<PAGE>

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.  20549

                                   FORM 10-Q


   (Mark One)

   [X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         For the quarterly period ended June 30, 1999
                                        -------------

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

         For the transition period from _____ to___________


                        Commission file number 0-11103
                                               -------

                                CENTOCOR, INC.
   ------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)


         Pennsylvania                                      23-2117202
   -------------------------------                   --------------------
   (State or other jurisdiction of                      (IRS Employer
   incorporation or organization)                     Identification No.)

   200 Great Valley Parkway     Malvern, Pennsylvania          19355-1307
   ----------------------------------------------------------------------
   (Address of principal executive offices)                    (Zip Code)



                                 610-651-6000
      ------------------------------------------------------------------
             (Registrant's telephone number, including area code)

   Indicate by check mark whether the Registrant (1) has filed all reports
   required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
   1934 during the preceding 12 months (or for such shorter period that the
   Registrant was required to file such reports), and (2) has been subject to
   such filing requirements for the past 90 days.         Yes  X  No
                                                             -----   ----

   Shares of Common Stock outstanding at August 2, 1999 were 70,983,946.

                                       1
<PAGE>

Part I:  Financial Information
------------------------------
Item I: Financial Statements

                        CENTOCOR, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                                (in thousands)
<TABLE>
<CAPTION>
                                                                       (Unaudited)
                                                                        JUNE 30,           December 31,
                                                                          1999                 1998
----------------------------------------------------                ---------------      ---------------
<S>        <C>                                         <C>            <C>             <C>  <C>
ASSETS

Current assets:

           Cash and cash equivalents (Notes 4 and 8)                $        96,446      $        67,332
           Short-term investments (Note 4)                                   77,883              137,938
           Accounts and contracts receivable                                101,002               90,780
           Inventory (Note 5)                                                53,278               45,259
           Prepaid expenses                                                   6,713                7,056
           Other current assets                                               1,600                5,676
                                                                    ---------------      ---------------
                                                                            336,922              354,041


Property, plant and equipment:
           Land and buildings                                                74,249               75,813
           Equipment, furniture, fixtures,
           improvements and construction in progress                        219,938              168,895
                                                                    ---------------      ---------------
                                                                            294,187              244,708
           Less accumulated depreciation                                    (87,868)             (89,285)
                                                                    ---------------      ---------------
                                                                            206,319              155,423

Long-term investments (Note 4)                                               20,923               21,332

Deferred tax assets (Note 9)                                                300,029              309,094

Intangible and other assets (Note 6)                                        238,354              242,199
                                                                    ---------------      ---------------

           Total Assets                                             $     1,102,547      $     1,082,089
                                                                    ===============      ===============

</TABLE>

See accompanying Notes to Consolidated Financial Statements.

                                       2
<PAGE>

                        CENTOCOR, INC. AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEETS (CONT'D.)

                                (in thousands)
<TABLE>
<CAPTION>

                                                                    (Unaudited)
                                                                      JUNE 30,        December 31,
                                                                       1999              1998
--------------------------------------------------------------- -----------------   ----------------
<S>                                                             <C>                <C>
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

          Accounts payable                                       $         29,643   $         15,670
          Accrued expenses                                                 78,824             89,084
          Notes payable (Note 8)                                            5,607              6,383
          Unearned revenues                                                 8,050              4,457
          Other current liabilities (Note 7)                               15,800             15,800
                                                               ------------------   ----------------
                                                                          137,924            131,394

Long-term debt (Note 8)                                                   460,000            460,000


Other liabilities                                                           3,844              4,476

Shareholders' equity (Notes 4, 8, 12, and 16):
          Preferred Stock, $.01 par value,
            10,000 shares authorized, none issued                               -                  -
          Common Stock, $.01 par value,
            100,000 shares authorized and
            70,966 and 70,756 issued and
            outstanding at June 30, 1999 and
            December 31, 1998, respectively                                   709                708
          Additional paid-in capital                                    1,103,645          1,098,315
          Deficit                                                        (598,965)          (618,185)
          Accumulated other comprehensive income (loss)                    (4,610)             5,381
                                                               ------------------   ----------------
                                                                          500,779            486,219
                                                               ------------------   ----------------

              Total liabilities and shareholders' equity       $        1,102,547   $      1,082,089
                                                               ==================   ================
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

                                       3
<PAGE>

                        CENTOCOR, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS

                     (in thousands except per share data)
                                  (Unaudited)

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
For the three months ended June 30,                                         1999                1998
-------------------------------------------------------------------------------------------------------
<S>                                                              <C>                 <C>
Revenues:
    Sales                                                         $         115,125   $         69,880
    Contracts                                                                 1,996             21,002
                                                                         ----------          ---------
                                                                            117,121             90,882

Costs and expenses:
    Cost of sales                                                            37,258             24,422
    Research and development                                                 21,559             16,048
    Marketing, general and administrative                                    39,439             26,108
                                                                         ----------          ---------
                                                                             98,256             66,578

Other income (expenses):
    Interest income                                                           2,003              3,636
    Interest expense                                                         (4,657)            (5,634)
    Litigation charge (Note 14)                                                   -             (1,300)
    Other                                                                      (985)              (276)
                                                                         ----------          ---------
                                                                             (3,639)            (3,574)
                                                                         ----------          ---------

Income before provision for income taxes                                     15,226             20,730

Provision for income taxes (Note 9)                                           6,090              1,450
                                                                          ---------         ----------

    Net income                                                  $             9,136  $          19,280
                                                                         ==========          =========



Basic earnings per share                                        $              0.13  $            0.27
                                                                          =========          =========

Diluted earnings per share                                      $              0.13  $            0.27
                                                                          =========         ==========

Weighted average number of shares
    outstanding                                                              70,939             70,384
                                                                          =========         ==========


Weighted average common and dilutive
 equivalent shares outstanding                                               72,663             72,144
                                                                         ==========          =========

</TABLE>

See accompanying Notes to Consolidated Financial Statements.

                                       4
<PAGE>

                        CENTOCOR, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS

                     (in thousands except per share data)
                                  (Unaudited)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
For the six months ended June 30,                                           1999                   1998
-----------------------------------------------------------------------------------------------------------
<S>                                                              <C>                <C>
Revenues:
    Sales                                                         $         215,622   $            126,385
    Contracts                                                                 2,246                 21,362
                                                                         ----------            -----------
                                                                            217,868                147,747

Costs and expenses:
    Cost of sales                                                            69,622                 45,182
    Research and development                                                 42,510                 35,961
    Marketing, general and administrative                                    73,693                 41,975
    Special charges (Note 11)                                                     -                145,405
                                                                         ----------            -----------
                                                                            185,825                268,523

Other income (expenses):
    Interest income                                                           4,234                  7,800
    Interest expense                                                         (9,984)                (8,321)
    Litigation charges (Note 14)                                                  -                 (4,730)
    Gain on sale of investments (Note 4)                                      5,196                  6,931
    Other                                                                       544                   (331)
                                                                         ----------            -----------
                                                                                (10)                 1,349
                                                                         ----------            -----------

Income (loss) before provision for income taxes                              32,033               (119,427)

Provision for income taxes (Note 9)                                          12,813                  1,600
                                                                          ---------           ------------

Net income (loss)                                                 $          19,220   $           (121,027)
                                                                         ==========            ===========



Basic earnings (loss) per share                                   $            0.27   $              (1.72)
                                                                          =========           ============

Diluted earnings (loss) per share                                 $            0.27   $              (1.72)
                                                                          =========           ============

Weighted average number of shares
 outstanding                                                                 70,901                 70,284
                                                                          =========           ============


Weighted average common and dilutive
 equivalent shares outstanding                                               72,518                 70,284
                                                                         ==========            ===========
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

                                       5
<PAGE>

<TABLE>
<CAPTION>
                                           CENTOCOR, INC. AND SUBSIDIARIES
                                        CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                   (in thousands)
                                                    (Unaudited)

------------------------------------------------------------------------------------------------------------------
For the six months ended June 30,                                               1999                    1998
------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>                <C>
Cash flows from operating activities:
    Net income (loss)                                                      $      19,220          $     (121,027)
    Adjustments to reconcile net income (loss) to net
     cash from operating activities:
      Provisions for depreciation and amortization                                23,366                  15,133
      Amortization of unearned revenue                                              (637)                 (1,521)
      Special charges (Note 11)                                                        -                 145,405
      Gain on sale of investments                                                 (5,196)                 (6,931)
      Changes in assets and liabilities:
        Accounts and contracts receivable                                        (15,147)                (44,540)
        Interest receivable                                                         (134)                    267
        Inventory                                                                (13,564)                 (9,359)
        Prepaid expenses                                                            (983)                   (657)
        Other current assets                                                       2,889                     106
        Intangible and other assets                                               (6,732)                 (7,838)
        Deferred tax assets                                                        9,065                       -
        Accounts payable                                                          15,432                   8,708
        Accrued expenses and other liabilities                                    (2,537)                 19,318
        Unearned revenue                                                           6,021                   5,000
        Other long-term liabilities                                                 (632)                  1,579
                                                                           -------------          --------------
      Net cash from operating activities                                          30,431                   3,643

Cash flows used for investing activities:
     Purchases of investments                                                    (99,342)                (89,619)
     Sales of investments                                                        165,993                 105,512
     RETAVASE acquisition and related costs                                            -                (337,039)
     Purchases of fixed assets                                                   (69,915)                (35,457)
                                                                           -------------           -------------
     Net cash used for investing activities                                       (3,264)               (356,603)

Cash flows from financing activities:
    Net proceeds from issuances of Common Stock                                    2,754                   2,473
    Net proceeds from issuance of long-term debt                                       -                 448,500
    Reduction of long-term debt                                                        -                 (54,765)
                                                                           -------------           -------------
     Net cash from financing activities                                            2,754                 396,208

Effect of foreign currency translation                                              (807)                   (100)
                                                                           -------------           -------------

Net increase in cash and cash equivalents                                         29,114                  43,148

Beginning cash and cash equivalents                                               67,332                  85,565
                                                                           -------------           -------------

Ending cash and cash equivalents                                           $      96,446           $     128,713
                                                                           =============           =============
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

                                       6
<PAGE>

                        Centocor, Inc. and Subsidiaries
             Condensed Notes to Consolidated Financial Statements
                                (Unaudited)
--------------------------------------------------------------------------------

Note 1
Basis of Presentation

   Centocor, Inc. ("Centocor" or the "Company") is a biopharmaceutical company
that creates, acquires and markets therapies that yield long-term benefits for
patients and the healthcare community.  Its products, developed through
monoclonal antibody and other technologies, help physicians deliver innovative
treatments to improve human health and restore patients' quality of life.  See
Note 16 - Subsequent Event.

   The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles applicable to interim
periods.  These financial statements do not include all disclosures required for
annual financial statements and should be read in conjunction with the more
complete disclosures contained in Centocor, Inc.'s audited financial statements
in the Company's Annual Report on Form 10-K for the year ended December 31,
1998.

   The statements reflect, in the opinion of management, all adjustments of a
normal and recurring nature necessary to present fairly the Company's
consolidated financial position at June 30, 1999 and the consolidated results of
operations for the three and six months ended June 30, 1999 and 1998, and cash
flows for the six months ended June 30, 1999 and 1998. The results of operations
and the cash flows are not necessarily indicative of the results to be expected
for the entire year.

Note 2
Commitments and Contingencies

  Liquidity and Capital Resources

  The Company, since inception, has incurred significant operating expenses
attempting to develop therapeutic and diagnostic products. The Company has also
incurred significant special charges. Consequently, the Company had experienced
substantial net cash outflows, which have been only partially offset by
significant contract revenues received through collaborative alliances with
pharmaceutical companies and the Company's financing activities and, more
recently, by therapeutic product sales.

  The Company's future financial condition is dependent upon the Company's rate
of net cash inflows and, ultimately, upon the achievement of significant and
sustained levels of therapeutic product sales. Under the Company's strategy of
entering into collaborative alliances with established pharmaceutical companies,
the Company generally shares sales revenues from products covered by such
arrangements with its partners. The level of future sales of the Company's
products will be dependent upon several factors, including, but not limited to,
the timing and extent of future regulatory approvals of those products, approval
and commercialization of competitive products and the degree of acceptance of
the Company's products in the marketplace. There can be no assurance that the
United States Food and Drug Administration ("FDA") or other regulatory
authorities will approve expanded labeling for ReoPro, RETAVASE, REMICADE or
other products or will approve any other of the Company's product candidates
under development for commercial sale.

