============================================================================
                                United States
                      SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D.C.   20549


                                  FORM 10-Q


 (Mark One)
   [ X ]  QUARTERLY REPORT FOR THE PERIOD ENDED JUNE 30, 2001 PURSUANT TO
          SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

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

                        Commission file number 0-31781

                         MediChem Life Sciences, Inc.
            (Exact name of registrant as specified in its charter)


           Delaware                                       36-3518660
  -------------------------------                      ----------------
  (State or other jurisdiction of                      (I.R.S. Employer
  incorporation or organization)                      Identification No.)


   2501 Davey Rd., Woodridge, Illinois                       60517
 ----------------------------------------                 ----------
 (Address of principal executive offices)                 (Zip Code)

                                (630) 783-4600
                                --------------
             (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
 such filing requirements for the past 90 days.   Yes  X   No __

 As of August 6, 2001, 26,593,397 shares of the Common Stock, $.01 par value,
 of the registrant were outstanding.

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                      Website is:  http://www.medichem.com

<PAGE>

                MEDICHEM LIFE SCIENCES, INC. AND SUBSIDIARIES
                                  FORM 10-Q
                                    INDEX
                       For Quarter Ended June 30, 2001


                                                                       Page
    Part I.    Financial Information                                   ----

      Item 1.  Financial Statements
                   Condensed Consolidated Balance Sheets                 2
                   Condensed Consolidated Statements of Operations       3
                   Condensed Consolidated Statements of Cash Flows       4
                   Notes to Condensed Consolidated Financial Statements  5

      Item 2.  Management's Discussion and Analysis of Financial
               Condition and Results of Operations                       9

      Item 3.  Quantitative and Qualitative Disclosures About
               Market Risk                                              14

    Part II.   Other Information

      Item 4.  Submission of Matters to a Vote of Security Holders      15

      Item 6.  Exhibits and Reports on Form 8-K                         15

    Signatures                                                          16

<PAGE>

 PART I.  FINANCIAL INFORMATION
 ITEM 1.  FINANCIAL STATEMENTS

<TABLE>

                 MediChem Life Sciences, Inc. and Subsidiaries
                     Condensed Consolidated Balance Sheets

                                                            June 30,           December 31,
                                                             2001                 2000
                                                          ------------         ------------
                     Assets                               (Unaudited)
 <S>                                                     <C>                  <C>
 Current assets:
    Cash and cash equivalents                            $   4,354,321        $  12,812,294
    Accounts receivable, net                                 2,885,966            2,437,234
    Accounts receivable - related party                      1,982,007              729,465
    Investments, available-for-sale securities               6,455,151            8,464,948
    Prepaid assets                                             598,032              623,424
    Deferred taxes                                             100,678              100,678
    Other current assets                                       309,172            1,349,968
                                                          ------------         ------------
        Total current assets                                16,685,327           26,518,011

 Property and equipment, net                                28,716,659           25,632,716
 Intangibles, net                                           28,533,285           30,208,940
 Goodwill, net                                              22,017,719           22,808,774
 Deferred taxes                                              1,981,327                    -
 Other assets                                                  211,068              135,619
                                                          ------------         ------------
        Total assets                                     $  98,145,385        $ 105,304,060
                                                          ============         ============

 Liabilities and Stockholders' Equity
 Current liabilities:
    Current portion of debt and capital
      lease obligations                                  $   1,227,665        $     247,704
    Accounts payable                                         1,410,671            2,254,930
    Accrued expenses                                         1,774,947            3,835,619
    Deferred revenue                                           600,694            1,883,349
                                                          ------------         ------------
        Total current liabilities                            5,013,977            8,221,602

 Long-term debt                                             12,164,348           10,702,411
 Capital lease obligations, less current portion             1,061,866              148,840
 Deferred taxes                                             10,962,676           11,636,370
                                                          ------------         ------------
        Total liabilities                                   29,202,867           30,709,223

 Stockholders' equity:
    Preferred stock, $.01 par value; 10,000,000 shares
      authorized, none issued and outstanding
      at June 30, 2001 and December 31, 2000                         -                    -
    Common stock, $.01 par value, 100,000,000 shares
      authorized, 26,562,197 shares issued and outstanding
      at June 30, 2001; 26,510,042 shares issued and
      outstanding at December 31, 2000                         265,622              265,100
    Additional paid-in capital                              89,779,277           89,711,354
    Deferred compensation                                     (159,460)            (142,909)
    Accumulated deficit                                    (20,941,952)         (15,237,893)
    Accumulated other comprehensive loss                          (969)                (815)
                                                          ------------         ------------
        Total stockholders' equity                          68,942,518           74,594,837
                                                          ------------         ------------
        Total liabilities and stockholders' equity       $  98,145,385        $ 105,304,060
                                                          ============         ============

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

</TABLE>
<PAGE>
<TABLE>

                MediChem Life Sciences, Inc. and Subsidiaries
               Condensed Consolidated Statements of Operations
                                 (Unaudited)

                                                                  Three-month period          Six-month period
                                                                    ended June 30,             ended June 30,
                                                              -------------------------   -------------------------
                                                                  2001          2000          2001          2000
                                                              -----------   -----------   -----------   -----------
 <S>                                                         <C>           <C>           <C>           <C>
 Contract Revenue:
  Contract revenue                                           $  4,343,968  $  4,099,872  $  8,046,703  $  7,533,945
  Contract revenue-related party                                  472,135       648,776     2,724,551     1,356,485
                                                              -----------   -----------   -----------   -----------
 Total contract revenue                                         4,816,103     4,748,648    10,771,254     8,890,430

 Contract service costs:
  Contract service costs                                        2,901,616     2,001,105     5,418,921     3,848,579
  Contract service costs-related party                            288,887       295,607       924,794       599,407
                                                              -----------   -----------   -----------   -----------
 Total contract service costs                                   3,190,503     2,296,712     6,343,715     4,447,986

