<PAGE>   1
                                                                   EXHIBIT 10.15


[CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE
BEEN REDACTED AND HAVE BEEN SEPARATELY FILED WITH THE COMMISSION.]


                        SUPPLY AND DISTRIBUTION AGREEMENT


         THIS SUPPLY AND DISTRIBUTION AGREEMENT dated as of June 28, 1994 (the
"Agreement"), is entered into between BIOSITE DIAGNOSTICS INCORPORATED, a
Delaware corporation ("Biosite"), having a place of business located at 11030
Roselle Street, Suite D, San Diego, California 92121, United States of America,
and E. MERCK, a German general partnership ("Merck"), having a place of business
located at Frankfurter Strasse 250, D-64293 Darmstadt, Germany.


                              W I T N E S S E T H :

         WHEREAS, Biosite owns or has rights to certain significant technology
which may be used in the development of reagents and a test device for use with
a test device reader to form a system to quantitatively measure analytes in the
immunoassay field.

         WHEREAS, Biosite and Merck have entered into a Collaborative
Development Agreement pursuant to which the parties agreed to collaborate in the
development of a hand held rapid in vitro immunoassay system, consisting of
reagents, a testing device and a reader, designed to quantitatively measure
multiple cardiac analytes released from damaged cardiac tissue for use in the
diagnosis and monitoring of myocardial infarction in humans, and if the parties
mutually agree, to quantitatively measure certain other analytes for use in
certain other fields.

         WHEREAS, Biosite desires to distribute such immunoassay system under
such Collaborative Development Agreement in the United States of America and
Canada, to appoint Merck as its exclusive distributor in Europe, Latin America
and South Africa, and to retain the exclusive distribution rights in Japan and
the rest of the world.

         WHEREAS, Biosite and Merck desire to enter into the Agreement whereby
Biosite appoints Merck as the exclusive distributor of such immunoassay system
in Europe, Latin America and South Africa, on the terms and subject to the
conditions set forth below.

         NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, the parties hereby agree as follows:
<PAGE>   2
                                    ARTICLE 1

                                   DEFINITIONS

         For purposes of the Agreement, the terms defined in this Article 1
shall have the respective meanings set forth below:

         1.1 "Affiliate" shall mean, with respect to any Person, any other
Person which directly or indirectly controls, is controlled by, or is under
common control with, such Person. A Person shall be regarded as in control of
another Person if it owns, or directly or indirectly controls, at least forty
percent (40%) of the voting stock or other ownership interest of the other
Person, or if it directly or indirectly possesses the power to direct or cause
the direction of the management and policies of the other Person by any means
whatsoever.

         1.2 "Agencies" shall mean, collectively, all sole agents, subsidiaries,
partnerships and other entities directly or indirectly controlled by Merck, and
all independent distributors of Merck diagnostic products, located in the
Territory.

         1.3 "Biosite Marks" shall mean those certain trademarks, tradenames,
designs and markings owned or licensed by Biosite and designated from time to
time in writing by Biosite for use by Merck under the Agreement in connection
with the promotion, marketing, sale and distribution of the Testing Device and
the Reader in the Territory for use in the Field.

         1.4 "Collaborative Development Agreement" shall mean that certain
Collaborative Development Agreement dated as of even date, between Biosite and
Merck, as amended, supplemented or restated from time to time.

         1.5 "Development Program" shall mean the development program, described
generally in the work plan set forth in Exhibit A to the Collaborative
Development Agreement, as revised from time to time as provided in the
Collaborative Development Agreement.

   
         1.6 "Europe" shall mean, collectively, Albania, Austria, Belgium,
Bosnia Herzogovina, Bulgaria, Croatia, Czech Republic, Denmark, Estonia,
Finland, France, Georgia, Germany, Greece, Hungary, Ireland, Italy, Latvia,
Liechtenstein, Lithuania, Luxembourg, the Netherlands, Norway, Poland,
Portugal, Romania, Russia, Serbia, Slovakian Republic, Slovania, Spain, Sweden,
Switzerland, Turkey, Ukraine, the United Kingdom, White Russia and Yugoslavia:
    

         1.7 "Field" shall mean the simultaneous and quantitative measurement of
multiple cardiac analytes released from damaged cardiac tissue, including CKMB,
Troponin I and Myoglobin, for use in the diagnosis and monitoring of myocardial
infarction in humans.

         1.8 "First Commercial Sale" shall mean the date of the first sale of
the Testing Device or the Reader in the Territory for use by the general public
in the Field.


                                       -2-

<PAGE>   3
   
         1.9 "Latin America" shall mean, collectively, Argentina, Belize,
Bolivia, Brazil, Chile, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala,
Guyana, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay and
Venezuela.
    
         1.10 "LRE" shall mean LRE Relais+Elektronik GmbH, a German
limited liability company.

         1.11 "Person" shall mean an individual, corporation, partnership,
trust, business trust, association, joint stock company, joint venture, pool,
syndicate, sole proprietorship, unincorporated organization, governmental
authority or any other form of entity not specifically listed herein.

         1.12 "Product" shall mean the hand held rapid in vitro immunoassay
system, consisting of reagents, a testing device and a reader, developed under
the Development Program.

         1.13 "Product Components" shall mean, collectively, the Reader, the
Reagents and the Testing Device as defined below:

                  1.13.1 "Reader" shall mean that certain testing device reader,
developed under the Reader Development and Supply Agreement, constituting a
component of the Product.

                  1.13.2 "Reagents" shall mean those certain reagents, developed
under the Development Program, constituting a component of the Product.

                  1.13.3 "Testing Device" shall mean that certain testing
device, developed under the Development Program, containing the Reagents and
constituting a component of the Product.

         1.14 "Reader Development and Supply Agreement" shall mean that certain
Reader Development and Supply Agreement dated as of even date, between Biosite
and LRE, as amended, supplemented or restated from time to time.

         1.15 "South Africa" shall mean the Republic of South Africa.

         1.16 "Specifications" shall mean the product specifications for the
Testing Device established by Biosite, as revised from time to time pursuant to
the provisions of Section 4.9.1 below.

