet the Worldwide Target.

      .3   By the    *    anniversary of the First European Commercial Sale, 
           the conditions set forth in Sections 7.3.1 and 7.3.2 shall all be 
           fully satisfied and the regulatory approvals shall have been 
           obtained as set forth in Section 7.3.1(b)(iv) for the facilities 
           necessary to meet the Worldwide Target.  If, by such    *   
           anniversary, such approvals have not been obtained, but the 
           applicable agencies have neither rejected such application for 
           such approval nor indicated that approval will not be granted, 
           then Phase I shall continue and the start of Phase II shall be 
           delayed for up to    *    until such approval is obtained.  If 
           approval is not obtained within    *    or at such earlier date if 
           the application for approval is rejected, Phase II shall not 
           commence and this condition shall not have been satisfied.

      .4   If any of the foregoing conditions has not been satisfied, then, 
           upon written notice from Schering, (a) Phase II shall not 
           commence; (b) for the remainder of the term of this Agreement 
           Chiron shall supply to Schering, and Schering shall purchase from 
           Chiron, Betaseron for the 

* Confidential portions of material have been omitted and filed separately
  with the Securities and Exchange Commission.

                                                                    Page 15

<PAGE>

           United States and Canada in an amount equal to the Capacity of 
           Chiron for Betaseron as of the date of such notice; PROVIDED that 
           if as of the    *    anniversary of the First European Commercial 
           Sale Chiron has satisfied the conditions set forth in Sections 
           7.3.1(a), (c) and (d) with respect to supplying Schering's 
           requirements for Betaseron in the U.S. and Canada, Chiron can 
           elect for the remainder of the term of this Agreement to supply to 
           Schering, and require that Schering purchase from Chiron, all of 
           the United States and Canadian requirements for Betaseron of 
           Schering and its Affiliates and licensees, subject to Section 7.14 
           and to Chiron's obligation to use its best efforts to have and 
           keep in place Capacity to supply such requirements for Betaseron 
           in the U.S. and Canada; (c) Schering will thereafter be entitled 
           to have all of its other requirements for Betaseron supplied by 
           any other supplier or manufacturer, including Schering or BI (and 
           without regard to Section 5.1), and notwithstanding any other term 
           of this Agreement (including Sections 9.4 and 9.5), Chiron shall 
           receive as sole compensation on account of such Non-Chiron Sales 
           an amount equal to    *    thereof during the term of this 
           Agreement and shall not be entitled to any payment under Section 
           9.4.1 or Section 9.5; and (d) the application of Schering Credits 
           and the creation of Chiron Credits under Section 9.4 shall cease 
           to take place and all Chiron Credits and Schering Credits shall be 
           extinguished.

      .5   Chiron shall advise Schering as soon as practicable (a) if it is 
           unable or does not elect to satisfy the conditions to Phase II set 
           forth in Section 7.3, and (b) of the occurrence of any of the 
           events set forth in Section 7.3.3.

7.4   USE OF SUBCONTRACTORS TO MEET PHASE II CONDITIONS.  Chiron may include
      the manufacturing capacity of subcontractors (other than BI) in meeting
      no more than    *    of the Worldwide Target with respect to any Major
      Processing Step, but only to the extent that such subcontractors: (a)
      have satisfied the conditions of Section 8.2, including having been
      approved by Schering pursuant thereto; (b) have been performing their
      duties pursuant to their respective subcontracting agreements to the
      reasonable satisfaction of each of Chiron and Schering; and (c) were
      supplying goods and services for the production of Betaseron as of the
      Fixing Date (defined below).

7.5   PHASE IN TO PHASE II.  Subject to the terms of this Agreement (including
      Section 8.2), Chiron may enter into a subcontracting agreement with BI
      for the supply of Betaseron during Phase II and Schering shall cooperate
      with Chiron's efforts with respect to entering into such an agreement. 
      Schering and Chiron shall consult as to whether and to what extent BI's
      supply obligations to Schering should continue into or through Phase II
      so as to promote a more economical, smooth, and rapid transition to Phase
      II worldwide supply of the market by Chiron.

7.6   WORLDWIDE TARGET DEFINED.  The "Worldwide Target" shall be agreed to
      between the Parties as of the    *    anniversary of the First European


* Confidential portions of material have been omitted and filed separately
  with the Securities and Exchange Commission.


                                                                    Page 16
<PAGE>
     Commercial Sale (the "Fixing Date"). The Worldwide Target shall represent a
     reasonable estimate, based on information available to the Parties as of
     the Fixing Date, of the total expected worldwide demand for Betaseron as of
     the seventh anniversary of the First European Commercial Sale at expected
     prices. Such estimate shall be based upon prior sales history, market
     demand in excess of current capacity, the size of the potential patient
     population for approved indications (or indications which are in the final
     stages of receiving approval) and expected rates of use by such patients,
     prior and current forecasts under Section 7.10 (which shall be considered
     in light of the accuracy of prior forecasts), and such other factors as are
     reasonably considered in forecasting demand on a long-range basis. The
     establishment of a Worldwide Target shall not relieve Chiron of any best
     efforts obligation to meet demand in excess of that amount. The calculation
     of the Worldwide Target shall not include potential sales arising from
     as-yet unapproved indications, nor shall it be reduced by the mere
     possibility of restricted sales due to factors such as the actions of a
     competitor not yet in the market or contemplated governmental actions.

     .1   Commencing three months prior to the Fixing Date, the Parties shall
          exchange all information reasonably relevant to anticipated future
          demand for Betaseron, and they shall commence discussions of an
          appropriate figure for the Worldwide Target. If the Parties cannot
          agree on a Worldwide Target within three months after the Fixing Date,
          then either Party may demand in writing (the "Demand") that the
          Worldwide Target be set by a third party (the "Referee"). On the tenth
          business day following the Demand, the parties shall simultaneously
          exchange in writing their proposed values for the Worldwide Target,
          which proposed values shall be binding as set forth below. Such
          proposed values need not reflect any prior negotiation, and previously
          suggested values shall not be admissible or disclosed to the Referee.
          Within thirty (30) days after the Demand, the Parties shall confer in
          order to select a mutually agreeable individual, who shall be
          independent of the Parties, to serve as the Referee. If the parties
          have not selected a Referee willing to serve within sixty (60) days of
          the Demand, then either Party may request that one be appointed by the
          American Arbitration Association ("AAA"). If the AAA is unwilling to
          appoint a Referee, then one shall be appointed by the Alameda County
          Superior Court. In any case, the parties shall use their best efforts
          to have a Referee appointed as promptly as practicable.

     .2   The Referee shall select the Worldwide Target, based on the above-
          referenced factors, from one of the two values proposed by the Parties
          under Section 7.6.1, and shall make all reasonable efforts to complete
          the process within thirty days of being appointed as Referee. The
          Parties shall each have equal opportunity to present their positions
          to the Referee. Where not inconsistent with the terms hereof, the
          Commercial Arbitration Rules of the AAA shall determine the actions of
          the Referee and the Parties hereunder. The Referee 


                                                                        Page 17

<PAGE>

          shall have no authority to decide any matter other than the Worldwide
          Target.

7.7   PHASE II SUPPLY.  During Phase II, Chiron shall supply to Schering,
      and Schering shall purchase from Chiron, all of the worldwide
      requirements for Betaseron of Schering and its Affiliates and
      licensees, subject to Sections 7.13 and 7.14. Chiron shall use its
      best efforts to have and keep in place capacity to supply worldwide
      demand for Betaseron in Phase II (which may be greater or less than
      the Worldwide Target) and to maintain each Chiron Site intended for
      the manufacture of Betaseron in operation and consistent with the
      requirements of Section 7.3.1(b)(ii) unless and until such Chiron Site
      may be replaced by one or more other Chiron Sites adequate for the
      manufacture of Betaseron hereunder.

7.8   ORDERING GENERALLY.  As set forth specifically below, the Parties
      shall cooperate in the forecasting of demand for Product and in
      providing for worldwide capacity for the manufacture thereof.

7.9   APPROVAL.  Upon notification of FDA Licensing, Schering shall confirm
      its then-current rolling forecast, and the Parties shall confer as to
      the possibility of increasing Schering's order in accordance with
      Chiron's manufacturing capacity. The Parties recognize that during the
      first year after First Commercial Sale there may exist some
      uncertainties concerning demand for Betaseron and agree to meet to 
      confer about these uncertainties on a regular basis, but any modification
      to the terms hereof shall be only as agreed in writing by the Parties.

7.10  ROLLING FORECASTS.  On execution hereof (attached as Exhibit 7.10),
      and thereafter on the first business day of each calendar quarter
      during the term of this Agreement, Schering shall deliver to Chiron a
      non-binding written forecast of the quantities of Vials (or of Acid
      Paste or G-75) that Schering expects in good faith to order in each of
      the three consecutive calendar quarters following the quarter for
      which the most recent order has been placed pursuant to Section 7.11.
      Such forecasts shall represent Schering's best estimate of its
      anticipated orders. At Chiron's request Schering shall confer with
      Chiron during meetings of the Development Committee or otherwise as to
      the basis for such forecasts and shall disclose to Chiron any
      underlying data for such forecasts.

7.11  QUARTERLY ORDERS.  Attached hereto as Exhibit 7.11 is Schering's
      Purchase Order for the entire calendar year 1993, which order Chiron
      hereby accepts. Beginning with the purchase order for the first
      calendar quarter of 1994, Schering shall place written purchase orders
      for Vials (and any Acid Paste or G-75 it may require) on a quarterly
      basis, not less than one hundred eighty (180) days prior to the
      commencement of the calendar quarter for which the Vials (or Acid
      Paste or G-75) are desired. Each purchase order shall specify
      requested delivery dates (and shall indicate whether Schering will
      provide the packaging and labels for any of the Vials pursuant to
      Section 8.9) and, if appropriate, divide the Vials intended for U.S. 
      and non-U.S. markets, and shall be net of (although it shall identify)
      any Vials to be supplied by BI (or


                                                                     Page 18
<PAGE>

       other supplier) as permitted hereunder.  Unless otherwise agreed by the
       Parties in writing, such purchase orders shall specify delivery dates
       that ratably distribute the delivery of Vials among each of the months
       included in such calendar quarter.  No less than 150 days before the
       commencement of the quarter in which the product is to be delivered,
       Chiron shall, in writing, advise Schering, in good faith, of the number
       of Vials which it accepts for delivery during that period, and Schering
       shall be entitled to rely on such advice for purposes of obtaining
       alternate supplies of Betaseron to make up any shortfall in such
       supplies.  Any orders placed hereunder shall be rounded upward, if
       necessary, to a reasonably whole Lot.  Chiron shall use its best efforts
       to accept purchase orders consistent with its Capacity and to deliver the
       number of Vials that it has accepted for delivery.  To the extent
       Schering places orders other than such regular quarterly orders, or to
       the extent that any orders accelerate the estimated delivery schedule,
       Chiron shall use reasonably diligent efforts to supply such quantities so
       ordered.  At the request of either Party, the Parties shall meet and
       confer in good faith regarding the establishment of a different ordering
       schedule to take account of market conditions, regulatory approval lag
       times, or manufacturing time.  If, after the Initial Sales Period,
       Chiron, having accepted an order, fails timely to deliver the full amount
       of such order, then Schering shall (without limiting any other rights
       hereunder) be reimbursed for the additional costs and expenses reasonably
       incurred by Schering and directly arising from such failure, including
       costs associated with the resumption of a drug allocation program, if
       such a step is required, and excluding consequential damages and the
       costs of obtaining alternative supplies of Betaseron which are provided
       for in Section 7.14.2.

