<PAGE>
 
                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549
                                  FORM 10-K/A
                               (Amendment No. 1)

[X]            ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1996
                          -----------------

                                       OR

[ ]          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________________ to _________________

Commission file number 0-11103
                       -------

                                CENTOCOR, INC.
                         -----------------------------
             (Exact name of registrant as specified in its charter)

          Pennsylvania                                     23-2117202
-----------------------------------                    ------------------
(State or other jurisdiction of                         (I.R.S. Employer
incorporation or organization)                         Identification No.)

200 Great Valley Parkway, Malvern, PA                     19355-1307
----------------------------------------                  ----------
(Address of principal executive offices)                  (Zip code)

      Registrant's telephone number, including area code:  (610) 651-6000
                                                           --------------

       Securities registered pursuant to Section 12(b) of the Act: None.
                                                                   ---- 
                                        
          Securities registered pursuant to Section 12(g) of the Act:

                   Series A Preferred Stock Purchase Rights
                   ----------------------------------------
                               (Title of Class)

                    Common Stock, par value $.01 per share
                    --------------------------------------
                               (Title of Class)

Warrants for the purchase of shares of Common Stock, par value $.01 per share*
----------------------------------------------------------------------------- 
                               (Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

            Yes   X   .  No       .
                ------      ------

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

The aggregate market value of the 69,053,050 shares of voting stock held by non-
affiliates of the Registrant as of February 18, 1997 was approximately
$2,572,226,113.

Common Stock outstanding at February 18, 1997: 69,589,250 shares.

                     DOCUMENTS INCORPORATED BY REFERENCE:

     Portions of the following document are incorporated by reference in this
Report on Form 10-K:
 
     Proxy Statement for the Annual Meeting of Shareholders held on May 14, 
1997 -- Part III, Items 10, 11, 12 and 13.

*Includes Warrants issued in January 1992 which were registered pursuant to
Section 12(g) of the Securities Exchange Act of 1934 as part of Units, each Unit
consisting of one share of Callable Common Stock of Tocor II, Inc., one Series T
Warrant and one callable Warrant.

EXPLANATORY NOTE:

This Amendment No. 1 to the Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996 is being filed solely for the purpose of
amending Part IV, Item 14 to refile Exhibit 10.24 to conform such exhibit to the
Registrant's confidential treatment request with respect to such exhibit.
<PAGE>
 
                                    Part IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTS ON FORM 8-K
--------------------------------------------------------------------------

     a.   Documents filed as part of the Report:

          i.   Financial Statements of Centocor Partners III, L.P.:

               Balance Sheets, December 31, 1996 and 1995.

               Statements of Operations for the Years Ended December 31, 1996,
               1995 and 1994.

               Statements of Cash Flows for the Years Ended December 31, 1996,
               1995 and 1994.

               Statements of Partners' Capital for the Years Ended December 31,
               1996, 1995 and 1994.

               Notes to Financial Statements.

               Independent Auditors' Report.

          ii.  Financial Statement Schedules:

               Schedule II - Valuation and Qualifying Accounts

               Schedules, other than those listed above, have been omitted
               because of the absence of conditions under which they are
               required or because the required information is included in the
               financial statements or the notes thereto.

                                       1
<PAGE>
 
          iii. Exhibits:

                    3.1    Restated Articles of Incorporation (incorporated by
                           reference to Exhibit 3.1 to Form S-1 Registration
                           Statement, File No. 2-80098).

                    3.2    Statement of Reduction of Authorized Shares filed
                           September 19, 1983 (incorporated by reference to
                           Exhibit 3.2 to Registrant's Annual Report on Form 10-
                           K for the year ended December 31, 1986).

                    3.3    Statement of Reduction of Authorized Shares filed
                           January 19, 1984 (incorporated by reference to
                           Exhibit 3.3 to Registrant's Annual Report on Form 10-
                           K for the year ended December 31, 1986).

                    3.4    Articles of Amendment filed April 18, 1984
                           (incorporated by reference to Exhibit 3.4 to
                           Registrant's Annual Report on Form 10-K for the year
                           ended December 31, 1986).

                    3.5    Statement of Reduction of Authorized Shares filed
                           February 25, 1985 (incorporated by reference to
                           Exhibit 3.5 to Registrant's Annual Report on Form 10-
                           K for the year ended December 31, 1986).

                    3.6    Statement of Reduction of Authorized Shares filed May
                           6, 1985 (incorporated by reference to Exhibit 3.6 to
                           Registrant's Annual Report on Form 10-K for the year
                           ended December 31, 1986).

                    3.7    Statement of Reduction of Authorized Shares filed
                           October 23, 1985 (incorporated by reference to
                           Exhibit 3.7 to Registrant's Annual Report on Form 10-
                           K for the year ended December 31, 1986).

                    3.8    Articles of Amendment filed April 16, 1987
                           (incorporated by reference to Exhibit 3.8 to
                           Registrant's Annual Report on Form 10-K for the year
                           ended December 31, 1987).

                    3.9    Articles of Amendment filed April 21, 1988
                           (incorporated by reference to Exhibit 3.9 to
                           Registrant's Annual Report on Form 10-K for the year
                           ended December 31, 1988) .