  Legal Proceedings

  In July 1995, PaineWebber Development Corporation, a wholly-owned subsidiary
of PaineWebber Group Inc., caused a suit to be filed against the Company by
PaineWebber R&D II, L.P. ("PWR&DII"), a research and development partnership
formed by PaineWebber in the mid-1980s and managed by it since then.  PWR&DII
was an investor in Centocor Partners III, L.P. ("CPIII"), a research partnership
for which PaineWebber acted as the sales agent and in other capacities.  The
Company purchased the Class A and Class C limited partners' interests in CPIII
in January 1997 and purchased the Class B limited partnership interest in CPIII
in May 1997.

                                       7
<PAGE>

                        Centocor, Inc. and Subsidiaries
             Condensed Notes to Consolidated Financial Statements
                                (Unaudited)
--------------------------------------------------------------------------------

    The suit was filed in the Court of Chancery of the State of Delaware.  CPIII
is named as a nominal defendant and the Company and Centocor Development
Corporation III ("CDCIII"), a wholly owned subsidiary of the Company which acted
as the general partner of CPIII, were named as defendants against whom relief is
sought.  The claim in this case was that at least $25,000,000 of the money paid
by Eli Lilly and Company ("Lilly") to the Company in 1992 represented profits
from the marketing of ReoPro, obligating the Company to pay a portion thereof to
CPIII, and that the Company was obligated to pay an increased percentage of the
profits from ReoPro to the former CPIII limited partners going forward.  The
Company answered the complaint in the Delaware action and filed a cross-claim
against nominal defendant CPIII and a third-party complaint against PaineWebber
Group Inc. and PaineWebber Development Corporation.  The cross-claim sought an
offset against any damages awarded the partners based on theories of unjust
enrichment and quasi contract.  The third-party claims (later amended to add
additional theories of liability and to make PaineWebber, Inc. an additional
third-party defendant) sought to hold the PaineWebber entities liable for some
or all of any alleged injury to the partnership.  On November 1, 1995, an
additional suit was commenced in the Delaware Court of Chancery by John E. Abdo,
a limited partner of CPIII, against the Company, CDCIII and certain of their
officers and directors.  The complaint, filed derivatively on behalf of CPIII,
asserted claims, inter alia, for breach of contract, breach of fiduciary duty,
common law fraud, and conspiracy and aiding and abetting.  The Company answered
this complaint and also filed a cross-claim against nominal defendant CPIII and
a third party complaint against PaineWebber Group Inc. and PaineWebber
Development Corporation, later amended to add additional theories of liability
and to name PaineWebber, Inc. as a further third-party defendant.  Abdo moved to
amend his complaint to assert claims against the persons appointed by
PaineWebber to the CDCIII Board of Directors.  That motion was granted.  Motions
to disqualify PWR&DII from serving as the derivative plaintiff were filed in
July 1996 by CPIII and in August 1996 by the Company and CDCIII.  Abdo joined
those motions.  No decision has been issued on those motions. The case brought
by PWR&DII has been settled, subject to final approval of the settlement by the
Court.  As part of the settlement, the complaint was amended to restate the
claims as class claims.  Abdo and Pharmaceutical Partners II, L.P., a limited
partnership which had purchased CPIII limited partnership interests, objected to
the settlement and were permitted to take discovery regarding the settlement.  A
hearing on the settlement was held on September 4, 1997.  On March 15, 1999, the
Court issued an opinion and order in which it approved the settlement as fair
and reasonable.  Once the Court has acted upon the applications for attorneys'
fees, the Court will enter an order and final judgement.  The settlement will
become effective if the Court's order and final judgement is affirmed (in the
event of an appeal) or is not appealed and is no longer subject to appeal.  If
the order becomes final, all claims will be dismissed, including those of Abdo.

  On January 19, 1998, a class action captioned Surgener v. Centocor, Inc. and
David P. Holveck was filed in the United States District Court for the Eastern
District of Pennsylvania.  Other similar suits were filed thereafter.  The Court
consolidated the actions and plaintiffs subsequently filed a consolidated class
action complaint.  The complaint in this action charged the Company and its
chief executive officer with having violated the federal securities laws.
Plaintiffs sought to represent a class of those who purchased the Company's
stock between December 2, 1997 and December 16, 1997, inclusive, and alleged
that defendants made false and misleading statements in connection with earnings
forecasts.  Damages in an unspecified amount were sought.  On June 25, 1998,
defendants filed a motion to dismiss the complaint.  On December 1, 1998, the
Court denied defendants' motion.  On December 22, 1998, defendants answered the
complaint, denying all liability and raising various affirmative defenses.  The
Court certified the action as a class action on behalf of all persons who
purchased the Company's securities between December 2, 1997 and December 16,
1997.  Discovery has been completed.  At the conclusion of discovery,
plaintiffs' counsel indicated that they would dismiss the action subject to
notice to the class and approval by the Court.   On August 6, 1999, plaintiffs
filed a motion for approval of class notice and to dismiss the action thirty
days after notice is given.

  Pursuant to the Asset Purchase Agreement between the Company and Roche
Healthcare, entered into in connection with the Company's acquisition of the
U.S. and Canadian product rights for RETAVASE, the Company assumed
responsibility for certain RETAVASE patent litigation instituted by Genentech,
Inc. against

                                       8
<PAGE>

                        Centocor, Inc. and Subsidiaries
             Condensed Notes to Consolidated Financial Statements
                                (Unaudited)
--------------------------------------------------------------------------------


Boehringer Mannheim GmbH and Boehringer Mannheim Corporation in the United
States and Germany. The Purchase Agreement provides that the cost of the
RETAVASE patent litigation (in the United States and Germany) is to be shared
equally by Roche Healthcare and the Company, and Roche is committed to assist
the Company in the litigation by making available, at Roche's expense, witnesses
and documents. If, as a result of (i) a binding determination (including a
permanent, temporary or preliminary injunction for so long as such injunction is
not stayed or vacated) in connection with the RETAVASE patent litigation (a
"Binding Determination") or (ii) a settlement of the RETAVASE patent litigation
(a "Settlement"), the Company is unable during the life of the relevant
Genentech patents to engage in the manufacture or sale of RETAVASE in the United
States and Canada, Roche Healthcare would be required to reimburse to the
Company up to 100% of the purchase price under the Purchase Agreement (excluding
any part of the $20,000,000 placed in escrow at the closing of the Purchase
Agreement) depending upon the length of the period for which the Company's
manufacturing and sale activities are prohibited. Furthermore, Roche Healthcare
would be required under the Purchase Agreement to indemnify the Company for (i)
any damages (including lost profits) and (ii) any reasonable royalty payments,
for which the Company may become liable to Genentech as a result of a Binding
Determination or a Settlement. Roche Healthcare's total purchase price
reimbursement and indemnification obligations relating to the RETAVASE patent
litigation are limited to an aggregate of 125% of the total purchase price under
the Purchase Agreement, excluding any portion of the Escrow Amount previously
returned to the Company.

  In a suit filed in the United States District Court for the District of
Massachusetts, Genentech charges Boehringer Mannheim GmbH and Boehringer
Mannheim Corporation with infringement of five patents.  Genentech seeks
judgment of infringement, an injunction, treble damages, and costs including
attorney's fees.  The defendants have denied infringement and raised various
affirmative defenses and counterclaims.  Defendants seek a declaration of
invalidity, unenforceability and non-infringement, damages under the antitrust
laws and a state statute and costs, including attorney's fees.  The Court
directed the parties to address initially three of the patents (United States
Patent Nos. 4,342,832, 5,034,225 and 4,511,502), reserving two for later
disposition (United States Patent Nos. 5,221,619 and 5,185,259).  The Court
conducted a Markman hearing as to the first three patents to be considered in
order to construe their claims.  It subsequently issued an opinion which limited
the construction of the claims asserted by Genentech in certain instances, while
not accepting all of defendants' arguments as to construction.  Thereafter, the
Court entertained argument on the motions by the defendants for summary judgment
of noninfringement as to the same three patents.  On March 27, 1998, the Company
moved to intervene as a named defendant in the litigation, and the Court
thereafter joined the Company as a party.  On April 14, 1999, the Court granted
summary judgment dismissing Genentech's claims for infringement of United States
Patent Nos. 4,342,832 and 4,511,502, but held that there remained issues
precluding summary judgment at this time with respect to the claims on United
States Patent No. 5,034,225.  The Court has not set a trial date for the case
concerning United States Patent 5,034,225, nor has it set a schedule for
proceedings with respect to United States Patent Nos. 5,221,619 and 5,185,259.
There can be no assurance that the defendants will prevail in obtaining a
judgment for noninfringement, invalidity, or unenforceability of United States
Patent Nos. 5,034,225, 5,221,619 and 5,185,259 in any subsequent trial or on any
of the patents (including those recently dismissed) in a subsequent appeal.  An
adverse determination in these proceedings could trigger the reimbursement or
indemnification provisions set forth above and could have a material adverse
effect on the Company's ability to sell RETAVASE.

  The patent litigation in Germany consists of a number of different
proceedings:  1) infringement suits by Genentech and its licensee against
Boehringer Mannheim based on the European patent EP 0 093 619 and on patents EP
0 217 379 and EP 0 228 862; 2) a nullity suit by Boehringer Mannheim against the
patent EP 0 093 619; 3) a nullity suit by Boehringer Mannheim against the patent
EP 0 217 379; and 4) an appeal by Boehringer Mannheim from the decision of the
European Patent Office arising from Boehringer Mannheim's opposition to the
patent EP 0 228 862.  The nullity suits and the opposition appeal challenge the
validity of the patents in issue or seek construction of the claims in a manner
which would exclude RETAVASE.  The infringement suit based on

                                       9
<PAGE>

                        Centocor, Inc. and Subsidiaries
             Condensed Notes to Consolidated Financial Statements
                                (Unaudited)
--------------------------------------------------------------------------------



the patent EP 0 093 619 was initially stayed pending the outcome of the
corresponding nullity action. Following a hearing in the nullity action against
the patent EP 0 093 619 on July 14, 1998, the court revoked the claims as
originally stated, but allowed alternative claims, the definition of which and
the reasons for which were subsequently set forth by the court. Boehringer
Mannheim, Genentech and Genentech's European licensee have all filed notices of
appeals. The court in the infringement action based on patents EP 0 217 379 and
EP 0 228 862 has directed certain questions to an expert. No report has been
received from the expert. At a hearing on July 28, 1998 in Boehringer Mannheim's
nullity suit against the patent EP 0 217 379, the court directed that further
evidence be submitted. After a further hearing, the Court declared that patent
invalid. No date has been set for a hearing on the appeal in the opposition
proceedings with regard to patent EP 0 228 862. The infringement suit, based on
patent EP 0 093 619, is now proceeding, following the decision in the related
nullity action, with the appointment of an expert to render advice to the Court.
If any of the German patent proceedings remain pending at the date when the
Company is no longer dependent on Boehringer Mannheim for the supply of
RETAVASE, the defense and risk of the remaining proceedings will revert to
Boehringer Mannheim. An adverse determination in these proceedings prior to the
time when the Company is no longer dependant on Boehringer Mannheim GmbH for the
supply of RETAVASE could trigger the reimbursement or indemnification provisions
set forth above and could have a material adverse effect on the Company's
ability to sell RETAVASE.

  On March 17, 1998, two additional patents were issued to Genentech, United
States Patent Nos. 5,728,565 (the "'565" Patent) and 5,728,566 (the "'566
Patent").  The '565 and `566 Patents issued from the same original application
as United States Patent No. 5,185,259, one of the patents at issue in the suit
that Genentech brought in the District of Massachusetts.  That same day, March
17,1998, Genentech brought suit against the Company for infringement of the `565
and `566 Patents in the United States District Court for the Northern District
of California (Case No. C-98-1046).  In that suit, as in Massachusetts,
Genentech seeks judgment of infringement, an injunction, damages and costs
including attorney's fees.  The Company answered the complaint, denying
infringement of the `565 and `566 Patents and raising various affirmative
defenses concerning invalidity of those patents.  On July 17, 1998, the Company
filed an amended answer and counterclaims against Genentech expanding the
affirmative defenses and further alleging that the `565 and `566 Patents are
invalid and unenforceable.  The amended answer also asserts counterclaims
against Genentech for declaratory judgments of noninfringement, invalidity and
unenforceability of the `565 and `566 Patents and for monopolization and
attempted monopolization under the federal antitrust and unfair competition
claims and moved to strike certain of the Company's affirmative defenses of
equitable estoppel and/or implied license, patent misuse, abandonment and
laches.  On November 9,1998, the Court entered an order denying Genentech's
motion to dismiss the antitrust and unfair competition counterclaims and
granting Genentech's motion to strike with respect to two of the affirmative
defenses (equitable estoppel/implied license and laches) while denying the
remainder of the motion to strike.  The parties have agreed that the antitrust
and unfair competition claims will be separated for discovery and trial along
with issues relating to damages.

