<PAGE>
 
                                                                           Draft
                                                                        08/13/98

                      SECURITIES AND EXCHANGE COMMISSION

                            WASHINGTON, D.C. 20549

                                   FORM 10-Q

      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
                             EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 1998    Commission File number 0 - 27698

                                  CHIREX INC.

            (Exact name of registrant as specified in its charter)

            DELAWARE                                    04-3296309
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

           300 ATLANTIC STREET
                SUITE 402
          STAMFORD, CONNECTICUT                           06901
(Address of principle executive office)                 (Zip Code)

                                (203) 351-2300
             (Registrant's telephone number, including area code)

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

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


Number of shares outstanding of the issuer's classes of common stock as of
August 12, 1998.

               Class                              Number of Shares Outstanding
--------------------------------------            ----------------------------
Common Stock, par value $.01 per share                     11,817,336

                                       1
<PAGE>
 
                                  CHIREX INC.

                                     INDEX

<TABLE> 
<CAPTION>
                                                                                                                      PAGE NUMBER
<S>               <C>                                                                                                 <C> 
PART I.           FINANCIAL INFORMATION

                  Item 1.   Financial Statements

                            Consolidated Balance Sheets
                            December 31, 1997 and June 30, 1998                                                             3

                            Consolidated Statements of Operations and Comprehensive Income (loss) for
                            the three-month and six-month periods ended June 30, 1997 and 1998                              4

                            Consolidated Statements of Cash Flows for the
                            six-month periods ended June 30, 1997 and 1998                                                  5

                            Notes to Consolidated Interim Financial Statements                                              6


                  Item 2.   Management's Discussion and Analysis of
                            Financial Condition and Results of Operations                                                   8


PART II.          OTHER INFORMATION

                  Item 4.   Submission of Matters to a Vote of Security Holders.                                           12

                  Item 5.   Other Information                                                                              12

                  Item 6.   Exhibits and Reports on Form 8-K                                                               12

                  SIGNATURE                                                                                                12
</TABLE> 

              This Quarterly Report on Form 10-Q contains forward-looking
statements. For this purpose, any statements contained herein that are not
statements of historical fact may be deemed to be forward-looking statements.
Without limiting the foregoing, the words "believes," "anticipates," "plans,"
"expects," and similar expressions are intended to identify forward-looking
statements. Many important factors could cause actual results to differ
materially from those indicated by forward-looking statements made herein and
presented elsewhere by management from time to time.

                                       2
<PAGE>
 
                        PART I - FINANCIAL INFORMATION

                                    ITEM 1

                             FINANCIAL STATEMENTS

                                  CHIREX INC.
                          CONSOLIDATED BALANCE SHEETS
                  AS OF DECEMBER 31, 1997 AND JUNE 30, 1998 

                (dollars in thousands except per-share amounts)

<TABLE> 
<CAPTION> 
                                                                    DECEMBER 31,           JUNE 30,                
                                                                        1997                 1998                  
                                                                    -------------        -------------             
                                                                                          (unaudited)              
<S>                                                                 <C>                  <C>                       
ASSETS                                                                                                             
------                                                                                                             
                                                                                                                   
Current Assets:                                                                                                    
                                                                                                                   
      Cash                                                               $ 5,347              $ 2,361              
      Trade and other receivables                                         18,811               14,129              
      Inventories                                                         23,225               29,188              
      Other current assets                                                 3,774                4,802              
                                                                    -------------        -------------             
         Total current assets                                             51,157               50,480              
Property, plant and equipment, net                                       120,755              132,273              
Other non-current assets                                                   3,591                2,497              
Intangible assets, net                                                    27,564               26,980              
                                                                    -------------        -------------             
      TOTAL ASSETS                                                     $ 203,067            $ 212,230              
                                                                    =============        =============             
                                                                                                                   
LIABILITIES AND STOCKHOLDERS' EQUITY                                                                               
------------------------------------                                                                               
                                                                                                                   
Current Liabilities:                                                                                               
                                                                                                                   
      Accounts payable                                                   $ 8,763             $ 14,570              
      Accrued expenses                                                    11,587               12,029              
      Income taxes payable                                                   348                    -              
      Current portion of long-term debt                                    7,311               14,844              
                                                                    -------------        -------------             
         Total current liabilities                                        28,009               41,443              
Long-term debt                                                            69,675               63,312              
Deferred income taxes                                                      7,955                8,917              
Deferred income                                                            4,333                5,778              
Contingencies                                                                  -                    -              
                                                                    -------------        -------------             
      Total liabilities                                                  109,972              119,450              
                                                                    -------------        -------------             
                                                                                                                   
