<PAGE>

                                  UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
                                       
                                   FORM 10-Q


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

                         OR

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

For Quarterly Period Ended September 29, 1996    Commission File Number: 0-12798

                              CHIRON CORPORATION
--------------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)

     Delaware                                    94-2754624
--------------------------------------------------------------------------------
(State or other jurisdiction of                  (I.R.S. Employer
incorporation or organization)                   Identification No.)

4560 Horton Street, Emeryville, California                  94608
--------------------------------------------------------------------------------
(Address of principal executive offices)                    (Zip code)

                                (510) 655-8730
--------------------------------------------------------------------------------
             (Registrant's telephone number, including area code)

                                Not Applicable
--------------------------------------------------------------------------------
                    (Former name, former address and former
                  fiscal year, if changed since last report)

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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

     Class                                   Outstanding at November 1, 1996
     -----                                   -------------------------------

Common Stock, $0.01 par value                       170,513,610 shares


<PAGE>


                              CHIRON CORPORATION
                               TABLE OF CONTENTS
--------------------------------------------------------------------------------

                                                                      PAGE NO.
                                                                      --------
PART I.   FINANCIAL INFORMATION

     ITEM 1.  FINANCIAL STATEMENTS

          Consolidated Balance Sheets as of
          September 30, 1996 and December 31, 1995 ...................    3

          Consolidated Statements of Operations for the
          three months and nine months ended September 30,
          1996 and 1995 ..............................................    4

          Consolidated Statements of Cash Flows for the
          nine months ended September 30, 1996 and 1995 ..............    5

          Notes to Consolidated Financial Statements .................    6

     ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
             FINANCIAL CONDITION AND RESULTS OF OPERATIONS ...........   18


PART II.  OTHER INFORMATION

     ITEM 1.  LEGAL PROCEEDINGS  .....................................   27

     ITEM 2.  CHANGES IN SECURITIES ..................................   27

     ITEM 3.  DEFAULTS UPON SENIOR SECURITIES ........................   27

     ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ....   27

     ITEM 5.  OTHER INFORMATION  .....................................   27

     ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K .......................   27


SIGNATURES ...........................................................   39


                                       2

<PAGE>


                               CHIRON CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                                                                     September 30,    December 31,
                                                                         1996             1995
                                                                     -------------    ------------
                                                                      (Unaudited)
<S>                                                                  <C>              <C>
                                     ASSETS
Current assets:
  Cash and cash equivalents                                            $  53,967      $  74,318
  Short-term investments in marketable debt securities                    45,080         61,066
                                                                     -----------      ---------
        Total cash and short-term investments                             99,047        135,384
  Accounts receivable                                                    340,358        285,779
  Inventories                                                            186,786        165,941
  Other current assets                                                    54,495         49,899
                                                                     -----------      ---------
        Total current assets                                             680,686        637,003
Noncurrent investments in marketable debt securities                      30,752         88,833
Property, plant, equipment and leasehold improvements, at cost:
  Land and buildings                                                     212,488        208,233
  Laboratory, production and office equipment                            365,864        292,828
  Leasehold improvements                                                 113,693         95,472
  Construction in progress                                                52,313         62,046
                                                                     -----------      ---------
                                                                         744,358        658,579
  Less:  accumulated depreciation and amortization                     (193,612)      (140,761)
                                                                     -----------      ---------
        Net property, plant, equipment and leasehold improvements        550,746        517,818
Purchased technology, net                                                 75,175         80,600
Other intangible assets, net                                              80,036         71,571
Investments in equity securities and affiliated companies                189,452         54,359
Other assets                                                              61,409         40,014
                                                                     -----------      ---------
                                                                    $  1,668,256   $  1,490,198
                                                                     -----------      ---------
                                                                     -----------      ---------

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable                                                       $76,821        $81,081
  Accrued compensation and related expenses                               51,698         56,994
  Short-term borrowings                                                  137,178         50,036
  Current portion of unearned revenue                                     21,525         20,838
  Taxes payable                                                           34,281         27,551
  Other current liabilities                                              141,794        132,095
                                                                     -----------      ---------
        Total current liabilities                                        463,297        368,595
Long-term debt                                                           420,044        413,248
Other noncurrent liabilities                                              37,478         35,943
Commitments and contingencies
Stockholders' equity:
  Common stock                                                             1,700            417
  Additional paid-in capital                                           1,763,227      1,727,711
  Accumulated deficit                                                (1,047,823)    (1,087,699)
  Cumulative foreign currency translation adjustment                     (2,093)            721
  Unrealized gain from investments                                        32,426         31,262
                                                                     -----------      ---------
        Total stockholders' equity                                       747,437        672,412
                                                                     -----------      ---------
                                                                      $1,668,256     $1,490,198
                                                                     -----------      ---------
                                                                     -----------      ---------

</TABLE>

         THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  ARE AN INTEGRAL PART OF THIS STATEMENT.


                                        3

<PAGE>


                                CHIRON CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>


                                                                 Three Months Ended             Nine Months Ended
                                                           -----------------------------  ----------------------------
                                                           September 30,   September 30,  September 30,  September 30,
                                                                1996            1995         1996            1995
                                                           ------------    ------------   ------------   -------------
<S>                                                        <C>             <C>            <C>            <C>

Revenues:
 Product sales, net                                         $  240,530     $  230,311     $  729,877     $  662,553
 Equity in earnings of unconsolidated joint
  businesses                                                    30,073         16,898         75,689         56,436
 Collaborative agreement revenues                               31,231         18,346         85,792         28,868
 Other revenues                                                 19,715          9,133         51,677         26,828
                                                            ----------     ----------     ----------     ----------
    Total revenues                                             321,549        274,688        943,035        774,685

Expenses:
 Cost of sales                                                 107,861        102,513        316,973        301,343
 Research and development                                       89,921         88,689        265,758        259,649
 Selling, general and administrative                            96,782         85,280        287,841        258,539
 Write-off of purchased in-process technologies                     --        132,535             --        364,951
 Costs related to Ciba transaction                                  --             --             --         49,478
 Restructuring and reorganization costs                             --             --             --         39,055
 Other operating expenses                                        3,193          3,536          8,793          9,323
                                                            ----------     ----------     ----------     ----------
    Total expenses                                             297,757        412,553        879,365      1,282,338
                                                            ----------     ----------     ----------     ----------

Income (loss) from operations                                   23,792      (137,865)         63,670      (507,653)

Other expense, net                                             (6,820)        (2,781)        (5,878)        (6,281)
                                                            ----------     ----------     ----------     ----------

Income (loss) before income taxes                               16,972      (140,646)         57,792      (513,934)

Provision for income taxes                                       5,194          4,461         17,916         16,122
                                                            ----------     ----------     ----------     ----------

Net income (loss)                                            $  11,778   $  (145,107)      $  39,876   $  (530,056)
                                                            ----------     ----------     ----------     ----------
                                                            ----------     ----------     ----------     ----------

Net income (loss) per share                                    $  0.07      $  (0.90)        $  0.22      $  (3.30)
                                                            ----------     ----------     ----------     ----------
                                                            ----------     ----------     ----------     ----------

Weighted average number of shares
 used in computing per share amounts                           175,848        161,716        177,292        160,840
                                                            ----------     ----------     ----------     ----------
                                                            ----------     ----------     ----------     ----------

</TABLE>

   THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE 
                AN INTEGRAL PART OF THIS STATEMENT.


                                         4

<PAGE>

                                CHIRON CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                 (IN THOUSANDS)
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                     Nine Months Ended
                                                                ----------------------------
                                                                September 30,  September 30,
                                                                     1996         1995
                                                                -------------  -------------
<S>                                                             <C>            <C>

Cash flows from operating activities:
 Net income (loss)                                                $  39,876      $(530,056)
 Adjustments to reconcile net income (loss)
  to net cash provided by (used in) operating activities:
   Depreciation and amortization                                     82,036         67,761
   Gain on sale of interest in affiliated company                   (12,226)            --
   Write-off of purchased in-process technologies                        --        364,951
   Other                                                              7,347         23,768
   Changes to:
    Accounts receivable                                             (57,072)        42,300
    Inventories                                                     (44,073)       (36,720)
    Other current assets                                            (10,588)        (3,401)
    Accounts payable                                                (14,904)        (7,151)
    Accrued compensation and related expenses                        (5,257)        (1,021)
    Taxes payable                                                     6,746         10,961
    Other current liabilities                                        13,073         32,079
    Other noncurrent liabilities                                      5,087        (20,428)
                                                                 ----------       --------
     Net cash provided by (used in) operating activities             10,045        (56,957)
Cash flows from investing activities:
 Purchase of investments in marketable debt securities              (55,008)      (122,177)
 Sale and maturity of investments in marketable debt securities     128,648        278,919
 Capital expenditures                                               (69,514)       (70,559)
 Businesses acquired, net of cash acquired                             (374)      (112,633)
 Proceeds from sale of interest in affiliated company                14,000             --
 Investments in equity securities and affiliates                   (133,700)        (1,103)
 Increase in other assets                                           (32,702)          (547)
                                                                 ----------       --------
     Net cash used in investing activities                         (148,650)       (28,100)
Cash flows from financing activities:
 Net borrowings (payments) under line of credit arrangements        (23,899)        16,769
 Proceeds from issuance of short-term debt                          111,040             --
 Repayment of notes payable and capital leases                       (5,725)        (3,017)
 Proceeds from capital contribution from Ciba                            --         24,845
 Proceeds from issuance of common stock                              36,838         30,630
                                                                 ----------       --------
     Net cash provided by financing activities                      118,254         69,227
                                                                 ----------       --------
     Net decrease in cash and cash equivalents                      (20,351)       (15,830)
Cash and cash equivalents at beginning of the period                 74,318         84,876
                                                                 ----------       --------
Cash and cash equivalents at end of the period                    $  53,967      $  69,046
                                                                 ----------       --------
                                                                 ----------       --------



</TABLE>


  THE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE 
                  AN INTEGRAL PART OF THIS STATEMENT.


                                      5

<PAGE>


                             CHIRON CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                       
                              SEPTEMBER 30, 1996


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     THE COMPANY

     Chiron Corporation (the "Company" or "Chiron") is a science-driven
     healthcare company that applies biotechnology and other techniques of
     modern biology and chemistry to develop, produce and sell products
     intended to improve the quality of life by diagnosing, preventing and
     treating human disease.  Chiron participates in four global human
     healthcare markets:  diagnostics, therapeutics, pediatric and adult
     vaccines and ophthalmic surgical products.  Chiron also develops or
     acquires new technologies, employing these technologies to discover and
     develop new products for the Company or for its partners.

     Chiron's diagnostic business includes automated immunodiagnostic systems,
     quantitative probe tests and critical blood analyte systems which are
     used by hospitals to diagnose and monitor patients in critical care
     settings. Chiron also provides blood screening tests, used to detect the
     presence of the human immunodeficiency virus ("HIV"), hepatitis virus and
     retroviruses, through its joint business with Ortho Diagnostic Systems,
     Inc. ("Ortho"), a Johnson & Johnson company. Chiron's therapeutics
     business emphasizes oncology and infectious diseases and provides
     products to hospitals and large clinics in the United States and Europe.
     Chiron's vaccine business is based primarily on the sale of pediatric and
     flu vaccines in Italy and other non-U.S., non-European geographic regions
     and to certain international health services, and through the Chiron
     Behring joint venture the sale of vaccines in Germany.  Chiron is also
     involved in the development and marketing of new pediatric and adult
     vaccines.  Through its ophthalmic business, Chiron provides products for
     the surgical correction of vision, as well as intraocular implants that
     deliver drugs to the eye. Chiron's ophthalmic business markets its
     products in the United States, Europe, and other geographic regions.

     BASIS OF PRESENTATION

     The information at September 30, 1996, and for the periods ended
     September 30, 1996 and 1995, is unaudited, but includes all normal
     recurring adjustments which Chiron's management believes to be necessary
     for fair presentation of the periods presented.  The consolidated balance
     sheet amounts at December 31, 1995, have been derived from audited
     financial statements.  Certain previously reported amounts have been
     reclassified to conform with the current period presentation. Interim
     results are not necessarily indicative of results for a full year.  This
     information should be read in conjunction with Chiron's audited
     consolidated financial statements for the year ended December 31, 1995.

     The consolidated financial statements include the accounts of the Company
     and its majority-owned subsidiaries.  All significant intercompany
     accounts and transactions have been eliminated in consolidation.
     Investments in joint ventures, partnerships and interests in which Chiron
     has an equity interest of 50 percent or less are accounted for using the
     equity or cost method, or in accordance with Statement of Financial
     Accounting Standards No. 115, "Accounting for Certain Investments in Debt
     and Equity Securities," as appropriate.  Certain foreign subsidiaries and
     investments in affiliated companies are accounted for on a one-month lag.
     The preparation of financial statements in conformity with generally
     accepted accounting principles requires management to make estimates and
     assumptions that affect the reported amounts of assets and liabilities
     and disclosure of contingent assets and liabilities at the date of the
     financial statements and the reported amounts of revenues and expenses
     during the reporting period.  Actual results could differ materially from
     those estimates.

                                      6


<PAGE>

     FISCAL YEAR

     The fiscal year of the Company is a 52 or 53-week year ending on the
     Sunday nearest the last day in December of each year.  As a result, the
     third quarters of 1996 and 1995 represent the thirteen-week periods ended
     September 29, 1996, and October 1, 1995, respectively.  For presentation
     purposes, dates used in the consolidated financial statements and notes
     refer to the calendar month end.

     INVENTORIES

     Pharmaceutical inventories are stated at the lower of cost or market
     using the average cost method or, in the case of vaccine products, using
     the last-in, first-out ("LIFO") method.  Diagnostic and ophthalmic
     products are valued at cost, using the first-in, first-out ("FIFO")
     method which is less than market value. Inventories consist of the
     following:

                                          SEPTEMBER 30,          DECEMBER 31,
                                              1996                  1995
                                          -------------          ------------
                                                        (IN THOUSANDS)

       Finished goods                       $ 108,502             $   96,327
       Work in progress                        33,989                 28,794
       Raw materials                           44,295                 40,820
                                          -------------          ------------
                                            $ 186,786             $  165,941
                                          -------------          ------------
                                          -------------          ------------

     INCOME TAXES

     Income tax expense for the quarter ended September 30, 1996 is based on
     an estimated annual effective income tax rate.  Income tax expense for
     the quarter ended September 30, 1995 includes a provision for state and
     foreign taxes based on estimated annual effective rates applicable to
     certain of the Company's subsidiaries.

