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                                                                    EXHIBIT 4.37

                             Dated December 2, 2003

                                  GALEN LIMITED

                                       and

          PHARMACEUTICAL DEVELOPMENT AND MANUFACTURING SERVICES LIMITED

            --------------------------------------------------------

                            MANUFACTURING, PACKAGING,
                        LABELLING, TESTING, QP RELEASE,
                          STORAGE & DESPATCH AGREEMENT

            --------------------------------------------------------

                              Ashurst Morris Crisp
                                 Broadwalk House
                                 5 Appold Street
                                     London
                                    EC2A 2HA

                               Tel : 020 7638 1111
                               Fax : 020 7638 1112

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                                    CONTENTS

<TABLE>
<CAPTION>
CLAUSE                                                                               PAGE
<S>                                                                                  <C>
1.     DEFINITIONS..............................................................       1
2.     SUPPLIER OBLIGATIONS.....................................................       5
3.     COMPANY OBLIGATIONS......................................................       7
4.     VARIATION OF SPECIFICATIONS..............................................       8
5.     PRODUCT ORDERS...........................................................      10
6.     DESPATCH.................................................................      15
7.     RISK AND TITLE...........................................................      16
8.     CHARGES AND PAYMENT TERMS................................................      16
9.     CONFIDENTIALITY..........................................................      18
10.    REGULATORY PROCEDURES AND DATA RETENTION.................................      19
11.    PRODUCT ACCEPTANCE.......................................................      19
12.    INTELLECTUAL PROPERTY....................................................      23
13.    WARRANTIES & INDEMNITIES.................................................      24
14.    INSURANCE................................................................      28
15.    PRODUCT HOLD OR RECALL...................................................      28
16.    TERM AND TERMINATION.....................................................      29
17.    FORCE MAJEURE............................................................      30
18.    DISPUTE RESOLUTION.......................................................      31
19.    ARBITRATION..............................................................      31
20.    NOTICES..................................................................      32
21.    VARIATION................................................................      33
22.    ENTIRE AGREEMENT.........................................................      33
23.    GENERAL..................................................................      33

SCHEDULE 1..............................................................................
Schedule 1 - List of Galen Products, Isodur, Dynamin & Distribution Products............
SCHEDULE 2..............................................................................
Minimum Order Quantity for Galen Products, Dynamin and Isodur...........................
SCHEDULE 3..............................................................................
MPLT Charges............................................................................
SCHEDULE 4..............................................................................
Storage & Despatch Charges..............................................................
SCHEDULE 5..............................................................................
Technical Agreement.....................................................................
SCHEDULE 6..............................................................................
Guaranteed Order Value..................................................................
SCHEDULE 7..............................................................................
Bill of Materials for each Galen Product, Dynamin and Isodur............................
</TABLE>
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THIS AGREEMENT is made on the 2nd day of December 2003

BETWEEN:-

(1)      GALEN LIMITED, (No. NI 30077) whose principal place of business is at
         Unit 22, Seagoe Industrial Estate, Craigavon, Co Armagh, Northern
         Ireland, BT63 5UA (the "COMPANY" ); and

(2)      PHARMACEUTICAL DEVELOPMENT AND MANUFACTURING SERVICES LIMITED, (No. NI
         45055) whose principal place of business is at Almac House, 20 Seagoe
         Industrial Estate, Craigavon, Co Armagh, Northern Ireland, BT63 5QD
         (the "SUPPLIER").

WHEREAS:

A.       The Company sells certain pharmaceutical Products (as defined below) to
         its customers and the Company wishes to engage the Supplier to
         manufacture, package, label, test for release-to-market, QP release,
         store and despatch Products on behalf of the Company.

B.       The Supplier has agreed to manufacture, package, label, test for
         release-to-market, QP release, store and despatch Products on behalf of
         the Company and the Company has agreed to procure these services from
         the Supplier subject always to the terms and conditions set out below.

IT IS NOW AGREED AS FOLLOWS:-

1.       DEFINITIONS

1.1      In this agreement unless the context otherwise requires:-

         "AFFILIATE" means any business entity which controls, is controlled by,
         or is under common control with either the Supplier or Company. For the
         purpose of this definition "CONTROL" shall mean either ownership of
         more than 50 per cent. of the issued capital of the company (or other
         business entity) or a right to direct the business and/or policies
         (including dividend policies) and/or affairs of such company whether by
         law, contract, governmental decree or regulation, ownership of voting
         power or otherwise and if one or more persons fits any of the
         categories set out in this paragraph (whether or not they are acting in
         concert) each such person shall be treated as in control of such
         company;

         "BILL OF MATERIALS" means the standard costs of Raw Materials and
         packaging materials required in connection with the manufacture,
         packaging and labelling (as applicable) of each Galen Product, Dynamin
         and Isodur;

         "BUSINESS DAY" means Monday to Friday, 9.00 am to 5.00 p.m. excluding
         public holidays and bank holidays in Northern Ireland;

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         "BUSINESS PURCHASE AGREEMENT" means the business purchase agreement
         between Galen Limited and Pharmaceutical Development and Manufacturing
         Services Limited dated 2 December 2003;

         "CGMP" means current Good Manufacturing Practice of the pharmaceutical
         industry standards as required by the EMEA in the European Union (and
         as more particularly described in Directive 91/356/EEC of 13 June 1991
         or as amended by Directive 2001/83/EC) and the similar guidelines and
         requirements of any other recognised and applicable national regulatory
         body, including (without limitation) the MHRA in the United Kingdom,
         including all standards, guidelines and requirements in relation to
         product description, manufacturing processes, quality control,
         packaging instructions, specifications and guidelines relating to the
         manufacture, testing, analysis, QP release and packaging of medicinal
         products;

         "CONFIRMED ORDERS" is defined at clause 5.2;

         "CONSEQUENTIAL LOSS" is defined at clause 13.7;

         "DESPATCH NOTICE" is defined at clause 6.1;

         "DISTRIBUTION PRODUCTS" means those pharmaceutical products supplied
         and delivered to the Supplier during the Term by the Company or third
         party suppliers of the Company, as set out in schedule 1 or such other
         products as agreed by the Parties from time to time, which shall be
         tested for release-to-market, QP released, stored and despatched by the
         Supplier in accordance with the terms of this agreement;

         "DYNAMIN" means bulk capsules of Isodur pharmaceutical product, which
         are supplied by the Company to the Supplier (in finished dosage form)
         from time to time in accordance with clause 3.1(b), and which the
         Supplier shall package, label, test for release-to-market, QP release,
         store and despatch for the Company in accordance with the terms of this
         agreement;

         "EFFECTIVE DATE" means the date of the Business Purchase Agreement;

         "EMEA" means the European Agency for the Evaluation of Medicinal
         Products;

         "GALEN PRODUCTS" means those pharmaceutical products listed in schedule
         1 together with any other such products which may be added from time to
         time by agreement of the Parties, which the Supplier shall manufacture,
         package, label, test for release-to-market, QP release, store and
         despatch for the Company in accordance with the terms of this
         agreement. For the avoidance of doubt references to Galen Products in
         this agreement shall not include Dynamin, Isodur or Distribution
         Products;

         "GUARANTEED ORDER VALUE" is defined at clause 5.7;

         "INTELLECTUAL PROPERTY" means any and all patents, trade marks, service
         marks, logos, rights in designs, get-up, trade, business or domain
         names and copyrights, (whether registered or not and any applications
         to register or rights to apply for registration of any of the
         foregoing), rights in inventions, know-how, trade secrets and other
         confidential information, rights in databases and all other
         intellectual property rights of a similar or corresponding character
         which may now or in the future subsist in any part of the world;

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         "ISODUR" means bulk capsules of Isodur pharmaceutical product, which
         are supplied by the Company to the Supplier (in finished dosage form)
         from time to time in accordance with clause 3.1(b), and which the
         Supplier shall package, label, test for release-to-market, QP release,
         store and despatch for the Company in accordance with the terms of this
         agreement;

         "LOSSES" means any and all damages, costs (including, without
         limitation, reasonable legal and other professional fees reasonably
         incurred), claims, (including third party claims) liabilities,
         expenses, losses and demands;

         "MANUFACTURING AND PACKAGING INSTRUCTIONS" means all relevant and
         current (as at the date of this agreement) descriptions and
         instructions concerning the processes, formulae and quality standards
         to be observed by the Supplier in relation to the manufacture,
         packaging and labelling of Galen Products and packaging and labelling
         of Dynamin and Isodur as provided by the Company. The Manufacturing and
         Packaging Instructions may be varied from time to time by written
         agreement of the Parties;

         "MARKETING AUTHORISATION" means, in respect of a Product, the relevant
         and current (as at the date of this agreement) Marketing Authorisation
         issued by the EMEA (or such other regulatory body that replaces the
         EMEA from time to time) in respect of the manufacture and supply of
         that Product in the European Union and such other Marketing
         Authorisations issued by any other applicable regulatory body in any
         jurisdiction where the manufacture and supply of that Product may occur
         from time to time in accordance within the terms of this agreement,
         including (without limitation) the MHRA, as shall be deemed attached to
         the Technical Agreement;

         "MATERIALS" means all Raw Materials (excluding bulk capsules of Dynamin
         and Isodur) and packaging materials used in connection with the
         manufacture, packaging, labelling, testing for release-to-market and QP
         release of Galen Products, Dynamin and Isodur by the Supplier in
         accordance with the terms of this agreement;

         "MHRA" means the Medicines and Healthcare products Regulatory Agency;

         "MINIMUM QUANTITY" means the minimum order quantity, which shall be in
         batch sizes or multiples of batch sizes (or as otherwise agreed by the
         Parties from time to time), for each particular Galen Product or
         Dynamin or Isodur, which may be included in a Confirmed Order as
         detailed in schedule 2;

         "MLPT CHARGES" is defined at clause 8.1;

         "NOMINATED INDIVIDUAL" shall mean the respective Head of Quality (or as
         otherwise agreed by the Parties) for each of the Parties from time to
         time (as confirmed to each other in writing);

         "PARTY" shall mean a party to this agreement;

         "PRODUCT SHELF LIFE" means the shelf life of each Product as set out in
         the relevant Marketing Authorisation;

         "PRODUCTS" means the Galen Products, Dynamin, Isodur and the
         Distribution Products;

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         "QP RELEASE" is defined at clause 11.1 and "QP released" shall have the
         corresponding meaning;

         "QUALIFIED PERSON" has the meaning ascribed to it under Article 21 of
         Directive 75/319/EEC (or as amended by Directive 2001/83/EC);

         "RAW MATERIALS" means active pharmaceutical ingredients and excipients;

         "REJECTION NOTICE" is defined at clause 11.1;

         "SPECIFICATIONS" means all relevant and current (as at the date of this
         agreement) manufacturing, packaging, labelling and testing
         specifications for the Products (as applicable) as provided by the
         Company. The Specifications may be amended by the Parties from time to
         time in accordance with clause 4;

         "STOCK OUT" means a situation where the Supplier cannot comply with its
         despatch obligations hereunder due to the Company having insufficient
         stock of a particular Galen Product Dynamin or Isodur available in the
         Supplier storage facilities at the Supplier Premises at any time 30
         days after the due date for completion and delivery into storage of a
         relevant Confirmed Order. In the case of the full range of Kapake
         products ("KAPAKE") and the full range of Ursogal products ("URSOGAL")
         the Stock Out period would be at any time 60 days after the due date
         for completion and delivery into storage of a relevant Confirmed Order.

