<PAGE>
 
                                                          Confidential Treatment
                                                                   EXHIBIT 10.20



Redacted information, denoted as "[REDACTED]," has been omitted from this 
document pursuant to a request for confidential treatment that has been 
separately filed with the Commission.




                       LICENSE AND DISTRIBUTION AGREEMENT

                                     Between

                            F H FAULDING & CO LIMITED

                               A.C.N. 007 870 984

                                       and

                               WARNER CHILCOTT plc
<PAGE>
 
                                    LICENSE AND DISTRIBUTION AGREEMENT dated as
                                    of December 31, 1997 between F H FAULDING &
                                    CO LIMITED, A.C.N. 007 870 984, a limited
                                    liability company organized and existing
                                    under the laws of Australia, with its
                                    principal offices at 115 Sherriff Street,
                                    Underdale, South Australia 5032, Australia
                                    ("FAULDING") and WARNER CHILCOTT plc, a
                                    corporation organized and existing under the
                                    laws of the Republic of Ireland, with its
                                    principal offices at Lincoln House, Lincoln
                                    Place, Dublin 2, Ireland ("WARNER
                                    CHILCOTT").

         WHEREAS, FAULDING and WARNER CHILCOTT, as assignee of Warner-Lambert
Company, are parties to the Prior License and Supply Agreements pursuant to
which FAULDING granted WARNER CHILCOTT a license to certain know-how and
information related to the Product and the exclusive right to manufacture and
distribute the Product in the Territory;

         WHEREAS, FAULDING and its Affiliate, Purepac Pharmaceutical Co.
("Purepac") are parties to an Agreement dated as of March 15, 1995, pursuant to
which FAULDING granted Purepac a non-exclusive license to distribute a Competing
Product in the Territory;

         WHEREAS, the parties intend hereby to terminate the Prior License and
Supply Agreements and to set forth the terms upon which FAULDING will grant
WARNER CHILCOTT:

                  A.       the exclusive right to import, distribute, promote
                           and sell the Product in the Territory; and

                  B.       a license to the Technology for the sole purpose of
                           selling and distributing the Product in the Territory
                           upon the terms and conditions set forth in this
                           Agreement.

         NOW, THEREFORE, in consideration of the mutual covenants contained
herein, FAULDING and WARNER CHILCOTT agree to the following:

         1.       DEFINITIONS

         As used in this Agreement, the following terms shall have the following
meanings:

                  a. "Affiliates" shall mean (i) an entity controlled by a
common parent that owns more than fifty percent of the voting stock of both such
entity and one of the parties to this Agreement and (ii) such parent company.

                  b. "Certificate of Analysis" shall mean a document, which is
signed and dated by a duly authorized representative of FAULDING certifying that
the Product conforms with the Product Specification.
<PAGE>
 
                  c. "CIP" shall mean "Carriage and Insurance Paid" to the
destination specified in Section 7 hereof, as such term is defined in Incoterms.

                  d. "Competing Product" shall mean a pharmaceutical product
which is an AB-rated equivalent to Doryx(TM) 100 mg capsules, as currently
defined in the 17th edition of Approved Drug Products with Therapeutic
Equivalence Evaluations, issued by the United States Department of Health and
Human Services.

                  e. "Confidential Information" shall mean and include all
information which may be disclosed by either party or its Affiliates to the
other party or its Affiliates either pursuant to this Agreement or pursuant to
any prior agreement concerning (i) the Product; (ii) any technology of either
party, including, without limitation, the Technology, (iii) any marketing
strategies and business of either party, including such strategies and business
relating directly to the Product, and (iv) any technology generated by either of
them as a result of the rights granted and obligations arising under this
Agreement but shall not include information which the party receiving the
information can show: (i) either is or becomes available to the public other
than as a result of a disclosure by the receiving party; (ii) at the time of
receipt is already in the possession of the receiving party or (iii) becomes
lawfully available to the receiving party on a non-confidential basis from a
third party entitled to make that disclosure.

                  f. "cGMP" shall mean current good manufacturing practices as
required by the U S. Food, Drug and Cosmetic Act and the regulations promulgated
thereunder.

                  g. "FDA" shall mean the U.S. Food and Drug Administration and
any successor organization.

                  h. "Firm Order" shall have the meaning set forth in Section
6(b).

                  i. "FOB" shall mean "Free on Board" to the destination
specified in Section 7 hereof, as such term is defined in Incoterms.

                  j. "Incoterms" shall mean the 1990 edition of the
International Commercial terms published by the International Chamber of
Commerce, as may be amended or modified from time to time.

                  k. "Independent Analyst" shall mean an analyst that is
acceptable to both of the parties.

                  l. "Intellectual Property Rights" shall include all rights and
interests, vested or arising out of any patent, copyright, design, trade mark,
trade secrets, goodwill or Confidential Information rights whether arising by
common law or by statute or any right to apply for registration under a statute
in respect of those or like rights.

