<Page>
                                                                EXHIBIT 10.04

                    SUBORDINATION AND INTERCREDITOR AGREEMENT


                  THIS SUBORDINATION AND INTERCREDITOR AGREEMENT (this
"Agreement") is made and entered into as of this 20th day of December, 2001, by
John N. Kapoor, as Trustee under THE JOHN N. KAPOOR TRUST, dated September 20,
1989 (the "Junior Party") and NEOPHARM, INC., a Delaware corporation (the
"Lender").

                                R E C I T A L S:

         A. The Lender and Akorn, Inc., a Louisiana corporation (the
"Borrower"), have entered into that certain Processing Agreement, of even date
herewith (the "Processing Agreement"), and, in connection therewith, Borrower
executed and delivered that certain Promissory Note, of even date herewith (the
"Promissory Note"), evidencing a loan made by Lender to Borrower, as of the date
hereof, in aggregate principal amount of THREE MILLION TWO HUNDRED FIFTY
THOUSAND DOLLARS (US$3,250,000.00), plus accrued but unpaid interest (the
"Lender Debt").

         B. On July 13, 2001, the Borrower and the Junior Party entered into
that certain Convertible Bridge Loan and Warrant Agreement (the "Junior
Agreement"), pursuant to which the Junior Party made certain loans to Borrower
in aggregate principal amount of FIVE MILLION AND 00/100 DOLLARS
($5,000,000.00), plus accrued interest thereon (the aforementioned loans,
accrued interest thereon and any other loans made by the Junior Party to the
Borrower (excluding any consulting fee, chairman's fee and expense
reimbursement, whether or not deferred, owed by Borrower to the Junior Party or
any entity controlled by the Junior Party), presently outstanding or made in the
future, to be collectively referred to as the "Junior Debt"). In connection with
the consummation of the Junior Agreement, the Junior Party entered into a
Subordination Agreement, of even date therewith, whereby the Junior Party agreed
to subordinate the Junior Debt to all outstanding debt owed by Borrower to The
Northern Trust Company ("Northern Trust"), Borrower's senior lender, under the
terms of an Amended and Restated Credit Agreement, as most recently amended by
that certain Forbearance Agreement, dated July 13, 2001, by and among Northern
Trust, the Borrower and the Borrower's wholly-owned subsidiary, Akorn (New
Jersey), Inc, an Illinois corporation.

         C. Lender was unwilling to enter into the Processing Agreement or
provide Borrower with the Lender Debt unless the Junior Party entered into this
Subordination and Intercreditor Agreement.

         NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is hereby agreed as follows:

         1. RECITALS. The Recitals of this Agreement are incorporated herein and
made a part hereof by this reference thereto.

         2. JUNIOR DEBT SUBORDINATE TO LENDER DEBT. The Junior Debt is hereby,
and shall continue to be, subject and subordinate in lien and in payment to the
lien and payment of the Lender Debt and any other document evidencing, securing
or guaranteeing the Lender Debt without regard to the application of such
proceeds together with all interest, late fees, default interest, future
principal advances and all other sums due under the Promissory Note. The
<Page>

foregoing shall apply notwithstanding the actual date and time of execution,
delivery, recordation, filing or perfection of the Lender Debt or the Junior
Debt, or the lien or priority of payment thereof.

         Until all Lender Debt shall have been paid in full, the Junior Party
shall not, directly or indirectly, demand or accept from the Borrower nor cancel
or otherwise discharge all or any part of the Junior Debt, and the Junior Party
shall not otherwise take or permit any action prejudicial to or inconsistent
with the Lender's priority position over the Junior Party created by this
Agreement. Excluded from the provisions of this paragraph 2 are the conversion
rights under the Junior Debt of principal and interest to an equity interest in
Borrower.

         3. ALLOCATION OF COLLATERAL DURING BANKRUPTCY, ETC. In the event of (a)
any proceeding under the Bankruptcy Code or other applicable federal or state
insolvency law relative to the Borrower, or (b) any liquidation, dissolution or
other winding up of the Borrower, whether voluntary or involuntary and whether
or not involving insolvency or bankruptcy, or (c) any assignment for the benefit
of creditors or any other marshaling of assets and liabilities of the Borrower,
then and in any such event, the Lender shall be entitled to receive payment in
full in cash of all amounts due or to become due on or in respect of the Lender
Debt, and to that end the Lender shall be entitled to receive as collateral
therefor, any payment or distribution of any kind or character, whether in cash,
property or securities which may be payable or deliverable to the Junior Party
in such proceeding, dissolution, liquidation or other winding up or event until
the Lender Debt is fully repaid and discharged.