         "STORAGE & DESPATCH CHARGES" is defined at clause 8.2;

         "SUPPLIER PREMISES" shall mean the Supplier's premises situated at Unit
         22, Seagoe Industrial Estate, Craigavon, Co Armagh, Northern Ireland,
         BT63 5UA or such other place at which the Supplier may, following
         written authorisation from the Company (not to be unreasonably withheld
         or delayed) manufacture, package, label, test for release-to-market, QP
         release, store and/or despatch Products from time to time in accordance
         with the terms of this agreement;

         "TECHNICAL AGREEMENT" means the technical agreement attached from time
         to time to this agreement at schedule 5 and which describes the quality
         control and manufacturing process standards to be followed in
         connection with the manufacturing, packaging, labelling, testing for
         release-to-market, QP release, storage and/or despatch of Products
         (where applicable) and which, amongst other things, has the Marketing
         Authorisations for the relevant Products deemed attached thereto. The
         Technical Agreement may be varied from time to time by written
         agreement of the Parties, whereupon the Parties will substitute the
         amended Technical Agreement at schedule 5;

         "TERM" means the terms of this agreement as defined in clause 16.1;

         "TESTING FOR RELEASE-TO-MARKET" means performing all quality control
         and other necessary testing and analysis and completing all related
         documentation as required by cGMP and any relevant Marketing
         Authorisations in respect of Galen Products, Dynamin, Isodur and
         Distribution Products;

         "TOTAL ORDER VALUE" is defined at clause 5.7;

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         "VAT" means value added tax or any other tax of a similar nature that
         may be substituted for or levied in addition to it in each case at the
         rate current from time to time;

         "YEAR" means a continuous period of 12 months commencing on the
         Effective Date of this agreement and each consecutive 12 month period
         thereafter during the Term;

         "YEAR 1" means the continuous period of 12 months commencing on the
         Effective Date of this Agreement;

         "YEAR 2" means the continuous period of 12 months commencing at the end
         of Year 1; and

         "YEAR 3" means the continuous period of 12 months commencing at the end
         of Year 2.

1.2      Reference to the singular includes the plural and vice versa.

1.3      A reference to a part, clause or schedule is a reference to a part,
         clause or schedule to this agreement.

2.       SUPPLIER OBLIGATIONS

2.1      The Supplier shall:

         (a)      use all reasonable endeavours to fulfil Confirmed Orders on
                  the due date for completion specified therein and shall
                  provide written notice to the Company of completion of each
                  Confirmed Order. Completion of a Confirmed Order is deemed to
                  be the date that the relevant Galen Products, Dynamin and/or
                  Isodur are delivered into storage at the Supplier Premises by
                  the Supplier;

         (b)      procure Raw Materials and packaging materials, manufacture,
                  package, label, test for release-to-market and QP release all
                  Confirmed Orders for Galen Products at the Supplier Premises
                  in accordance with cGMP, the Technical Agreement, the
                  Marketing Authorisations, the Manufacturing and Packaging
                  Instructions and the Specifications;

         (c)      procure packaging materials, package, label, test for
                  release-to-market and QP release all Confirmed Orders for
                  Dynamin and Isodur at the Supplier Premises in accordance with
                  cGMP, the Technical Agreement, the Marketing Authorisations,
                  the Manufacturing and Packaging Instructions and the
                  Specifications;

         (d)      comply with its obligations under the Technical Agreement (as
                  may be amended by the Parties from time to time in accordance
                  with this agreement);

         (e)      provide and maintain clean and safe storage in accordance with
                  cGMP, the Technical Agreement and the relevant Marketing
                  Authorisations for all Products at the Supplier Premises until
                  such Products are despatched in accordance with clause 6;

         (f)      despatch all Products in accordance with clause 6;

                                     - 5 -
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         (g)      on two Business Days notice, permit authorised representatives
                  of the Company, the Company's customers or representatives of
                  any regulatory authorities from time to time during normal
                  working hours to enter and inspect the Supplier Premises in
                  order to:

                  (i)      inspect the same;

                  (ii)     inspect and take away samples of Products;

                  (iii)    observe and inspect operations, methods and records
                           relating to the Supplier's manufacturing, packaging,
                           labelling, testing for release-to-market, QP
                           releasing, storage and/or despatch of the Products
                           (but excluding, for the avoidance of doubt, any
                           financial records of the Supplier) and report any
                           legitimate concerns relating to any of those
                           processes to the respective Nominated Individuals for
                           discussion by the Parties at their earliest
                           convenience in order to determine how those
                           legitimate concerns are to be handled in respect of
                           the applicable Technical Agreement,

                           PROVIDED THAT the Company shall be responsible for
                           the safety of its representatives and customers at
                           all times during such visitation and shall ensure
                           that they comply with the confidentiality provisions
                           in clause 9 of this agreement and all reasonable
                           regulations and instructions issued by the Supplier
                           relating to the conduct of persons on the Supplier
                           Premises;

         (h)      unless otherwise provided herein, provide at its own cost,
                  expense and risk all equipment, plant, apparatus, appliances
                  necessary to enable the Supplier to manufacture, package,
                  label, test for release-to-market, QP release, store and/or
                  despatch Products (as appropriate) and otherwise fulfil its
                  obligations under this agreement;

         (i)      unless otherwise provided herein, provide at its own cost,
                  expense and risk all Materials necessary to enable the
                  Supplier to fulfil its obligations under this agreement;

         (j)      be responsible for managing all complaints from the Company in
                  relation to Products, including (without limitation) and,
                  provided that the complaint is solely due to the default of
                  the Supplier, at its sole cost promptly conducting all
                  necessary research and testing of Product batches relating to
                  such complaint, keeping the Company's Nominated Individual
                  fully informed of all such complaints, completing all related
                  paperwork and otherwise managing such complaints in a timely
                  manner and in accordance with best current industry standards
                  and regulations and with all due care, diligence and skill.
                  The Company shall reimburse the Supplier for all reasonable
                  direct costs and expenses incurred by the Supplier in relation
                  to the relevant complaint and in respect of managing that
                  complaint, save where such complaint is due to default by the
                  Supplier under this agreement;

         (k)      maintain its Manufacturer's Licence and Wholesale Dealer's
                  Licence, as granted by the MHRA as soon as practicable after
                  the date of this agreement, current at all times and notify
                  the Company of any changes to those facility licences which
                  will impact the Marketing Authorisations for the Products; and

                                     - 6 -
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         (l)      be responsible for monitoring the condition of all Products
                  and bulk capsules of Isodur stored by the Supplier at the
                  Supplier Premises from time to time and shall notify the
                  Company promptly in the event that any such Product or bulk
                  capsules of Isodur are found to be damaged, and further shall
                  (on written instruction by the Company and at the Company's
                  reasonable cost) be fully responsible for the removal and
                  destruction of such damaged items together with any items
                  which the Company confirms are beyond their Product Shelf Life
                  from time to time.

3.       COMPANY OBLIGATIONS

3.1      The Company shall:

         (a)      provide the Supplier with all relevant information concerning
                  the Products to enable the Supplier to discharge its
                  obligations under this agreement in accordance with the
                  Technical Agreement, the Specifications and the Manufacturing
                  and Packaging Instructions;

         (b)      supply and deliver (or procure the supply and delivery of)
                  such quantities of bulk capsules of Isodur pharmaceutical
                  product (in finished dosage form) for the purposes of its
                  obligations under this agreement in respect of Dynamin and
                  Isodur, and Distribution Products to the Supplier from time to
                  time during the Term in accordance with the Technical
                  Agreement to enable the Supplier to meet Confirmed Orders and
                  comply with Despatch Notices. All such quantities of bulk
                  capsules of Isodur and Distribution Products shall be supplied
                  free of charge by the Company to the Supplier;

         (c)      provide to the Supplier all relevant details in the
                  Specification or Manufacturing and Packaging Instructions of
                  the Company's trade mark livery together with associated
                  original artwork required by the Supplier for the purposes of
                  obtaining packaging and labels for Galen Products, Dynamin and
                  Isodur, provided that the Supplier's reasonable costs of
                  providing new artwork drafts and generation shall be borne by
                  the Company. The Company hereby grants to the Supplier a
                  non-exclusive, non-assignable licence of the aforementioned
                  trade marks and their associated get-up, and of its
                  Intellectual Property in the aforementioned artwork, for the
                  Term, BUT only for the purpose of using the same to package
                  and label Galen Products, Dynamin and/or Isodur in accordance
                  herewith and in accordance with the Company's instructions
                  from time to time. All use of the Company's trade marks by the
                  Supplier shall at all times be for the benefit of the Company
                  and any goodwill accrued to the Supplier by its use of such
                  trade marks shall accrue to and be held in trust by it for the
                  Company, which goodwill the Supplier agrees to assign to the
                  Company at the Company's request at any time, whether during
                  or after the subsistence of this agreement;

         (d)      give the Supplier written notice of any change required to the
                  packaging and/or labelling of Galen Products, Dynamin and/or
                  Isodur during the Term (such notice to include all related
                  approved artworks from the Company), whereby the Supplier
                  shall obtain and commence using such revised packaging and/or
                  labels within three months of such notice. If the EMEA, MHRA
                  or any other applicable regulatory authority notifies the
                  Company of a required change to the packaging and/or
                  labelling, the Company shall provide written notice to the
                  Supplier within 5 Business

                                     - 7 -
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                  Days thereafter setting out full details of the changes to be
                  made. The Supplier shall use its reasonable endeavours to
                  obtain replacement packaging and/or labelling following such
                  notice according to the time schedule dictated by the EMEA,
                  MHRA or any other applicable regulatory authority but shall
                  not be held liable by the Company for failure to comply with
                  such time schedule provided the cause of such failure is
                  beyond the Supplier's reasonable control;

         (e)      in the event of any change in the packaging requirements made
                  pursuant to 3.1(d), bear the cost to the Supplier of any
                  unused packaging material reasonably held or purchased by the
                  Supplier, provided that such cost shall in no event exceed
                  more than 6 months' supply of packaging materials based on the
                  Company's forecasting obligations herein;

         (f)      give full details to the Supplier of any quality complaint
                  received by the Company regarding Products and discuss the
                  appropriate response to the complaint and the handling of the
                  complaint with the Supplier in accordance with clause 2.1(j);

         (g)      ensure that all information supplied to the Supplier for the
                  purposes of this agreement (including information contained in
                  the Technical Agreement) complies (where applicable) with the
                  Marketing Authorisation for the relevant Product;

         (h)      comply with its obligations under the Technical Agreement,
                  Specifications and Manufacturing and Packaging Instructions;

         (i)      seek a variation of the Marketing Authorisations in respect of
                  the Galen Products, Dynamin, Isodur and the Distribution
                  Products so that the Supplier is named as a manufacturer,
                  assembler, tester for release-to-market, storer and despatcher
                  of such Products (as applicable); and

         (j)      monitor stock levels of all Products and bulk capsules of
                  Isodur stored at the Supplier Premises from time to time by
                  the Supplier for the Company and shall be responsible for
                  identification of any such Products or bulk capsules of Isodur
                  that may be beyond their Product Shelf Life from time to time.

4.       VARIATION OF SPECIFICATIONS

4.1      The Company may at any time propose a variation to a Specification by
         at least 60 days' written notice to the Supplier or by such other
         reasonable notice period as agreed by the Parties from time to time
         (consent of the Supplier not to be unreasonably withheld or delayed).
         The Supplier may at any time propose a variation to a Specification by
         at least 60 days' written notice to the Company or by such other
         reasonable notice period as agreed by the Parties from time to time,
         provided that the Company may (at its sole discretion) reject such
         variation if it reasonably believes such variation may detrimentally
         affect the Company or any of its rights hereunder.