         1.17 "Steering Committee" shall mean the joint development committee
composed of representatives of Biosite and Merck as described in Section 4.1 of
the Collaborative Development Agreement.

         1.18 "Territory" shall mean, collectively, Europe, Latin America and
South Africa.

         1.19 "Third Party" shall mean any Person other than Biosite, Merck and
their respective Affiliates.



                                       -3-
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                                    ARTICLE 2

                         REPRESENTATIONS AND WARRANTIES

         Each party hereby represents and warrants to the other party as
follows:

         2.1 Existence and Power. Such party (a) is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
organized; (b) has the requisite power and authority and the legal right to own
and operate its property and assets, to lease the property and assets it
operates under lease, and to carry on its business as it is now being conducted
and (c) is in compliance with all requirements of applicable law, except to the
extent that any noncompliance would not have a material adverse effect on the
properties, business, financial or other condition of such party and would not
materially adversely affect such party's ability to perform its obligations
under the Agreement.

         2.2 Authorization and Enforcement of Obligations. Such party (a) has
the requisite power and authority and the legal right to enter into the
Agreement and to perform its obligations hereunder and (b) has taken all
necessary corporate action on its part to authorize the execution and delivery
of the Agreement and the performance of its obligations hereunder. The Agreement
has been duly executed and delivered on behalf of such party, and constitutes a
legal, valid, binding obligation, enforceable against such party in accordance
with its terms.

         2.3 Consents. All necessary consents, approvals and authorizations of
all governmental authorities and other Persons required to be obtained by such
party in connection with the Agreement have been obtained.

         2.4 No Conflict. The execution and delivery of the Agreement and the
performance of such party's obligations hereunder do not conflict with or
violate any requirement of applicable laws or regulations.


                                    ARTICLE 3

                              APPOINTMENT AND SCOPE

         3.1 Appointment. Subject to the terms and conditions and for the term
of the Agreement, Biosite hereby appoints Merck as an independent distributor of
the Testing Device and the Reader in the Territory for use in the Field. Merck
shall be the exclusive distributor of the Testing Device and the Reader in the
Territory for use in the Field. Merck hereby accepts such appointment and shall
use its best efforts to promote, market, distribute and sell the Testing Device
and the Reader in the Territory for use in the Field and to meet the reasonably
foreseeable market demand

                                       -4-
<PAGE>   5
therefor. Merck shall refrain from actively promoting, marketing, selling,
distributing, seeking customers, establishing any branch and maintaining any
distribution depot or network for the sale of the Testing Device or the Reader
outside the Territory and outside the Field.

         3.2 Subdistributorships. Merck shall have the right to appoint one or
more Agencies as subdistributors under the Agreement. Such subdistributorships
shall be subject to the terms and conditions of the Agreement. Merck shall make
reasonable efforts to cause its subdistributors to comply with the provisions of
the Agreement.

         3.3 Exclusivity. For purposes of Section 3.1 above, the term
"exclusive" shall mean that, subject to the terms and conditions of the
Agreement and as long as Merck is in full compliance with its obligations
hereunder, Biosite shall not appoint any other agents, representatives or
distributors to promote, market, sell or distribute the Testing Device or the
Reader in the Territory for use in the Field.
   
         3.4 Noncompetition. During the term of the Agreement, neither Biosite
nor Merck shall, for itself or with any Affiliate or Third Party, market,
promote, sell or distribute any disposable in vitro immunoassay test device in
combination with a hand held reader in the Territory for use in the Field,
without the prior express written consent of the other party.
    
         3.5 Independent Purchaser Status. Merck shall be an independent
purchaser and seller of the Testing Device and the Reader. Merck shall not act
as an agent or legal representative of Biosite, nor shall Merck have any right
or power to act for or bind Biosite in any respect or to pledge its credit.
Merck shall be free to resell the Testing Device and the Reader in the Territory
for use in the Field on such terms as it may, in its sole discretion, determine,
including price, returns, credits and discounts. The detailed operations of
Merck under the Agreement are subject to the sole control and management of
Merck.

         3.6 Perishable Products. Merck acknowledges that the Testing Devices
are perishable.


                                    ARTICLE 4

                              TERMS AND CONDITIONS
                          OF SUPPLY OF TESTING DEVICES

         Biosite shall manufacture, sell and deliver, and Merck shall purchase
from Biosite, such Testing Devices as Merck and its subdistributors require for
sale to customers in the Territory for use in the Field on the terms and subject
to the conditions set forth below:

         4.1 Price.
   
                  4.1.1 For the period through the second anniversary of the
 First
    

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Commercial Sale, the sales price for each Testing Device purchased by Merck
hereunder (the "Sales Price") shall equal [CONFIDENTIAL MATERIAL REDACTED AND
FILED SEPARATELY WITH THE COMMISSION], both as defined below, calculated as of a
mutually acceptable date not more than sixty (60) days before the reasonably
anticipated date of the First Commercial Sale.

   
                  a. The "Manufacturing Cost" shall equal (a) the 
fully-burdened cost to Biosite, expressed on a per unit manufactured basis, of
manufacturing the Testing Device, together with the packaging thereof, including
the cost of materials, direct labor and benefits, and overhead, with inventory
used for the Testing Device shipped to be determined on a FIFO basis but
consistent with product lot releases, all as determined in accordance with
generally accepted accounting principles and consistently with Biosite's
accounting practices for other products manufactured, plus (ii) all royalties
owing to Third Parties in connection with the sale of the Testing Device by
Biosite to Merck or its subdistributors hereunder.

                  b. The "Average Market Price" shall equal the average of the
per unit sales price of the Testing Device to end users in Italy, Germany,
France and Spain for use in the Field. If the parties are unable to determine
or to agree on the per unit sales price of the Testing Device to end users in
such countries for purposes of such calculation, such per unit sales price in
such countries shall be determined by independent market research conducted by
a mutually acceptable Third Party, provided that such research and determined
per unit sales price is reasonably acceptable to the Steering Committee.