7.12   REPORTS.  Chiron will report weekly to Schering its progress in the
       manufacture of Vials and Vial Equivalents hereunder until Chiron reaches
       the target Capacity of    *    per year set forth in Exhibit 4.1, and
       thereafter Chiron need only report monthly.  Chiron shall promptly
       notify Schering if it appears that Chiron will be unable timely to
       deliver any amounts accepted for delivery pursuant to Section 7.11.

7.13   LIMITATIONS.  Chiron's obligations to supply Betaseron to Schering
       hereunder shall be subject to the limitations of Chiron's production
       capacity, except that such limitations shall not act to limit or excuse
       Chiron's obligations to use its best efforts hereunder.

7.14   SUPPLY SHORTFALLS; CAPACITY PLANNING.  
       .1     At any time during the term of this Agreement Schering shall be
              entitled to qualify or license any reasonable supplier or
              manufacturer (including BI and Schering) to manufacture Betaseron
              or any other Beta Molecule in any jurisdiction, and shall be
              entitled to enter into an agreement with such supplier or
              manufacturer to act as an alternate source of supply of Betaseron
              or any Beta Molecule to Schering in any jurisdiction; provided
              that Schering shall not order or purchase Betseron from such
              supplier (other than non-commercial quantities of Betaseron used
              solely for regulatory licensing of such supplier) except under
              circumstances permitted under this Agreement.


* Confidential portions of material have been omitted and filed separately with
  the Securities and Exchange Commission.

                                                                       Page 19

<PAGE>

       .2     If at any time Chiron is unable or otherwise fails to supply (or
              notifies Schering that it cannot supply) Schering with the
              Betaseron for a particular calendar quarter ordered pursuant to
              Section 7.11, Schering shall be entitled, upon notice to Chiron,
              to obtain the shortage in its requirements for such calendar
              quarter from any other licensed  supplier or manufacturer
              (including BI or Schering).  Chiron's sole compensation for
              Betaseron manufactured by such supplier (or Schering) pursuant to
              this Section shall be the payments set forth in Section 9.4.1 or
              9.5, as applicable; provided that if pursuant to Section 7.3.4(b)
              Chiron has not elected to be Schering's exclusive U.S. and
              Canadian supplier and any shortage of Betaseron is a result of a
              purchase order in respect of the U.S. and Canada being in excess
              of Chiron's Capacity, then the provisions of Section 7.3.4(c)
              shall apply in respect of payments to be made on Non-Chiron Sales
              to cover such shortages, and any other payments to be made for
              shortage requirements that are subject to Section 7.3.4 shall be
              made pursuant to the payment provisions of Section 9.4.1 or 9.5. 
              Schering shall use its best efforts to minimize the Allocated
              Supply Cost of such Betaseron.  Schering shall be fully
              responsible for the supply of quantities of Betaseron for which it
              exercises its rights hereunder.

       .3     The Parties will meet and confer at least annually, through the
              Development Committee or otherwise, to discuss projections for
              anticipated worldwide demand for Betaseron and to mutually
              determine in good faith a reasonable plan for Chiron's provision
              of appropriate levels of manufacturing capacity beyond    *    to
              meet such demand.  In the event of any differences of opinion
              regarding the amount of or rate at which capacity should be put in
              place by Chiron, or regarding the anticipated demand, or if the
              demand for Betaseron is substantially different than anticipated,
              the Parties shall resolve such matters by good faith negotiation
              in a timely manner, taking into account the principles that Chiron
              has rights and obligations to manufacture and supply the worldwide
              demand for Betaseron (subject to the exceptions set forth in this
              Agreement), that Schering needs to have a reliable source of
              Betaseron to satisfy such demand, that substantial lead-time may
              be required to qualify and establish additional capacity at Chiron
              Sites or with any other supplier, that Schering needs to continue
              to supply patients being treated with Betaseron, and that the
              timely supply of worldwide demand is in the best interests of both
              Parties.  To the extent Chiron reasonably appears to be unable, or
              in fact is unable, to supply quantities of Betaseron to Schering
              for any material period of time, the Parties will discuss how to
              enable Schering to satisfy such demand, which may include
              Schering and/or Chiron entering into a supply agreement with a
              third party (or Schering supplying itself) for a commercially
              reasonable period of time.  The Parties in reaching such
              resolution shall take into account the levels of risk associated
              with various options, the equitable allocation of such risk and
              the appropriate return for the necessary investment by Chiron or
              any alternate supplier.

* Confidential portions of material have been omitted and filed separately with
  the Securities and Exchange Commission.
                                                                       Page 20


<PAGE>

                     ARTICLE VIII - PROCESSING AND MANUFACTURING

8.1    FACILITIES.  Pending completion of expanded production capacity as
       contemplated under Section 4.1, Chiron will manufacture Betaseron in the
       same facilities as described in the IND and the Biologic Master File,
       that is, fermentation, recovery, purification, and a portion of the
       fill-finish will be done in the PDU and additional fill-finish will be
       done in the CMF.  Upon completion or acquisition of facilities for
       expanded production capacity by Chiron, the Parties shall, as set forth
       in Articles II and VI, cooperate and use best efforts to prepare, file
       and amend, as appropriate, applicable regulatory filings to achieve full
       utilization of such capacity in a timely manner.  Chiron will provide
       qualified manufacturing and quality control personnel and will
       manufacture Products according to applicable international, national,
       federal, state and local laws and regulations (including GMP) governing
       the manufacture of a drug or biological.

8.2    SUBCONTRACTORS.  Subject to Section 7.4 and to the consent of Schering
       (which may not be unreasonably withheld), Chiron may subcontract with one
       or more third parties for the performance of one or more Major Processing
       Steps PROVIDED that each subcontracting agreement for any Major
       Processing Steps shall contain the following provisions:  (a) in the
       event of a change of control of Chiron as defined in Section 17.7.2,
       Schering shall be permitted to assume all of Chiron's rights and
       obligations under such subcontracting agreement; (b) the manufacture of
       Betaseron by each subcontractor shall be approved by the FDA or other
       appropriate governmental agency; (c) the Betaseron or services to be
       supplied by each subcontractor and the manufacturing process therefor
       shall comply with all Beta Specifications and warranties under this
       Agreement; and (d) Betaseron will be required to be supplied on
       reasonable commercial terms, including an obligation on the part of each
       subcontractor to pay damages for breach of its supply obligations, which
       damages shall include at least the cost of securing alternate supplies. 
       In addition, without Schering's consent, Chiron may not use
       subcontractors to satisfy its obligations pursuant to Section 4.1 and may
       not have more than    *    of Chiron's Capacity in respect of any Major
       Processing Step performed by a subcontractor.  Notwithstanding any such
       subcontracting agreement, Chiron shall remain fully responsible for all
       of its obligations under this Agreement.

8.3    MANUFACTURING PROCEDURES.  In the manufacturing of the Vials, Chiron
       shall adhere to the Beta Specifications and shall utilize such additional
       or modified procedures, facilities, equipment and labeling which may from
       time to time be agreed upon in advance and in writing by the Development
       Committee and/or as required by the FDA or other appropriate governmental
       regulatory authority.  Any amendment to the Release Specifications shall
       be by agreement of the Parties not to be unreasonably withheld.  Chiron,
       at its sole cost, shall maintain and retain samples required by GMP or
       any other applicable regulations.  In addition, Chiron will, at its sole
       cost, select and retain samples of each Lot of Betaseron and conduct an
       ongoing stability program as mutually agreed to by the Parties, will
       maintain all stability records for such period as is required by the FDA
       or other regulatory agency

*  Confidential portions of material have been omitted and filed separately
   with the Securities and Exchange Commission.

                                                                    Page 21

<PAGE>

       and furnish Schering with copies of all such records at Schering's
       request and will undertake any Lot-by-Lot testing required by the FDA or
       other regulatory agency, or as requested and paid for by Schering
       pursuant to budgets agreed in advance.


8.4    COMPLETION OF VIAL EQUIVALENTS.  Vial Equivalents of Acid Paste or G-75
       shall be deemed complete upon compliance with Chiron's quality assurance
       testing procedures (including those contained in the ELA/PLA or
       applicable Foreign Filing) and release therefrom.

8.5    DELIVERY.  Promptly upon completion of quality assurance testing by
       Chiron of each Lot ordered hereunder, Chiron shall notify Schering of the
       completion thereof and shall provide Schering with appropriate
       Certificates of Analysis for such Lot.  The Vials shall comply with all
       of Chiron's warranties under this Agreement.  Schering shall have final
       authority to accept the Vials from Chiron on a Lot-by-Lot basis, based on
       whether the Lot complies with all of Chiron's warranties under this
       Agreement, and Schering shall have the right to review batch records as
       well as quality assurance results.  If Chiron and Schering disagree as to
       whether a Lot has been rightfully rejected then the Parties shall submit
       the matter to a mutually acceptable third party, such as a testing
       laboratory in the case of a dispute over analysis of the Vials.  The
       costs and fees of such third party shall be shared equally by the
       Parties.  Within five business days of notification of completion and
       provision of the Certificates of Analysis, unless Schering has properly
       rejected such Lot, Schering shall cause such Lot to be removed at
       Schering's own cost (subject to Section 9.2.2) from the premises where
       such Lot was finished.  If Schering requires longer than such five-day
       period to arrange for removal due to special circumstances, including the
       reasonable need to review batch records prior to acceptance, Schering
       shall so notify Chiron and the Parties shall discuss in good faith a
       reasonable extension of such five-day period.  Prior to delivery, Chiron
       shall store Betaseron, Acid Paste and G-75 at its own expense.  Except
       for Vials intended for distribution in the United States, title to and
       risk of loss for all Vials shall pass to Schering upon delivery to a
       carrier at the Chiron Site.  Title to and risk of loss for Vials intended
       for distribution in the United States shall pass to Schering's United
       States Affiliate upon delivery to a carrier at the Chiron Site.

8.6    INSPECTION.  Schering may inspect each Lot shipped by Chiron and shall
       notify Chiron of any non-conformance to Beta Specifications (or other
       proper reason for rejection) within thirty (30) days after receipt of the
       shipment and the relevant batch records being made available to Schering.
       Any delivery not rejected by Schering within such thirty (30) days shall
       be deemed accepted unless Schering informs Chiron that Schering's testing
       or investigation is still under way, in which case the time shall be
       extended for a reasonable period to allow completion of the testing or
       investigation; provided however, if a Lot is subsequently rejected by the
       FDA or other applicable regulatory agency (or by Schering in the event
       the quality control testing of the Products necessarily requires more
       than 30 days), payment for that Lot by Schering shall be suspended by
       Schering, or, if already paid, the

                                                                    Page 22
<PAGE>

      next payment to Chiron by Schering under Section 9.1 shall be reduced by 
      crediting the amount Schering had advanced for the non-conforming Lot. 
      If such Lot is subsequently accepted by the FDA, or other agency, with 
      at least six months remaining prior to the expiration date of such Lot, 
      then Schering will, upon Schering's acceptance of such Lot, pay Chiron 
      according to this Agreement.

8.7   ADDITIONAL TESTING. Schering shall have the right to request any 
      additional testing of the Vials (in addition to testing necessary to 
      determine whether to accept the Vials) that Schering reasonably believes 
      necessary and, if requested, Chiron shall use best efforts to promptly 
      perform such testing and inform Schering of the results; PROVIDED 
      HOWEVER, that all such additional testing shall be at Schering's sole 
      cost and expense, and Schering shall reimburse Chiron for its costs 
      (according to agreed budgets) incurred in performing such additional 
      testing within thirty (30) days after Chiron submits an invoice for such 
      costs; and provided further, that such additional testing shall not be a 
      basis for Schering delaying payment for any Vials and any such payment 
      shall be subsequently refunded or credited against payment to be made to 
      Chiron pursuant to Section 9.1, if non-conformity with the Beta 
      Specifications or warranties is discovered.
      