4.2      Either Party may at any time in order to comply with applicable law or
         regulation propose a variation to a Specification by at least 60 days'
         written notice to the other Party. The Parties shall then negotiate in
         good faith to agree the changes to the Specification and the time scale
         in which to implement such variation in order to comply with applicable
         law or regulation.

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4.3      Any agreed variation of a Specification, whether pursuant to clause 4.1
         or 4.2, shall be incorporated by amendment to the relevant
         Specification set out in the Technical Agreement.

4.4      If, following receipt by the Supplier of a written notice proposing a
         variation of Specification by the Company under clause 4.2, the
         Supplier (in the reasonable opinion of the Company) unreasonably
         withholds its consent to such variation or the Supplier is unable (for
         whatever reason) to comply with the variation, in each case within 60
         days of such notice, the Company may (at its entire discretion and
         without prejudice to any other rights or remedies the Company may have
         hereunder in respect of such failure to comply by the Supplier or to
         the rest of the Supplier's obligations hereunder) on further written
         notice to the Supplier:

         (a)      terminate any Confirmed Orders for any Galen Product, Dynamin
                  and/or Isodur which is the subject of the proposed variation;

         (b)      terminate all of the Supplier's obligations hereunder in
                  respect of any Galen Product, Dynamin and/or Isodur which is
                  the subject of the proposed variation (hereinafter referred to
                  in this clause 4.4 as a "TERMINATED PRODUCT"); and

         (c)      contract with any third party for the manufacture, packaging,
                  labelling, testing for release-to-market, QP release, storage
                  and/or despatch of any such Terminated Product; and

         (d)      require that this agreement be amended to reflect the
                  Terminated Products which are the subject of the proposed
                  variation, including (without limitation) reducing the
                  Guaranteed Order Value in accordance with clause 5.8, provided
                  that such amendments shall be without prejudice to the
                  Parties' rights and obligations under this agreement in so far
                  as they apply to the remaining Galen Products, Isodur and/or
                  Dynamin.

4.5      The Company shall bear all costs necessarily incurred by the Supplier
         as a result of any changes to Specifications made pursuant to clause
         4.1 provided the Company has requested such changes or such changes
         which are necessary to comply with the relevant Marketing Authorisation
         or Specifications or any revision to such Marketing Authorisations or
         Specifications. Any direct costs reasonably and necessarily incurred by
         the Supplier as a result of any change to Specifications requested by
         the Supplier pursuant to clause 4.1 shall be shared equally by the
         Parties provided that any cost savings resulting to the Supplier from
         such change to Specifications shall be fairly reflected (by way of a
         reduction) in the MPLT Charges. Costs incurred as a result of any
         change to Specifications made pursuant to clause 4.2 shall be borne by
         the Company provided that any reduced cost of Materials or increased
         efficiency in relation to any of the Supplier's obligations hereunder
         due to such change in Specification shall be shared equally between the
         Parties.

4.6      If any Galen Product, Dynamin and/or Isodur is terminated by the
         Company pursuant to clauses 4.1, 4.2 or 4.7 the Company shall reimburse
         the cost to the Supplier reasonably incurred based on the Company's
         forecasting obligations hereunder up to:

         (a)      three months' supply of Raw Materials in respect of Kapake and
                  Ursogal;

         (b)      six months' supply of Raw Materials in respect of any other
                  Galen Product; or

                                     - 9 -
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         (c)      six months' supply of Materials (excluding Raw Materials) for
                  any Galen Product, Dynamin and/or Isodur,

         to the extent such Materials relate to the Terminated Product.

4.7      Notwithstanding the foregoing provisions in this clause 4, the Company
         may at its discretion terminate any Product from the scope of this
         agreement provided that the Guaranteed Order Value shall not be diluted
         or reduced on the basis of such termination.

5.       PRODUCT ORDERS

5.1      GUARANTEED ORDERS

         (a)      During the Term the Company agrees to order Galen Products,
                  Dynamin and Isodur from the Supplier and the Supplier agrees
                  to provide Galen Products, Dynamin and Isodur, in each case
                  from time to time and in accordance with the terms of this
                  agreement.

         (b)      From the commencement of and during Year 3 the Company
                  warrants and undertakes to grant to the Supplier the exclusive
                  right to manufacture, package, label, test for
                  release-to-market, QP release, store and/or despatch (where
                  applicable) of any or all of the Products for the Company
                  provided that the Supplier's MPLT, timing, Storage & Despatch
                  Charges and any other relevant charges are no less favourable
                  to the Company than any then current third party supplier's
                  charges to manufacture, package, label, test for
                  release-to-market, QP release, store and/or despatch (where
                  applicable) each such Product and timing in respect thereof
                  and further provided that:

                  (i)      the Company shall at least 6 months prior to the end
                           of Year 2 notify the Supplier in writing of its
                           intention to contract during Year 3 with a third
                           party supplier for the manufacture, packaging,
                           labelling, testing for release-to-market, QP release,
                           storage and/or despatch (where applicable) of any or
                           all of the Products;

                  (ii)     the Company shall as soon as practicable following
                           such notice obtain and provide to the Supplier a
                           written proposal from such third party supplier (the
                           "PROPOSAL"), such Proposal to include a quotation
                           relating to charges and time-scale in which such
                           third party supplier can manufacture, package, label,
                           test for release-to-market, QP release, store and/or
                           despatch (where applicable) the relevant Product or
                           Products;

                  (iii)    the Company shall not notify such third party
                           suppliers that the Supplier shall be given the
                           opportunity to match the Proposal in relation to such
                           charges and time-scale;

                  (iv)     the Supplier shall provide a written proposal to the
                           Company within 10 Business Days of receipt of the
                           Proposal, such proposal to set out the Supplier's
                           proposed charges and time-scale in respect of the
                           manufacture, package, label, test for
                           release-to-market, QP release, store and/or despatch
                           (where applicable) for the relevant Product or
                           Products; and

                                     - 10 -
<PAGE>

                  (v)      the Company undertakes not to engage the services of
                           the third party supplier provider if the Supplier's
                           proposal matches or betters the Proposal.

5.2      ORDERING PROCESS

         (a)      Prior to the first Business Day of each month during Year 1
                  and Year 2, the Company shall provide the Supplier with a
                  written forecast of the Company's anticipated requirements for
                  each Galen Product, Dynamin and/or Isodur to be manufactured,
                  packaged, labelled, tested for release-to-market, QP released
                  and delivered into storage at the Supplier Premises in
                  accordance with the provisions of this agreement for each of
                  the following 12 months. The first three months of each 12
                  month forecast shall be firm irrevocable orders confirming
                  quantities and due date for completion of manufacturing,
                  packaging, labelling testing for release-to-market, QP release
                  and delivery into storage at the Supplier Premises of each
                  such Galen Product, Dynamin and/or Isodur ("CONFIRMED
                  ORDERS"). For the avoidance of doubt, the due date for
                  completion of manufacturing, packaging, labelling, testing for
                  release-to-market, QP release and delivery into storage at the
                  Supplier Premises of each Galen Product, Dynamin and/or
                  Isodur, which forms the subject of a Confirmed Order, shall
                  (unless otherwise agreed by the Parties) be the last day of
                  the month in respect of which that Confirmed Order relates. In
                  no event shall the Company place a Confirmed Order for Galen
                  Products, Dynamin and/or Isodur where the order contained
                  therein for a particular Galen Product or Dynamin or Isodur is
                  less than the Minimum Quantity in respect of such Galen
                  Product, Dynamin and Isodur.

         (b)      Subject as hereinafter set out, the Supplier shall not without
                  good reason refuse to accept in writing all Confirmed Orders
                  placed by the Company in accordance with the terms of clause
                  5.2(a) within 5 Business Days of receipt thereof. If the
                  quantity of Galen Products, Dynamin and/or Isodur requested to
                  be delivered in a given month under a Confirmed Order exceeds
                  by more than 20 per cent. the quantity forecast in the most
                  recent forecast for that month provided under clause 5.2(a),
                  then the Supplier shall be entitled to reject such portion of
                  the Confirmed Order as is in excess of the 20 per cent.
                  tolerance in its absolute discretion. The Supplier shall
                  deliver written notification of any such rejection under this
                  clause 5.2(b) to the Company within 5 Business Days of the
                  Supplier's receipt of the Confirmed Order.

         (c)      The Company shall provide Confirmed Orders for Galen Products,
                  Dynamin and/or Isodur in each month that are not less than 75
                  per cent. of the most recent forecast for that month provided
                  under clause 5.2(a) and shall not reduce a forecast for any
                  month by more than 25 per cent. of the forecast for that month
                  given in the immediately preceding month.

         (d)      The Company shall use all reasonable endeavours to ensure that
                  Confirmed Orders correspond with the anticipated requirements
                  set out in the monthly forecasts.

         (e)      For the avoidance of doubt (but subject to clause 5.1(b)), the
                  Company shall be under no obligation whatsoever to place any
                  Confirmed Orders with the Supplier during Year 3.

                                     - 11 -
<PAGE>

         (f)      In relation to the forecasting obligations of the Company
                  hereunder the Company will use its reasonable endeavours to
                  ensure that the forecasting utilised by the Company shall:

                  (i)      follow historical patterns of forecasting used by the
                           Company in the two year period prior to the date of
                           this agreement; and

                  (ii)     not contain any unexpected or unusual elements which
                           would or may result in difficulties for the Supplier
                           in fulfilling its manufacturing and distribution
                           obligations hereunder.

                  Notwithstanding the foregoing, the Supplier shall during the
                  first three months of the Term use its best endeavours to meet
                  any additional Confirmed Orders which do not follow the
                  Company's historical forecasting patterns.

5.3      If, for any reason, the Supplier believes that it is unlikely to be
         able to fulfil any (or any part of any) Confirmed Order, it shall
         promptly inform the Company in writing of this belief. However nothing
         in this clause 5.3 shall release the Supplier from its obligation to
         fulfil any Confirmed Order.

5.4      In the event that the Supplier fails to fulfil any (or part of any)
         Confirmed Order within 10 Business Days after the due date specified in
         the Confirmed Order (the "ORDER DEADLINE"), and in the absence of fault
         on the part of the Company for such default, in particular in relation
         to the Company's forecasting obligations hereunder, the Company may (at
         its entire discretion and without prejudice to any other rights or
         remedies it may have hereunder in respect of such default) on written
         notice to the Supplier:

         (a)      terminate any such Confirmed Order;

         (b)      subject to clause 13.7, recover from the Supplier (by way of
                  damages for direct loss of gross profits) a cash payment to
                  the value of and in respect of any and all actual orders
                  received by the Company for Galen Products (excluding Kapake
                  and Ursogal), Dynamin and/or Isodur which are cancelled by
                  customers of the Company due to a Stock Out occurring (if any)
                  in respect of such failure by the Supplier to meet an Order
                  Deadline; and

         (c)      subject to clause 13.7, recover from the Supplier (by way of
                  damages for direct loss of gross profits) a cash payment to
                  the value of and in respect of any and all:

                  (i)      actual orders received by the Company for Kapake
                           and/or Ursogal which are cancelled by customers of
                           the Company due to a Stock Out occurring (if any) in
                           respect of such failure by the Supplier to meet an
                           Order Deadline; and

                  (ii)     customer orders for Kapake and/or Ursogal that would
                           reasonably be expected to have been received by the
                           Company but which were not so received due to a Stock
                           Out occurring (if any) in respect of such failure by
                           the Supplier to meet an Order Deadline (based on the
                           customers' ordering history for Kapake and/or Ursogal
                           during the 60 days immediately prior to such a Stock
                           Out occurring).

