<PAGE>

                                                                   EXHIBIT 10.12

EMPLOYMENT AGREEMENT
--------------------------------------------------------------------------------

                                    between

Permatec Pharma AG                    and              Dr. Dario Carrara
Hardstrasse 18                                         Storchenweg 3
4132 Muttenz                                           4104 Oberwil

("Employer")                                           ("Manager")

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

Function:         The functional position is as Head of Development, to be
                  changed as of January 1, 2001 to Head of Corporate Research &
                  Development. The Manager reports directly to the CEO of the
                  employer and/or the Permatec Group.

Place of
Employment:       Primary place of employment shall be in the Basle, Switzerland
                  area. The Manager shall also travel from time to time,
                  visiting licensors, customers and other members of the
                  Permatec Group in Europe, the United States and South America.

Duties of
Manager:          During the term of the employment the Manager shall exercise
                  the required managerial duties and functions and other
                  activities usually required from a head of R&D such other
                  activities as may be reasonably required by the superiors and
                  the board of directors from time to time. The Manager shall
                  use his reasonable best efforts to perform all such managerial
                  services at the standard of performance as is customary in
                  Switzerland and as reasonably requested by the superiors and
                  the board of directors.

Work week:        The work-hours amount to 40 hours per week, in accordance with
                  the Company's internal regulations. Due to the executive
                  position of the Manager any extra hours are not additionally
                  compensated and are already considered in the salary
                  structure.

Salary:           The salary amounts to CHF 13,076.-- per month.
                  A thirteenth payment amount one month's salary is also payable
                  in December (pro rata temporis)

Bonuses:          The payment of bonuses is entirely in the discretion of the
                  board of directors of the Employer.

Stock Options:    Upon completion of a merger of the employer with a public
                  company or upon completion of an IPO, the Manager shall
                  participate in a stock option program of the employer's group
                  of companies and shall receive as further compensation for his
                  services, a reasonable number of stock options, reflecting the
                  importance of the Manager for the Company, such options to be
                  granted by the option committee of the board of directors of
                  the public group.

Expenses:         The Manager shall receive a general flat expense compensation
                  of CHF 800.-- per month for which the Manager does not need to
                  account.
<PAGE>

                  The employer pay the costs of two round trips Switzerland-
                  Buenos Aires-Switzerland (coach class) per year for the
                  Manager and his direct family members.

                  All other business expenses are reimbursed to the Manager in
                  accordance with the expense regulations of the Employer
                  applicable from time to time and against justification by
                  vouchers.

Relocation
Expenses:         The Employer pays for up to CHF 3,000 towards the lodging and
                  rental expenses of the Manager and his family in Switzerland.

                  The Employer pays for up to CHF 6,500 of the fees of a
                  relocation consulting company during the first 24 month of the
                  employment.

                  The Employer contributes towards the cost of German language
                  training of the Manager and his family with an amount of up to
                  CHF 10,000 during the first 12 month of the employment.

School Allowance: The company contributes towards the private school costs of
                  the two children of the Manager an amount of up to CHF 25,000
                  per year.

Company Car:      The Employer puts at the disposal of the Manager a company
                  car, presently Audi A6 or equivalent, for business and private
                  use. Fuel consumption for private use is to be paid by the
                  Manager.

Pension Fund:     The manager is entitled to join the executive pension fund
                  plan (Beletage) of the Employer at the same terms and
                  conditions as the other executive managers of the Employer.

Insurance:        The Employer includes the manager in its accidence insurance
                  plan.

Deductions:       The statutory premiums for social security, insurances,
                  pension fund and income tax withholding will be deducted from
                  the salary each month.

Vacation:         Vacation entitlement amount to 20 working days per calendar
                  year (pro rata temporis).

Sick Leave:       The base salary is paid for up to an aggregate of 5 (five)
                  weeks per calendar year of absences for sickness of the
                  Manager, or such other longer time periods which may be
                  prescribed by the applicable laws.

Duration and
Termination:      This contract shall come into force on April 1, 2000 and is
                  entered into for an indeterminate period. The trial period is
                  waived. The employment may be terminated by either party by
                  giving the other party 3 month written notice, effective at
                  the end of any month.

Non-Competition:  The Manager shall refrain during the entire term of employment
                  from engaging in any other occupation or activity against
                  compensation, including paid memberships on board of

                                      -2-
<PAGE>

                  directors, unless the board gives its written consent thereto
                  which consent may not be unreasonably withheld. In addition,
                  upon termination of the employment and for a period of 12
                  month from the effective date of termination, the Manager
                  shall abstain from engaging directly or indirectly into any
                  activity competing with the activities of the employer or the
                  enlarged Permatec Group; the area of this non-compete covenant
                  shall be restricted to Switzerland, Germany, France, Italy and
                  the United States of America.

Obligation of
Secrecy:          The Manager herewith commits himself during the entire period
                  of his employment, and also after the term of the employment
                  of this Agreement, to treat as strictly confidential any and
                  all company business documentation and also any and all
                  information to which he becomes privy, to the extent that such
                  documentation of information is not specifically declared as
                  free for public dissemination. Such documentation and
                  information will not be put to personal use, nor made
                  available to third parties. Upon termination of the employment
                  the employee commits himself to return to the Company all
                  documentation which have come into the Manager's possession in
                  connection with the performance of his duties; the Manager
                  shall not retain in his possession any copies and shall
                  execute a written declaration of this fact upon termination of
                  the employment.

Intellectual
Property:         The Manager shall not have any rights in or entitlement to or
                  ownership in any inventions, patent applications, patents or
                  any other intellectual property rights which are derived by
                  the employer with the contribution of the Manager. All
                  intellectual property rights, inventions and patents,
                  including all inventions mentioned in section 332 paragraph 1
                  and paragraph 2 of the Swiss Code of Obligations belong
                  exclusively to the Employer, regardless of the contributions
                  to or participation of the Manager in the creation of any
                  inventions or intellectual property rights. The remuneration
                  of the invention and patents is included in the salary. The
                  Manager has the right to be listed as an "inventor" in the
                  patent applications in the name of the employer or a group
                  company for those inventions where the Manager has personally
                  substantially contributed.

Other contractual
conditions:       To the extent not specifically stated or overridden by the
                  terms and conditions of this contract the Swiss Code of
                  Obligations, the Swiss Employment Laws and the pertinent
                  federal and cantonal regulations will apply. The Manager is
                  also bound by the employer's general rules and regulation as
                  communicated to the employees and managers from time to time.

Place of
Jurisdiction:     All disputes arising in connection with the employment shall
                  be submitted to the exclusive jurisdiction of the courts in
                  the Canton Basle-Land.

                                      -3-
<PAGE>

Muttenz, May 31, 2000                        Permatec Pharma AG

/s/ Dr. Dario Carrara                        /s/ Dr. Jacques Conella
--------------------------------             ----------------------------------
Dr. Dario Carrara                            Dr. Jacques Conella
                                             Executive Chairman

                                             /s/ Dr. T.M. Rinderknecht
                                             ----------------------------------
                                             Dr. T.M. Rinderknecht
                                             Director










                                      -4-