<PAGE>   1
                                                                  EXHIBIT 10.79
                            ASSET PURCHASE AGREEMENT



                                     BETWEEN



                  SYNTEX PHARMACEUTICALS INTERNATIONAL LIMITED

                                       and

                       MEDICIS PHARMACEUTICAL CORPORATION
<PAGE>   2
                              TABLE OF CONTENTS

<TABLE>
<S>     <C>                                                           <C>
1.      DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . .  1

2.      ASSETS BEING SOLD . . . . . . . . . . . . . . . . . . . . . .  4
        2.1     Trademarks  . . . . . . . . . . . . . . . . . . . . .  4
        2.2     Registrations . . . . . . . . . . . . . . . . . . . .  4
        2.3     Manufacturing Technology and Know-How . . . . . . . .  4
        2.4     Trademark Agreements  . . . . . . . . . . . . . . . .  4
        2.5     Manufacturing Information . . . . . . . . . . . . . .  5
        2.6     Data Bank Documents . . . . . . . . . . . . . . . . .  5
        2.7     Worldwide Safety Reports  . . . . . . . . . . . . . .  5
        2.8     Assumption of Liabilities . . . . . . . . . . . . . .  5

3.      PURCHASE PRICE  . . . . . . . . . . . . . . . . . . . . . . .  5

4.      REPRESENTATIONS AND WARRANTIES OF SELLER  . . . . . . . . . .  5
        4.1     Organization  . . . . . . . . . . . . . . . . . . . .  5
        4.2     Authority . . . . . . . . . . . . . . . . . . . . . .  5
        4.3     Title to Assets . . . . . . . . . . . . . . . . . . .  6
        4.4     No Violation or Conflict  . . . . . . . . . . . . . .  6
        4.5     Registrations . . . . . . . . . . . . . . . . . . . .  6
        4.6     Patents . . . . . . . . . . . . . . . . . . . . . . .  7
        4.7     Taxes . . . . . . . . . . . . . . . . . . . . . . . .  7
        4.8     Financial Information . . . . . . . . . . . . . . . .  7
        4.9     Absence of Certain Changes  . . . . . . . . . . . . .  7
        4.10    Violations of Law . . . . . . . . . . . . . . . . . .  7
        4.11    No Government Restrictions  . . . . . . . . . . . . .  7
        4.12    Litigation  . . . . . . . . . . . . . . . . . . . . .  8
        4.13    Limitation of Warranty  . . . . . . . . . . . . . . .  8
        4.14    Trademarks  . . . . . . . . . . . . . . . . . . . . .  8
        4.15    Additional Representations  . . . . . . . . . . . . .  8

5.      REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . .  8
        5.1     Organization  . . . . . . . . . . . . . . . . . . . .  8
        5.2     Authority . . . . . . . . . . . . . . . . . . . . . .  8
        5.3     No Violation or Conflict  . . . . . . . . . . . . . .  8
        5.4     No Government Restrictions  . . . . . . . . . . . . .  9
        5.5     Litigation  . . . . . . . . . . . . . . . . . . . . .  9
        5.6     Financing . . . . . . . . . . . . . . . . . . . . . .  9

6.      SELLER'S COVENANTS  . . . . . . . . . . . . . . . . . . . . .  9
        6.1     Conduct of Business . . . . . . . . . . . . . . . . .  9
        6.2     Compliance with Laws  . . . . . . . . . . . . . . . . 10
        6.3     Disclosure Supplements  . . . . . . . . . . . . . . . 10
        6.4     Access; Investigation . . . . . . . . . . . . . . . . 10
        6.5     Further Assurances  . . . . . . . . . . . . . . . . . 10

7.      BUYER'S COVENANTS . . . . . . . . . . . . . . . . . . . . . . 11
        7.1     Transfer of Products  . . . . . . . . . . . . . . . . 11
        7.2     Labeling  . . . . . . . . . . . . . . . . . . . . . . 11
        7.3     Further Assurances  . . . . . . . . . . . . . . . . . 11
</TABLE>
<PAGE>   3
<TABLE>
<S>     <C>                                                          <C>
8.      COVENANTS BY BUYER AND SELLER . . . . . . . . . . . . . . . . 11
        8.1     Stability Studies . . . . . . . . . . . . . . . . . . 11
        8.2     Supply Agreement  . . . . . . . . . . . . . . . . . . 11
        8.3     Labeling  . . . . . . . . . . . . . . . . . . . . . . 11
        8.4     Use of Seller Trademarks  . . . . . . . . . . . . . . 11
        8.5     Assignment of Trademarks  . . . . . . . . . . . . . . 12
        8.6     Assignment of Registrations . . . . . . . . . . . . . 12
        8.7     Access to Information . . . . . . . . . . . . . . . . 12
        8.8     Confidentiality Agreement . . . . . . . . . . . . . . 12
        8.9     Press Releases  . . . . . . . . . . . . . . . . . . . 12
        8.10    Government Filings  . . . . . . . . . . . . . . . . . 13

9.      CONDITIONS PRECEDENT TO CLOSING . . . . . . . . . . . . . . . 13
        9.1     Conditions to Obligation of Buyer . . . . . . . . . . 13
                9.1.1   Representations and Warranties  . . . . . . . 13
                9.1.2   Performance . . . . . . . . . . . . . . . . . 13
                9.1.3   HSR Act Approvals . . . . . . . . . . . . . . 14
                9.1.4   No Adverse Change . . . . . . . . . . . . . . 14
                9.1.5   Officer's Certificate . . . . . . . . . . . . 14
                9.1.6   Litigation  . . . . . . . . . . . . . . . . . 14
                9.1.7   Authorization . . . . . . . . . . . . . . . . 14
                9.1.8   Proceedings and Instruments Satisfactory  . . 14
        9.2     Conditions to Obligations of Seller . . . . . . . . . 14
                9.2.1   Representations and Warranties  . . . . . . . 14
                9.2.2   Performance . . . . . . . . . . . . . . . . . 14
                9.2.3   HSR Act Approvals . . . . . . . . . . . . . . 15
                9.2.4   Officer's Certificate . . . . . . . . . . . . 15
                9.2.5   Litigation  . . . . . . . . . . . . . . . . . 15
                9.2.6   Authorization . . . . . . . . . . . . . . . . 15
                9.2.7   Proceedings and Instruments Satisfactory  . . 15

10.     THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . 15
        10.1    The Closing . . . . . . . . . . . . . . . . . . . . . 15
        10.2    Deliveries by Seller  . . . . . . . . . . . . . . . . 15
        10.3    Deliveries by Buyer . . . . . . . . . . . . . . . . . 16

11.     TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . 16
        11.1    Termination . . . . . . . . . . . . . . . . . . . . . 16
        11.2    Effect of Termination . . . . . . . . . . . . . . . . 17

12.     SURVIVAL; INDEMNIFICATION . . . . . . . . . . . . . . . . . . 17
        12.1    Survival of Representations; Remedy for Breach  . . . 17
        12.2    Indemnification by Seller . . . . . . . . . . . . . . 17
        12.3    Indemnification by Buyer  . . . . . . . . . . . . . . 18
        12.4    Limitations . . . . . . . . . . . . . . . . . . . . . 18
        12.5    Notice  . . . . . . . . . . . . . . . . . . . . . . . 18
        12.6    Participation in Defense  . . . . . . . . . . . . . . 18
        12.7    Settlements . . . . . . . . . . . . . . . . . . . . . 19
        12.8    Set-Off . . . . . . . . . . . . . . . . . . . . . . . 19

13.     NON-COMPETITION AND CONFIDENTIALITY . . . . . . . . . . . . . 19
        13.1    Non-Compete . . . . . . . . . . . . . . . . . . . . . 19
        13.2    Confidentiality . . . . . . . . . . . . . . . . . . . 20

14.     NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

15.     SYNACORT  . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
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<TABLE>
<S>     <C>                                                          <C>
16.     ARBITRATION AND GOVERNING LAW . . . . . . . . . . . . . . . . 21
        16.1    Generally . . . . . . . . . . . . . . . . . . . . . . 21
        16.2    Defenses and Bankruptcy . . . . . . . . . . . . . . . 21
        16.3    Commencement of Arbitration . . . . . . . . . . . . . 22
        16.4    Governing Law and Place of Arbitration  . . . . . . . 22
        16.5    Discovery and Other Matters . . . . . . . . . . . . . 22
        16.6    Hearing . . . . . . . . . . . . . . . . . . . . . . . 22
        16.7    Arbitrators Fees  . . . . . . . . . . . . . . . . . . 23

17.     ADDITIONAL TERMS  . . . . . . . . . . . . . . . . . . . . . . 23
        17.1    Brokers . . . . . . . . . . . . . . . . . . . . . . . 23
        17.2    Injunctive Relief . . . . . . . . . . . . . . . . . . 23
        17.3    Expenses  . . . . . . . . . . . . . . . . . . . . . . 23
        17.4    Attorneys' Fees . . . . . . . . . . . . . . . . . . . 23
        17.5    Successors and Assigns  . . . . . . . . . . . . . . . 23
        17.6    Entire Agreement  . . . . . . . . . . . . . . . . . . 24
        17.7    Amendments; No Waiver . . . . . . . . . . . . . . . . 24
        17.8    Counterparts  . . . . . . . . . . . . . . . . . . . . 24
        17.9    Severability  . . . . . . . . . . . . . . . . . . . . 24
        17.10   Captions  . . . . . . . . . . . . . . . . . . . . . . 24
</TABLE>
<PAGE>   5
                            ASSET PURCHASE AGREEMENT

         THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into on January 21, 1997 (the "Effective Date") by and between Syntex
Pharmaceuticals International Limited, a Bermuda corporation ("Seller") and
Medicis Pharmaceutical Corporation, a Delaware corporation ("Buyer").