                                     - 12 -
<PAGE>

         For the purposes of clause 5.4(b) damages would be in respect of the
         period commencing on the date of the Stock Out and ending on the date
         being the earlier of (i) the Stock Out no longer existing and (ii) the
         relevant Product or Products being terminated in accordance with clause
         5.5 (if applicable).

         For the purposes of clause 5.4(c) damages would be in respect of the
         period commencing on the date of the Stock Out and ending on the date
         the earlier of (i) the Stock Out no longer existing and customers'
         orders received reverting to a level consistent with ordering history
         for Kapake and/or Ursogal during the 60 days immediately prior to such
         a Stock Out occurring (provided that the Supplier shall not be
         responsible for such damages beyond the date falling 3 months from the
         date of the end of the Stock Out) and (ii) the relevant Product or
         Products being terminated in accordance with clause 5.5 (if
         applicable).

         For the purposes of this clause 5, a Confirmed Order will be deemed to
         be fulfilled by the Supplier to the extent that no less than 95 per
         cent., in relation to Kapake and Ursogal and no less than 75 per cent.
         of any other Product detailed in the relevant Confirmed Order is
         manufactured and delivered into storage at the Supplier Premises by the
         Supplier in accordance with this agreement.

5.5      In the event that the Supplier fails to fulfil any (or part of any)
         Confirmed Order in accordance with Order Deadlines on three or more
         occasions in any period of 90 days during the Term, and provided that
         such failures relate to different batches of a Product or Products and
         in the absence of fault on the part of the Company on each occasion, in
         particular in relation to its forecast obligation hereunder, the
         Company may (at its entire discretion and without prejudice to any
         other rights or remedies it may have hereunder in respect of such
         default or to the rest of the Supplier's obligations hereunder) on
         written notice to the Supplier:

         (a)      terminate all of the Supplier's obligations hereunder in
                  respect of any Galen Product, Dynamin and/or Isodur, which is
                  the subject of any such failed Order Deadline (hereinafter
                  referred to in this clause 5.5 as a "TERMINATED PRODUCT");

         (b)      contract with any third party for the manufacture, packaging,
                  labelling, testing for release-to-market, QP release, storage
                  and/or despatching of any such Terminated Product;

         (c)      require that this agreement be amended to reflect the reduced
                  number of Galen Products, Dynamin and/or Isodur, including
                  (without limitation) reducing the Guaranteed Order Value in
                  accordance with clause 5.8, provided that such amendments
                  shall be without prejudice to the Parties' rights and
                  obligations under this agreement in so far as they apply to
                  the remaining Products;

         (d)      subject to clause 13.7, recover from the Supplier (by way of
                  damages for direct loss of gross profits) a cash payment to
                  the value of and in respect of any and all actual orders
                  received by the Company for Terminated Products (excluding
                  Kapake and Ursogal) which are cancelled by customers of the
                  Company due to a Stock Out occurring (if any) in respect of
                  such Terminated Products. For the purposes of this clause
                  5.5(d) damages would be in respect of the period commencing on
                  the date the later of (i) termination of such Product or
                  Products by the Company in accordance with this clause 5.5 and
                  (ii) a Stock Out occurring (if any), and ending on the date
                  the

                                     - 13 -
<PAGE>

                  earlier of (i) when the Company "qualifies" a new supplier for
                  such Terminated Products and (ii) 3 months after the end of
                  the Stock Out;

         (e)      subject to clause 13.7, recover from the Supplier (by way of
                  damages for direct loss of gross profits) a cash payment to
                  the value of and in respect of:

                  (i)      any and all actual orders received by the Company for
                           Kapake and/or Ursogal which are cancelled by
                           customers of the Company due to a Stock Out occurring
                           (if any) in respect of such Terminated Products; and

                  (ii)     customers' orders for Kapake and/or Ursogal that
                           would reasonably be expected to have been received by
                           the Company but which were not so received due to a
                           Stock Out occurring (if any) in respect of such
                           Terminated Products (based on the customers' ordering
                           history for Kapake and/or Ursogal during the 60 days
                           immediately prior to such a Stock Out occurring);

                  For the purposes of this clause 5.5(e) damages would be in
                  respect of the period commencing on the date the later of (i)
                  termination of such Product or Products by the Company in
                  accordance with this clause 5.5 and (ii) a Stock Out occurring
                  (if any), and ending on the date the earlier of (i) when the
                  Company "qualifies" a new Supplier for such Terminated
                  Products and customers' orders received revert to a level
                  consistent with ordering history for Kapake and/or Ursogal
                  during the 60 days immediately prior to such a Stock Out
                  occurring and (ii) 3 months after the end of the Stock Out;
                  and

         (f)      subject to clause 13.7, recover from the Supplier (by way of
                  direct damages) a cash payment to the value of any and all
                  reasonable costs incurred by the Company in relation to
                  "identifying" and "qualifying" a new supplier for the
                  Terminated Products.

5.6      Without prejudice to clause 5.2, specific arrangements for Galen
         Products, Dynamin or Isodur may be agreed between the Parties from time
         to time, including (without limitation) arrangements to deal with
         promotional activity being conducted by the Company. The costs of any
         such promotional activity are to be at the Company's own expense.

5.7      GUARANTEED ORDER VALUE

         (a)      Subject to clauses 4.4(d), 5.5(c), 11.9(c), 16.4 and 17.5 the
                  Company warrants that the Total Order Value for both Year 1
                  and Year 2 combined shall be (pound)19.65 million (the
                  "GUARANTEED ORDER VALUE").

         (b)      In the event that the Total Order Value for both Year 1 and
                  Year 2 combined (the "ACTUAL VALUE") is less than Guaranteed
                  Order Value, the Company shall compensate the Supplier by
                  making a cash payment to the Supplier in the amount of 50 per
                  cent. multiplied by the difference between the Actual Value
                  and the Guaranteed Order Value.

         (c)      In the event that the Actual Value is greater than the
                  Guaranteed Order Value by (pound)2 million or less, the
                  Supplier shall make a cash rebate payment to the Company in
                  the amount of 10 per cent. multiplied by the difference
                  between the Actual Value and the Guaranteed Order Value.

                                     - 14 -
<PAGE>

         (d)      In the event that the Actual Value is greater than(pound)21.65
                  million, the Supplier shall make a cash rebate payment to the
                  Company in the amount equal to:

                  (i)      15 per cent. multiplied by the difference between the
                           Actual Value and(pound)21.65 million; plus

                  (ii)     L200,000.

         The payments referred to in paragraphs (b), (c) and (d) above shall be
         paid within 60 days of the end of Year 2. For the purposes of this
         clause 5.7, "TOTAL ORDER VALUE" shall mean the total of all MPLT
         Charges which the Supplier may, by virtue of this agreement, invoice
         the Company for in respect of all Confirmed Orders received by the
         Supplier during any given Year. For the avoidance of doubt, the Total
         Order Value shall be exclusive of any applicable VAT.

5.8      For the avoidance of doubt, in respect of any reference in this
         agreement to "reduction of Guaranteed Order Value", "reducing the
         Guaranteed Order Value" or other similar reference (including, without
         limitation, such references within clauses 4.4(d), 5.5(c), and 11.9(c))
         such reduction or revised Guaranteed Order Value shall be calculated on
         the basis of a pro rata reduction from the date of termination of the
         relevant Product until the end of Year 2 by reference to the values set
         out in schedule 6.

6.       DESPATCH

6.1      The Company shall provide the Supplier with at least 3 Business Days'
         advanced notice in writing of its despatch requirements for Products,
         including (without limitation) quantities, despatch and collection
         timing (a "DESPATCH NOTICE"). For the avoidance of doubt, storage,
         despatch and collection of Products shall take place at Unit 14 of the
         Supplier Premises or as otherwise agreed and the form of the Despatch
         Notice is to be agreed by the Parties as soon as practicable following
         the date of this agreement.

6.2      The Supplier shall despatch the Products in accordance with the terms
         of the Despatch Notice and this clause 6.

6.3      The Supplier shall forward a copy of each despatch note (or such other
         form of confirmation of despatch of Products as the Supplier shall use
         from time to time) to the Company within two Business Days of such
         despatch or as otherwise agreed by the Parties from time to time.

6.4      If the Supplier fails due to its negligent act or omission or in the
         event of a Stock Out to despatch any Products within 5 Business Days
         after the due delivery date specified in the relevant Despatch Notice
         (a "DESPATCH FAILURE"), then in the absence of fault on the part of the
         Company, the Company may (at its entire discretion and without
         prejudice to any other rights or remedies it may have hereunder in
         respect of such default or to the rest of the Supplier's obligations
         hereunder) on written notice to the Supplier:

         (a)      terminate any outstanding Despatch Notice in respect of which
                  there has been a Despatch Failure resulting in the
                  cancellation of that order by a customer of the Company; and

                                     - 15 -
<PAGE>

         (b)      subject to clause 13.7, recover from the Supplier (by way of
                  damages for direct loss of gross profits) a cash payment to
                  the value of any and all actual orders for Products which are
                  cancelled by customers of the Company due to a Despatch
                  Failure.

6.5      In the event that 15 per cent. or more of the Despatch Notices result
         in Despatch Failures in any 90 day period during the Term, and in the
         absence of fault on the part of the Company in respect of any such
         Despatch Failures, hereunder:

         (a)      the Nominated Individuals will meet within 5 Business Days of
                  written request served by the Company to discuss the Despatch
                  Failures; and

         (b)      if at any time within a period of 30 days following such
                  meeting 15 per cent. or more of the Despatch Notices result in
                  Despatch Failures the Company may terminate all of the
                  Supplier's obligations hereunder in respect of storing and
                  despatching Products on behalf of the Company; and

         (c)      in the event of the Supplier failing to meet its obligations
                  under (b) above and subject to clause 13.7, recover from the
                  Supplier (by way of direct damages) a cash payment to the
                  value of any and all reasonable costs incurred by the Company
                  in transporting stocks of all Products from the Supplier
                  Premises to new storage and despatch facilities.

7.       RISK AND TITLE

7.1      Subject to clause 14, title and risk in Dynamin, Isodur and the
         Distribution Products shall remain with the Company at all times.

7.2      Subject to clause 14, title and risk in Galen Products shall pass from
         the Supplier to the Company following safe delivery of the Products
         into storage at the Supplier Premises, provided that payment of all
         MPLT Charges due and properly invoiced by the Supplier in respect of
         those Galen Products have been made by the Company.

8.       CHARGES AND PAYMENT TERMS

8.1      The charges which shall be paid by the Company to the Supplier for
         performance of all of its obligations hereunder (excluding the Storage
         & Despatch Charges), (the "MPLT CHARGES") shall be as set out in
         schedule 3.

8.2      The charges which shall be paid by the Company to the Supplier for
         performance of all of its storage and despatch obligations hereunder,
         (the "STORAGE & DESPATCH CHARGES") shall be as set out in schedule 4.

8.3      Unless otherwise stated, all sums payable under this agreement are
         exclusive of VAT and any other duties or taxes. Any VAT or other duties
         or taxes payable in respect of such sums shall be payable in addition
         to such sums.

8.4      The Supplier shall submit invoices for MPLT Charges and the Storage &
         Despatch Charges at the end of each month, such invoices to be
         submitted in the lawful currency of the United Kingdom.

                                     - 16 -
<PAGE>

8.5      The Company shall pay to the Supplier the full amount of each invoice
         to the bank account designated by the Supplier in the lawful currency
         of the United Kingdom, without any deduction or discount within 45 days
         of the date of each invoice.

8.6      Both parties reserve the right to charge interest at 2 per cent. per
         annum above the base rate of the UK branch of the Bank of Ireland rates
         on all overdue amounts hereunder, such interest being deemed to accrue
         on a day to day basis from the due date for payment.