     PER SHARE DATA

     Per share information is based on the weighted average number of common
     and dilutive common equivalent shares outstanding.  Common equivalent
     shares result from the assumed exercise of outstanding options and
     warrants that have a dilutive effect when applying the treasury stock
     method.  Shares assumed to be issued upon conversion of the Company's
     convertible debentures are not included for any of the periods presented
     since their inclusion would be anti-dilutive. Fully diluted per share
     data has not been presented, as the amounts would not differ materially
     from primary per share data.

     At the annual meeting of stockholders in May 1996, stockholders
     approved an amendment to the Company's restated certificate of
     incorporation, increasing the number of authorized common shares from 100
     million to 500 million. Subsequently,  Chiron's Board of Directors
     declared a 4-for-1 stock split effected in the form of a dividend on the
     Company's common stock that was distributed on August 2, 1996, to
     stockholders of record on July 19, 1996.  As a result, the Company
     increased its common stock balance by $1.3 million for the par value of
     the common stock issued to effect the stock split, and correspondingly
     reduced additional paid-in capital.  All warrants, stock options and
     convertible bond conversion rates were adjusted for the effect of the
     split. All references in these financial statements to per share amounts
     have been retroactively restated to reflect the increased number of
     common shares outstanding.

                                      7


<PAGE>

2.   BUSINESS COMBINATIONS

     FIRST QUARTER 1995 ACQUISITIONS

     Effective January 1, 1995, under a series of agreements between Chiron
     and Ciba-Geigy Ltd. and its affiliates ("Ciba"), Chiron acquired all of
     the outstanding common stock of Chiron Diagnostics Corporation ("Chiron
     Diagnostics"), formerly Ciba Corning Diagnostics Corp., and Ciba's
     interests in Chiron Vaccines Company, formerly Chiron Biocine Company,
     and Biocine S.p.A.  On March 31, 1995, Chiron Vision acquired the
     ophthalmic surgical division of IOLAB from Johnson & Johnson. These
     acquisitions were accounted for under the purchase method of accounting.
     As a result of the acquisitions and as required by generally accepted
     accounting principles, during the first quarter of 1995, Chiron
     recognized as an expense the amount allocated to purchased in-process
     technology resulting in a charge against earnings of $230.7 million.
     Costs related to the Ciba transaction totaling $49.5 million were also
     included in the first quarter of 1995, primarily representing employee
     payments and related taxes, and legal and investment advisor fees.

     ACQUISITION OF VIAGENE, INC. ("VIAGENE")

     On September 29, 1995, Chiron acquired all of the outstanding common
     stock of Viagene, not previously owned by the Company, in exchange for
     approximately $35.5 million in cash and 3.7 million shares of Chiron
     common stock.  Additionally, on September 29, 1995, unexercised options
     to purchase Viagene common stock were converted into options to purchase
     approximately 528,000 shares of Chiron common stock.  These shares and
     options have been adjusted for the stock split effected in August 1996.
     Prior to the acquisition, Chiron had an ongoing collaboration with
     Viagene in the area of gene therapy and, pursuant to the collaboration
     arrangement, held an investment in the outstanding voting stock of
     Viagene with a carrying value, net of unrealized gains and a realized
     loss, of approximately $14.1 million as of September 29, 1995.  The
     Viagene acquisition has been accounted for under the purchase method of
     accounting, and accordingly, Viagene's financial results are included in
     Chiron's consolidated operating results from September 29, 1995 forward.

     The following unaudited pro forma information presents the results of
     operations of Chiron and Viagene for the three-month and nine-month
     periods ended September 30, 1995, with pro forma adjustments as if the
     acquisition had been consummated on January 1, 1995.  This pro forma
     information does not purport to be indicative of what would have occurred
     had the acquisition been made as of those dates or of results which may
     occur in the future. The pro forma information does not include the
     write-off of purchased in-process technology of $130.3 million related to
     the acquisition recognized as an expense in the third quarter of 1995.

                                    THREE MONTHS ENDED      NINE MONTHS ENDED
                                    SEPTEMBER 30, 1995      SEPTEMBER 30, 1995
                                    ------------------      ------------------
                                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

 Total revenues                         $  276,930              $  781,643
 Loss before non-recurring 
    charges                                (20,263)               (145,070)
 Loss before non-recurring 
    charges per share                        (0.12)                  (0.88)


     AGREEMENT WITH BEHRINGWERKE AG

     Effective July 1, 1996, Chiron purchased a 49 percent interest in the
     human vaccine business of Behringwerke AG, a subsidiary of Hoechst AG, a
     German company.  The total acquisition price, which was payable in cash
     and subject to adjustment pending the completion of an audited opening
     balance sheet, was $119.0 million and includes costs directly related to
     the acquisition.  This amount has been reflected as a component of
     investments in equity securities and affiliated companies in the
     accompanying September 30, 1996 consolidated balance sheet.  Of the total
     acquisition price, $96.4 million was allocated to various intangible
     assets such as goodwill, trademarks and patents, and is being amortized
     on a straight-line basis

                                      8


<PAGE>

     over lives ranging from 5 to 20 years.

     Under the terms of the agreement, Chiron has an option to purchase the
     remaining 51 percent interest in March 1998, 1999, 2000 or 2001, and
     Behringwerke AG has the option to have Chiron acquire the remaining 51
     percent interest in March 2001.  During the period of mutual ownership,
     Chiron and Behringwerke AG will operate the vaccine business as a joint
     venture, which has been named Chiron Behring.

     During the quarter ended September 30, 1996, Chiron recognized $0.8
     million as its share of the joint venture's results, which includes
     amortization of the aforementioned intangible assets, as equity in
     earnings of unconsolidated joint businesses.  The results of the venture
     are reported on a one-month lag.

3.   RESTRUCTURING AND REORGANIZATION COSTS

     During 1995, Chiron recorded $39.1 million in restructuring and
     reorganization charges, including $16.9 million arising from the
     acquisition and integration of IOLAB, representing the expected costs of
     integrating the acquired business with Chiron's existing business as well
     as write-downs of previously capitalized costs.  Of the total charge of
     $39.1 million, $8.0 million was due to a change in plans to expand the
     Company's Emeryville research and development facilities, $7.7 million was
     related to the idling of the Company's Puerto Rico manufacturing facility
     and $1.0 million was related to a scale-back of manufacturing operations
     at the Company's Amsterdam facility.  The majority of these
     facility-related charges, as well as $3.7 million of other
     facility-related charges, were paid in 1995.  Of the $16.9 million
     recorded as a result of the acquisition of IOLAB, approximately $6.7
     million related to write-downs of previously capitalized facility and
     inventory costs.  The remaining $10.2 million consists of $5.5 million of
     employee termination costs and $4.7 million of lease termination and
     other costs.  The integration process is expected to be substantially
     complete by the end of 1997.

     The current status of the accrued restructuring charges is summarized
     below:

<TABLE>
<CAPTION>
                                                              AMOUNT
                                               AMOUNT OF     UTILIZED       AMOUNT TO
                                                 TOTAL        THROUGH      BE UTILIZED
                                             RESTRUCTURING  SEPTEMBER 30    IN FUTURE
                                                 CHARGE         1996         PERIODS
                                             -------------  -------------  -----------
                                                           (IN THOUSANDS)
<S>                                          <C>             <C>            <C>
Chiron Vision restructuring charges:
   Employee-related costs                      $  5,506     $  (5,506)       $    --
   Facility and lease termination costs           6,242        (3,296)         2,946
   Duplicate and excess inventory                 3,476        (2,564)           912
   Other                                          1,724        (1,041)           683
                                             -------------  -------------  -----------
                                                 16,948       (12,407)         4,541

Puerto Rico manufacturing facility                7,650        (3,670)         3,980
Postponement of Emeryville facility expansion     7,990        (7,990)            --
Amsterdam manufacturing facility                  1,000        (1,000)            --
Other facility-related                            3,718        (3,718)            --
Other                                             1,750        (1,450)           300
                                             -------------  -------------  -----------
                                               $ 39,056     $ (30,235)      $  8,821
                                             -------------  -------------  -----------
                                             -------------  -------------  -----------
</TABLE>

                                      9

<PAGE>


4.   COLLABORATIONS AND JOINT BUSINESS ARRANGEMENTS

     GENERAL

     The Company has entered into a number of collaborative arrangements with
     other pharmaceutical and biotechnology companies for the development and
     marketing of certain technologies and products.  The majority of these
     collaborations are in the development or clinical trial phase.  Chiron
     and its collaborative partners generally contribute certain technologies
     and research efforts to the collaboration.  In addition, Chiron and its
     collaborative partners commit, subject to certain limitations and
     cancellation clauses, to share in the funding of the collaborations'
     ongoing research and clinical trial costs.  Chiron, under certain of the
     arrangements, has purchased equity securities, including common and
     preferred stock and warrants to purchase common and preferred stock, of
     the collaborative partner.

     JAPAN TOBACCO INC. ("JT")

     In March 1996, the Company and JT entered into a technology transfer and
     development agreement whereby the pharmaceutical division of JT acquired
     a non-exclusive, perpetual license to apply certain of Chiron's
     combinatorial chemistry technologies in JT's research and product
     development programs.  Both Chiron and JT will share in certain
     improvements to the technology made by either party, subject to certain
     conditions. The agreement provides an initial technology transfer term of
     two years and may be extended at the option of JT for an additional two
     years. Through September 30, 1996, Chiron received collaborative research
     agreement revenues from JT of $7.6 million, substantially all of which
     was recognized in the first quarter of 1996.

     CIBA AND FOCAL INC. ("FOCAL")

     In April 1996, Chiron, Ciba and Focal entered into an agreement in the
     area of restenosis, the reclosure of arteries following angioplasty.
     Chiron and Ciba will each individually utilize its own cardiovascular
     drugs together with Focal's drug delivery technology to develop products
     designed to prevent restenosis.  Under the terms of the agreement, Chiron
     and Ciba will receive exclusive worldwide rights to Focal's technology in
     selected restenosis fields for their respective drug compounds entered
     into the research program.  Chiron and Ciba will be individually
     responsible for developing and marketing the resulting products, and
     Focal will retain manufacturing rights for the final products.  Chiron
     and Ciba will jointly provide funding for certain preclinical studies,
     after which each company will fund development for its own products. Each
     company will also be individually responsible to make milestone payments
     to Focal for its products developed, totaling $10.0 million per product.
     Through September 30, 1996, Chiron paid Focal $0.3 million for its share
     of costs which was recorded as research and development expense.

     RIBOZYME PHARMACEUTICALS INC. ("RPI")

     In May 1996, Chiron and RPI entered into a collaboration to use RPI's
     ribozyme technology to determine the function of a number of genetic
     sequences.  Chiron will select a certain number of gene sequences and RPI
     will synthesize ribozymes that will selectively inhibit the action of the
     target sequences in Chiron's assays.  Chiron will have the option to
     develop, and, in certain circumstances, manufacture ribozymes or other
     products found to be important in disease pathology.  Under the terms of
     the agreement, Chiron will pay RPI for the ribozymes used in the research
     and make milestone payments depending upon the number of products
     successfully developed.  Chiron also agreed to pay RPI royalties from the
     sale of commercialized products.  The royalty payments will be reduced by
     up to 50 percent of the milestone payments made as it relates to specific
     products.  Through September 30, 1996, no costs have been incurred.

                                      10


<PAGE>

     Under the terms of a separate agreement dated February 29, 1996, RPI
     committed to provide funding for certain research projects.  During the
     quarter ended September 30, 1996, Chiron recognized $1.8 million of
     collaborative agreement revenues pursuant to this agreement.

     GENERAL INJECTABLES & VACCINES, INC. ("GIV")
     
     In September 1996, Chiron reached an agreement with Biological and
     Popular Culture, Inc. ("BPC"), a newly organized holding company for GIV
     and affiliated companies, pursuant to which GIV and its affiliates agreed
     to perform certain distribution and promotional services for Chiron's
     vaccine products in the U.S.  The initial term of the service agreement
     is five years, with potential one year extensions thereafter.
     
     In connection with the agreement, Chiron invested $30.0 million in BPC,
     of which $13.8 million consisted of BPC voting preferred stock which is
     convertible at Chiron's option into 30 percent of the outstanding common 
     stock of BPC. Alternatively, Chiron, at its option, may require BPC to re-
     deem the preferred stock at par plus accrued dividends at a future date. Of
     the preferred stock investment, a significant amount represents excess
     purchase price and will be amortized over the term of the five-year
     initial service agreement.  The remainder of the $30.0 million investment
     consisted primarily of two interest-bearing loans to BPC and its
     subsidiaries with various maturities.  Chiron agreed to make additional
     capital contributions in the event BPC exceeds certain earnings
     requirements and which BPC agreed to use to repay one of the loans.
     
     Chiron will report its share of BPC's results, including amortization
     of the aforementioned excess purchase price, as equity in earnings of
     unconsolidated joint businesses.

     BEN VENUE LABORATORIES, INC. ("BEN VENUE")

     Effective May 1, 1996, Chiron sold its 50 percent interest in a generic
     oncology business to Ben Venue, Chiron's joint venture partner, for $14.0
     million in cash, resulting in a $12.2 million gain which has been
     included in other expense, net in the accompanying consolidated
     statements of operations.

5.   FINANCIAL INSTRUMENTS

     FOREIGN CURRENCY CONTRACTS

     To reduce its exposure to foreign currency risk, the Company enters into
     forward currency contracts ("forwards") and, starting in 1996, purchases
     average rate put options ("options").  Forward currency contracts are
     used to hedge material foreign currency denominated receivables and
     payables, while the options are used to hedge anticipated transactions.
     The Company does not use these financial instruments for trading or
     speculative purposes.

     The Company has purchased, and may in the future purchase options to
     reduce the exchange rate impact of a strengthening U.S. dollar on the
     underlying hedged amounts.  The Company's exposure is limited to the
     amount paid for the options.  The cost of the options, which is recorded
     in other current assets, is deferred and amortized over the relevant term
     of the period hedged.  Any corresponding gains are reported in income at
     the conclusion of the period hedged.

     At September 30, 1996, the notional amount of the forwards and options
     totaled $69.9 million and $19.1 million, respectively.  The options were
     denominated in the following currencies: Japanese yen, French francs,
     Australian dollars, Canadian dollars, Belgian francs and Spanish pesetas.
     All option contracts expire through December 1996.  The fair value of the
     options at September 30, 1996, based upon dealer quotes, totaled
     approximately $0.3 million.