  On February 9,1999, another patent was issued to Genentech, United States
Patent No. 5,869,314 (the "'314 Patent").  The `314 Patent issued from the same
original applications as the `565 and `566 Patents.  The same day, February 9,
1999, Genentech brought suit against the Company for infringement of the `314
Patent in the United States District Court for the Northern District of
California (Case No. C-99-0604).  In that suit, as in its other suits in
Massachusetts and California, Genentech seeks judgment of infringement, an
injunction, damages, and costs including attorney's fees.  The Company answered
the complaint on April 19,1999, and asserted defenses and counterclaims similar
to those it had asserted in Case No. C-98-1046 except that it did not include
the equitable estoppel/implied license and laches defenses that had been
dismissed in the Case No. C-98-1046.

  Because of the similarity of the claims in the `314 Patent to the claims in
the `565 and `566 Patents, the Court conducted a Markman hearing on all three
patents (`565, `566, and `314) on April 30, 1999.  On May 12, 1999, the Court
issued an opinion construing the claims of those patents.  At the April 30,1999
hearing, the Court stated that Case No. C-99-0604 should proceed along the same
schedule as Case No. C-98-1046.  Therefore, trial in both

                                       10
<PAGE>

                        Centocor, Inc. and Subsidiaries
             Condensed Notes to Consolidated Financial Statements
                                (Unaudited)
--------------------------------------------------------------------------------

cases was scheduled to commence in or about October, 1999 and dispositive
motions in both cases were to be considered in August, 1999.

  Roche Healthcare has confirmed Centocor's understanding that the suits that
Genentech has brought against the Company in the Northern District of California
are covered by the indemnification and reimbursement provisions of the Purchase
Agreement.  An adverse determination in the Northern District of California
proceedings could have a material adverse effect on the Company's ability to
sell RETAVASE.

   As part of the Asset Purchase Agreement, it was agreed that in the event the
governance agreement between Roche Healthcare's parent and Genentech allowed
Roche Healthcare's parent to control Genentech or in the event the parent
obtained 100% of the stock of Genentech, Roche Healthcare's parent would cause
the patent litigation to be dismissed with prejudice and would cause Genentech
not to institute any additional infringement litigation relating to RETAVASE on
those patents.  On June 2, 1999, Roche Healthcare's parent announced its
intention to cause Genentech to purchase the remaining amount of Genentech stock
that Roche did not already own, thus giving Roche Healthcare's parent 100% of
the stock of Genentech and allowing Roche Healthcare's parent to control
Genentech.  In accordance with the Purchase Agreement, Genentech has agreed to
dismiss the patent litigation in the United States with prejudice, and Centocor
and Genentech are currently negotiating additional terms of dismissal, including
Centocor's dismissal of counterclaims that were brought in response to the
various actions.  With respect to the German actions, discussions are in
progress with Roche Healthcare's parent as to the manner in which the claims
against Boehringer Mannheim will be terminated or otherwise limited so as to
remove any threat to Centocor's supply of RETAVASE.

   On June 29, 1999, a writ of summons was served on Centocor B.V. and Centocor,
Inc. in The Netherlands.  The writ was filed by Yeda Research and Development
Company Limited, Interlab Limited and Ares-Serono International S.A.  The writ
alleges that the manufacture and sale of REMICADE infringes European Patent 0
186 833 (the "Yeda patent") and seeks to prohibit Centocor from manufacturing,
marketing, using or trading in REMICADE.  The writ also seeks fines against
Centocor, damages resulting from the alleged infringement, and costs of the
suit.  The Company intends to defend this action vigorously.

  While it is not possible to predict with certainty the eventual outcome of
these matters, the Company believes that the foregoing proceedings will not have
a material adverse effect on the Company.

  Royalties

  In January 1997, the Company exercised its option to acquire the limited
partnership interests in CPIII and made an advance payment of approximately
$13,598,000 in cash to the Class A and Class C limited partners of CPIII. The
Company recorded this payment as a prepaid royalty in January 1997. The Company
thereafter acquired the Class B limited partnership interest.  The Company is
required to make future royalty payments to the former limited partners of CPIII
based upon future sales of ReoPro.

  The Company has entered into agreements to support research at certain
research institutions. These agreements, which grant the Company licenses and/or
options to license certain technology resulting from the research, generally
require the Company to pay royalties to such institutions on the sales of any
products that utilize the licensed technology. Further, the Company has licenses
under certain patents, patent applications and technology and pays the licensors
or their licensees royalties under such agreements.

  The Company has entered into indemnity agreements with the former limited
partners of Centocor Cardiovascular Imaging Partners ("CCIP"), Centocor Partners
II, L.P. ("CPII") and CPIII pursuant to which the Company would be obligated,
under certain circumstances, to compensate these parties for the fair market
value of their respective interests under any license agreements with the
Company relating to their respective products

                                       11
<PAGE>

                        Centocor, Inc. and Subsidiaries
             Condensed Notes to Consolidated Financial Statements
                                (Unaudited)
--------------------------------------------------------------------------------

which are lost through the exercise by the U.S. government of any of its rights
relating to the licensed technology. The amount of any such loss would be
determined annually by independent appraisal.

  All royalties are reflected in cost of sales as incurred. Royalty costs
represent a significant percentage of sales.

  Product Liability and Product Recall

  The testing and marketing of medical products entails an inherent risk of
product liability. There is also a risk that circumstances might develop
requiring a product recall. The Company maintains limited product liability
insurance coverage and does not maintain product recall or product tampering
insurance coverage. Centocor's business may be materially adversely affected by
a successful product liability claim in excess of any insurance coverage. There
can be no assurance that product liability insurance coverage will continue to
be available to Centocor in the future on reasonable terms or at all.

Note 3
Collaborative Arrangements

  Relationship with Eli Lilly and Company

  In July 1992, Centocor and Lilly entered into a Sales and Distribution
Agreement later amended in June 1993.  Under that Agreement, as amended,
Centocor is principally responsible for developing and manufacturing ReoPro, and
Lilly will assist Centocor in the regulatory filings and continued development
of ReoPro for various clinical indications.  Also, in the event Centocor cannot
manufacture ReoPro or under certain other circumstances, such as material breach
of the agreement by or the bankruptcy of Centocor, Lilly has the option to
assume the manufacture of ReoPro and assure the continued supply of the product,
even to the extent of acquiring Centocor's related manufacturing assets at their
independently appraised values.

  In June 1996, the Company and Lilly further amended its Sales and Distribution
Agreement, pursuant to which Lilly no longer has the right to buy ReoPro for
resale in Japan, but Lilly retains its exclusive right to buy and resell ReoPro
in the rest of the world.

  Because of the complementary nature of RETAVASE and ReoPro in the
cardiovascular field, the Company believes that joint promotion of RETAVASE and
ReoPro could result in increased market penetration for ReoPro.  Accordingly,
the Company and Lilly are jointly promoting ReoPro in the United States.

   Relationship with Fujisawa Pharmaceutical Co., Ltd.

   In August 1996, Centocor entered into an agreement with Fujisawa
Pharmaceutical Co., Ltd., appointing Fujisawa as the exclusive distributor of
ReoPro in Japan.  The Company and Fujisawa will co-develop ReoPro in Japan and
jointly file for Japanese product approval.  Fujisawa shall bear all external
costs associated with the clinical development of ReoPro in Japan and may make
future milestone payments to the Company.

   Relationship with Glaxo Wellcome plc

   In November 1993, Centocor and Glaxo Wellcome plc ("Glaxo Wellcome") entered
into an agreement for the development and marketing of certain of Centocor's
monoclonal antibody-based cancer therapeutic products, including PANOREX
(edrecolomab).  In November 1994, Centocor and Glaxo Wellcome amended their
agreement and Glaxo Wellcome became the exclusive worldwide distributor for
PANOREX. Under the

                                       12
<PAGE>

                        Centocor, Inc. and Subsidiaries
             Condensed Notes to Consolidated Financial Statements
                                (Unaudited)
--------------------------------------------------------------------------------

agreement, Glaxo Wellcome is responsible principally for the continuing clinical
development of PANOREX, and Centocor is responsible principally for
manufacturing PANOREX and securing regulatory approvals.

   Relationship with Roche Healthcare Limited

   In March 1998, Centocor and Roche Healthcare Limited entered into the
RETAVASE Asset Purchase Agreement, pursuant to which Centocor acquired the North
American product rights to RETAVASE.  The RETAVASE Asset Purchase Agreement
requires that Centocor establish and qualify, either directly or through
contract manufacturers, arrangements for the manufacture of RETAVASE for sale in
the United States within four years of the consummation of the acquisition
(subject to extension by the United States Federal Trade Commission (the "FTC")
for up to two additional one year periods if it appears that the required FDA
approvals are likely to be obtained within such extended time period) (the
"Transfer Period"). Under the Purchase Agreement, Centocor is entitled to
recover all or a portion of the $20,000,000 Escrow Amount upon the achievement
of certain manufacturing milestones. Roche will cooperate in Centocor's
establishment of manufacturing arrangements by providing training and other
assistance and has agreed to maintain assets sufficient to supply RETAVASE for
the Transfer Period. Centocor must be successful in establishing such
manufacturing arrangements by the end of the Transfer Period or the RETAVASE
assets will revert to Roche, which must then divest them to another party.

   Relationship with Boehringer Mannheim GmbH and Boehringer Mannheim
Corporation

   During the Transfer Period Boehringer Mannheim GmbH will continue to supply
RETAVASE to Centocor from its facilities in Germany at an agreed price per unit
pursuant to a Supply Agreement.  Boehringer Mannheim GmbH has represented and
warranted that the products supplied to Centocor will meet FDA approved
specifications and has provided the Company with customary indemnities,
including for damages that result from the failure of the product to meet FDA
approved specifications.

   Relationship with Schering-Plough Ltd.

   In April 1998, Centocor entered into an agreement with Schering-Plough Ltd.
("Schering-Plough"), giving Schering-Plough exclusive worldwide marketing
rights, excluding the United States, Japan and portions of the Far East, to
REMICADE.  REMICADE is a novel monoclonal antibody in development for the
treatment of Crohn's disease and rheumatoid arthritis.

   Under terms of the agreement, Centocor received a $20,000,000 non-refundable
payment and could receive additional payments of up to $30,000,000 upon the
achievement of certain milestones.  In addition, Schering-Plough and the Company
will divide profits related to REMICADE and have agreed to share certain
internal and external development expenses related to the product.  Centocor
retains U.S. marketing rights for REMICADE for all indications, but reserves the
right to co-promote with Schering-Plough.  Centocor previously granted
distribution rights to REMICADE in Japan and portions of the Far East to Tanabe
Seiyaku Co., Ltd.

   Relationship with Biovail Corporation International

   On September 15, 1998, Centocor entered into an agreement with Biovail
Corporation International, making Biovail the exclusive distributor of RETAVASE
in Canada in exchange for an up-front payment of $4,000,000 and additional
payments on future sales, which will be recognized as income over the life of
the agreement.

                                       13
<PAGE>

                        Centocor, Inc. and Subsidiaries
             Condensed Notes to Consolidated Financial Statements
                                (Unaudited)
--------------------------------------------------------------------------------

  Relationship with Pharmacia & Upjohn

  In March 1999, Pharmacia & Upjohn and the Company announced an agreement to
co-promote Pharmacia & Upjohn's Fragmin (dalteparin sodium injection) in the
United States.

  Under the terms of the agreement, the Company will promote Fragmin to
cardiovascular specialists across the U.S. for the treatment of unstable angina,
an indication approved by the FDA in May 1999.

  Fragmin, a low molecular weight heparin preparation, is marketed by Pharmacia
& Upjohn in more than 40 countries.  In the U.S., it is currently marketed by
Pharmacia & Upjohn for the prevention of deep-vein thrombosis in patients at
risk undergoing abdominal surgery.