8.7      Subject to clause 8.10, on provision by the Supplier to the Company of
         reasonable written evidence of any increase (provided such increase is
         greater than 5 per cent.) in the cost to the Supplier of procuring the
         Bill of Materials of any Galen Products, Isodur and/or Dynamin, then
         the parties shall increase applicable MPLT Charges in respect of the
         relevant Product or Products as set out in schedule 3 to reflect (i)
         the amount of any such increase and (ii) an additional 8.5% of the
         amount of such increase to reflect the increased cost of rejects and
         process waste. For the avoidance of doubt this provision shall not
         apply in respect of any increase in cost incurred by the Supplier due
         to any wrongful act or omission by the Supplier (including, without
         limitation, any penalties or increase supply costs incurred by the
         Supplier due to late purchasing of Materials).

8.8      Subject to clause 8.10, the Supplier hereby undertakes to promptly
         notify the Company of any decrease (provided such decrease is greater
         than 5 per cent.) in the cost to the Supplier of procuring the Bill of
         Materials of any Galen Products, Isodur and/or Dynamin. On receipt of
         such notice or in the event that the Company obtains reasonable
         evidence that there has been a material decrease in the cost to the
         Supplier of procuring any Bill of Materials (and such evidence is
         presented to the Supplier), the parties shall reduce the MPLT Charges
         in respect of the relevant Products, Isodur and/or Dynamin in schedule
         3 to reflect (i) the amount of any such reduction and (ii) an
         additional 8.5% of the amount of such reduction to reflect the reduced
         cost of rejects and process waste.

8.9      Subject to clause 8.10, if at any stage during the Term there is an
         increase or decrease in the cost to the Supplier of procuring any Bill
         of Materials which is greater than or equal to 10 per cent., the
         Parties agree to meet to discuss such change within 5 Business Days of
         notice by either Party.

8.10     The Parties' respective Nominated Individuals or other agreed parties
         shall meet at least every 6 months during the Term (the first such
         meeting to be six months after the date of this agreement) for the
         purposes of reviewing and implementing any changes referred to in
         clauses 8.7, 8.8 and 8.9 and any other relevant issues in respect of
         this agreement from time to time. For the avoidance of doubt, at the
         first six monthly meeting after the date of this agreement the Parties
         shall determine the percentage increases or decreases referred to in
         clauses 8.7, 8.8 and 8.9 by reference to the Bill of Materials for each
         Galen Product, Isodur and Dynamin as set out in schedule 7 and at
         subsequent six monthly meetings by reference to the same, or as may
         have been updated (provided any such increase or decrease was greater
         than 5 per cent.) by the Parties at the prior six monthly meeting. For
         the avoidance of doubt, changes referred to at clauses 8.7, 8.8 and 8.9
         may only be raised and/or implemented at or immediately following such
         six monthly meetings.

                                     - 17 -
<PAGE>

9.       CONFIDENTIALITY

9.1      As used in this agreement, the term "CONFIDENTIAL INFORMATION" means
         any technical or business information furnished by one party (the
         "DISCLOSING PARTY") to the other party (the "RECEIVING PARTY") in
         connection with this agreement. Such Confidential Information may
         include, without limitation, trade secrets, know-how, inventions,
         technical data or specifications, testing methods, business or
         financial information, research and development activities, regulatory
         data, product and marketing plans and customer and supplier
         information. Confidential Information that is disclosed orally or
         visually shall be documented in a written notice prepared by the
         Disclosing Party and delivered to the Receiving Party within 30 days of
         disclosure; such notice shall summarise the Confidential Information
         disclosed to the Receiving Party and reference the time and place of
         disclosure.

9.2      The Receiving Party agrees that it shall:-

         (a)      maintain all Confidential Information in strict confidence,
                  except that the Receiving Party may disclose or permit the
                  disclosure of any Confidential Information to its directors,
                  officers, employees, consultants and advisors who are
                  obligated to maintain the confidential nature of such
                  Confidential Information for the purposes set forth in this
                  agreement;

         (b)      use all Confidential Information solely for the purposes set
                  forth in this agreement or as otherwise authorised by this
                  agreement; and

         (c)      allow its directors, officer, employees, consultants and
                  advisors to reproduce the Confidential Information only to the
                  extent necessary to effect the purposes set forth in this
                  agreement or as otherwise authorised by this agreement, with
                  all such reproductions being considered Confidential
                  Information.

9.3      The obligation set out in clause 9.2 shall not apply to the extent that
         the Receiving Party can demonstrate that certain Confidential
         Information:-

         (a)      was in the public domain prior to the time of its disclosure
                  under this agreement;

         (b)      entered the public domain after the time of its disclosure
                  under this agreement through means other than an unauthorised
                  disclosure resulting from an act or omission of the Receiving
                  Party;

         (c)      was subsequently disclosed to the Receiving Party without any
                  obligation of confidence by a third party provided that such
                  third party was acting lawfully and not in breach of any duty
                  of confidence;

         (d)      is independently developed or discovered without the aid,
                  application or use of Confidential Information; or

         (e)      is required to be disclosed to comply with applicable laws or
                  regulations, or with a court or administrative order, provided
                  that the Disclosing Party takes all reasonable and lawful
                  actions to obtain confidential treatment for such disclosure
                  and, if possible, to minimise the extent of such disclosure.

                                     - 18 -
<PAGE>

9.4      Following the termination of this agreement, the Receiving Party shall
         return to the Disclosing Party all originals, copies and summaries of
         documents, materials and other tangible manifestations of Confidential
         Information in the possession or control of the Receiving Party save
         that either party may retain one copy of any such Confidential
         Information if required to do so under any regulatory or legal
         requirement. The obligations in this clause 9.4 shall not apply to any
         Confidential Information which the Company shall have a continuing
         right to use under clause 12. The obligations set forth in this clause
         shall survive for a period of 10 years following termination of this
         agreement.

10.      REGULATORY PROCEDURES AND DATA RETENTION

10.1     Any Party requested to submit information for a governmental or
         regulatory inspection (the "INSTRUCTED PARTY") shall, providing that
         the inspection relates to the Products and the work performed for the
         Company by the Supplier hereunder, promptly notify the other Party as
         soon as practicable. If the Instructed Party is requested to prepare
         responses as a result of a request made by any such inspection in
         respect of the manufacture, packaging, labelling, testing for
         release-to-market, QP release, storage and/or despatch of Products as
         contemplated under this agreement, the response submitted shall be
         subject to review by the other Party before submission to such
         authority. The other Party shall (upon request of the Instructed Party)
         use their best endeavours to provide support for preparing such
         responses. The Instructed Party is not entitled to amend any additional
         submission which any other Party is hereby entitled to provide. Primary
         responsibility for preparation of a response to a request for
         information is deemed to be with the Company in the absence of any
         contrary categorical statement from the governmental or regulatory
         inspecting authority. Any response shall be submitted to the
         governmental or regulatory authority by the Company alone. The Supplier
         shall not undertake any communications relating to the Products with
         any governmental or regulatory authority.

10.2     If the Supplier's participation in any regulatory review relating to
         Products is:

         (a)      not routine; and

         (b)      not related to the performance of the Supplier of its
                  obligations hereunder; and

         (c)      material with regard to personnel, time and expense,

         the Parties shall review costs associated with the participation and
         shall agree to a reasonable rate of compensation in advance of the
         participation in the aforementioned governmental regulatory inspection.
         All other costs associated with such review are to be borne by the
         Party incurring the same.

10.3     The Supplier shall be responsible for the archiving and retention of
         all relevant documentation in accordance with the terms outlined in the
         relevant ICH Guidelines.

11.      PRODUCT ACCEPTANCE

11.1     The Supplier shall procure that all batches of Products despatched by
         the Supplier shall be the subject of quality control certificates of
         analysis and a certificate of conformity signed by a Qualified Person
         ("QP RELEASE") confirming that each of the products covered by such
         certificate conform with the relevant Specifications, the Manufacturing
         and Packaging

                                     - 19 -
<PAGE>

         Instructions and the Technical Agreement and were (as applicable
         hereunder) manufactured, packaged, labelled, tested for
         release-to-market, stored and despatched in accordance with the
         relevant Marketing Authorisations and cGMP. All such Products shall be
         deemed accepted by the Company unless the Company, acting reasonably
         and in good faith, (and in the absence of a negligent act or omission
         of the Company) shall give written notice of rejection (a "REJECTION
         NOTICE") to the Supplier as soon as reasonably practicable, but in any
         event within 10 Business Days, following despatch.

11.2     The Rejection Notice shall state in reasonable detail (sufficient to
         enable the Supplier to identify the nature of the problem and the tests
         or studies to be conducted by or on its behalf to confirm or dispute
         the same) the reason why any Product (or batch of Products) are not
         acceptable to the Company. Any Rejection Notice shall be accompanied by
         copies of all written reports relating to tests, studies or
         investigations performed by or for the Company on the rejected Products
         as at the date of the Rejection Notice.

11.3     The Supplier shall as soon as reasonably practicable, but in any event
         within 30 Business Days, following receipt of a Rejection Notice
         either:

         (a)      acknowledge in writing to the Company that the Products in
                  question were validly rejected and correct and/or replace all
                  rejected Products and place all such replacement Products into
                  storage at the Supplier Premises and provide written
                  notification to the Company of such on the date that the
                  replacement Products are so placed into storage. The Supplier
                  shall be fully responsible for all costs associated with
                  correcting and/or replacing and placing such Products into
                  storage and shall compensate the Company for all direct costs
                  reasonably suffered or incurred by it in returning any
                  rejected Products to the Supplier Premises; or

         (b)      require the Company to return the rejected Products or samples
                  thereof to the Supplier for further testing (at the cost of
                  the Supplier). The Supplier shall use its reasonable
                  endeavours to complete such testing as soon as reasonably
                  practicable following receipt of such rejected Products or
                  samples.

         During the period of testing under clause 11.3(b) the Supplier shall
         use all reasonable endeavours to comply with any additional Confirmed
         Orders placed by the Company outside the scope of the Company's
         forecasting obligations hereunder.

11.4     The Company's test results or basis for rejection of Products shall be
         conclusive unless the Supplier notifies the Company, within 20 Business
         Days of receipt by the Supplier of a Rejection Notice or, in respect of
         clause 11.3(b) the rejected Products or samples thereof, that the
         Supplier disagrees with such test results or its responsibility for the
         problem in question, such notice to attach copies of all related test
         results and other documentary evidence available to the Supplier in
         support of the its case. On receipt of such notice (and accompanying
         documentation) the Company shall have 10 Business Days to review the
         Supplier's case, after which time the Company will, at its option,
         either:

         (a)      acknowledge in writing to the Supplier that it had mistakenly
                  rejected the Products in question and compensate the Supplier
                  for all direct costs reasonably suffered or incurred by the
                  Supplier in relation to testing any rejected Products or
                  samples in accordance with clause 11.3(b); or

                                     - 20 -
<PAGE>

         (b)      arrange for representative samples of the Products in question
                  to be submitted to a mutually acceptable independent
                  laboratory or consultant (if a laboratory analysis issue) for
                  analysis or review, the costs of which shall be paid by the
                  Party that is determined by the independent laboratory or
                  consultant to have been incorrect in its determination of
                  whether the Products should be rejected. All tests carried out
                  by the laboratory (or consultant) shall comply with the
                  analytical methods relating to the Specifications, Marketing
                  Authorisations, Manufacturing and Packaging Instructions and
                  the Technical Agreement.