                    3.10   Articles of Amendment filed April 26, 1988
                           (incorporated by reference to Exhibit 3.10 to
                           Registrant's Annual Report on Form 10-K for the year
                           ended December 31, 1988).

                    3.11   Statement Re Series A Preferred Stock filed October
                           11, 1988 (incorporated by reference to Exhibit 3.11
                           to Registrant's Annual Report on Form 10-K for the
                           year ended December 31, 1988).

                    3.12   Articles of Amendment filed April 13, 1990
                           (incorporated by reference to Exhibit 3.12 to
                           Registrant's Annual Report on Form 10-K for the year
                           ended December 31, 1990).

                                       2
<PAGE>
 
                    3.13   Articles of Amendment filed April 26, 1991
                           (incorporated by reference to Exhibit 3.13 to
                           Registrant's Annual Report on Form 10-K for the year
                           ended December 31, 1991).

                    3.14   Statement of Correction filed October 16, 1991 to
                           Articles of Amendment filed April 26, 1991
                           (incorporated by reference to Exhibit 3.14 to
                           Registrant's Annual Report on Form 10-K for the year
                           ended December 31, 1991).

                    3.15   By-Laws of Centocor, Inc. as amended October 30, 1992
                           (incorporated by reference to Exhibit 3.15 to
                           Registrant's Annual Report on Form 10-K for the year
                           ended December 31, 1992).

                    4.1    Specimen Certificate for Common Stock (incorporated
                           by reference to Exhibit 4 to Amendment No. 1 to Form
                           S-1 Registration Statement, File No. 2-80098).

                    4.2    Rights Agreement between Centocor, Inc. and the First
                           National Bank of Boston as Rights Agent dated
                           September 26, 1988 (incorporated by reference to
                           Exhibit 4 to Registrant's Current Report on Form 8-K
                           dated September 26, 1988).

                    4.3    Form of Indenture between Centocor, Inc. and Chase
                           Manhattan Trustees Limited as Trustee Dated as of
                           October 16, 1991 (incorporated by reference to
                           Exhibit 4.3 to Form S-3 Registration Statement, Reg.
                           No. 33-44231).

                    4.4    Form of Debenture Issued to Purchasers of 6 3/4%
                           Convertible Subordinated Debentures Due October 16,
                           2001 (included in Exhibit 4.9) (incorporated by
                           reference to Exhibit 4.3 to Form S-3 Registration
                           Statement, Reg. No. 33-44231).

                    4.5    Form of Series T Warrant Issued to Purchasers of
                           Units, each Unit consisting of one share of Tocor II
                           Callable Common Stock, one Series T warrant to
                           purchase one share of Centocor Common Stock, and one
                           Callable warrant to purchase one share of Centocor
                           Common Stock (incorporated by reference to Exhibit
                           4.2 to Amendment No. 4 to Form S-1/S-3 Registration
                           Statement of Tocor II and Centocor, Reg. No. 33-
                           44072).

                    4.6    Form of Callable Warrant Issued to Purchasers of
                           Units, each Unit consisting of one share of Tocor II
                           Callable Common Stock, one Series T warrant to
                           purchase one share of Centocor Common Stock, and one
                           Callable warrant to purchase one share of Centocor
                           Common Stock (incorporated by reference to Exhibit
                           4.3 to Amendment No. 4 to Form S-1/S-3 Registration
                           Statement of Tocor II and Centocor, Reg. No. 33-
                           44072).

                                       3
<PAGE>
 
                    10.1*  Form of Non-Qualified Stock Option Agreement
                           (incorporated by reference to Exhibit 10.01 to
                           Registrant's Annual Report on Form 10-K for the year
                           ended December 31, 1987).

                    10.2*  Incentive Stock Option Plan, as amended (incorporated
                           by reference to Exhibit 10.03 to Registrant's Annual
                           Report on Form 10-K for the year ended December 31,
                           1986).

                    10.3*  1983 Incentive Stock Option Plan, as amended
                           (incorporated by reference to Exhibit 10.04 to
                           Registrant's Annual Report on Form 10-K for the year
                           ended December 31, 1986).

                    10.4*  1983 Restricted Common Stock Award Plan, as amended
                           and restated (incorporated by reference to Exhibit
                           10.04 to Registrant's Annual Report on Form 10-K for
                           the year ended December 31, 1993).

                    10.5*  1987 Non-Qualified Stock Option Plan, as amended and
                           restated (incorporated by reference to Exhibit 10.05
                           to Registrant's Annual Report on Form 10-K for the
                           year ended December 31, 1990).

                    10.6*  1989 Non-Employee Directors' Non-Qualified Stock
                           Option Plan (incorporated by reference to Exhibit
                           10.06 to Registrant's Annual Report on Form 10-K for
                           the year ended December 31, 1989).

                    10.7   Lease Agreement for property located at Great Valley
                           Parkway, Malvern, PA 19355 (incorporated by reference
                           to Exhibit 10.07 to Registrant's Annual Report on
                           Form 10-K for the year ended December 31, 1989).