 Gross profit                                                   1,625,600     2,451,936     4,427,539     4,442,444

  Milestone and intellectual property revenue, net                188,346       222,000       377,525       222,000
  Milestone and intellectual property revenue-related
    party, net                                                          -             -             -       350,000
                                                              -----------   -----------   -----------   -----------
 Total milestone and intellectual property revenue, net           188,346       222,000       377,525       572,000

 Operating expenses:
  Selling, general and administrative                           4,107,673     2,285,436     8,322,175     4,128,171
  Research and development                                        462,044             -       868,697             -
  Depreciation and amortization                                 1,977,129       728,968     3,823,537       989,196
                                                              -----------   -----------   -----------   -----------
 Total operating expenses                                       6,546,846     3,014,404    13,014,409     5,117,367

 Loss from operations                                          (4,732,900)     (340,468)   (8,209,345)     (102,923)

 Other income (expense):
  Interest expense                                               (319,667)     (294,791)     (339,420)     (475,200)
  Interest income                                                 154,995        78,590       416,618       117,914
  Loss on disposal of asset                                       (22,266)            -       (22,266)            -
  Change in value of redeemable stock warrants                          -             -             -    (1,905,487)
                                                              -----------   -----------   -----------   -----------
 Total other income (expense)                                    (186,938)     (216,201)       54,932    (2,262,773)
                                                              -----------   -----------   -----------   -----------
 Loss before income taxes                                      (4,919,838)     (556,669)   (8,154,413)   (2,365,696)
 Benefit for income taxes                                      (1,328,931)      (38,102)   (2,450,354)            -
                                                              -----------   -----------   -----------   -----------
 Net loss                                                      (3,590,907)     (518,567)   (5,704,059)   (2,365,696)
   Less:
      Accretion to redemption value of preferred stock                  -       331,116             -       654,336
                                                              -----------   -----------   -----------   -----------
      Net loss available to common stockholders              $ (3,590,907) $   (849,683) $ (5,704,059) $ (3,020,032)
                                                              ===========   ===========   ===========   ===========
 Per share data - basic and diluted:
      Net loss available to common stockholders              $      (0.14) $      (0.09) $      (0.22) $      (0.36)
                                                              ===========   ===========   ===========   ===========
      Pro forma net loss available to common stockholders                  $      (0.06)               $      (0.22)
                                                                            ===========                 ===========

      Weighted average number of common shares outstanding     26,531,227     9,120,675    26,520,878     8,291,263
                                                              ===========   ===========   ===========   ===========

      Pro forma weighted average number of common
        shares outstanding                                                   13,813,349                  13,813,349
                                                                            ===========                 ===========

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

</TABLE>
<PAGE>
<TABLE>

                MediChem Life Sciences, Inc. and Subsidiaries
               Condensed Consolidated Statements of Cash Flows
                                 (Unaudited)

                                                                Six-month period
                                                                 ended June 30,
                                                          ---------------------------
                                                              2001           2000
                                                          ------------   ------------
 <S>                                                     <C>            <C>
  Cash flows from operating activities:
    Net loss                                             $  (5,704,059) $  (2,365,696)
    Adjustments to reconcile net loss to net
      cash used in operating activities:
        Depreciation and amortization                        3,823,537        989,196
        Bad debt expense                                        14,373        (13,980)
        Deferred taxes                                      (2,655,021)             -
        Redeemable stock warrant appreciation                        -      1,905,487
        Noncash compensation expense                            36,642          4,154
        Noncash interest expense                                     -         39,597
        Loss on disposal of asset                               22,266              -
        Changes in assets and liabilities:
          Accounts receivable                               (1,715,647)      (247,220)
          Prepaid and other current assets                   1,066,188       (190,358)
          Other assets                                         (75,449)      (591,603)
          Accounts payable                                    (844,259)       207,044
          Accrued expenses                                  (2,060,672)    (1,069,786)
          Other liabilities                                 (1,282,655)      (742,677)
                                                          ------------   ------------
  Net cash used in operating activities                     (9,374,756)    (2,075,842)
                                                          ------------   ------------
  Cash flows from investing activities:
    Capital expenditures                                    (3,189,431)    (3,021,015)
    Purchase of intangibles                                    (29,900)             -
    Proceeds from the sale of securities                     2,009,643              -
    Cost of purchased businesses, net of cash acquired               -       (336,744)
                                                          ------------   ------------
  Net cash used in investing activities                     (1,209,688)    (3,357,759)
                                                          ------------   ------------

  Cash flows from financing activities:
    Net borrowings under revolving line of credit                    -      2,000,000
    Proceeds from the issuance of loans payable              2,641,175              -
    Repayment of loans payable                                (381,906)       (21,749)
    Repayment of capital lease obligations                    (148,050)      (109,626)
    Repayment of debt to stockholder                                 -     (3,000,000)
    Proceeds from options exercised                             15,252              -
                                                          ------------   ------------
  Net cash provided by (used in) financing activities        2,126,471     (1,131,375)
                                                          ------------   ------------

  Net decrease in cash and cash equivalents                 (8,457,973)    (6,564,976)

  Cash and cash equivalents at beginning of period          12,812,294      8,164,730
                                                          ------------   ------------
  Cash and cash equivalents at end of period             $   4,354,321  $   1,599,754
                                                          ============   ============

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

</TABLE>

               MEDICHEM LIFE SCIENCES, INC. AND SUBSIDIARIES
           NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                (Unaudited)

 (1)  Basis of Presentation

 The accompanying  condensed  consolidated  financial  statements  have  been
 prepared in accordance with accounting principles generally accepted in  the
 United States of America and  applicable Securities and Exchange  Commission
 regulations for interim financial statements.  These financial statements do
 not include  all  of  the  information  and  notes  required  by  accounting
 principles generally accepted in the United  States of America for  complete
 financial  statements.    In  the  opinion  of  management,  the   financial
 statements presented contain all adjustments, consisting of normal recurring
 adjustments, which are necessary  for a fair  presentation of the  financial
 position and results of operations for  the periods presented.  The  results
 of operations for the three-month and six-month periods ended June 30,  2001
 are not necessarily indicative of the  operating results for the full  year.
 These financial statements should  be read in  conjunction with our  audited
 financial statements and the notes thereto included  in our Company's Annual
 Report on Form 10-K for the fiscal year ended December 31,2000.