8.8   RIGHT TO REVIEW PROCESSES. Chiron shall maintain all quality 
      assurance manufacturing records and batch production records directly 
      related to the manufacture of Betaseron, or copies thereof, as required 
      by FDA or other applicable regulations. Schering shall own all quality 
      assurance manufacturing records and batch production records directly 
      related to the manufacture of Betaseron. Schering's personnel have the 
      right to review and audit compliance with Manufacturing Specifications 
      during regular business hours at reasonable intervals, and shall have 
      the right to visit and inspect each Chiron Site at such times as 
      required for the purpose of review of batch records and manufacturing 
      and quality assurance procedures with respect to Betaseron, provided 
      that such review or audit does not impede Chiron's manufacture and 
      release processes. Schering personnel shall not have access to any 
      records, information, or data concerning other Chiron products (other 
      than Products hereunder), and Schering personnel having access to any 
      Chiron Site shall execute reasonable confidentiality agreements to 
      prevent disclosure of such information that may be discovered 
      inadvertently. Schering's personnel may make general inquiries the 
      answers to which will be held in confidence by them, concerning such 
      matters as manufacturing scheduling, and equipment cleaning in the 
      shared areas of the PDU and CMF or of any other Chiron Site to insure 
      that Betaseron is being manufactured under GMP. 
      
8.9   LABELING. Chiron shall produce all Vials in a finished and 
      packaged form, using labels, cartons, package inserts and trade pack 
      shippers in accordance with the format prepared by Schering. Unless the 
      Parties agree otherwise and the Acts so permit, Chiron or Cetus (as 
      appropriate) shall be identified as the manufacturer on the labels. 
      Schering shall give reasonable advance notice of any label, labeling, or 
      packaging change to enable Chiron to switch labels, labeling, or 
      packaging without interrupting Chiron's production
      

                                                                    Page 23

<PAGE>

      schedule or incurring unreasonable expense, and unless required by the 
      FDA or other regulatory agency, such changes shall not significantly 
      increase the Chiron Cost of Goods without Chiron's approval, unless 
      Schering agrees to pay for such significant increase. To the extent 
      consistent with FDA or other applicable regulations, Schering or its 
      Affiliate shall have its name placed as prominently as possible on the 
      label of the final product. The cost of packaging and labels shall be 
      borne by Chiron, PROVIDED that if Schering provides packaging or labels 
      for any Vials, the actual reduction in the Chiron Cost of Goods shall be 
      credited to Schering with respect to such Vials against payment to be 
      made upon delivery pursuant to Section 9.1.

8.10  INVESTIGATIONS OF COMPLAINTS. Schering shall have the primary 
      right and responsibility to investigate and answer all complaints 
      concerning Products. If permitted by the Acts, Schering shall have the 
      primary right and responsibility to report to the FDA or other 
      applicable regulatory agency all complaints and corrective actions with 
      respect to Products, but if so required by the Acts, Chiron shall 
      perform such reporting. In this regard, Schering will supply Chiron with 
      a copy of any completed investigation report as required by GMP, as well 
      as any other report needed by Chiron to comply with the Acts. Chiron 
      will promptly notify Schering of any adverse events, complaints or 
      problems, or any inquiries made by healthcare providers, or any actual 
      or threatened legal or regulatory action of the FDA or other regulatory 
      agency relating to Products hereunder of which Chiron has notice. 

8.11  FDA REGULATION OF "OWNERSHIP". 

      .1   If and to the extent permitted under the Acts, (a) Schering 
      shall make all decisions and have regulatory responsibility in respect 
      of the ELA/PLA and (b) the ELA/PLA shall be amended so that Schering or 
      its Affiliate is named in the ELA/PLA as the "Responsible Head" thereof. 
      The Parties shall use their best efforts to amend the ELA/PLA in this 
      manner, including cooperating in presenting this goal and the business 
      agreement of the parties to the FDA.

      .2   If permitted under the Acts, Schering may have sign-off 
      authority with respect to all batch records (including in-process batch 
      records) at Schering's sole cost, risk and expense, provided that 
      Schering exercises such authority without interfering with Chiron's 
      manufacture and release processes.

      .3   If, in the reasonable opinion of Schering based on issued or 
      proposed regulations, or correspondence or statements of the FDA which 
      have been made available to Chiron or to which Chiron has been a party, 
      it appears that transferring certain responsibilities for Betaseron 
      quality control or approval to Schering personnel, including final 
      authority for approval of Betaseron, would materially enhance the 
      ability of Schering to be named in the ELA/PLA as the "Responsible 
      Head", then Chiron shall allow Schering, at its sole cost, risk, and 
      expense, to test and release for sale Betaseron manufactured at the 
      Chiron Site(s), and, if it reasonably appears necessary, to place such


                                                                        Page 24

<PAGE>

      personnel with such final authority for approval of Betaseron in 
      the Chiron Site(s) to the extent permitted by the Acts. Chiron shall not 
      be liable for any error or omission of such personnel or in such 
      testing, including the erroneous approval of Betaseron for release.

                            ARTICLE IX - PAYMENTS


In consideration of the obligations of Chiron hereunder, Schering shall pay 
Chiron as follows:

9.1   PAYMENT ON DELIVERY OR COMPLETION. Within 30 days after the later 
      of the delivery of each shipment of Betaseron to Schering by Chiron 
      pursuant to Section 7.11 or receipt of the related invoice, or written 
      notification of completion of Vial-Equivalents, unless any of them is 
      subsequently not accepted pursuant to Section 8.6, Schering shall pay 
      Chiron an amount equal to the number of Vials shipped or 
      Vial-Equivalents completed multiplied by the amount set forth herein 
      applicable to the period in which such Vials were ordered. For orders 
      placed in the Initial Sales Period, the payment pursuant to this Section 
      9.1 shall be    *    per Vial,    *    per Vial-Equivalent of Acid 
      Paste, and    *    per Vial-Equivalent of G-75; for orders placed after 
      the Initial Sales Period, the payment shall be    *    per Vial,    *    
      per Vial-Equivalent of Acid Paste, and    *    per Vial-Equivalent of 
      G-75. No payment shall be due hereunder for Betaseron and/or Vials 
      delivered pursuant to Section 4.2. Any payment which has been made 
      pursuant to this Section 9.1 for a Vial-Equivalent which is incorporated 
      into a Vial delivered hereunder shall be credited against the payment 
      otherwise due on account of such Vial. After 1993, payment for 
      Vial-Equivalents ordered by Schering shall only be made to the extent 
      Chiron has completed the manufacture of Vial-Equivalents in excess of 
      Chiron's reasonable need for inventory on hand in view of Schering's 
      order history, good-faith forecasts, and then-pending orders.
      
9.2   PAYMENT FOR CHIRON SALES, GENERALLY. Within 60 days after the end 
      of each calendar quarter, Schering shall pay Chiron an amount equal to 
      the applicable Effective Percentage Rate multiplied by the Chiron Sales 
      in such quarter, less the following adjustments (which adjustments shall 
      be carried forward from quarter to quarter to the extent they exceed the 
      amount otherwise to be paid in any quarter pursuant to this Section):
      
      .1   a credit of any amounts paid under Section 9.1, plus a 
           credit of any amounts credited to Schering pursuant to Section 8.9, 
           to the extent such amounts have not previously been credited against
           payments under this Section 9.2.1 and were paid for delivery of 
           those Vials which account for the Chiron Sales in such calendar 
           quarter;

      .2   during Phase I only, a credit equal to the additional 
           shipping costs (including insurance) which were incurred by Schering
           or its Affiliates as a result of Schering taking delivery of 
           Betaseron used for Foreign Chiron Sales at the Chiron Site as 
           compared to taking delivery at BI's German facility, assuming use of
           reasonable and appropriate carriers and comparable delivery terms;


* Confidential portions of material have been omitted and filed separately
  with the Securities and Exchange Commission.

                                                                        Page 25

<PAGE>

      .3   the application of any Schering Credits under Section 9.4.2;
      .4   any amounts credited under Sections 9.3 and/or 9.7.

9.3   INDIGENT AND REBATE VIALS. To the extent, if any, that Vials are 
      provided without charge by Schering pursuant to an "indigent program" or 
      as a non-cash rebate with respect to certain purchases of Betaseron, 
      Schering shall be entitled to credit, pursuant to Section 9.2.4, any 
      payments for such Vials made pursuant to Section 9.1. Schering shall act 
      reasonably in determining the number of such Vials to be distributed, 
      which shall not exceed 10% of the then-current Capacity of Chiron without 
      the consent of Chiron, which shall not be unreasonably withheld.
      
9.4   PAYMENT FOR FOREIGN NON-CHIRON SALES AND CREDITS. 

      .1   FOREIGN NON-CHIRON SALES PAYMENTS. Subject to Sections 
           7.3.4 and 9.4.2, within 60 days after the end of each calendar 
           quarter, Schering shall pay Chiron an amount equal to the greater of
           (a)   Foreign Non-Chiron Sales for such quarter multiplied by the 
                 applicable Effective Percentage Rate, less the Allocated Supply
                 Cost attributable to such sales; or
           (b)    *    multiplied by such Foreign Non-Chiron Sales.
           To the extent, if any, that the amount payable pursuant 
           to the preceding sentence, plus the Allocated Supply Cost 
           attributable to such Foreign Non-Chiron Sales, exceeds    *    
           multiplied by such Foreign Non-Chiron Sales, such excess amounts 
           shall be deemed to be "Schering Credits" and shall be applied by 
           Schering against certain amounts otherwise due to Chiron or carried 
           forward, as set forth in Section 9.4.2.

      .2   APPLICATION OF SCHERING CREDITS. Schering shall be entitled to 
           apply any outstanding Schering Credits in any calendar quarter 
           against payments otherwise due Chiron under either subsection (a) or
           (b) below (but not both):
           (a)   pursuant to Section 9.2 (in respect of Domestic 
                 Chiron Sales in such quarter), until such time, if at all, that
                 Section 9.4.2(b) is applicable or
           (b)   pursuant to both Section 9.2 (in respect of Foreign Chiron 
                 Sales in such quarter) and Section 9.4.1 (in respect of 
                 Foreign Non-Chiron Sales in such quarter), at such time as 
                 Chiron demonstrates that it has the Capacity (not including 
                 the Capacity derived from subcontracting Major Processing 
                 Steps to third parties, and only if Chiron has the Capacity 
                 to fully supply Schering's orders reasonably necessary to 
                 meet demand for Betaseron in the United States and Canada 
                 pursuant to Section 7.11 and has fully satisfied those 
                 orders) to deliver to Schering for sale in Europe    *    or 
                 more in the immediately succeeding four calendar quarters;
           PROVIDED, HOWEVER, that such Schering Credits shall not be applied 
           (but shall be carried forward from quarter to quarter) to the extent
           they would result in Chiron receiving payment:


* Confidential portions of material have been omitted and filed separately
  with the Securities and Exchange Commission.