                                      -2-
<PAGE>
 
                  m. "Latent Defect" shall mean a deviation from Product
Specification that is discovered subsequent to receipt by WARNER CHILCOTT in any
Product that had met Product Specification at the time of receipt.

                  n. "Medical Affairs Liaison" shall have the meaning set forth
in Section 13.

                  o. "Minimum Obligation Period" shall have the meaning set
forth in Section 11.

                  p. "Net Sales of Product" shall mean WARNER CHILCOTT's gross
invoiced sales of Product less [REDACTED], which is the agreed upon allowance
for cash discounts and Medicaid rebates. Any discount, allowance, rebate,
management fee or wholesaler chargeback for Product that is given to a customer
due to the purchase of a product other than the Product, or due to the purchase
of any service, shall not be taken into consideration in the calculation of Net
Sales of Product.

                  q. "Objection Notice" shall have the meaning set forth in
Section 8(b).

                  r. "Prior License and Supply Agreements" shall mean the U.S.
License Agreement and the U.S. Supply Agreement, both of which are dated as of
September 5, 1985 as amended between F H FAULDING & Co Limited and WARNER
CHILCOTT, Inc., as assignee of Warner-Lambert Company.

                  s. "Product" shall mean the Doryx(TM) 100 mg capsules to be
supplied by FAULDING to WARNER CHILCOTT for marketing and distribution in the
Territory.

                  t. "Product Specification" shall mean the latest approved
specification of the Product by the FDA.

                  u. "Purepac" shall mean Purepac Pharmaceutical Co., an
Affiliate of Faulding, whose principal offices are located at 200 Elmora Avenue,
Elizabeth, New Jersey.

                  v. "Regulatory Authority" shall mean the FDA and/or any other
like authority whether Federal or State regulating the manufacture,
distribution, marketing and/or sale in the U.S. of therapeutic substances.

                  w. "Tablet" shall have the meaning set forth in Section 4.

                  x. "Technology" shall mean the technology in relation to the
Product, including the technical, scientific, industrial information and
knowledge, confidential information and expertise in relation to such Product.

                  y. "Territory" shall mean the United States of America,
including its territories and possessions and the Commonwealth of Puerto Rico.

                                      -3-
<PAGE>
 
                  z. "Warner Chilcott, Inc." shall mean Warner Chilcott, Inc., a
New Jersey corporation and wholly owned subsidiary of WARNER CHILCOTT.

         2.       GRANT OF EXCLUSIVE LICENSE

                  a. FAULDING hereby grants to WARNER CHILCOTT and, subject to
the provisions set forth in Section 2(e), to Warner Chilcott, Inc.:

                           i.       an exclusive license, exclusive even as to
                                    Licensor (subject to the provisions of
                                    Section 11 below) to package, store,
                                    promote, sell and distribute the Product in
                                    the Territory on the terms and conditions
                                    set forth in this Agreement; and

                           ii.      an exclusive license, exclusive except as to
                                    Licensor and its Affiliates for the sole
                                    purpose of qualifying an alternate
                                    manufacturing site under Section 5 below, to
                                    use the Technology for the sole purpose of
                                    packaging, storing, promoting, selling and
                                    distributing the Product in the Territory
                                    and to assist FAULDING in qualifying an
                                    alternate manufacturer of the Product under
                                    the circumstances described in Section 5
                                    hereto.

                  b.       WARNER CHILCOTT agrees that during the term of this
Agreement, it:

                           i.       will not sell or attempt to sell the
                                    Product, either on its own account or
                                    through any third party outside the
                                    Territory nor will it sell any Product to
                                    any person or corporation within the
                                    Territory where it has reasonable grounds to
                                    believe that such other person or
                                    corporation intends to sell the Product
                                    outside the Territory;

                           ii.      will not manufacture, sell or distribute any
                                    Competing Product or attempt to manufacture,
                                    sell or distribute any Competing Product,
                                    either on its own account or through any
                                    third party, whether within or outside the
                                    Territory, and

                           iii.     will maintain facilities to package Product
                                    and hold Product for distribution within the
                                    Territory only in (A) the Territory and (B)
                                    the Republic of Ireland; and

                           iv.      will refer to FAULDING all inquiries, sales
                                    leads, prospects and other information
                                    WARNER CHILCOTT may receive concerning sales
                                    and prospective sales of the Product outside
                                    the Territory.

                  c.       FAULDING agrees that, during the term of the
Agreement:

                                      -4-
<PAGE>
 
                           i.       subject to the provisions of Section 11, it
                                    will not market, sell or attempt to market
                                    or sell the Product or any Competing Product
                                    within the Territory, either on its own
                                    account or through any third party, nor will
                                    it market or sell (nor will it allow or
                                    permit any Affiliate or other related party
                                    to market or sell) any Product, or any
                                    Competing Product, to any person or
                                    corporation outside the Territory where it
                                    has reasonable grounds to believe that such
                                    other person or corporation intends to sell
                                    such Product within the Territory; and

                           ii.      will refer to WARNER CHILCOTT all inquiries,
                                    sales leads, prospects and other information
                                    FAULDING or its Affiliates may receive
                                    concerning sales and prospective sales of
                                    the Product within the Territory.

                  d. WARNER CHILCOTT understands and agrees that FAULDING has
the right to distribute, or grant any rights to any third party to distribute
the Product outside the Territory subject to the provisions of subsection (c) of
this Section.

                  e. WARNER CHILCOTT agrees that without FAULDING's prior
written consent, it will not grant any sub-license of the rights granted to it
under Section 2(a) nor delegate the exercise of the rights granted to it under
Section 2(a) to any party, other than Warner Chilcott, Inc. and understands and
agrees that the grant of the license in Section 2(a) hereof to Warner Chilcott,
Inc. (but not to WARNER CHILCOTT) will be automatically terminated, without the
necessity of FAULDING providing notice to WARNER CHILCOTT or Warner Chilcott,
Inc., in the event that WARNER CHILCOTT's beneficial percentage interest in
Warner Chilcott, Inc. falls below 51% beneficial ownership.