                    10.8   Partnership Purchase Option Agreement among Centocor,
                           Inc., CCIP, Centocor Development Corporation I, each
                           Class A limited partner and the Class B limited
                           partner, dated September 12, 1985 (incorporated by
                           reference to Exhibit 10.53 to Registrant's Post
                           Effective Amendment No. 1 to Form S-1 Registration
                           Statement, File No. 2-95057).

                    10.9   Indemnity Agreement between Centocor, Inc. and CCIP,
                           dated September 12, 1985 (incorporated by reference
                           to Exhibit 10.71 to Registrant's Post Effective
                           Amendment No. 1 to Form S-1 Registration Statement,
                           File No. 2-95057).

                    10.10* Qualified Savings and Retirement Plan, as amended and
                           restated (incorporated by reference to Exhibit 10.14
                           to Registrant's Annual Report on Form 10-K for the
                           year ended December 31, 1989).

                    10.11  Partnership Purchase Option Agreement among Centocor,
                           Inc., CPII, Centocor Development Corporation II, each
                           Class A limited partner and the Class B limited
                           partner, dated December 17, 1986 (incorporated by
                           reference to Exhibit 10.23 to Registrant's Annual
                           Report on Form 10-K for the year ended December 31,
                           1986).

                                       4
<PAGE>
 
                    10.12  Indemnity Agreement between Centocor, Inc. and CPII,
                           dated December 17, 1986 (incorporated by reference to
                           Exhibit 10.26 to Registrant's Annual Report on Form
                           10-K for the year ended December 31, 1986).

                    10.13  Indemnity Agreement between CPIII and Centocor, Inc.,
                           dated December 23, 1987 (incorporated by reference to
                           Exhibit 10.41 to Registrant's Annual Report on Form
                           10-K for the year ended December 31, 1987).

                    10.14  Partnership Purchase Option Agreement among Centocor,
                           Inc., CPIII, Centocor Development Corporation III,
                           and the Class C limited partner, dated December 23,
                           1987 (incorporated by reference to Exhibit 10.43 to
                           Registrant's Annual Report on Form 10-K for the year
                           ended December 31, 1987).

                    10.15  Amendment dated March 23, 1988 to Partnership
                           Purchase Option Agreement among Centocor, Inc.,
                           CPIII, Centocor Development Corporation III and the
                           Class C limited partner dated December 23, 1987
                           (incorporated by reference to Exhibit 10.37 to
                           Registrant's Annual Report on Form 10-K for the year
                           ended December 31, 1988).

                    10.16  Series E, F and G Preferred Stock Purchase Agreement
                           dated as of November 20, 1991 between Centocor
                           Delaware, Inc. and Corvas International, Inc.
                           (incorporated by reference to Exhibit 10.28 to Form 
                           S-1 Registration Statement of Corvas International,
                           Inc. Reg. No. 33-44555).

                    10.17  Sales and Distribution Agreement between Centocor,
                           Inc. and Eli Lilly and Company dated July 15, 1992.
                           (The Registrant has requested confidential treatment
                           from the Securities and Exchange Commission for
                           portions of this Agreement.) (incorporated by
                           reference to Exhibit 10.32 to Registrant's Annual
                           Report on Form 10-K for the year ended December 31,
                           1992).

                    10.18  Reimbursement Agreement between Centocor, Inc. and
                           Eli Lilly and Company dated July 15, 1992. (The
                           Registrant has requested confidential treatment from
                           the Securities and Exchange Commission for portions
                           of this Agreement.) (incorporated by reference to
                           Exhibit 10.33 to Registrant's Annual Report on Form
                           10-K for the year ended December 31, 1992).

                    10.19  Investment Agreement between Centocor, Inc. and Eli
                           Lilly and Company dated July 15, 1992. (The
                           Registrant has requested confidential treatment from
                           the Securities and Exchange Commission for portions
                           of this Agreement.) (incorporated by reference to
                           Exhibit 10.34 to Registrant's Annual Report on Form
                           10-K for the year ended December 31, 1992).

                    10.20  Amendment to Sales and Distribution Agreement among
                           Centocor, Inc., Centocor B.V. and Eli Lilly and
                           Company dated June 27, 1993. (The Registrant has
                           requested confidential treatment from the Securities
                           and 

                                       5
<PAGE>
 
                           Exchange Commission for portions of this Agreement.)
                           (incorporated by reference to Exhibit 10.35 to
                           Registrant's Annual Report on Form 10-K for the year
                           ended December 31, 1993).

                    10.21  Option Agreement between Centocor B.V. and Eli Lilly
                           Nederland B.V. dated August 20, 1993. (The Registrant
                           has requested confidential treatment from the
                           Securities and Exchange Commission for portions of
                           this Agreement.) (incorporated by reference to
                           Exhibit 10.36 to Registrant's Annual Report on Form
                           10-K for the year ended December 31, 1993).

                    10.22  Deed of Mortgage from Centocor B.V. to Eli Lilly
                           Nederland B.V. dated August 26, 1993 (incorporated by
                           reference to Exhibit 10.37 to Registrant's Annual
                           Report on Form 10-K for the year ended December 31,
                           1993).