                                      11


<PAGE>


     CROSS CURRENCY INTEREST RATE SWAPS

     The Company selectively enters into cross currency interest rate swaps
     ("swaps") through major financial institutions to modify the interest
     and/or currency characteristics of specific outstanding debt obligations.
     Each swap agreement corresponds to all or a portion of the principal
     balance and term of a specific debt obligation. These swap agreements
     involve the exchange of interest payments denominated in different
     currencies, based upon the terms described in the swap agreements, with
     an exchange of the underlying notional principal amounts upon maturity.
     The net difference between the interest amounts paid and received is
     recognized as an adjustment of interest expense.  The related interest
     amount payable or receivable from the major financial institutions is
     included in other current liabilities or assets.

     In May 1996, the Company entered into a swap agreement that matures in
     June 1997 with a notional amount of $24.9 million.  The Company
     effectively converted debt denominated in U.S. dollars to Japanese yen.
     The agreement provides for the Company to make quarterly interest
     payments starting June 30, 1996, based on a variable rate tied to
     three-month Japanese LIBOR (0.56% at September 30, 1996) while receiving
     interest based on a variable rate tied to three-month U.S. dollar LIBOR
     (5.6% at September 30, 1996).

     In July 1996, the Company also entered into swap agreements that mature
     in July 2001 with an aggregate notional amount of $112.6 million.  The
     Company effectively converted debt denominated in U.S. dollars to German
     marks. The agreements provide for the Company to make quarterly interest
     payments based upon a fixed German mark rate of 6.2% while receiving
     interest based on a variable rate tied to three-month U.S. dollar LIBOR.

6.   LINE OF CREDIT ARRANGEMENTS

     During 1996, the Company expanded its short-term borrowing capacity by
     entering into two separate one-year revolving, unsecured credit
     agreements with major financial institutions for borrowing capabilities
     up to $50.0 million and $100.0 million, respectively.  These facilities
     bring the total committed, unsecured short-term revolving credit
     facilities available to the Company in the U.S. to $200.0 million.  The
     credit facilities in the U.S. are guaranteed by Ciba and provide for
     various borrowing rate options, as defined in the agreements.  As of
     September 30, 1996, $100.0 million was outstanding under these facilities
     with interest rates tied to U.S. dollar LIBOR (5.7% at September 30,
     1996).

7.   OPERATING LEASE

     In June 1996, the Company entered into a seven-year operating lease
     agreement with a group of financial institutions to rent a research and
     development facility to be constructed in Emeryville, California. Under
     the terms of the lease agreement, the financial institutions have
     committed $195.0 million toward the total construction cost of the
     project. No lease payments are required during the construction period
     which is expected to last less than three years.  Thereafter, rent
     amounts will be due quarterly, based upon the total construction costs
     incurred.

     Under the lease arrangement, which has been guaranteed by Ciba through
     December 31, 1999, the Company has the option to purchase the constructed
     properties.  Alternatively, Chiron can cause the property to be sold to a
     third party.  The Company is also contingently liable under residual
     value guarantees in the event of market value declines.

8.   CONTINGENCIES
     
     ABBOTT LABORATORIES.  On December 13, 1993, Chiron filed a patent
     infringement action against Abbott Laboratories ("Abbott") in the United
     States District Court for the Northern District of California, alleging
     infringement of Chiron's U.S. Patent No. 5,156,949 ("the '949 patent").
     The patent claims the use of recombinant envelope antigens in immunoassays
     for HIV antibodies. On April 1, 1996, Chiron and Ortho,


                                      12


<PAGE>

     Chiron's exclusive licensee under the '949 patent, entered into a 
     settlement agreement with Abbott under which Abbott will be granted a 
     royalty-bearing, non-exclusive license under the '949 patent and 
     foreign counterparts thereof.  The litigation was dismissed on August 
     31, 1996, and in the third quarter of 1996 Chiron received $6.9 million 
     of royalties related to prior period sales of HIV immunodiagnostics 
     tests. This amount has been reflected in equity in earnings of 
     unconsolidated joint businesses in the accompanying consolidated 
     statements of operations.  Under the terms of the settlement agreement, 
     the Chiron-Ortho joint business will also receive an ongoing royalty 
     from Abbott based on the sale of products incorporating the patents.
     
     On September 12, 1995, the United States Patent & Trademark Office
     ("PTO") declared an interference between the '949 patent and an
     application owned by the U.S. Government and Centocor, Inc. ("Centocor").
     Chiron is the junior party.  In the above described litigation with
     Abbott, the District Court granted Chiron's request for summary judgment
     that the U.S. Government/Centocor application in the subject
     interference, which is senior to Chiron's, neither enabled the claimed
     invention nor disclosed the best mode of practicing the invention.  If 
     the PTO makes a similar ruling on either enablement or best mode, Chiron 
     could then become the senior party. It is not known when or on what 
     basis the PTO will resolve the subject interference.
     
     On April 26, 1994, Abbott filed suit against Chiron in the United States
     District Court for the Northern District of Illinois alleging that the
     Company's bDNA probe assays infringed three patents licensed or acquired
     by Abbott from third parties.  On April 1, 1996, Chiron and Abbott
     entered into a settlement agreement under which Chiron will be granted a
     royalty-bearing, non-exclusive license under the three patents in suit
     and the foreign counterparts thereof.  The litigation was dismissed on
     August 20, 1996.
     
     BIOANALYSIS/GEN-PROBE.  On March 22, 1996, Chiron Diagnostics filed suit
     in the United States District Court for the Southern District of
     California against Bioanalysis Limited, Gen-Probe Incorporated and the
     University of Wales College of Medicine alleging, among other things,
     patent infringement, intentional interference with contractual rights and
     breach of contract. Chiron Diagnostics' claims arose under its 1984
     license from Bioanalysis of chemiluminescent technology used by Chiron
     Diagnostics in its ACS-TM- and Magic-Registered Trademark- Lite 
     diagnostic test kits. After Chiron Diagnostics filed suit, Bioanalysis 
     made certain demands and counterclaims.  On July 1, 1996, the parties 
     entered into a settlement agreement.  Under the terms of the 
     settlement, among other things, Chiron Diagnostics and Bioanalysis have 
     entered into an amended and restated license, Chiron Diagnostics and 
     Gen-Probe Incorporated agreed to certain cross-licenses, and each of 
     the actions brought among the parties has been dismissed.
     
     DANIEL W. BRADLEY.  On December 20, 1994, Dr. Daniel W. Bradley, formerly
     with the U.S. Centers for Disease Control (the "CDC"), brought suit 
     in the United States District Court for the Northern District of
     California against Chiron, Ortho, certain employees of Chiron, and the
     United States government. Subsequently, Bradley dismissed the United
     States as a defendant.  Bradley, who collaborated with Chiron scientists
     on the research that led to the discovery of HCV, alleged he has been
     wrongly excluded as an inventor of HCV.  He requested various forms of
     relief, including declarations that he was an inventor of Chiron's
     patents related to HCV and that these patents were unenforceable. Bradley
     further sought monetary damages and a constructive trust on all past and
     future profits, as well as penalties under federal and state Racketeering
     and Corrupt Organization (RICO) statutes. On July 15, 1996, the Court
     dismissed Bradley's second amended complaint with prejudice and without
     further leave to amend. Bradley has appealed the District Court's 
     decision to the United States Court of Appeals for the Federal Circuit.  
     The Company intends to oppose that appeal.
     
     EVANS.  Biocine S.p.A. ("Biocine") filed an action against Evans Medical
     Limited (a division of Medeva plc) ("Evans") in the Tribunal of Milan on
     October 23, 1995, seeking a declaration of invalidity of Evans' Italian 
     counterpart to its European Patent No. 0 162 639 ("the '639 patent"), 
     allegedly relating to the p69 antigen of BORDATELLA PERTUSSIS. Biocine 
     later filed a claim against Evans with the Milan court seeking a 
     declaration of noninfringement with respect to Biocine's Acelluvax-TM- 
     and Acelluvax-TM- DTP vaccines. Evans has responded that Biocine's 
     vaccines infringe the '639 patent. Also, in February 1996, Chiron and
     Chiron B.V. filed an action seeking a declaration of invalidity and non-
     infringement with respect to Evans' Dutch equivalent to the '639 patent

                                      13
<PAGE>

     in the District Court of The Hague in The Netherlands. On April 4, 1996, 
     a similar action was filed by Chiron against Evans' U.K. equivalent to 
     the '639 patent in the High Court of Justice, Chancery Division, Patents 
     Court of the U.K. SmithKline Beecham Biologicals S.A. ("SKBB"), Evans' 
     exclusive licensee, and Medeva plc were also named as defendants. On 
     April 4, 1996, Evans filed suit against Chiron in the United States 
     District Court for the Eastern District of Texas. The complaint, which was
     not served on Chiron until July 1996, alleges that Chiron infringes the 
     U.S. Patent Nos. 5,237,052 and 5,438,120 which are counterparts of the 
     '639 patent. Evans seeks a permanent injunction, plus damages. Chiron 
     believes that the Biocine vaccines do not infringe any valid claim of the 
     '639 patent or its U.S. counterparts. Biocine previously had opposed 
     issuance of the '639 patent before the European Patent Office 
     ("EPO") and, along with other parties, has appealed the EPO opposition 
     decision which maintained the patent in amended form.

     INTERNATIONAL MUREX TECHNOLOGIES CORPORATION. Chiron, Ortho, and certain 
     Ortho affiliates (the "Chiron/Ortho parties") have been involved in a 
     series of legal actions against subsidiaries of International Murex 
     Technologies Corporation ("IMTC") related to infringement of Chiron's HCV 
     patents in HCV immunodiagnostics. The first such action was filed on March 
     2, 1992 in the High Court for England and Wales. Subsequent infringement 
     suits were filed in Germany, The Netherlands, Italy, Belgium and Australia.
     Chiron sought damages and injunctions against future infringement in these
     actions. On June 11, 1996, Murex Diagnostics Australia, Pty. Limited 
     ("MDAUS") filed an action against Chiron and Ortho in the Federal Court of
     Australia, New South Wales District Registry, General Division, alleging 
     violation of the Australian 1974 Trade Practices Act and seeking an order 
     which would restrain Chiron and Ortho from engaging in allegedly anti-
     competitive activities in connection with their HCV tests. On August 27, 
     1996, the Chiron/Ortho parties and IMTC entered into a settlement 
     agreement the specific terms of which are confidential. Under the terms of
     the settlement agreement, all of the litigation referenced above, with 
     the exception of litigation with IMTC's subsidiary, Murex Diagnostics, 
     Ltd. ("MD") will be dismissed. On February 22, 1996, MD made it known that
     it had changed its name to Specialist Diagnostics Ltd. ("SDL"), and filed 
     a petition for voluntary liquidation. The Chiron/Ortho parties and the 
     trustees for SDL entered into a settlement agreement in September 1996. 
     It is expected that the U.K. bankruptcy court will approve the settlement 
     and that the subject litigation will be dismissed.

     On March 5, 1996, IMTC filed a complaint against Chiron, Johnson & 
     Johnson ("J&J"), Institut Pasteur and Abbott Laboratories with 
     the European Commission ("EC"), alleging violations of Articles 85 
     and 86 of the EC Treaty and Articles 53 and 54 of the European 
     Economic Area Agreement concerning licensing practices under 
     Chiron's U.K. Patent No. 2,212,511 ("the '511 patent") and 
     European Patent No. 0 318 216 ("the '216 patent"), a counterpart of 
     the '511 patent. The EC complaint charges that Chiron and J&J have 
     entered into license agreements with competitors which constitute
     market sharing and price fixing in the HCV and other blood testing fields,
     thus abusing an allegedly dominant position in the HCV market. IMTC claims
     that Chiron's HCV patents constitute an "essential facility" which must be
     "freely licensed on reasonable commercial terms." The EC complaint seeks, 
     among other things, interim measures in the form of a compulsory license 
     from Chiron to IMTC applicable in all European Union member states for the
     manufacture of HCV antigen and nucleic acids for immunodiagnostic reasons. 
     The EC has posed certain questions to the parties and Chiron has responded.

     On April 11, 1996, the Opposition Division of the EPO upheld the
     '216 patent in amended form over the oppositions of MD/SDL, United 
     Biomedical, Inc., F. Hoffmann-LaRoche & Co. AG., Behringwerke AG and 
     the Research Foundation for Microbial Diseases of Osaka University. 
     The Opposition Division's decision is subject to appeal.

                                       14
<PAGE>

     NATIONAL TRANSPORTATION SAFETY BOARD ("NTSB"). On September 5, 1996, a 
     DC-10 aircraft operated by Federal Express Corporation, and the majority 
     of its cargo, was destroyed by fire.  The NTSB, an agency of the federal 
     government, is investigating all of the circumstances surrounding the 
     incident.  One area of the NTSB investigation concerns possible linkage 
     between the fire and certain Chiron laboratory equipment which was 
     shipped in a Federal Express container aboard the aircraft.  Chiron 
     elected to become a party to that investigation and is providing 
     information and assistance to the NTSB. The NTSB has not yet reached any 
     conclusions concerning the cause of the fire.
  
     LUIS RUIZ AND SERGIO LENCHIG.  On October 1, 1996, Luis Ruiz and Sergio  
     Lenchig, owners of U.S. Patent No. 5,133,726 and certain other 
     proprietary rights related to corneal shaping, filed a lawsuit against 
     Chiron Vision in the United States District Court for the Eastern 
     District of Virginia.  The lawsuit alleges that Chiron Vision breached 
     the license agreement among Ruiz, Lenchig, and Chiron for such 
     technology.  Plaintiffs seek declaratory relief and damages according to 
     proof.  The Company has not yet filed its response.         

     SICOR.  As of April 10, 1996, Chiron entered into a settlement 
     agreement which resulted in dismissal of a 1991 lawsuit filed 
     in the United States District Court for the Northern District 
     of California against Cetus Oncology Corporation ("Cetus"), 
     Ben Venue Laboratories, Inc., Cetus Ben Venue Therapeutics ("CBVT")
     and Erbamont, Inc. and its affiliates by Alco Chemicals, Ltd. ("Alco")
     and Sicor, S.p.A. ("Sicor"). The Sicor complaint alleged breach of a CBVT
     contract to purchase bulk doxorubicin from Sicor, as well as antitrust
     violations and interference with contract and prospective advantage, and
     sought unspecified damages. Cetus denied any entitlement to recovery in
     this lawsuit and had filed counterclaims.  In February 1995, Sicor and
     Alco filed a further action in the United States District Court for the
     Northern  District of California and an arbitration against CBVT for
     amounts  allegedly owed by CBVT to Sicor and Alco for the supply of 
     doxorubicin, plus interest and attorneys' fees.  Under the April 10, 
     1996 settlement agreement, each of the actions brought among the parties
     was dismissed with prejudice.
     