         This Agreement sets forth the terms and conditions upon which Buyer is
purchasing from Seller and Seller is selling to Buyer the Assets (as hereinafter
defined).

         NOW THEREFORE, in consideration of the representations, warranties,
covenants and agreements set forth herein, the parties hereto agree as follows:


1.       DEFINITIONS

         1.1 "Active Ingredients" mean the pharmaceutical compounds fluocinolone
acetonide, fluocinonide, and hydrocortisone, and all salts and esters thereof.

         1.2 "Additional Trademarks" means the trademark/service mark
registrations and applications that are set forth on Schedule 0 together with
all records associated therewith.

         1.3 "Affiliate" of a party shall mean any individual, corporation or
other business entity (e.g. limited or general partnership, trust or estate,
joint venture or association) controlling, controlled by or under common control
with such party. "Control" (including "controlling", "controlled by" and "under
common control with") shall mean the direct or indirect ownership of more than
fifty percent (50%) of the voting or income interest in such party, corporation
or other business entity respectively. Notwithstanding the foregoing, Genentech,
Inc. ("Genentech") shall not be considered an Affiliate of Seller for the
purpose of this Agreement for so long as there are material restrictions on the
ability of Seller and its Affiliates to control Genentech.

         1.4 "ANDS" means an Abbreviated New Drug Submission, as such term is
defined by the Food and Drug Regulations issued pursuant to the Food and Drugs
Act and as interpreted by the HPB.

         1.5 "Assets" has the meaning ascribed to such term in Section 0.

         1.6 "Broker" has the meaning ascribed to such term in Section 16.1.

         1.7 "Business" means the business as currently conducted by Seller with
respect to manufacture and sale of the Products in the Territory.

         1.8 "Buyer Labeling" means the printed labels, labeling and packaging
materials, including printed carton, container label and package inserts, used
by Buyer and bearing Buyer's name for each Product.

         1.9 "cGMP's" means the then-current Good Manufacturing Practices
applicable to the manufacture of pharmaceutical products for human use in Canada
in accordance with the Food and Drug Regulations under the Food and Drugs Act.

         1.10 "Closing" has the meaning ascribed to such term in Section 0.
<PAGE>   6
         1.11 "Closing Date" has the meaning ascribed to such term in Section 0.

         1.12 "Closing Time" means 12:01 a.m. on the date of Closing.

         1.13 "Confidentiality Agreement" has the meaning ascribed to such term
in Section 0.

         1.14 "Damages" has the meaning ascribed to such term in Section 0.

         1.15 "Data Bank Documents" has the meaning ascribed to such term in
Section 0.

         1.16 "Disclosure Schedule" means the disclosure schedule delivered
prior to the Effective Date to Buyer by Seller in connection with this
Agreement. The sections of the Disclosure Schedule correspond to the sections of
this Agreement.

         1.17 "DIN" means the drug identification number.

         1.18 "DOJ" means the United States Department of Justice.

         1.19 "Effective Date" means January 21, 1997.

         1.20 "FTC" means the United States Federal Trade Commission.

         1.21 "HPB" means the applicable federal Canadian authorities and
agencies including the Health Protection Branch of Health Canada.

         1.22 "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations thereunder.

         1.23 "Indemnifiable Claims" has the meaning ascribed to such term in
Section 0.

         1.24 "Indemnified Party" has the meaning ascribed to such term in
Section 0.

         1.25 "Indemnifying Party" has the meaning ascribed to such term in
Section 0.

         1.26 "Know-How" has the meaning ascribed to such term in Section 0.

         1.27 "Law" means any federal, state, province, foreign, local or other
law, ordinance, rule, regulation, or governmental requirement or restriction of
any kind, and any rules, regulations, and orders promulgated thereunder.

         1.28 "Material Adverse Effect" means an event that has a material
adverse effect on the Assets, taken as a whole.

         1.29 "NDS" means a New Drug Submission, as such term is defined by the
Food and Drug Regulations issued pursuant to the Food and Drugs Act and as
interpreted by the HPB.

         1.30 "Net Sales" means the gross invoice amount of Products sold to
third parties, less (a) promotional and trade discounts; (b) sales and excise
taxes, value added and other taxes and insurance premiums and duties which are
billed to customers as separate items on invoices; (c) allowances for short-
<PAGE>   7
shipments and price adjustments; and (d) contract chargebacks and rebates,
government rebates, and returns (e.g., spoiled, damaged or outdated Products).

         1.31 "Patheon Agreement" means the agreement between Hoffmann-La Roche
Limited, a Canadian corporation, and Patheon to be entered into on January 31,
1997.

         1.32 "Patents" means any patent or patent application and any and all
divisions, continuations, continuations-in-part, reexaminations, reissues,
extensions, pending or granted supplementary protection, certificates,
substitutions, confirmations, registrations, revalidations, revisions, additions
and the like, of or to said patent and patent application.

         1.33 "PFC Agreement" means the Supply Agreement between Seller and
Pharmaceutical Fine Chemicals S.A. dated February 13, 1996.

         1.34 "Products" means each presentation of those finished
pharmaceutical products set forth in the Registrations.

         1.35 "Purchase Price" has the meaning ascribed to such term in Article
0.

         1.36 "Registrations" has the meaning ascribed to such term in Section
0.

         1.37 "Schedule" means a schedule to the Disclosure Schedule.

         1.38 "Supply Agreement" means the agreement referred to in Section 0.

         1.39 "Synacort Assets" means the Synacort License, the Synacort
Trademarks, and the Synacort Trademark Agreements.

         1.40 "Synacort License" has the meaning ascribed to such term in
Section 0.

         1.41 "Synacort NDSs" means the NDSs that are set forth on Schedule 0
and the regulatory records relating exclusively thereto.

         1.42 "Synacort Trademark" means the trademark registrations that are
set forth on Schedule 0 together with all records associated therewith.

         1.43 "Synacort Trademark Agreements" means those agreements set forth
on Schedule 0 to the extent such agreements relate to the Synacort Trademark.

         1.44 "Syntex Labeling" means the printed labels, labeling and packaging
materials, including printed carton, container label and package inserts,
currently used by Syntex for each Product.

         1.45 "Territory" means Canada.

         1.46 "Trademark Agreements" has the meaning ascribed to such term in
Section 0.

         1.47 "Trademarks" has the meaning ascribed to such term in Section 0.

2.       ASSETS BEING SOLD

         Subject to the terms and conditions of this Agreement, at Closing,
Seller shall sell, transfer, assign, convey and deliver to Buyer, its successors
<PAGE>   8
and assigns forever, to the extent contemplated herein, all of the right, title,
and interest of Seller in the assets listed below in the Territory
(collectively, the "Assets"), the Synacort Assets, and the Additional
Trademarks, and Buyer shall assume all rights, title, and interest of Seller in
the Assets, the Synacort Assets, and the Additional Trademarks.

         2.1 Trademarks. The trademark/service mark registrations and
applications that are set forth on Schedule 0 together with all records
associated therewith (the "Trademarks").

         2.2 Registrations. The NDSs and the ANDS that are set forth on Schedule
0 (the "Registrations") and the regulatory records relating exclusively thereto.

         2.3 Manufacturing Technology and Know-How. The manufacturing technology
and know-how that is exclusively used in manufacturing any Product ("Know-How")
and any documents which relate specifically and exclusively to such Know-How. In
addition, Seller shall grant Buyer a non-exclusive, perpetual, paid-up,
irrevocable, royalty-free, world-wide license, with right to sub-license, to use
any manufacturing technology and know-how that are necessary or used in
manufacturing any Product (but not exclusively used thereto) with such license
or sublicense being restricted to use for the Products, unless Buyer can
demonstrate by written records that such know-how was known prior to any
disclosure of such know-how by Seller or its Affiliates to Buyer or is now
public knowledge or becomes public knowledge in the future other than by breach
of any agreement between Buyer and its Affiliates and Seller and its Affiliates.