                                       14
<PAGE>

                        Centocor, Inc. and Subsidiaries
             Condensed Notes to Consolidated Financial Statements
                                (Unaudited)
--------------------------------------------------------------------------------

Note 4
Cash Equivalents and Investments

  Management determines the appropriate classification of its investments in
debt and equity securities at the time of purchase and reevaluates such
determination at each balance sheet date. Securities that the Company has both
the intent and ability to hold to maturity are carried at amortized cost.
Securities that the Company does not intend to hold to maturity are classified
either as "available for sale" or as "trading" and are carried at fair value.
Unrealized gains and losses on securities classified as available for sale are
carried as a separate component of shareholders' equity. Unrealized gains and
losses on specific securities classified as trading are reported as a component
of other income (expenses).

  At June 30, 1999, securities classified as trading, available for sale and
held to maturity are summarized below (in thousands).

<TABLE>
<CAPTION>
                                                            Unrealized
                                    Adjusted      -------------------------------         Fair
Trading securities:                   Cost            Gains            Losses            Value
                                 -------------    -------------    --------------    --------------
<S>                            <C>             <C>                <C>             <C>
Securities and obligations of
 the U.S. Treasury and other
  U.S. government agencies     $        44,554  $            23  $            602  $         43,975
Other short-term obligations            24,549                4               367            24,186
Corporate bonds and
  commercial paper                      65,166                -                 -            65,166
                                 -------------    -------------    --------------    --------------
                               $       134,269  $            27  $            969  $        133,327
                                 =============    =============    ==============    ==============


                                                           Unrealized
                                    Adjusted     -------------------------------          Fair
Investments available for sale:       Cost            Gains            Losses            Value
                                 -------------    -------------    --------------    --------------
Equity securities              $        5,693    $         230    $            -    $        5,923
                               ==============    =============    ==============    ==============

                                                                Unrealized
                                    Carrying       --------------------------------       Fair
Investments held to maturity:         Value           Gains             Losses           Value
                                 --------------    --------------    --------------    -------------

Securities and obligations of
 the U.S. Treasury and other
  U.S. government agencies       $        5,994  $              -  $              -  $         5,994
Certificates of deposit                   6,130                 -                 -            6,130
                                 --------------    --------------    --------------    -------------
                                 $       12,124  $              -    $            -    $      12,124
                                 ==============    ==============    ==============    =============
</TABLE>
At June 30, 1999, these securities were classified as follows (in thousands):

<TABLE>
<S>                                       <C> <C>
Cash equivalents                            $       67,568
Short-term investments                              77,883
Long-term investments                                5,923
                                            --------------
                                            $      151,374
                                            ==============
</TABLE>

   The Company has agreed to maintain investments with fair values of $5,840,000
as of June 30, 1999 at a lending bank as collateral for loans from that bank.
See Note 8 - Debt.

                                       15
<PAGE>

                       Centocor, Inc. and Subsidiaries
             Condensed Notes to Consolidated Financial Statements
                                  (Unaudited)
--------------------------------------------------------------------------------

   As part of the Company's agreements with Roche Healthcare, the Company has
placed $20,000,000 in escrow, $15,000,000 of which is classified as a long-term
investment.  Centocor is entitled to recover all or a portion of the $20,000,000
upon the successful completion of certain milestones in the transfer of the
manufacturing of RETAVASE from Boehringer Mannheim to Centocor.

   In March 1999, the Company sold an equity investment in Biometric Imaging,
Inc. consisting of 3,174,603 shares classified as available for sale resulting
in a realized gain of $5,196,000.

   In February 1998, Centocor Diagnostics, Inc., which was then a wholly owned
subsidiary of Centocor, Inc., sold an equity investment in ChromaVision Medical
Systems, Inc. consisting of 962,740 shares classified as available for sale
resulting in a realized gain of $6,931,000.

   The Company entered into a series of foreign exchange forward contracts to
hedge changes in exchange rates that impact the Company's inventory production
activities in Leiden, The Netherlands.  Ultimately, the Company's cost of sales
is affected by changes in exchange rates.  At June 30, 1999 the Company had
foreign exchange forward contracts valued at $90,244,000 to hedge the majority
of anticipated inventory production through June 2000.

Note 5
Inventory

   Inventory, net of reserves, consists of the following (in thousands):

<TABLE>
<CAPTION>
                                   June 30,            December 31,
                                     1999                  1998
                              ----------------     ------------------
<S>                        <C>                  <C>
Raw materials                 $          5,464     $            5,801
Work in progress                        39,680                 20,908
Finished goods                           8,134                 18,550
                              ----------------     ------------------
                              $         53,278     $           45,259
                              ================     ==================
</TABLE>

   Inventories have various expiration dates.  The Company continually evaluates
the extent of inventory reserves considered necessary based upon the future
regulatory and commercial status of such products.  There can be no assurance
that additional reserves for inventories will not be required in the future.

Note 6
Intangible and Other Assets

   Intangible and other assets consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                                   June 30,            December 31,
                                                                     1999                  1998
                                                               ---------------     ------------------
<S>                                                         <C>  <C>            <C>  <C>
Acquired regulatory licenses                                   $        79,351     $           82,248
Goodwill                                                                35,386                 36,678
Prepaid royalties related to CPIII                                      26,291                 26,802
Deferred charges                                                         8,591                 12,976
Debt issuance costs                                                     10,434                 11,345
Other licenses                                                          27,154                 18,017
All other                                                               51,147                 54,133
                                                               ---------------     ------------------
                                                               $       238,354     $          242,199
                                                               ===============     ==================
</TABLE>

                                       16
<PAGE>

                        Centocor, Inc. and Subsidiaries
             Condensed Notes to Consolidated Financial Statements
                                  (Unaudited)
--------------------------------------------------------------------------------

   Intangible and other assets related to the acquisition of RETAVASE,
consisting primarily of goodwill and acquired regulatory licenses, are being
amortized over periods ranging from six to fifteen years.

   Prepaid royalties related to CPIII represent an advance payment of
approximately $13,600,000 in cash paid to the former limited partners of CPIII
in connection with the purchase of the limited partnership interests in CPIII
and an additional $15,800,000 payable to the former limited partners of CPIII in
connection with the revision of future royalties. See Note 2 - Commitments and
Contingencies and Note 7 - Other Current Liabilities.

   Deferred charges include a prepayment of certain future royalties and a
prepayment associated with the commercialization and market development of
ReoPro.

   Intangible and other assets are reviewed for impairment whenever events or
circumstances provide evidence that suggests that the carrying amount of the
asset may not be recoverable. Impairment is evaluated by using identified or
expected cash flows.

Note 7
Other Current Liabilities

   In June 1997, the Company announced that it had reached an agreement to
settle the litigation brought by PaineWebber R&D Partners II, L.P. on behalf of
CPIII, against Centocor arising out of Centocor's Sales and Distribution
Agreement with Lilly with respect to ReoPro. See Note 2 - Commitments and
Contingencies. The settlement is conditional on the finality of the Delaware
Chancery Court approval of the settlement. The agreement provides, among other
things, for Centocor to pay the former limited partners of CPIII $10,800,000
from which attorney's fees and expenses will be deducted, an additional
$5,000,000, when cumulative world-wide sales of ReoPro exceed $600,000,000 and a
revision to the royalties payable to the former limited partners of CPIII. The
Company has recorded a current liability for the $15,800,000 for these probable
payments to the former limited partners of CPIII.

Note 8
Debt

   Notes Payable

   Notes payable at June 30, 1999 and December 31, 1998 consists of $5,607,000
and $6,383,000, respectively, of borrowings under short-term notes at an
interest rate of 3.9% per annum at June 30, 1999, payable in Dutch guilders no
later than September 30, 1999. These borrowings are secured by investments at
the lending bank of $5,840,000.

   Long-term debt

   4 3/4% Convertible Subordinated Debentures

   On February 20, 1998, the Company issued $460,000,000 aggregate principal
amount of the 4 3/4% Convertible Subordinated Debentures (the "4 3/4%
Debentures") due February 15, 2005. The 4 3/4% Debentures are convertible by the
holders into approximately 9,338,000 shares of the Company's Common Stock at an
initial conversion price of $49.261 per share, subject to adjustment in certain
circumstances. The 4 3/4% Debentures are not redeemable by the Company prior to
February 21, 2001. After February 21, 2001, the 43/4% Debentures will be
redeemable by the Company at a redemption price of 102.714% of the principal
amount of the 4 3/4% Debentures and declining annually. The holders of the
4 3/4% Debentures will be entitled at any time after 90 days following the date
of original issuance thereof through the close of business on the final maturity
date of the 4 3/4%
                                       17
<PAGE>

                       Centocor, Inc. and Subsidiaries
             Condensed Notes to Consolidated Financial Statements
                                  (Unaudited)
--------------------------------------------------------------------------------

Debentures, subject to prior redemption, to convert any of the 4 3/4% Debentures
or portions thereof into Common Stock of the Company, subject to the terms of
the Indenture.

   At June 30, 1999, the aggregate amount of senior obligations outstanding
amounted to $5,607,000.

Note 9
Income Taxes

   The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes." The
Company has net operating loss carryforwards for tax purposes that begin to
expire in 2005. Since realization of the entire tax benefit associated with
these carryforwards is not assured, a partial valuation allowance was recorded
against this tax benefit. In addition, pursuant to the Tax Reform Act of 1986,
the annual utilization of these losses may be limited. The Company believes that
any such limitation will not have a material impact on the utilization of these
carryforwards.

  Centocor has approximately $360,000,000 of gross deferred tax assets
consisting primarily of the future tax benefit from net operating loss
carryforwards.  In the fourth quarter of 1998, the Company concluded that it is
more likely than not that it will realize a portion of the benefit of such tax
assets.  Accordingly, the Company reduced the valuation allowance against the
asset and recorded a tax benefit of $282,000,000 in December 1998.  Due to the
recognition of the Company's tax benefit in 1998, the Company's effective tax
rate will approximate the applicable statutory rates.

   The recognition of these deferred tax assets under SFAS 109 has no impact on
the Company's cash flows for income taxes despite the change in the Company's
effective tax rate. A provision for income taxes of $6,090,000 and $12,813,000
were recorded for the three and six months ended June 30, 1999 as compared to
$1,450,000 and $1,600,000 for the three and six months ended June 30, 1998.  The
Company's effective tax rate for the six months ended June 30, 1999 is 40%
compared to 7% for the six months ended June 30, 1998.

Note 10
Supplemental Information on Cash Flows

   No interest was paid for the three months ended June 30, 1999 and $10,925,000
was paid for the six months ended June 30, 1999.  Interest paid for the three
and six months ended June 30, 1998 was $1,685,000.

   Income tax payments made for the three months ended June 30, 1999 were
$432,000 and the six months ended June 30, 1999 were $701,000.  Income tax
payments for the three and six months ended June 30, 1998 were approximately
$12,000.

   In March 1999, the Company sold an equity investment in Biometric Imaging,
Inc. consisting of 3,174,603 shares classified as available for sale resulting
in a realized gain of $5,196,000.

   In February 1998, Centocor Diagnostics sold an equity investment in
ChromaVision Medical Systems, Inc. consisting of 962,740 shares classified as
available for sale resulting in a gain of $6,931,000.

Note 11
Special Charges

   In the first quarter of 1998, the Company recorded special charges of
$145,405,000 consisting of the following:

                                       18
<PAGE>

                       Centocor, Inc. and Subsidiaries
             Condensed Notes to Consolidated Financial Statements
                                  (Unaudited)
--------------------------------------------------------------------------------

  Acquisition of RETAVASE

  On March 13, 1998, the Company completed the acquisition of the U.S. and
Canadian product rights for RETAVASE, an acute-care cardiovascular drug, from
Roche Healthcare for $335,000,000 in cash.

  RETAVASE is a recombinant biologic cardiology care product administered for
the treatment of acute myocardial infarction (heart attack) to improve blood
flow to the heart.  It is among the class of fibrinolytic drugs known as "clot
busters."  RETAVASE received marketing authorization from the FDA in October
1996 and was launched in January 1997.