         In the event that, notwithstanding the foregoing provisions of this
Section 3, the Junior Party shall have received any cash or assets of any kind
from Borrower as payment for the Junior Debt or to secure, guarantee or
discharge all or any part of the Junior Debt before all Lender Debt is paid in
full, then and in such event such cash or assets shall be delivered forthwith to
the Lender or, if required by law, the trustee in bankruptcy, receiver,
custodian, assignee, agent or other person making payment or distribution of
assets of the Borrower as collateral for the Lender Debt remaining unpaid, to
the extent necessary to pay all the Lender Debt in full, after giving effect to
any concurrent payment or distribution to or for the Lender.

         4. CERTAIN MATTERS RELATING TO BANKRUPTCY. The Junior Party hereby
waives any objection it may have to the use of cash collateral or the financing
of the Borrower pursuant to either Section 363 or Section 364, including,
without limitation, Section 364(d), of the Bankruptcy Code. Notice of a proposed
financing or use of cash collateral shall be deemed given upon the sending of
such notice by telegraph, telecopy or hand delivery to the Junior Party at
address indicated on the signature page attached hereto. All allocations of
payments between the Lender and the Junior Party, subject to any court order,
continue to be made after the filing of a petition under the Bankruptcy Code on
the same basis that the payments were to be allocated prior to the date of such
filing. To the extent that the Lender receives payments on the Lender Debt which
are subsequently invalidated, declared to be fraudulent or preferential, set
aside and/or required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, state or federal law, common law, or equitable cause,
then, to the extent of such payment or proceeds received, the Lender Debt, or
part thereof, intended to be satisfied shall be reinstated and continue in full
force and effect as if such payments or proceeds had not been received by the
Lender.


                                       2
<Page>

         5. CONTINUING NATURE OF SUBORDINATION. This Agreement shall be
effective and may not be terminated or otherwise revoked by the Junior Party
until the Lender Debt shall have been fully repaid and discharged and all
financing arrangements between the Borrower and the Lender under the Promissory
Note as amended from time to time, have been terminated. If the Junior Party
shall have any right under applicable law to terminate or revoke this Agreement
which right cannot be waived, such termination or revocation shall not be
effective until written notice of such termination or revocation, signed by the
Junior Party, is delivered to the Lender pursuant to the provisions of Section
10, PROVIDED, HOWEVER, that no such notice of termination or revocation shall
affect or impair any of the agreements and obligations of the Junior Party
hereunder with respect to any and all Lender Debt existing prior to the time of
receipt of such notice by the Lender, any and all Lender Debt created or
acquired thereafter pursuant to any previous commitments made by the Lender
under the Promissory Note, any and all extensions or renewals of any of the
foregoing, any and all interest accruing on any of the foregoing, and any and
all expenses paid or incurred by the Lender in endeavoring to collect or realize
upon any of the foregoing; and all of the agreements and obligations of the
Junior Party under this Agreement shall, notwithstanding any such notice of
termination or revocation, remain fully in effect until such Lender Debt
(including any extensions or renewals thereof and all such interest and
expenses) shall have been paid in full.

         The Junior Party agrees that the Lender shall be entitled to manage and
supervise the Lender's loans to the Borrower in accordance with applicable law,
the terms of the Promissory Note and the Lender's usual practices, modified from
time to time as the Lender deems appropriate under the circumstances, without
regard to the existence of any rights that the Junior Party may now or hereafter
have and that the Lender shall have no liability to the Junior Party for, and
Junior Party hereby waives any claim which the Junior Party may now or hereafter
have against, the Lender arising out of any and all actions which the Lender, in
good faith, takes or omits to take with respect to the Promissory Note or any
other agreement related thereto or to the collection of the Lender Debt.

         6. INFORMATION CONCERNING FINANCIAL CONDITION OF THE BORROWER. The
Junior Party hereby assumes responsibility for keeping itself informed of the
financial condition of Borrower and of all other circumstances bearing upon the
risk of nonpayment of the Lender Debt that diligent inquiry would reveal, and
the Junior Party hereby agrees that the Lender shall have no duty to advise the
Junior Party of information known to the Lender regarding such condition or any
such circumstances except as set forth below.

         7. ASSIGNMENT; REFINANCING. The Junior Agreement and the rights and
obligations therein may be sold, assigned or transferred by the Junior Party to
an entity controlled by the Junior Party, to members of the immediate family of
the Junior Party, or to trusts, partnerships, S-corporations or other
beneficiaries of the Junior Party. In the event of such transfer, the assignee
shall become subject to the terms of this Agreement. Except for such transfers
described above, the Junior Party shall not sell, assign or otherwise transfer
any interest in the Junior Agreement without the prior written consent of the
Lender, which consent shall not be unreasonably withheld.