         2.4 Trademark Agreements. Seller shall assign and Buyer shall assume
all rights and obligations under those agreements set forth on Schedule 0 to the
extent such agreements relate to the Trademarks (the "Trademark Agreements").

         2.5 Manufacturing Information. Accurate and complete copies of the
current Manufacturing Worksheets and copies of the Manufacturing Quality
Assurance Notebooks with respect to the Products currently available, including
batch records, development reports (if existing), and other documents and
records embodying manufacturing information.

         2.6 Data Bank Documents. Right to obtain copies of and reference the
animal toxicology, animal mutagenicity, human clinical study and final reports,
and drug monograph/investigator brochures, a list of which is set forth on
Schedule 0 (the "Data Bank Documents").

         2.7 Worldwide Safety Reports. A hard copy of the Worldwide Safety
Reports with respect to Products.

         2.8 Assumption of Liabilities. The parties expressly acknowledge and
agree that (i) Buyer is not assuming or undertaking any liabilities relating to
or arising from the conduct of the Business, the sale or marketing of the
Products and/or the ownership or use of the Assets prior to the Closing; (ii)
Seller retains all such liabilities; and (iii) Buyer shall have no obligation to
Seller or any of its Affiliates or to any third party for any such liabilities.

3.       PURCHASE PRICE

         Subject to the terms and conditions of this Agreement, in reliance on
the representations, warranties, covenants and agreements of the Seller
contained herein, and in consideration of the sale, conveyance, assignment,
<PAGE>   9
transfer and delivery of the Assets provided for in Article 0 hereof, Buyer
shall deliver to Seller, in full payment for the aforesaid sale, conveyance,
assignment, transfer and delivery, the Purchase Price, consisting of: (i) two
million six hundred thousand United States dollars (US $2,600,000.00) payable to
Seller at Closing by bank wire transfer to Seller at such banking institution,
designated not less than five (5) days prior to Closing by Seller. Additional
payments of one hundred thousand United States dollars (US $100,000.00) shall be
delivered by Buyer to Seller at each of the first, second and third anniversary
of the Closing for a total of three (3) such additional payments ("Additional
Payments"). Each Additional Payment shall be reduced by fifty percent (50%) if
Net Sales in the Territory have decreased by more than twenty percent (20%)
during the twelve (12) months immediately preceding the corresponding
anniversary.

4.       REPRESENTATIONS AND WARRANTIES OF SELLER

         4.1 Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of Bermuda, with full corporate
power and authority to consummate the transactions contemplated hereby. Seller
has all requisite power and authority to own and operate the Assets being
conveyed by Seller pursuant to this Agreement and to carry on the activities
constituting the business.

         4.2 Authority. The execution and delivery of this Agreement by Seller
and the consummation and performance of the transactions contemplated hereby,
have been duly and validly authorized by all necessary corporate and other
proceedings, and this Agreement has been duly authorized, executed, and
delivered by Seller and, assuming the enforceability against Buyer, constitutes
the legal, valid and binding obligation of Seller, enforceable in accordance
with its terms except (i) if such enforcement would be subject to bankruptcy,
insolvency, reorganization, moratorium or similar laws effecting the rights of
creditors generally; and (ii) as specific performance and other equitable
remedies are subject to the general discretion of the court. The Supply
Agreement, and all other documents executed by Seller or its Affiliates and
delivered at the Closing, including those delivered pursuant to Section 0,
constitute a valid and binding obligation of Seller or the respective Affiliate
of Seller executing such documents enforceable in accordance with their
respective terms.

         4.3 Title to Assets. Except as set forth in Schedule 0, Seller has good
and marketable title to all the Assets and will convey good and marketable title
at Closing, free and clear of any and all liens, encumbrances, claims,
mortgages, leases, security interests, charges or restrictions. Notwithstanding
the foregoing, Seller retains the right to use and to transfer to other buyers
of the products containing any Active Ingredient outside the Territory
information that is similar or identical to that contained in the Registrations
and the Know-How; provided, however, that no such buyer has been expressly
granted by Seller or any Affiliate of Seller the right to sell, transfer or
distribute any of the products containing any Active Ingredient into the
Territory based on such Registrations and Know-How and neither Seller nor any
Affiliate shall expressly grant any buyer such right. Buyer acknowledges that
Seller cannot prevent such a buyer from using such information, including
registrations and know-how that is substantially similar to the Registrations
and Know-How, to sell, transfer or distribute such products in the Territory. In
addition, trademarks that are the same as or similar to the Trademarks may be
registered in other countries and may be either retained by Seller for its use
or sold to other buyers in either case, for use solely outside the Territory.
<PAGE>   10
         4.4 No Violation or Conflict. Seller's execution and delivery of this
Agreement and the other related documents delivered by Seller in connection with
transactions contemplated herein and the performance of this Agreement by Seller
(and the transactions contemplated herein) (a) do not and will not conflict
with, violate or constitute or result in a default or an event creating rights
of acceleration, termination, or cancellation, or a loss of right under any Law,
judgment, order, decree, the articles of incorporation or bylaws of Seller or
any mortgage, contract or agreement to which Seller is a party or by which
Seller is bound or (b) will not result in the creation or imposition of any
lien, charge, mortgage, claim, pledge, security interest, restriction or
encumbrance of any kind on, or liability with respect to, the Assets or the
Business except as otherwise provided herein or otherwise disclosed on the
Disclosure Schedule. None of the Trademark Agreements require the consent of any
third party to the assignment of such Trademark Agreement from Seller to Buyer;
provided, however, that with respect to the Patheon Agreement, Seller must give
prior written notice of any assignment to Patheon and Buyer must covenant in
writing with Patheon to be bound by the terms of the Patheon Agreement.

         4.5 Registrations. The Registrations are the only registrations
required by the HPB to sell and market the Products in the Territory. All
Products in Schedule 2.2 are registered and eligible for immediate sale without
regulatory limitations.

         4.6 Patents. There are no Patents with respect to the Active
Ingredients or Products in the Territory.

         4.7 Taxes. There are no liens for taxes upon the Assets except for
liens for current taxes not yet due and payable which shall remain the sole
obligation of the Seller.

         4.8 Financial Information. Seller and its Affiliates have no material
liabilities, contingent, absolute, accrued or otherwise, relating to the Assets,
other than as set forth in Schedule 0.

         4.9      Absence of Certain Changes.

                  4.9.1 Except as set forth in Schedule 0 or as otherwise set
forth in this Agreement, since December 16, 1996, there has not been any (i)
Material Adverse Effect or material adverse change in the financial condition or
results of operation of the Business, (ii) damage, destruction or loss which has
or may reasonably be expected to have a Material Adverse Effect, or (iii)
transaction or commitment outside the ordinary course of business with respect
to the Assets or the Business.

                  4.9.2 As of the date hereof and as of the Closing Date and
except as otherwise disclosed on Schedule 0, Seller is not aware of any facts,
circumstances, or proposed or contemplated events that could reasonably be
expected to have a Material Adverse Effect after Closing.

                  4.9.3 No default under any lease, agreement, contract or other
material arrangement relating to the Business, including but not limited to the
Patheon Agreement, the Paco Agreements, and the Trademark Agreements has been
declared and is continuing and, to Seller's knowledge, no condition exists
which, with notice or lapse of time or both, would constitute a default under
any such agreement. All of the such agreements are valid and subsisting and are
in full force and effect and, to Seller's knowledge, no claim exists or has been
asserted with respect to such agreements that would adversely effect the
Business. Seller has not received notice that any party to any such agreements
<PAGE>   11
intends to cancel or terminate such agreements or to exercise or not exercise
any options or rights under such agreements, or to resist any effort by Seller
or its successors to exercise or not exercise such options or rights.

         4.10 Violations of Law. Except as set forth in Schedule 0, neither the
operation of the Business nor the Assets (i) violates or conflicts with any
Registrations, any Law, governmental specification, authorization, or
requirement, or any decree, judgment, order, or similar restriction in any
material respect, or (ii) to the best of Seller's knowledge, has been the
subject of an investigation or inquiry by any governmental agency or authority
regarding violations or alleged violations, or found by any such agency or
authority to be in violation, of any Law.