     SMITHKLINE BEECHAM BIOLOGICALS S.A.  Chiron owns issued 
     European Patent No. 0 120 551 ("the '551 patent") which relates to 
     yeast expression vectors containing foreign gene sequences including, 
     for example, hepatitis B virus ("HBV") surface antigen, and expression 
     methods thereof.  Chiron also owns European Patent No. 0 460 716 ("the 
     '716 patent") which contains related claims.  Chiron believes that 
     SKBB's  Engerix-B-Registered Trademark- vaccine against HBV infringes 
     the '551 patent and the '716 patent.  In April 1996, SKBB filed suit 
     against Chiron in the Tribunal of First Instance of Brussels seeking a 
     declaration that the '551 and '716 patents are:  (1) null and void in 
     Belgium; and (2) not infringed by SKBB in a variety of European 
     countries.  SKBB also filed an application for preliminary relief 
     which, if granted, would suspend the effects of the '551 and '716 
     patents and would allow SKBB to continue production and 
     commercialization of Engerix-B-Registered Trademark- in all designated 
     countries until a decision on validity and infringement is rendered.
     A substantive hearing on SKBB's preliminary relief application is expected
     to be held in the first quarter of 1997.

     STAAR SURGICAL COMPANY ("STAAR").  On May 7, 1996, Chiron Vision filed a
     lawsuit in the Superior Court of the State of California for the County 
     of Los Angeles against Staar for specific performance, indemnity, 
     breach of contract, an accounting and declaratory relief.  The 
     lawsuit asserts, among other things, that Staar failed to honor 
     certain indemnity obligations related to Staar's rights in certain 
     foldable lens technology licensed to Chiron Vision, failed to
     extend to Chiron Vision most favored rates and/or terms in connection
     with its license from Staar of certain foldable lens technology, which
     includes US Patent No. 4,573,998, and failed to transfer to Chiron Vision
     rights to certain technology as contractually obligated.  Chiron Vision
     seeks damages, declaratory and other relief. Staar has denied Chiron
     Vision's allegations and filed a cross-complaint against Chiron Vision
     alleging breach of contract and other claims and seeking declaratory
     relief and damages according to proof.

                                      15


<PAGE>

     STOCKHOLDER LITIGATION.  In November 1994, Chiron, its directors, and
     certain of its officers were sued in three essentially identical lawsuits
     filed as class actions on behalf of Chiron stockholders, alleging that
     the directors had violated their fiduciary duty by failing to maximize
     stockholder value in connection with the series of transactions effected
     with Ciba-Geigy, Ltd. which were announced on November 20, 1994. Two of
     the actions filed respectively on November 14, 1994 and November 22, 1994
     (HANNA V. CHIRON CORP., ET AL., C.A. No. 13874, and DEZUBE V. CHIRON
     CORPORATION ET AL., C.A. 13896) were filed in the Court of Chancery of
     the State of Delaware in and for New Castle County.  These complaints
     sought injunctive relief, rescission and attorneys' fees.  Plaintiff in
     the HANNA action additionally sought damages in an unspecified amount.
     Plaintiff in the DEZUBE action additionally sought an accounting.  The
     complaints were answered by all defendants, who denied the material
     allegations of the complaints. The third action was filed in the Superior
     Court of California, Alameda County, Northern Division, on December 1,
     1994 (PERERA ET AL., V. CHIRON CORPORATION ET AL., C.A. No. 744522-2).
     Plaintiffs there sought injunctive and declaratory relief, an
     accounting, costs and disbursements, including attorneys' and experts'
     fees, and other relief.
     
     On October 17, 1995, the PERERA plaintiffs commenced a new action (the
     "Federal Action") in the United States District Court for the Northern
     District of California, against the same defendants and Ciba-Geigy, Ltd.,
     Ciba-Geigy's Chairman Alex Krauer, Ciba-Geigy Corporation, and Ciba
     Biotech Partnership, Inc. (collectively, the "Ciba Defendants").  The
     Federal Action asserts both state and federal claims, including a claim
     under Sections 10(b), 14(d) and 14(e) of the Securities Exchange Act of
     1934, and seeks damages and injunctive relief.  On October 23, 1995, in
     light of the filing of the Federal Action, the PERERA action was
     dismissed by stipulation of the parties.
     
     Plaintiffs and all of the defendants other than the Ciba Defendants
     entered into an agreement to settle the Federal Action on a class-wide
     basis, subject to approval by the Court. Under the terms of that
     settlement agreement, Chiron has paid attorneys fees and expenses to
     plaintiffs' counsel and agreed to redeem or otherwise render ineffective
     the stockholder rights plan created under that certain Rights Agreement
     dated as of August 25, 1994, as amended.  Chiron has no other obligations
     under the settlement agreement.  The HANNA and DEZUBE actions are to be
     dismissed as moot following approval of the settlement and dismissal of
     the Federal Action.  The settlement received final approval of the court
     on May 21, 1996.
     
     SUMMIT TECHNOLOGY, INC.  On June 11, 1996, the German Federal Patent
     Court dismissed an action filed by Chiron Technolas, a subsidiary of
     Chiron Vision, which sought to invalidate the German counterpart of a
     European patent held by an affiliate of Summit Technology, Inc., a
     manufacturer of ophthalmic lasers.  The Company has decided not to
     appeal this decision.  Summit's German patent is also the subject of a
     separate infringement action filed on September 24, 1994 by Summit
     against Chiron Technolas and another subsidiary of Chiron Vision, Chiron
     Adatomed, in the German Regional Court.  The Regional Court granted
     judgment for Summit in August 1995, including an injunction, and awarded
     damages in an amount to be determined.  The Company's appeal of the
     judgment is pending.
     
     UNITED BIOMEDICAL, INC.  On May 14, 1992, the Chiron/Ortho parties brought
     an infringement action against United Biomedical, Inc. ("UBI") and certain
     companies of the Akzo Nobel Group ("Organon") for infringement of the '511
     patent directed to HCV immunodiagnostics.  On May 4, 1994, Chiron 
     instituted summary legal proceedings against UBI and Organon in the 
     District Court of The Hague, The Netherlands, alleging infringement of the
     '216 patent as a result of the defendants' manufacture and sale of HCV 
     immunoassay kits. UBI supplied and Organon marketed HCV immunoassay test 
     kits throughout Europe.  Both the U.K. and Dutch courts granted Chiron 
     injunctions against future infringement by UBI and Organon, and the U.K. 
     court ordered Organon and UBI to pay damages.  The Chiron/Ortho parties 
     and Organon settled all HCV litigation pending between them on October 9, 
     1995, and the Chiron/Ortho parties were compensated for past infringement.
     The Chiron/Ortho parties and UBI entered into a settlement agreement 
     effective May 1, 1996 the terms of which are confidential and under 
     which the U.K. and Dutch litigation has been dismissed.

                                      16
<PAGE>


     OTHER MATTERS. The Company is party to other matters of litigation,
     certain of which are described in Item 3, Legal Proceedings, on page 10
     of the Company's report on Form 10-K for the period ended December 31,
     1995, and as to which there have been no material changes since such 
     Form 10-K was filed.

                                      17


<PAGE>

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                       
OVERVIEW

     The discussion below contains forward-looking statements that involve
risks and uncertainties relating to the future financial performance of Chiron
Corporation (the "Company" or "Chiron"), and actual events or results may
differ materially.  In evaluating such statements, stockholders and investors
should specifically consider the various factors identified below and under
the caption "Factors That May Affect Future Operating Results" which could
cause actual results to differ materially from those indicated by such
forward-looking statements.

     Chiron is a science-driven healthcare company that applies biotechnology
and other techniques of modern biology and chemistry to develop, produce and
sell products intended to improve the quality of life by diagnosing,
preventing and treating human disease.  Chiron participates in four human
healthcare markets:  diagnostics, including blood screening tests, automated
immunodiagnostic systems, critical blood analyte systems and new quantitative
probe tests; therapeutics, with an emphasis on oncology, serious infectious
diseases and critical care diseases; adult and pediatric vaccines; and
ophthalmic surgical products, including instruments and devices used for the
surgical correction of vision and intraocular implants to deliver drugs to
the eye. Chiron also develops or acquires new technologies, employing these
technologies to discover and develop new products for the Company or for its
partners.

RESULTS OF OPERATIONS

REVENUES

     The Company's revenues are derived from a variety of sources, including
product sales, joint business arrangements, collaborative agreements and
product royalty agreements.  Product sales, Chiron's largest revenue category,
consists of the following product lines for the three-month and nine-month
periods ended September 30:

<TABLE>
<CAPTION>
                                              THREE MONTHS          NINE MONTHS
                                           ENDED SEPTEMBER 30,   ENDED SEPTEMBER 30,
                                           -------------------  --------------------
                                              1996      1995      1996        1995
                                           ---------  --------  --------    --------
                                                        (IN THOUSANDS)
<S>                                        <C>        <C>       <C>         <C>
    Diagnostic products                     $134,816  $131,194  $412,300    $396,461
    Ophthalmic products                       49,911    45,884   154,365     122,640
    Vaccine products                          21,374    18,217    61,680      53,652
    Betaseron-Registered Trademark- sales     16,807    18,490    49,948      42,706
    Oncology products                         16,595    15,826    48,415      43,761
    Other products                             1,027       700     3,169       3,333
                                           ---------  --------  --------    --------
                                            $240,530  $230,311  $729,877    $662,553
                                           ---------  --------  --------    --------
                                           ---------  --------  --------    --------
</TABLE>


     As Chiron continues to expand its presence in international markets,
particularly European markets, seasonal fluctuations in product sales and the
related gross profit amounts have become more significant. For this reason,
revenues and gross profit amounts from certain product lines are generally
higher in the first half and fourth quarter of the year.  As a result,
Chiron's results in any one quarter are not necessarily indicative of results
to be expected for a full year.

     Diagnostic product sales include direct sales and sales-type leases of 
fully-automated, random-access immunodiagnostic 
(ACS:180-Registered Trademark-, automated chemiluminescence system) testing 
systems and reagents for these systems, as well as sales of critical blood 
analyte systems, clinical chemistry products and manual immunodiagnostic 
systems.  Sales of diagnostic products increased in both the third quarter 
and first nine months of 1996 over the comparable periods in 1995, primarily 
due to increased sales of branched DNA probe tests for human immunodeficiency 
virus ("HIV") and immunodiagnostic products. The growth in immunodiagnostic 
product sales

                                      18

<PAGE>

resulted from continued penetration of the instruments market and increased 
sales volume of reagents resulting from increased system placements and an 
expanded menu of tests on the ACS:180-Registered Trademark- system, partially 
offset by reduced sales of manual immunodiagnostics.

     Sales of ophthalmic products increased for both the third quarter of 
1996 and on a year-to-date basis as compared to 1995.  The sales growth in 
the third quarter of 1996 was primarily due to sales of the Company's new 
Vitrasert-TM- Implant (Cytovene-Registered Trademark-; Roche Laboratories) 
product, the first drug delivery system to provide local, sustained therapy 
for the eye.  Chiron received approval from the U.S. Food and Drug 
Administration ("FDA") during the first quarter of 1996 to market the 
product.  As a result, the Company recorded $3.3 million and $9.1 million of 
Vitrasert-TM- Implant sales during the third quarter and first nine months of 
1996, respectively.  The sales growth during the nine months ended September 
30, 1996 was also due to increased sales of viscoelastic products and sales 
of foldable intraocular lenses as a result of the March 1995 acquisition of 
the surgical product division of IOLAB from Johnson & Johnson and the 
continuing evolution in the marketplace favoring foldable lens 
technology-based products.

     Vaccine product sales consist of sales of pediatric and adult vaccines 
primarily in Italy and to international public health organizations by 
Chiron's Biocine S.p.A. subsidiary ("Chiron Biocine").  Chiron Biocine's 
vaccine products include Acelluvax-Registered Trademark-, a recombinant 
acellular pertussis vaccine; Agrippal-Registered Trademark-, a flu vaccine; 
and Polioral-TM-, an oral polio vaccine.  Vaccine product sales increased for 
both the third quarter of 1996 and on a year-to-date basis as compared to 
1995 due to Chiron Biocine's expansion into new export markets for its polio 
vaccine and its combined measles-mumps-rubella vaccine.  In addition, in 
September 1996 Chiron Biocine submitted a product license application to the 
FDA, seeking approval to market its recombinant acellular pertussis vaccine, 
combined with diphtheria and tetanus ("DTaP"), for infants and children in 
the U.S., under the tradename Pertugen-TM-.

     Under the terms of a development and supply agreement with Schering AG, 
Germany ("Schering"), and its U.S. affiliate, Berlex Laboratories, Inc. 
("Berlex"), Chiron manufactures Betaseron-Registered Trademark- (interferon 
beta-1b) for Berlex. Under the terms of the agreement, Chiron earns an 
initial partial payment for Betaseron-Registered Trademark- upon shipment to 
Berlex and a subsequent secondary payment upon Berlex's final net sales of 
the product to customers.  Betaseron-Registered Trademark- product sales 
during the third quarter of 1996 are comprised primarily of initial and 
secondary revenues and revenues for Betaseron-Registered Trademark- 
distributed by Schering for use in an early access program for European 
patients prior to commercial approval in Europe.  Betaseron-Registered 
Trademark- product sales during the third quarter of 1995 relate primarily to 
initial payments for shipments of Betaseron-Registered Trademark- product to 
Berlex. On a year-to-date basis, Betaseron-Registered Trademark- product 
revenues increased in 1996 compared to 1995 primarily due to secondary 
revenues arising from net sales by Berlex, and European revenues arising from 
product distributed by Schering for use in an early access program for 
European patients.  Chiron expects to continue shipments to Berlex during the 
fourth quarter of 1996 and, accordingly, expects to earn initial and 
secondary revenues from sales to Berlex.  Chiron also expects to earn 
revenues from shipments to Schering for sales into non-U.S. markets in the 
fourth quarter of 1996.

     Future levels of Chiron's Betaseron-Registered Trademark- shipments will 
depend upon the rate at which new patients are enrolled from existing and 
future markets, the extent to which patients, once enrolled, remain compliant 
with the prescribed treatment regimen and continue to regularly receive 
Betaseron-Registered Trademark-, and the impact of competing products, 
including other beta interferon products that were approved for sale in the 
U.S. during 1996.  In addition, based upon the level of inventories carried 
by Berlex, the timing of future shipments to Berlex and the related revenue 
may vary by quarter.

     Sales of oncology products, principally Proleukin-Registered 
Trademark-(aldesleukin, interleukin-2), increased during the three-month and 
nine-month periods ended September 30, 1996, over the same periods in 1995, 
primarily due to increased unit sales.  Average worldwide selling prices 
remained roughly constant between the third quarters of 1996 and 1995 and for 
the first nine months of 1996 compared to 1995.