                    10.23  Deed of Pledge from Centocor B.V. to Eli Lilly
                           Nederland B.V. dated August 26, 1993 (incorporated by
                           reference to Exhibit 10.38 to Registrant's Annual
                           Report on Form 10-K for the year ended December 31,
                           1993).

                    10.24  Amendment to Sales and Distribution Agreement among
                           Centocor, Inc., Centocor B. V. and Eli Lilly and
                           Company dated July 26, 1996. (The Registrant has
                           requested confidential treatment from the Securities
                           and Exchange Commission for portions of this
                           Agreement).

                    10.25  Stock Purchase Agreement made as of December 16, 1993
                           by and between Centocor, Inc. and The Wellcome
                           Foundation Limited (incorporated by reference to
                           Exhibit 10(a) to the Registrant's Current Report on
                           Form 8-K dated December 16, 1993).

                    10.26  Supply, Distribution and Sales Agreement dated
                           December 16, 1993 by and among Centocor, Inc.,
                           Centocor B.V., The Wellcome Foundation Limited and
                           Burroughs Wellcome Co. (The Registrant has requested
                           confidential treatment from the Securities and
                           Exchange Commission for portions of this Agreement.)
                           (incorporated by reference to Exhibit 10(b) to the
                           Registrant's Current Report on Form 8-K dated
                           December 16, 1993).

                    10.27  Clinical and Regulatory Development Agreement dated
                           December 16, 1993 among Centocor, Inc., Centocor
                           B.V., The Wellcome Foundation Limited and Burroughs
                           Wellcome Co. (The Registrant has requested
                           confidential treatment from the Securities and
                           Exchange Commission for portions of this Agreement.)
                           (incorporated by reference to Exhibit 10(c) to the
                           Registrant's Current Report on Form 8-K dated
                           December 16, 1993).

                    10.28  Centocor Technology License Agreement dated as of
                           December 16, 1993 among Centocor, Inc., Centocor
                           B.V., The Wellcome Foundation Limited and Burroughs
                           Wellcome Co. (The Registrant has requested
                           confidential treatment from the Securities and
                           Exchange Commission for portions of

                                       6
<PAGE>
 
                           this Agreement.) (incorporated by reference to
                           Exhibit 10(e) to the Registrant's Current Report on
                           Form 8-K dated December 16, 1993).

                    10.29  Relicense Agreement dated as of December 16, 1993
                           among Centocor, Inc., Centocor B.V., The Wellcome
                           Foundation Limited and Burroughs Wellcome Co.
                           (incorporated by reference to Exhibit 10(f) to the
                           Registrant's Current Report on Form 8-K dated
                           December 16, 1993).

                    10.30  Appendix A - Glossary of Terms to each of the
                           Agreements dated as of December 16, 1993 by and among
                           Centocor, Inc., Centocor B.V., The Wellcome
                           Foundation Limited and Burroughs Wellcome Co. (The
                           Registrant has requested confidential treatment from
                           the Securities and Exchange Commission for portions
                           of this Agreement.) (incorporated by reference to
                           Exhibit 10(g) to the Registrant's Current Report on
                           Form 8-K dated December 16, 1993).

                    10.31  First Supplemental Agreement dated as of November 15,
                           1994 among Centocor, Inc., Centocor B.V., The
                           Wellcome Foundation Limited and Burroughs Wellcome
                           Co. (The Registrant has requested confidential
                           treatment from the Securities and Exchange Commission
                           for portions of this Agreement.) (incorporated by
                           reference to Exhibit 10(a) to the Registrant's
                           Current Report on Form 8-K dated November 15, 1994).

                    10.32  Wellcome Clinical Development Agreement dated as of
                           November 15, 1994 among Centocor, Inc., Centocor
                           B.V., The Wellcome Foundation Limited and Burroughs
                           Wellcome Co. (The Registrant has requested
                           confidential treatment from the Securities and
                           Exchange Commission for portions of this Agreement.)
                           (incorporated by reference to Exhibit 10(b) to the
                           Registrant's Current Report on Form 8-K dated
                           November 15, 1994).

                    10.33  Distribution Agreement between Centocor, Inc. and
                           Fujisawa Pharmaceutical Co. Ltd dated August 15,
                           1996. (Registrant has requested confidential
                           treatment from the Securities and Exchange Commission
                           for portions of this Agreement) (incorporated by 
                           reference to same-numbered exhibit to Registrant's 
                           Annual Report on Form 10-K for the year ended 
                           December 31, 1996).

                    11     Computation of Earnings (Loss) per Common Share
                           (incorporated by reference to same-numbered exhibit
                           to Registrant's Annual Report on Form 10-K for the
                           year ended December 31, 1996).

                    12     Statement re: Computation of Ratios (incorporated by 
                           reference to same-numbered exhibit to Registrant's 
                           Annual Report on Form 10-K for the year ended 
                           December 31, 1996).

                    21     Subsidiaries of the Registrant (incorporated by 
                           reference to same-numbered exhibit to Registrant's 
                           Annual Report on Form 10-K for the year ended 
                           December 31, 1996).

                    23     Consent of Independent Auditors.

                    27     Financial Data Schedule (incorporated by reference to
                           same-numbered exhibit to Registrant's Annual Report
                           on Form 10-K for the year ended December 31, 1996).