         8. COVENANTS AND ASSURANCES. The Junior Party shall (a) provide the
Lender with a copy of any and all notices of default, event of default or
acceleration which the Junior Party gives Borrower under or in connection with
the Junior Agreement or Junior Debt, which notices to the Lender shall be given
at the same time as the Junior Party gives such notices to the


                                       3
<Page>

Borrower, and (b) upon the request of Lender, execute and deliver to the Lender
such other documents and assurances and do or cause to be done all such other
acts and things as may be reasonably required by the Lender in order to give
effect to this Agreement.

         The Lender shall provide the Junior Party with a copy of any and all
notices of default, events of default or acceleration which the Lender gives
Borrower under or in connection with the Lender Debt, which notices to the
Junior Party shall be given at the same time Lender gives such notices to the
Borrower.

         9. WAIVERS, ETC. No delay on the part of the Lender in its respective
exercise of any right or remedy shall operate as a waiver thereof, and no single
or partial exercise by the Lender of any right or remedy shall preclude other or
further exercise thereof or the exercise of any other right or remedy; nor shall
any modification or waiver of any of the provisions of this Agreement be binding
upon the Lender or Junior Party except as expressly set forth in a writing duly
signed and delivered on behalf of the Lender.

         10. NOTICES. Any notice or other communication to any party in
connection with this Agreement shall be in writing and shall be sent by manual
delivery, facsimile transmission, overnight courier or United States mail
certified mail, return receipt requested (postage prepaid) addressed to such
party at the address specified on the signature page hereof, or at such other
address as such party shall have specified to the other party hereto in writing.
All periods of notice shall be measured from the date of delivery thereof if
manually delivered, from the date of sending thereof if sent by facsimile
transmission, from the first business day after the date of sending if sent by
overnight courier, or from four days after the date of mailing if mailed;
provided, however, that any notice to the Lender shall be deemed to have been
given only when received by the Lender.

         11. GOVERNING LAW AND CONSTRUCTION. The validity, construction and
enforceability of this Agreement shall be governed by the internal laws of the
State of Illinois, without giving effect to conflict of laws principles thereof.

         12. CONSENT TO JURISDICTION. AT THE OPTION OF THE LENDER, THIS
AGREEMENT MAY BE ENFORCED IN ANY FEDERAL COURT OR ILLINOIS STATE COURT SITTING
IN COOK COUNTY, ILLINOIS; AND THE BORROWER AND JUNIOR PARTY EACH CONSENT TO THE
JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVE ANY ARGUMENT THAT VENUE IN
SUCH FORUMS IS NOT CONVENIENT. IN THE EVENT THE BORROWER OR JUNIOR PARTY
COMMENCE ANY ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT
THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS
AGREEMENT, THE LENDER AT ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE
TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH
TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE
DISMISSED WITHOUT PREJUDICE.

         13. WAIVER OF JURY TRIAL. BORROWER AND JUNIOR PARTY IRREVOCABLY WAIVE
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT AND ANY


                                       4
<Page>

OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

         14. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of Borrower, the Junior Party
and the Lender.

         15. MULTIPLE COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original and all of
which shall constitute one and the same instrument.


                                       5
<Page>

         IN WITNESS WHEREOF, the parties hereto have executed, or caused this
agreement to be executed by the respective officers thereunto duly authorized,
as of the day and year first above written.

                       John N. Kapoor, as Trustee under
                       THE JOHN N. KAPOOR TRUST,
                       Dated September 20, 1989

                       By:
                          ----------------------------
                       Its:
                           ---------------------------

                       Address:
                               -----------------------

                       Fax No.:
                               -----------------------
                       Attn:             John Kapoor



                       NEOPHARM, INC., a Delaware corporation

                       By:
                          ----------------------------
                       Its:     President and Chief Executive Officer

                       Address: 150 Field Drive, Suite 195
                                Lake Forest, Illinois  60045
                                Attn:  President and Chief Executive Officer
                       Fax No.: (847) 295-8854

Acknowledged and Agreed by:

AKORN, INC., a Louisiana corporation

By:
   -----------------------
Its:

Address:          Akorn, Inc.
                  2500 Millbrook Drive
                  Buffalo Grove, IL 60089-4694
                  Facsimile No. (847) 279-6123
                  Attn:  Ben Pothast


                                       6