11.5     If it is agreed or otherwise determined by the independent laboratory
         or consultant pursuant to clause 11.4(b) that the Company:

         (a)      had the right to reject the Products which are the subject of
                  the Rejection Notice as a result of a failure by the Supplier
                  to comply with any or all of the Marketing Authorisations,
                  cGMP, Specifications, Manufacturing and Packaging Instructions
                  or Technical Agreement, the Supplier shall correct and replace
                  into storage at the Supplier Premises for the Company such
                  Products within 30 Business Days of such determination and
                  shall be fully responsible for all costs associated with the
                  testing, correcting and/or replacing and placing into storage
                  of such Products in accordance with clause 11 and shall
                  compensate the Company for all direct costs reasonably
                  suffered or incurred by it in returning any rejected Products
                  to the Supplier Premises;

         (b)      was not justified in rejecting any of the Products, the
                  Company shall compensate the Supplier for all direct costs
                  reasonably suffered or incurred by the Supplier in relation to
                  testing such Products in accordance with clause 11.3(b).

11.6     For the avoidance of doubt, the supply of replacement Products pursuant
         to clause 11.3(a) and 11.5(a) shall be without prejudice to any other
         right or remedy which the Company may have under this agreement, at law
         or otherwise.

11.7     In the event of any non-conformity, fault or defect being found in any
         Product (whether pursuant to clause 11.3(a) or 11.5(a)), the Supplier
         shall not part with possession of any Product, which is or may be
         affected by such non-conformity, fault or defect to any third party and
         shall, in accordance with the Company's instructions, dispose of all
         stocks of such Products with all reasonable skill and care and in such
         a way that it is not identifiable as connected in any way with the
         Product or the Company.

11.8     If the Supplier is unable to correct and/or replace all rejected
         Products and place into storage in accordance with clauses 11.3(a) or
         11.5(a) within 30 Business Days (a "REPLACEMENT FAILURE"), then the
         Company may (at its entire discretion and without prejudice to any
         other rights or remedies it may have hereunder in respect of such
         default or to the rest of the Supplier's obligations hereunder) on
         written notice to the Supplier:

         (a)      subject to clause 13.7, recover from the Supplier (by way of
                  damages for direct loss of gross profits) a cash payment to
                  the value of and in respect of any and all actual orders for
                  Galen Products (excluding Kapake and Ursogal), Dynamin and/or
                  Isodur which are cancelled by customers of the Company due to
                  a Stock Out occurring (if any) in respect of such Replacement
                  Failure;

                                     - 21 -
<PAGE>

         (b)      subject to clause 13.7, recover from the Supplier (by way of
                  damages for direct loss of gross profits) a cash payment to
                  the value of and in respect of any and all:

                  (i)      actual orders for Galen Products for Kapake and/or
                           Ursogal, which are cancelled by customers of the
                           Company due to a Stock Out occurring (if any) in
                           respect of such Replacement Failure; and

                  (ii)     customer orders for Kapake and/or Ursogal that would
                           reasonably be expected to have been received by the
                           Company but which were not so received due to a Stock
                           Out occurring (if any) in respect of such Replacement
                           Failure (based on the customers' ordering history for
                           Kapake and/or Ursogal during the 60 days immediately
                           prior to such a Stock Out occurring).

         For the purposes of clause 11.8(a) damages would be in respect of the
         period commencing on the date of the Stock Out and ending on the date
         the earlier of (i) the Stock Out no longer existing and (ii) the
         relevant Product or Products being terminated in accordance with clause
         11.9 (if applicable).

         For the purposes of clause 11.8(b) damages would be in respect of the
         period commencing on the date of the Stock Out and ending on the date
         the earlier of (i) the Stock Out no longer existing and customers'
         orders received reverting to a level consistent with ordering history
         for Kapake and/or Ursogal during the 60 days immediately prior to such
         a Stock Out occurring (provided that the Supplier shall not be
         responsible for such damages beyond the date falling 3 months from the
         date of the end of the Stock Out) and (ii) the relevant Product or
         Products being terminated in accordance with clause 11.9 (if
         applicable).

11.9     If there are three or more Replacement Failures during any 90 day
         period during the Term, the Company may (at its entire discretion and
         without prejudice to any other rights or remedies it may have hereunder
         in respect of such default or to the rest of the Supplier's obligations
         hereunder) on written notice to the Supplier:

         (a)      terminate all of the Supplier's obligations hereunder in
                  respect of any such rejected Product (hereinafter referred to
                  in this clause 11.9 as a "REJECTED PRODUCT");

         (b)      contract with any third party for the manufacture, packaging,
                  labelling, testing for release-to-market, QP release, storage
                  and/or despatching of any such Rejected Product;

         (c)      require that this agreement be amended to reflect any Rejected
                  Products, including (without limitation) reducing the
                  Guaranteed Order Value in accordance with clause 5.8, provided
                  that such amendments shall be without prejudice to the
                  Parties' rights and obligations under this agreement in so far
                  as they apply to the remaining Products;

         (d)      subject to clause 13.7, recover from the Supplier (by way of
                  damages for direct loss of gross profits) a cash payment to
                  the value of and in respect of any and all actual orders
                  received by the Company for Rejected Products (excluding
                  Kapake and Urgosal) which are cancelled by customers of the
                  Company due to a Stock Out occurring (if any) in respect of
                  such Rejected Products. For the purposes of this clause
                  damages would be in respect of the period commencing on the
                  date the later of

                                     - 22 -
<PAGE>

                  (i) termination of such Product or Products by the Company in
                  accordance with this clause 11.9 and (ii) a Stock Out
                  occurring (if any), and ending on the date the earlier of (i)
                  when the Company "qualifies" a new supplier for such Rejected
                  Products and (ii) 3 months after the end of the Stock Out;

         (e)      subject to clause 13.7, recover from the Supplier (by way of
                  damages for direct loss of gross profits) a cash payment to
                  the value of and in respect of:

                  (i)      any and all actual orders received by the Company for
                           Kapake and/or Ursogal which are cancelled by
                           customers of the Company due to a Stock Out occurring
                           (if any) in respect of such Rejected Products; and

                  (ii)     customers' orders for Kapake and/or Ursogal that
                           would reasonably be expected to have been received by
                           the Company but which were not so received due to a
                           Stock Out occurring (if any) in respect of such
                           Rejected Products (based on the customers' ordering
                           history for Kapake and/or Ursogal during the 60 days
                           immediately prior to such Stock Out occurring);

                  For the purposes of this clause damages would be in respect of
                  the period commencing on the date the later of (i) termination
                  of such Product or Products by the Company in accordance with
                  this clause 11.9 and (ii) a Stock Out occurring (if any), and
                  ending on the date the earlier of (i) when the Company
                  "qualifies" a new supplier for such Rejected Products and
                  customers' orders received revert to a level consistent with
                  ordering history or Kapake and/or Ursogal during the 60 days
                  immediately prior to such a Stock Out occurring and (ii) 3
                  months after the end of the Stock Out;

                  and

         (f)      recover from the Supplier (by way of direct damages) a cash
                  payment to the value of any and all reasonable costs incurred
                  by the Company in relation to "identifying and qualifying" a
                  new supplier for the Rejected Products.

12.      INTELLECTUAL PROPERTY

12.1     Other than pursuant to clauses 3.1 or 12.2, nothing in this agreement
         shall affect, or grant any right to, Intellectual Property owned by the
         Parties prior to the commencement of this agreement.

12.2     All Intellectual Property which subsists in any documents, drawings,
         items, designs, processes, software or any other thing developed by the
         Supplier or any of its employees or agents (whether in conjunction with
         the Company or not) in performance of the agreement shall vest in the
         Supplier unless otherwise agreed in writing between the Parties.

12.3     The Company shall be responsible for obtaining all necessary consents
         in respect of the use of any third party's Intellectual Property by the
         Supplier which subsists in any materials provided by the Company to the
         Supplier pursuant to clause 3.1(a) or (b), which are necessary for the
         Supplier's performance of this agreement, provided that the Supplier
         shall enter into such licences or other agreement as may reasonably be
         required for such purpose. Where any royalties or other sums are
         payable to any third party in respect of the use of any

                                     - 23 -
<PAGE>

         such Intellectual Property, such sums shall be paid by the Company
         unless otherwise specified.

12.4     The Supplier shall have the right to assign any of the Supplier's
         Intellectual Property rights to any third party.

13.      WARRANTIES & INDEMNITIES

13.1     The Supplier hereby warrants to the Company that:-

         (a)      all Products manufactured, packaged, labelled, tested for
                  release-to-market, QP released, stored and/or despatched
                  hereunder have been so manufactured, packaged, labelled,
                  tested for release-to-market, QP released, stored and/or
                  despatched with all due skill, competence, care and attention
                  and will at the time of delivery conform in all respects with
                  the Specifications and the Manufacturing and Packaging
                  Instructions and will, subject to clause 13.3(c), be free from
                  any non-conformity, fault or defects caused by breach of any
                  of the Supplier's warranties in this clause 13.1;

         (b)      all Products manufactured, packaged, labelled, tested for
                  release-to-market, QP released, stored and/or despatched
                  hereunder have been so manufactured, packaged, labelled,
                  tested for release-to-market, QP released, stored and/or
                  despatched in accordance with the terms of this agreement, the
                  Technical Agreement, the Marketing Authorisations, the cGMP
                  and all applicable European Union and United Kingdom
                  legislation, rules and other requirements of the appropriate
                  regulatory authorities (including without limitation the EMEA
                  and the MHRA) in force from time to time during the Term;

         (c)      the labels and packaging produced and/or obtained by the
                  Supplier for each Galen Product, Isodur and Dynamin will
                  conform to the label copy and packaging copy provided and
                  approved by the Company to the Supplier in the Technical
                  Agreement;

         (d)      the Products shall at all times during the Term be free and
                  clear from any mortgage, charge, pledge, lien, encumbrance,
                  third party right or interest of any kind and not misbranded
                  or adulterated; and

         (e)      it has the power and authority to execute and deliver the
                  agreement and perform its obligations thereunder.

13.2     The Supplier does not exclude or limit its liability (if any) to the
         Company:

         (a)      in respect of any claim for death or personal injury caused by
                  the negligence of the Supplier;

         (b)      in respect of any claim for death or personal injury caused by
                  the negligence of the Supplier under Part 2 of the Consumer
                  Protection (Northern Ireland) Order 1987;

         (c)      in respect of any other liability which may not be limited or
                  excluded at law; or

         (d)      fraud or dishonesty.

                                     - 24 -
<PAGE>

13.3     The Company warrants to the Supplier that:

         (a)      it has authority to supply (and to authorise the Supplier to
                  use as contemplated by this agreement) the Technical
                  Agreement, the Marketing Authorisations, Specifications,
                  Manufacturing and Packaging Instructions and any other written
                  instructions or information furnished by it to the Supplier
                  for the purposes of this agreement and any work undertaken by
                  the Supplier hereunder shall not infringe the rights
                  (including any Intellectual Property rights) of any third
                  party provided that such work is undertaken strictly in
                  accordance with the Technical Agreement, the Marketing
                  Authorisations, Specifications, Manufacturing and Packaging
                  Instructions and other such written instructions or
                  information;

         (b)      the sale by the Company of Products manufactured, packaged,
                  labelled, tested for release-to-market, QP released, stored
                  and/or despatched by the Supplier hereunder shall not infringe
                  the rights (including any Intellectual Property rights) of any
                  third party provided that such work is undertaken strictly in
                  accordance with the Technical Agreement, the Marketing
                  Authorisations, Specifications, Manufacturing and Packaging
                  Instructions or any other written instructions or information
                  furnished by the Company to the Supplier for the purposes of
                  this agreement;

         (c)      the Isodur bulk capsules supplied to the Supplier in
                  accordance with clause 3.1(b) will have been manufactured by
                  the Company's third party suppliers and delivered to the
                  Supplier with due skill, competence, care and attention;

         (d)      the Isodur bulk capsules supplied to the Supplier in
                  accordance with clause 3.1(b) will have been handled and
                  stored by the Company's third party suppliers in accordance
                  with the terms of the Technical Agreement, the relevant
                  Marketing Authorisations, cGMP and all appropriate European
                  Union and United Kingdom legislation, rules and other
                  requirements of the appropriate regulatory authorities
                  (including without limitation the EMEA and the MHRA) in force
                  from time to time during the Term;

         (e)      the Isodur bulk capsules will, during their Product Shelf
                  Life, continue to conform to the Company's warranties set out
                  in this clause 13.3, provided that the Dynamin and Isodur are
                  packaged, labelled, tested for release-to-market, QP released,
                  stored and despatched by the Supplier with due skill,
                  competence, care and attention and in accordance with this
                  agreement; and

         (f)      it has the power and authority to execute and deliver the
                  agreement and perform its obligations thereunder.