         3.       TERMINATION OF PRIOR AGREEMENTS.

         Contemporaneously with the execution of this Agreement:

                  a. the parties agree to, and hereby terminate, the Prior
License and Supply Agreements in their entirety; and

                  b. FAULDING agrees to cause Purepac (and all other Affiliates
and related parties of Faulding) (i) immediately upon the parties' execution of
this Agreement, to ship no more than 500 bottles (each containing 50 capsules)
of its Competing Product into the Territory and (ii) no later than five (5) full
business days after the date hereof, to cease accepting any orders for its
Competing Product. Notwithstanding the foregoing, however, the parties
acknowledge and agree that Purepac Pharmaceutical Co. will retain the FDA
approval for such Competing Product. Moreover, WARNER CHILCOTT agrees to
reimburse FAULDING for unsold Product in Purepac's possession, at the rate of
[REDACTED] per capsule, up to an aggregate maximum payment of [REDACTED].

                                      -5-
<PAGE>
 
         4.       NEGOTIATION OF FURTHER AGREEMENT

                  The parties agree to enter into good faith negotiations with
respect to a potential new agreement pursuant to which Faulding, in return for
appropriate consideration from WARNER CHILCOTT, would develop a [REDACTED]
tablet (the "Tablet") for WARNER CHILCOTT's distribution in the Territory. It is
the parties' mutual intent to enter into a license and distribution agreement
with respect to the Tablet on substantially similar commercial terms as are
contained in this Agreement and that the Tablet agreement would supersede and
replace this Agreement. Unless this Agreement is so superseded (or otherwise
expires or is terminated), Faulding agrees that neither it nor its Affiliates or
related parties will, during the term of this Agreement, market. distribute or
sell Tablets in the Territory.

         5.       QUALIFICATION OF ALTERNATIVE MANUFACTURING SITE

                  ln the event that FAULDING fails, for any reason, to supply
WARNER CHILCOTT with Product in full for a period of three (3) months or more
after the date of delivery specified by WARNER CHILCOTT in any Firm Order, the
parties will reasonably agree to the selection of a third party for the supply
of WARNER CHILCOTT's requirements of Product until FAULDING is capable of
resuming the supply of Product to WARNER CHILCOTT, and FAULDING will use
commercially reasonable efforts to arrange for such supply (including, if
necessary, qualifying such alternate manufacturing facility).

         6.       FORECASTS; SUPPLY OF PRODUCT.

                  a. The parties currently intend that FAULDING will supply
Product, in bulk capsule form, to WARNER CHILCOTT. In the event that at any time
during the term of this Agreement, WARNER CHILCOTT desires to have FAULDING
deliver Product in finished pack form, the parties agree to negotiate in good
faith the terms upon which the Product will be so delivered.

                  b. On the date hereof and, thereafter, on the first day of
each quarter during the term of this Agreement, WARNER CHILCOTT shall provide
FAULDING with a forecast of its requirements of Product for distribution in the
Territory for the immediately ensuing twelve month period, specifying the
approximate quantities of Product for use as samples and the approximate
quantities for sale in the Territory. The forecast for the most current
three-month period shall constitute a firm order ("Firm Order") which (i) shall
state in reasonable detail the quantities of Product ordered and dates for
delivery of Product; (ii) the quantities to be used as samples and (iii) shall
be binding on both parties regarding the amount of Product to be purchased or
supplied, as the case may be. The forecast for the remaining nine-month period
is for planning purposes only and does not constitute a commitment to purchase
or supply.

                  c. No Firm Order delivered hereunder, subsequent to the
initial Firm Order, shall provide for an increase of more than [REDACTED]
([REDACTED]%) per cent of the quantity of Product contained in the immediately
preceding Firm Order, unless otherwise agreed by both parties.

                                      -6-
<PAGE>
 
                  d. The Firm Orders will specify delivery dates not less than
90 days in advance of the date of such Firm Order. Upon receipt of a Firm Order
from WARNER CHILCOTT, FAULDING shall effect delivery of the Product covered
thereby in accordance with its current production and delivery schedule, using
commercially reasonable efforts to ship Product within ten (10) business days of
the shipment date specified in the Firm Order to the destination designated in
the Firm Order. FAULDING will notify WARNER CHILCOTT of any expected delay or
back order of the Product and the expected shipping date within eight (8)
business days of its receipt of the Firm Order.

                  e. The batch size for the Product shall be [REDACTED]
capsules, unless the parties agree in writing to an alternate batch size. WARNER
CHILCOTT shall place all Firm Orders for Product in multiples of the batch size.
Any batch, or multiple thereof, may be comprised, at WARNER CHILCOTT's option,
of any reasonable combination of Product for sample use or commercial sale.

                  f. If WARNER CHILCOTT claims that there is a shortage of
Product delivered by FAULDING pursuant to a Firm Order, it shall submit written
notice to FAULDING within sixty (60) days after the date of a delivery of such
Firm Order. In case of alleged non-delivery, a written claim must be submitted
to FAULDING within thirty (30) days of the FAULDING delivery advice notice. In
the absence of such a written claim, in the case of either alleged shortage or
non-delivery, the Product shall be deemed to have been delivered in accordance
with this Agreement. In any event, WARNER CHILCOTT shall not be entitled to
cancel or refuse to accept delivery by reason only of an alleged shortage or a
delay in the shipment of any Firm Order.