     The Company markets many of its commercial products internationally.  As
a result, product revenues in almost all product lines are affected by
fluctuating foreign currency exchange rates. Foreign product sales were $132.6
million and $407.4 million for the three-month and nine-month periods ended
September 30, 1996, respectively, versus $125.6 million and $373.0 million for
the comparable periods in 1995, respectively.  International

                                      19


<PAGE>

sales of diagnostic, vaccine and ophthalmic products accounted for the 
majority of the increase in foreign product sales between periods. For the 
three-month and nine-month periods ended September 30, 1996, approximately 56 
percent of Chiron's product sales were denominated in foreign currencies.  
The net effect of changing foreign currency exchange rates did not 
significantly impact product sales when compared with the quarterly and 
year-to-date periods in 1995.  Changing currency exchange rates have had, and 
will continue to have, an impact on Chiron's results.  The Company's other 
revenues, discussed below, are largely denominated in U.S. dollars but are 
impacted by the Company's joint partners' and collaborators' non-U.S. 
operations.

     Joint business revenues consist substantially of Chiron's one-half 
interest in the pretax operating earnings of its joint diagnostic business 
with Ortho Diagnostic Systems, Inc. ("Ortho").  The joint business receives a 
royalty from Abbott Laboratories ("Abbott") for Abbott's sales of hepatitis C 
virus ("HCV") tests which use the Chiron technology and which compete 
directly with tests marketed by Ortho.  Results from the joint business are 
recorded by Chiron on a one-month lag based upon estimates supplied by Ortho 
and are subject to a final annual accounting during the first quarter of the 
subsequent year.  For the third quarter of 1996, Chiron's share of the pretax 
earnings increased to $29.9 million from $15.6 million for the comparable 
quarter in 1995.  In 1996, the joint business recorded increased sales from 
the introduction of a new HIV antigen test as well as increased profits from 
sales growth to Ortho's overseas affiliates.  The increase in profits was 
offset by increased sales and marketing costs associated with the 
introduction of the new HIV antigen test and by sales of certain lower margin 
products. Also included in Chiron's share of the operating results of the 
joint business during the third quarter of 1996 are $6.9 million in royalties 
resulting from a settlement with Abbott related to prior period sales of HIV 
immunodiagnostic tests. Under the terms of the settlement agreement, the 
joint business will receive an ongoing royalty from Abbott based on the sale 
of products incorporating technology covered by certain Chiron HIV patents.

     For the nine-month period ended September 30, 1996, Chiron's share of the
pretax earnings of the joint business with Ortho increased by $18.4 million as
compared to 1995, due to the increasing volume of HCV and HIV tests sold,
increased royalties from Abbott, adjustments arising from the final 1995
accounting, and the settlement agreement with Abbott.  These increases more
than offset a reduction between periods in gross profit margins and an
increase in sales and marketing, and research and development expenses.

     Joint business revenues for the third quarter of 1996 also include $0.8
million related to Chiron's 49 percent share of the operating results of a new
joint venture with Behringwerke AG.  Chiron's interest in the joint venture
was purchased in July 1996.  The results of the venture are reported on a one-
month lag.


     Collaborative agreement revenues consist of fees received for research
services as they are performed, fees received for completed research or
technology, fees received upon attainment of benchmarks specified in related
research agreements, and proceeds from sales of biological materials to
research partners for clinical and preclinical testing.  Collaborative
agreement revenues for the three-month and nine-month periods ended September
30, 1996 increased when compared to the comparable periods of 1995.  The
increase between periods is primarily attributable to revenues of $21.0
million and $52.0 million recognized during the third quarter and first nine
months of 1996, respectively, as compared to revenues of $12.0 million
recognized during the third quarter and first nine months of 1995 from
Ciba-Geigy Limited of Basel, Switzerland ("Ciba") under the terms of a
research funding agreement.  In 1995, Ciba agreed to provide $250 million
(which may be increased up to $300 million subject to certain conditions) in
support of research at Chiron.  Chiron anticipates continued utilization of
the research funding provided by Ciba under the terms of the research funding
agreement.

     Also contributing to the increase in collaborative agreement revenues are
amounts earned by Chiron's wholly

                                      20

<PAGE>

owned subsidiary, Viagene, Inc. ("Chiron Viagene") which was acquired in 
September 1995.  During the three-month and nine-month periods ended 
September 30, 1996, Chiron recognized revenues of $2.3 million and $6.9 
million, respectively, from Chiron Viagene's collaborative agreement with 
Green Cross Corporation of Japan for HIV gene therapy research and clinical 
development.  During the first nine months of 1996, Chiron also received 
initial revenues of $7.5 million from Japan Tobacco Inc. ("JT") pursuant to 
the terms of a technology transfer and development agreement whereby the 
pharmaceutical division of JT acquired a non-exclusive, perpetual license to 
apply certain of Chiron's combinatorial chemistry technologies in JT's 
research and product development programs.  In addition, during the third 
quarter of 1996, Chiron received $1.8 million from Ribozyme Pharmaceuticals 
Inc. for Chiron's expenditures on various gene therapy and delivery research 
projects.

     Other revenues consist principally of product royalties, laboratory 
services, and sales fees earned by the Company for sales and marketing 
services rendered on behalf of Ciba.  Other revenues increased in the third 
quarter and first nine months of 1996 primarily due to increased sales fees 
received from Ciba for sales of Aredia-Registered Trademark- (pamidronate 
disodium for injection), as well as increased nucleic acid probes reference 
laboratory service revenues and royalties to Chiron from Schering's European 
sales of Betaferon-TM-.   Chiron currently promotes Aredia-Registered 
Trademark- for Ciba on an exclusive basis in the U.S. under the terms of a 
contract which expires in March 1997.  Ciba has informed Chiron that Ciba 
will resume marketing of the product following the expiration of the 
contract.  Chiron and Ciba are negotiating the transition of the marketing 
responsibilities for Aredia-Registered Trademark-, including whether Chiron 
will have any ongoing role in the promotion of the product.

COSTS AND EXPENSES

     Gross profit margins during the third quarters of 1996 and 1995 remained
constant at 55 percent of product sales.  Increases in gross profit margins
resulting from the receipt of secondary revenues from Berlex's net sales of
Betaseron-Registered Trademark- and sales of immunodiagnostic assays and
branched DNA probes were offset by reduced margins resulting from sales of
clinical chemistry products and a change in the mix of vaccine product sales.
On a year-to-date basis, however, gross profit margins increased in 1996 to 57
percent from 55 percent in 1995 due to secondary revenues related to Betaseron
-Registered Trademark- sales; improved margins arising from changes in the
sales mix of ophthalmic products and non-recurring 1995 costs resulting from
the acquisition of IOLAB; and sales of immunodiagnostic assays and branched
DNA probes.  These increases were partially offset by reduced margins
resulting from sales of clinical chemistry products, a change in the mix of
vaccine product sales and costs arising during the second quarter of 1996 of
temporarily idled manufacturing facilities in Italy.  Gross margin percentages
may fluctuate significantly in future periods as the Company's product mix
continues to evolve and as the costs of new facilities are included in cost of
goods sold.

     Research and development expenses increased slightly in the third quarter
and first nine months of 1996, as compared to 1995, partially due to the
Company's acquisition of Chiron Viagene in September 1995.  Chiron Viagene is
engaged in the discovery and development of gene transfer drugs for the
treatment of severe viral infections, cancers and other diseases and added
$4.7 million and $13.8 million of research and development expense during the
third quarter and first nine months of 1996, respectively.  In addition,
vaccine research and development expense increased by $6.8 million and $15.3
million during the third quarter and first nine months of 1996, respectively,
primarily due to Chiron's effort to obtain FDA approval of its DTaP vaccine.
During the third quarter and first nine months of 1996, diagnostic research
and development expenses increased by $7.0 million and $5.0 million,
respectively, as compared to the comparable periods in 1995, due to continued
improvements of existing immunodiagnostic instrument systems and continued
development of branched DNA probe tests, used to quantify levels of virus and
other indicators of disease.  Partially offsetting these increases is a $3.0
million reduction in September 1996 arising from the annual collaboration
accounting with G.D. Searle & Co. ("Searle"), related to research and
development costs of tissue factor pathway inhibitor products.

     Further offsetting these increases to research and development expense
during the three-month and nine-month periods ended September 30, 1996 are the
following items, recognized as research and development expense pursuant to
collaborative arrangements with other pharmaceutical and biotechnology
companies during the comparable periods in 1995:

                                      21
<PAGE>

-    Chiron paid $16.4 million to Cephalon, Inc. in the third quarter of 1995
     related to the funding of certain collaboration expenses and the purchase
     of additional program rights;

-    The Company paid $8.8 million to Searle for the development and marketing
     of tissue factor pathway inhibitor products;

-    Chiron made a $3.5 million milestone payment to DepoTech Corporation
     ("DepoTech") for the research, development and marketing of products
     incorporating certain drug delivery technologies developed by DepoTech;

-    An initial license payment of $2.5 million was paid by Chiron to
     Progenitor, Inc. ("Progenitor"), pursuant to a collaboration for the
     development and commercialization of therapeutic and vaccine products
     incorporating Progenitor's proprietary gene therapy technology;

-    The Company reached an agreement with Genelabs Technologies, Inc.
     ("Genelabs"), whereby Chiron and Genelabs cross-licensed certain rights to
     HCV, hepatitis G virus, human T-cell leukemia virus - I and human T-cell 
     leukemia virus - II diagnostic tests.  From payments totaling $8.5 million,
     approximately $6.4 million was recognized as expense during the first nine
     months of 1995;

-    Chiron made payments totaling $5.0 million to New York University ("NYU")
     under an agreement whereby Chiron and its sublicensee, Ciba, acquired 
     certain rights to NYU's optical gene mapping technology.

     Additionally,  Chiron, together with Johnson & Johnson ("J & J"), 
co-funded the development and introduction of a home HIV testing service 
business, Direct Access Diagnostics, and has had an option to participate as 
an equal partner with J&J in this business.  As a result of an adverse 
arbitration decision and subsequent affirming court decision, J&J must 
transfer the business and certain assets of the Direct Access Diagnostics 
business to a third party. Accordingly, Chiron does not currently expect to 
participate in the further development of this business opportunity.  The 
Company is discussing with J&J a resolution of its previous interest.

     Selling, general and administrative ("SG&A") expenses increased during 
the three-month and nine-month periods ended September 30, 1996 as compared 
to the comparable periods in 1995.  SG&A expenses in 1996 were higher due to 
selling and marketing costs to support Chiron's vaccine, immunodiagnostic and 
branched DNA probes products; Chiron's new Vitrasert-TM- Implant product; and 
due to increased costs in the ophthalmic business resulting from the 
acquisition of IOLAB, including costs related to an expanded international 
sales force. Selling and marketing expenses continue to represent the largest 
portion of total SG&A expenses, as Chiron devoted significant resources to 
support sales volumes in its product lines.

     The write-off of purchased in-process technology during the third quarter
of 1995 consists primarily of $130.3 million related to the acquisition of
Chiron Viagene in September 1995.  During the nine months ended September 30,
1995, the write-off of purchased in-process technology also consists of $222.6
million for the acquisitions from Ciba of Chiron Diagnostics Corporation
("Chiron Diagnostics"), formerly Ciba Corning Diagnostics Corp., and
Ciba's interests in Chiron Biocine and Chiron Vaccines Company ("Chiron
Vaccines"), formerly The Biocine Company; $10.3 million for the acquisition of
IOLAB; and $1.8 million from an increase in Chiron's ownership of Technolas
GmbH, a German laser ophthalmic business.

     In 1995, costs related to the Ciba transaction consist primarily of
employee payments and related tax liabilities and legal and investment advisor
fees.

     Restructuring and reorganization costs for the first nine months of 1995
represent certain accrued costs of integrating the acquired businesses with
Chiron's existing businesses, costs related to the idling of the Company's
Puerto Rico manufacturing facility and the scaling-back of manufacturing
operations at the Company's Amsterdam facility, and costs related to the
write-down of duplicate facilities at the Company's Emeryville, California,
headquarters.  Also included was a charge related to the change in plans to
expand the Company's Emeryville research and administrative facilities.

OTHER ITEMS

     Other expense, net, consists primarily of investment income on
the Company's cash and investment balances and interest expense on outstanding
debt and capital lease obligations. Other expense, net, was
negatively effected during the third quarter of 1996 by increased interest
expense as a result of increased debt borrowings, and reduced investment
income arising from lower cash balances in the Company's investment portfolio.
Comparatively, other expense, net, during the third quarter of 1995
includes a $3.0 million gain on the sale of property.  On a year-to-date
comparative basis, the other expense, net, balance reflects lower
investment income amounts.  This decrease was more than offset by a $12.2
million gain arising from the sale of the Company's

                                      22

<PAGE>

one-half interest in a generic cancer chemotherapeutics business, effective 
May 1, 1996.

     Through completion of the sale, Chiron recognized in 1996 $1.9 million of
equity in earnings of joint businesses from its one-half interest in the
generic cancer chemotherapeutics business that is described above. During the
nine months ended September 30, 1995, Chiron recognized $2.5 million of equity
in earnings.

     The provision for income taxes in the third quarter and the first nine
months of 1996 is based on an estimated annual effective income tax rate.  The
provision for income taxes during the comparable periods in 1995 was
comprised primarily of foreign taxes on certain foreign operations of the
Company.  Substantially all of the write-off of purchased in-process
technologies was not deductible for income tax purposes and thus did not
create a tax benefit in 1995.

LIQUIDITY AND CAPITAL RESOURCES

     Chiron's capital requirements are generally funded from public and
private sales of debt and equity.  In addition to these sources of capital,
future capital requirements may be financed through a combination of debt,
utilization of research funding from Ciba, possible off-balance sheet
financing (such as R&D limited partnerships and operating leases), and the use
of existing cash and investment balances.  Until required for operations,
Chiron's policy is to keep its cash and investments, which totaled
approximately $129.8 million at September 30, 1996, in a diversified portfolio
of investment grade financial instruments, including money market instruments,
corporate notes and bonds, government or government agency securities, or
other debt securities.  By policy, the amount of credit exposure to any one
institution is limited. These investments are generally not collateralized and
primarily mature within three years.  Investments with maturities in excess of
one year are presented on the balance sheet as noncurrent investments.

     Chiron attempts to reduce its exposure to fluctuations in foreign
currency exchange rates by entering into forward currency contracts
("forwards") and average rate put options ("options").  Forwards are used to
hedge balance sheet exposure resulting from completed transactions denominated
in a foreign currency, and options are used to hedge anticipated transactions.
Forward contracts are settled monthly and currently outstanding option
contracts mature within three months.  As of September 30, 1996, the Company
held forward and option contracts totaling $69.9 million and $19.1 million,
respectively.