Stockholders' equity:                                                                                              
                                                                                                                   
      Common stock ($.01 par value, 30,000,000 shares authorized,                                                  
         11,792,990 and 11,802,719 shares issued and outstanding                                                   
         on December 31, 1997 and June 30, 1998, respectively)               118                  118              
      Additional paid-in capital                                         100,788              101,010              
      Retained earnings                                                  (11,411)             (11,898)             
      Cumulative translation adjustment                                    3,600                3,550              
                                                                    -------------        -------------             
         Total stockholders' equity                                       93,095               92,780              
                                                                    =============        =============             
      TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                       $ 203,067            $ 212,230              
                                                                    =============        =============             
</TABLE> 

The accompanying notes are an integral part of the consolidated financial
statements.

                                       3
<PAGE>
 
                                  CHIREX INC.
                   CONSOLIDATED STATEMENTS OF OPERATIONS AND

            CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
                FOR THE THREE-MONTH AND SIX-MONTH PERIODS ENDED

                            JUNE 30, 1997 AND 1998

                                  (UNAUDITED)
                   (in thousands, except per-share amounts)

<TABLE> 
<CAPTION> 
                                        Three Months Ended               Six Months Ended         
                                             June 30                         June 30              
                                  -------------------------------  -----------------------------  
                                     1997              1998           1997             1998       
                                  ------------     --------------  ------------     ------------  
<S>                               <C>              <C>             <C>              <C>           
CONSOLIDATED STATEMENTS                                                                           
  OF OPERATIONS                                                                                   
                                                                                                  
Revenues:                                                                                         
                                                                                                  
     Product sales                   $ 19,996           $ 28,359      $ 46,280         $ 51,960   
     License fee and royalty                                                                      
       income                             161                195           383              252   
                                  ------------     --------------  ------------     ------------  
             Total revenues            20,157             28,554        46,663           52,212   
                                  ------------     --------------  ------------     ------------  
                                                                                                  
Costs and expenses:                                                                               
     Cost of goods sold                14,107             21,456        34,778           40,758   
     Selling, general and                                                                         
       administrative                   2,272              3,151         4,566            6,277   
     Research and development             974              1,085         2,081            2,286   
     Other expenses                         -                221             -              221   
     Restructuring charge net                                                                     
       of proceeds from                                                                           
       disposition of                                                                             
       Acetaminophen                                                                              
       business                         6,593                  -         6,593                -   
                                  ------------     --------------  ------------     ------------  
             Total costs                                                                          
               and expenses            23,946             25,913        48,018           49,542   
                                  ------------     --------------  ------------     ------------  
                                                                                                  
Operating profit                       (3,789)             2,641        (1,355)           2,670   
                                                                                                  
Interest expense - net                     59             (1,425)          (75)          (2,829)  
Amortization of goodwill                 (291)              (291)         (582)            (582)  
                                  ------------     --------------  ------------     ------------  
                                                                                                  
Income (loss) before                                                                              
  income taxes                         (4,021)               925        (2,012)            (741)  
Benefit (provision) for                                                                           
  income taxes                          1,327               (316)          516              254   
                                                                                                  
                                  ============     ==============  ============     ============  
Net income (loss)                    $ (2,694)             $ 609      $ (1,496)          $ (487)  
                                  ============     ==============  ============     ============  
                                                                                                  
Weighted average number                                                                           
  of common shares                                                                                
  outstanding                          11,352             11,809        11,149           11,803   
                                  ============     ==============  ============     ============  
                                                                                                  
Basic and diluted net                                                                             
  income (loss) per                                                                               
  common share                        $ (0.24)            $ 0.05       $ (0.13)         $ (0.04)  
                                  ============     ==============  ============     ============  
                                                                                                  
                                                                                                  
CONSOLIDATED STATEMENTS                                                                           
  OF COMPREHENSIVE                                                                                
  INCOME (LOSS)                                                                                   
                                                                                                  
Net income (loss)                    $ (2,694)             $ 609      $ (1,496)          $ (487)  
                                                                                                  
Change in cumulative                                                                              
  translation adjustment                  244               (845)       (1,372)             (50)  
                                  ============     ==============  ============     ============  
Comprehensive net loss               $ (2,450)            $ (236)     $ (2,868)          $ (537)  
                                  ============     ==============  ============     ============  
</TABLE> 


The accompanying notes are an integral part of the consolidated financial
statements.