          *These exhibits constitute compensatory plans.


                                       7
<PAGE>
 
b.  The Registrant has filed the following reports on Form 8-K since the
    beginning of the quarter ended December 31, 1996:
    
                       None

               For the purposes of complying with the amendments to the rules
          governing Form S-8 (effective July 13, 1990) under the Securities Act
          of 1933, the undersigned registrant hereby undertakes as follows,
          which undertaking shall be incorporated by reference into registrant's
          Registration Statements on Form S-8, Nos. 2-86486, 33-16285, 33-00167,
          33-35731, 33-23480, 33-16284, and 33-35730.

               Insofar as indemnification for liabilities arising under the
          Securities Act of 1933 may be permitted to directors, officers and
          controlling persons of the registrant pursuant to the foregoing
          provisions, or otherwise, the registrant has been advised that in the
          opinion of the Securities and Exchange Commission such indemnification
          is against public policy as expressed in the Securities Act of 1933
          and is, therefore, unenforceable. In the event that a claim for
          indemnification against such liabilities (other than the payment by
          the registrant of expenses incurred or paid by a director, officer or
          controlling person of the registrant in the successful defense of any
          action, suit or proceeding) is asserted by such director, officer or
          controlling person in connection with the securities being registered,
          the registrant will, unless in the opinion of its counsel the matter
          has been settled by controlling precedent, submit to a court of
          appropriate jurisdiction the question whether such indemnification by
          it is against public policy as expressed in the Act and will be
          governed by the final adjudication of such issue.

                                       8
<PAGE>
 
 
Centocor Partners III, L.P.
Balance Sheets
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                             December 31,   December 31,
                                                 1996           1995
                                             -------------  -------------
<S>                                          <C>            <C>
Assets
 
 Cash                                         $    32,646    $     4,187
 Investment in joint venture                    3,677,478        618,011
                                              -----------    -----------
  Total Assets                                $ 3,710,124    $   622,198
                                              ===========    ===========
 
Liabilities
 
 Current liabilities:
  Accounts payable and accrued expenses       $    78,325    $    70,133
  Due to Centocor, Inc. (Note 7)                6,801,420      7,954,507
                                              -----------    -----------
                                                6,879,745      8,024,640
Partners' capital (Note 4)                     (3,169,621)    (7,402,442)
                                              -----------    -----------
 
  Total Liabilities and Partners' capital     $ 3,710,124    $   622,198
                                              ===========    ===========
</TABLE>


See accompanying Notes to Financial Statements.

-------------------------------------------------------------------------------

                                       9
<PAGE>
 
Centocor Partners III, L.P.
Statements of Operations
-------------------------------------------------------------------------------

<TABLE> 
<CAPTION>
For the Years ended December 31,          1996            1995            1994
                                      -------------  --------------  --------------
<S>                                   <C>            <C>             <C>             
Revenues:
 
 Equity in earnings of
 joint venture (Note 6)               $  7,850,936   $   1,269,919   $       4,490
                                      ------------   -------------   -------------
 
Costs and Expenses:
 
 Research and development (Note 7)      29,120,796      29,900,000      22,850,000
 General and administrative                131,794          23,548           4,500
                                      ------------    ------------    ------------
                                        29,252,590      29,923,548      22,854,500
                                      ------------    ------------    ------------
 
Loss for the period                   $(21,401,654)   $(28,653,629)   $(22,850,010)
                                      ============    ============    ============
</TABLE>


See accompanying Notes to Financial Statements.

--------------------------------------------------------------------------------

                                      10
<PAGE>
 
Centocor Partners III, L.P.
Statements of Cash Flows
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
For the Years ended December 31,                      1996           1995           1994
                                                  ------------   ------------   ------------
<S>                                               <C>            <C>            <C>
Cash flows used for operating activities:
 
  Loss                                            $(21,401,654)  $(28,653,629)  $(22,850,010)
  Change in due to Centocor, Inc.                   (1,153,087)       957,381      2,863,000
  Change in accounts payable
     and accrued expenses                                8,192         27,726          4,500
  Change in investment in joint venture             (3,059,467)      (106,381)        (4,490)
                                                  ------------   ------------   ------------
  Net cash used for operating activities           (25,606,016)   (27,774,903)   (19,987,000)
 
Cash flows from financing activities:
 
  Distributions to partners                         (4,653,278)    (1,163,538)             -
  General partner capital contributions             30,287,753     28,942,628     19,987,000
                                                  ------------   ------------   ------------
  Net cash from financing activities                25,634,475     27,779,090     19,987,000
                                                  ------------   ------------   ------------
 
Increase in cash and cash equivalents                   28,459          4,187              -
 
Cash and cash equivalents at beginning of year           4,187              -              -
                                                  ------------   ------------   ------------
 
Cash and cash equivalents at end of year          $     32,646   $      4,187   $          -
                                                  ============   ============   ============
</TABLE>


See accompanying Notes to Financial Statements.