 (2)  Reclassifications

 Certain  amounts  in  previously  issued  financial  statements  have   been
 reclassified to conform to the current year's presentation.  For the  three-
 month and  six-month  periods ended  June  30, 2001,  expenses  relating  to
 internal research and development activities were separately identified  and
 categorized as a  new line  item entitled  research and  development in  the
 condensed consolidated statements of operations.

 (3)  Recent Accounting Pronouncements

 In June 2001, the Financial Accounting  Standards Board issued Statement  of
 Financial Accounting  Standards No.  141, Business  Combinations (FAS  141),
 which supersedes  Accounting  Principles  Board  Opinion  No.  16,  Business
 Combinations, and  Statement  of  Financial  Accounting  Standards  No.  38,
 Accounting for Pre-acquisition Contingencies of Purchased Enterprises.  This
 Statement establishes  financial  accounting  and  reporting  standards  for
 business combinations.  The provisions of this Statement are required to  be
 applied  to  all  business  combinations  initiated  after  June  30,  2001.
 Management is  currently evaluating  the impact,  if  any, of  adopting  the
 provisions of FAS 141.

 In June 2001, the Financial Accounting  Standards Board issued Statement  of
 Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets
 (FAS 142),  which supersedes  Accounting Principles  Board Opinion  No.  17,
 Intangible  Assets,  and  establishes  financial  accounting  and  reporting
 standards for intangible  assets acquired individually  or with  a group  of
 other assets at acquisition.  This Statement addresses financial  accounting
 and reporting for goodwill and other  intangible assets subsequent to  their
 acquisition.  Upon  adoption of  FAS 142, the  Company will  be required  to
 reassess the  useful lives  and residual  values  of all  intangible  assets
 acquired, and make any necessary amortization period adjustments by the  end
 of the first interim period after adoption.  In addition, to  the  extent an
 intangible asset  is identified  as having  an indefinite  useful life,  the
 Company will be  required to  test the  intangible asset  for impairment  in
 accordance with the provisions of FAS  142 within the first interim  period.
 The provisions of this  Statement are required to  be applied starting  with
 fiscal years  beginning  after  December 15,  2001.Management  is  currently
 evaluating the impact, if any, of adopting the provisions of FAS 142.


 (4) Business Combinations

 On May 31, 2000, we acquired all the outstanding common stock of  ThermoGen,
 Inc. and Emerald  BioStructures, Inc.  The acquisitions  were accounted  for
 using the purchase method of accounting.

 The following unaudited pro forma financial  information for the six  months
 ended June 30, 2000 presents combined  results of operations of the  Company
 as if ThermoGen and  Emerald BioStructures had been  acquired on January  1,
 2000.  The pro forma financial information does not necessarily reflect  the
 results of operations  that would have  occurred had  the acquisitions  been
 consummated at the beginning of the period presented.


            Total contract revenue                      $ 10,040,279
            Net loss available to common stockholders   $ (4,579,847)
            Per share net loss available to common
            stockholders - basic and diluted            $      (0.24)


 (5) Related Party Transactions

 On February 22, 2001, the Company entered into a contract with Advanced Life
 Sciences, Inc. to produce and deliver  a certain compound for $1.1  million.
 Advanced Life Sciences,  Inc.  is  an early stage drug  development  company
 owned by MediChem's Chairman, CEO and principal stockholder.  The price  for
 producing the  compound approximates  the fee  that would  be charged  by  a
 third-party  chemistry  service  provider, and the compound was delivered in
 March 2001.  As  of  August 10, 2001,  the Company has received a payment of
 $300,000  on the receivable  for  this contract  sale.  The sole shareholder
 of  Advanced  Life  Sciences has guaranteed  the  payment of  the  remaining
 receivable by the end of September 2001.

 (6) Debt

 Effective June 1, 2001, the  Company converted its $12,000,000  construction
 loan related to its recently completed  Woodridge, Illinois facility into  a
 5-year mortgage  loan amortized  over 20  years.   The  loan has  a  limited
 unsecured principal  guaranty from  the Company's  Chairman and  CEO in  the
 amount of $3,000,000.  The guarantee will decline by $500,000 at each fiscal
 year end, starting at December 31, 2001.   Repayment of the loan is  secured
 by a mortgage and security agreement creating a first and prior lien on  the
 building  and  all  fixtures  and  improvements,  and  a  first   collateral
 assignment of  all  rents, issues,  security  deposits and  profits  of  the
 project.  Interest on the first $5.0 million  of the loan is fixed at  7.74%
 through May 2002.  Interest on the remaining $7.0 million will be calculated
 on  the  30-day  LIBOR  floating  rate  plus  225  basis  points.  Principal
 reductions on  the loan  will equal  $50,000 per  month with  the  remaining
 balance becoming  due at  the end  of the  loan  term.   At June  30,  2001,
 $12,000,000 was outstanding under the mortgage loan.

 During the second  quarter, the Company  entered into  two promissory  notes
 with General Electric  Capital Corporation  for the  purchase of  laboratory
 equipment.  These notes were for $442,220 and $533,080 and bear interest  at
 fixed rates of 9.57% and  9.47%, respectively.  The  terms of the notes  are
 four years and  are payable in  equal monthly payments  based on a  48-month
 amortization plus  interest.   These  notes  are secured  by  the  equipment
 purchased.