                                                                        Page 26



<PAGE>

           (c)   (if Section 9.4.2(a) applies) for such Domestic Chiron Sales, 
                 in an amount less than the sum of    *    of such Domestic 
                 Chiron Sales, plus the Chiron Cost of Goods for such Chiron 
                 Sales, or 
           (d)   (if Section 9.4.2(b) applies) for such Foreign Non-Chiron 
                 Sales, in an amount less than    *    of such Foreign 
                 Non-Chiron Sales, and for such Foreign Chiron Sales, in an 
                 amount less than the sum of    *    of such Foreign Chiron 
                 Sales plus the Chiron Cost of Goods (which shall include any 
                 credit applied under Section 9.2.2) for such Foreign Chiron 
                 Sales.
           The Schering Credits shall be decreased to the extent they have been
           applied by Schering against payments otherwise due to Chiron.

      .3   REDUCTION OF CHIRON CREDITS. In each calendar quarter in which there 
           are no outstanding Schering Credits and are outstanding Chiron 
           Credits, the Chiron Credits shall, solely for purposes of Section
           9.4.4, be reduced by an amount equal to the sum of:

           (a)   the amount by which the payments received by Chiron in 
                 respect of Foreign Chiron Sales in such calendar quarter
                     *    of such Foreign Chiron Sales, plus the Chiron 
                 Cost of Goods (which shall include any credit applied under 
                 Section 9.2.2) for such Foreign Chiron Sales; plus

           (b)   the amount by which payments received by Chiron in respect of 
                 Foreign Non-Chiron Sales    *    of such Foreign Non-Chiron 
                 sales.

      .4   FOREIGN EFFECTIVE PERCENTAGE RATE BEFORE FULL REDUCTION. In any 
           calendar quarter, after the    *    anniversary of the First 
           European Commercial Sale, in which there are Chiron Credits to 
           be reduced pursuant to Section 9.4.3, the Effective Percentage 
           Rate for Foreign Chiron Sales and Foreign Non-Chiron Sales 
           shall be    *    . In any other quarter, the Effective 
           Percentage Rate for such Foreign Chiron Sales and Foreign 
           Non-Chiron Sales shall be the Effective Percentage Rate then 
           in effect under Section 9.6 for Domestic Chiron Sales, instead 
           of    *    , and the provisions of Sections 9.2 and 9.4.1 will 
           not otherwise be affected.

      .5   INTEREST. Any unapplied Schering Credits or unreduced Chiron
           Credits shall be denominated in U.S. dollars and shall accrue
           interest at LIBOR, calculated from the date accrued until the date
           applied or reduced. All Schering Credits and Chiron Credits will 
           be extinguished at the end of the term of this Agreement. Schering 
           Credits and Chiron Credits are only to be used for the purposes 
           expressly set forth in Section 9.4 and neither Party shall have any
           right or obligation (during the term of this Agreement or upon 
           expiration or earlier termination thereof) with respect to 
           such Credits except as set forth in Section 9.4.

* Confidential portions of material have been omitted and filed separately
  with the Securities and Exchange Commission.

                                                                    Page 27

<PAGE>

      .6   EXTENSION OF THE TERM OF THIS AGREEMENT. The term of this 
           Agreement may be extended for up to    *    successive 
              *    periods beyond the Original Term in order to allow a 
           Party to apply or reduce its Credits, as the case may be. If   
            *    before the expiration of the Original Term a Party has a 
           Credit and at the rate such Credit has been applied or reduced 
           over the prior    *    such Credit would not be fully applied 
           or reduced by such expiration of the Original Term, then such 
           Party may give notice at such time to the other Party that 
           this Agreement will be extended    *    beyond the Original 
           Term, and this Agreement shall be so extended. Assuming a 
           Party has exercised its right as to the previous    *    
           period, this right to extend this Agreement may be exercised 
           as to the    *    and    *        *    periods if (a) two 
           years before the then-scheduled expiration of this Agreement a 
           Party has a Credit and at the rate such Credit has been 
           applied or reduced over the prior two years such Credit would 
           not be fully applied or reduced by such expiration of this 
           Agreement, and (b) such Party provides notice at such time 
           that it will extend the term of this Agreement for such    *   
           period. If Chiron exercises this right as to any    *    
           period, Schering shall have the option (by providing notice to 
           Chiron within 60 days after Schering is notified that Chiron 
           has exercised its right as to any    *    period) of paying 
           Chiron on the then-scheduled expiration of this Agreement an 
           amount in U.S. dollars equal to the "value" of the Chiron 
           Credits as of such then-scheduled expiration date, in which 
           case this Agreement will expire on its then-scheduled
           expiration date. If Schering exercises this right as to any    
           *    period. Chiron shall have the option (by providing notice 
           to Schering within 60 days after Chiron is notified that 
           Schering has exercised its right as to any    *    period) of 
           paying Schering on the then-scheduled expiration of this 
           Agreement an amount in U.S. dollars equal to the "value" of 
           the Schering Credits as of such then-scheduled expiration 
           date, in which case this Agreement will expire on its 
           then-scheduled expiration date.

9.5   PAYMENT FOR DOMESTIC NON-CHIRON SALES. Except as set forth in Section 
      7.3.4, if there should be any Domestic Non-Chiron Sales in any calendar 
      quarter, Schering shall pay Chiron, within 60 days after the end of such 
      quarter, the Effective Percentage Rate multiplied by the amount of such 
      Domestic Non-Chiron Sales, less the Allocated Supply Cost attributable to 
      such sales.

9.6   EFFECTIVE PERCENTAGE RATE. Subject to Section 9.4.4, the "Effective 
      Percentage Rate" shall mean the percentage rate set forth below during the
      time period specified; which shall be measured starting with the First 
      Commercial Sale:


* Confidential portions of material have been omitted and filed separately
  with the Securities and Exchange Commission.



                                                                        Page 28

<PAGE>

     FULL YEARS COMMENCING FROM FIRST COMMERCIAL SALE:    *    

     EFFECTIVE PERCENTAGE RATE    *    


9.7  NON-REVENUE VIALS. After the First Commercial Sale, any Vial which is
     delivered and accepted, but disposed of in other than a revenue-bearing
     transaction (e.g., sample Vials, and clinical trial supplies, other than
     those supplied under Section 4.2) shall be deemed a "Non-Revenue Vial," and
     Chiron shall have as sole compensation for such Non-Revenue Vial    *      
        *     per Vial, and to the extent that, pursuant to section 9.1, a 
     greater amount may have been paid for such Vial, the difference shall be
     credited against the payment set forth in section 9.2. During the Initial
     Sales Period, there shall be no more than    *    Non-Revenue Vials per 
     year, and thereafter such number as the Parties may reasonably agree. If
     Schering desires to order more than the applicable maximum number of 
     Non-Revenue Vials for any year, the price of such Vials and the quantity to
     be supplied shall be negotiated by the Parties. This Section shall not 
     apply to Vials supplied pursuant to Section 4.2 or 9.3.

9.8  FDA DELAY. Prior to FDA Licensing, Chiron shall not be required to 
     perform fill-finish operations on G-75 so as to make Vials unless and 
     until Chiron elects to do so in view of the progress of the ELA/PLA
     at the FDA.

9.9  UNUSABLE VIALS. Without further charge to Schering under Section 9.1,
     Chiron will replace as soon as practicable after FDA Licensing and on
     Schering's request, Vials which were delivered to Schering prior to
     FDA Licensing and which, at the time of FDA Licensing, have less than six
     months remaining prior to the expiration date of such Vials. Such Vials
     shall be destroyed by Schering, returned to Chiron, or otherwise
     disposed of in accordance with the agreement of the Parties.

9.10 FORM OF PAYMENT. All payments due Chiron hereunder shall be made in
     United States dollars, for Chiron's account, by wire transfer to a bank
     in the United States designated in writing by Chiron; PROVIDED
     that where payments in respect of Net Sales are based on Net Sales
     in non-U.S. currencies, the amount of Net Sales and any deductions used
     used to calculate Net Sales, if any, accrued and expressed in the
     currency of each country shall be converted into Deutsche Marks and then
     into U.S. dollars, with each conversion at the average of the average
     daily "bid" and "ask" exchange rates as provided by Reuters prevailing
     in Frankfurt at 1:00 p.m. for the applicable calendar quarter.

9.11 OTHER CONSIDERATION. If Schering or its Affiliates or licensees receive
     any form of consideration other than money for supplying Betaseron,
     including (by way of example) obtaining more favorable pricing for
     Schering on other products, Chiron shall be entitled to payments
     hereunder based on the

* Confidential portions of material have been omitted and filed separately
  with the Securities and Exchange Commission.

                                                                    Page 29

<PAGE>

     reasonable value of such consideration as if it were payment in cash for 
     sales of Betaseron.

                        ARTICLE X - REPORTS AND BOOKS

10.1 REPORTS. Within 60 days after the end of each calendar quarter, Schering 
     shall provide Chiron with a written report setting forth in reasonable 
     detail the number, description and aggregate Net Sales for such quarter, 
     itemizing Net Sales of Product supplied by each of Chiron and BI (and 
     any other supplier), any credits which may be applicable under Section 
     9.2, the amount of any Schering Credits or Chiron Credits, and the 
     Allocated Supply Cost applicable for such quarter, and the calculation of 
     the amounts to be paid to Chiron pursuant to this Agreement, including 
     Article IX above; together with data in reasonable detail in support of 
     the calculations of such amounts. Where Schering has been required to 
     withhold an income or other similar tax from amounts otherwise due 
     Chiron, Schering shall provide Chiron with satisfactory evidence of 
     such tax in order to permit Chiron to claim a credit therefor. Any 
     amount due Chiron in respect of such quarter and which has not been 
     previously paid shall accompany such report.

10.2 EXAMINATION OF BOOKS.

     .1   Each of the Parties shall keep and maintain complete and accurate 
          books of account in respect of its activities under this Agreement 
          for which payment may be required, in accordance with applicable 
          accounting principles consistently applied (including GAAP for U.S. 
          entities) and in accordance with local law. The Parties shall 
          retain such records for so long as the Parties shall mutually 
          determine but unless agreed otherwise for five years after the 
          period to which such records relate.

     .2   In addition to any other inspection rights, Chiron shall have the 
          right, for any period during which Schering or its Affiliates shall 
          be marketing or distributing Product and for three years thereafter 
          and through an independent certified public accountant reasonably 
          acceptable to Schering, to examine the relevant books and records 
          of account of Schering and its Affiliates engaged in activities 
          under this Agreement at normal business hours, upon reasonable 
          demand, to determine whether appropriate accounting and payment 
          have been made by Schering hereunder. Any expenses incurred by 
          Chiron in connection with any such examination shall be borne by 
          Chiron.

     .3   In addition to any other inspection rights, Schering shall have the 
          right for any period during which Chiron shall be engaged in 
          activities at Schering's expense and for three years thereafter and 
          through an independent certified public accountant reasonably 
          acceptable to Chiron, to examine the relevant books and records of 
          account of Chiron at normal business hours, upon reasonable demand, 
          to determine whether appropriate accounting has been made by Chiron

                                                                        Page 30

<PAGE>

          hereunder. Any expenses incurred by Schering in connection with any 
          such examination shall be borne by Schering.

10.3 COSTS. Where a Party hereunder is to be paid or credited with its costs, 
     such costs shall be fully burdened and shall be calculated according to 
     such Party's standard and established internal project costing 
     methodology, which methodology shall be calculated in compliance with 
     applicable accounting principles, including GAAP in the case of Chiron 
     and any U.S. Affiliate of Schering, and shall include a reasonable 
     allocation of corporate overhead, all in accordance with such 
     established method. Each Party shall use its best efforts to perform 
     activities to be charged to the other Party in a cost-effective manner.