  Charges relating to the acquisition of RETAVASE included (in thousands):

<TABLE>
<CAPTION>
<S>                                                   <C>
Charge for acquired research and development
  related to new applications of RETAVASE                  $134,495
One-time transitional expenses related to the
  integration of RETAVASE into Centocor                       4,943
                                                           --------
                                                           $139,438
                                                           ========
</TABLE>

  The value of acquired research and development related to this acquisition
represented the current development of a combination cardiovascular therapy
employing the fibrinolytic drug RETAVASE in combination with ReoPro. This
combination therapy, in research and development at acquisition, was expected to
address potential side effects of RETAVASE therapy, increase the speed of
therapy, amplify the effectiveness of RETAVASE, improve long-term outcomes and
increase safety through lower RETAVASE doses.

  At the date of acquisition, RETAVASE had been on the market for over a year.
However, the combination therapy was in development and was not technologically
feasible. While certain animal studies had been done showing favorable results,
the ReoPro/RETAVASE therapy was at the point of commencing Phase II clinical
trials. The combination therapy was expected to require a Phase III trial as
well, despite this therapy representing the combination of two drugs previously
approved for sale.

  At the acquisition date, there remained questions as to both the potential
efficacy and safety of the combination therapy. Given alternative therapies
available in the cardiovascular field, improved efficacy at prevailing safety
levels or equivalent efficacy with improved safety would need to be established
for commercial viability to exist. Because of the uncertainty associated with
these issues, and both the uncertainty and remaining effort associated with
clinical trials for this therapy, the combination ReoPro/RETAVASE therapy had
not established technological feasibility at the acquisition date. Technological
feasibility will not be proven until marketing authorization is received from
the FDA.


  The estimated fair value of all acquired intangible assets, including the
acquired combination therapy project was determined through independent
appraisal. Other identified intangibles included the commercial reteplase
(RETAVASE) full-dose product line, patents, trademarks and trade names, the
customer base of prescribing physicians associated with RETAVASE and the
assembled workforce.

  The value of the acquired in-process research and development project was
determined by projecting expected completion costs for the combination therapy
as well as projected cash flows resulting from its commercialization.  The net
cash flows implied by this projection were discounted to present value using an
appropriate risk adjusted cost of capital.  This rate was developed by including
a risk premium above the return associated with the valuation of the reteplase
product line (which included approved RETAVASE applications) and above the
observed weighted average costs of capital for comparable companies involved
with the sale and development of similar therapies.

                                       19
<PAGE>

                        Centocor, Inc. and Subsidiaries
             Condensed Notes to Consolidated Financial Statements
                                  (Unaudited)
--------------------------------------------------------------------------------

    Centocor Diagnostics, Inc. Restructuring

  Charges related to the Centocor Diagnostics, Inc. restructuring consist of (in
thousands):

<TABLE>
<CAPTION>

<S>                            <C>
Severance....................        $3,142
Asset impairments............         2,825
                                     ------
                                     $5,967
                                     ======
</TABLE>

Note 12
Comprehensive Income

  In January 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, Reporting Comprehensive Income ("Statement 130").  Statement
130 establishes rules for the reporting and display of comprehensive income and
its components; however, the adoption of Statement 130 had no impact on the
Company's net income or shareholders' equity.  Statement 130 requires unrealized
gains or losses on the Company's available-for-sale securities and foreign
currency translation adjustments, which prior to adoption were reported
separately in shareholders' equity, to be included in other comprehensive income
(loss).

The components of comprehensive income (loss) are as follows (in thousands):

<TABLE>
<CAPTION>
                                                           For the three                       For the six
                                                           months ended                        months ended
                                                 --------------------------------    -------------------------------
                                                    June 30,         June 30,         June 30,          June 30,
                                                      1999             1998             1999              1998
                                                 --------------     -------------    ------------     --------------
<S>                                              <C>                <C>              <C>              <C>
Net income (loss)                                $        9,136     $      19,280    $     19,220     $     (121,027)
Foreign currency translation adjustments                 (3,853)            1,816         (10,982)               603
Unrealized gain (loss) on marketable
 securities                                                 961                 -             991               (963)
Reclassification adjustment -- realized
 gain on available for sale security                          -                 -               -             (6,931)
                                                 --------------     -------------    ------------     --------------
Subtotal other comprehensive income (loss)               (2,892)            1,816          (9,991)            (7,291)
                                                 --------------     -------------    ------------     --------------
Total comprehensive income (loss)                $        6,244     $      21,096    $      9,229     $     (128,318)
                                                 ==============     =============    ============     ==============
</TABLE>

The components of accumulated other comprehensive income (loss) are as follows
(in thousands):

<TABLE>
<CAPTION>
                                                                       June 30,            December 31,
                                                                         1999                 1998
                                                                  ---------------      ------------------
<S>                                                               <C>                  <C>
Cumulative foreign currency translation adjustments               $        (4,840)     $            6,142
Unrealized gain (loss) on marketable securities                               230                    (761)
                                                                  ---------------      ------------------
Other comprehensive income (loss)                                 $        (4,610)     $            5,381
                                                                  ===============      ==================
</TABLE>

Note 13
Earnings per share

  The Company adopted Financial Accounting Standard Board Statement No. 128
Earnings per Share in 1997.  Below is a reconciliation of basic earnings per
share to diluted earnings per share.

                                       20
<PAGE>

                        Centocor, Inc. and Subsidiaries
             Condensed Notes to Consolidated Financial Statements
                                  (Unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                For the three months ended June 30, 1999
                                                   ----------------------------------------------------------------
                                                             Income                 Shares
                                                         (in thousands)         (in thousands)         Per Share
                                                           (Numerator)           (Denominator)           Amount
                                                       ------------------     ------------------     --------------
<S>                                                    <C>                    <C>                    <C>
Basic EPS                                              $            9,136                 70,939     $         0.13
Incremental shares from assumed
  exercise of dilutive options and warrants                             -                  1,724
                                                       ------------------     ------------------     --------------
Diluted EPS                                            $            9,136                 72,663     $         0.13
                                                       ==================     ==================     ==============

                                                                For the three months ended June 30, 1998
                                                   ----------------------------------------------------------------
                                                              Income                 Shares
                                                          (in thousands)         (in thousands)         Per Share
                                                            (Numerator)           (Denominator)           Amount
                                                       ------------------     ------------------     --------------

Basic EPS                                              $           19,280                 70,384     $         0.27
Incremental shares from assumed
  exercise of dilutive options and warrants                             -                  1,760
                                                       ------------------     ------------------     --------------
Diluted EPS                                            $           19,280                 72,144     $         0.27
                                                       ==================     ==================     ==============

                                                                 For the six months ended June 30, 1999
                                                   ----------------------------------------------------------------
                                                             Income                 Shares
                                                         (in thousands)         (in thousands)         Per Share
                                                           (Numerator)           (Denominator)           Amount
                                                       ------------------     ------------------     --------------

Basic EPS                                              $           19,220                 70,901     $         0.27
Incremental shares from assumed
  exercise of dilutive options and warrants                             -                  1,617
                                                       ------------------     ------------------     --------------
Diluted EPS                                            $           19,220                 72,518     $         0.27
                                                       ==================     ==================     ==============
</TABLE>

   For the six months ended June 30, 1998 no exercise of options and warrants or
other common stock equivalents is assumed since their effect is antidilutive,
resulting from the Company reporting a loss for this period.

   When dilutive, options are included as share equivalents using the treasury
stock method and are included in the calculation of diluted per share data.  The
approximately 9,338,000 shares issuable upon the conversion of the 4 3/4%
Debentures are not assumed to have converted and are not included in the
calculation of diluted per share data in all periods presented since their
effect is antidilutive.

Note 14
Litigation Charges

   In October 1992, the Company was served with a complaint filed by the Velos
Group, a Maryland partnership ("Velos") in the U.S. District Court for the
District of Maryland.  The complaint primarily alleged that the Company breached
certain provisions of a license agreement between Velos and the Company pursuant
to which the Company has exclusive rights to U.S. Patent No. 5,057,598, as well
as various patent applications and foreign patents.  The complaint sought
declaratory relief and monetary relief in excess of $100,000,000.  On February
20, 1998, the Company and Velos entered into a comprehensive settlement
agreement resolving all

                                       21
<PAGE>
                        Centocor, Inc. and Subsidiaries
             Condensed Notes to Consolidated Financial Statements
                                  (Unaudited)
--------------------------------------------------------------------------------

claims between them. Upon the execution and delivery of the settlement
agreement, the Company paid to Velos $4,750,000 in full and final satisfaction
of any and all obligations that the Company may have owed as the result of any
claims that had been brought by Velos, or that it may have owed in the future
under the provisions of the license agreement, including the future minimum
annual royalty payments that would become due. The Company and Velos exchanged
general releases and both parties filed stipulations dismissing all litigation
between them (including appeals). The Company granted to Velos a fully-paid
exclusive license to United States Patent No. 5,057,598 (which had been assigned
to the Company on November 7, 1990 and has no applicability to any of the
Company's products or product candidates); and the parties terminated the
license agreement. As a result of the completion of the comprehensive settlement
agreement in February 1998, the Company recorded a one-time charge to earnings
of $3,430,000 primarily representing the portion of the payment due to Velos
which had not been previously expensed.

   In July 1995, PaineWebber R&D Partners, L.P., a research and development
partnership, filed suit against the Company on behalf of a class of all former
limited partners of  Centocor Partners II, L.P. ("CPII").  The complaint charged
that some portion of the $100,000,000 paid by Eli Lilly & Co. to the Company in
July 1992 constituted revenues for the licensing, sublicensing or sale of HA-1A
(Centoxin) and that the Company was obligated to pay a percentage thereof to the
former limited partners of CPII, in addition to amounts already paid. A similar
suit was filed by another former CPII partner, Jerome J. Petrisko.  That action
was subsequently consolidated with the PaineWebber action, and the consolidated
action was certified as a class action. In November 1997, the Company filed a
motion for summary judgment which the Court granted with respect to certain
claims by the plaintiffs but denied with respect to plaintiffs' claim for an 8%
royalty on approximately $71,000,000. Thereafter, the parties entered into a
settlement agreement under which the Company agreed to make a payment to the
class members of $1,300,000. As a result, the Company recorded a one-time charge
to earnings in the second quarter of 1998 for $1,300,000. On September 11, 1998,
the Court entered an Order approving the settlement of the case as fair,
adequate and reasonable, and settlement checks were issued on or about November
9, 1998.

Note 15
Segment Information

     In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 131, Disclosures about Segments of an Enterprise and Related Information
("Statement 131"). Statement 131 supercedes Statement of Financial Accounting
Standards No. 14, Financial Reporting for Segments of a Business Enterprise, and
establishes new standards for reporting information about operating segments in
annual financial statements and requires selected information about operating
segments in interim financial reports. Statement 131 also establishes standards
for related disclosures about products and services, geographic areas and major
customers.  Statement 131 is effective for periods beginning after December 15,
1997. The Company adopted this accounting standard in 1998.  This Statement has
no impact on the Company's results of operations, financial condition or
liquidity.

     Segment information for the three and six months ended June 30, 1998 was as
follows (in thousands):

<TABLE>
<CAPTION>
                                                          For the three months ended June 30, 1998
                                    -----------------------------------------------------------------------------------
                                        Pharmaceutical           Diagnostics               Other              Total
                                       Business Segment        Business Segment

                                    --------------------    --------------------    ----------------    ---------------
<S>                                 <C>                     <C>                     <C>                  <C>
Revenues                            $             82,880    $              8,002    $              -     $       90,882

Segment income (loss)               $             23,084    $              1,201    $         (5,005)    $       19,280
</TABLE>

<TABLE>
<CAPTION>
                                                            For the six months ended June 30, 1998
                                    -----------------------------------------------------------------------------------
                                        Pharmaceutical           Diagnostics               Other              Total
                                       Business Segment        Business Segment

                                    --------------------    --------------------    ----------------    ---------------
<S>                                 <C>                     <C>                     <C>                  <C>
Revenues........................    $            131,899    $             15,848    $              -     $      147,747

Segment income (loss)               $             24,142    $                469    $       (145,638)    $     (121,027)
</TABLE>

    The Company operated in only the pharmaceutical business segment in 1999 due
to the sale of the oncology diagnostic business in November 1998.

Note 16
Subsequent Event

   On July 20, 1999, Centocor, Inc. entered into an Agreement and Plan of Merger
(the "Merger Agreement"), under which a wholly owned subsidiary of Johnson &
Johnson will merge with and into Centocor (the "Merger") in a stock for stock
exchange.