         4.1.2 The Sales Price shall be revised by the mutual agreement of the
parties from time to time on or after the first anniversary of the First
Commercial Sale. At such times after such first anniversary as the parties
mutually agree, the parties shall meet and in good faith discuss any necessary
or appropriate adjustments to the Sales Price. The parties shall consider such
factors as the Manufacturing Cost, Biosite's actual gross margins, the Average
Market Price and Merck's actual distribution margins during the period since the
Sales Price was last set and any reasonably foreseeable future changes in such
factors.
    
         4.2 Orders. Merck shall make all purchases of Testing Devices hereunder
by submitting firm purchase orders to Biosite. Such purchase orders shall be in
writing and in a form reasonably acceptable to Biosite. In the event of an
inconsistency between the terms and conditions of any purchase order and the
Agreement, the terms and conditions of the Agreement shall prevail. Purchase
orders shall not be binding upon Biosite unless and until accepted by Biosite.
Biosite shall notify Merck in writing of its acceptance of purchase orders and
of the scheduled delivery dates therefor.
   
         4.3 Terms of Sales. Biosite shall ship all Testing Devices fca airport
San Diego (Incoterms 1990) (=free carrier arrival) freight and insurance paid by
Merck. Biosite shall use its commercially reasonable efforts to meet scheduled
delivery dates. The lead time for shipping of ordered Testing Devices shall be
four (4) months after receipt by Biosite of each order from Merck. In the event
Biosite is able to fill orders by Merck in less than four (4) months, Biosite
and Merck shall agree upon a delivery in advance. Merck shall arrange for
shipping and procurement insurance at Merck's expense and shall ship all Testing
Devices from Biosite's facility in San Diego, California to Merck's warehouse in
Darmstadt, Federal Republic of Germany, or any other location determined by
Merck. Merck shall pay all taxes and
    
                                       -6-
<PAGE>   7
charges, including all inspection fees and duties, applicable to the sale and
transport of the Testing Devices by Merck in the Territory.

         4.4 Deferral of Shipment. Notwithstanding the foregoing, Biosite may
defer shipment of Test Devices if and while Merck is in default of any of its
obligations under the Collaborative Development Agreement, including its
obligations to pay any amounts when due.

   
         4.5 Payments. Merck shall pay Biosite within thirty (30) days from date
of the applicable invoice by Biosite to Merck for all Test Devices purchased
hereunder for sale in Europe. Merck shall pay or shall cause its Affiliates,
Agencies and other subdistributors to pay Biosite within sixty (60) days from
date of the applicable invoice by Biosite for all Test Devices purchased
hereunder for sale in Latin America and South Africa. Merck shall make all
payments under the Agreement to Biosite in United States dollars to Biosite's
account in a financial institution located in the United States.

         4.6 Currency Exchange. The exchange rate for Deutsche Marks is 1.65
Deutsche Marks for one United States dollar. Currency fluctuations of greater
than ten percent (10%) from this exchange rate will be evaluated for
stabilization within ninety (90) days of the event. If stabilization does not
occur, both parties agree to discuss an adjustment of Sales Price.

         4.7 Forecasts. Not less than sixty (60) days prior to the reasonably
anticipated date of the First Commercial Sale, and prior to the first day of
each quarter thereafter, Merck shall prepare and provide Biosite with a written
forecast of the estimated requirements of Merck and its subdistributors for each
quarter in the succeeding four (4) quarters. Merck shall be required to purchase
one hundred percent (100%) of the quantity forecasted for the first quarterly
period of each forecast. Merck shall not increase or decrease the quantity
estimated for the first quarterly period of each forecast by more than twenty
five percent (25%) of the quantity estimated for the first quarterly period of
the previous forecast, without the prior express written consent of Biosite. In
the event Merck's orders for any quarter exceed one hundred fifty percent (150%)
of the quantities forecasted in the most recent forecast for such quarter,
Biosite in its sole discretion shall have the right to reject any orders for
quantities in excess of such amounts.
    


                                       -7-
<PAGE>   8
   
         4.8 Returned Goods. If any Testing Device does not conform to the
Specifications, and fails to pass Merck's quality control following the
procedures provided by Biosite upon arrival in Darmstadt, Merck shall return the
nonconforming Testing Device to Biosite in accordance with the reasonable
instructions of Biosite or, on Biosite's request, dispose locally of such
nonconforming Testing Device. In both cases all costs shall be borne by Biosite.
Should any Test Devices be returned as provided above, Biosite shall replace the
returned Test Devices as soon as reasonably practicable. Such replacement Test
Devices shall be at no additional cost to Merck if Merck had previously paid
Biosite for the returned Test Devices. Notwithstanding the foregoing, Biosite
shall not be responsible for any Testing Device which fails to pass Merck's
quality control as a result of improper storage and handling during or after
shipment to Merck.
    
         4.9 Warranty.

                  4.9.1 The Specifications shall be attached as an exhibit to
the Agreement once initially established by Biosite and, with respect to the
Specifications for the Testing Device in the Territory, shall be mutually agreed
by Biosite ad Merck. Subject to the provisions of Section 4.9.2 below, Biosite
warrants that each Testing Device shall perform as stated in the Specifications
and shall be manufactured in accordance with applicable good manufacturing
practices ("GMP") as prescribed by the United States Food and Drug
Administration. The Specifications are subject to change by Biosite upon thirty
(30) days' prior written notice to Merck, during which period Biosite shall
consult with Merck on such changes and consider any comments Merck has with
regard to such changes. Notwithstanding any such changes, each Testing Device
shall perform substantially as described in the Specifications originally
established by Biosite.

                  4.9.2 Other than as set forth in Section 4.9.1 above or in
this Section 4.9.2, Biosite makes no representations or warranties, express or
implied, regarding the Testing Device, including any warranty of
merchantability, of fitness for a particular purpose, or against infringement of
any trademarks, copyrights or other proprietary rights now or hereafter
existing. [Except as Biosite has otherwise advised Merck prior to the date of
the Agreement, Biosite warrants, to its current actual knowledge, that the form
of the Testing Device contemplated by Biosite as of the date of the Agreement
does not infringe the issued patents of any third party. If the Testing Device
is determined to infringe any issued patent, Biosite will make its commercially
reasonable efforts to obtain all appropriate licenses and other rights.