         7.       PURCHASE PRICE; PAYMENTS & ADJUSTMENTS

                  a. FAULDING will manufacture and supply bulk capsules of
Product to WARNER CHILCOTT, FOB carrier Adelaide, Australia:

                           i.       for WARNER CHILCOTT's commercial sale in the
                                    Territory at the initial price of (a)
                                    [REDACTED], per [REDACTED] capsules, and

                           ii.      for distribution in the Territory as samples
                                    at [REDACTED] per [REDACTED] capsules.

The parties agree that these initial prices will stay in effect for a period of
at least one year from the date hereof. Thereafter, the purchase price will be
reviewed annually and may be increased by FAULDING, upon thirty (30) days prior
written notice to WARNER CHILCOTT, to include demonstrated increases of the
actual direct costs of manufacturing Product (raw materials, labor, reasonable
direct overhead etc). Any revised price will apply only to Product shipped
pursuant to Firm Orders placed after the effective date of the revised price.

                  b. WARNER CHILCOTT will pay for the Product within thirty (30)
days after FAULDING's delivery of the Product and acceptance by WARNER CHILCOTT
under this Section 

                                      -7-
<PAGE>
 
6(a) of this Agreement and such payment will be effected by wire transfer into
an account designated by FAULDING. Payment will be in U. S. Dollars.

         8.       ACCEPTANCE OF THE PRODUCT.

                  a. FAULDING will supply a Certificate of Analysis with each
delivery of the Product.

                  b. All Product received by WARNER CHILCOTT shall be deemed
accepted unless WARNER CHILCOTT gives FAULDING written notice (the "Objection
Notice") either (i) within thirty (30) days of such receipt or (ii) within five
(5) days of the delivery of notice upon the discovery of a Latent Defect, as set
forth in subsection (f) hereof. In either case, WARNER CHILCOTT shall specify
the manner in which the shipment of Product, in whole or part, fails to meet
FAULDING's warranties set forth in Section 9(a) of this Agreement.

                  c. In the event that WARNER CHILCOTT gives written notice to
FAULDING under Section 9(a) and the parties are unable, within thirty (30) days
of that notice, to agree upon whether a batch of Product complies with the
requirements set forth in Section 9(a), the parties agree to submit a sample of
the Product to an Independent Analyst for a report.

                  d. The cost of the report of the Independent Analyst will be
paid by the party against which the Independent Analyst rules.

                  e. If the Independent Analyst determines that the Product does
not comply with the requirements set forth in Section 9(a), FAULDING will
replace such Product free of charge to WARNER CHILCOTT and FAULDING will
reimburse WARNER CHILCOTT for WARNER CHILCOTT's reasonable expenses with respect
to the shipment of such Product, including, without limitation freight expenses
and shipment expenses incurred by WARNER CHILCOTT in connection with the
disposition or return of such Product.

                  f. It is possible for a shipment of Product, or a portion
thereof, to have Latent Defects. As soon as either party becomes aware of a
Latent Defect in any batch of Product, it shall immediately give written notice
to the other party and the batch involved, at WARNER CHILCOTT's election, shall
be deemed rejected as of the date of such notice. Upon determination, pursuant
to the procedures set forth in subsections (c)- (e) of this Section, in that any
Latent Defect has been caused by an action or omission by FAULDING or an
Affiliate of Faulding, FAULDING shall use commercially reasonable efforts, at
its own cost, to ship replacement Product to WARNER CHILCOTT.

         9.       MANUFACTURE, TRANSPORT, STORAGE AND DISTRIBUTION OF THE
PRODUCT

                  a. Faulding warrants that all quantities of Product supplied
by FAULDING to WARNER CHILCOTT pursuant to this Agreement will:

                                      -8-
<PAGE>
 
                           i.       conform in all respects to the Product
                                    Specification;

                           ii.      be manufactured in conformity with cGMP and
                                    with any applicable FDA regulations; and

                           iii.     will not contain any product or article that
                                    would cause the Product to be adulterated or
                                    misbranded within the meanings of Section
                                    501 and 502 of the Food, Drug and Cosmetic
                                    Act.

OTHER THAN THE REPRESENTATIONS SET FORTH IN THIS SECTION 9(a), FAULDING MAKES NO
OTHER WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH RESPECT TO THE
PRODUCT AND WILL NOT BE LIABLE TO WARNER CHILCOTT FOR CONTINGENT, REMOTE,
INCIDENTAL OR CONSEQUENTIAL DAMAGES.

                  b. FAULDING will supply WARNER CHILCOTT with instructions
concerning suitable conditions for transport and storage of the Product and
WARNER CHILCOTT warrants it will transport and store the Product under those
suitable conditions so as not to adversely affect the Product.

                  c. WARNER CHILCOTT warrants that it will package and label the
Product, and maintain and update the package insert labeling in compliance with
all applicable laws and regulations in the Territory. In the event that either
of the parties becomes aware of any defect in any batch of Product it will
immediately notify the other party and provide such party with a full disclosure
of that defect or unsuitability.