 (7) Net Loss Per Share

<TABLE>

 The following table summarizes the calculations for net loss per share:

                                                       For the three-month period ended
                                   -----------------------------------------------------------------------------
                                               June 30, 2001                         June 30, 2000
                                   -------------------------------------  --------------------------------------
                                                   Average                                Average
                                   Income (loss)   shares      Per share  Income (loss)   shares      Per share
                                    (numerator) (denominator)   amount     (numerator) (denominator)   amount
                                    -----------  -----------    ------     -----------  -----------    ------
 <S>                               <C>           <C>           <C>        <C>           <C>           <C>
 Net loss                          $ (3,590,907)                          $   (518,567)
   Less accretion to redemption
    value of preferred stock                  -                                331,116
                                    -----------                            -----------
 Common stock outstanding                         26,531,227
                                                 -----------
 Class A common stock
  outstanding                                                                             9,120,675
                                                                                         ----------
 Basic and diluted loss per share:
  Net loss available
    to common stockholders         $ (3,590,907)  26,531,227   $ (0.14)   $  (849,683)    9,120,675   $ (0.09)
                                    ===========  ===========    ======     ===========  ===========    ======

                                                         For the six-month periods ended
                                   -----------------------------------------------------------------------------
                                               June 30, 2001                         June 30, 2000
                                   -------------------------------------  --------------------------------------
                                                   Average                                Average
                                   Income (loss)   shares      Per share  Income (loss)   shares      Per share
                                    (numerator) (denominator)   amount     (numerator) (denominator)   amount
                                    -----------  -----------    ------     -----------  -----------    ------
 <S>                               <C>           <C>           <C>        <C>           <C>           <C>
 Net loss                          $ (5,704,059)                          $ (2,365,696)
   Less accretion to redemption
    value of preferred stock                  -                                654,336
                                    -----------                            -----------
 Common stock outstanding                         26,520,878
                                                 -----------
 Class A common stock
   outstanding                                                                            8,291,263
                                                                                        -----------
 Basic and diluted loss per share:
  Net loss available
    to common stockholders         $ (5,704,059)  26,520,878   $ (0.22)   $ (3,020,032)   8,291,263   $ (0.36)
                                    ===========  ===========    ======     ===========  ===========    ======

</TABLE>

 Basic and diluted  net earnings  (loss) per  common share  are presented  in
 conformity with SFAS  No. 128,  "Earnings Per Share",  and SAB  98, for  all
 periods  presented.   Under the  provisions  of  SAB 98,  common  stock  and
 redeemable convertible preferred stock that has  been issued or granted  for
 nominal consideration prior to the anticipated effective date of the initial
 public offering must be included in the calculation of basic and diluted net
 earnings (loss) per common share as if these shares had been outstanding for
 all periods presented.

 In accordance with SFAS No. 128,  basic and diluted net earnings (loss)  per
 share have  been computed  using the  weighted-average number  of shares  of
 common stock outstanding during the period.  Pro forma basic and diluted net
 earnings (loss) per common share, as presented in the condensed consolidated
 statements of operations,  has been computed  for the  three-month and  six-
 month periods ended June 30, 2000 as described above, and also gives  effect
 to  the  conversion  of  the  Company's   Class  A  preferred  stock   which
 automatically converted to common stock immediately prior to the  completion
 of the Company's initial public offering on October 26, 2000 (using the  "as
 if converted" method) from the original date of issuance.

 (8) Comprehensive Income (Loss)

 The following table presents the  components of the Company's  comprehensive
 loss for the six-months ended June 30, 2001:

           Net loss                                   $ (5,704,059)

           Other comprehensive loss
             Unrealized gain (loss) on
              available-for-sale securities                   (154)
                                                       -----------
           Total comprehensive loss                   $ (5,704,213)
                                                       ===========


 (9) Supplemental Cash Flow Information

 The following table presents the supplemental cash flow information for  the
 six-month periods ended June 30, 2001 and 2000:




                                      For the six-month period ended June 30,
                                      ---------------------------------------
                                             2001                  2000
                                         ----------             ----------
 Supplemental disclosure of
  cash flow information:
   Interest paid                        $   491,155            $   423,263
   Income taxes paid                    $         -            $   664,692

 Supplemental disclosure of
  non-cash investing activities:
   Equipment acquired under
    capital lease                       $ 1,243,705            $         -

 The company purchased all of the
   capital stock of ThermoGen
   and Emerald for $41,691,888.
   Liabilities were assumed as
   follows:
    Fair value of assets acquired       $         -            $43,526,286
    Class A common stock instruments
     issued for capital stock           $         -            $41,355,144
    Cash paid                           $         -            $   336,744
    Liabilities assumed                 $         -            $ 1,841,470



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

 OVERVIEW

 Founded in 1987, we believe we were the first independent chemistry  company
 to  offer  a  broad array  of discovery-related medicinal chemistry services
 to  pharmaceutical  and  biotechnology  customers.  From  a company  focused
 exclusively on medicinal chemistry  services, we have  evolved into a  full-
 service drug discovery technology and  services company. Our development  of
 strong relationships with  pharmaceutical companies  by initially  providing
 basic medicinal chemistry services helped us  to identify their unmet  needs
 in the later stages of the drug discovery process. In response, we  expanded
 our  service  offerings  to  include  process  development,  analytical  and
 separations chemistry and chemical synthesis and scale up.  To capitalize on
 recent  advances  in  genomics,  we  have  acquired and developed technology
 and  services  in  early-stage  proteomics,  combinatorial   chemistry   and
 biocatalysis.