                  4.9.3 Merck shall distribute the Testing Devices labeled by
Biosite in the Territory for use in the Field so as to include all warnings and
instructions necessary for the proper use of the Testing Devices and shall not
extend any other product

                                       -8-
<PAGE>   9
warranty, express or implied, other than the warranty included in Section 4.9.1
above.

         4.10 Product Control. Each Testing Device shipped by Biosite shall
contain numbers identifying manufacturing lot, expiry date for control purposes,
and lot-specific quality control report.
   
         4.11 Merck's Contingent Manufacturing Rights. If Biosite fails to
supply, or to cause an Affiliate or Third Party to supply, Merck and its
subdistributors with the reasonably forecasted quantities of Testing Devices for
two (2) consecutive calendar quarters in accordance with the provisions of this
Article 4, if Merck requests in writing within thirty (30) days after the end of
such second calendar quarter, Biosite shall grant Merck a license (without the
right to grant sublicenses) to manufacture supply and distribute the
requirements of Merck and its subdistributors for the Testing Device in the
Territory for use in the Field. As soon as reasonably practicable after such
request, the parties shall negotiate in good faith the terms and conditions of a
mutually acceptable license agreement, which would include the following terms
and conditions:
    
                  4.11.1 Biosite would transfer to Merck all applicable
technology, including all applicable patent rights, know-how, data, information
and organisms (all to the extent Biosite has the right to grant licenses or
other rights thereunder), to enable Merck to manufacture and supply the Testing
Device. Except as Biosite has otherwise advised Merck prior to the date of the
Agreement, Biosite has no current actual knowledge of any prohibition on
Biosite's right to transfer to Merck for such purpose any such technology
licensed to Biosite as of the date of the Agreement.

                  4.11.2 Biosite would provide such technical assistance to
Merck as reasonably requested by Merck, and Merck would reimburse Biosite for
the reasonable cost of such services.
   
                  4.11.3 In consideration for the grant of such license rights,
Merck would pay Biosite a royalty, without deduction, equal to  [CONFIDENTIAL
MATERIAL REDACTED AND FILED SEPARATELY WITH THE COMMISSION] of the net sales of
all Testing Devices manufactured by Merck, and Merck would pay all royalties
owing to any Third Parties on such sales of Testing Devices.
    

                                    ARTICLE 5

                              TERMS AND CONDITIONS
                              OF SUPPLY OF READERS


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<PAGE>   10
         The Readers to be sold and distributed by Merck in the Territory for
use in the Field under the Agreement shall be manufactured and supplied by LRE
on the terms and subject to the conditions of the Reader Development and Supply
Agreement. During the term and subject to the provisions of the Agreement,
Biosite shall appoint Merck under the Reader Development and Supply Agreement as
Biosite's exclusive distributor of the Reader in the Territory for use in the
Field. Subject to the provisions of the Agreement and the Reader Development and
Supply Agreement, Merck shall enter into a separate agreement with LRE pursuant
to which LRE shall manufacture and supply Readers for sale and distribution by
Merck in the Territory for use in the Field. Biosite makes no representations or
warranties, express or implied, regarding the Reader, including any warranty of
merchantability, of fitness for a particular purpose, or against infringement of
any trademarks, copyrights or other proprietary rights now or hereafter
existing. Biosite shall have no liability to Merck, its subdistributors or their
respective customers arising out of or relating to (a) any negligence,
recklessness or intentional act or omission by or on behalf of LRE, (b) any
breach by LRE of its obligations under the Reader Development and Supply
Agreement, (c) any misrepresentation or breach of warranty by LRE, or (d) any
damage to personal property, personal injury or death resulting from the
manufacture or use of the Reader.


                                    ARTICLE 6

                               COVENANTS OF MERCK

         6.1 Sales Promotion. Merck shall use its best efforts to promote the
sale and use of the Testing Device and the Reader in the Territory for use in
the Field. Merck shall provide complete training of Merck's or subdistributors'
sales representatives in the use of the Testing Device and the Reader.

         6.2 Expenses. Merck shall be responsible for all of its own expenses
and employees in connection with its activities contemplated by the Agreement.
Merck shall incur no expense chargeable to Biosite, except as may be
specifically authorized in advance in writing in each case by Biosite.

         6.3 Promotional Materials; Package Inserts. Merck shall ensure that all
advertising, promotional literature, packaging and package inserts comply with
applicable laws and regulations. Merck shall not use any advertising or
promotional materials to promote the Testing Device or the Reader or any
packaging or package inserts that have not been mutually agreed by Biosite and
Merck. Merck shall prepare necessary translations of Biosite's sales literature,
package inserts and labeling.

         6.4 Import Licenses, Exchange Controls, and Other Governmental
Approvals, Compliance.


                                      -10-
<PAGE>   11



                  6.4.1 Merck shall, at its own expense: (a) obtain any
registration, license, permit, governmental approval (collectively, any
"registration") that may be necessary to permit the purchase, distribution and
resale by Merck of the Testing Device and the Reader in each country in the
Territory; (b) comply with all registration requirements for each country in the
Territory; and (c) comply with any and all laws, regulations and orders that may
be applicable to Merck by reason of its execution of the Agreement, including
any requirement to be registered as Biosite's independent distributor with any
governmental authority, and including any and all laws, regulations or orders
that govern or affect the ordering, export, shipment, import, sale (including
government procurement), delivery, or redelivery of the Testing Device and the
Reader in the Territory. Merck shall not engage in any course of conduct that,
in Biosite's reasonable belief, would cause Biosite to be in violation of the
laws of any jurisdiction.

                  6.4.2 All registrations in the Territory of the Testing Device
and the Reader shall be made in the name of Merck and shall remain the property
of Merck during the term of the Agreement. Merck shall provide Biosite a copy of
each such registrations and application therefor.