                  d. Each of the WARNER CHILCOTT and FAULDING agrees to comply
with its respective regulatory submission obligations in the Territory with
respect to the Product and WARNER CHILCOTT agrees to pay any regulatory fees
arising from WARNER CHILCOTT's or Warner Chilcott, Inc.'s use of the Product
hereunder.

                  e. FAULDING assumes all loss and indemnifies and holds
harmless WARNER CHILCOTT and its Affiliates and their respective officers,
director, employees, distributors and agents from and against any and all loss
(excluding consequential loss and loss of profits), liability, damage, fee, cost
(including reasonable attorneys fees), expense, suit, claim, demand, judgement
and prosecution directly arising or resulting from (i) Faulding's warranties set
forth in Section 9(a) of this Agreement or (ii) any reckless or unlawful act on
the part of FAULDING or any of its employees or agents for personal injury
(including death) suffered while engaged in performance of this Agreement.

                  f. FAULDING will procure at its own expense from a mutually
acceptable insurer, and maintain in full force and effect throughout the term of
this Agreement and for five (5) years thereafter, product liability insurance
with a single limit liability of not less than [REDACTED] in one claim and in
the aggregate, for bodily injury, death or property damage, insuring WARNER
CHILCOTT from and against any and all loss (excluding consequential loss and

                                      -9-
<PAGE>
 
loss of profits), liability, damage, fee, cost (including reasonable attorneys
fees), expense, suit, claim, demand, judgement and prosecution directly arising
from or incidental to or resulting from the manufacture of the Product. This
provision does not limit FAULDING's liability under Section 9(e). FAULDING will,
when reasonably requested by WARNER CHILCOTT to do so, provide to WARNER
CHILCOTT a copy of such policy or a certificate of insurance evidencing the
required coverage and evidence that the policy remains in force.

                  g. WARNER CHILCOTT assumes all risk of loss and indemnifies
and holds harmless FAULDING and its Affiliates, sub-licensees and designees and
their respective officers, directors and employees from and against any and all
loss (excluding consequential loss and loss of profits), liability, damage, fee,
cost (including reasonable attorney's fees), expense, suit, claim, demand,
judgement and prosecution directly or indirectly arising from or resulting from
(i) a breach by WARNER CHILCOTT of its obligations under this Agreement, (ii)
the marketing, distribution, sale, the transportation, storage or packaging of
the Product by WARNER CHILCOTT or any of its Affiliates, sub-licensees or
designees or any of their respective employees or agents (other than matters
covered by subsection 9(e) above) or (iii) any reckless or unlawful act on the
part of WARNER CHILCOTT, its Affiliates, sub-licensees or designees or any of
their respective employees or agents for personal injury (including death)
suffered while engaged in performance of this Agreement.

                  h. WARNER CHILCOTT will procure at its own expense from a
mutually acceptable insurer, and maintain in full force and effect throughout
the term of this Agreement and for [REDACTED] years thereafter, product
liability insurance with a single limit liability of not less than [REDACTED] in
one claim and in the aggregate for bodily injury, death or property damage,
insuring FAULDING and its Affiliates and designees from and against any and all
loss (excluding consequential loss and loss of profits), liability, damage, fee,
cost (including reasonable attorney's fees), expense, suit, claim, demand,
judgement and prosecution directly or indirectly arising from or incidental to
or resulting from a breach by WARNER CHILCOTT of its obligations under this
Agreement, or from the marketing, distribution, sale transportation, storage or
packaging of the Product by WARNER CHILCOTT (other than matters covered by
subsection 9(e) above). This provision does not limit WARNER CHILCOTT's
liability under clause 9(g). WARNER CHILCOTT will, when reasonably requested by
FAULDING to do so, provide to FAULDING a copy of such policy or a certificate of
insurance evidencing the required coverage and evidence that the policy remains
in force.

         10.      MARKETING AND OTHER RELATED DUTIES OF THE PARTIES

                  a. WARNER CHILCOTT will use commercially reasonable efforts to
distribute the Product in the Territory and to maximize sales of the Product
throughout the Territory and will maintain appropriate warehousing, sales and
distribution personnel and facilities to perform this and its other obligations
under this Agreement.

                  b. Each of the parties will provide the other party with
reports and information reasonably required by the other party to assist it in
fulfilling its obligations hereunder.

                                      -10-
<PAGE>
 
         11.      MINIMUM ORDERS FOR COMMERCIAL SALE

                  a. For so long as no Competing Product is being sold or
marketed in the Territory, WARNER CHILCOTT's minimum purchase obligations of
Product for commercial sale in the Territory during the term of the Agreement
are as follows:


                        i.       Period ending [REDACTED]  [REDACTED] capsules
                                                                
                        ii.      [REDACTED]                [REDACTED] capsules
                                                                
                        iii.     [REDACTED]                [REDACTED] capsules
                                                                
                        iv.      [REDACTED]                [REDACTED] capsules

                        v.       For each             
                                 [REDACTED]           
                                 month period
                                 subsequent to                
                                 [REDACTED]
                                 during the term
                                 of the Agreement          [REDACTED] capsules 