10.4 "CHIRON COST OF GOODS" shall mean Chiron's cost of supplying Betaseron (or 
     subcontracting the supply thereof) hereunder, calculated in accordance 
     with Chiron's accounting method as specified in Section 10.3 and set out 
     in Exhibit 10.4; PROVIDED that in calculating "Chiron Cost of Goods", 
     Chiron shall only be entitled to include idle capacity to the extent 
     that the portion of the facility or equipment which is idle is completed 
     and licensed by the appropriate authority for the production of 
     Betaseron, "in use" (according to GAAP) and dedicated to the production 
     of Betaseron; and PROVIDED FURTHER that such accounting method shall be 
     reasonable in the context of the pharmaceutical industry. Schering shall 
     have the right to audit both the method and content of the calculation 
     of the Chiron Cost of Goods, including in particular the appropriateness 
     of any idle capacity allocation, and any unusual or unreasonable expense 
     included in Chiron's calculation shall be stricken at Schering's 
     reasonable request.

10.5 INTEREST ON OVERDUE PAYMENTS. If any sum due hereunder is not paid in 
     full on the due date, interest at LIBOR or the maximum rate permitted by 
     law, whichever is lower, shall accrue upon any unpaid balance from the 
     date on which such sum first became due until such time as payment is 
     made in full.

                   ARTICLE XI - RIGHTS IN PRODUCT TECHNOLOGY

11.1 OWNERSHIP. Subject to the rights and obligations herein, each Party 
     shall own the entire right, title and interest in and to all Program 
     Patents and Know-how invented or acquired solely by such Party, and the 
     Parties shall jointly own any Program Patents or Know-how invented or 
     acquired jointly by such Parties, all according to applicable law.

11.2 PATENT PROSECUTION. Each Party ("the filing Party") may, at its sole 
     discretion, file, prosecute, maintain and defend against opposition 
     proceedings the Program Patents it owns in such countries as the filing 
     Party shall determine. During the term of this Agreement, the filing 
     Party shall, at the reasonable request and expense of the other Party, 
     file for such Program Patents in such countries as the other Party deems 
     necessary to protect its rights under this Agreement, but the rights 
     under such Program Patents shall continue to be owned by the originally
     filing Party. With respect to jointly-owned Program Patents or Know-how, 
     the owners shall 

                                                                    Page 31

<PAGE>

     cooperate to file, prosecute, maintain, abandon (where the Parties agree 
     it would be necessary and appropriate to protect trade secret rights), 
     and defend against opposition proceedings such Program Patents jointly 
     and share or bear the cost thereof as they may agree.

     The filing Party shall keep the other Party apprised of the status of 
     each Program Patent and shall give reasonable consideration to any 
     suggestions or recommendations of the other Party concerning the 
     preparation, filing, prosecution, maintenance and defense thereof. If, 
     during the term of this Agreement, the filing Party intends to allow any 
     Program Patent to lapse or become abandoned without having first filed a 
     substitute, the filing Party shall, whenever practicable, notify the 
     other Party of such intention at least sixty (60) days prior to the date 
     upon which such Program Patent shall lapse or become abandoned, and the 
     other Party shall thereupon be entitled to assume responsibility for the 
     prosecution, maintenance and defense thereof in a particular 
     jurisdiction (unless the filing Party reasonably determines to abandon 
     the Program Patent in order to protect its trade secrets), but such 
     actions shall not act to transfer any rights beyond those expressly set 
     out herein, except that if the other Party assumes such responsibility 
     it shall be entitled to a non-exclusive, royalty-free license only to 
     such Program Patent and only in such jurisdiction.

11.3 LICENSE GRANTS.

     .1  SCHERING GRANT. Schering agrees that neither Schering nor its 
         Affiliates shall assert against Chiron or its Affiliates   *    
         Schering or its Affiliates hereunder; PROVIDED, HOWEVER, that such 
             *    

     .2  CHIRON GRANTS.  Chiron agrees that neither Chiron nor its Affiliates 
         shall assert against Schering or its Affiliates    *   without first 
         obtaining the consent of Chiron, which shall not be withheld 
         unreasonably. Subject to the rights of Chiron to supply Beta 
         Molecules to Schering pursuant to this Agreement, and without 
         further obligation hereunder, Chiron hereby grants Schering     *    

* Confidential portions of material have been omitted and filed separately 
  with the Securities and Exchange Commission.


                                                                     Page 32
<PAGE>

 *        for the purpose of   *    under the terms and conditions of this 
Agreement; PROVIDED that with respect to    *    Chiron will grant Schering   
 *    
     .3   NEW TECHNOLOGY.  During the term of this Agreement, neither Party 
          shall be required to license or permit the use by the other Party 
          of any of its Program Patents or Know-how in the manufacture, use 
          or sale of any Product hereunder except as provided in Section 
          11.3.1 and 11.3.2, without its consent or the grant of any 
          necessary license, which consent or license may be conditioned on 
          receipt of some consideration from the other Party.

11.4 PROVISION OF ACCESS.  Chiron and Schering shall provide designated 
     representatives of each other with copies of each patent application and 
     written embodiments of know-how relevant to the licenses granted in 
     Section 11.3, as well as process improvements which Chiron proposes to 
     implement in its manufacture of any Product.  At any time during the 
     term of this Agreement that BI or any other supplier (including 
     Schering) is to supply or be qualified to supply Product to Schering 
     pursuant to this Agreement, Chiron shall, at Schering's request and 
     expense and to the full extent of Chiron's license grant hereunder, 
     provide BI and such other suppliers in confidence with such copies and 
     teach their personnel the use of such technology.

11.5 LICENSES TO THIRD PARTIES.  Except as expressly provided herein, during 
     the term of this Agreement,    *    Schering shall not grant    *    

                       ARTICLE XII - THIRD-PARTY PATENTS

12.1 NO WARRANTY.  Except as expressly set out herein, no Party makes any 
     warranty with respect to the validity, perfection or dominance of any 
     patent 

* Confidential portions of material have been omitted and filed separately 
  with the Securities and Exchange Commission.


                                                                        Page 33

<PAGE>

     or other proprietary right included in its Know-how or any 
     Program Patents or with respect to the absence or rights in third 
     parties which may be infringed by the manufacture, use, or sale of any 
     Product.

12.2 NOTICE OF OTHER PATENTS.  Each Party shall bring to the attention of the 
     other Party any patent or patent application it discovers, or has 
     discovered, and which relates to the subject matter of this Agreement, 
     and shall cooperate with each other so that each Party can determine 
     whether valid rights of a third party may be infringed.

12.3 NOTIFICATION OF PATENT LITIGATION.  In the event that either Chiron or 
     Schering is sued by a third party charging infringement of a patent 
     resulting from the manufacture, use or sale of Products by the Parties 
     or any of their Affiliates, or is otherwise charged with infringement or 
     threatened with suit for infringement, the Party sued or receiving such 
     charge or threat shall promptly notify the other Party.  Thereafter, the 
     Parties shall jointly attempt to formulate a mutually agreeable strategy 
     to address such event, including possible licenses, joint litigation, or 
     other strategies.

12.4 RESPONSIBILITY.  Unless the Parties expressly agree otherwise, 
     responsibilities for potential liabilities arising from alleged 
     infringement of third party patents by the activities of the Parties 
     regarding Betaseron shall be governed by the following provisions:

     .1   Chiron will have Sole Responsibility with respect to Betaseron 
          provided by Chiron to Schering hereunder for every third-party 
          patent claim that is infringed or alleged to be infringed by    *   
           , and that:
(a)  is a *

     .2   Schering will have Sole Responsibility for every claim in any 
          third-party patent, which is infringed or alleged to be infringed 
          by the    *    other than a claim for which Chiron has Sole 
          Responsibility, as defined in Section 12.4.1.

     .3   Third-party patent claims which are the Sole Responsibility of 
          either Chiron or Schering shall include only those    *    

* Confidential portions of material have been omitted and filed separately 
  with the Securities and Exchange Commission.


                                                                        Page 34

<PAGE>

          .4   "Sole Responsibility" means that the responsible Party shall 
               have (a) the sole right to settle any dispute based on such 
               third-party patent claims so long as the settlement maintains
               the existing rights of the other Party to make, use and/or sell
               Betaseron; PROVIDED that the responsible Party shall obtain 
               the prior written approval of the other Party, which shall not 
               be unreasonably withheld, before entering into any settlement 
               of a claim, if as a result, injunctive or other relief (other
               than monetary damages to be paid by the responsible Party) would
               be imposed against the other Party, (b) the obligation to bear
               all costs and expenses of any such settlement and of any 
               license obtained under the relevant patent rights, (c) the
               obligation to bear, and to indemnify the other Party against, 
               the costs of any royalties, damages for past infringement or 
               other monetary damages awarded by a non-appealable judgment or 
               decision of a court or other competent tribunal to any third 
               party against either Party, and (d) the sole right to control, 
               and obligation to pay all costs in connection with, any such 
               litigation, subject to a right of the other Party to 
               participate in such litigation  at its own expense and to the 
               extent permitted by applicable law. Where both Parties have 
               Sole Responsibility for claims in the same litigation, the 
               Parties shall cooperate in good faith and, to the extent 
               possible, the responsible Party will retain its 
               responsibilities as defined in the preceding sentence as to 
               those claims for which it is the responsible Party. Each Party 
               shall notify the other promptly upon notice of any such third 
               party patent claim or lawsuit subject to this Section 12.4.

          .5   A party having Sole Responsibility shall not be liable to the 
               other Party for any costs or damages not provided for in 
               Section 12.4.4 which are incurred by the other Party as a 
               result of any settlement or decision of any court or other 
               tribunal, including any lost profits or other business losses 
               resulting from any injunction or decision prohibiting either 
               Party from buying, making, using or selling Betaseron, and 
               such costs or damages shall not include any lost profits, 
               incidental or consequential damages, or any damages resulting 
               from the loss of capital investments and similar losses.

12.5      TRADEMARKS. Schering warrants and represents that it has the right 
          to use the trademarks and tradenames that will be used in 
          connection with the marketing of Betaseron, including the mark 
          BETASERON -R- in the United States. Chiron shall obtain no rights in 
          the mark BETASERON, but shall continue to own its own marks 
          including CHIRON and CETUS and its centaur and whale designs.

               ARTICLE XIII - INDEMNIFICATION AND WARRANTIES

13.1      ENVIRONMENTAL INDEMNIFICATIONS: PERMITS. Notwithstanding any other 
          indemnification obligation in this Agreement, and in addition to 
          any rights the Parties may have under relevant federal, state, or 
          local statutory and common laws, Chiron shall indemnify and hold 
          harmless Schering and its Affiliates from and against any and all 
          claims, actions, investigation costs, 

                                                                      Page 35

<PAGE>

          response costs, losses, damages, and other costs and expenses 
          (including attorney and consulting fees) incurred thereby as a 
          result of Environmental Matters; PROVIDED HOWEVER, this 
          indemnification does not apply to the extent it results from the acts 
          or omissions of personnel of Schering or its Affiliates which occur at
          any Chiron Site or Supplier Site.