 ACQUISITIONS

 On May 31, 2000, we acquired all the outstanding common stock of  ThermoGen,
 Inc. and Emerald  BioStructures, Inc.  The acquisitions  were accounted  for
 using the  purchase  method of  accounting  and our  results  of  operations
 included the results of ThermoGen and  Emerald BioStructures since the  date
 of acquisition.  We issued approximately  5.0 million shares of our Class  A
 common stock in exchange for the outstanding shares of ThermoGen and Emerald
 BioStructures.  The  purchases resulted  in approximately  $55.7 million  of
 goodwill and intangibles.

 INITIAL PUBLIC OFFERING

 On October 31, 2000, we completed  our initial public offering of  7,360,000
 shares of common stock (which included  960,000 over-allotment shares) at  a
 public offering price of $7.00 per share.  We received net proceeds of $45.3
 million.  We  used $9.7 million  of the net  proceeds to repay  in full  and
 terminate our credit facility, $11.5 million for the mandatory redemption of
 outstanding preferred stock,  $2.1 million  for the  optional redemption  of
 outstanding warrants,  $1.6 million  for  general corporate  purposes,  $1.5
 million to repay a note payable to  a stockholder and $0.4 million to  repay
 outstanding shareholder  loans arising  from the  acquisition of  ThermoGen,
 Inc.


 RESULTS OF OPERATIONS

 Three-month period ended June 30, 2001 compared with the three-month period
 ended June 30, 2000

 Contract revenue
 Total contract revenue  including related party  increased $0.1 million,  or
 1%, to $4.8  million for the  three-month period ended  June 30, 2001,  from
 $4.7  million  for the  three-month period  ended June  30, 2000.   Contract
 revenue excluding  related  party  increased $0.2  million,  or 6%, to  $4.3
 million for the three-month  period ended June 30,  2001, from $4.1  million
 for the three-month period ended June 30, 2000.  Increased  contract revenue
 excluding related  party was  achieved from  higher  volume in  our  service
 offerings for structural biology and  additional research grants.   Contract
 revenue-related party decreased $0.1  million, or 27%,  to $0.5 million  for
 the three-month period ended June 30, 2001, from $0.6 million for the three-
 month period ended June 30, 2000.  The decrease in contract  revenue-related
 party was a result of reduced project load with Advanced Life Sciences.

 Gross profit
 Gross profit from total contract revenue decreased $0.9 million, or 34%,  to
 $1.6 million  for the  three-month period  ended June  30, 2001,  from  $2.5
 million for  the three-month  period  ended June  30,  2000.   Gross  profit
 excluding related party decreased $0.7 million, or 31%, to $1.4 million  for
 the three-month period ended June 30, 2001, from $2.1 million for the three-
 month period ended June 30, 2000.  Related party gross profit decreased $0.2
 million, or 48%, to $0.2 million  for the three-month period ended June  30,
 2001, from $0.4 million for the three-month period ended June 30, 2000.

 Gross profit as a percent of total contract revenue decreased to 34% for the
 three-month period ended June 30, 2001, from 52% for the three-month  period
 ended June 30, 2000.  Gross profit  excluding related party as a percent  of
 contract revenue decreased to 33% for the three-month period ended June  30,
 2001, from 51% for the three-month period ended June 30, 2000.  The majority
 of the reduction in gross profit excluding related party is attributable  to
 the  emphasis  on  selling  multi-disciplinary  service  offerings  in   the
 marketplace.  This is because the sell-cycle time associated with  marketing
 and closing  drug discovery  and development  programs  is longer  than  our
 traditional chemical synthesis  and scale-up projects.   Longer  sell-cycles
 contribute to lower utilization of staff.   The lower utilization is also  a
 result of new hires  in scientific staff to  meet the needs associated  with
 planned revenue growth.   Because the  scientific staff  represents a  fixed
 cost to the  Company, utilization varies  with changes  in contract  service
 revenue volume.   Related party  gross profit  decreased to  39% of  related
 party contract revenue for the three-month period ended June 30, 2001,  from
 54% for the three-month period ended June 30, 2000.  The decrease in related
 party gross profit  was a result  of reduced project  load and lower  margin
 business with Advanced Life Sciences.

 Milestone and intellectual property revenue
 Milestone and intellectual  property revenue decreased  $34,000, or 15%,  to
 $188,000 for the three-month period ended  June 30, 2001, from $222,000  for
 the three-month period ended June 30, 2000.  All milestone revenue earned in
 2001 represented third party activity.

 Operating expenses
 Selling, general and administrative expenses increased $1.8 million, or 80%,
 to $4.1 million for  the three-month period ended  June 30, 2001, from  $2.3
 million for the three-month period ended June 30, 2000.  As a percentage  of
 total  contract  revenues,  selling,  general  and  administrative  expenses
 increased 37 percentage points to 85% for the three-month period ended  June
 30, 2001, from  48% for the  three-month period ended  June 30,  2000.   The
 increase in selling, general and  administrative expenses was due  primarily
 to expanding  our  geographic presence  through  four new  market  locations
 including two new sales offices, an increase in administrative and marketing
 personnel to support our expanding operations and customer base, an increase
 in  administrative  expenses  associated  with  the  ThermoGen  and  Emerald
 BioStructures operations and an increase  in facility costs associated  with
 the development of our Woodridge Discovery Center.

 Research and  development expenses  include  compensation and  benefits  for
 scientific personnel for  work performed on  un-funded proprietary  research
 projects and costs of supplies and  related chemicals.  Non-funded  research
 and development was $0.5 million for  the three-month period ended June  30,
 2001 compared to $0 for  the three-month period ended  June 30, 2000.   This
 non-funded research  and  development  is distinguished  from  the  research
 expenses reported in the  past.  The research  and development disclosed  in
 our Annual Report on Form 10-K for 2000 represented research funded  through
 SBIR grant programs.