                  6.4.3 Upon the expiration or earlier termination of the
Agreement, Biosite shall have the right, at its option, to take over the
above-described registrations or, where necessary, to obtain registration under
Biosite's name at its own cost. Merck shall use its best efforts to assist
Biosite in the transfer to, or obtaining of any such registrations in the name
of, Biosite (or Biosite's agent) in a quick and efficient manner.

                  6.4.4 Upon the expiration or earlier termination of the
Agreement, if the parties mutually agree, Merck shall continue distribution of
the Testing Device and the Reader in each country in the Territory on the same
terms and conditions in effect as of the date of expiration or termination until
Biosite (or Biosite's agent) is able to obtain any required registration for
distribution of the Testing Devices and the Readers in such country; provided,
however, that the indemnification provisions set forth in Article 8 below shall
continue during such period.

         6.5 Local Laws and Regulations. Merck shall notify Biosite of the
existence and content of any mandatory provision of law in each country in the
Territory or any other applicable law that conflicts with any provision of the
Agreement at the time of its execution or thereafter. Merck shall advise Biosite
fully with respect to all regulations, labeling laws, standards, specifications
and other requirements imposed by law, regulation or order in any country in the
Territory and applicable to the Testing Device and the Reader. Merck promptly
shall inform Biosite should, in its opinion, any amendment to the Agreement or
any additional agreement be required or be advisable in order to comply with the
laws of any country in the Territory, or any subdivision thereof.

                                      -11-
<PAGE>   12
   
         6.6 Quarterly Reports. Merck shall prepare and provide Biosite with
quarterly written sales reports within 30 days of the end of each calendar
quarter (January - March, April - June, July - September, October - December),
commencing with the first calendar quarter after the First Commercial Sale. The
quarterly reports shall summarize sales of the Testing Device and the Reader by
Merck and its subdistributors during the preceding quarter for each country in
the Territory.
    

                                    ARTICLE 7

                             OBLIGATIONS OF BIOSITE

         7.1 Sales Support. Biosite regularly shall provide Merck with
literature on the Testing Device and technical information relating to the
Testing Device and its proper use. Unless otherwise expressly agreed by Biosite,
all such information and materials will be furnished in the English language and
at no extra costs for Merck.

         7.2 Assistance. Biosite shall provide Merck with all data and other
information available to Biosite, and shall execute such certificates and other
instruments, as reasonably necessary to assist Merck in obtaining all necessary
product registrations in the Territory for the Testing Device. Biosite shall
cause LRE to provide Merck with all data and other information available to LRE,
and shall execute such certificates and other instruments, as reasonably
necessary to assist Merck in obtaining all necessary product registrations in
the Territory for the Reader. Biosite shall provide Merck with reasonable access
to and assistance of its technical, sales, and service personnel in San Diego,
California as Biosite deems appropriate. Such assistance under this Section 7.2
shall be without charge to Merck except as may be otherwise mutually agreed.


                                    ARTICLE 8

                                    INDEMNITY

         8.1 Indemnity. Each party shall indemnify, defend and hold harmless the
other party, its directors, officers, employees and agents from all losses,
liabilities, damages and expenses (including reasonable attorneys' fees and
costs) that they may suffer as a result of any claims, demands, actions or other
proceedings made or instituted by any third party against any of them and
arising out of or relating to (a) any breach of the Agreement by the
indemnifying party, (b) any recklessness or intentional act or omission by or on
behalf of the indemnifying

                                      -12-
<PAGE>   13
party in the performance of its activities contemplated by the Agreement, (c)
any representations or statements not specifically authorized by the indemnified
party herein or otherwise in writing, or (d) any violation by the indemnifying
party (or any of their employees or agents) of, or failure to adhere to, any
applicable law, regulation or order in any country in the Territory or of the
United States, in each case other than those certain losses, liabilities,
damages and expenses arising out of the gross negligence or willful misconduct
of the indemnified party.

         8.2 Procedure. A party (the "Indemnitee") that intends to claim
indemnification under this Article 8 shall promptly notify the other party (the
"Indemnitor") of any such loss, liability, damage or expense, or any claim,
demand, action or other proceeding with respect to which the Indemnitee intends
to claim such indemnification. The Indemnitor shall have the right to
participate in, and, to the extent the Indemnitor so desires, jointly with any
other indemnitor similarly noticed, to assume the defense thereof with counsel
selected by the Indemnitor; provided, however, that an Indemnitee shall have the
right to retain its own counsel, with the fees and expenses to be paid by the
Indemnitor, if representation of the Indemnitee by the counsel retained by the
Indemnitor would be inappropriate due to actual or potential differing interests
between such Indemnitee and any other party represented by such counsel in such
proceedings. The indemnity obligations under this Article 8 shall not apply to
amounts paid in settlement of any loss, liability, damage or other expense if
such settlement is effected without the consent of the Indemnitor, which consent
shall not be withheld unreasonably. The failure to deliver notice to the
Indemnitor within a reasonable time after the commencement of any such action,
if prejudicial to its ability to defend such action, shall relieve such
Indemnitor of any liability to the Indemnitee under this Article 8, but the
omission so to deliver notice to the Indemnitor will not relieve it of any
liability that it may have to any Indemnitee otherwise than under this Article
8. The Indemnitor may not settle the action or otherwise consent to an adverse
judgment in such action that diminishes the rights or interests of the
Indemnitee without the express written consent of the Indemnitee. The
Indemnitee, its employees and agents, shall cooperate fully with the Indemnitor
and its legal representatives in the investigation of any action, claim or
liability covered by this indemnification.

         8.3 Insurance. Merck and Biosite each shall maintain, through
self-insurance or otherwise, products liability insurance against claims
regarding the manufacture, sale, distribution or use of the Testing Device and
the Reader in the Territory under the Agreement, in such amounts as it
customarily maintains for similar activities. Biosite and Merck each shall
maintain such insurance during the term of the Agreement and thereafter for so
long as it maintains insurance for itself covering such activities.