                                       4
<PAGE>
 
                                  CHIREX INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
            FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 1997 AND 1998
                                  (UNAUDITED)
                                (in thousands)

<TABLE> 
<CAPTION> 
                                                                           Six Months Ended
                                                                               March 31
                                                                   ---------------------------------
                                                                       1997                1998
                                                                   --------------      -------------
<S>                                                                <C>                 <C> 
Cash flows from operating activities:
     Net income (loss)                                                  $ (1,496)            $ (487)
     Adjustments to reconcile net income (loss) to cash provided
        by operating activities:
        Depreciation & amortization                                        4,785              6,246
        Deferred tax provision (benefit)                                       -                868
        Restructuring and impairment charge                               12,901                  -
        Proceeds from sale of acetaminophen business                      (6,308)                 -
        Changes in assets and liabilities:
            Receivables                                                   (2,572)             4,911       
            Inventories                                                   (3,828)            (6,350)
            Other current assets                                            (105)             1,036
            Accounts payable and accrued expenses                         (1,288)             5,911
            Income taxes payable                                           1,458             (1,200)
            Deferred income                                               (2,250)             1,374
                                                                   --------------      -------------
     Net cash provided from operating activities                           1,297             12,309    
                                                                   --------------      -------------
Cash flows from investing activities:
     Proceeds from disposition of acetaminophin business                   4,100                  -
     Capital expenditures                                                 (3,709)           (15,477)
                                                                   --------------      -------------
     Net cash provided from (used in) investing activities                   391            (15,477)
                                                                   --------------      -------------
Cash flows from financing activities:
     Borrowings on line of credit and revolving credit 
       facility, net                                                      (3,771)               (25)
     Proceeds from issuance of stock                                       4,180                  -
     Proceeds from exercise of stock options                                  98                222
                                                                   --------------      -------------
     Net cash provided from financing activities                             507                197
                                                                   --------------      -------------
Effect of exchange rate changes on cash                                      257                (15)
                                                                   --------------      -------------
Net increase (decrease) in cash                                            2,452             (2,986)
Cash at beginning of period                                                  291              5,347
                                                                   --------------      -------------
Cash at end of period                                                    $ 2,743            $ 2,361
                                                                   ==============      =============
</TABLE> 

The accompanying notes are an integral part of the consolidated financial
statements.

                                       5
<PAGE>
 
                                  CHIREX INC.
               NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS


1.  NATURE OF OPERATIONS AND PRINCIPLES OF CONSOLIDATION


NATURE OF OPERATIONS


  ChiRex Inc. (the "Company" or "ChiRex") is a Contract Manufacturing
Organization ("CMO") serving the out-sourcing needs of the pharmaceutical
industry through its extensive pharmaceutical fine chemical manufacturing and
process development capabilities and proprietary technologies. The Company
supports and supplements the in-house development and manufacturing capabilities
of its pharmaceutical and biotechnology customers with a broad range of fully
integrated services, accelerating the time from drug discovery to
commercialization.  The Company manufactures products at its world-class FDA
cGMP manufacturing facilities located in Dudley, England and Annan, Scotland.
ChiRex holds over 50 patents and patent applications in the field of chiral
chemistry.


PRINCIPLES OF CONSOLIDATION


  The financial statements of the Company include the historical results of its
subsidiaries for the entire period presented or from the date of acquisition.

  The interim financial statements, in the opinion of management, reflect all
adjustments (including normal recurring adjustments) necessary for a fair
presentation of the results for the interim period ended June 30, 1998.  The
results of operations for the interim period are not necessarily indicative of
the results of operations expected for the fiscal year.

  See Form 10-K filed as of and for the year ended December 31, 1997 for
additional information.


2.  RECENT ACCOUNTING DEVELOPMENTS:

Net Income (Loss) per Common Share

  Basic income (loss) per common share for the second quarter and six-month
periods ended June 30, 1997 and 1998 were computed by dividing the net income
(loss) by the weighted average shares outstanding during the period in
accordance with Statement of Financial Accounting Standards No. 128, Earnings
per Share ("SFAS 128").  Since the effect of the assumed exercise of stock
options of 605,000 shares and 525,000 shares for the second quarter and first
six months of 1998, respectively, were either diminimus or anti-dilutive, basic
and diluted income (loss) per common share as presented on the statement of
operations are the same.  Upon adoption of SFAS 128 at year-end 1997, the
Company's reported earnings per common share for the second quarter and first
half of 1997 were required to be restated.  There was no effect on net loss per
common share for the second quarter and first half of 1997 from the adoption of
SFAS 128.