         4.11 No Government Restrictions. Except as listed or described on
Schedule 0, no consent, approval, order or authorization of, or registration,
declaration or filing with, any governmental agency is required to be obtained
or made by or with respect to Seller in connection with the execution and
delivery of this Agreement by Seller or the consummation by it of the
transactions contemplated hereby to be consummated by it.

         4.12 Litigation. Except as set forth in Schedule 0 attached hereto or
as set forth on Schedules 0 and 0, neither the Business nor the Assets is the
subject of (i) any outstanding judgment, order, writ, injunction or decree of,
or settlement agreement with, any person, corporation, business entity, court,
arbitrator or administrative or governmental authority or agency, limiting,
restricting or affecting the Business, the Assets, or the Products in a way that
would have a Material Adverse Effect, (ii) any pending or, to the best of
Seller's knowledge, threatened claim (excluding the adverse drug reports set
forth in the Registrations), suit, proceeding, charge, inquiry, investigation or
action of any kind, and (iii) any court suits filed with respect to the Assets
since January 1, 1990.

         4.13 Limitation of Warranty. Seller will not warrant that buyers of
products outside the Territory that are substantially similar to or identical
with the Products will not attempt to register such products in the Territory.

         4.14 Trademarks. Each of the Trademarks being conveyed by this
Agreement is being conveyed free and clear of any liens, security interests and
other encumbrances and is freely assignable by Seller. Seller is not required,
and Buyer will not be required, to pay any royalty to any person with respect to
use of any of the Trademarks. Except as set forth in the Trademark Agreements,
the Trademarks do not infringe upon or conflict with the trademarks or other
rights of any third party in the Territory.

         4.15 Additional Representations. Seller owns no inventory of finished
Products, it does not sell Products to customers, and it has no agreements other
than the Trademark Agreements and the PFC Agreement that are material to the
Business.

5.       REPRESENTATIONS AND WARRANTIES OF BUYER

         5.1 Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, with full
corporate power and authority to consummate the transactions contemplated
hereby.

         5.2 Authority. The execution and delivery of this Agreement by Buyer,
and the consummation and performance of the transactions contemplated hereby,
have been duly and validly authorized by all necessary corporate and 
<PAGE>   12
other proceedings, and this Agreement has been duly authorized, executed, and
delivered by Buyer and, assuming the enforceability against Seller, constitutes
the legal, valid and binding obligation of Buyer, enforceable in accordance with
its terms except (i) if such enforcement would be subject to bankruptcy,
insolvency, reorganization, moratorium or similar laws effecting the rights of
creditors generally; and (ii) as specific performance and other equitable
remedies are subject to the general discretion of the court.

         5.3 No Violation or Conflict. The execution and delivery of this
Agreement by Buyer and the performance of this Agreement (and the transactions
contemplated herein) by Buyer do not and will not conflict with, violate or
constitute or result in a default under any Law, judgment, order, decree, the
articles of incorporation or bylaws of Buyer, or any contract or agreement to
which Buyer is a party or by which Buyer is bound.

         5.4 No Government Restrictions. Except as listed or described on
Schedule 0, no consent, approval, order or authorization of, or registration,
declaration or filing with, any governmental agency is required to be obtained
or made by or with respect to Buyer in connection with the execution and
delivery of this Agreement by Buyer or the consummation by it of the
transactions contemplated hereby to be consummated by it, except with respect to
the filing of a pre-merger notification report under the HSR Act.

         5.5 Litigation. To the best knowledge of Buyer, there are no claims,
actions, suits, proceedings or investigations pending or threatened by or
against Buyer with respect to the transactions contemplated hereby, at law or in
equity or before or by any federal, state, municipal or other governmental
department, commission, board, agency, instrumentality or authority.

         5.6 Financing. Buyer will have funds sufficient to pay the Purchase
Price on the Closing Date.

6.       SELLER'S COVENANTS

         6.1 Conduct of Business. Seller agrees that from the date hereof until
the Closing Date that, except as specifically disclosed in Schedule 0 or unless
otherwise consented to by Buyer in writing, Seller shall

                  6.1.1 maintain the Assets in good status and condition and not
sell or dispose of any Assets except sales of Products in the ordinary course of
business;

                  6.1.2 cause the Business to be conducted in the ordinary
course consistent with the practice over the past six (6) months and make all
reasonable efforts consistent with practices over the past six (6) months to
preserve the Assets and the reputation of the Business and the Products and to
preserve for Buyer the goodwill of suppliers, customers, distributors, and
others having relations with the Business.

                  6.1.3 not enter into any new, or amend any existing, contract,
commitment, or agreement relating to the Business, the Products or the Assets or
extend any credit or incur any obligation with respect to the conduct of the
Business or the Assets except (i) for the Patheon Agreement, (ii) or in the
ordinary course of business and consistent with past business practices;

                  6.1.4 not engage in any special pricing, rebate, allowance,
promotional or marketing programs inconsistent with past practices or for the
purpose of maintaining customer inventory levels of Product in excess of those
levels maintained in the past; 
<PAGE>   13
                  6.1.5 promptly inform Buyer of any change in the Business or
Assets that could reasonably be expected to have a Material Adverse Effect;

                  6.1.6 not subject any of the Assets or any part thereof to any
mortgage, pledge, security interest, encumbrance, lien or restriction of use or
suffer such to be imposed or license or grant to any other party the right to
use any of the Trademarks or any of the Know-How except for use outside the
Territory;

                  6.1.7 perform in all material respects all of its obligations
under any agreement with any third party relating to the Business, the Products,
or the Assets unless such third party is in default under such agreement; and

                  6.1.8 maintain its books of accounts and records relating to
the Business, the Products or the Assets in the usual, regular and ordinary
manner including, but not limited to, the maintenance of any and all documents
required by any federal or state regulatory agency or governmental body.

         6.2 Compliance with Laws. Seller shall comply in all material respects
with all Laws and in all respects with all orders of any court or federal,
state, local or other governmental entity applicable to the Business or the
Assets.

         6.3 Disclosure Supplements. From time to time following execution of
this Agreement but prior to the Closing Date, Seller will promptly inform Buyer,
in writing, of any matter that may arise hereafter and that, if existing or
occurring prior to the execution of this Agreement, would have been required to
be set forth or described herein or in the Disclosure Schedule.

         6.4 Access; Investigation. From and after the date hereof and up to
Closing, Buyer and its authorized agents, officers, and representatives shall
have reasonable access to the Business and the Assets and all records and
information related thereto (except for information that Seller is contractually
obligated not to disclose), during normal business hours upon reasonable prior
notice and at a time and manner mutually agreed upon between Buyer and Seller in
order to conduct such examination and investigation of the Assets and the
Business as Buyer shall reasonably deem necessary, provided that such
examinations shall not unreasonably interfere with Seller's operations and
activities.

         6.5 Further Assurances. Seller shall use all reasonable efforts to
implement the provisions of this Agreement, and for such purpose Seller, at the
request of Buyer, at or after Closing, will, without further consideration,
execute and deliver, or cause to be executed and delivered, to Buyer such deeds,
assignments, bills of sale, consents and other instruments in addition to those
required by this Agreement, in form and substance satisfactory to Buyer, as
Buyer may reasonably deem necessary or desirable to implement any provision of
this Agreement.

7.       BUYER'S COVENANTS

         7.1 Transfer of Products. Following Closing, Buyer shall use all
reasonable efforts and, except as otherwise set forth herein, at its own expense
to obtain as expeditiously as possible such governmental approvals and
registrations from the HPB, or similar regulatory authorities, as may be
necessary with respect to the manufacture and sale of the Products by Buyer or
its designee.
<PAGE>   14
         7.2 Labeling. Following Closing, Buyer shall at its own expense and as
expeditiously as possible use all reasonable efforts to obtain such HPB
approvals necessary for the Buyer Labeling for each Product.

         7.3 Further Assurances. Buyer shall use all reasonable efforts to
implement the provisions of this Agreement, and for such purpose Buyer, at the
request of Seller, at or after Closing, will, without further consideration,
execute and deliver, or cause to be executed and delivered, to Seller such
consents and other instruments in addition to those required by this Agreement,
in form and substance satisfactory to Seller, as Seller may reasonably deem
necessary or desirable to implement any provision of this Agreement.

8.       COVENANTS BY BUYER AND SELLER

         8.1 Stability Studies. As soon as possible following Closing, Buyer
shall qualify a site as a testing site for stability studies or request Patheon
to continue to conduct such stability studies at Buyer's expense, for Products
not manufactured by Patheon. Seller shall have no responsibility for on-going
stability studies for the Products following Closing.

         8.2 Supply Agreement. Buyer and Seller, or their Affiliates, at Closing
shall enter into the Supply Agreement, attached as Exhibit A.