                                      -13-
<PAGE>   14
                                    ARTICLE 9

                     CONFIDENTIALITY AND PROPRIETARY RIGHTS

         9.1 Confidentiality.

   
         9.1.1 During the term of the Agreement, and for a period of five (5)
years following the expiration or earlier termination hereof, each party shall
maintain in confidence all information (including samples) disclosed by the
other party and identified as, or acknowledged to be, confidential (the
"Confidential Information"), and shall not use, disclose or grant the use of the
Confidential Information except on a need-to-know basis to those directors,
officers, employees, consultants, clinical investigators, contractors, permitted
sublicensees or permitted assignees, to the extent such disclosure is reasonably
necessary in connection with such party's activities as expressly authorized by
the Agreement. To the extent that disclosure is authorized by the Agreement,
prior to disclosure, each party hereto shall obtain agreement of any such person
or entity to hold in confidence and not make use of the Confidential Information
for any purpose other than those permitted by the Agreement. Each party shall
notify the other promptly upon discovery of any unauthorized use or disclosure
of the other party's Confidential Information.
    

                  9.1.2 The confidentiality obligations contained in Section
9.1.1 above shall not apply to the extent that (a) any receiving party (the
"Recipient") is required (i) to disclose information by law, order or regulation
of a governmental agency or a court of competent jurisdiction, or (ii) to
disclose information to any governmental agency for purposes of obtaining
approval to test or market a product, provided in either case that the Recipient
shall provide written notice thereof to the other party and sufficient
opportunity to object to any such disclosure or to request confidential
treatment thereof; or (b) the Recipient can demonstrate that (i) the disclosed
information was public knowledge at the time of such disclosure by the other
party hereunder, or thereafter became public knowledge, other than as a result
of actions of the Recipient, its directors, officers, employees, consultants,
clinical investigators, contractors, permitted sublicensees and permitted
assignees in violation hereof; (ii) the disclosed information was rightfully
known by the Recipient or its affiliates (as shown by its written records) prior
to the date of disclosure to the Recipient by the other party hereunder; or
(iii) the disclosed information was disclosed to the Recipient or its affiliates
on an unrestricted basis from a source unrelated to any party to the Agreement
and not under a duty of confidentiality to the other party. Notwithstanding any
other provision of the Agreement, Biosite may disclose Confidential Information
of Merck relating to information developed pursuant to the Agreement to any
person or entity with whom Biosite has, or is proposing to enter into, a
business

                                      -14-
<PAGE>   15
relationship, as long as such person or entity has entered into a
confidentiality agreement with Biosite.

                  9.1.3 Biosite and Merck shall not disclose any terms or
conditions of the Agreement to any Third Party without the prior consent of the
other party, except as required by applicable law or to Persons with whom Merck
or Biosite has entered into or proposes to enter into a business relationship,
provided that such Persons shall enter into the required confidentiality
agreement. Notwithstanding the foregoing, prior to execution of the Agreement,
Merck and Biosite shall agree upon the substance of information that can be used
to describe the terms of this transaction, and Merck and Biosite may disclose
such information, as modified by mutual agreement from time to time, without the
other party's consent.

         9.2 Patent Rights. Biosite does not, either expressly or impliedly,
grant any licenses to Merck under any patents owned or controlled by Biosite or
under which Biosite has any rights, except the right to sell and use the Testing
Device and the Reader on the terms and subject to the conditions of the
Agreement. Subject to the provisions of Section 4.11 above, Biosite does not
grant any rights to manufacture under the Agreement.

         9.3 Biosite Marks. The trademarks or tradenames in the Territory for
the Testing Device and the Reader shall be mutually acceptable to Biosite and
Merck. Merck shall not use any Biosite Marks, or any word, title, expression,
trademark, design or marking that is confusingly similar thereto, as part of its
corporate or business name or in any other manner. Notwithstanding the
foregoing, (a) Merck may identify itself as an authorized distributor of
Biosite, and (b) Merck may use the Biosite Marks for display purposes in
connection with solicitation of orders for the Testing Device and the Reader.
Merck shall not alter, remove or modify any Biosite Marks, nor affix any other
trademarks, labels or markings to the Testing Device and the Reader without
Biosite's consent; provided, however, that Merck may affix labels or other
indices on the Testing Devices and the Readers it distributes to identify it as
the distributor of the Testing Device and the Reader so long as such labels do
not cover and are not inconsistent with the Biosite Marks, labels or markings.
All registrations of the Biosite Marks shall be paid by Biosite. No other Merck
labels, package inserts or other material shall accompany the Testing Device and
the Reader without the prior written consent of Biosite.

         9.4 Copyrights.

                  9.4.1 Merck hereby acknowledges that Biosite has claimed, or
may claim, copyright protection with respect to certain parts of the Testing
Device and the Reader and the labels, inserts and other materials regarding the
Testing Device and the Reader. Merck further acknowledges the validity of
Biosite's right to claim copyright protection with respect to such items.

                                      -15-
<PAGE>   16
Merck further acknowledges that Biosite has advised Merck that it has the sole
and exclusive right to claim the copyright protection with respect to all such
items. Merck shall take no action or make no omission which is in any way
inconsistent with Biosite's claim of copyright protection with respect to such
items.

                  9.4.2 Nothing contained in this Section 9.4 shall prohibit
Merck from copying and distributing to its sales representatives Testing Device
and Reader advertising, literature and other materials prepared by or on behalf
of Biosite for the purpose of fulfilling Merck's obligations under the
Agreement. In order to protect against infringement of Biosite's copyrights
through unauthorized reproduction or duplication of its copyrighted materials,
all such materials included with or relating to the Testing Device and the
Reader, and used by Merck in conducting its activities contemplated by the
Agreement, shall bear appropriate copyright markings.

         9.5 Protection of Proprietary Rights. Merck shall cooperate with
Biosite, take such actions and execute such documents, as reasonably requested
by Biosite and at Biosite's expense, to assist Biosite in the protection of
confidential information, patents, trademarks or copyrights owned by or licensed
to Biosite. Merck shall inform Biosite immediately of any infringements or other
improper action with respect to any such confidential information, patents,
trademarks or copyrights that come to the attention of Merck.