Comprehensive Income

  In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS
130").  This statement establishes standards for reporting and display of
comprehensive income and its components.  Components of comprehensive income are
net income and all other non-owner changes in equity such as the change in the
cumulative translation adjustment.  This statement requires that an enterprise:
(a) classify items of other comprehensive income by their nature in a financial
statement and (b) display the accumulated balance of other comprehensive income
separately from retained earnings and additional paid-in capital in the equity
section of a balance sheet.  SFAS 130 is effective for financial statements
issued for periods beginning after December 15, 1997.  Presentation of
comprehensive income for earlier periods provided for comparative purposes is
required and has been presented in these financial statements.

                                       6
<PAGE>
 
3.  SUBSEQUENT EVENT

  In July 1998, the Company and its lenders agreed to an amendment of the
Facilities Agreement entered into in October 1997. The amendment modified
certain terms contained in the Facilities Agreement. Management believes the
Company is in compliance with all terms and covenants of the Facilities
Agreement as amended.

4.  RECLASSIFICATION

  Certain amounts in the prior period's financial statements have been
reclassified to be consistent with the current period presentation.

                                       7
<PAGE>
 
Item 2

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

  The following discussion and analysis should be read in conjunction with the
historical consolidated financial statements and the notes thereto included
elsewhere herein.

INTRODUCTION

  ChiRex Inc. is a CMO serving the out-sourcing needs of the pharmaceutical
industry through its extensive pharmaceutical fine chemical manufacturing and
process development capabilities and proprietary technologies. The Company
supports and supplements the in-house development and manufacturing capabilities
of its pharmaceutical and biotechnology customers with a broad range of fully
integrated services, accelerating the time from drug discovery to
commercialization. The Company manufactures products at its world-class FDA cGMP
manufacturing facilities located in Dudley, England and Annan, Scotland.  ChiRex
holds over 50 patents and patent applications in the field of chiral chemistry.

  In April 1997, the Company disposed of its acetaminophen (paracetamol, an
over-the-counter analgesic) business and in September 1997, the Company ceased
production of acetaminophen.  At the time of the disposition, acetaminophen was
the largest volume product manufactured by the Company, representing
approximately 31% of the Company's 1996 pro-forma revenues, but was not highly
profitable at the gross margin level.  In connection with the disposition of the
business, the Company recorded a $6.6 million pre-tax restructuring charge net
of proceeds on disposition in the second quarter of 1997, and implemented
measures designed to offset the effect of the disposal on operating performance.
The Company's decision to dispose of its acetaminophen business followed a
strategic review of several alternatives and was based on a number of factors,
including the continued domination of the acetaminophen business by high volume,
low cost manufacturers and the Company's expectation that the market price of
acetaminophen would continue to erode.

  On October 31, 1997, the Company completed the purchase of a Glaxo Wellcome
FDA cGMP pharmaceutical production facility located in Annan, Scotland.  The
Company paid approximately $66.8 million (40.0 million) for the facility plus an
additional payment for certain working capital of approximately $1.7 million
((Pounds)1.0 million).  As part of the transaction, Glaxo Wellcome awarded the
Company a five-year contract to supply certain pharmaceutical intermediates and
active ingredients with an aggregate sales value of approximately $450 million.
Under the Asset Purchase Agreement, ChiRex purchased all of the buildings, land
and equipment at the 154-acre Annan, Scotland property, encompassing three main
production facilities plus certain working capital.  The Company plans to invest
approximately $25 million over two years to accommodate newly contracted
products and to modify the facility for general-purpose pharmaceutical fine
chemical manufacturing.  Under the Supply Agreement, ChiRex will manufacture up
to ten products at Annan and Dudley.  The acquisition has been accounted for as
a purchase and, accordingly, the operating results of the Annan facility have
been included in the Company's consolidated financial statements from the date
of acquisition.

  Substantially all of the Company's revenues and expenses are denominated in
Great Britain pounds sterling, and to prepare the Company's financial statements
such amounts are translated into U. S. dollars at average exchange rates in
accordance with generally accepted accounting principles.