The parties agree that in order to comply with the minimum purchase obligations
of this Section 11, WARNER CHILCOTT shall be obligated to place Firm Orders at a
point in time in each of the periods set forth above ( a "Minimum Obligation
Period") so that FAULDING will have sufficient time as set forth in Section
6(d), during that Minimum Obligation Period to fill and ship a quantity of
Product at least equal to WARNER CHILCOTT's minimum purchase obligation for that
same Period. To the extent, however, that FAULDING, for any reason other than a
default by WARNER CHILCOTT, is delayed in its ability to manufacture and ship
Product during any Minimum Obligation Period, WARNER CHILCOTT's minimum purchase
obligation for such Minimum Obligation Period will be excused. Notwithstanding
the provisions of the previous sentence, however, any quantity of Product
ordered to fulfill a minimum purchase obligation during any Minimum Obligation
Period, which FAULDING ships in any subsequent Period, will only be credited
against WARNER CHILCOTT's minimum purchase obligation for the period in which it
was ordered and not for any subsequent Period and any failure by FAULDING to
ship Product during any Minimum Obligation Period will not excuse WARNER
CHILCOTT's minimum purchase obligations for any subsequent Periods, as set forth
in this Section 11.

                  b. WARNER CHILCOTT agrees to guarantee full payment for the
respective minimum quantity of Product, as set forth above, irrespective of
whether, in the applicable Period (i) WARNER CHILCOTT purchases, or fails to
purchase, such respective minimum quantity or (ii) FAULDING takes either of the
actions set forth in Section 1 l(d) hereof. The parties agree that any sale of
Product by FAULDING for WARNER CHILCOTT's distribution as samples shall not be
included in the calculation of WARNER CHILCOTT's minimum purchase obligation.

                  c. On the last business day of each of the periods set forth
in Section 11(a), WARNER CHILCOTT shall pay, by wire transfer, the amount due to
FAULDING, if any, pursuant to WARNER CHILCOTT's applicable minimum payment
obligation set forth in Section 1 l(a).

                                      -11-
<PAGE>
 
                  d. In the event that WARNER CHILCOTT fails during any of the
foregoing periods to purchase Product from FAULDING in the respective minimum
quantities set above, FAULDING shall have the option upon thirty (30) days'
prior written notice to WARNER CHILCOTT to:

                           i.       convert the license granted hereunder to a
                                    non-exclusive license;

                           ii.      terminate this Agreement; or

                           iii.     purchase the registered Doryx(TM) brand
                                    product at a price equal to three times
                                    WARNER CHILCOTT's Net Sales of Product in
                                    the Territory during the immediately
                                    preceding twelve (12) month period from the
                                    date of FAULDING's notice.

provided however, that WARNER CHILCOTT shall be permitted during such thirty
(30) day period to pay an amount equal to the shortfall between the minimum
purchase quantities and the actual number of capsules purchased, multiplied by
[REDACTED] per [REDACTED] capsules and upon such payment to avoid the
termination therefor of this Agreement, of WARNER CHILCOTT's exclusive grant
hereunder, or of the sale of the registered Doryx(TM) brand product.

                  e. WARNER CHILCOTT has paid FAULDING, contemporaneously with
the execution of this Agreement, a nonrefundable advance payment in the amount
of [REDACTED], toward its minimum purchase obligation of Product under Section
1.1 (a)(ii), which payment shall be credited against its purchase of Product
during the period from July 1 through December 31, 1998.

                  f. In the event that a third party commences marketing a
Competing Product, the parties agree that (i) the license granted hereunder
shall become non-exclusive as to FAULDING and FAULDING or its sublicensees shall
have the right to store, promote, distribute and sell its Competing Product in
the Territory and (ii) WARNER Chilcott will continue to have the right to
purchase Product for sale in the Territory at the same price as set forth herein
but will be relieved of its minimum purchase obligations hereunder as of the
date the third party commences marketing the aforementioned Competing Product.
In the event that the license granted hereunder shall become non-exclusive
pursuant to Section 1 l(d), WARNER Chilcott will continue to have the right to
purchase Product for sale in the Territory at the same price as set forth herein
but will be relieved of its minimum purchase obligations hereunder as of the
date of FAULDING's written notice to WARNER CHILCOTT.

         12.      RECALLS

                  a. If WARNER CHILCOTT or FAULDING determines that any quantity
of Product should be recalled for any reason, that party will give to the other
party notice of the need to recall that quantity and specify its reasons for the
need to carry out the recall. If possible, such notice shall be in writing to
the other party. If, however, either party determines that in order to avoid 

                                      -12-
<PAGE>
 
an immediate or perceived threat to health, time does not permit written notice,
such notice may be by phone to the other party's Medical Affairs Liaison to be
confirmed in writing after such notice.

                  b. If within twenty four (24) hours of the receipt of the
notice, the parties are unable to agree upon the need to carry out the recall,
either party may mandate that the Product be recalled, with or without the
agreement of the other party, if it reasonably determines that such recall is
necessary to protect the public health or is necessary to insure compliance with
applicable laws and regulations.

                  c. The reasonable out-of-pocket costs of the recall and
replacement of Products, if applicable, will be borne by the party, whose
commission or omission has caused the necessity of such recall. If the parties
are unable to reach agreement regarding the necessity of a recall or the party
responsible for its costs, either party may request that the Product be
submitted to an Independent Analyst for a report, the cost of which shall be
paid by the party whose act or omission has caused the necessity of the recall.

                  d. WARNER CHILCOTT will administer all recalls.

                  e. In the event that the FDA requires or otherwise initiates a
recall of the Product for any reason whatsoever, WARNER CHILCOTT will forthwith
administer the recall.