         8.3 Labeling. In accordance with Section 7.2, Buyer is responsible for
having the Buyer Labeling approved by the HPB as soon as possible. Buyer may use
the Syntex Labeling on the Inventory until such Inventory is exhausted;
provided, however, that Seller may, at its option, buy-back from Buyer all
inventory labeled with Seller's NDC number upon Buyer having sufficient
inventory, to be determined by Buyer in its sole discretion to be exercised in
good faith, of the applicable Product labeled with Buyer's NDC number. In
addition, Buyer may use the Syntex Labeling on each Product manufactured by
Seller or its Affiliates for Buyer until the earlier of the date (i) the HPB
approves the Buyer Labeling for use on such Product and Buyer, using all
reasonable efforts, has obtained sufficient supplies of materials with Buyer
Labeling for use on such Products, or (ii) twelve (12) months following Closing,
provided, however, if at the end of such twelve (12) month period the HPB has
not yet approved the Buyer Labeling, then such twelve (12) month period shall be
extended for a period of time to be mutually agreed by the parties (such
agreement not to be unreasonably withheld) reasonably required to obtain such
approval.

         8.4 Use of Seller Trademarks. Other than the use of the Syntex Labeling
as set forth in Section 0, any use by Buyer of the trademarks, tradenames, or
logos of Seller, other than the use of the Trademarks, the Synacort Trademarks,
and the Additional Trademarks, as provided herein, must be approved by Seller
prior to such use.

         8.5 Assignment of Trademarks. By or before Closing, Buyer and Seller
shall prepare in good faith an assignment pursuant to which Seller agrees the
Trademarks, the Synacort Trademarks, and the Additional Trademarks shall be
assigned to Buyer. Following Closing, Buyer shall prepare and Seller shall
execute such documents as Buyer may reasonably request in order to record the
assignment of the Trademarks, the Synacort Trademarks, and the Additional
Trademarks. The responsibility and expense of preparing and filing such
documents and any actions required ancillary thereto, shall be borne solely by
Buyer.

         8.6 Assignment of Registrations. At or following Closing, Buyer shall
prepare and Seller shall execute such documents as Buyer may reasonably 
<PAGE>   15
request in order to record the assignment of the Registrations. Buyer shall pay
any user fees associated with any Product that accrues after Closing but prior
to transfer of such Registration.

         8.7 Access to Information. Buyer and Seller will, upon reasonable prior
notice, make available to the other, to the extent reasonably required for the
purpose of assisting Seller or Buyer in obtaining governmental approvals and
preparation of tax returns or financial statements required by the Securities
and Exchange Commission (to the extent information is available) relating to the
Assets, and prosecuting or defending or preparing for the prosecution or defense
of any action, suit, claim, complaint, proceeding or investigation at any time
brought by or pending against Seller or Buyer relating to the Assets, other than
in the case of litigation between the parties hereto, such information or
records (or copies thereof) in their possession after Closing. Buyer shall also
provide Seller with any adverse drug events simultaneously with notification of
the HPB for so long as Buyer markets the Products for serious or
life-threatening adverse event and for three years following Closing for all
other adverse drug events.

         8.8 Confidentiality Agreement. The parties agree that certain letter
agreement dated October 15, 1996 between an Affiliate of Seller and Buyer (the
"Confidentiality Agreement"), shall survive either termination of this Agreement
or Closing as an independent agreement; provided, however, that upon Closing,
the restrictions on use and the confidentiality obligations of the
Confidentiality Agreement shall no longer be in effect with respect to
Evaluation Materials (as defined therein) relating to the transferred Assets.

         8.9 Press Releases. Neither the Seller nor the Buyer, nor any Affiliate
thereof, will issue or cause publication of any press release or other
announcement or public communication with respect to this Agreement or the
transactions contemplated hereby without the prior written consent of the other
party, which consent will not be unreasonably withheld or delayed. Neither party
shall use the name of the other party in any public statement, prospectus,
annual report, or press release without the prior written approval of the other
party, which may not be unreasonably withheld or delayed, provided, however,
that both parties shall give the other party a minimum of five business days to
review such press release, prospectus, annual report, or other public statement.
Notwithstanding the foregoing, Buyer may make any disclosure which Buyer, in the
opinion of its counsel, is obligated to make pursuant to applicable law, in
which case, Buyer shall still endeavor to give Seller an opportunity to review
such disclosure but shall not be obligated to do so if such disclosure must, in
the opinion of its counsel, be made without time for review. The failure of
Buyer to draft such disclosure in a timely fashion shall not be deemed a reason
to avoid submitting such disclosure to Seller.

         8.10 Government Filings.

                  8.10.1 Within three (3) business days after the date hereof,
Buyer will, or will cause the ultimate parent entities of Buyer to, and Seller
will cause the ultimate parent entities of Seller to, make such filings,
together with a request for early termination, as may be required by the HSR Act
with respect to the consummation of the transactions contemplated by this
Agreement. Thereafter, Buyer will or will cause the ultimate parent entities of
Buyer to, and Seller will cause the ultimate parent entities of Seller to, each
file or cause to be filed as promptly as practicable with the FTC and the DOJ
any supplemental information that may be requested pursuant to the HSR Act. All
such filings will comply in all material respects with the requirements of the
respective laws pursuant to which they are filed. 
<PAGE>   16
                  8.10.2 Each of the parties will use its respective reasonable
good faith efforts to obtain, and to cooperate with the others in obtaining, all
authorizations, consents, orders and approvals of any governmental agencies, and
cooperate with making any filings that may be or become necessary in connection
with the consummation of the transactions contemplated by this Agreement prior
to or after Closing, and to take all reasonable actions to avoid the entry of
any order or decree by any governmental agency prohibiting the consummation of
the transactions contemplated hereby.

9.       CONDITIONS PRECEDENT TO CLOSING

         9.1 Conditions to Obligation of Buyer. The obligation of Buyer to
complete the transactions contemplated hereby is subject to the satisfaction on
or prior to the Closing Date of the following conditions (all or any of which
may be waived in whole or in part by Buyer):

                  9.1.1 Representations and Warranties. The representations and
warranties made by Seller in this Agreement shall have been true and correct in
all respects as of the Closing Date with the same force and effect as though
said representations and warranties had been made on the Closing Date (except
for representations and warranties made as of a specified date, which will be
true and correct in all respects as of the specified date).

                  9.1.2 Performance. Seller shall have performed and complied in
all material respects with all agreements, obligations and conditions required
by this Agreement to be so performed or complied with by it prior to or at
Closing, including the delivery of documents set forth in Section 0.

                  9.1.3 HSR Act Approvals. All filings required to be made in
connection with the transactions contemplated by this Agreement under the HSR
Act shall have been made, the waiting period under the HSR Act shall have
expired or been terminated, and no conditions to the transactions contemplated
by this Agreement shall have been imposed or proposed by any governmental agency
as part of obtaining such HSR Act approval.

                  9.1.4 No Adverse Change. During the period from the date of
this Agreement to the Closing Date there shall not have occurred or been
discovered, and there shall not exist on the Closing Date except for that which
has been otherwise disclosed elsewhere in this Agreement or in the Disclosure
Schedule at the time of execution of this Agreement, any condition or fact that
could reasonably be expected to have a Material Adverse Effect.

                  9.1.5 Officer's Certificate. Seller shall have delivered to
Buyer a certificate, dated the Closing Date and executed by an officer of
Seller, certifying to the fulfillment of all conditions set forth in this
Article 0.

                  9.1.6 Litigation. No investigation, suit, action, or other
proceeding shall be threatened or pending before any court or governmental
agency that seeks the restraint, prohibition, damages, or other relief in
connection with this Agreement or the consummation of the transactions
contemplated by this Agreement.

                  9.1.7 Authorization. Seller shall have furnished to Buyer all
documents Buyer may reasonably request relating to the existence of Seller, the
corporate authority for and the validity of this Agreement, all in form and
substance satisfactory to Buyer.
<PAGE>   17
                  9.1.8 Proceedings and Instruments Satisfactory. All
proceedings, corporate or other, to be taken in connection with the transactions
contemplated by this Agreement, and all documents incident thereto, shall be
reasonably satisfactory in form and substance to Buyer and Buyer's counsel, and
Seller shall have made available to Buyer for examination the originals or true
and correct copies of all documents which Buyer may reasonably request in
connection with the transactions contemplated by this Agreement.

         9.2 Conditions to Obligations of Seller. The obligations of Seller to
complete the transactions contemplated hereby is subject to the satisfaction on
or prior to the Closing Date of the following conditions (all or any of which
may be waived in whole or in part by Seller):

                  9.2.1 Representations and Warranties. The representations and
warranties made by Buyer in this Agreement shall have been true and correct in
all respects as of the Closing Date with the same force and effect as though
said representations and warranties had been made on the Closing Date (except
for representations and warranties made as of a specified date, which will be
true and correct in all respects as of the specified date).