 Depreciation and amortization expenses increased  $1.3 million, or 171%,  to
 $2.0 million  for the  three-month period  ended June  30, 2001,  from  $0.7
 million for the three-month  period ended June 30,  2000.  The increase  was
 due to $0.8 million of amortization expense resulting from intangible assets
 acquired in  the  ThermoGen  and Emerald  BioStructures  acquisitions,  $0.2
 million of  incremental  depreciation  expense  associated  with  facilities
 expansion, and the balance was the result of additional capital spending.

 Other expenses, net
 Interest income increased to $155,000 in  the  three-month period ended June
 30, 2001,  from $79,000 in the three-month period ended June 30, 2000.  This
 increase is  due to  interest earned  on the  available-for-sale  securities
 purchased with  proceeds  received  from our  October  2000  initial  public
 offering.

 Interest expense increased to $320,000 for the three-month period ended June
 30, 2001, from $295,000 for the three-month period ended June 30, 2000.  The
 interest expense for the period ended June 30, 2001 included interest on the
 Woodridge facility construction loan  and mortgage loan.   Interest paid  on
 the  construction  loan was  capitalized until  March 2001.  In  the  second
 quarter of 2001, this loan was converted into a mortgage loan.

 Income taxes
 An income tax  benefit of  $1.3 million  was recognized  in the  three-month
 period ended June  30, 2001 compared  to a tax  benefit of  $38,000 for  the
 three-month period ended June 30, 2000.  The tax benefit was recognized as a
 result of a net  operating loss and temporary  differences arising from  the
 amortization  of  intangible  assets  of  approximately  $1.0  million   and
 $300,000, respectively.  The net taxable  losses  generated this year can be
 used  to offset future taxable income  for a period of up  to 20 years.  The
 Company believes it is more likely than not that it will be able to  utilize
 the net operating loss  carry forward when  operations become profitable  in
 future years.

 Six-month period ended June 30, 2001 compared with the six-month period
 ended June 30, 2000

 Contract revenue
 Total contract revenue  including related party  increased $1.9 million,  or
 21%, to $10.8  million for the  six-month period ended  June 30, 2001,  from
 $8.9  million  for  the  six-month period  ended  June  30, 2000.   Of  this
 increase, $1.0  million was  due  to revenue  generated  from the  May  2000
 acquisitions, while the remainder  of the increase is  due to general  sales
 growth.  Contract revenue excluding related party increased $0.5 million, or
 7%, to $8.0 million for the six-month period ended June 30, 2001, from  $7.5
 million for the six-month  period ended June 30,  2000.  Increased  contract
 revenue excluding  related party  was achieved  from  higher volume  in  our
 service offerings  for structural  biology and  additional research  grants.
 Contract revenue-related  party increased  $1.3 million,  or 101%,  to  $2.7
 million for the six-month period ended June 30, 2001, from $1.4 million  for
 the six-month period ended June 30, 2000.  The increase in contract revenue-
 related party was achieved primarily from a chemical synthesis and scale  up
 project with Advanced Life Sciences.

 Gross profit
 Gross profit from total contract revenue was $4.4 million for the  six-month
 periods ended  June 30,  2001 and  June 30,  2000.   Gross profit  excluding
 related party decreased $1.1 million, or  29%, to $2.6 million for the  six-
 month period ended June 30, 2001, from $3.7 million for the six-month period
 ended June 30, 2000.  Related party gross profit increased $1.0 million,  or
 138%, to $1.8  million for the  six-month period ended  June 30, 2001,  from
 $0.8 million for the six-month period ended June 30, 2000.

 Gross profit as a percent of total contract revenue decreased to 41% for the
 six-month period ended  June 30,  2001, from  50% for  the six-month  period
 ended June 30, 2000.  Gross profit  excluding related party as a percent  of
 contract revenue decreased to  33% for the six-month  period ended June  30,
 2001, from 49% for the six-month period  ended June 30, 2000.  The  majority
 of the reduction in gross profit excluding related party is attributable  to
 the  emphasis  on  selling  multi-disciplinary  service  offerings  in   the
 marketplace.  This is because the sell-cycle time associated with  marketing
 and closing  drug discovery  and development  programs  is longer  than  our
 traditional chemical synthesis  and scale-up projects.   Longer  sell-cycles
 contribute to lower utilization of staff.   The lower utilization is also  a
 result of new hires  in scientific staff to  meet the needs associated  with
 planned revenue growth.   Because the  scientific staff  represents a  fixed
 cost to the  Company, utilization varies  with changes  in contract  service
 revenue  volume.  Related party  gross profit  increased to  66% of  related
 party contract revenue for  the six-month period ended  June 30, 2001,  from
 56%  for  the  six-month  period ended  June  30,  2000.  This  increase  is
 attributed to a chemical synthesis and  scale up project with Advanced  Life
 Sciences.

 Milestone and intellectual property revenue
 Milestone and intellectual property revenue  decreased $194,000, or 34%,  to
 $378,000 for the six-month period ended June 30, 2001, from $572,000 for the
 six-month period ended June 30, 2000.  All milestone revenue earned in  2001
 represented third party activity.


 Operating expenses
 Selling, general  and administrative  expenses  increased $4.2  million,  or
 102%, to $8.3  million for the  six-month period ended  June 30, 2001,  from
 $4.1 million for the six-month period ended June 30, 2000.  As a  percentage
 of total  contract revenues,  selling, general  and administrative  expenses
 increased 31 percentage points  to 77% for the  six-month period ended  June
 30, 2001,  from 46%  for the  six-month period  ended  June  30, 2000.   The
 increase in selling, general and  administrative expenses was due  primarily
 to expanding  our  geographic presence  through  four new  market  locations
 including two new sales offices, an increase in administrative and marketing
 personnel to support our expanding operations and customer base, an increase
 in  administrative  expenses  associated  with  the  ThermoGen  and  Emerald
 BioStructures operations and an increase  in facility costs associated  with
 the development of our Woodridge Discovery Center.