13.2      "ENVIRONMENTAL MATTERS" are:

               (a) The operation by Chiron or its Affiliates, or any entity 
          which produces or manufactures Betaseron or any raw material used 
          therefor or provides services relating thereto under a 
          subcontracting arrangement with Chiron or its Affiliates, of any 
          Chiron Site or Supplier Site or other site or facility in a manner 
          that is not in compliance with and in violation of any 
          Environmental Law as defined herein. "Environmental Law" means any 
          treaty, law, ordinance, regulation or order of any jurisdiction, 
          relating to environmental matters, including, but not limited to, 
          matters governing air pollution; water pollution; the use, 
          handling, reporting, release, storage, transport, or disposal of 
          Hazardous Materials as defined herein; exposure to or discharge of 
          Hazardous Materials; occupational safety and health; and public 
          health. "Hazardous Materials" includes, but is not limited to, air 
          contaminant, water pollutant, hazardous material, hazardous 
          waste, hazardous substance, toxic and hazardous substance, medical 
          waste, infectious waste, "chemicals known to the State of 
          California to cause cancer or reproductive toxicity", asbestos and 
          PCB's, as such substances are defined under any applicable federal, 
          state or local statute, regulation, rule or ordinance.

               (b) Any action where (i) there has been a release of Hazardous 
          Materials into the environment; or (ii) Hazardous Materials have 
          been Disposed of at a site as the term "Disposed" is defined in 
          applicable Environmental Laws.

               (c) Any failure to (i) obtain or maintain all permits, or (ii) 
          provide all notices, required by Environmental Laws for the lawful 
          operation of any Chiron Site or Supplier Site or other facilities 
          or sites.

               (d) Any failure during the term of this Agreement to obtain 
          and/or maintain in full force and effect all permits required under 
          the Environmental Laws, in the form required by permitting 
          authorities in light of this Agreement, for any operation or 
          disposal at any Chiron Site or Supplier Site or other facility or 
          site.

               (e) Any other actual or alleged act or omission relating to 
          the handling or disposal of Hazardous Materials at any Chiron Site 
          or Supplier Site or other facility or site.

13.3      WARRANTIES AND LIMITATION OF DAMAGES. Chiron warrants that the 
          Vials made by or for Chiron hereunder shall be manufactured in 
          accordance with GMPs, and shall conform to the Beta Specifications 
          and shall be in compliance with all applicable international, 
          national, state and federal laws and regulations, 
  
                                                                      Page 36

<PAGE>

         PROVIDED that the foregoing warranty shall not apply to any Vials to 
         the extent that Schering has exercised authority for the approval of 
         such Vials, or has assumed responsibility for quality control 
         thereof, pursuant to Section 8.11, and Schering's acts or omissions 
         thereunder result in the failure of such Vials to comply with such 
         warranties. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED HEREIN CHIRON 
         MAKES NO WARRANTIES EXPRESS OR IMPLIED AND EXPRESSLY DISCLAIMS 
         WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE OR MERCHANTABILITY, 
         AND CHIRON SHALL NOT BE LIABLE FOR INCIDENTAL OR CONSEQUENTIAL 
         DAMAGES IN ANY CASE OF NONCONFORMITY. NEITHER PARTY SHALL BE LIABLE 
         TO THE OTHER PARTY FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES ARISING 
         FROM ANY ALLEGED OR ACTUAL BREACH OF THIS AGREEMENT.

13.4     INDEMNIFICATIONS BY CHIRON.  Chiron will indemnify and hold Schering 
         and its Affiliates harmless against any loss, damage, action, suit, 
         claim, demand, liability or expense, including Costs of Recall (a 
         "Loss"), that may be brought, instituted or arise against or be 
         incurred by Schering or its Affiliates to the extent such Loss is 
         based on or arises out of:    *



                                            ; PROVIDED that the foregoing 
         indemnification shall not apply to any Loss to the extent such Loss 
         is based on or arises out of the matters described in Section 
         13.5(a), (b) or (c).

13.5     INDEMNIFICATION BY SCHERING.  Schering will indemnify and hold 
         Chiron and its Affiliates harmless against any Loss that may be 
         brought, instituted or arise against or be incurred by Chiron or its 
         Affiliates to the extent such Loss is based on or arises out of:    *



                                             ; PROVIDED that the foregoing 
         indemnification shall not apply to any Loss to the extent such Loss 
         is based on or arises out of the matters described in Section 
         13.4(a), (b) or (c).

13.6     INDEMNIFICATION RE VISITING EMPLOYEES.  Each Party shall indemnify 
         and hold the other Party harmless against any and all liability, 
         damage, loss, cost or expense arising from any claim made or suit 
         brought by such Party's own employees or agents against the other 
         Party, which claims arise in whole or in part from injuries or harm 
         allegedly suffered by such employees or agents while present at the 
         premises of the other Party, except for such injury or harm caused 
         by the gross negligence or willful misconduct of such other Party.


* Confidential portions of material have been omitted and filed separately 
  with the Securities and Exchange Commission.

                                                                        Page 37

<PAGE>

13.7     CLAIMS PROCEDURES.  Each Party will give the other prompt written 
         notice of any injury or claim alleged to have occurred as a result 
         of the use or application of Betaseron or any final dosage form 
         manufactured using Betaseron supplied under this Agreement, 
         specifying the time, place and circumstances thereof and the names 
         and addresses of the persons involved. Each Party will also furnish 
         promptly to the other copies of all papers or official documents 
         received in respect of any actions arising out of any such alleged 
         injury. If an event occurs which either Party believes is an 
         indemnifiable event pursuant to this Article, that Party shall 
         notify the indemnifying Party promptly. If such event involves a 
         claim of any third party, or any employee of either Chiron or 
         Schering, the indemnifying Party shall have sole control over, and 
         shall assume all expense with respect to the defense, settlement, 
         adjustment or compromise of any claim as to which this Section 
         requires it to indemnify the other Party, provided that the 
         indemnifying Party shall obtain the prior written approval of the 
         indemnified Party, which shall not be unreasonably withheld, before 
         entering into any settlement, adjustment or compromise of any claim, 
         or before ceasing to defend any claim, if pursuant thereto or as a 
         result thereof there would be imposed injunctive or other relief 
         (other than monetary damages to be paid by the indemnifying Party) 
         against the indemnified Party. The indemnified Party may employ 
         counsel at its own expense to assist in the handling of such claims. 
         The indemnified Party must provide reasonable assistance to the 
         indemnifying Party in defense against the claim, including without 
         limitation, providing all relevant facts known to it, assisting in 
         discovery proceedings, and providing witnesses.

13.8     INSURANCE.  Each Party shall obtain and maintain in effect with 
         financially sound and reputable insurers an appropriate insurance 
         policy with respect to its obligations under this Article, to the 
         extent such policy can be obtained and maintained on reasonable 
         commercial terms and if such a policy cannot be so obtained and 
         maintained, the Parties shall meet and confer regarding appropriate 
         alternatives, which may include appropriate reserves in respect of 
         such obligations. At the request of a Party, the other Party will 
         supply a Certificate of Insurance or evidence of such reserve, 
         reasonably satisfactory to the requesting Party, indicating the 
         terms of coverage.

13.9     COMPLIANCE.  The parties shall comply fully with all applicable laws 
         and regulations in connection with their respective activities under 
         this Agreement.

                     ARTICLE XIV - TERM, TERMINATION, AND EXPIRATION

14.1     TERM.  Unless earlier terminated pursuant to the terms of Section 
         14.3 or extended pursuant to Section 9.4.6 or 14.2, this Agreement 
         shall continue in effect until the end of the Original Term, 
         whereupon it shall expire.

14.2     RENEWAL.  The Parties may, by mutual written agreement, renew this 
         Agreement for successive terms of    *    Three years prior to the 
         expiration date of this Agreement, the Parties shall confer as to the 
         mutual desirability of such renewal and each party shall disclose 
         to the other its


* Confidential portions of material have been omitted and filed separately 
  with the Securities and Exchange Commission.

                                                                        Page 38
<PAGE>

     intentions regarding renewal. Unless the Parties agree to renew prior to
     two years before expiration, this Agreement will expire pursuant to 
     Section 14.1.

14.3 TERMINATION.

     .1   If either Party defaults in the performance of, or fails to be in 
          compliance with, any material warranty, representation, agreement 
          or covenant of this Agreement, and such default or noncompliance 
          shall not have been substantially remedied, or steps initiated to 
          substantially remedy the same to the other Party's reasonable 
          satisfaction, within 60 days after receipt by the defaulting Party 
          of a written notice thereof and demand to cure such default from 
          the other Party, the Party not in default may terminate this 
          Agreement, at the option of such Party and by written notice to the 
          defaulting Party.

     .2   Either Party may terminate this Agreement if, at any time, the 
          other Party shall file in any court pursuant to any statute, a 
          petition in bankruptcy or insolvency or for reorganization in 
          bankruptcy or for an arrangement or for the appointment of a 
          receiver or trustee of such Party or of its assets, or if such 
          Party proposes a written agreement of composition or extension of 
          its debts, or if such Party shall be served with an involuntary 
          petition against it, filed in any insolvency proceeding, and such 
          petition shall not be dismissed within sixty (60) days after the 
          filing thereof, or if such Party shall propose or be a party to any 
          dissolution, or if such Party shall make an assignment for the 
          benefit of creditors.

     .3   Except as otherwise expressly provided herein, termination by 
          either Party pursuant to this Article XIV shall not prejudice any 
          other remedy that a Party might have in law or equity, except that 
          neither Party may claim compensation for lost opportunity or like 
          consequential damages arising out of the fact of such termination.

14.4 SURVIVAL. Unless expressly provided to the contrary, the provisions of 
     Articles XII, XIII, XIV, XV and XVI shall survive the expiration or 
     termination of this Agreement.

14.5 PREPARATORY ACTIVITIES OF SCHERING. Chiron acknowledges that Schering 
     shall, after expiration or termination of this Agreement, be free to 
     make, have made, use and sell any Beta Molecule to the extent it can do 
     so without infringing on Chiron's intellectual property or other 
     proprietary rights. In order to provide for an orderly transition, 
     Schering shall notify Chiron at least one year prior to the expiration 
     of this Agreement of Schering's plan for the transfer of manufacturing 
     upon expiration. Chiron shall, at Schering's expense and upon such 
     notice, cooperate reasonably with Schering or its designee in disclosing 
     thereto the technology used for the manufacture of Products hereunder.

14.6 PREPARATORY ACTIVITIES OF CHIRON. Schering acknowledges that, unless the 
     Parties otherwise agree in writing to extend the term of this Agreement

                                                                      Page 39

<PAGE>

     beyond the Original Term, Chiron may desire to utilize its capacity for 
     the manufacture of Beta Molecules after expiration or termination of 
     this Agreement to the extent it can do so without infringing on 
     Schering's intellectual property or other proprietary rights. Schering 
     further acknowledges and agrees that Chiron may commence making 
     preparations for the post-termination manufacture and commercial sale of 
     such Beta Molecules beginning two years before the expiration or 
     termination of this Agreement. Such preparations may include the steps 
     necessary to obtain FDA approval for Chiron to sell any Beta Molecule, 
     including human clinical trials and the filing of a product license 
     application, and Chiron shall have the right to cross-reference the 
     ELA, and the corresponding portions of any Foreign Filings but Chiron 
     shall not be entitled to begin commercial sale of any Beta Molecule 
     prior to the expiration or termination of this Agreement. Chiron shall not 
     be prohibited from making such preparations during the two years prior 
     to the expiration or termination of this Agreement or from 
     manufacturing, using or selling any Beta Molecule after expiration or 
     termination of this Agreement, provided such activities do not infringe 
     Schering's intellectual property or other proprietary rights and are not 
     inconsistent with Section 11.5. Schering agrees that it will not assert 
     against Chiron any claim based on trade secrets or confidentiality 
     obligations under this Agreement to the extent Chiron, in making 
     preparations during the two years prior to the expiration or termination 
     of this Agreement or in making, using or selling any Beta Molecule after 
     expiration or termination hereof, uses processes, materials or 
     procedures that were developed by Cetus or Chiron and provide no 
     potential or actual independent economic value over processes, materials 
     or procedures that are generally known in the industry.