         13.      ADVERSE DRUG EVENT REGULATION.

                  a. The parties shall each appoint a liaison (a "Medical
Affairs Liaison") to communicate with each other with regard to information
required in this Section 13 and Section 12 hereof. Either party may change its
Medical Affairs Liaison by written notice to the other party.

                  b. During the term of this Agreement, WARNER CHILCOTT and
FAULDING shall give each other notice, as set forth in this Section 14, of any
adverse drug experience ("ADE") associated with the Product as to which WARNER
CHILCOTT or FAULDING obtains information in accordance with the following:

                           i.       Any ADE case report obtained by WARNER
                                    CHILCOTT or FAULDING shall be reported to
                                    the other's Medical Affairs Liaison, by
                                    facsimile within five (5) working days, or
                                    in the event of a serious or unexpected ADE,
                                    three (3) working days, of receipt of the
                                    Minimum Criteria. The recipient shall
                                    acknowledge receipt of such information
                                    within one (1) working day of its receipt of
                                    the report. Reports shall be made on either
                                    a CIMS I, Medwatch or ADRAC blue card form.
                                    As used in this subsection, "Minimum
                                    Criteria" shall mean (A) name of the drug;
                                    (B) a description of the adverse drug
                                    experience; (C) patient identifiers (any one
                                    or more of the following: the name,
                                    initials, clinical investigation number,
                                    age, sex or weight and (D) an identifiable
                                    source (i.e., the reporter)

                                      -13-
<PAGE>
 
                           ii.      WARNER CHILCOTT shall prepare and submit to
                                    the FDA the periodic safety reports with a
                                    copy being provided to FAULDING.

                           iii.     Each of the parties will maintain complete
                                    and accurate records of each ADE for such
                                    periods as may be required by applicable law
                                    in the Territory, but not less than five (5)
                                    years after the date of receipt.

                  c. WARNER CHILCOTT will (i) file any ADE Report for Product
required by the applicable Regulatory Authority; (ii) give FAULDING timely
notice of any meetings or discussions with the relevant Regulatory Authority
concerning safety of the Product and (iii) notify FAULDING of any regulatory
action taken concerning the safety of the Product within one (1) business day of
the action being taken and will provide FAULDING with complete information
concerning that action.

         14.      INTELLECTUAL PROPERTY

                  a. WARNER CHILCOTT acknowledges and agrees that FAULDING,
subject to WARNER CHILCOTT's Intellectual Property Rights set forth in
subsection (b) of this Section, is the owner of all Intellectual Property Rights
of any kind in relation to the Technology and the Product and any improvements
made by FAULDING to the Technology or the Product, including, without
limitation, the right to patents, registered or other designs, copyright,
trademarks or trade names. Nothing contained in this Agreement shall be
effective to give WARNER CHILCOTT any rights of ownership in and to any
Intellectual Property Rights of FAULDING and the license granted to WARNER
CHILCOTT pursuant to Section 2 of this Agreement is for the sole purpose of
selling and marketing the Product in the Territory.

                  b. FAULDING acknowledges and agrees that WARNER CHILCOTT is
the owner of all Intellectual Property Rights of any kind in relation to WARNER
CHILCOTT's trademarks, trade names and logos, including "Doryx". Other than as
set forth in Section 11(d), nothing contained in this Agreement shall be
effective to give FAULDING any rights of ownership in and to any Intellectual
Property Rights of WARNER CHILCOTT.

                  c. In the event of either party becoming aware of a patent or
other third party Intellectual Property Right in the Territory which may be
potentially infringed by the Product, its formulation, use or its process of
manufacture, or the use in relation to the Product of any of WARNER CHILCOTT's
trademarks, trade names or logos, that party will immediately notify the other
party.

                  d. If either party becomes aware of a potential infringement
of the other party's Intellectual Property Rights in the Territory it will
immediately notify the other party.

                  e. FAULDING will have the sole right to determine what
conduct, if any, to take in relation to the infringement of FAULDING's
Intellectual Property Rights and WARNER CHILCOTT will have the sole right to
determine what conduct, if any, to take in relation to the infringement of
WARNER CHILCOTT's Intellectual Property Rights (collectively, the "Infringed

                                      -14-
<PAGE>
 
Party"). At the request of the Infringed Party the other party will consult,
cooperate with and assist the Infringed Party in any such conduct and the
Infringed Party will reimburse other party's reasonable expenses associated
therewith.