                  9.2.2 Performance. Buyer shall have performed and complied in
all material respects with all agreements, obligations and conditions required
by this Agreement to be so performed or complied with by it prior to or at
Closing, including the delivery of documents set forth in Section 0.

                  9.2.3 HSR Act Approvals. All filings required to be made in
connection with the transactions contemplated by this Agreement under the HSR
Act shall have been made, the waiting period under the HSR Act shall have
expired or been terminated, and no conditions to the transactions contemplated
by this Agreement shall have been imposed or proposed by any governmental agency
as part of obtaining such HSR Act approval.

                  9.2.4 Officer's Certificate. Buyer shall have delivered to
Seller a certificate, dated the date of Closing and executed by an officer of
Buyer, certifying to the fulfillment of all conditions specified in this Article
0.

                  9.2.5 Litigation. No investigation, suit, action, or other
proceeding shall be threatened or pending before any court or governmental
agency that seeks the restraint, prohibition, damages, or other relief in
connection with this Agreement or the consummation of the transactions
contemplated by this Agreement.

                  9.2.6 Authorization. Buyer shall have furnished to Seller all
documents Seller may reasonably request relating to the existence of Buyer, the
corporate authority for and the validity of this Agreement, all in form and
substance satisfactory to Seller.

                  9.2.7 Proceedings and Instruments Satisfactory. All
proceedings, corporate or other, to be taken in connection with the transactions
contemplated by this Agreement, and all documents incident thereto, shall be
reasonably satisfactory in form and substance to Seller and Seller's counsel,
and Buyer shall have made available to Seller for examination the originals or
true and correct copies of all documents which Seller may reasonably request in
connection with the transactions contemplated by this Agreement.

10.      THE CLOSING
<PAGE>   18
         10.1 The Closing. Subject to the satisfaction of all of the conditions
to each party's obligations set forth in Article 0 hereof (or, with respect to
any condition not satisfied, the waiver in writing thereof by the party or
parties for whose benefit the condition exists), the closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at 9:00 a.m.
(local time) on the first Monday following the day in which all required waiting
periods under the HSR Act have expired or been terminated (the "Closing Date")
or at such other time, date (but in no event later than March 31, 1997) and
place as the parties hereto may agree in writing. The transfer of the Assets
shall be deemed to have occurred as of the Closing Time.

         10.2 Deliveries by Seller. Unless otherwise specified in this Section
0, at Closing, Seller or its Affiliate, as appropriate, shall deliver to Buyer
in form reasonably satisfactory to Buyer, each properly executed and dated as of
the Closing Date, where appropriate:

                  10.2.1 except as otherwise provided herein, such deeds, bills
of sale, endorsements, assignments, assignment agreements, and other good and
sufficient instruments of conveyance and transfer as shall be effective to vest
in Buyer free and clear title to the Assets as contemplated by this Agreement

                  10.2.2 Secretary's Certificate certifying that the Board of
Directors of Seller has authorized this Agreement;

                  10.2.3 the Supply Agreement;

                  10.2.4 a receipt for the Purchase Price; and

                  10.2.5 originals of those Trademark Agreements exclusively
related to the Products.

         10.3 Deliveries by Buyer. At Closing, Buyer or its Affiliate, as
appropriate, shall deliver or cause to be delivered to Seller:

                  10.3.1 The Purchase Price payable in accordance with Article
0;

                  10.3.2 Secretary's Certificate certifying that the Board of
Directors of Buyer has authorized this Agreement; and

                  10.3.3 the Supply Agreement.

11.      TERMINATION

         11.1 Termination. This Agreement and the transactions contemplated
hereby may be terminated at any time prior to the Closing Date:

                  11.1.1 By the mutual written consent of Seller and Buyer;

                  11.1.2 By either Seller or Buyer if Closing shall not have
occurred on or before March 1, 1997, unless such date has been extended by
mutual agreement in writing (the "Termination Date");

                  11.1.3 By either Seller or Buyer if consummation of the
transactions contemplated hereby shall violate any final order, decree or
judgment of any court or governmental body having competent jurisdiction.

                  11.1.4 By Buyer if there has been a material misrepresentation
by Seller or a material breach by Seller of any of the warranties or covenants
<PAGE>   19
of Seller set forth herein that Seller has not cured within fourteen (14) days
after receipt of notice from Buyer requesting such to be cured (but in no event
later than the Termination Date) or that Buyer has not waived in writing; or

                  11.1.5 By Seller if there has been a material
misrepresentation by Buyer or a material breach by Buyer of any of the
warranties or covenants of Buyer set forth herein that Buyer has not cured
within fourteen (14) days after receipt of notice from Seller requesting such to
be cured (but in no event later than the Termination Date) or that Seller has
not waived in writing.

         11.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 0, all further obligations of Seller and Buyer under this Agreement
shall terminate without further liability of Seller or Buyer except (a) for the
obligations of Buyer and Seller under Sections 0, 0, 0, and 0; and (b) that such
termination shall not constitute a waiver by any party of any claim it may have
for damages caused by reason of a breach by the other party of a representation,
warranty, covenant or agreement.

12.      SURVIVAL; INDEMNIFICATION

         12.1 Survival of Representations; Remedy for Breach. The
representations, warranties and covenants made by Buyer and Seller under this
Agreement shall survive the Closing for a period of eighteen (18) months. Any
Indemnifiable Claims (as hereinafter defined) or claim for tax reimbursement
that a party may have arising out of the other party's breach of its
representations, warranties, or covenants contained in this Agreement shall be
made by notice to the other party no later than eighteen (18) months following
the Closing Date ("Claim Period") and there shall be no recovery for
indemnification for breach of a representation, warranty, or covenant under this
Agreement for any Indemnifiable Claim or claim for tax reimbursement first
asserted after that date. Seller and Buyer agree to use reasonable efforts to
mitigate any loss or damage for which they may seek indemnification under this
Article 12 or for which they may seek recovery under law or equity.

         12.2 Indemnification by Seller. Subject to the limitations set forth in
Section 0, and in addition to any other rights Buyer may have under law or at
equity, Seller shall indemnify and hold harmless Buyer and its Affiliates,
officers, directors, and agents and employees from any and all damages, losses,
liabilities, third party claims, lawsuits, obligations and expenses (including
reasonable attorneys fees and costs) (collectively, "Damages") that Buyer shall
incur or suffer from (a) any breach of a representation, warranty, or covenant
of Seller in this Agreement or in any of the agreements, instruments or
documents executed or delivered by Seller pursuant to this Agreement; (b) any
liabilities or obligations arising from, or relating to, the conduct of the
Business by the Seller, the sale, distribution or marketing of the Products, or
the use or ownership of the Assets prior to the Closing (including without
limitation, claims by third parties for product liability or personal injury or
for violation of employment law or other duties) (Section 12.2 (a) and (b),
collectively "Buyer's Indemnifiable Claims"); and (c) any taxes associated with,
imposed upon or in respect of the conduct of the Business, the sale of the
Products, or the use or ownership of the Assets prior to the Closing Date; or
(d) taxes imposed with respect to the transfer of the Assets to the Buyer
pursuant to this Agreement, including any assessments against Seller as a member
of a consolidated reporting group with any other entity except for payment of
GST tax which shall be paid by Buyer (Section 12.2 (c) and (d), collectively
"Buyer's Tax Claims").

         12.3 Indemnification by Buyer. Subject to the limitations set forth in
Section 0, and in addition to any other rights it may have under law or at
<PAGE>   20
equity, Buyer shall indemnify and hold harmless Seller and its Affiliates,
officers, directors, and agents and employees from any and all Damages that
Seller shall incur or suffer from (a) any breach of a representation, warranty,
or covenant of Buyer in this Agreement or in any of the agreements, instruments
or documents executed or delivered by Buyer pursuant to this Agreement; (b) any
liabilities or obligations arising from, or relating to, the conduct of the
Business by the Buyer, the sale, distribution or marketing of the Products, or
the use or ownership of the Assets following the Closing (including without
limitation, claims by third parties for product liability or personal injury or
for violation of employment law or other duties) (Section 12.3 (a) and (b),
collectively "Seller's Indemnifiable Claims") (Buyer's Indemnifiable Claims and
Seller's Indemnifiable Claims are hereby collectively referred to as
"Indemnifiable Claims"); or (c) any taxes associated with, imposed upon or in
respect of the conduct of the Business, the sale of the Products, or the use or
ownership of the Assets following the Closing Date; or (d) payment of GST tax
(Section 12.3 (c) and (d), collectively "Seller's Tax Claims").