                                   ARTICLE 10

                              TERM AND TERMINATION

   
         10.1 Term. Unless terminated earlier pursuant to Section 10.2 or 10.3
below, the Agreement shall continue in full force and effect for a term expiring
seven (7) years after the date of the First Commercial Sale. Thereafter, the
Agreement automatically shall be renewed for successive periods of one (1) year
each, unless terminated by either party upon twelve (12) months prior written
notice to the other party.
    

         10.2 Termination by Mutual Agreement. The parties may terminate the
Agreement at any time upon the express written agreement of both parties.

   
         10.3 Termination for Cause. Except as otherwise provided in Section
12.2 below, either party may terminate the Agreement upon or after the breach of
any material provision of the Agreement by the other party if the other party
has not cured such breach within ninety (90) days after notice thereof from the
non-breaching party.
    

                                      -16-
<PAGE>   17
         10.4 Effect of Expiration and Termination. Expiration or termination of
the Agreement shall not relieve the parties of any obligation accruing prior to
such expiration or termination. The provisions of Articles 8 and 9 shall survive
the expiration or termination of the Agreement. Additionally, the following
provisions shall apply on the termination or expiration of the Agreement:

                  10.4.1 Merck shall cease all sales of the Testing Device and
the Reader and all other activities on behalf of Biosite and shall return to
Biosite and immediately cease all use of any Confidential Information then in
Merck's possession; provided, however, that Merck may continue to use any
information that falls within the descriptions of clause (b) of Section 9.1.2
above.

                  10.4.2 Merck shall remove from its property and immediately
discontinue all use, directly or indirectly, of the Biosite Marks and any word,
title, expression, trademark, design, or marking that is confusingly similar
thereto.

                  10.4.3 Upon termination by Biosite, Biosite shall have the
right, at its option, to repurchase Merck's inventory of Testing Devices and
Readers at Merck's purchase price plus reasonable freight, insurance and duties.
In all other cases, Merck shall have the right to sell the remaining stock of
Testing Devices and Readers. Notwithstanding the foregoing, in case of
termination of the Agreement, Merck and Biosite shall negotiate in good faith
the continuation of the delivery of Testing Devices due to still effective
long-term contracts with customers in the Territory. In case of termination of
the Agreement, Biosite either (a) shall continue to sell Testing Devices
directly to such customers, or at Biosite's option, (b) enable Merck to continue
to purchase Testing Devices and to resell the same only to customers holding
such long term contracts, on the terms and conditions provided for under the
Agreement.

                  10.4.4 In accordance with the provisions of Section 6.4.4
above, Merck shall take all such actions and execute such documents as Biosite
reasonably requests to assist Biosite in obtaining any registrations necessary
for Biosite (or Biosite's agent) to continue selling the Testing Device and the
Reader in the Territory.

         10.5 Sole Remedy. Biosite's repurchase of Merck's inventory of the
Testing Device and the Reader or Merck's right to sell such inventory if not so
repurchased by Biosite, pursuant to Section 10.4.3 above, shall constitute
Merck's sole remedy upon the termination or expiration of the Agreement. Under
no circumstances shall Biosite be liable to Merck by reason of termination or
expiration of the Agreement for compensation, reimbursement, or damages for (a)
loss of prospective compensation, (b) goodwill or loss thereof, or (c)
expenditures, investments, leases or any type of commitment made in connection

                                      -17-
<PAGE>   18
with the Merck's business or in reliance on the existence of the Agreement.


                                   ARTICLE 11

                          CONCILIATION AND ARBITRATION

         11.1 Conciliation. Biosite and Merck shall exercise their commercially
reasonable efforts to settle between themselves in an amicable way any dispute,
controversy or claim which may arise out of or relating to the Agreement within
thirty (30) days after one party receives notice from the other party of such
dispute, controversy or claim.

         11.2 Arbitration. If not settled by the parties in accordance with
Section 11.1 above, any dispute, controversy or claim originally initiated by
either party and arising out of or relating to the Agreement shall be referred
to and resolved by binding arbitration, held in New York, New York, United
States of America, and conducted in accordance with the American Arbitration
Association ("AAA") Commercial Arbitration Rules, and the following provisions:

                  11.2.1 The arbitral tribunal shall be composed of three (3)
persons each of whom shall be neutral, independent and impartial. Each party
shall nominate an arbitrator, and the two (2) arbitrators so appointed shall
appoint a third, who shall act as president of the arbitral tribunal. If either
party fails to nominate an arbitrator within thirty (30) days of receiving
notice of the nomination of an arbitrator by the other party, such (second)
arbitrator shall be appointed at the request of the first party by the AAA. If
the two arbitrators selected by the parties fail to select a third, presiding
arbitrator within twenty (20) days of the appointment of the second arbitrator,
the third arbitrator shall be appointed at the request of the first party by the
AAA.

                  11.2.2 The arbitrators shall hold a preliminary meeting with
the parties within thirty (30) days of the appointment of the third or presiding
arbitrator for the purpose of determining the issues to be decided in the
arbitration, the specific procedures to be followed and the schedule for
briefing and/or hearings. The arbitrators shall hold a hearing which, unless the
parties otherwise agree, should be recorded by stenographic or other means.
Within one hundred twenty (120) days of the preliminary meeting (except in
extraordinary cases), the arbitrators shall issue an award in writing which
shall state the reasons for the award and which, except as set forth in the
following sentence, shall be final and binding between the parties. Judgment
upon the award rendered by the arbitrators may be entered in any court of
competent jurisdiction.


                                      -18-
<PAGE>   19
                  11.2.3 The parties agree that the award of the arbitrators
shall be the sole and exclusive remedy between them regarding any claims,
counterclaims, issues or accountings presented or pled to the arbitrators; that
it shall be made and shall promptly by payable in United States dollars free of
any tax, deduction or offset; and that any costs, fees or taxes incident to
enforcing the award shall, to the maximum extent permitted by law, be charged
against the party resisting such enforcement.