13.4     Subject to clause 13.2, and except for liability which may arise under
         clause 13.5, no liability of the Supplier to the Company whether under
         this agreement or otherwise in connection with the manufacture,
         packaging, labelling, testing for release-to-market, QP release,
         storage and/or despatch of Products hereunder shall arise unless a
         claim is notified in writing to the Supplier within 12 months after
         such time as the Company first becomes aware of such claim. Except for
         liability which may arise under clauses 13.3 or 13.6, no liability of
         the Company to the Supplier whether under this agreement or otherwise
         in connection with the manufacture, packaging, labelling, testing for
         release-to-market, QP release, storage and/or despatch of Products
         hereunder shall arise unless a claim is notified in writing to the

                                     - 25 -
<PAGE>

         Company within 12 months after such time as the Supplier first becomes
         aware of such claim.

13.5     The Supplier undertakes to indemnify and keep the Company fully
         indemnified in respect of:-

         (a)      all Losses which the Company may suffer or incur from any
                  third party claims or allegations concerning product liability
                  which are caused by, arise out of or relate to:

                  (i)      a breach of any of the Supplier's warranties
                           contained in clause 13.1;

                  (ii)     negligence or other wrongful conduct; or

                  (iii)    a breach of any statutory duty,

                  by or of the Supplier, its employees, agents, sub-contractors
                  or Affiliates; and

         (b)      all Losses which the Company may suffer or incur in connection
                  with any third party claims or allegations that the Galen
                  Products, Isodur or Dynamin infringes any Intellectual
                  Property right of a third party (other than a claim covered
                  under clause 13.6(b).

                  The Company shall forward to the Supplier as soon as may be
                  reasonably practicable notice of any claim, liability, demand,
                  matter or circumstance against which the Company claims to be
                  indemnified (the "CLAIM"), and giving such reasonable details
                  thereof as the Company then has from time to time thereafter
                  keeping the Supplier reasonably informed of the same and shall
                  not admit any liability nor make any payment, settlement or
                  compromise in respect of such Claim without the written
                  consent of the Supplier (such consent not to be unreasonably
                  withheld). The Supplier shall, if it so chooses and by prior
                  written notice to the Company, in the name of the Company
                  control the conduct of the defence, settlement, compromise,
                  counterclaim and all third party action in respect of such
                  Claim, provided that the Supplier shall keep the Company
                  regularly informed as to the conduct thereof, all costs and
                  expenses incurred by the Supplier in controlling such conduct
                  shall be borne by the Supplier and the Supplier shall
                  indemnify the Company in respect of all reasonable costs and
                  expenses incurred as a result of such conduct.

13.6     The Company undertakes to indemnify and keep the Supplier fully
         indemnified in respect of:-

         (a)      all Losses which the Supplier may suffer or incur from any
                  third party claim as a result of:

                  (i)      any defect or error contained in the Manufacturing
                           Authorisations, the Technical Agreement
                           Specifications or the Manufacturing and Packaging
                           Instructions or any other incorrect or defective
                           information or instructions provided in writing by or
                           on behalf of the Company to the Supplier for the
                           purposes of this agreement;

                                     - 26 -
<PAGE>

                  (ii)     a breach of the Company's warranties contained in
                           clauses 5.7 (but subject to clauses 16.4 and 17.5) or
                           13.3; or

                  (ii)     a breach of any statutory duty; and

         (b)      all Losses which the Supplier may suffer or incur in
                  connection with any third party claims or allegations that the
                  Galen Products, Isodur or Dynamin infringes any Intellectual
                  Property rights of a third party (other than a claim covered
                  under clause 13.5(b)).

         The Supplier shall forward to the Company as soon as may be reasonably
         practicable notice of any claim, liability, demand, matter or
         circumstance against which the Supplier claims to be indemnified (the
         "CLAIM"), and giving such reasonable details thereof as the Supplier
         then has from time to time thereafter keeping the Company reasonably
         informed of the same and shall not admit any liability nor make any
         payment, settlement or compromise in respect of such Claim without the
         written consent of the Company (such consent not to be unreasonably
         withheld). The Company shall, if it so chooses and by prior written
         notice to the Supplier, in the name of the Supplier control the conduct
         of the defence, settlement, compromise, counterclaim and all third
         party action in respect of such Claim, provided that the Company shall
         keep the Supplier regularly informed as to the conduct thereof, all
         costs and expenses incurred by the Company in controlling such conduct
         shall be borne by the Company and the Company shall indemnify the
         Supplier in respect of all reasonable costs and expenses incurred as a
         result of such conduct.

13.7     LIMITATION OF LIABILITY

         (a)      Notwithstanding the foregoing provisions of this clause 13,
                  neither Party shall be liable for any Consequential Loss
                  suffered by any person whether such Consequential Loss arises
                  from breach of contract, or tort, or statutory duty or
                  negligence or any other wrongful act or default or in
                  connection with any other claim regardless of whether any
                  other remedy provided herein fails. "CONSEQUENTIAL LOSS" as
                  used here shall mean any indirect or consequential loss
                  (including loss of production, loss of profit, loss of
                  revenue, loss of contract, loss of opportunity, cost of
                  capital, cost of substitute services or claims of third
                  parties for any of the foregoing to the extent that such
                  losses are indirect or consequential). For the avoidance of
                  doubt, this limitation shall be without prejudice to the
                  Company's rights and remedies under clauses 5.4(b) and (c),
                  5.5(d) and (e), 6.4(b), 6.5(c), 11.8(a) and (b) and 11.9(d),
                  (e) and (f).

         (b)      Other than with respect to liability arising under clause 13.2
                  and the indemnification provisions set out in clause 13.5(b),
                  the total liability of the Supplier for any one claim and/or
                  the aggregate of all claims in any year howsoever caused
                  arising out of or in connection with this agreement shall be
                  limited to (pound)5,000,000.

         (c)      Other than with respect to liability arising under the
                  indemnification provisions set out in clauses 13.6(a)(ii) and
                  clause 5.7, the total liability of the Company howsoever
                  caused arising out of or in connection with this agreement
                  shall be limited to (pound)2,000,000 for all claims in any one
                  Year.

         (d)      For the avoidance of doubt, in relation to each Parties'
                  rights to claim for direct and indirect damages under this
                  agreement for loss and re-location including (without

                                     - 27 -
<PAGE>

                  limitation) in respect of the Company's rights under clauses
                  5.4(b) and (c), 5.5(d) and (e), 6.4(b), 6.5(c), 11.8(a) and
                  (b) and 11.9(d), (e) and (f) and without dilution of each
                  Parties' position in relation to mitigation of losses under
                  common law, the Parties hereby agree to take all reasonable
                  steps consistent with their duty to mitigate loss.

14.      INSURANCE

14.1     During the Term, the Company and the Supplier will maintain adequate
         liability insurance covering their respective obligations hereunder. In
         particular and unless otherwise agreed in writing the Supplier shall,
         subject to clauses 14.2 and 14.3, maintain at its own cost during the
         Term and for the Product Shelf Life of any Products manufactured,
         packaged, labelled, tested for release-to-market, QP released, stored
         and/or despatched by the Supplier hereunder with an insurer of good
         repute:

         (a)      Public Liability insurance for a sum assured of not less than
                  (pound)5,000,000; and

         (b)      Product Liability insurance for a sum assured of not less than
                  (pound)5,000,000.

14.2     The Supplier shall use all reasonable endeavours to obtain as soon as
         reasonably practicable after the date of this agreement and maintain at
         its own cost thereafter during the Term and for the Product Shelf Life
         of any Products manufactured, packaged, labelled, tested for
         release-to-market, QP released, stored and/or despatched by the
         Supplier hereunder with an insurer of good repute Product Liability
         insurance in accordance with clause 14.1 above.

14.3     Notwithstanding clause 14.2, the Company agrees that the Supplier shall
         be added as a "named insured party" to its existing Product Liability
         Insurance policy in respect of certain Company-owned Products until
         such time, not to exceed three months from the date of this agreement,
         as the Supplier can obtain its own Product Liability insurance cover in
         accordance with clause 14.2 above provided that the Supplier shall
         reimburse the Company for any related additional premium cost.

14.4     Upon request of either Party from time to time the other Party shall
         provide evidence of the current validity of the insurances required
         under clauses 14.1, 14.2 and 14.3 by submitting a copy of the original
         insurance certificates to the requesting Party and each Party shall
         notify the other as soon as reasonably practicable following any
         variation or termination or avoidance of such insurance.

14.5     For the avoidance of doubt, any breach of this clause by either Party
         shall be deemed to be a material breach of this agreement for the
         purposes of clause 16.2.

15.      PRODUCT HOLD OR RECALL

15.1     Without prejudice to any other rights or remedies available to the
         Company under this agreement or at law, in the event that the Company
         is required by law or regulation or reasonably considers it necessary
         to undertake a product hold or recall in respect of any Product as a
         result of it being defective or otherwise failing to comply with the
         applicable Specifications (or the Company reasonably suspecting that
         such Product is defective or fails to comply with the applicable
         Specifications), then:

                                     - 28 -
<PAGE>

         (a)      the Company shall be free to undertake a product hold or
                  recall in respect of all such Products; and

         (b)      PROVIDED such defect or other failure of such Products to
                  comply with the applicable Specifications was solely due to a
                  failure by or of the Supplier, its employees, agents,
                  sub-contractors or Affiliates to comply with any obligation in
                  this agreement, the Company shall be free to recover all
                  reasonable direct costs and expenses relating to such product
                  hold or recall from the Supplier, including (without
                  limitation) advertising expenses and all costs associated
                  with:

                  (i)      collection of Products from customers of the Company;

                  (ii)     return of Products to the Supplier;

                  (iii)    testing of Products; and

                  (iv)     correcting and/or replacing Products, and

                  the Supplier shall provide reasonable and prompt assistance to
                  the Company in relation to any such product hold or recall
                  programme.

15.2     If the product hold or recall is not solely due to a failure by the
         Supplier (or any agent, sub-contractor or employee of the Supplier) to
         comply with its obligation hereunder, the Supplier shall provide all
         reasonable assistance to the Company (at the Company's reasonable
         expense) in respect of any such product hold or recall.

15.3     Any dispute as to the cause of any defective Product or any Product
         which fails to comply with the Specifications, which are the subject of
         a product hold or recall, shall be dealt with in accordance with clause
         18.