                                       8
<PAGE>
 
RESULTS OF OPERATIONS

Three-month period ended June 30, 1997 and 1998

  Total revenues increased $8.4 million, or 41.7% to $28.6 million in the second
quarter of 1998, from $20.2 million in the comparable period in 1997, as new
products came on stream and shipments under the Glaxo Wellcome supply contract
expanded, partly offset by the unfavorable effect on revenues from the sale of
the acetaminophen business which contributed $5.1 million in revenues in the
second quarter of 1997.

  Cost of goods sold increased $7.3 million, or 52.1% to $21.4 million in the
three-month period ended June 30, 1998 from $14.1 million in last year's second
quarter.  This increase is due to the higher volume of new product sales partly
offset by lower acetaminophen sales, expenses associated with new product
introductions and the under-utilization of the Annan facility acquired in the
fourth quarter of 1997 during its re-conditioning into a general purpose
pharmaceutical fine chemical manufacturing facility.  The Company also
experienced production interruptions for one product during the second quarter
that resulted in unfavorable manufacturing variances.  The production
difficulties for this product were resolved and full-scale production resumed in
mid-July 1998.  As a result of the above factors, gross margin percentage in the
second quarter of 1998 decreased to 24.9% from 30.0% in 1997.

  Research and development expenses increased $0.1 million, or 11.3% to $1.1
million in the second quarter of 1998.  This increase was due mainly to the cost
of additional research chemists and pilot plant costs to support the new product
pipeline.

  Selling, general and administrative expenses increased $0.9 million or 38.7%,
to $3.2 million in three-month period ended June 30, 1998 from $2.3 million last
year.  This increase is due primarily to additional expenses associated with the
Annan facility acquired in the fourth quarter of 1997 and expenses incurred
related to the search for a Chief Operating Officer.

  Interest expense was $1.4 million in the second quarter of 1998 compared to
interest income of $0.1 million in last year's second quarter.  This is a result
of higher borrowing levels resulting from the acquisition of the Annan facility
in the fourth quarter of 1997 and significant capital improvement projects.

  Other expenses in the second quarter of 1998 of $0.2 million represents costs
incurred by a special committee of the Company's board of directors whose work
culminated in a restructuring announced in July 1998.  ChiRex expects to post a
one-time after-tax restructuring charge of approximately $3.3 million, or $0.28
cents per share, in the third quarter of 1998.

  In connection with the disposition of the Company's acetaminophen business,
the Company recorded a $6.6 million pre-tax restructuring charge, net of
proceeds on disposition in the second quarter of 1997

  The provision for income taxes was $0.3 million in the three-month period
ended June 30, 1998, which is $1.6 million higher than the $1.3 million benefit
for income taxes in the comparable prior-year period.  This represents an
effective rate of 34.2% in 1998 compared to an effective rate of 33.0% in the
same period in 1997.  The higher effective tax rate in 1998 is the result of
profitability expectations for 1998.

  As a result of the factors described above, the Company reported net income of
$0.6 million in the second quarter of 1998 compared to net loss of $2.7 million
for the comparable prior-year period.

Six-month period ended June 30, 1997 and 1998

  Total revenues increased $5.5 million, or 11.9% to $52.2 million in the first
half of 1998, from $46.7 million in the comparable period in 1997, as new
products came on stream and shipments under the Glaxo Wellcome supply contract
expanded, partly offset by the unfavorable effect on revenues from the sale of
the acetaminophen business which contributed $12.1 million in revenues to the
first six months of 1997.

                                       9
<PAGE>
 
  Cost of goods sold increased $6.0 million, or 17.2% to $40.8 million in the
six-month period ended June 30, 1998 from $34.8 million in last year's first
half.  This increase is due to the higher volume of new product sales partly
offset by lower acetaminophen sales, expenses associated with new product
introductions, and the under-utilization of the Annan facility acquired in the
fourth quarter of 1997 during its re-conditioning into a general-purpose
pharmaceutical fine chemical manufacturing facility.  The Company also
experienced production interruptions for one product during the second quarter
that resulted in unfavorable manufacturing variances.  The production
difficulties for this product were resolved and full-scale production resumed in
mid-July 1998.  As a result of the above factors, gross margin percentage in the
first half of 1998 decreased to 21.9% from 25.5% in 1997.

  Research and development expenses increased $0.2 million, or 9.8% to $2.3
million in the first six months of 1998.  This increase was due mainly to the
cost of additional research chemists and pilot plant costs to support the new
product pipeline.