   Pursuant to the Merger Agreement, Centocor shareholders will receive a
fraction of a share of Johnson & Johnson common stock for each share of Centocor
common stock they own, based upon an exchange ratio.  The exchange ratio is
calculated by dividing $61.00 by the average closing market price of shares of
Johnson & Johnson common stock during a period of 20 trading days ending with
the second trading day immediately preceeding the Centocor shareholders meeting
and, except as described below, will not be less than 0.5823 or greater than
0.7117.  If the average closing price of shares of Johnson & Johnson common
stock is less than $73.07 or greater than $118.81, then the exchange ratio will
be calculated using $52.00 or $69.18, respectively, as the numerator.

   The Merger is to be accounted for as a pooling of interests transaction.
Consummation of the Merger is subject to various conditions, including: (i)
receipt of the approval of the Merger Agreement by Centocor shareholders; (ii)
termination or expiration of the applicable waiting period (or any extension
thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976; (iii)
receipt of opinions as to the tax and accounting treatment of the Merger; (iv)
satisfaction of certain customary conditions.

                                       22
<PAGE>
                        Centocor, Inc. and Subsidiaries
             Condensed Notes to Consolidated Financial Statements
                                  (Unaudited)
--------------------------------------------------------------------------------

  In the event the Merger is terminated by Centocor under certain circumstances,
Centocor will pay a termination fee of $125,000,000 (the "Termination Fee").

  In connection with the Merger Agreement, Centocor, and Johnson & Johnson
entered into a stock option agreement (the "Option Agreement"), pursuant to
which Centocor granted to Johnson & Johnson an irrevocable option to purchase,
under certain circumstances, up to 11,099,963 shares of Centocor common stock at
a price, subject to certain adjustments, of $61.00 per option share.  The Option
Agreement was granted as an inducement by Centocor for Johnson & Johnson to
enter into the Merger Agreement.  Johnson & Johnson's total profit under the
Option Agreement will not exceed $150,000,000 less the amount of the Termination
Fee actually paid.

                                       23
<PAGE>

Item 2: Management's Discussion and Analysis of Financial Condition and Results
-------------------------------------------------------------------------------
of Operations
-------------


Results of Operations

General

   This quarterly report on Form 10-Q contains forward-looking statements that
have been made pursuant to the provisions of the Private Securities Litigation
Reform Act of 1995.  Such forward-looking statements are based on current
expectations, estimates and projections about the Company's business and
industry, management's beliefs and certain assumptions made by the Company's
management.  Investors are cautioned that matters subject to forward-looking
statements involve risks and uncertainties including economic, competitive,
governmental, technological and other factors which may affect the Company's
business and prospects.  Words such as "anticipates," "expects," "intends,"
"plans," "believes," "seeks," "estimates," variations of such words and similar
expressions are intended to identify such forward-looking statements.  These
statements are not guarantees of future performance and are subject to certain
risks, uncertainties and assumptions that are difficult to predict.  Such risks
and uncertainties include, but are not limited to, those associated with (i) the
timing, completion and outcome of clinical trials for, regulatory approval of,
and market acceptance of the Company's products; (ii) the strength of the
Company's patent position and the patent position of others; (iii) the Company's
forward integration into direct commercialization of certain products; (iv) the
Company's ability to construct and maintain manufacturing facilities that meet
regulatory requirements and satisfy the Company's inventory needs; (v) the
Company's dependence on its collaborative partners; (vi) uncertainties regarding
health care reform and reimbursement from third party payors; (vii) changes in
the competitive environment in which the Company operates; (viii) the outcome of
pending litigation; (ix) the potential for product liability claims and (x) the
availability of raw materials and other necessary inputs into the production
process.  Therefore, actual results may differ materially from those expressed
or forecasted in any such forward-looking statements.  Unless required by law,
the Company undertakes no obligation to update publicly any forward-looking
statements, whether as a result of new information, future events or otherwise.

   Centocor, Inc. ("Centocor" or the "Company") is a biopharmaceutical company
that creates, acquires and markets therapies that yield long-term benefits for
patients and the healthcare community.  Its products, developed through
monoclonal antibody and other technologies, help physicians deliver innovative
treatments to improve human health and restore patients' quality of life.

   The Company, since inception, has incurred significant operating expenses
developing therapeutic and diagnostic products.  The Company has also incurred
significant special charges. Consequently, the Company had experienced
substantial operating losses.  The Company expects that its sales of therapeutic
products in 1999 will provide sufficient revenues to cover operating expenses
and provide net income for the year.  The Company's results for the six months
ended June 30, 1999 and the three and six months ended June 30, 1998 have been
affected by various significant one-time events.  There were no significant one-
time events for the three months ended June 30, 1999.  For the six months ended
June 30, 1999, the significant one-time event was a gain on sale of an
investment in Biometric Imaging, Inc.  Significant one-time events for the three
months ended June 30, 1998 included non-recurring contract revenue and
litigation charge. Significant one-time events for the six months ended June
30, 1998 included non-recurring contract revenue, special charges, litigation
charges and the gain on sale of an investment.  Excluding such significant one-
time events, the Company's earnings per share would have been $0.23 (basic) and
$0.22 (diluted) for the six months ended June 30, 1999 and $0.03 and $0.05
(basic and diluted) for the three and six months ended June 30,1998,
respectively.

   The Company has four therapeutic products approved for sale and several
product candidates in various stages of development.

   ReoPro(R) (abciximab) is co-promoted in the United States by Centocor and Eli
Lilly and Company ("Lilly").  Lilly distributes the product worldwide, except in
Japan, where Fujisawa Pharmaceutical Company, Ltd. ("Fujisawa") will distribute
it if approved.  ReoPro is a therapeutic product approved for the reduction of
acute ischemic cardiac complications in patients undergoing percutaneous
coronary intervention ("PCI") such as

                                       24
<PAGE>

Item 2: Management's Discussion and Analysis of Financial Condition and Results
-------------------------------------------------------------------------------
of Operations
-------------

angioplasty procedures, and for those patients with unstable angina who are
refactory to conventional therapy and for whom PCI is planned within twenty-four
hours.

   REMICADE(TM)  (infliximab) is marketed in the United States by Centocor.
REMICADE was cleared for marketing by the U.S. Food and Drug Administration
("FDA") in August 1998 for the treatment of moderately-to-severely active
Crohn's disease for the reduction of signs and symptoms in patients who have an
inadequate response to conventional therapy.  It is also indicated as a
treatment for patients with fistulizing Crohn's disease for reduction in the
number of draining enterocutaneous fistula(s).  Centocor has retained exclusive
marketing rights for REMICADE in the United States.  Following approval from
global regulatory agencies, if achieved, Tanabe Seiyaku Company, Ltd. ("Tanabe")
will market the product in Japan and parts of the Far East, while Schering-
Plough Ltd. ("Schering-Plough") will market REMICADE in all other countries
throughout the world.

   RETAVASE(R)  (reteplase) is marketed in the United States by Centocor.  In
March 1998, Centocor completed the acquisition of the United States and Canadian
product rights for RETAVASE, a leading acute care cardiovascular drug, from
Roche Healthcare Ltd. ("Roche").  RETAVASE is a recombinant biologic cardiology
care product administered for the treatment of acute myocardial infarction
(heart attack) to improve blood flow to the heart.  It is among the class of
drugs known as "clot busters".

   PANOREX(R) (edrecolomab) is marketed by Glaxo Wellcome plc and sold in
Germany as an adjuvant therapy in the treatment of post-operative colorectal
cancer.

   PANOREX, RETAVASE and REMICADE are trademarks of Centocor.  ReoPro is a
trademark of Lilly.

   Three months ended June 30, 1999 compared to the three months ended June 30,
1998

   The increase in sales for the three months ended June 30, 1999, as compared
to the three months ended June  30, 1998 is principally due to REMICADE sales in
1999 which did not exist in 1998, as well as an increase in sales of ReoPro and
RETAVASE.

   For the three months ended June 30, 1999, ReoPro sales to Lilly were
$65,556,000 and Lilly's announced sales to end-users were $114,300,000.  For the
three months ended June 30, 1998 sales to Lilly were $47,523,000 and Lilly's
announced sales to end-users were $101,000,000.  The Company's sales of RETAVASE
for the three months ended June 30, 1999 were $24,904,000 as compared to
$15,197,000 for the three months ended June 30, 1998.  For the three months
ended June 30, 1999, the Company's sales of PANOREX to Glaxo Wellcome were
$1,396,000 as compared to $138,000 for the three months ended June 30, 1998.
REMICADE sales for the three months ended June 30, 1999 were $23,269,000.
REMICADE sales commenced in September 1998.

   The level of the Company's sales of ReoPro to Lilly and of PANOREX to Glaxo
Wellcome is dependent upon the orders placed and the levels of inventory
maintained by each of these marketing partners.  The Company expects ReoPro end-
user sales to increase in 1999 as market acceptance continues to grow.
Therefore, the Company expects its sales of ReoPro to Lilly to increase in 1999
over 1998 levels. RETAVASE and REMICADE sales are also expected to increase in
1999 over 1998 as additional market acceptance is achieved.  PANOREX sales to
Glaxo Wellcome in 1999 are not expected to have a significant impact on the
Company's financial results.

   Diagnostic product sales for the three months ended June 30, 1998 were
$7,000,000.  In November 1998, the Company sold the oncology diagnostic business
to Fujirebio Inc. for approximately $36,500,000 in cash.  Under the terms of the
sale, Fujirebio has purchased Centocor's in vitro diagnostic oncology business,
which includes immunoassays using monoclonal antibody technology that aids in
the detection and monitoring of tumor-associated antigens.

   The level of future sales of the Company's products will be dependent upon
several factors, including, but not limited to, the timing and extent of future
regulatory approvals, the availability of production capacity, as well

                                       25
<PAGE>

Item 2: Management's Discussion and Analysis of Financial Condition and Results
-------------------------------------------------------------------------------
of Operations
-------------

as the continued availability of necessary raw materials and intermediate inputs
into the production process, approval and commercialization of competitive
products and ultimately, the degree of acceptance of the Company's products in
the marketplace.

   Cost of sales increased for the three months ended June 30, 1999 as compared
to the three months ended June 30, 1998 due primarily to REMICADE sales in 1999
that did not exist in 1998, an increase in RETAVASE sales in 1999 over 1998, as
well as increased sales of ReoPro to Lilly. The Company is required to make
certain royalty payments, based on sales of products.  These payments represent
a significant percentage of cost of sales. The Company expects an increase in
cost of sales in 1999, the extent of which will depend primarily on the amount
and mix of products sold.  Other factors that can influence cost of sales
include, but are not limited to, exchange rate fluctuations, unplanned
production losses, cell line yields, increases in royalty obligations, costs of
raw materials and production interruptions due to plant upgrades.

   Research and development expenses for the three months ended June 30, 1999
increased as compared to the three months ended June 30, 1998 due principally to
REMICADE and ReoPro clinical activities which are being shared with Schering-
Plough and Lilly, respectively.  The level of the Company's total research and
development expenses in future periods will be dependent upon the extent of
clinical trial-related activities.  Research and development expenses are
expected to increase in 1999 as compared to 1998 due to clinical trial
activities in connection with the continued expansion of ReoPro use for
additional indications including, but not limited to, acute myocardial
infarction, unstable angina and in stroke.  In addition, clinical trial
activities for REMICADE, primarily Phase III trials for the Crohn's disease and
severe rheumatoid arthritis indications, are expected to continue throughout
1999.

   Marketing, general and administrative expenses for the three months ended
June 30, 1999 increased as compared to the three months ended June 30, 1998 due
principally to the integration of the Company's RETAVASE and REMICADE sales
force and related infrastructure into the organization and continued ReoPro,
RETAVASE and REMICADE market development efforts.  Marketing, general and
administrative expenses are expected to increase in 1999 as compared to 1998 due
primarily to the Company's increased investment in the direct promotion and sale
of RETAVASE and REMICADE and co-promotion of ReoPro and Fragmin.

   Interest income decreased for the three months ended June 30, 1999 as
compared to the three months ended June 30, 1998 due to the decrease in the
level of the Company's investments and lower rates of return on the Company's
investments.  Interest income in future periods will depend primarily on the
level of the Company's investments and the rates of return obtained on such
investments.

   Interest expense decreased for the three months ended June 30, 1999 as
compared to the three months ended June 30, 1998 due to the interest expense on
the Company's 4 3/4% Convertible Debentures being capitalized as part of the
construction of the Company's U.S. manufacturing facility.  Interest expense in
1999 is expected to increase slightly as a result of the interest on the 4 3/4%
Debentures.  Interest expense in future periods will depend upon the level of
debt outstanding.