         12.4 Limitations. Notwithstanding anything to the contrary herein,
neither Buyer and its Affiliates nor Seller shall be entitled to seek
indemnification or any recovery under law or at equity with respect to any
Indemnifiable Claim until the aggregate amount of such claims exceeds Two
Hundred Thousand United States Dollars ($200,000) (the "Basket Limitation");
provided, however, that (i) if either party is responsible to the other for any
amount in excess of the Basket Limitation, then the Basket Limitation shall not
be deemed applicable and such party shall be responsible to fully indemnify the
other party for all Damages; (ii) in no event shall either party be required to
indemnify the other for breaches of the representations, warranties, and
covenants made in this Agreement for an amount in excess of the Purchase Price;
and (iii) neither the Basket Limitation nor the limitation in the immediately
preceding clause shall be applicable to (x) third party claims or (y) Buyer's
Tax Claims or Seller's Tax Claims; provided, that Damages shall be limited to
one-third (1/3) of the Purchase Price with respect to the representations and
warranties under Sections 0, 0, 0, and 0; and provided further, that Damages
shall be limited to one-half (1/2) of the Purchase Price with respect to the
representations and warranties under Sections 0 and 0.

         12.5 Notice. A party seeking indemnification pursuant to Section 0 or 0
(an "Indemnified Party") shall give prompt notice to the party from whom such
indemnification is sought (the "Indemnifying Party") of the assertion of any
claim, or the commencement of any action, suit or proceeding, in respect of
which indemnity is or may be sought hereunder (whether or not the limits set
forth in Section 0 have been exceeded) and will give the Indemnifying Party such
information with respect thereto as the Indemnifying Party may reasonably
request, but no failure to give such notice shall relieve the Indemnifying Party
of any liability hereunder (except to the extent the Indemnifying Party has
suffered actual prejudice thereby).

         12.6 Participation in Defense. The Indemnifying Party may, at its
expense, participate in or assume the defense of any such action, suit or
proceeding involving a third party. In such case the Indemnified Party shall
have the right (but not the duty) to participate in the defense thereof, and to
employ counsel, at its own expense, separate from counsel employed by the
Indemnifying Party in any such action and to participate in the defense thereof.
The Indemnifying Party shall be liable for the fees and expenses of one firm as
counsel (and appropriate local counsel) employed by the Indemnified Party if the
Indemnifying Party has not assumed the defense thereof. Whether or not the
Indemnifying Party chooses to defend or prosecute any claim involving a third
party, all the parties hereto shall cooperate in the defense or prosecution
thereof and shall furnish such records, information and testimony, and attend
<PAGE>   21
such conferences, discovery proceedings, hearings, trials and appeals, as may be
reasonably requested in connection therewith.

         12.7 Settlements. The Indemnifying Party shall not be liable under this
Article for any settlement effected without its consent of any claim, litigation
or proceedings in respect of which indemnity may be sought hereunder, unless the
Indemnifying Party refuses to acknowledge liability for indemnification under
this Article 0 and/or declines to defend the Indemnified Party in such claim,
litigation or proceeding.

         12.8 Set-Off. In addition to any other remedies that Buyer may have
against Seller for indemnification under the provisions of this Agreement or
under law or at equity, Buyer may set off against any amount otherwise due and
yet unpaid to Seller as part of the Purchase Price or otherwise, any amount owed
by Seller or its Affiliates to Buyer under any provision of this Agreement, any
instrument or agreement delivered pursuant thereto, or otherwise.

13.      NON-COMPETITION AND CONFIDENTIALITY

         13.1 Non-Compete. Seller acknowledges that in order to assure Buyer
that Buyer will retain the value of the Assets, Buyer wishes assurances that
Seller and its Affiliates shall not utilize their special knowledge of the
Business and their relationship with customers, suppliers, and others to compete
with the Buyer with respect to the Business. For a period of five (5) years
beginning on the Closing Date, neither Seller nor its Affiliates shall engage in
any business that manufactures, packages, distributes or sells finished products
in the Territory whose sole or major active ingredients consist of the Active
Ingredients for topical use in dermatology except for (i) the transactions
involving Buyer, e.g. the sale to Buyer of Active Ingredient pursuant to the
Supply Agreement contemplated herein, (ii) as part of a product whose primary
indication is the treatment of vulvovaginal mycotic infections; provided that,
nothing in this Article shall in any way restrict or preclude the Seller or any
of its Affiliates from acquiring another company, business or line of products
(including by license thereof or through investment therein), in which less than
a twenty percent (20%) of the revenues and/or assets is derived from or
represents finished products whose sole or major active ingredients consist of
the Active Ingredients for topical use in dermatology and to continue to operate
such business following such acquisition. In promoting any such acquired product
or in promoting any other dermatology product that Seller may develop,
manufacture of market in compliance with this Section 13.1, Seller shall not
make use of the history, heritage or brand equity of the Products as part of any
such promotional plan or activity.

         13.2 Confidentiality. Seller acknowledges that the Assets and all other
confidential or proprietary information with respect to the Business are
valuable, special and unique. Neither Seller nor any of its Affiliates shall, at
any time after the Closing Date, disclose, directly or indirectly, to any third
party, or use or purport to authorize any third party to use any confidential or
proprietary information with respect to the Business, whether or not for
Seller's or an Affiliate's own benefit, without the prior written consent of
Buyer, including without limitation, information as to the financial condition,
results of operations, customers, suppliers, products, inventions, sources,
leads or methods of obtaining new supplies, marketing strategies or any other
information relating to the Business or Products which could reasonably be
regarded as confidential, but not including information which (i) does not
relate directly and exclusively to the Business or the Products, provided that
Seller and its Affiliates shall not disclose such information to the direct
detriment of the Business; or (ii) is or shall become generally available to the
public other than as a result of an unauthorized disclosure by 
<PAGE>   22
Seller or an Affiliate or third party to whom Seller or an Affiliate has
provided such information; or (iii) as may be necessary for Seller or any of its
Affiliates to perform its obligations under this Asset Purchase Agreement or the
transactions or agreements contemplated herein; or (iv) that is required by Law
to be disclosed by Seller or any of its Affiliates.

14.      NOTICES

         Any notice required or permitted to be given hereunder shall be deemed
sufficient if sent by facsimile letter or overnight courier, or delivered by
hand to Seller or Buyer at the respective addresses and facsimile numbers set
forth below or at such other address and facsimile number as either party hereto
may designate. If sent by facsimile letter, notice shall be deemed given when
the transmission is completed if the sender has a confirmed transmission report.
If a confirmed transmission report does not exist, then the notice will be
deemed given when the notice is actually received by the person to whom it is
sent. If delivered by overnight courier, notice shall be deemed given when it
has been signed for. If delivered by hand, notice shall be deemed given when
received.

        if to Buyer, to:   Medicis Pharmaceutical Corporation
                           4383 East Camelback Road
                           Phoenix, Arizona 85018
                           Attn: Jonah Shacknai

        with a copy to:    Brown & Bain
                           2901 North Central Avenue
                           Phoenix, Arizona 85012-2788
                           Attn:   Frank M. Placenti

        if to Seller, to:  Syntex Pharmaceuticals International Limited
                           Ave. Samuel Lewis
                           Torre Hongkong Bank, Piso No. 18/P.O. Box 7386
                           Panama 5, Republic of Panama
                           Attn:   General Manager

         with a copy to:

                  F. Hoffmann-La Roche Ltd.
                  CH-4070 Basel, Switzerland
                  Attn:    Corporate Law Department

         and a copy to:

                  Hoffmann-La Roche Limited
                  2455 Meadowpine Boulevard
                  Mississauga, Ontario L5N 6L7
                  Attention:  General Counsel

15.      SYNACORT

         At Closing, Seller shall grant Buyer an exclusive, fully paid-up
license, with right to sub-license, to manufacture, market and sell products in
the Territory using the Synacort NDSs; provided, however, that Buyer may not
manufacture, market or sell any product for the treatment of vulvovaginal
mycotic infections products using the Synacort NDSs. At Closing, Seller shall
transfer to Buyer and Buyer shall assume all regulatory responsibility for the
Synacort NDSs. In addition, Seller hereby assigns and Buyer shall assume all
rights and obligations under the Synacort Trademarks and the Synacort Trademark
<PAGE>   23
Agreements effective as of Closing.