     In future periods, Chiron expects to incur substantial capital
spending consistent with the Company's commitment to expand its manufacturing
capacity for specific products.  During the nine months ended September 30,
1996, Chiron continued the expansion of certain vaccine production facilities
in Italy as well as the expansion of its research and development and certain
administrative facilities in Emeryville.  The expansion of the Emeryville
facilities is projected to occur in stages over the next thirty years.  In
June 1996, Chiron entered into a seven-year operating lease agreement with a
group of financial institutions to rent a research and development facility to
be constructed as part of the Emeryville expansion project.  Under the terms
of this agreement, the financial institutions have committed $195.0 million
towards the total construction cost of the project.  No lease payments will
be required during the construction period which is expected to last less
than three years.

     During 1996, Chiron expanded its short-term borrowing capacity by
entering into two separate one-year revolving, unsecured credit agreements
with major financial institutions for borrowing capabilities up to $50.0
million and $100.0 million, respectively.  These facilities bring the total
committed, unsecured short-term revolving credit facilities available to the
Company in the U.S. to $200.0 million.  These credit facilities in the U.S.
are guaranteed by Ciba and provide for various borrowing rate options,
as defined in the agreements.  As of September 30, 1996, $100.0 million was
outstanding under these facilities.

     During 1996, Chiron selectively entered into cross currency interest rate
swaps ("swaps") to modify the interest and/or currency characteristics
of specific outstanding debt obligations.  During the second quarter of 1996,
Chiron entered into a one-year swap agreement with a notional amount of $24.9
million, effectively converting debt denominated in U.S. dollars to Japanese
yen and lowering the effective variable interest rate.  During July 1996,

                                      23

<PAGE>

Chiron also entered into swap agreements that mature in July 2001 with an
aggregate notional amount of $112.6 million, effectively converting debt
denominated in U.S. dollars to German marks and modifying the interest rate
from a variable rate to a fixed German mark rate of 6.2%.

     In July 1996, Chiron purchased a 49 percent interest in the human 
vaccine business of Behringwerke AG, a subsidiary of Hoechst AG.  The total 
acquisition price was $119.0 million and includes costs directly related to 
the acquisition.  This amount is subject to adjustment pending the completion 
of an audited opening balance sheet.  Under the terms of the agreement, 
Chiron has an option to purchase the remaining 51 percent interest over the 
next five years and Behringwerke AG has the option to have Chiron acquire the 
remaining interest in March 2001.  During the period of mutual ownership, 
Chiron and Behringwerke AG will operate the vaccine business as a joint 
venture, which has been named Chiron Behring.  In addition, during September 
1996, Chiron invested $30.0 million in General Injectables & Vaccines, Inc. 
("GIV") for a combination of preferred stock and debt.  GIV will distribute 
and actively promote Chiron's vaccine products in the U.S.

     Chiron's liquidity may be further impacted in future periods by its
decision to fund its share of expenses in certain of its joint ventures and
collaboration agreements.  Over the next several years, Chiron anticipates
funding collaborations with a number of research partners, and may
make additional equity investments in collaborative partners.

     During the nine months ended September 30, 1996, cash and cash
equivalents decreased by $20.4 million.  Of this amount, $10.0 million was
provided by the Company's operating activities, compared to $57.0 million used
during the nine months ended September 30, 1995.

     Investing activities consumed cash of $148.7 million during the first
nine months of 1996, versus $28.1 million in 1995.  During 1996, net sales of
marketable debt securities and capital expenditures totaled $73.6 million
and $69.5 million, respectively, versus $156.7 million and $70.6 million,
respectively, during 1995.  Additionally, in 1995 Chiron received $14.2
million, net of cash paid, through its acquisition of Chiron Diagnostics,
Chiron Biocine and Chiron Vaccines and paid $95.0 million and $35.5 million in
cash for the acquisitions of IOLAB and Viagene, respectively.  During the
first nine months of 1996, Chiron received $14.0 million from the sale of its
one-half interest in a generic cancer chemotherapeutics business and paid
$114.3 million and $30.0 million for the Company's 49 percent interest in
Chiron Behring and investment in GIV, respectively.

     Cash provided by financing activities of $118.3 million during the nine
months ended September 30, 1996 reflects cash proceeds of $36.8 million
received from the exercise of stock options and issuance of stock under the
Company's employee stock purchase plan, and increased net debt borrowings
totaling $81.4 million.  Cash provided by financing activities of $69.2
million during the comparable period in 1995 includes approximately $13.8
million of net debt borrowings, $30.6 million related to the issuance of
common stock under the Company's employee benefit plans, and a capital
contribution of $24.8 million pursuant to the 1995 agreements with Ciba.

     Chiron believes that its cash and investments, funds provided by
operations, and funding arrangements discussed above, together with Ciba's
agreement in 1995 to guarantee $425.0 million of debt for Chiron and Chiron's
option to issue up to $500.0 million of new equity to Ciba, will be sufficient
to meet its cash requirements during the upcoming twelve months and through
the foreseeable future.

FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS

        Chiron wishes to caution stockholders and investors that the following
important factors, among others, in some cases have affected, and in the
future could affect, Chiron's actual results and could cause Chiron's actual
consolidated results for the fourth quarter of 1996, and beyond, to differ
materially from those expressed in any forward-looking statements made by, or
on behalf of, Chiron.  The statements under this caption are intended to serve
as cautionary statements within the meaning of the Private Securities
Litigation Reform Act of 1995.  The following information is not intended to
limit in any way the characterization of other statements or information under
other captions as cautionary statements for such purpose:

                                      24

<PAGE>

-      Delays, difficulties or failure in obtaining regulatory approval
       (including approval of its systems, procedures and facilities for
       production) for the Company's products.  These may include, for
       example, approval of the Company's Italian manufacturing facilities and
       processes as satisfying FDA requirements for production of the
       Company's DTaP vaccines, approval for Myotrophin, a drug under
       development by Chiron and Cephalon, Inc., for which additional clinical
       trials may be required by the FDA, and approval for Quantiplex-TM- for 
       HIV and follow-on bDNA probe products, for which the FDA may require 
       substantial additional process and systems validation.

-      Inability to maintain or initiate third party arrangements
       which generate revenues, in the form of license fees, research and
       development support, royalties, sales fees and other payments, in
       return for rights in technology or products under development or
       promotional or other services provided by the Company.

-      The issuance and use of patents and proprietary technology
       by Chiron and its competitors, including the possible negative effect
       on the Company's ability to develop, manufacture and sell its products
       if it is unable to obtain licenses to patents which may be required for
       such products.

-      Delays or difficulties in developing and acquiring technology and
       technical and managerial personnel to manufacture and/or deliver the
       Company's products in commercial quantities at reasonable costs and
       in compliance with applicable quality assurance and environmental
       regulations and governmental permitting requirements.

-      Possible changes in laws, regulations and guidelines of regulatory
       agencies, which may affect the scope, standards, timelines and sales of
       certain of the Company's products including, for example, off-label
       sales of pharmaceuticals and research use only sales of diagnostic
       instruments.

-      The ability and willingness of customers to substitute competitive
       products for the Company's products once other products for similar
       indications are approved for marketing.

-      Difficulties in obtaining key raw materials and supplies for the
       manufacture of the Company's products.

-      Increased costs of development, regulatory approval, manufacture,
       sales, and marketing associated with the introduction of novel products
       and fluctuation of such costs between periods.

-      Difficulties in launching or marketing the Company's products,
       many of which are novel products based on biotechnology, and
       unpredictability of customer acceptance of such products.

-      Decline in the Betaseron-Registered Trademark- customer base in
       the U.S.; the extent to which patients, once enrolled, remain compliant
       with the prescribed treatment regimen and continue to regularly receive
       Betaseron-Registered Trademark-; the impact of competing products, 
       including other beta interferon products; pricing, promotional and 
       marketing decisions by the Company's partner, Schering.

-      Continued lower product margins resulting from the Chiron-Ortho
       joint business' renegotiated contract with the American Red Cross;
       changes in the product mix whereby the proportion of higher margin HCV
       tests sold relative to other lower margin products is less;
       expanding sales of competing HCV tests by unlicensed third parties.

-      Continued increases in research and development spending in order
       to develop new products and increase market share.

-      Continued or increased pressure to reduce selling prices of the
       Company's products.

-      Underutilization of the Company's existing or new manufacturing
       facilities or of any facility expansions, resulting in production
       inefficiencies and higher costs; start-up costs and inefficiencies and
       delays and increased depreciation costs in connection with the start of
       production in new plants and expansions.

-      The cost of acquiring in-process technology, either by license,
       collaboration or purchase of another entity.

-      Increased financing costs resulting from the expanded use of debt
       for operating and acquisition-related activities.

-      Amount and rate of growth in Chiron's selling, general and
       administrative expenses; and the impact of unusual or infrequent
       charges resulting from Chiron's ongoing evaluation of its business
       strategies and organizational structures, including the continued costs
       of integration of newly acquired businesses.

-      The acquisition of fixed assets and other assets, including
       inventories and receivables; and the making or incurring of any
       expenditures and expenses, including, among others, depreciation and
       research and development expenses; any revaluation of assets,
       including, among others, the Company's investments in the equity
       securities of other companies with whom it collaborates, or
       related expenses, and the amount of, and any changes to, tax rates.

                                      25

<PAGE>

-      The ability or inability of Chiron to obtain, or hedge against,
       foreign currency, foreign exchange rates and fluctuations in those
       rates.

-      The costs and other effects of legal and administrative cases and
       proceedings (whether civil, such as product-related or environmental,
       or criminal); settlements and investigations; developments or
       assertions by or against Chiron relating to intellectual property
       rights and licenses.

-      Failure of corporate partners to commercialize successfully the
       Company's products or to retain and expand the markets served by the
       commercial collaborations; conflicts of interest, priorities and
       commercial strategies which may arise between the Company and such
       corporate partners.

-      Seasonal fluctuations in product sales and resulting gross margin
       amounts.

                                      26

<PAGE>

ITEM 1.   LEGAL PROCEEDINGS.

          Information responding to Item 1 is set forth in Part 1., Item 1., 
          Notes to Consolidated Financial Statements, Note 8. "Contingencies," 
          which information is incorporated herein by reference.

ITEM 2.   CHANGES IN SECURITIES.  None.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES.  None.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.  None.

ITEM 5.   OTHER INFORMATION.  None.

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K.

(a)  Exhibits.

     EXHIBIT
     NUMBER                   EXHIBIT
     -------                  -------
      2.01  Agreement and Plan of Merger, made as of February 6,
            1987, incorporated by reference to Exhibit 2.01 of the Registrant's
            Form 10-Q report for the period ended September 30, 1994.

      3.01  Restated Certificate of Incorporation of the Registrant, dated
            August 18, 1987, incorporated by reference to Exhibit 3.01 of
            the Registrant's Form 10-K report for fiscal year 1991.

      3.02  Certificate of Amendment of Restated Certificate of
            Incorporation of the Registrant, dated December 12, 1991,
            incorporated by reference to Exhibit 3.01 of the Registrant's Form
            10-K report for fiscal year 1991.

      3.03  Bylaws of the Registrant, as amended, incorporated by reference
            to Exhibit 3.03 of the Registrant's Form 10-K report for fiscal
            year 1994.

      3.04  Certificate of Amendment of Restated Certificate of
            Incorporation of the Registrant, dated May 21, 1996, incorporated by
            reference to Exhibit 3.04 of the Registrant's Form 10-Q report for
            the period ended June 30, 1996.

      4.01  Indenture, dated as of May 21, 1987, between Cetus Corporation
            and Bankers Trust Company, Trustee, incorporated by reference to
            Exhibit 4.01 of the Registrant's Form 10-Q report for the period
            ended September 30, 1994.

      4.02  First Supplemental Indenture, dated as of December 12, 1991, by
            and among Registrant, Cetus Corporation, and Bankers Trust
            Company, incorporated by reference to Exhibit 4.02 of the
            Registrant's Form 10-K report for fiscal year 1992.

      4.03  Second Supplemental Indenture, dated as of March 25, 1996, by
            and among the Registrant, Cetus Oncology Corporation (formerly
            Cetus Corporation), and Bankers Trust Company, incorporated by
            reference to Exhibit 4.03 of the Registrant's Form 10-Q report for
            the period ended June 30, 1996.

                                      27

<PAGE>

      4.04  Indenture, dated as of November 15, 1993, between Registrant
            and The First National Bank of Boston, as Trustee, incorporated by
            reference to Exhibit 4.03 of the Registrant's Form 10-K report for
            fiscal year 1993.

      4.05  Rights Agreement, dated as of August 25, 1994, between the
            Company and Continental Stock Transfer & Trust Company, which
            includes the Certificate of Designations for the Series A Junior
            Participating Preferred Stock as Exhibit A, the form of Right
            Certificate as Exhibit B and the Summary of Rights to Purchase
            Preferred Shares as Exhibit C, incorporated by reference to Exhibit
            4.04 of the Registrant's current report on Form 8-K dated 
            August 25, 1994.

      4.06  Amendment No. 1 to Rights Agreement dated as of November 20,
            1994, between Chiron Corporation and Continental Stock Transfer &
            Trust Company, incorporated by reference to Exhibit 4.05 of the
            Registrant's current report on Form 8-K, dated November 20, 1994.

      4.07  $1,000,000 County of Lorain, Ohio Variable Rate Industrial
            Revenue Bonds dated as of July 1, 1984, due July 1, 2014,
            incorporated by reference to Exhibit 4.06 of the Registrant's Form
            10-Q report for the period ended April 2, 1995. The Registrant
            agrees to furnish to the Commission upon request a copy of such
            agreement which it has elected not to file under the provisions of
            Regulation 601(b)(4)(iii).

      4.08  $1,000,000 Walpole Industrial Development Authority 6.75%
            Industrial Revenue Bonds dated as of July 1, 1979, due July 1, 2004,
            incorporated by reference to Exhibit 4.07 of the Registrant's Form
            10-Q report for the period ended April 2, 1995. The Registrant
            agrees to furnish to the Commission upon request a copy of such
            agreement which it has elected not to file under the provisions of
            Regulation 601(b)(4)(iii).

      4.09  Amendment No. 2 to Rights Agreement dated as of August 9,
            1996, between Chiron Corporation and Continental Stock Transfer &
            Trust Company, incorporated by reference to Exhibit 4.09 of the
            Registrant's Form 10-Q report for the period ended June 30, 1996.