   In June 1998, the Company recorded a one-time charge of $1,300,000
representing a reserve for litigation.  See Note 14 - Litigation Charges.

   The Company expects its effective tax rate in 1999 to be approximately 40%.

   Six months ended June 30, 1999 compared to the six months ended June 30, 1998

   The increase in sales for the six months ended June 30, 1999, as compared to
the six months ended June 30, 1998 is principally due to REMICADE sales in 1999
which did not exist in 1998, as well as an increase in sales of ReoPro and
RETAVASE.

                                       26
<PAGE>

Item 2: Management's Discussion and Analysis of Financial Condition and Results
-------------------------------------------------------------------------------
of Operations
-------------

   For the six months ended June 30, 1999, ReoPro sales to Lilly were
$123,584,000 and Lilly's announced sales to end-users were $215,300,000.  For
the six months ended June 30, 1998 sales to Lilly were $93,211,000 and Lilly's
announced sales to end-users were $170,900,000.  The Company's sales of RETAVASE
for the six months ended June 30, 1999 were $45,295,000 and sales of RETAVASE by
Centocor for the period beginning March 16, 1998 through June 30, 1998 were
$17,501,000.  For the six months ended June 30, 1999, the Company's sales of
PANOREX to Glaxo Wellcome were $2,394,000 as compared to $1,528,000 for the six
months ended June 30, 1998.  REMICADE sales for the six months ended June 30,
1999 were $44,349,000.  REMICADE sales commenced in September 1998.

   Diagnostic product sales for the six months ended June 30, 1998 were
$14,507,000.  In November 1998, the Company sold the oncology diagnostic
business to Fujirebio Inc. for approximately $36,500,000 in cash.  Under the
terms of the sale, Fujirebio has purchased Centocor's in vitro diagnostic
oncology business, which includes immunoassays using monoclonal antibody
technology that aids in the detection and monitoring of tumor-associated
antigens.

   Cost of sales increased for the six months ended June 30, 1999 as compared to
the six months ended June 30, 1998 due primarily to REMICADE sales in 1999 that
did not exist in 1998, an increase in RETAVASE sales in 1999 as well as
increased sales of ReoPro to Lilly. The Company is required to make certain
royalty payments, based on sales of products.  These payments represent a
significant percentage of cost of sales.

   Research and development expenses for the six months ended June 30, 1999
increased as compared to the six months ended June 30, 1998 due principally to
REMICADE and ReoPro clinical activities which are being shared with Schering-
Plough and Lilly, respectively.  The level of the Company's total research and
development expenses in future periods will be dependent upon the extent of
clinical trial-related activities.

   Marketing, general and administrative expenses for the six months ended June
30, 1999 increased as compared to the six months ended June 30, 1998 due
principally to the integration of the Company's RETAVASE and REMICADE sales
force and related infrastructure into the organization, amortization of the cost
of acquired intangibles and continued ReoPro, RETAVASE and REMICADE market
development efforts.

   Interest income decreased for the six months ended June 30, 1999 as compared
to the six months ended June 30, 1998 due to the decrease in the level of the
Company's investments and lower rates of return on the Company's investments.

   Interest expense increased for the six months ended June 30, 1999 as compared
to the six months ended June 30, 1998 due to the issuance of the Company's
4 3/4% Convertible Debentures in February 1998. Interest expense in 1999 is
expected to increase slightly as a result of the interest on the 4 3/4%
Debentures. Interest expense in future periods will depend upon the level of
debt outstanding.

   For the six months ended June 30, 1998, the Company recorded one-time special
charges of $145,405,000 consisting of a charge of $139,438,000 relating to the
acquisition of RETAVASE and a charge of $5,967,000 relating to the restructuring
of Centocor Diagnostics.  See Note 11 - Special Charges.

   In February 1998, the Company recorded a one-time charge of $3,430,000
representing the settlement of litigation.  See Note 14 - Litigation Charges.

   Per Share Calculations

   At June 30, 1999, approximately 5,443,000 shares of the Company's Common
Stock were issuable upon exercise of outstanding options and warrants and upon
vesting of restricted stock awards. The Company uses the weighted average number
of shares outstanding in calculating basic per share data. When dilutive,
options and warrants are included as share equivalents using the treasury stock
method and are included in the calculation of

                                       27
<PAGE>

Item 2: Management's Discussion and Analysis of Financial Condition and Results
-------------------------------------------------------------------------------
of Operations
-------------

diluted per share data. The approximately 9,338,000 shares issuable upon
conversion of the 4 3/4% Debentures are not considered Common Stock equivalents
and are not included in the calculation of basic or diluted per share data but
would be included in the calculation of diluted per share data if their effect
is dilutive.

   No shares issuable upon conversion of the 4 3/4% Debentures were included in
the per share calculations for any period presented since to do so would have
been anti-dilutive.  Depending upon the market value of the Company's Common
Stock and its results of operations for such periods, the Company may be
required to include shares issuable upon the conversion of the 4 3/4% Debentures
in its calculations of per share data for such periods if the effect would be
dilutive.

   Liquidity and Capital Resources

   The Company, since inception, has incurred significant operating expenses
attempting to develop its products. The Company has also incurred significant
special charges.  Consequently, the Company had experienced substantial net cash
outflows, which have been only partially offset by significant contract revenues
received through collaborative alliances with pharmaceutical companies and the
Company's financing activities.

   The Company's future financial condition is dependent upon the Company's rate
of net cash inflows and, ultimately, upon the achievement of significant and
sustained levels of therapeutic product sales. Under the Company's collaborative
alliances with established pharmaceutical companies, the Company generally
shares sales revenues from products covered by such arrangements with its
partners.  The level of future sales of the Company's products will be dependent
upon several factors, including, but not limited to, the timing and extent of
future regulatory approvals of those products, approval and commercialization of
competitive products and the degree of acceptance of the Company's products in
the marketplace.  There can be no assurance that FDA or other regulatory
authorities will approve expanded labeling for ReoPro, REMICADE and other
products or will approve any other of the Company's product candidates under
development for commercial sale.

   At June 30, 1999, the Company had cash, cash equivalents and investments of
$195,252,000, including equity investments of $5,923,000.  For the six months
ended June 30, 1999, the Company had cash flows from operations of $30,431,000.
The Company's total cash flows for the six months ended June 30, 1999 included
the receipt of $6,596,000 representing the proceeds from the sale of an equity
investment in Biometric Imaging Inc., and $2,754,000 from the exercise of
options to purchase shares of the Company's Common Stock.  The extent and timing
of future option exercises, if any, are primarily dependent upon the market
price of the Company's Common Stock and general financial market conditions, as
well as the exercise prices and expiration dates of the options.  At June 30,
1999 the Company had a note payable of $5,607,000 which is secured by
investments at the lending bank of $5,840,000, and $20,000,000 of its cash is
held in escrow and is restricted based upon the successful completion of certain
milestones in the transfer of the manufacturing of RETAVASE from Boehringer
Mannheim to Centocor.  The Company's total cash, cash equivalents and
investments decreased by $31,350,000 from December 31, 1998, principally as a
result of capital expenditures relating to the establishment of a U.S.
biopharmaceutical manufacturing facility to support ReoPro and REMICADE
production. The Company believes that its cash, cash equivalents and investments
will be sufficient to fund its operations through at least the end of 2000.

   Accounts receivable at June 30, 1999 increased as compared to December 31,
1998 due primarily to the timing of receipts from sales of ReoPro to Lilly, as
well as increased sales of REMICADE and RETAVASE.

   Gross property, plant and equipment at June 30, 1999 increased as compared to
December 31, 1998, principally due to the investment of $69,915,000 for the
purchase of property and equipment, partially offset by the impact of exchange
rates on property and equipment denominated in foreign currencies. The Company
expects its total investments in property, plant and equipment to increase in
1999 by an amount up to approximately $100,000,000 for its manufacturing
capacity expansion plans in Europe and the establishment of a U.S.
biopharmaceutical manufacturing facility to support ReoPro and REMICADE
production requirements.  The

                                       28
<PAGE>

Item 2: Management's Discussion and Analysis of Financial Condition and Results
-------------------------------------------------------------------------------
of Operations
-------------

Company continually evaluates the future needs for its facilities and equipment.
There can be no assurance that there will not be losses resulting from sales, or
that reserves to reduce the carrying value, of certain fixed assets will not be
required in the future.

   Long-term investments at June 30, 1999 decreased as compared to December 31,
1998 principally due to the sale of an equity investment in Biometric Imaging,
Inc., classified as available for sale in March 1999.

   The Company has entered into indemnity agreements with the former limited
partners of CCIP, CPII and CPIII pursuant to which the Company would be
obligated, under certain circumstances, to compensate these parties for the fair
market value of their respective interests under any license agreements with the
Company relating to their respective products which are lost through the
exercise by the U.S. government of any of its rights relating to the licensed
technology. The amount of any such loss would be determined annually by
independent appraisal.

   Legal Proceedings

   The Company is subject to certain litigation, as more fully described in Note
2 to the Centocor, Inc. and Subsidiaries Condensed Notes to Consolidated
Financial Statements (Unaudited).  While it is not possible to predict with
certainty the eventual outcome of these matters, the Company believes that those
proceedings will not have a material adverse effect on the Company.

   Product Liability and Product Recall

   The testing and marketing of medical products entails an inherent risk of
product liability.  There is also a risk that circumstances might develop
requiring a product recall.  The Company maintains limited product liability
insurance coverage and does not maintain product recall or product tampering
insurance coverage.  Centocor's business may be materially adversely affected by
a successful product liability claim in excess of any insurance coverage. There
can be no assurance that product liability insurance coverage will continue to
be available to Centocor in the future on reasonable terms or at all.

   Year 2000 Issues

   The Company is aware of the issues associated with the programming code in
many existing computer systems as the millennium approaches.  The "Year 2000" or
"Y2K" problem is pervasive; virtually every computer operation may be affected
in some way by the rollover of the two digit year value to 00.  The risk is that
computer systems will not properly recognize date sensitive information when the
year changes to 2000.  Systems that do not properly recognize such information
could generate erroneous data or cause a system to fail, resulting in business
interruption. The Year 2000 issue is expected to affect the systems of the
Company and various entities with which the Company interacts, including the
Company's marketing partners, suppliers, and various vendors.

   To address the Y2K problem, the Company has established a Year 2000 project
and a Y2K Steering Committee comprised of representatives from key functional
areas.  In addition, an Information Technology Association of America certified
Y2K consulting firm has been engaged to assist with the validation and
management of the Year 2000 project.  The project encompasses global corporate
initiatives, including the Company's manufacturing facility in The Netherlands
and the United States manufacturing facility which is currently under
construction.

   In June 1999, the Company completed the implementation of a new Enterprise
Resource Planning ("ERP") system, which is Y2K compliant.  The completion of the
initial phase of this project has replaced many of the Company's primary
financial and manufacturing business applications and has simultaneously
replaced some of the Company's critical systems (i.e., systems which, if not Y2K
compliant, pose risks to revenues, manufacturing

                                       29
<PAGE>

Item 2: Management's Discussion and Analysis of Financial Condition and Results
-------------------------------------------------------------------------------
of Operations
-------------

processes or individuals, property and the environment). Centocor's goal is to
achieve full Y2K readiness by the end of the third quarter of 1999.

   The Centocor Year 2000 Project is designed to address three major areas: (1)
information technology systems, including business application software; (2)
hardware, equipment and instrumentation, including embedded systems; (3) and
third party relationships.  The Company's approach within each of these areas is
to inventory, assess and prioritize those systems which present potential Y2K
problems; remediate (repair, replace or upgrade) non-compliant items; test each
major area of exposure to ensure compliance; and develop contingency plans to
minimize potential business interruption.

   High-level risk assessments have been completed for all functional areas.
Inventory and assessments for Information Technology Department-supported
business systems and infrastructure as well as hardware, equipment and
instrumentation are completed.  Remediation or replacement is in process.  Test
plans and scripts are under development, with testing to occur as new equipment
is acquired or old equipment is replaced.  All testing is scheduled for
completion by the end of the third quarter of 1999.

   The failure of the Company or third parties to be fully Year 2000 compliant
for essential systems and equipment by January 1, 2000 could result in
interruptions in normal business operations.  The Company's potential risks
include, but are not limited to, (i) the failure of security systems, heating
systems or other operational systems and equipment of the Company's facilities
and (ii) the inability to receive critical equipment and/or supplies from
vendors.