 Research and  development expenses  include  compensation and  benefits  for
 scientific personnel for  work performed on  un-funded proprietary  research
 projects  and  costs  of  supplies  and  related  chemicals.   Research  and
 development was $0.9 million  for the six-month period  ended June 30,  2001
 compared to $0  for the six-month  period ended June  30, 2000.   This  non-
 funded research and development is distinguished from the research  expenses
 reported in the past.  The research and development disclosed in our  Annual
 Report on Form 10-K for 2000 represented research funded through SBIR  grant
 programs.

 Depreciation and amortization expenses increased  $2.8 million, or 287%,  to
 $3.8 million for the six-month period ended June 30, 2001, from $1.0 million
 for the six-month period ended June 30, 2000.  The increase was due to  $2.1
 million of amortization expense resulting from intangible assets acquired in
 the ThermoGen  and  Emerald  BioStructures  acquisitions,  $0.3  million  of
 incremental depreciation expense associated  with facilities expansion,  and
 the balance was the result of additional capital spending.

 Other expenses, net
 Interest income increased to $417,000 in the six-month period ended June 30,
 2001, from  $118,000 in  the six-month  period ended  June 30,  2000.   This
 increase is  due to  interest earned  on the  available-for-sale  securities
 purchased with  proceeds  received  from our  October  2000  initial  public
 offering.

 Interest expense decreased to $339,000 for  the six-month period ended  June
 30, 2001, from $475,000 for the six-month  period ended June 30, 2000.   The
 interest expense for the period ended June 30, 2001 included interest on the
 Woodridge facility construction loan  and mortgage loan.   Interest paid  on
 the construction  loan was  capitalized until  March 2001.   In  the  second
 quarter of 2001, this loan was converted into a mortgage loan.

 Income taxes
 An income tax benefit of $2.5 million was recognized in the six-month period
 ended June 30, 2001.   No tax expense was  recorded in the six-month  period
 ended June 30, 2000.  The 2001 tax benefit  was recognized as a result of  a
 net operating loss and temporary  differences arising from the  amortization
 of  intangible   assets  of   approximately  $1.8   million  and   $674,000,
 respectively.  The  net taxable losses  generated this year  can be used  to
 offset future taxable income for a period of 20 years.  The Company believes
 it is more likely than not that it will be able to utilize the net operating
 loss carry forward when operations become profitable in future years.


 LIQUIDITY AND CAPITAL RESOURCES

 We have historically funded our business through cash flows from operations,
 proceeds from  borrowings and  the issuance  of preferred  stock and  public
 common stock.  During the six-month period ended June 30, 2001, we used $9.4
 million in cash flows from operations of which $6.4 million was attributable
 to 2001 operations  and $3.0 million  was attributable  to 2000  operations.
 For the year  ended December  31, 2000, we  generated $1.0  million in  cash
 flows from operations.

 During the six-month period ended June 30, 2001 and the year ended  December
 31, 2000, total capital  expenditures were $3.2  million and $20.3  million,
 respectively.  Capital expenditures were incurred in 2001 predominantly  for
 the purchase of laboratory equipment to enhance our service offerings.

 In April 1999, we began to develop a 14-acre site in Woodridge, Illinois for
 the construction of  a new 100,000  square foot  headquarters and  discovery
 laboratories center.  This facility cost $18.5 million for construction  and
 an  additional  $3.8  million  for  laboratory  instrumentation,   software,
 furniture  and equipment  upgrades.  In May  2000, we  received an  18-month
 construction loan in  the amount of  $12.0 million to  finance the  project.
 Effective June 1,  2001, we converted  the $12.0  million construction  loan
 into a 5-year mortgage loan  amortized over 20 years.  The new facility came
 into  operation  in  the  first  quarter  of  2001.   The  new  offices  and
 laboratories have been developed with the capability of being expanded by an
 additional 100,000 square feet.

 Working capital  was $11.7  million  at June  30,  2001, compared  to  $18.3
 million at December 31, 2000.  The  decrease in working capital at June  30,
 2001, was  primarily due  to the  operating loss,  a reduction  of  accounts
 payable and accrued expenses and an increase in accounts receivable.

 We believe that the remaining net proceeds from our initial public offering,
 together with  cash  generated  from operations  and  borrowings  under  the
 mortgage loan, will be  sufficient to fund  our anticipated working  capital
 needs and capital expenditures, other  than financing necessary to  complete
 future acquisitions,  if any,  for at  least the  next 6  months.   We  have
 secured the  services of  two investment  banking  firms to  pursue  various
 strategies to provide  working capital  beyond the  next 6  months.   Future
 acquisitions, if any, could  be funded with the  issuance of debt or  equity
 securities.    There  can  be  no  assurance  that  attractive   acquisition
 opportunities will be  available to us  or will be  available at prices  and
 upon such other  terms that  are attractive to  us.   We regularly  evaluate
 potential acquisitions of other businesses,  products and product lines  and
 may hold discussions regarding  such potential acquisitions.   As a  general
 rule, we will publicly  announce such acquisitions  only after a  definitive
 purchase agreement has been signed.  In addition, in order to meet our long-
 term liquidity  needs  or  consummate  future  acquisitions,  we  may  incur
 additional indebtedness  or issue  additional  equity and  debt  securities,
 subject to market and other conditions.  There can be no assurance that such
 additional financing will be available on terms acceptable to us or at  all.
 Our failure  to  raise  the  funds necessary  to  finance  our  future  cash
 requirements or consummate  future acquisitions could  adversely affect  our
 ability to pursue our strategy and could negatively affect our operations in
 future periods.