      10.01 Lease between Registrant and BGR Associates, a California
            limited partnership, dated May 26, 1989, incorporated by reference
            to Exhibit 10.01 of the Registrant's Form 10-Q report for the period
            ended September 30, 1994.

      10.02 First Amendment to Lease between Registrant and BGR
            Associates, a California limited partnership, incorporated by
            reference to Exhibit 10.02 of the Registrant's Form 10-K report for
            fiscal year 1995.

      10.03 Lease between Registrant and BGR Associates II, a
            California limited partnership, dated May 26, 1989, incorporated by
            reference to Exhibit 10.02 of the Registrant's Form 10-Q report for
            the period ended September 30, 1994.

                                      28


<PAGE>

      10.04 First Amendment to Lease between Registrant and BGR
            Associates II, a California limited partnership, dated as of March
            15, 1995, incorporated by reference to Exhibit 10.04 of the
            Registrant's Form 10-K report for fiscal year 1995.

      10.05 Agreement and Plan of Merger dated as of April 23, 1995
            between Viagene, Inc., a Delaware corporation, and Chiron
            Corporation, incorporated by reference to Exhibit 10.67 of the
            Registrant's current report on Form 8-K dated April 24, 1995.

      10.06 Stockholders' Agreement dated as of April 23, 1995 among
            certain stockholders of Viagene, Inc., a Delaware corporation, and
            Chiron Corporation, incorporated by reference to Exhibit 10.68 of
            the Registrant's current report on Form 8-K dated April 24, 1995.

      10.07 Stock and Asset Purchase Agreement dated as of March 6,
            1995, by and among Johnson & Johnson, a New Jersey corporation, Site
            Microsurgical Systems, Inc., a Pennsylvania corporation, and Chiron
            Corporation and Amendment No. 1 to Stock and Asset Purchase
            Agreement, entered into March 31, 1995 by and among Johnson &
            Johnson, Site Microsurgical Systems, Inc. and Chiron Corporation,
            incorporated by reference to Exhibit 10.05 of the Registrant's Form
            10-Q report for the period ended April 2, 1995.

      10.08 Revolving Credit Facility dated as of March 24, 1995,
            between Chiron Corporation and Swiss Bank Corporation, San Francisco
            Branch, incorporated by reference to Exhibit 10.06 of the
            Registrant's Form 10-Q report for the period ended April 2, 1995.

      10.09 Joint Venture Agreement by and between Chiron Biocine
            Corporation, a California corporation, and CIBA-GEIGY Biocine
            Corporation, a Delaware corporation, dated April 15, 1987 (with
            certain confidential information deleted), incorporated by reference
            to Exhibit 10.23 of the Registrant's Form 8 filed with the
            Commission on February 14, 1992.

      10.10 Amendment to Biocine Joint Venture Agreement by and
            between Chiron Biocine Corporation, a California corporation, and
            CIBA-GEIGY Biocine Corporation, a Delaware corporation, effective as
            of January 1, 1992, incorporated by reference to Exhibit 10.63 to
            Registrant's Form 10-Q report for the period ended June 30, 1992.

      10.11 Research and License Agreement by and between Registrant
            and The Biocine Company, a Delaware partnership, dated April 15,
            1987 (with certain confidential information deleted), incorporated
            by reference to Exhibit 10.24 of the Registrant's Form 8 filed with
            the Commission on February 14, 1992.

      10.12 License Agreement by and between CIBA-GEIGY Biocine
            Corporation, a Delaware corporation, and The Biocine Company, a
            Delaware partnership, dated April 15, 1987 (with certain
            confidential information deleted), incorporated by reference to
            Exhibit 10.25 of the Registrant's Form 8 filed with the Commission
            on February 14, 1992.

                                      29

<PAGE>

      10.13 License Agreement by and between Chiron Biocine
            Corporation, a California corporation, and The Biocine Company, a
            Delaware partnership, dated April 15, 1987 (with certain
            confidential information deleted), incorporated by reference to
            Exhibit 10.26 of the Registrant's Form 8 filed with the Commission
            on February 14, 1992.

      10.14 Letter Agreement signed by CIBA-GEIGY Corporation, dated
            April 15, 1987, incorporated by reference to Exhibit 10.13 of the
            Registrant's Form 10-Q report for the period ended September 30,
            1994.

      10.15 Agreement between the Registrant and Ortho Diagnostic
            Systems, Inc., a New Jersey corporation, dated August 17, 1989, and
            Amendment to Collaboration Agreement between Ortho Diagnostic
            Systems, Inc. and Registrant, dated December 22, 1989 (with certain
            confidential information deleted), incorporated by reference to
            Exhibit 10.14 of the Registrant's Form 10-Q report for the period
            ended September 30, 1994.

      10.16 License and Supply Agreement between Ortho Diagnostic
            Systems, Inc., a New Jersey corporation, the Registrant and Abbott
            Laboratories, an Illinois corporation, dated August 17, 1989 (with
            certain confidential information deleted), incorporated by reference
            to Exhibit 10.15 of the Registrant's Form 10-Q report for the
            quarter ended June 30, 1994.

      10.17 Chiron 1991 Stock Option Plan, as amended, incorporated by
            reference to Annex 2 of the Registrant's Proxy Statement dated 
            April 11, 1996.*

      10.18 Forms of Option Agreements, Chiron 1991 Stock Option Plan,
            as amended, incorporated by reference to Exhibit 10.17 of the
            Registrant's Form 10-K report for fiscal year 1993.*

      10.19 Form of Automatic Share Right Agreement, Chiron 1991 Stock
            Option Plan, as amended.

      10.20 Forms of Option Agreements, Cetus Corporation Amended and
            Restated Common Stock Option Plan, incorporated by reference to
            Exhibit 10.33 of Registrant's Form 10-K report for fiscal year
            1991.*

      10.21 Forms of Supplemental Letter concerning the assumption of
            Cetus Corporation options by Chiron, incorporated by reference to
            Exhibit 10.34 of Registrant's Form 10-K report for fiscal year
            1991.*

      10.22 Indemnification Agreement between the Registrant and Dr.
            William J. Rutter, dated as of February 12, 1987 (which form of
            agreement is used for each member of Registrant's Board of
            Directors), incorporated by reference to Exhibit 10.21 of the
            Registrant's Form 10-Q report for the period ended September 30,
            1994.

      10.23 Stock Purchase Agreement by and between the Registrant and
            Johnson & Johnson Development Corporation, a corporation organized
            and existing under the laws of the State of New Jersey, dated as of
            October 3, 1986, incorporated by reference to Exhibit 10.22 of the
            Registrant's Form 10-Q report for the period ended September 30,
            1994.

                                      30

<PAGE>

      10.24 Revolving Credit Agreement, dated as of July 12, 1996,
            between Registrant and Bank of America National Trust and Savings
            Association, incorporated by reference to Exhibit 10.24 of the
            Registrant's Form 10-Q report for the period ended June 30, 1996.

      10.25 Form of Debenture Purchase Agreement between the
            Registrant and CIBA-GEIGY, Limited, a Swiss corporation, dated June
            22, 1990, incorporated by reference to Exhibit 10.25 of the
            Registrant's Form 10-K report for fiscal year 1994.

      10.26 Chiron Corporation 1.90% Convertible Subordinated Note due
            2000, Series B, incorporated by reference to Exhibit 10.25 of the
            Registrant's Form 10-K report for fiscal year 1993.

      10.27 Investment Agreement dated as of November 20, 1994 among
            Ciba-Geigy Limited, Ciba-Geigy Corporation, Ciba Biotech
            Partnership, Inc. and Chiron Corporation, incorporated by reference
            to Exhibit 10.54 of the Registrant's current report on Form 8-K
            dated November 20, 1994.

      10.28 Governance Agreement dated as of November 20, 1994 among
            Ciba-Geigy Limited, Ciba-Geigy Corporation and Chiron Corporation,
            incorporated by reference to Exhibit 10.55 of the Registrant's
            current report on Form 8-K dated November 20, 1994.

      10.29 Subscription Agreement dated as of November 20, 1994 among
            Ciba-Geigy Limited, Ciba-Geigy Corporation, Ciba Biotech
            Partnership, Inc. and Chiron Corporation, incorporated by reference
            to Exhibit 10.56 of the Registrant's current report on Form 8-K
            dated November 20, 1994.

      10.30 Cooperation and Collaboration Agreement dated as of
            November 20, 1994, between Ciba-Geigy Limited and Chiron
            Corporation, incorporated by reference to Exhibit 10.57 of the
            Registrant's current report on Form 8-K dated November 20, 1994.

      10.31 Registration Rights Agreement dated as of November 20,
            1994 between Ciba Biotech Partnership, Inc. and Chiron Corporation,
            incorporated by reference to Exhibit 10.58 of the Registrant's
            current report on Form 8-K dated November 20, 1994.

      10.32 Market Price Option Agreement dated as of November 20,
            1994 among Ciba-Geigy Limited, Ciba-Geigy Corporation, Ciba Biotech
            Partnership, Inc. and Chiron Corporation, incorporated by reference
            to Exhibit 10.59 of the Registrant's current report on Form 8-K
            dated November 20, 1994.

      10.33 Amendment dated as of January 3, 1995 among Ciba-Geigy
            Limited, Ciba- Geigy Corporation, Ciba Biotech Partnership, Inc. and
            Chiron Corporation, incorporated by reference to Exhibit 10.60 of
            the Registrant's current report on Form 8-K dated January 4, 1995.

      10.34 Supplemental Agreement dated as of January 3, 1995 among
            Ciba-Geigy Limited, Ciba-Geigy Corporation, Ciba Biotech
            Partnership, Inc. and Chiron Corporation, incorporated by reference
            to Exhibit 10.61 of the Registrant's current report on Form 8-K
            dated January 4, 1995.

                                      31


<PAGE>

      10.35 Amendment with Respect to Employee Stock Option
            Arrangements dated as of January 3, 1995 among Ciba-Geigy Limited,
            Ciba-Geigy Corporation, Ciba Biotech Partnership, Inc. and Chiron
            Corporation, incorporated by reference to Exhibit 10.62 of the
            Registrant's current report on Form 8-K dated January 4, 1995.*

      10.36 Supplemental Benefits Agreement, dated July 21, 1989,
            between the Registrant and Dr. William J. Rutter, incorporated by
            reference to Exhibit 10.27 of the Registrant's Form 10-Q report for
            the period ended September 30, 1994.*

      10.37 Lease dated as of July 1, 1983 between Cetus Corporation
            and H.B. Chapman, Jr., incorporated by reference to Exhibit 10.28 of
            the Registrant's Form 10-Q report for the period ended September 30,
            1994.

      10.38 Amendment to Lease, made as of March 20, 1990, amending
            Lease dated July 1, 1983, between Harold B. Chapman, Jr. and Cetus
            Corporation, incorporated by reference to Exhibit 10.37 of the
            Registrant's Form 10-Q report for the period ended April 2, 1995.

      10.39 Second Amendment to Lease made as of January 1, 1995
            between Harold B. Chapman, Jr. and the Registrant, incorporated by
            reference to Exhibit 10.39 of the Registrant's Form 10-K report for
            fiscal year 1995.

      10.40 Option Agreement between Harold B. Chapman, Jr., and the
            Registrant, dated January 1, 1995 and Letter dated February 28, 1996
            to Harold B. Chapman, Jr.

      10.41 Lease commencing March 1, 1987, between EuroCetus B.V. and
            the Municipal Land Company of the City of Amsterdam (Translation),
            incorporated by reference to Exhibit 10.40 of the Registrant's Form
            10-K report for fiscal year 1995.

      10.42 Form of Option Agreement (with Purchase Agreements
            attached thereto) between Cetus Corporation and each former limited
            partner of Cetus Healthcare Limited Partnership, a California
            limited partnership, incorporated by reference to Exhibit 10.31 of
            the Registrant's Form 10-Q report for the period ended September 30,
            1994.

      10.43 Form of Option Agreement (with forms of Purchase
            Agreements attached thereto), dated December 30, 1986, between Cetus
            Corporation and each former limited partner of Cetus Healthcare
            Limited Partnership II, a California limited partnership,
            incorporated by reference to Exhibit 10.32 of the Registrant's Form
            10-Q report for the period ended September 30, 1994.

      10.44 Big-O Property Purchase and Leaseback Agreement, dated as
            of October 31, 1988, between Cetus Corporation and Richard K.
            Robbins, incorporated by reference to Exhibit 10.33 of the
            Registrant's Form 10-Q report for the period ended September 30,
            1994.

                                      32

<PAGE>

      10.45 Triple Net Lease dated as of January 20, 1989, between
            Cetus Corporation and BGR Associates III, a California limited
            partnership, and Marin County Exchange Corporation, incorporated by
            reference to Exhibit 10.34 of the Registrant's Form 10-Q report for
            the period ended September 30, 1994.

      10.46 License Agreement between the Registrant and the Board of
            Trustees of the Leland Stanford Junior University, dated December
            15, 1981, incorporated by reference to Exhibit 10.07 of the
            Registrant's Form 10-Q report for the period ended September 30,
            1994.

      10.47 Stock Purchase and Warrant Agreement dated May 9, 1989,
            between Cetus Corporation and Hoffmann-La Roche Inc., incorporated
            by reference to Exhibit 10.36 of the Registrant's Form 10-Q report
            for the period ended September 30, 1994.

      10.48 Letter Agreement, dated as of December 12, 1991, relating
            to Stock Purchase and Warrant Agreement between Registrant and
            Hoffmann-La Roche Inc., incorporated by reference to Exhibit 10.59
            of Registrant's Form 10-K report for fiscal year 1991.

      10.49 Letter Agreement dated September 26, 1990 between the
            Registrant and William G. Green, incorporated by reference to
            Exhibit 10.41 of the Registrant's Form 10-K report for fiscal year
            1992.*

      10.50 Letter Agreement dated December 18, 1991 between
            Registrant and Jack Schuler, incorporated by reference to Exhibit
            10.42 of the Registrant's Form 10-K report for fiscal year 1992.*

      10.51 Lease between Sclavo S.p.A. and Biocine Sclavo S.p.A.,
            dated January 7, 1992, incorporated by reference to Exhibit 10.49 of
            the Registrant's Form 10-Q report for the period ended April 2,
            1995.

      10.52 Agreement made as of November 11, 1993 by and between
            Kodak Clinical Diagnostics Limited, a company registered in England,
            and Ciba Corning Diagnostics Corp., a Delaware corporation, and
            Letter dated October 7, 1994 from Kodak Clinical Diagnostics Limited
            to Ciba Corning Diagnostics Corp., incorporated by reference to
            Exhibit 10.50 of Amendment No. 1 to the Registrant's Form 10-Q
            report for the period ended April 2, 1995. [Certain information has
            been omitted from the Agreement pursuant to a request by Registrant
            for confidential treatment pursuant to Rule 24b-2.]