   The Company has contacted all of its critical suppliers and strategic
business partners with regard to their Year 2000 readiness and remediation
plans, and detailed evaluations of those plans, and their potential impact on
the Company, are being developed. Most of those parties state that they intend
to be Y2K compliant by 2000. However, there can be no assurances that the
systems of other companies on which the Company's systems rely will be timely
converted, or that a failure to convert by another company, or a conversion that
is incompatible with the Company's systems, would not have a material adverse
affect on the Company. Contingency plans with respect to critical suppliers,
strategic business partners and essential systems and equipment are
substantially complete. The Company intends to have the contingency plans
completed by September 30, 1999; however, there can be no assurance that it will
meet this objective by such date or by January 1, 2000.

   The total costs associated with Year 2000 compliance are not expected to be
material to Centocor's financial position and are estimated to be approximately
$2,500,000.

   The foregoing estimated completion times and costs are management's best
estimates and utilize numerous assumptions of future events including the
continued availability of certain resources, third party modification plans and
other factors.  However, there can be no assurances that these estimates will be
achieved and actual results could differ materially from those estimates.
Specific factors that might cause such material differences include, but are not
limited to, the availability and cost of personnel trained in this area, the
ability to locate and correct all relevant computer codes, the readiness of
strategic partners and similar uncertainties.  Further, given the complexity of
the Year 2000 issues, the Company is currently unable at this time to determine
whether Year 2000 failures will have a material impact on results of operation,
liquidity or financial condition.  The Company's Y2K Project is intended to
significantly reduce, but not eliminate, levels of uncertainty about Year 2000
compliance.

   Inflation

   The Company believes the effects of inflation generally do not have a
material adverse impact on its operations or financial condition.

                                       30
<PAGE>

Item 2: Management's Discussion and Analysis of Financial Condition and Results
-------------------------------------------------------------------------------
of Operations
-------------

   Euro Conversion

   On January 1, 1999, member countries of the European Monetary Union ("EMU")
began a three-year transition from their national currencies to a new common
currency, the "Euro".  In the first phase, the permanent rates of exchange
between the members' national currency and the Euro has been established and
monetary, capital, foreign exchange and interbank markets will be converted to
the Euro.  National currencies will continue to exist as legal tender and may
continue to be used in commercial transactions.  By January 2002, Euro currency
will be issued and by July, 2002, the respective national currencies will be
withdrawn.  The Company has operations in Leiden, The Netherlands and
accordingly, is establishing action plans that will address the Euro's impact on
information systems, currency exchange rate risk, taxation, contracts and
pricing.  Based on its current assessments, management believes that the costs
of the Euro conversion will not have a material impact on the operations, cash
flows or financial position of the Company.

                                       31
<PAGE>

Item 3: Quantitative and Qualitative Disclosures About Market Risk
--------------------------------------------------------------------------------

   Interest Rate Sensitivity

   The Company has exposure to changing interest rates, primarily in the United
States.  The Company's investment portfolio includes investment grade debt
instruments.  These bonds are subject to interest rate risk and could decline in
value if interest rates fluctuate.  Due to the short duration and conservative
nature of these instruments, the Company does not believe that it has material
exposure to interest rate risk related to its investment portfolio.  All of the
Company's outstanding indebtedness has a fixed interest rate of 4 3/4% and
matures in 2005, subject to prior redemption.

   Exchange Rate Sensitivity

   The Company conducts operations in countries other than the United States,
primarily its manufacturing facility in Leiden, The Netherlands.  The Company's
consolidated financial statements are denominated in U.S. dollars, accordingly,
changes in exchange rates between foreign countries and the U.S. dollar will
affect the translation of financial results of foreign subsidiaries into U.S.
dollars for purposes of recording the Company's consolidated financial results.

   The Company entered into a series of foreign exchange forward contracts to
hedge changes in exchange rates that impact the Company's inventory production
activities in Leiden, The Netherlands.  Ultimately, the Company's cost of sales
is affected by changes in exchange rates.  At June 30, 1999 the Company had
foreign exchange forward contracts valued at $90,244,000 to hedge the majority
of anticipated inventory production through June 2000.

                                       32
<PAGE>

Part II  OTHER INFORMATION

Item 1:  Legal Proceedings

See Note 2 to the Centocor, Inc. and Subsidiaries Condensed Notes to
Consolidated Financial Statements (Unaudited), which is attached hereto and
incorporated herein by reference.

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

         (a)  The Annual Meeting of Shareholders was held on May 14, 1999 at the
              Company's principal office at 200 Great Valley Parkway, Malvern,
              Pennsylvania.

         (b)  With respect to the election of directors for a term of one year
              expiring on the date of the 2000 annual meeting of shareholders,
              each nominee was elected with the following vote:

<TABLE>
<CAPTION>
                                                          Total Vote For            Total Vote Withheld
                                                           Each Director             From Each Director
                                                      ---------------------     --------------------------
<S>                                                     <C>                       <C>
Anthony B. Evnin                                          55,947,072                      1,932,170
William F. Hamilton                                       55,947,066                      1,932,176
David P. Holveck                                          55,943,871                      1,935,371
Antonie T. Knoppers                                       55,901,295                      1,977,947
Ronald A. Matricaria                                      55,948,640                      1,930,602
Hubert J.P. Schoemaker                                    55,953,106                      1,926,136
Joseph C. Scodari                                         55,941,027                      1,938,215
Richard D. Spizzirri                                      55,926,228                      1,953,014
Lawrence Steinman                                         55,941,453                      1,937,789
Jean C. Tempel                                            55,951,987                      1,927,255
</TABLE>


         (c)  The proposed Amended and Restated 1989 Non-Employee Directors'
              Non-Qualified Stock Option Plan (1999) was approved with the
              following vote:

<TABLE>
<CAPTION>
              For            Against         Abstain      Broker Non-Vote
         --------------   -------------    ------------  -------------------
<S>                       <C>              <C>           <C>
           53,910,827       3,475,785         492,630           N/A
</TABLE>

                                       33
<PAGE>

Item 6:  Exhibits and Reports on Form 8-K

     (a) Exhibits

         4.0    Amendment to Rights Agreement dated as of July 20, 1999 between
                Centocor, Inc. and Bank Boston, N.A. as Rights Agent dated
                September 26, 1998.

         27.0   Centocor, Inc. and subsidiaries Financial Data Schedule for the
                six months ended June 30,1999

     (b) Reports on Form 8-K


         The Registrant has filed the following reports on Form 8-K since the
         beginning of the quarter ended June 30, 1999:

         Date of Report                 Item Covered
         --------------                 ------------
         July 20, 1999                       5,7
         July 21, 1999                       5,7


                                       34
<PAGE>

                                   SIGNATURES


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



                                        Centocor, Inc.
                                        (Registrant)


                                         /s/ David P. Holveck
Date:    August 16, 1999                -----------------------------
                                        David P. Holveck
                                        Chief Executive Officer
                                        (principal executive officer)


                                         /s/ Dominic J. Caruso
Date:    August 16, 1999                -----------------------------
                                        Dominic J. Caruso
                                        Senior Vice President and
                                        Chief Financial Officer
                                        (principal financial and
                                        accounting officer)

                                       35
<PAGE>

                                                                     EXHIBIT 4.0



                         AMENDMENT TO RIGHTS AGREEMENT


      Amendment to Rights Agreement, dated as of July 20, 1999 (the
"Amendment"), by and between Centocor, Inc., a Pennsylvania corporation (the
"Company"), and BankBoston, N.A., a national banking association, as Rights
Agent (the "Rights Agent").

      WHEREAS, on September 26, 1998, the Company and the Rights Agent entered
into a Rights Agreement (the "Agreement"), the terms of which are incorporated
herein by reference and made a part hereof; and

      WHEREAS, the Company, with approval of the Board of Directors of the
Company, and the Rights Agent have mutually agreed to modify the terms of the
Agreement in certain respects.

      NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth, and intending to be legally bound hereby, the parties hereto
agree that the Agreement shall be and hereby is amended in the following manner:

      Section 1. Amendment of the Definition of "Acquiring Person."  The
                 -------------------------------------------------
definition of Acquiring Person set forth in Section 1(a) of the Agreement is
hereby amended by adding the following sentence at the end thereof:


      "Notwithstanding any other provision of this Agreement, the occurrence of
(A) the approval, execution, and delivery of (i) the Agreement and Plan of
Merger, dated as of July 20, 1999 (as it may be amended from time to time, the
"Merger Agreement"), by and among Johnson & Johnson, a New Jersey corporation
("Parent"), Admiral Merger Corp., a wholly owned subsidiary of Parent and
Pennsylvania corporation ("Sub") and the Company and (ii) the Stock Option
Agreement, dated as of July 20, 1999 (as it may be amended from time to time,
the "Stock Option Agreement"), by and between the Company and Parent, (B) the
consummation of the transactions contemplated by the Merger Agreement and the
Stock Option Agreement or (C) the announcement of any of the foregoing events
will not, individually or collectively, cause Parent, Sub and their affiliates,
either individually or as a group, to be deemed an Acquiring Person."


      Section 2. Amendment of the Definition of "Final Expiration Date."
                 -------------------------------------------------------
Section 7(a) of the Agreement is hereby modified and amended to change the
reference to "September 26, 2008" to "September 26, 2008 or, if earlier,
immediately prior to the merger contemplated by the Merger Agreement becoming
effective", it being agreed that September 26, 2008 or, if applicable, such
earlier date, shall for all purposes of the Agreement be deemed to be the "Final
Expiration Date."

      Section 3. Exclusion from Triggering Events.  The Agreement is hereby
                 --------------------------------
further modified and amended by adding a new Section 34 immediately after the
end of Section 33 thereof to read in its entirety as follows:

     "Section 34. Excluded Transactions.  Notwithstanding any other provision of
                  ----------------------
     this Agreement, the occurrence of (A) the approval, execution and delivery
     of the Merger Agreement and the Option Agreement, (B) the consummation of
     the transactions contemplated by the Merger Agreement and the Option
     Agreement or (C) the announcement of any of the foregoing events shall not,
     individually or collectively, be deemed to constitute a Triggering Event,
     nor will such performance or consummation result in the occurrence of a
     Stock Acquisition Date, Distribution Date, or any other separation of the
     Rights from the underlying Common Stock, nor entitle or permit the holders
     of the Rights to exercise the

<PAGE>

     Rights or otherwise affect the rights of the holders of the Rights,
     including giving the holders of the Rights the right to acquire securities
     of any party to the Merger Agreement."

     Section 4. Effective Date.  This Amendment shall become effective as of the
                ---------------
date of the Merger Agreement (the "Effective Date").  If the Merger Agreement is
terminated without the Effective Time (as defined in the Merger Agreement)
having occurred, this Amendment shall be null and void.

     Section 5. Governing Law.  This Amendment shall be deemed to be a contract
                --------------
made under the laws of the Commonwealth of Pennsylvania and for all purposes
shall be governed by and construed in accordance with the laws of such State
applicable to contracts to be made and performed entirely within such State.

     Section 6. Counterparts.  This Amendment may be executed in any number of
                -------------
counterparts, each of such counterparts shall for all purposes be deemed to be
an original, and all such counterparts shall together constitute but one and the
same instrument.

     Section 7. Rights Agreement as Amended.  As of the date hereof, the term
                ----------------------------
"Agreement" as used in the Agreement shall be deemed to refer to the Agreement
as amended hereby.  It is expressly understood and agreed that except as
provided above, all terms, conditions and provisions contained in the Agreement
shall remain in full force and effect without any further change or modification
whatsoever.  In executing and delivering this Amendment, the Rights Agent shall
be entitled to all of the privileges and immunities afforded to the Rights Agent
under the terms and conditions of the Rights Agreement.

                                  * * * * * *

   IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.


Attest:                           CENTOCOR, INC.


By: /s/ Cynthia Cary              By: /s/ George D. Hobbs
    ----------------                  -------------------
   Name: Cynthia Cary                 Name: George D. Hobbs
   Title: Executive Assistant         Title: Secretary


Attest:                           BANKBOSTON, N.A.
                                  as Rights Agent

By: /s/Patricia A. Deluca         By: /s/ Margaret Prentice
    ---------------------             ---------------------
      Name: Patricia A. DeLuca        Name: Margaret Prentice
      Title: Account Manager          Title: Managing Director