16.      TERM AND TERMINATION

16.1     Subject to earlier termination as provided for in clause 16.2, this
         agreement shall commence on the Effective Date and shall remain in
         force for a fixed period of two (2) Years from the Effective Date (the
         "TERM") and, unless otherwise agreed by the parties in writing
         beforehand, and subject to clause 5.1(b) shall terminate automatically
         on the expiry of the Term.

16.2     In the event that any Party:

         (a)      suffers the appointment of a receiver or administrator over
                  any part of its property or the presentation of a winding-up
                  petition or passes a resolution for its winding-up except for
                  amalgamation or reconstruction;

         (b)      enters into any composition or arrangement with its creditors
                  or becomes insolvent;

         (c)      commits an irremediable material breach of this agreement;

         (d)      commits a remediable material breach of an obligation under
                  this agreement which it does not remedy within 60 days
                  starting on the day after receipt of written notice

                                     - 29 -
<PAGE>

                  from the other Party of giving details of such breach and
                  requiring the breaching Party to remedy the breach; or

         then this agreement may be terminated at any time by the other Party by
         written notice with immediate effect.

         For the purposes of this clause:

         (a)      a breach is remediable if time is not of the essence in
                  performing the obligation and if the breaching party can
                  comply with the obligation within the 60 day period; and

         (b)      a "material breach" means a breach (including, without
                  limitation, an anticipatory breach) which is serious in the
                  widest sense of having a serious effect on the benefit which
                  the innocent party would otherwise derive from this agreement
                  in accordance with its terms (but shall exclude any breach
                  under clauses 4.4, 5.4, 5.5, 6.4, 6.5, 11.8 and 11.9).

16.3     For the avoidance of doubt the parties agree that the Company cannot
         exercise its rights to termination and claims for any form of damages
         contemplated under clauses 5.4, 5.5, 6.4, 6.5, 11.8, 11.9 during the
         first three months of the Term save in the case of negligent act or
         omission of the Supplier.

16.4     In the event of termination by the Company under clause 16.2 the
         Company's warranties and obligations under clause 5.7 (in respect of
         the Guaranteed Order Value) shall no longer apply.

16.5     Termination of this agreement for any reason will be without prejudice
         to the rights and obligations of the parties accruing up to and
         including the date of such termination.

17.      FORCE MAJEURE

17.1     "EVENT OF FORCE MAJEURE" means, in relation to either Party, an event
         or circumstance beyond the reasonable control of that Party (the
         "CLAIMING PARTY") including, without limitation, strikes, lock outs and
         other industrial disputes (in each case, whether or not relating to the
         Claiming Party's workforce), war, civil war, act of God, fires,
         insurrection or riots, embargoes, requirements, regulations of any
         governmental authority or unavailability of raw materials in the market
         which comply with the Specifications and/or Marketing Authorisations.

17.2     The Claiming Party shall not be deemed to be in breach of this
         agreement or otherwise liable to the other Party (the "NON-CLAIMING
         PARTY") for any delay in performance or any non-performance of any
         obligations under this agreement (and the time for performance shall be
         extended accordingly) if and to the extent that the delay or
         non-performance is due to an Event of Force Majeure provided that:-

         (a)      the Claiming Party could not have avoided the effect of the
                  Event of Force Majeure by taking precautions which, having
                  regard to all matters known to it before the occurrence of the
                  Event of Force Majeure and all relevant factors, it ought to
                  have taken but did not take; and

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         (b)      the Claiming Party has used all reasonable endeavours to
                  mitigate the effect of the Event of Force Majeure and to carry
                  out its obligations under this agreement in any other way that
                  is reasonably practicable.

17.3     On becoming aware of an Event of Force Majeure, the Claiming Party
         shall promptly notify the Non-claiming Party of the nature and extent
         of the circumstances giving rise to the Event of Force Majeure and its
         expected effect and duration. The Claiming Party shall use all
         reasonable endeavours to resume performance of its obligations under
         this agreement as soon as practicably possible.

17.4     If the Event of Force Majeure in question prevails for a continuous
         period in excess of six calendar months after the date on which it
         began, the Non-claiming Party may give notice to the Claiming Party
         terminating this agreement. The notice to terminate must specify the
         termination date, which must be not less than 30 clear days after the
         date on which the notice to terminate is given. Once a notice to
         terminate has been validly given, this agreement will terminate on the
         termination date set out in the notice. Neither Party shall have any
         liability to the other in respect of termination of this agreement due
         to an Event of Force Majeure, but all rights and liabilities which have
         accrued prior to termination shall subsist.

17.5     In the event of termination by the Company under clause 17.4, the
         Company's warranties and obligations under clause 5.7 (in respect of
         the Guaranteed Order Value) shall no longer apply.

18.      DISPUTE RESOLUTION

         The parties will act in good faith and use commercially reasonable
         efforts to promptly resolve any claim, dispute, controversy or
         disagreement (each a "DISPUTE") between the Parties or any of their
         respective subsidiaries, Affiliates, successors and assigns under or
         related to this agreement or any document executed pursuant to this
         agreement. If the parties are unable to amicably resolve a Dispute
         within 10 Business Days (the "DISPUTE RESOLUTION PERIOD") the parties
         may by agreement refer the dispute to the resolution mechanisms set out
         in clause 19 or otherwise proceed to court in accordance with clause
         23.8.

19.      ARBITRATION

19.1     Except as otherwise expressly provided herein, this agreement (and any
         dispute, controversy, proceedings or claim of whatever nature arising
         out of or in any way relating to this agreement or its formation) shall
         be governed by and construed in accordance with the laws of Northern
         Ireland. Subject to the Parties seeking to resolve disputes in
         accordance with clause 18, any dispute arising out of or in connection
         with this agreement including any question regarding its existence,
         validity or termination shall be referred to and finally resolved by
         arbitration under the Arbitration (Northern Ireland) Order 1996.

19.2     With respect to the proceedings to be adopted regarding any referral to
         arbitration:

         (a)      The number of arbitrators shall be three on the basis that
                  each Party shall select one arbitrator and the two so
                  appointed arbitrators will select the third (all such
                  selections to be made as soon as practicably possible
                  following the expiry of the Dispute Resolution Period and in
                  any event within 5 Business Days;

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         (b)      The place of arbitration shall be Northern Ireland;

         (c)      The language to be used in the arbitral proceedings shall be
                  English; and

         (d)      Any determination by such arbitrators shall be final and
                  conclusively binding.

19.3     Judgement on the arbitral award may be entered in any court having
         jurisdiction thereof.

20.      NOTICES

20.1     Any notice, demand or other communication given or made under or in
         connection with the matters contemplated by this agreement shall be in
         writing and shall be delivered personally or sent by fax or prepaid
         first class post (air mail if posted to or from a place outside the
         United Kingdom):-

         In the case of Galen Limited to:
         Unit 22, Seagoe Industrial Estate
         Craigavon
         Co Armagh
         Northern Ireland
         BT63 5UA

         Attention: Company Secretary

         In the case of Pharmaceutical Development and Manufacturing Services
         Limited to:
         Almac House, Seagoe Industrial Estate
         Craigavon
         Co Armagh
         Northern Ireland
         BT63 5QD

         Attention: Graeme McBurney

         and shall be deemed to have been duly given or made as follows:

         (a)      if personally delivered, upon delivery at the address of the
                  relevant Party;

         (b)      if sent by first class post, two Business Days after the date
                  of posting;

         (c)      if sent by air mail, 5 Business Days after the date of
                  posting; and

         (d)      if sent by fax, on receipt by sender of delivery confirmation
                  report;

         provided that if, in accordance with the above provision, any such
         notice, demand or other communication would otherwise be deemed to be
         given or made after 5.00 p.m. such notice, demand or other
         communication shall be deemed to be given or made at 9.00 a.m. on the
         next Business Day.

20.2     A Party may notify the other Party to this agreement of a change to its
         name, relevant addressee, address or fax number provided that such
         notification shall only be effective on:-

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         (a)      the date specified in the notification as the date on which
                  the change is to take place; or

         (b)      if no date is specified or the date specified is less than 5
                  Business Days after the date on which notice is given, the
                  date falling 5 Business Days after notice of any such change
                  has been given.

21.      VARIATION

         Subject to the provisions of clause 4, no purported variation of the
         operative clauses of this agreement shall take effect unless made in
         writing and signed by an authorised representative of each Party and
         expressly incorporating the terms of this agreement.

22.      ENTIRE AGREEMENT

22.1     Each Party on behalf of itself and as agent for each of its Affiliates
         acknowledges and agrees with the other Party that:-

         (a)      this agreement together with any other documents referred to
                  in this agreement and in particular the Business Purchase
                  Agreement, Technical Agreement, Manufacturing and Packaging
                  Instructions, Specifications and the Marketing Authorisations
                  (together the "DOCUMENTS") constitutes the entire and only
                  agreement between the Parties and their respective Affiliates
                  relating to the subject matter of the Documents and that each
                  of the Documents shall be read together in determining the
                  obligations of each Party; and

         (b)      neither it nor any of its Affiliates have been induced to
                  enter into any Document in reliance upon, nor have they been
                  given, any warranty, representation, statement, assurance,
                  covenant, agreement, undertaking, indemnity or commitment of
                  any nature whatsoever other than as are expressly set out in
                  the Documents and, to the extent that any of them have been,
                  it (acting on behalf of itself and as agent on behalf of each
                  of its Affiliates) unconditionally and irrevocably waives any
                  claims, rights or remedies which any of them might otherwise
                  have had in relation thereto.

23.      GENERAL

23.1     This agreement shall only become binding on the Parties in the event
         that the Business Purchase Agreement becomes unconditional in all
         respects.

23.2     Other than to its Affiliates the Supplier shall not assign,
         sub-contract or otherwise transfer this agreement or any of its rights
         and obligations hereunder without the prior written consent of the
         Company (such consent not to be unreasonably withheld or delayed).

23.3     If any part of this agreement is held to be unlawful or unenforceable
         that part shall be struck out and the Parties shall use all reasonable
         endeavours to insert a lawful and enforceable substitute provision
         which, as closely as may be possible, reflects the intended purpose and
         operation of the original provision as intended by the Parties and, in
         any event, the remainder of this agreement shall remain in full force
         and effect.

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<PAGE>

23.4     Save as otherwise expressly provided herein, no delay neglect or
         forbearance by a Party in enforcing its rights under this agreement
         shall be a waiver or prejudice of those rights.

23.5     The rights and remedies herein provided are cumulative with and not
         exclusive of any rights or remedies provided by law.

23.6     Nothing in this agreement and no action taken by the parties pursuant
         to this agreement shall constitute, or be deemed to constitute, a
         partnership, association, joint venture or other co-operative activity.

23.7     This agreement (and any dispute, controversy, proceedings or claims of
         whatever nature arising out of or in any way relating to this agreement
         or its formation) shall be governed by and construed in accordance with
         the law of Northern Ireland.

23.8     Each of the parties to this agreement irrevocably agrees that the
         courts of Northern Ireland shall have exclusive jurisdiction to hear
         and decide any suit, action or proceedings, and/or (subject to clause
         18) to settle any disputes, which may arise out of or in connection
         with this agreement and, for these purposes, each Party irrevocably
         submits to the jurisdiction of the courts of Northern Ireland.

23.9     The Contracts (Rights of Third Parties) Act 1999 shall not apply to
         this agreement and no rights or benefits expressly or impliedly
         conferred by it shall be enforceable under that Act against the parties
         to it by any other person.

IN WITNESS whereof this agreement has been duly executed on the date first above
written.

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<PAGE>

Signed by                  )
for and on behalf of       )
GALEN LIMITED              )

Signed by                  )
for and on behalf of       )
PHARMACEUTICAL             )
DEVELOPMENT AND
MANUFACTURING
SERVICES LIMITED

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