  Selling, general and administrative expenses increased $1.7 million or 37.5%,
to $6.3 million in six-month period ended June 30, 1998 from $4.6 million last
year.  This increase is due primarily to additional expenses associated with the
Annan facility acquired in the fourth quarter of 1997 and expenses incurred
related to the search for a Chief Operating Officer.

  Interest expense was $2.8 million in the first half of 1998 compared to $0.1
million last year.  This is a result of higher borrowing levels resulting from
the acquisition of the Annan facility in the fourth quarter of 1997 and
significant capital improvement projects.

  The benefit for income taxes was $0.3 million in the six-month period ended
June 30, 1998, which is $0.2 million lower than the $0.5 million benefit for
income taxes in the comparable prior-year period.  This represents an effective
rate of 34.2% in 1998 compared to an effective rate of 25.7% in the same period
in 1997.  The higher effective tax rate in 1998 is the result of profitability
expectations for 1998.

  As a result of the factors described above, the Company reported net loss of
$0.5 million in the first half of 1998 compared to net loss of $1.5 million for
the comparable prior-year period.


LIQUIDITY AND CAPITAL RESOURCES

  Cash provided from operations for the first six months of 1998 of $12.3
million is $11.0 million higher than the $1.3 million provided in the same
period in 1997 and reflects a $5.8 million reduction in the Company's net
investment in operating assets.

  Net cash used in investing activities in the first half of 1998 was $15.4
million compared to $0.4 million source of funds in the same period of 1997.
Capital spending in 1998 includes expenditures for plant maintenance, alteration
of equipment at Dudley to accommodate new products, and modification of the
Annan facility.  The majority of these expenditures are to accommodate newly
contracted products at Dudley and Annan, and to convert the Annan facility to a
general-purpose pharmaceutical fine chemical manufacturing facility.

  Net cash provided from financing activities for the first half of 1998 of $0.2
million is the result of proceeds received from the exercise of stock options.

  The Company expects to satisfy its cash requirements, including the
requirements of its subsidiaries, through internally generated cash and
borrowings.


FOREIGN CURRENCY

  The Company currently expects that sales of its products outside the United
States will continue to be a substantial 

                                       10
<PAGE>
 
percentage of its net sales. The Company currently intends to hedge its foreign
exchange exposure to a certain extent by entering into forward contracts with
banks to the extent that the timing of the currency flows can reasonably be
anticipated. The Company believes it has a natural currency hedge because its
operating expenses tend to be denominated in matched currencies. Also the
Company has partly offset foreign currency-denominated assets with foreign
currency-denominated liabilities.

  Financial results of the Company could be adversely or beneficially affected
by fluctuations in foreign exchange rates. Fluctuations in the value of foreign
currencies will affect the U. S. dollar value of the Company's net investment in
its foreign subsidiaries, with related effects included in a separate component
of stockholders' equity titled Cumulative Translation Adjustments. Operating
results of foreign subsidiaries are translated into U. S. dollars at average
monthly exchange rates and balance sheet amounts are translated at period-end
exchange rates.  In addition, the U. S. dollar value of transactions based in
foreign currency also fluctuates with exchange rates. The Company expects that
the largest foreign currency exposure will result from activity in Great Britain
pounds sterling, German marks and Dutch guilders.

                                       11
<PAGE>
 
PART II - OTHER INFORMATION


ITEM 4.    Submission of Matters to a vote of Security Holders.
           ----------------------------------------------------

           -NONE-

ITEM 5.    Other Information
           -----------------

           -NONE-

ITEM 6.    Exhibits and Reports on Form 8-K
           --------------------------------

           (a)  Exhibits. The exhibits listed on the accompanying Exhibit Index
                are filed as part of this Quarterly Report on Form 10-Q.

           (b)  Current Reports on Form 8-K:
                    On July 7, 1998, the Company filed a Current Report on Form
                    8-K reporting management changes and restructuring.

SIGNATURE


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


                                        CHIREX INC.



Date:  August 14, 1998          By:     /s/ Michael A. Griffith
                                        -----------------------
 
                                        Michael A. Griffith
                                        Co-Chief Executive Officer
                                        and Chief Financial Officer

                                       12
<PAGE>
 
EXHIBIT INDEX


Exhibit Number                          Description
--------------                          -----------

 4.4   First Amendment Dated 30 July 1998 to Facilities Agreement Dated 30
         October 1997
10.41  Consulting Agreement with W. Dieter Zander
10.42  Consulting Agreement with Elizabeth M. Greetham
27     Financial Data Schedule.

                                       13