-------------------------------------------------------------------------------

                                      11
<PAGE>
 
Centocor Partners III, L.P.
Statements of Partners' Capital
-------------------------------------------------------------------------------

<TABLE> 
<CAPTION> 
                                      Limited           General
                                      Partners          Partner           Total
                                    ------------      ----------      -------------
<S>                                 <C>               <C>             <C>
Balance, December 31, 1993          $   470,452       $ (4,135,345)   $ (3,664,893)
 
Contributions                                 -         19,987,000      19,987,000
Loss                                        (10)       (22,850,000)    (22,850,010)
                                    ------------      -------------   -------------
 
Balance, December 31, 1994              470,442         (6,998,345)     (6,527,903)
 
Distributions                        (1,151,903)           (11,635)     (1,163,538)
Contributions                                 -         28,942,628      28,942,628
Income (Loss)                         1,233,530        (29,887,159)    (28,653,629)
                                    ------------      -------------   -------------
 
Balance, December 31, 1995              552,069         (7,954,511)     (7,402,442)
 
Distributions                        (4,606,745)           (46,533)     (4,653,278)
Contributions                                 -         30,287,753      30,287,753
Income (Loss)                         7,631,925        (29,033,579)    (21,401,654)
                                    ------------      -------------   -------------
 
Balance, December 31, 1996          $ 3,577,249       $ (6,746,870)   $ (3,169,621)
                                    ============      =============   =============
</TABLE>


See accompanying Notes to Financial Statements.

-------------------------------------------------------------------------------

                                      12
<PAGE>
 
Centocor Partners III, L.P.
Notes to Financial Statements
--------------------------------------------------------------------------------

1.   Basis of Presentation
     ---------------------

     Centocor Partners III, L.P. ("CPIII" or the "Partnership"), was formed in
December 1987, and is managed by its general partner, Centocor Development
Corporation III, a wholly owned subsidiary of Centocor, Inc. ("Centocor"), a
Pennsylvania corporation, which is subject to the reporting requirements of the
Securities Exchange Act of 1934. The Partnership was organized to develop and
derive income from the sale of one therapeutic product (ReoPro) and one imaging
product (Capiscint) which are expected to be used in the treatment and
diagnosis, respectively, of two different types of cardiovascular disease.

     In 1987 and 1988, the Partnership and Centocor sold (a) 542.25 units,
consisting of 111 Class C limited partnership interests and 431.25 Class A
limited partnership interests each together with warrants to purchase shares of
Centocor common stock, and (b) one Class B limited partnership interest,
together with warrants to purchase shares of Centocor common stock.  The
purchase prices were $90,000 for the Class C interests, $100,000 for the Class A
interests and $150,000 for the Class B interest.

     The net proceeds from the sale of limited partnership interests were used
primarily to pay expenses incurred under the Partnership's agreement with
Centocor (the "Development Agreement") to perform research and development for
the Partnership (see Note 7).

     The Partnership also entered into a Cross License Agreement pursuant to
which Centocor granted to the Partnership an exclusive license to use all patent
rights, know-how, technical information and biological materials owned or
controlled by Centocor within the Partnership's field of activity.  Under the
Cross License Agreement, the Partnership agreed to grant to Centocor an
exclusive royalty-free license to all patent rights, know-how, technical
information and biological materials arising from research and development
conducted under the Development Agreement for all purposes outside of the
Partnership's field of activity.

     Centocor entered into a Partnership Purchase Option Agreement with each of
the limited partners. On January 31, 1997, Centocor exercised its option to
acquire the Class A and Class C limited partnership interests. In connection
therewith, the general partner has terminated the research program and after the
acquisition of the Class B limited partnership interests, which is expected to
occur on or about May 1, 1997, the partnership is expected to dissolve. (See
Note 5)
 
2.   Summary of Significant Accounting Policies
     ------------------------------------------

     Investment in Joint Venture
     ---------------------------

     The Partnership accounts for its investment in the joint venture (see Note
6) under the equity method of accounting. The joint venture is expected to
terminate in 1997 upon the occurrence of certain events. (See Note 5)

                                      13
<PAGE>
 
Centocor Partners III, L.P.
Notes to Financial Statements
--------------------------------------------------------------------------------

     Income Taxes
     ------------

     The Partnership's distributable income or loss is reportable for income tax
purposes by the partners; therefore, no provision for income taxes has been made
in the accompanying financial statements.  The Partnership's tax returns are
subject to examination by federal and state taxing authorities.  Because many
types of transactions are susceptible to varying interpretations under federal
and state income tax laws and regulations, certain amounts may be subject to
change at a later date upon final determination by the respective taxing
authorities.