                  11.2.4 Questions concerning arbitrability under this dispute
resolution clause shall be governed exclusively by the United States Arbitration
Act. The arbitrators shall be empowered to consider and decide claims or issues
arising under or relating to state and federal statutes governing business
practices, but shall not be empowered to nor shall they award punitive damages.

                  11.2.5 As part of any arbitral award rendered pursuant to this
Section 11.2, the arbitrators shall make an award of arbitral costs and
reasonable attorneys' fees to the prevailing party.

                  11.2.6 The Agreement shall be governed by and construed in
accordance with the laws of the State of New York and shall not be governed by
the United Nations Convention on Contracts for the International Sale of Goods.


                                   ARTICLE 12

                                  MISCELLANEOUS

         12.1 Notices. Any consent, notice or report required or permitted to be
given or made under the Agreement by one of the parties to the other shall be in
writing, delivered personally or by facsimile (and promptly confirmed by
personal delivery, air mail, internationally-recognized delivery service or
courier), air mail, internationally-recognized delivery service or courier,
postage prepaid (where applicable), addressed to such other party at its address
indicated below, or to such other address as the addressee shall have last
furnished in writing to the addressor and (except as otherwise provided in the
Agreement) shall be effective upon receipt by the addressee.

         If to Biosite:                     Biosite Diagnostics Incorporated
                                            11030 Roselle Street, Suite D
                                            San Diego, California 92121, U.S.A.
                                            Attention:  Kim D. Blickenstaff
                                                        President


                                      -19-
<PAGE>   20
         with a copy to:                 Pillsbury Madison & Sutro
                                         235 Montgomery Street, 15th Floor
                                         San Francisco, California 94104, U.S.A.
                                         Attention:  Thomas E. Sparks, Jr.

         If to Merck:                    E. Merck
                                         Frankfurter Strasse 250
                                         D-64293 Darmstadt
                                         Germany
                                         Attention:  Dr. Bernd Reckmann

         with a copy to:                 E. Merck
                                         Frankfurter Strasse 250
                                         D-64293 Darmstadt
                                         Germany
                                         Attention:  LEW/Licensing

         12.2 Force Majeure. Neither party shall be held liable or responsible
to the other party nor be deemed to have defaulted under or breached the
Agreement for failure or delay in fulfilling or performing any term of the
Agreement to the extent, and for so long as, such failure or delay is caused by
or results from causes beyond the reasonable control of the affected party
including fire, floods, embargoes, war, acts of war (whether war be declared or
not), insurrections, riots, civil commotions, strikes, lockouts or other labor
disturbances, acts of God or acts, omissions or delays in acting by any
governmental authority or the other party.

   
         12.3 Assignment. The Agreement may not be assigned or otherwise
transferred, nor, except as expressly provided hereunder, may any right or
obligations hereunder be assigned or transferred by either party without the
consent of the other party; provided, however, that either Biosite or Merck may,
without such consent, assign the Agreement and its rights and obligations
hereunder in connection with the transfer or sale of all or substantially all of
its business, or in the event of its merger or consolidation or change in
control or similar, transaction. Any permitted assignee shall assume all
obligations of its assignor under the Agreement.
    

         12.4 Severability. Each party hereby acknowledges that it does not
intend to violate any public policy, statutory or common laws, rules,
regulations, treaty or decision of any government agency or executive body
thereof of any country or community or association of countries. Should one or
more provisions of the Agreement be or become invalid, the parties shall
substitute, by mutual consent, valid provisions for such invalid provisions
which valid provisions in their economic effect are sufficiently similar to the
invalid provisions that it can be reasonably assumed that the parties would have
entered into the Agreement with such provisions. In case such provisions cannot
be agreed upon, the invalidity of one or several provisions of the Agreement
shall not affect the validity of the Agreement as a whole, unless the invalid
provisions are of such essential importance to the Agreement that it is to be
reasonably assumed that the parties would not have entered into the Agreement
without the invalid provisions.


                                      -20-
<PAGE>   21
         12.5 U.S. Export Laws and Regulations. Biosite and Merck each
acknowledge that the development and commercialization rights and information
disclosure requirements of the Agreement are subject to the laws and regulations
of the United States of America relating to the export of products and technical
information. Without limitation, Biosite and Merck each shall comply with all
such laws and regulations.

         12.6 Entire Agreement. The Agreement contains the entire understanding
of the parties with respect to the subject matter hereof. All express or implied
agreements and understandings, either oral or written, heretofore made are
expressly superseded by the Agreement. The Agreement may be amended, or any term
hereof modified, only by a written instrument duly executed by both parties.

         12.7 Headings. The captions to the several Articles and Sections hereof
are not a part of the Agreement, but are merely guides or labels to assist in
locating and reading the several Articles and Sections hereof.

         12.8 Independent Contractors. It is expressly agreed that Biosite and
Merck shall be independent contractors and that the relationship between the two
parties shall not constitute a partnership, joint venture or agency. Neither
Biosite nor Merck shall have the authority to make any statements,
representations or commitments of any kind, or to take any action, which shall
be binding on the other, without the prior consent of the party to do so.

         12.9 Language. The English language version of the Agreement shall
govern and control any translations of the Agreement into any other language.

         12.10 Waiver. The waiver by either party of any right hereunder or the
failure to perform or of a breach by the other party shall not be deemed a
waiver of any other right hereunder or of any other breach or failure by said
other party whether of a similar nature or otherwise.

         12.11 Counterparts. The Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

         IN WITNESS WHEREOF, the parties have executed the Agreement as of the
date first set forth above.


                                          BIOSITE DIAGNOSTICS INCORPORATED


                                          By /s/ Kim D. Blickenstaff
                                             -----------------------------------

                                      -21-
<PAGE>   22
                                          Title  President

                                          E. MERCK


                                          By  /s/ Dr. Walter Bardorff
                                             -----------------------------------
                                               Dr. Walter Bardorff

                                          Title   General Manager,
                                                  Diagnostics Division


                                          By  /s/ Dr. Bernd Reckmann
                                             -----------------------------------
                                               Dr. Bernd Reckmann

                                          Title  Head of Marketing and
                                                 Sales Diagnostic Division



                                      -22-