16.      ARBITRATION AND GOVERNING LAW

         16.1 Generally. Except for the right of either party to apply to a
court of competent jurisdiction for a Temporary Restraining Order to preserve
the status quo or prevent irreparable harm pending the selection and
confirmation of a panel of arbitrators in accordance herewith, any dispute,
controversy or claim arising out of or relating to this Agreement, to a breach
or termination thereof, or to the rights of any party for indemnification
thereunder ("Claim") shall be settled by final and binding arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association ("AAA") in effect on the day the arbitration is commenced in
accordance with this Agreement ("Rules"). In the event of any inconsistency
between such Rules and the terms of this Agreement, this Agreement shall
supersede the Rules. Any judgment on any award rendered in the arbitration may
be entered in any court having jurisdiction and shall be final,. binding,
non-appealable, and conclusive. The AAA shall have jurisdiction over all parties
to this Agreement for purposes of the arbitration.

         16.2 Defenses and Bankruptcy. Any statute of limitations or other
equitable or legal doctrine which would otherwise be applicable to any action
brought by any of the parties shall be applicable in the Arbitration. In the
event any party to this Agreement files a petition under the bankruptcy laws of
the United States or has a petition filed against it which results in an order
for relief or other indicia that a bankruptcy case has commenced, it is the
express intention of the parties to this Agreement that this Agreement shall
control and be enforced in accordance with is terms and conditions that any
Claim shall remain subject to arbitration to the maximum extent permitted by
law.

         16.3 Commencement of Arbitration. Any party may commence arbitration by
serving upon all other parties a written demand for arbitration sent by
certified mail, return receipt requested, in accordance with Agreement, with a
copy of the same delivered by certified mail, return receipt requested, to the
AAA regional office in which Palo Alto California is then located. The AAA shall
administer the arbitration. The arbitration panel shall consist of three
members, one being appointed by each party and the third, who shall be the
chairman of the panel, being appointed by mutual agreement of the two
party-appointed arbitrators. In the event of failure of said two arbitrators to
agree within sixty (60) days after the commencement of the arbitration
proceeding upon the appointment of the third arbitrator, the third arbitrator
shall be appointed by the AAA in accordance with the Rules. In the event that
either party shall fail to appoint an arbitrator within thirty (30) days after
the commencement of the arbitration proceeding, such arbitrator and the third
arbitrator shall be appointed by the AAA in accordance with the Rules. The
arbitration award shall be rendered by a majority of the members of the Board of
Arbitration. Except as expressly provided in this Agreement in Section 17.9, the
panel shall not be entitled to modify this Agreement or the transactions
contemplated herein.

         16.4 Governing Law and Place of Arbitration. The arbitrators shall
apply the laws of the State of New York (regardless of its or any other
jurisdiction's choice of law principles). The place of arbitration shall be
Phoenix, Arizona.

         16.5 Discovery and Other Matters. There shall be no rights of discovery
in connection with the arbitration except as follows:
<PAGE>   24
                  16.5.1 Each party shall have the right to request the
arbitrators to issue subpoenas for documents in accordance with the rules;

                  16.5.2 Each party shall have the right to initiate one (1)
deposition of one representative of each party to the arbitration; and each
party shall have the right to initiate one (1) additional oral deposition
pursuant to a subpoena issued by the arbitrators or any court of competent
jurisdiction.

                  16.5.3 At any time following the tenth day after the
commencement of the arbitration in accordance with this Agreement, a written
notice served upon all parties shall be sufficient to compel the attendance of
any party at a deposition upon not less than sixty (60) days notice and no
subpoena shall be required for that purpose. If a person fails or refuses to
testify at a deposition, that person shall not be permitted to testify at the
hearing, except for good cause shown. The number of depositions that may be
initiated by either party may be varied by agreement of all parties to the
arbitration but not by any action, order or request of the arbitrators or any
court.

         16.6 Hearing. Not less than thirty (30) days prior to the scheduled
arbitration proceeding, the arbitrator shall conduct a preliminary hearing in
accordance with the AAA guidelines. Not less than five (5) days prior to the
preliminary hearing, all parties to the arbitrations shall serve upon all other
parties to the arbitration a written list of witnesses and exhibits to be used
at the arbitration hearing. Except for good cause shown, no witness or exhibit
may be utilized at the arbitration hearing other than as set forth on such list.
the arbitrators shall receive evidence at a single hearing. The arbitrators
shall award reasonable attorneys' fees and costs in favor of the prevailing
party or parties. The arbitrator shall issue a final award not more than twenty
(20) days following the conclusion of the hearing. The arbitrators shall have
the power to hear and decide, by documents only or with a hearing (at the
arbitrators sole discretion) any prehearing motions in the nature of a pre-trial
motion to dismiss or for summary judgment.

         16.7 Arbitrators Fees. The arbitrators shall be entitled to receive
reasonable compensation at an hourly rate to be established between the
arbitrators and he AAA. If required by the arbitrators, Buyer, on the one hand,
and Seller, on the other, will deposit with the AAA an equal share of the total
anticipated fee of the arbitrators in an amount to be estimated by the AAA. The
non-prevailing party(s) in the proceedings shall be ordered to pay, and shall
have the ultimate responsibility for, all arbitrators fees and the fees of the
AAA and such fees shall be included in the judgment to be entered against the
non-prevailing party or parties.

17.      ADDITIONAL TERMS

         17.1 Brokers. Buyer represents to Seller that it has not employed any
investment banker, broker, finder or intermediary (a "Broker") in connection
with the transactions contemplated hereby who might be entitled to a fee or any
commission from Seller upon consummation of the transactions contemplated
hereby. Seller represents to Buyer that it has not employed any Broker in such
connection who might be entitled to a fee or any commission from Buyer upon
consummation of the transactions contemplated hereby.

         17.2 Injunctive Relief. It is possible that remedies at law may be
inadequate and, therefore, the parties hereto shall be entitled to seek
equitable relief including, without limitation, injunctive relief, specific
performance or other equitable remedies in addition to all other remedies 
<PAGE>   25
provided hereunder or available to the parties hereto at law or in equity.

         17.3 Expenses. Except as otherwise expressly provided in this
Agreement, all legal, accounting and other costs and expenses incurred in
connection herewith and the transactions contemplated hereby shall be paid by
the party incurring such expenses.

         17.4 Attorneys' Fees. If there is any litigation or arbitration with
respect to this Agreement, the prevailing party shall be entitled to receive
from the non-prevailing party and the non-prevailing party shall pay upon demand
all reasonable fees and expenses of counsel for the prevailing party.

         17.5 Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of the parties and their respective successors and
assigns; provided that this Agreement may not be assigned by any party without
the written consent of the other party.

         17.6 Entire Agreement. This Agreement, the exhibits hereto, the
Disclosure Schedule and the Confidentiality Agreement embody the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersede and replace all previous negotiations, understandings,
representations, writings, and contract provisions and rights relating to the
subject matter hereof.

         17.7 Amendments; No Waiver. No provision of this Agreement may be
amended, revoked or waived except by a writing signed and delivered by an
authorized officer of each party. No failure or delay on the part of either
party in exercising any right hereunder will operate as a waiver of, or impair,
any such right. No single or partial exercise of any such right will preclude
any other or further exercise thereof or the exercise of any other right. No
waiver of any such right will be deemed a waiver of any other right hereunder.

         17.8 Counterparts. This Agreement may be executed in one or more
counterparts all of which shall together constitute one and the same instrument
and shall become effective when a counterpart has been signed by Buyer and
delivered to Seller and a counterpart has been signed by Seller and delivered to
Buyer.

         17.9 Severability. The parties agree that (a) the provisions of this
Agreement shall be severable and (b) in the event that any of the provisions
hereof are held by a court of competent jurisdiction to be invalid, void or
otherwise unenforceable, (i) such invalid, void or otherwise unenforceable
provisions shall be automatically replaced by other provisions that are as
similar as possible in terms to such invalid, void or otherwise unenforceable
provisions but are valid and enforceable and (ii) the remaining provisions shall
remain enforceable to the fullest extent permitted by law, provided that the
rights and interests of the parties hereto shall not be materially affected.

         17.10 Captions. Captions herein are inserted for convenience of
reference only and shall be ignored in the construction or interpretation of
this Agreement. Unless the context requires otherwise, all references herein to
Articles and Sections are to the articles and sections of this Agreement.

         IN WITNESS WHEREOF, this Agreement has been signed by duly authorized
representatives of each of the parties hereto as of the Effective Date.

<PAGE>   26
SYNTEX PHARMACEUTICALS                      MEDICIS PHARMACEUTICAL   
INTERNATIONAL LIMITED                       CORPORATION
                                     
                                     
                                     
By  /s/ John R. Talbot                   By  /s/ Jonah Shacknai
   -------------------------------         ------------------------------------
                                     
Name    John R. Talbot                  Name     Jonah Shacknai
     -----------------------------           ----------------------------------
                                     
Title:  President                       Title:   Chairman and Chief Executive
       ---------------------------               Officer 
                                               --------------------------------