3.   Contingencies
     -------------

     In July 1995, PaineWebber Development Corporation ("PaineWebber"), a
wholly-owned subsidiary of PaineWebber Group, Inc., caused suit to be filed
against Centocor and Centocor Development Corporation III ("CDCIII", the general
partner of the Partnership and a wholly-owned subsidiary of Centocor) by a
development partnership formed in the mid 1980s by PaineWebber and managed by it
since then. The PaineWebber partnership, PaineWebber R&D Partners II,
L.P.("PWR&DII"), an investor in the Partnership, filed suit in the Court of
Chancery of the State of Delaware. In the complaint, the plaintiff seeks to sue
derivatively on behalf of CPIII. The Partnership is named as a nominal defendant
and Centocor and CDCIII are named as defendants against whom relief is sought.
The claim is that at least $25 million of the money paid by Eli Lilly and
Company ("Lilly") to Centocor in 1992 represented profits from the marketing of
ReoPro, obligating Centocor to pay a portion thereof to the Partnership, and
that Centocor is obligated to pay an increased percentage of the profits from
ReoPro to the Partnership going forward. Centocor answered the complaint in the
Delaware action and filed a cross-claim against nominal defendant CPIII and a
third party complaint against PaineWebber Group Inc. and PaineWebber Development
Corporation. The cross-claim seeks an offset against any damages awarded the
partners based on theories of unjust enrichment and quasi contract. The third-
party claims (since amended to add additional theories of liability and to make
PaineWebber, Inc. an additional third-party defendant) seek to hold the
PaineWebber entities liable for some or all of any alleged injury to the
partnership. On November 1, 1995, an additional suit was commenced in the
Delaware Court of Chancery by a limited partner, John E. Abdo, against Centocor
and CDCIII and certain of their officers and directors.  The complaint, filed
derivatively on behalf of the Partnership, asserts claims, inter alia, for
breach of contract, breach of fiduciary duty, common law fraud, and conspiracy
and aiding and abetting. Centocor answered this complaint and also filed a
cross-claim against nominal defendant CPIII and a third-party complaint against
PaineWebber Group, Inc., and PaineWebber, since amended to add additional
theories of liability and to name PaineWebber, Inc. as a further third-party
defendant. Abdo moved to amend his complaint to assert claims against the
persons appointed by PaineWebber to the CDCIII Board of Directors. That motion
was granted. Motions to disqualify PWR&DII from serving as the derivative
plaintiff were filed in July 1996 by CPIII and in August 1996 by Centocor and
CDCIII. Abdo joined those motions. No decision has been issued on those motions.
The parties in the PWR&DII suit have considered ways and means to resolve the
issues without further litigation.  The Partnership incurred approximately
$131,794 in legal expenses related to these suits in 1996 and cumulative legal
expenses to date of approximately $155,000 as a result of being named a nominal
defendant in the above suits.

     Under paragraph 7.8 of the Agreement of Limited Partnership, the
Partnership is obligated, under certain conditions, to indemnify CDCIII and its
officers and directors in respect of all fees,

                                      14
<PAGE>
 
Centocor Partners III, L.P.
Notes to Financial Statements
--------------------------------------------------------------------------------

costs and expenses incurred in connection with or resulting from any claim
against CDCIII and its officers and directors that arises out of or in any way
relates to the Partnership or its properties, business or affairs including any
losses or damages resulting from such claims and amounts paid in settlement or
compromise.  Therefore, the Partnership may incur legal expenses and other costs
pertaining to the suits described above.

     CPIII is expected to terminate in 1997 pursuant to the purchase by Centocor
of all limited partner interests. (See Note 5)

4.   Partners' Capital
     -----------------

     Profits and losses of the Partnership are generally allocated 1 percent to
the general partner and 99 percent to the limited partners.  Losses resulting
from research and development expenditures in excess of the limited partners'
capital contributions are allocated to the general partner (see Note 7).

5.   Partnership Purchase Option
     ---------------------------

     On January 31, 1997, Centocor exercised its purchase option and made an
advance payment to the Class A and Class C limited  partners of $13,598,000 in
the aggregate. Centocor plans to exercise its option to purchase the Class B
limited Partnership interest by making a payment of $41,500 in the aggregate on
or about May 1, 1997 at which time the joint venture will terminate.

     CPIII is expected to terminate on or around July 30, 1997 pursuant to the
transfer of all limited partner interests to Centocor.  Pursuant to the terms of
the Partnership Purchase Agreement, Centocor will make future quarterly royalty
payments to the former limited partners. For each quarter beginning with the
first quarter of the year 2000, Centocor's payments to the former limited
partners will be reduced by 25 percent of the amount otherwise payable to the
former limited partners until Centocor has recouped the amount of the advance
payment.

6.   Joint Venture
     -------------

     The Partnership and Centocor formed a joint venture for the purpose of
commercializing any products developed within the Partnership's field of
activity.  The Joint Venture Agreement provided that Centocor  manufacture the
products on behalf of the joint venture for its actual costs of manufacturing.
Under the Joint Venture Agreement, Centocor also provided marketing services for
the joint venture for a commission of 17 percent of joint venture sales and
received 10 percent of joint venture sales as reimbursement for its management
and administrative services.  The profits and losses of the joint venture are to
be allocated approximately 75 percent to Centocor and 25 percent to the
Partnership.

     The joint venture will terminate upon Centocor's exercise of the option to
purchase the Class B limited Partnership interest.