14.7 INTELLECTUAL PROPERTY RIGHTS ON TERMINATION OR EXPIRATION. Upon 
     expiration or earlier termination of this Agreement:

     .1   Schering shall have an    *    in order to    *    solely to the 
          extent that during the term of this Agreement    *    ; PROVIDED 
          that Schering shall not be entitled to the foregoing license if 
          Chiron shall have    *    

     .2   Chiron shall have an    *     solely to the extent that during the 
          term of this Agreement    *     PROVIDED that Chiron shall not be 
          entitled to the

* Confidential portions of material have been omitted and filed separately
  with the Securities and Exchange Commission.


                                                                      Page 40

<PAGE>

              foregoing license if    *

14.8   REFERENCE TO ELA. After the term of this Agreement, Chiron shall have 
       a non-exclusive right to use and refer to the ELA and Items 1.1, 1.2,
       1.3, 1.4, 1.5, 2.2, and 3 "Chemistry and Manufacturing Controls" and
       Appendices I-1, I-2.1, I-2.2, I-3 and I-4 of the PLA, and any 
       corresponding portions of any Foreign Filings.

14.9   ACCOUNTING. Upon any termination of this Agreement, the Parties shall,
       within 90 days after termination, prepare reports and make payments in 
       a manner substantially the same as provided for in Article X hereof, to
       account for unaccounted Net Sales.

14.10  PHASE IN/PHASE OUT OPTION. In order to provide for an efficient and 
       orderly transition in the event (a) this Agreement expires on the 
       Original Term or (b) this Agreement expires at such later date 
       pursuant to Section 9.4.6 or 14.2, the Parties agree as follows:

       .1     Subject to the terms and conditions set out herein, Schering 
              shall have the option to supply and/or order Products in the 
              following amounts and during the following periods: (a) for the
              one-year period commencing two years before the expiration of 
              this Agreement ("Year A"), Schering may supply itself with (or
              arrange for the supply of) up to    *    of the average total
              annual quantity of Products which had been provided by Chiron in
              the previous two years (the "Baseline Supply"), in lieu of 
              Chiron supplying that quantity in such period; (b) for the 
              one-year period commencing one year before expiration of this
              Agreement, ("Year B"), Schering may supply up to    *    of the 
              Baseline Supply, in lieu of Chiron supplying that quantity in 
              such period; (c) for the one-year period immediately following 
              the expiration of this Agreement ("Year C"), Schering may 
              require Chiron to supply Schering with up to    *    of the 
              Baseline Supply in such period, and (d) for the one-year period
              commencing one year after the expiration of this Agreement 
              ("Year D"), Schering may require Chiron to supply Schering with 
              up to    *    of the Baseline Supply in such period.

       .2     As to any Product which Schering supplies in Year A or Year B, 
              Chiron will be entitled to receive, in lieu of any other 
              payment under this Agreement, the    *

       .3     As to any Product which Chiron supplies in Years C or D, Chiron 
              will receive, in lieu of any other payment under this Agreement,
              an amount per Vial equal to    *

       .4     Schering may exercise the option set forth herein in respect of 
              none, any or all of the periods referred to in subsections 
              14.10.1(a) through


* Confidential portions of material have been omitted and filed separately 
  with the Securities and Exchange Commission.

                                                                         Page 41


<PAGE>

              (d) above, PROVIDED that notice as to each period must be 
              delivered to Chiron no later than one year prior to the 
              commencement of such period specifying the percentage of the 
              Baseline Supply (in reasonable whole Lots) which is to be supplied
              by Schering and Chiron, as the case may be, for such period, and
              FURTHER PROVIDED that under Section 14.10.1 the percentage of the
              Baseline Supply which Schering elects to manufacture (or have 
              manufactured) may not be less in Year B than in Year A; and the 
              percentage of such Baseline Supply which Schering elects to 
              require Chiron to provide may not be greater in Year D than in 
              Year C, without Chiron's consent.

       .5     If Schering exercises its right to have Chiron supply Products 
              during Year C or D, this Agreement will expire pursuant to 
              Section 14.1, except that the following Articles and Sections 
              shall survive such termination and shall continue to be in effect 
              during the period that Chiron supplies Products to Schering 
              pursuant to this Section 14.10 (except as such Articles and 
              Sections may be in conflict with this Section 14.10 and except 
              that such survival shall not be deemed to extend the date of 
              expiration or termination of this Agreement as referred to in
              such Articles and Sections):

       NUMBER     HEADINGS

       7.11       Quarterly Orders
       7.12       Reports
       7.13       Limitations
       VIII       Processing and Manufacturing, excluding Section 8.11.3
       9.10       Form of Payment
       X          Reports and Books
       XI         Rights in Product Technology, excluding Sections 11.2 and
                  11.5
       XII        Third-Party Patents (as to Betaseron only)
       XIII       Indemnification and Warranties
       14.3       Termination
       14.4       Survival
       14.5       Preparatory Activities of Schering
       14.6       Preparatory Activities of Chiron
       14.7       Intellectual Property Rights on Termination or Expiration
       14.8       Reference to ELA
       14.9       Accounting
       14.10      Phase In/Phase Out Option
       XV         Product Recall
       XVI        Confidentiality
       XVII       Miscellaneous, excluding Section 17.7.2


                          ARTICLE XV - PRODUCT RECALL


15.1   "COSTS OF RECALL" shall be deemed to include all costs arising from a 
       recall of Product, including but not limited to notifying purchasers 
       of the fact of the


                                                                         Page 42



<PAGE>

      recall, arranging for the return of Product from the purchasers, 
      storage, destruction, or remediation of returned Product, and
      replacement of Product. "Costs of Recall" shall not include cash
      refunds, lost profits, damage to goodwill, or other consequential
      injury to either Party. Any cash refund made by Schering hereunder
      on account of a recall will, for the purpose of calculating Net Sales
      under Section 9.2, be subtracted from the amount calculated as Net
      Sales in the calendar quarter immediately following such recall. All
      recalls shall be performed pursuant to the guidelines set forth in 21
      CFR 7.40 ET SEQ.

15.2  DECISION TO RECALL. Where a recall is requested by the FDA or by 
      another agency or authority having regulatory jurisdiction over the
      Product, Schering shall perform the recall and shall be responsible for
      preparing all necessary paperwork and handling all interactions with the
      FDA or such other agency or authority to the extent permitted by law.
      Where a recall is not requested by a regulatory body, but a Party feels
      such a recall may be advisable, such recall shall be discussed by the
      Development Committee, with final authority for deciding such recall
      residing with Schering. In the event that Chiron advises that there
      should be a recall of Product based on a specific, identifiable event
      or circumstance, and Schering declines to so recall the Product, then
      Chiron shall be indemnified and held harmless against any liability to
      a third party which results from the event or circumstance upon which
      Chiron advised such recall and which arises after the earliest date on
      which such recall could have been accomplished. Chiron's advice and
      Schering's decision to recall a Product shall be made only in good
      faith and with due regard for the commercial interests of the Parties 
      and the strong public interest in access to Product, and in public
      health and safety, and in accordance with the standards of conduct
      prevailing in the industry.


                    ARTICLE XVI - CONFIDENTIALITY

16.1  CONFIDENTIALITY. The confidential technical and business information of 
      either Party or both Parties shall hereafter be called collectively the 
      "Information", and shall include Technology and Mixed Technology and other
      information which was required to be held in confidence pursuant to the
      Ownership Agreement. The Parties acknowledge that the Information
      designated as confidential by the providing Party shall be considered to
      be confidential by the receiving Party, and the receiving Party shall not 
      disclose to others, (including to any Affiliates of the receiving Party
      not bound by like conditions of confidentiality), nor make any use of the 
      Information received from the providing Party for any purpose other than
      as contemplated in this Agreement, without the prior written consent of
      the providing Party prior to the later of: the termination or expiration
      of this Agreement (other than for breach by the receiving Party) or ten
      (10) years after first disclosure thereof, except to the extent any of the
      Information (i) was known to the receiving Party prior to the disclosure
      hereunder or developed independent of the disclosure; (ii) is or becomes
      publicly known through no fault or omission attributable to the receiving
      Party, (iii) is rightfully given to the receiving Party from sources
      independent of the providing Party, which sources

                                                                    Page 43

<PAGE>


      rightfully possess such information, or (iv) is licensed to the 
      receiving Party to use for its own activities outside of this Agreement.
      Upon notice to the other Party, a Party may also disclose Information to 
      government health authorities necessary to meet applicable regulations.

16.2 SURVIVAL. Upon the termination for any reason of this Agreement, each 
     Party shall return any and all documents of the other Party which contain 
     Information (other than Information related to Technology or to Mixed 
     Technology, as defined in the Ownership Agreement, which is owned by or 
     licensed to such Party) and shall destroy any copies thereof, except that
     the Parties may retain one copy of all documents for legal record-keeping 
     purposes or as required by applicable regulations.


                   ARTICLE XVII - MISCELLANEOUS

17.1  NOTICES. Any notice or other communication required or permitted to be 
      given by either Party under this Agreement shall be effective when
      delivered, if delivered by hand or by electronic facsimile or five days
      after mailing if mailed by registered or certified mail, postage prepaid
      and return receipt requested, and shall be addressed to each Party at the
      following addresses or such other address as may be designated by notice
      pursuant to this Section:


If to Cetus or Chiron:                       If to Schering:
Chiron Corporation                           Schering A.G.
4560 Horton Street                           Mullerstrasse 170-178
Emeryville, CA 94608                         W-1000 Berlin 65
Attn: President                              Germany
Facsimile: 510-655-3282                      Attn: Head of SBU CNS; with a
                                             copy to Legal Department

with copy to:                                with copies to:
General Counsel                              Schering Berlin, Inc.
                                             110 East Hanover Avenue
Facsimile: (510) 654-5360                    Cedar Knolls, NJ 07927
                                             Attn: Vice President, Law &
                                               Secretary
                                             Facsimile:  (201) 267-7721

                                             Berlex Laboratories, Inc.
                                             15049 San Pablo Avenue
                                             Richmond, California 94804
                                             Attn: Vice President, General
                                               Manager
                                             Facsimile: (510) 262-7095


17.2  AMENDMENTS. No amendment, modification or addition hereto shall be 
      effective or binding on either Party unless set forth in writing and
      executed by duly authorized representatives of both Parties.



                                                                    Page 44

<PAGE>

17.3    WAIVER.  No waiver of any rights under this Agreement shall be  
        deemed effective unless contained in writing signed by the 
        Party charged with such waiver, and no waiver of any breach or 
        failure to perform shall be deemed a waiver of any future breach or 
        failure to perform or any other right arising under this Agreement.

17.4    HEADINGS.  The section headings contained in this Agreement are 
        included for convenience only and form no part of the agreement 
        between the Parties.

17.5    APPLICABLE LAW.  This Agreement shall be governed by, subject to and 
        construed in accordance with the laws of the State of California and 
        the Parties consent to the jurisdiction of the courts in that state. 
        Except as set forth expressly herein, no dispute arising out of this 
        Agreement or the Ownership Agreement, or any other matter shall be 
        submitted to arbitration without the advance written consent of both 
        Parties.