 RECENT ACCOUNTING PRONOUNCEMENTS

 In June 2001, the Financial Accounting  Standards Board issued Statement  of
 Financial Accounting  Standards No.  141, Business  Combinations (FAS  141),
 which supersedes  Accounting  Principles  Board  Opinion  No.  16,  Business
 Combinations, and  Statement  of  Financial  Accounting  Standards  No.  38,
 Accounting for Pre-acquisition Contingencies of Purchased Enterprises.  This
 Statement establishes  financial  accounting  and  reporting  standards  for
 business combinations.  The provisions of this Statement are required to  be
 applied  to  all  business  combinations  initiated  after  June  30,  2001.
 Management is  currently evaluating  the impact,  if  any, of  adopting  the
 provisions of FAS 141.

 In June 2001, the Financial Accounting  Standards Board issued Statement  of
 Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets
 (FAS 142),  which supersedes  Accounting Principles  Board Opinion  No.  17,
 Intangible  Assets,  and  establishes  financial  accounting  and  reporting
 standards for intangible  assets acquired individually  or with  a group  of
 other assets at acquisition.  This Statement addresses financial  accounting
 and reporting for goodwill and other  intangible assets subsequent to  their
 acquisition.  Upon  adoption of  FAS 142, the  Company will  be required  to
 reassess the  useful lives  and residual  values  of all  intangible  assets
 acquired, and make any necessary amortization period adjustments by the  end
 of the first interim period after adoption.   In addition, to the extent  an
 intangible asset  is identified  as having  an indefinite  useful life,  the
 Company will be  required to  test the  intangible asset  for impairment  in
 accordance with the provisions of FAS  142 within the first interim  period.
 The provisions of this  Statement are required to  be applied starting  with
 fiscal years beginning  after December 15,  2001.   Management is  currently
 evaluating the impact, if any, of adopting the provisions of FAS 142.

 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 The discussion of our results of  operations and financial condition  should
 be  read  in  conjunction  with  the  accompanying  consolidated   financial
 statements and the notes thereto included within this report. This Form 10-Q
 contains "forward-looking statements" within the  meaning of Section 27A  of
 the Securities Act of  1933, as amended, and  Section 21E of the  Securities
 Exchange  Act  of  1934,  as  amended.   Our  actual  results  could  differ
 materially from  those  contained  in  the  forward-looking  statements  and
 therefore, prospective investors are cautioned that any such forward-looking
 statements are not guarantees  of future performance  and involve risks  and
 uncertainties.  Actual events or results may differ from those discussed  in
 the forward-looking statements  as a result  of various factors,  including,
 without limitation, a reduction in research and development spending in  the
 pharmaceutical and  biotechnology  industries,  our ability  to  compete  in
 multiple areas of the drug development technology and services industry, the
 loss of  a  significant customer,  the  termination of  contracts  on  short
 notice, our ability to attract and  retain scientific personnel, the  impact
 of government regulations on our service  offerings, our ability to  produce
 proprietary technology, to protect our intellectual property and to  license
 technologies from others.  We refer you to the detailed discussion of  these
 and other risk factors contained in our registration statement on Form  S-1,
 as declared effective on October 26, 2000.


 ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 Investment risk

 The primary objective of our investment activities is to preserve  principal
 while at the same time maximizing the income we receive from our  activities
 without increasing risk.  Some of the securities that we invest in may  have
 market risk.   This means  that a change  in prevailing  interest rates  may
 cause the fair value of the principal amount of the investment to fluctuate.
 For example, if we  hold a security  that was issued  with a fixed  interest
 rate at the prevailing  rate and the prevailing  rate later rises, the  fair
 value  of the principal amount of  our investment will probably decline.  To
 minimize this risk  in the future,  we intend to  maintain our portfolio  of
 cash equivalents  and short-term  investments in  a variety  of  securities,
 including commercial paper,  government and  non-government debt  securities
 and money market  funds.  The  average duration of  all our investments  has
 generally been less than one  year.  Due to  the short-term nature of  these
 investments, we believe we have no  material exposure to interest rate  risk
 arising from our investments.  Therefore, no quantitative tabular disclosure
 is required.

 Interest rate risk

 A portion of the mortgage loan has a  floating rate of LIBOR plus 225  basis
 points.   Accordingly,  any movement  in  LIBOR will  impact  the  Company's
 interest expense.   The outstanding  mortgage loan balance at June 30,  2001
 was $12 million.   Based  on this balance,  a hypothetical  10% increase  in
 LIBOR  would  result  in   an  increase  in   annual  interest  expense   of
 approximately $28,000.  The Company has not historically used interest  rate
 swaps, caps or  other derivative financial  instruments for  the purpose  of
 hedging  fluctuations  in  interest  rates   on  its  floating  rate   debt.
 Consequently, an increase in interest rates could have an adverse effect  on
 the Company's future results.

 PART II. OTHER INFORMATION

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

 Our Annual Meeting of Stockholders was held on May 17, 2001.  At the
 meeting, stockholders voted on (i) the election of three directors; and (ii)
 the ratification of the appointment of KPMG LLP as our independent public
 accountants for 2001.  Voting on each such matter was as follows:

                                              Votes    Withheld/     Broker
                                Votes For    Against  Abstentions  Non-Votes
                                ----------   -------  -----------  ---------
 1) Election of Directors:
        Larry C. Hansen, PhD    25,559,655    9,821          -          -
        W. Brett Ingersoll      25,559,655    9,821          -          -
        Robert D. Weist         25,559,655    9,821          -          -

 2) Ratification of Independent
        Public Accountants      25,560,746    4,144      4,586          -




 ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

      (a)  Exhibits.
           None

      (b)  Reports on Form 8-K.
           None


<PAGE>
                                  SIGNATURES


  Pursuant to the requirements of Section 13 or 15(d) 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.



                         MEDICHEM LIFE SCIENCES, INC.



                    By:  /s/ Richard Wieland
                       ------------------------------
                              R. Richard Wieland
                         Executive Vice President and
                           Chief Financial Officer


                    By:  /s/ Michael J. Cogan
                       ------------------------------
                               Michael J. Cogan
                                Controller and
                           Chief Accounting Officer



 Date:  August 14, 2001