     In July 1992, Centocor and Lilly entered into a Sales and Distribution
Agreement later amended in June 1993. Under that Agreement, as amended in June
1993, Centocor is principally responsible for developing and manufacturing
ReoPro, and Lilly will assist Centocor in the

                                      15
<PAGE>
 
Centocor Partners III, L.P.
Notes to Financial Statements
--------------------------------------------------------------------------------

regulatory filings and continued development of ReoPro for various clinical
indications.  Also, in the event Centocor cannot manufacture ReoPro or under
certain other circumstances, such as material breach of the agreement by or the
bankruptcy of Centocor, Lilly has the option to assume the manufacture of ReoPro
and assure the continued supply of the product, even to the extent of acquiring
Centocor's related manufacturing assets at their independently appraised values.

     In June 1996, Centocor and Lilly amended the Sales and Distribution
Agreement. Under this amendment, Lilly no longer has the right to buy ReoPro for
resale in Japan; however, Lilly will maintain its exclusive right to buy and
resell ReoPro in the rest of the world.

     In August 1996, Centocor entered into an agreement with Fujisawa
Pharmaceutical Co., Ltd., appointing Fujisawa as the exclusive distributor of
ReoPro in Japan. Centocor and Fujisawa will co-develop ReoPro in Japan and
jointly file for Japanese product approval. Fujisawa shall bear all external
costs associated with the clinical development of ReoPro in Japan.

     Through the joint venture, Centocor commenced sales of ReoPro to Lilly in
January 1995. ReoPro sales to Lilly for the twelve months ended December 31,
1996 were $88,669,000.  The level of sales of ReoPro will depend upon a number
of factors, including the timing and extent of additional regulatory approvals
for ReoPro, approval and commercialization of competitive products, the degree
of acceptance of ReoPro in the marketplace, and the strength of Centocor's
patent position and that of others.

7.   Research Funding
     ----------------

     The initial funding by the limited partners for the Partnership's research
program pursuant to the Development Agreement with Centocor was exhausted in
1990.  In order to continue the research program, the Partnership extended the
terms of the Development Agreement with Centocor. Approximately $143,383,000 of
the Partnership's research costs through December 31, 1996 were funded by the
general partner.  At December 31, 1996 and 1995, approximately $6,801,000 and
$7,955,000, respectively, were due to Centocor for expenditures under the
Development Agreement. Pursuant to Centocor's purchase of the Class A and Class
C limited partner interests as per Note 5, the General Partner has terminated
the research program in accordance with the Development Agreement.

                                      16
<PAGE>
 
                          INDEPENDENT AUDITORS' REPORT


The Partners of Centocor Partners III, L.P.:

We have audited the accompanying balance sheets of Centocor Partners III, L.P.
("the Partnership") as of December 31, 1996 and 1995, and the related statements
of operations, cash flows and partners' capital for each of the years in the
three-year period ended December 31, 1996.  These financial statements are the
responsibility of the Partnership's management.  Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

As disclosed in Notes 1 and 5 to the financial statements, on January 31, 1997,
Centocor exercised its option to acquire the Class A and Class C limited
Partnership interests. In connection therewith, the general partner has
terminated the research program and after the acquisition of the Class B limited
Partnership interests, which is expected to occur on or about May 1, 1997, the
Partnership is expected to dissolve.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Centocor Partners III, L.P. at
December 31, 1996 and 1995, and the results of its operations and its cash flows
for each of the years in the three-year period ended December 31, 1996, in
conformity with generally accepted accounting principles.

KPMG Peat Marwick LLP



Philadelphia, Pennsylvania
January 31, 1997

                                      17
<PAGE>
 
                                                                     Schedule II
                        CENTOCOR, INC. AND SUBSIDIARIES
                       VALUATION AND QUALIFYING ACCOUNTS
                  FOR THE THREE YEARS ENDED DECEMBER 31, 1996
                                (IN THOUSANDS)

<TABLE> 
<CAPTION> 
                    Balance    Charged to               Balance   Charged to             Balance   Charged to              Balance
                      at       Costs and                   at     Costs and                at      Costs and                 at
Classification      12/31/93   Expenses    Deductions   12/31/94  Expenses   Deductions  12/31/95  Expenses    Deductions  12/31/96
--------------      --------   ---------   ----------   --------  ---------- ----------  --------  ----------  ----------  --------
<S>                 <C>        <C>         <C>          <C>       <C>        <C>         <C>       <C>         <C>         <C> 

Inventory Reserves   $64,743    $3,609      ($53,472)    $14,880   $2,094     ($15,938)   $1,036    $662        ($357)     $1,341
                   ================================================================================================================
</TABLE>

                                      18
<PAGE>
 
                                   SIGNATURES
                                   ----------

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Form 10-K/A report to
be signed on its behalf by the undersigned, thereunto duly authorized.

                             CENTOCOR, INC.


Date: May 13, 1998           By:   /s/  Dominic J. Caruso
                                -----------------------------------
                                Dominic J. Caruso
                                Senior Vice President - Finance and
                                Chief Financial Officer

                                      19
<PAGE>
 
                                 EXHIBIT INDEX

        Exhibit Number
        --------------

             10.24          Amendment to Sales and Distribution Agreement among
                            Centocor, Inc., Centocor B.V. and Eli Lilly and
                            Company dated June 26, 1996. (The Registrant has
                            requested confidential treatment from the Securities
                            and Exchange Commission for portions of this
                            Agreement.)

             23             Consent of Independent Auditors.