17.6    SEVERABILITY.  If any provision of this Agreement is held to be 
        invalid, void or unenforceable for any reason, it shall be adjusted, 
        if possible, rather than voided in order to achieve the intent of 
        the Parties to the maximum extent possible. In any event, all other 
        provisions of this Agreement shall be deemed valid and enforceable 
        to the fullest extent possible.

17.17   ASSIGNMENT BINDING EFFECT

        .1  Neither this Agreement, nor any rights granted hereunder, shall 
            be assignable by any Party hereto without the prior written 
            consent of the other Party, in such other Party's discretion; 
            PROVIDED HOWEVER, that either Party may assign this Agreement 
            without the consent of the other Party (i) to its Affiliates, if the
            assigning Party guarantees the full performance of its Affiliates' 
            obligations hereunder or (ii) subject to Section 17.7.2, to a third 
            party purchasing substantially all the assets of the company 
            provided such third party agrees to be bound by this Agreement. Any 
            purported assignment in contravention of this Section shall, at the 
            option of the non-assigning Party, be null and void and of no 
            effect.
          
        .2  If any unaffiliated third party shall purchase Chiron (or Cetus, 
            if Cetus owns any IFN Property), or substantially all of the 
            assets of Chiron (or Cetus, if Cetus owns any IFN Property), or 
            the property or facilities of Chiron or Cetus used in the 
            manufacture of Products under this Agreement ("change of 
            control"), Schering shall have the option to purchase or lease 
            from Chiron, Cetus or such third-party purchaser, as the case may 
            be, all the property, contracts (including this Agreement), 
            facilities and equipment of Chiron and Cetus used  (or 
            substantially completed and intended for use) in the manufacture 
            of Products under this Agreement (the "IFN Property"), at the 
            aggregate fair market value (or, in the case of a lease, the 
            lease value) of the IFN Property. Where the IFN Property is used 
            solely or primarily for the manufacture of Products, Schering 
            shall have the right to buy such IFN Property, and if the IFN 
            Property is also used for the manufacture

                                                                      Page 45

<PAGE>

            of other substances, Chiron shall retain a leasehold interest in 
            such IFN Property to continue to make such other substances for 
            seven years. Where the IFN Property is used primarily for the 
            manufacture of substances other than Products, Schering shall 
            have the right to a leasehold interest in such IFN Property to 
            make Product for the remainder of the term of this Agreement. 
            Such fair market value shall be evaluated taking into account the 
            going concern value of the IFN Property, including the value of 
            the supply provisions of this Agreement and shall be determined 
            by an independent third party mutually agreed upon by the 
            Parties. Such option must be exercised, if at all, by notifying 
            Chiron in writing of such exercise within 90 days after Chiron 
            notifies Schering that it proposes to enter into a sale agreement 
            or that a change of control may occur that would meet the 
            conditions set forth in the first sentence of this Section 17.7.2.

17.8    BEST EFFORTS.  In each case in this Agreement in which a Party is 
        required to use best efforts to perform a specified action, the 
        degree of effort required shall be deemed limited to what is 
        commercially reasonable under the applicable facts and 
        circumstances, without taking into account alternative commercial 
        opportunities available to such Party.

17.9    FURTHER ASSURANCES.  Each Party hereto agrees to execute, 
        acknowledge and deliver such further instruments, and to do all 
        such other acts as may be necessary or appropriate in order to 
        carry out the purposes and intent of this Agreement.

17.10   FORCE MAJEURE.  No Party shall be liable for any failure or delay 
        in performance under this Agreement to the extent such failure or 
        delay arises from any cause of any nature beyond the reasonable 
        control of such Party, and which would render performance 
        hereunder impossible including, without in any way limiting the 
        generality of the foregoing, fire, explosion, earthquake, storm, 
        flood, strike, labor difficulties, war, insurrection, riot, act 
        of God or the public enemy, or any law, act, order, export or 
        import control regulations, proclamation, decree, regulation, 
        ordinance, or instructions of local, state, federal or foreign 
        governmental or other public authorities, or judgment or decree of 
        a court of competent jurisdiction (but excluding a court injunction 
        against a Party's performance) and not otherwise arising out of breach 
        by such Party of this Agreement ("Force Majeure"). In the event of 
        the occurrence of such a cause or the reasonable likelihood of 
        such occurrence, the Party so affected shall give prompt written 
        notice to the other Party, stating the period of time the same is 
        expected to continue and shall use best efforts to end the 
        failure or delay and ensure that the effects of such case of   
        Force Majeure are minimized.

17.11   NEGATION OF AGENCY.  Nothing herein contained shall be deemed to 
        create an agency, joint venture, amalgamation, partnership, or 
        similar relationship between Schering and Chiron.

17.12   PUBLICITY.  No public announcement concerning the existence or the 
        terms of this Agreement shall be made, either directly or indirectly, 
        by Chiron or

                                                                      Page 46


<PAGE>

        Schering, except as may be legally required by applicable laws, 
        regulations, or judicial order, without first obtaining the approval 
        of the other Party and agreement upon the nature, text, and timing of 
        such announcement, which approval and agreement shall not be 
        unreasonably withheld. The Party desiring to make any such 
        public announcement shall provide the other Party with a written 
        copy of the proposed announcement in sufficient time prior to public 
        release to allow such other Party to comment upon such announcement, 
        prior to public release. Chiron shall not issue any press release 
        or make any public announcement which includes or otherwise uses 
        the name "Schering" in any public statement or document except 
        with the prior written consent of Schering.

17.13   REGISTRATION AND FILING OF THE AGREEMENT.  To the extent, if any, 
        that a Party concludes in good faith that it is required to file or
        register this Agreement or a notification thereof with any 
        governmental authority, including without limitation the U.S. 
        Securities and Exchange Commission and the Competition Directorate of 
        the Commission of the European Communities in accordance with 
        applicable laws and regulations, such Party may do so, and the other
        Party shall cooperate in such filing or notification and shall 
        execute all documents reasonably required in connection therewith. 
        The Parties shall promptly inform each other as to the activities 
        or inquiries of any such governmental authority relating to this 
        Agreement, and shall cooperate to respond to any request for 
        further information therefrom. 

17.14   ENTIRE AGREEMENT.  This Agreement (together with the Exhibits hereto 
        as such exhibits may be amended from time to time in accordance 
        with this Agreement) contains the entire agreement between the 
        Parties with respect to the subject matter hereof. Any prior 
        agreement, arrangement or undertaking, whether oral or in 
        writing, other than the Ownership Agreement is hereby superseded.

17.15   CONSTRUCTION.  This Agreement is the product of mutual negotiation 
        and is not to be construed strictly against either Party. 

17.16   BENEFICIARIES.  No person, other than Schering, Chiron or Cetus and 
        their permitted assignees hereunder, shall be deemed an intended 
        beneficiary hereunder or have any right to enforce any obligation 
        of this Agreement.

17.17   AFFILIATES OF PARTIES.  Each Party may perform its obligations 
        hereunder personally or through one or more Affiliates. Neither 
        Party shall permit any of its Affiliates to commit any act 
        (including any act of omission) which such Party is prohibited 
        hereunder from committing directly.

17.18   SPECIFIC ENFORCEMENT.  Each Party hereto shall be entitled to an 
        injunction or injunctions to prevent material breaches of this 
        Agreement and to specifically enforce the provisions of this 
        Agreement, in addition to any other remedy to which such Party 
        may be entitled, at law or in equity.

                                                                      Page 47

<PAGE>

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by 
their duly authorized representatives as of the Effective Date.

SCHERING AG                             CHIRON CORPORATION

By: /s/ Erlen                          By: /s/ William J. Rutter
   ----------------------                  -----------------------

Title: Vorstandsmitgl                  Title:  Chairman
      -------------------                      -------------------


                                        CETUS ONCOLOGY CORPORATION
By:  ppa. [illegible]                   By: /s/ William J. Rutter
   ----------------------                  -----------------------

Title: Head, SBU CNS                   Title: Chairman
      -------------------                     --------------------






                                                                      Page 48

<PAGE>

                    EXHIBIT 4.1 - TARGET CAPACITIES AND
                       DEVELOPMENT AND MARKETING PLAN

                              TARGET CAPACITIES

The following target capacities are based on the Parties' understanding of 
expected demand for Betaseron and Chiron's Capacity for Betaseron in the 
United States and Canada, and on expectation of FDA Licensing by Mid-1993:

On the order of    *    Million Vials delivered to Schering in 1993;

On the order of    *    Million Vials delivered to Schering in 1994;

On the order of    *    Million Vials delivered to Schering in 1995;

On the order of    *    Million Vials delivered to Schering in 1996 and in 
each calendar year thereafter during Phase I.


                           CHIRON DEVELOPMENT PLAN

As presently contemplated, Chiron's development plan consists of the 
following:    *


                             SCHERING MARKET PLAN

As presently contemplated, Schering's marketing plan includes:    *


* Confidential portions of material have been omitted and filed separately 
  with the Securities and Exchange Commission.



                                                                      Page 49

<PAGE>

                                       *


* Confidential portions of material have been omitted and filed separately 
  with the Securities and Exchange Commission.



                                                                      Page 50

<PAGE>

                       EXHIBIT 7.10 - NON-BINDING FORECAST

In accordance with the provisions of Section 7.10 of the Agreement, Schering 
forecasts as follows:

<TABLE>
<CAPTION>
                                            WORLDWIDE
       DATE OF ORDER      FOR DELIVERY        ORDERS               CHIRON ORDERS
       <S>                <C>               <C>                    <C>
       July 1, 1993          1Q1994          *    Vials                *    V

       October 1, 1993       2Q1994          *    V                    *    V

       January 1, 1994       3Q1994          *    V                    *    V

</TABLE>

Schering expects no third-party supply of Betaseron during the period covered 
by this non-binding forecast


* Confidential portions of material have been omitted and filed separately 
  with the Securities and Exchange Commission.



                                                                      Page 51

<PAGE>

                      EXHIBIT 7.11 - INITIAL PURCHASE ORDER

Schering hereby places the following orders with Chiron, which orders Chiron 
hereby accepts. This Order is subject to all terms of the Agreement:

Paste    *


G-75    *


Vials    *


Second Quarter, 1993
Third Quarter, 1993    *
Fourth Quarter, 1993


* Confidential portions of material have been omitted and filed separately 
  with the Securities and Exchange Commission.




                                                                      Page 52

<PAGE>

                                   EXHIBIT 10.4

                               CHIRON COST OF GOODS

Expenses included in, but not limited to, the fully absorbed manufacturing 
cost:

1. Direct materials (which includes the cost of Diluent).

2. Salaries, wages and benefits of personnel directly engaged in 
   manufacturing the product.

3. Overhead associated with direct production, including, but not limited to:

   a. Depreciation, leasehold improvements and equipment leases
   b. Repair and maintenance
   c. Manufacturing supplies

4. General manufacturing overhead, including, but not limited to:

   a. Manufacturing Administration
   b. Materials Management
   c. Validation and Calibration
   d. Documentation and Compliance
   e. Quality Assurance/Quality Control
   f. Technical Services
   g. Regulatory Compliance

5. General facilities overhead, including, but not limited to:

   a. Rent, utilities, property tax, insurance and other assigned general 
      facilities' costs
   b. Purchasing
   c. Environmental Health and Safety
   d. Management Information Systems
   e. Engineering

6. Corporate Overhead

                                                                      Page 53


<PAGE>

                                       *

                                  Exhibit 1.7.3

           THERE ARE 14 PAGES INCLUDED WITHIN THIS REDACTED PORTION.


                                       *


                                       *


* Confidential portions of material have been omitted and filed separately 
  with the Securities and Exchange Commission.



                                                                      Page 54