      10.53 Regulatory Filing, Development and Supply Agreement
            between the Registrant, Cetus Oncology Corporation, a wholly-owned
            subsidiary of the Registrant, and Schering AG, a German company,
            dated as of May 10, 1993 (with certain confidential information
            deleted), incorporated by reference to Exhibit 10.50 of the
            Registrant's current report on Form 8-K dated February 9, 1994.

      10.54 Description of Executive Officer Variable Compensation
            Program, incorporated by reference to Exhibit 10.57 of the
            Registrant's Form 10-K report for fiscal year 1995.*

                                      33

<PAGE>

      10.55 Chiron Corporation 1995 Executive Officer Variable Cash
            Compensation Plan, incorporated by reference to Annex 2 of the
            Registrant's Proxy Statement dated April 18, 1995.*

      10.56 Amended and Restated License Agreement effective April 1,
            1996 between Ciba Corning Diagnostics Corp., a Delaware corporation,
            and Bioanalysis Limited, a corporation organized under the laws of
            the United Kingdom of Great Britain and Northern Ireland.  [Certain
            confidential information has been omitted from the Agreement and
            filed separately with the Securities and Exchange Commission
            pursuant to a request by Registrant for confidential treatment
            pursuant to Rule 24b-2.]

      10.57 Letter Agreement dated December 30, 1993 by and between
            Registrant and Schering AG, a German company (with certain
            confidential information deleted), incorporated by reference to
            Exhibit 10.51 of the Registrant's Form 10-K report for fiscal year
            1993.

      10.58 Guaranty, dated as of September 29, 1994, made by
            Registrant, in favor of Bankers Trust Company, as trustee,
            incorporated by reference to Exhibit 10.52 of the Registrant's Form
            10-Q report for the period ended September 30, 1994.

      10.59 Guaranty, dated as of September 29, 1994, made by Cetus
            Corporation, in favor of The First National Bank of Boston, as
            trustee, incorporated by reference to Exhibit 10.53 of the
            Registrant's Form 10-Q report for the period ended September 30,
            1994.

      10.60 Letter Agreements dated September 11, 1992, July 15, 1994
            and September 14, 1994 between the Registrant and Lewis T. Williams,
            incorporated by reference to Exhibit 10.54 of the Registrant's Form
            10-Q report for the period ended September 30, 1994.*

      10.61 Letters dated May 6, 1996 and May 25, 1996 to Magnus
            Lundberg.*

      10.62 Letter to Dino Dina dated April 24, 1984, incorporated by
            reference to Exhibit 10.66 of the Registrant's Form 10-K report for
            fiscal year 1994.*

      10.63 Research Agreement, dated as of July 15, 1985, between
            Ciba-Geigy Limited, a Swiss corporation, and Ciba Corning
            Diagnostics Corp., a Delaware corporation, incorporated by reference
            to Exhibit 10.64 of the Registrant's Form 10-Q report for the period
            ended April 2, 1995.

      10.64 Licensing Agreement, effective December 18, 1986, by and
            between Miles Laboratories, Inc., a Delaware corporation, and Ciba
            Corning Diagnostics Corp., a Delaware corporation, and Letter dated
            December 18, 1992 from Ciba Corning Diagnostics Corp. to Miles
            Laboratories, Inc., incorporated by reference to Exhibit 10.65 of
            Amendment No. 1 to the Registrant's Form 10-Q report for the period
            ended April 2, 1995.[Certain information has been omitted from the
            Agreement pursuant to a request by Registrant for confidential
            treatment pursuant to Rule 24b-2.]

                                      34


<PAGE>

      10.65 Magnetocluster Binding Assay Technology Agreement, dated
            as of January 21, 1983, by and between Bioclinical Group, Inc., a
            Delaware corporation, and Corning Glass Works, a New York
            corporation, incorporated by reference to Exhibit 10.66 of Amendment
            No. 1 to the Registrant's Form 10-Q report for the period ended
            April 2, 1995.  [Certain information has been omitted from the
            Agreement pursuant to a request by Registrant for confidential
            treatment pursuant to Rule 24b-2.]

      10.66 Turn-back License Agreement, dated as of May 30, 1986, by
            and between Ciba Corning Diagnostics Corp., a Delaware corporation,
            and Advanced Magnetics, Inc., a Delaware corporation, incorporated
            by reference to Exhibit 10.67 of the Registrant's Form 10-Q report
            for the period ended April 2, 1995. [Certain information has been
            omitted from the Agreement pursuant to a request by Registrant for
            confidential treatment pursuant to Rule 24b-2.]

      10.67 Settlement Agreement, dated August 30, 1989, between Ciba
            Corning Diagnostics Corp. and Advanced Magnetics, Inc., incorporated
            by reference to Exhibit 10.68 of the Registrant's Form 10-Q report
            for the period ended April 2, 1995.  [Certain information has been
            omitted from the Agreement pursuant to a request by Registrant for
            confidential treatment pursuant to Rule 24b-2.]

      10.68 Lease made and entered into December 17, 1984 between BGR
            Associates, a California limited partnership, and Cetus Corporation
            and Amendment to Lease dated December 17, 1984, entered into
            effective February 1, 1986, incorporated by reference to Exhibit
            10.69 of the Registrant's Form 10-Q report for the period ended
            April 2, 1995.

      10.69 Second Amendment to Lease dated as of March 15, 1995
            between BGR Associates, a California limited partnership, and
            Registrant, incorporated by reference to Exhibit 10.73 of the
            Registrant's Form 10-K report for fiscal year 1995.

      10.70 Agreement, effective as of December 21, 1988, by and
            between Hoffmann-La Roche Inc., a New Jersey corporation, and Cetus
            Corporation, incorporated by reference to Exhibit 10.70 of the
            Registrant's Form 10-Q report for the period ended April 2, 1995.
            [Certain information has been omitted from the Agreement pursuant to
            a request by Registrant for confidential treatment pursuant to Rule
            24b-2.]

      10.71 Agreement, effective as of December 21, 1988, by and among
            F. Hoffmann-La Roche Ltd., a Swiss corporation, Cetus Corporation,
            and EuroCetus International, B.V., a Netherlands Antilles
            corporation, incorporated by reference to Exhibit 10.71 of the
            Registrant's Form 10-Q report for the period ended April 2, 1995.
            [Certain information has been omitted from the Agreement pursuant to
            a request by Registrant for confidential treatment pursuant to Rule
            24b-2.]

                                      35

<PAGE>

      10.72 Agreement, by and between Cetus Oncology Corporation,
            EuroCetus International, N.V., and F. Hoffmann-La Roche Ltd.,
            incorporated by reference to Exhibit 10.72 of the Registrant's Form
            10-Q report for the period ended April 2, 1995. [Certain information
            has been omitted from the Agreement pursuant to a request by
            Registrant for confidential treatment pursuant to Rule 24b-2.]

      10.73 Agreement commencing January 1, 1991, between EuroCetus
            B.V. and the Municipal Development Corporation (Translation),
            incorporated by reference to Exhibit 10.41 of the Registrant's Form
            10-K report for fiscal year 1994.

      10.74 Settlement Agreement on Purified IL-2, made as of April
            14, 1995, by and between Cetus Oncology Corporation, dba Chiron
            Therapeutics, a Delaware corporation, and Takeda Chemical
            Industries, Ltd., a Japanese corporation, incorporated by reference
            to Exhibit 10.74 of the Registrant's Form 10-Q report for the period
            ended July 2, 1995.  [Certain information has been omitted from the
            Agreement pursuant to a request by Registrant for confidential
            treatment pursuant to Rule 24b-2.]

      10.75 License Agreement made and entered into December 1, 1987,
            by and between Sloan Kettering Institute for Cancer Research, a
            not-for-profit New York corporation, and Cetus Corporation,
            incorporated by reference to Exhibit 10.75 of the Registrant's Form
            10-Q report for the period ended July 2, 1995.  [Certain information
            has been omitted from the Agreement pursuant to a request by
            Registrant for confidential treatment pursuant to Rule 24b-2.]

      10.76 Chiron Funding L.L.C. Limited Liability Company Agreement,
            entered into and effective as of December 28, 1995, among the
            Registrant, Chiron Biocine Company and Biocine S.p.A. and Ciba-Geigy
            Corporation, incorporated by reference to Exhibit 10.80 of the
            Registrant's Form 10-K report for fiscal year 1995. [Certain
            information has been omitted from the Agreement and filed separately
            with the Securities and Exchange Commission pursuant to a request by
            Registrant for confidential treatment pursuant to Rule 24b-2.  The
            omitted confidential information has been identified by the
            following statement: "Confidential Treatment Requested".]

      10.77 Agreement between Ciba-Geigy Limited and the Registrant
            made November 15, 1995, incorporated by reference to Exhibit 10.81
            of the Registrant's Form 10-K report for fiscal year 1995.  [Certain
            information has been omitted from the Agreement and filed separately
            with the Securities and Exchange Commission pursuant to a request by
            Registrant for confidential treatment pursuant to Rule 24b-2.  The
            omitted confidential information has been identified by the
            following statement: "Confidential Treatment Requested".]

      10.78 Reimbursement Agreement dated as of March 24, 1995,
            between Ciba-Geigy Limited, a Swiss corporation, and the Registrant,
            incorporated by reference to Exhibit 10.76 of the Registrant's Form
            10-Q report for the period ended July 2, 1995.

                                      36

<PAGE>


      10.79 Promissory Note, as amended and restated, dated January 1,
            1995 by Ciba Corning Diagnostics Corp., incorporated by reference to
            Exhibit 10.83 of the Registrant's Form 10-K report for fiscal year
            1995.

      10.80 Commercial lease between Domilyon Corporation and Domilens
            Laboratories and Amendment No. 1 to Commercial Lease dated May 9,
            1994, incorporated by reference to Exhibit 10.84 of the Registrant's
            Form 10-K report for fiscal year 1995.

      10.81 Agreement between the Registrant and Cephalon, Inc. dated
            as of January 7, 1994, and Letter Agreements between the Registrant
            and Cephalon dated January 13, 1995 and May 23, 1995, incorporated
            by reference to Exhibit 10.85 of the Registrant's Form 10-K report
            for fiscal year 1995.  [Certain information has been omitted from
            the Agreements and filed separately with the Securities and Exchange
            Commission pursuant to a request by Registrant for confidential
            treatment pursuant to Rule 24b-2.  The omitted confidential
            information has been identified by the following statement:
            "Confidential Treatment Requested".]

      10.82 Reimbursement Agreement, dated as of June 28, 1996,
            between Ciba-Geigy Limited, a Swiss corporation, and the Registrant,
            incorporated by reference to Exhibit 10.94 of the Registrant's Form
            10-Q report for the period ended June 30, 1996.

      10.83 Reimbursement Agreement, dated as of May 20, 1996, between
            Ciba-Geigy Limited, a Swiss corporation, and the Registrant,
            incorporated by reference to Exhibit 10.95 of the Registrant's Form
            10-Q report for the period ended June 30, 1996.

      10.84 Letter Agreement between the Registrant and Dr. Richard W.
            Barker dated May 1, 1996, incorporated by reference to Exhibit 10.88
            of the Registrant's Form 10-Q report for the period ended June 30,
            1996.*

      10.85 Revolving Credit Agreement, dated as of March 23, 1996,
            between the Registrant and Morgan Guaranty Trust Company of New
            York, incorporated by reference to Exhibit 10.89 of the Registrant's
            Form 10-Q report for the period ended June 30, 1996.

      10.86 Purchase and Assignment Agreement between Behringwerke
            Aktiengesellschaft, on the one side, and 31. CORSA
            Verwaltungsgesellschaft mbH and the Registrant, on the other side,
            dated February 17, 1996, Closing Agreement, by and among
            Behringwerke Aktiengesellschaft, on the one side, and the Registrant
            and 31. CORSA Verwaltungsgesellschaft mbH, on the other side, dated
            June 29, 1996 and Letter Agreement dated June 29, 1996 between the
            Registrant, 31. CORSA Verwaltungsgesellschaft mbH and Behringwerke
            Aktiengesellschaft. [Certain confidential information has been
            omitted from the Agreements and filed separately with the Securities
            and Exchange Commission pursuant to a request by Registrant for
            confidential treatment pursuant to Rule 24b-2.]

                                      37

<PAGE>


      10.87 Royalty Projects Agreement by and between Ciba Corning
            Diagnostics Corp., a Delaware corporation, and Ciba-Geigy Limited, a
            Swiss corporation. [Certain confidential information has been
            omitted from the Agreement and filed separately with the Securities
            and Exchange Commission pursuant to a request by Registrant for
            confidential treatment pursuant to Rule 24b-2.]

      10.88 Purchase Agreement between BNP Leasing Corporation and the
            Registrant, dated June 28, 1996, incorporated by reference to
            Exhibit 10.90 of the Registrant's Form 10-Q report for the period
            ended June 30, 1996.


      10.89 Lease Agreement between BNP Leasing Corporation and the
            Registrant, dated June 28, 1996, incorporated by reference to
            Exhibit 10.91 of the Registrant's Form 10-Q report for the period
            ended June 30, 1996.

      10.90 Ground Lease between BNP Leasing Corporation and the
            Registrant, dated June 28, 1996, incorporated by reference to
            Exhibit 10.92 of the Registrant's Form 10-Q report for the period
            ended June 30, 1996.

      10.91 Reimbursement Agreement, dated as of July 12, 1996,
            between Ciba-Geigy Limited, a Swiss corporation, and the Registrant,
            incorporated by reference to Exhibit 10.93 of the Registrant's Form
            10-Q report for the period ended June 30, 1996.

      11    Statement of Computation of Earnings per Share.

      27    Financial Data Schedule.

------------------------------------------
*Management contract, compensatory plan or arrangement.

(b)    Reports on Form 8-K

     None.

                                      38

<PAGE>

                              CHIRON CORPORATION

                              September 30, 1996




                                  SIGNATURES


     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.




                                           CHIRON CORPORATION



DATE: November 12, 1996                    BY: /s/ Edward E. Penhoet
      ---------------------------------        --------------------------------
                                               Edward E. Penhoet
                                               President and Chief
                                               Executive Officer



DATE: November 12, 1996                    BY: /s/ Dennis L. Winger
      ---------------------------------        --------------------------------
                                               Dennis L. Winger
                                               Senior Vice President, 
                                               Finance and Administration,
                                               Chief Financial Officer, and
                                               Principal Accounting Officer

                                      39