         15       CONFIDENTIALITY

                  a Each of the parties agrees that it will not, unless
specifically authorized by the other party:

                           i.       disclose any Confidential Information of the
                                    other party that it may acquire at any time
                                    during the term of this Agreement to a third
                                    party;

                           ii.      make use of any Confidential Information of
                                    the other party for any purpose other than
                                    for the purposes set forth in this
                                    Agreement; or

                           iii.     make, or allow anyone else to make, copies
                                    of any Confidential Information of the other
                                    party unless for the purposes set forth in
                                    this Agreement.

                  b        Each of the parties will:

                           i.       use its best efforts to prevent unauthorized
                                    disclosure of the Confidential Information
                                    by its employees; and

                           ii.      restrict the disclosure of the Confidential
                                    Information to only those of its employees
                                    who require the Confidential Information for
                                    the purposes of fulfilling its obligations
                                    under this Agreement and to the relevant
                                    Regulatory Authority in the Territory.

                  c.  If either party (the "Receiving Party") is required (by
oral questions, interrogations, requests for information or documents, subpoena
or similar process) to disclose any Confidential Material of the other party, it
agrees to provide the other party with prompt notice of such request(s), to the
extent practicable, so that the other party may seek an appropriate protective
order and/or waive the Receiving Party's compliance with the provisions of this
Agreement. If, failing the entry of a protective order or receipt of a waiver
under this Agreement, the Receiving Party is, in the opinion of its counsel,
compelled to disclose Confidential Material of the other party under pain of
liability for contempt or other censure or penalty, it may disclose such
information to such tribunal(s) without liability under this Agreement

                  d.  All Confidential Information, whether in permanent or
magnetic/computer disk form or any other form, will be returned to the
disclosing party within thirty (30) days of the termination of the Agreement,
for any reason whatsoever, or the expiration of the Agreement.

                  e.  The obligations undertaken by each party under this
Section shall continue in force for a period of five (5) years following the
termination or expiration of this Agreement.

                                      -15-
<PAGE>
 
         16.      AUDITS.

                  a.  WARNER CHILCOTT or its authorized representative shall
have the right, no more than once annually and at its own cost, to visit
FAULDING's manufacturing and laboratory facilities for Product during regular
business hours, provided WARNER CHILCOTT gives fourteen (14) days prior written
notice to FAULDING. During any such visit, WARNER CHILCOTT's representatives
shall have the right (a) to inspect the manufacturing facilities for the
Product, (b) to inspect quality control procedures relative to the Product, and
(c) to audit any records and reports pertinent to the manufacturing of Product
to ensure that FAULDING complies with all applicable regulations for the
production of Product, including, without limitation, compliance with applicable
cGMP; provided that the information is not proprietary in nature.

                  b.  FAULDING shall have the right, no more than once annually
and at its own cost, during regular business hours, provided FAULDING gives
fourteen (14) days prior written notice to WARNER CHILCOTT to have a qualified
accountant of FAULDING, or a qualified auditor, reasonably approved by WARNER
CHILCOTT, audit WARNER CHILCOTT's records relative to the payments to FAULDING
set forth in Section 11 of this Agreement.

                  c.  The party conducting the audit or inspection shall assume
all risk of loss and indemnify and hold the other party harmless from and
against any and all loss, liability, damage, claim and expense including, but
not limited to, reasonable attorneys' fees arising out of or resulting from such
audits or inspections.

                  d.  In the event of an audit by a Regulatory Authority with
respect to the Product, FAULDING shall use its best efforts to provide such
Regulatory Authority with a prompt, accurate and complete response to any
deficiencies noted during the audit. FAULDING agrees that it shall use its best
efforts to promptly address, and, if necessary correct, any and all such
deficiencies to the satisfaction of the Regulatory Authority and of WARNER
CHILCOTT.

                  e.  In the event of an audit by a Regulatory Authority with
respect to the Product, WARNER CHILCOTT shall use its best efforts to provide
such Regulatory Authority with a prompt, accurate and complete response to any
deficiencies noted during the audit. WARNER CHILCOTT agrees that it shall use
its best efforts to correct promptly any and all deficiencies to the
satisfaction of the Regulatory Authority and of FAULDING.

                  f.  Each party will promptly give the other party written
notice at the commencement of any audit by a Regulatory Authority with respect
to the Product.

         17.      TERM AND TERMINATION.

                  a.  This Agreement shall be for an initial seven (7) year term
commencing as of the date of this Agreement. Thereafter, this Agreement shall
automatically be renewed for renewal terms of two (2) years' duration unless
either party shall provide the other party with notice of its intent not to
renew the Agreement not less than six (6) months prior to the expiration of the
initial term or any renewal term then in effect; provided, however, that the
provision of such notice of

                                      -16-
<PAGE>
 
intent not to renew shall not effect any of the other substantive rights of the
parties under this Agreement during the final six (6) months of the initial or
renewal term during which such notice is provided.

                  b.  This Agreement may be terminated by a non defaulting
party;

                           i.       by notice in writing if the other party
                                    shall default in the performance of any of
                                    its obligations under this Agreement and
                                    such default shall continue for a period of
                                    not less than thirty (30) days after written
                                    notice specifying such default shall have
                                    been given; or

                           ii.      if the other party makes an arrangement with
                                    its creditors or goes into receivership or
                                    liquidation, or if a receiver or a receiver
                                    and manager is appointed in respect of the
                                    whole or part of the property or business of
                                    the party in default;

                           iii.     if a major part of the assets or all of the
                                    assets of the other party are disposed of or
                                    acquired by any other person; or

                           iv.      it has been notified by the other party of
                                    circumstances constituting force majeure
                                    pursuant to Section 18 and that force
                                    majeure prevails for a continuous period of
                                    six (6) months.

                  c.  Upon thirty (30) days after notice of termination has been
given, as herein provided, or in the event of FAULDING's termination of this
Agreement under Section 17(b), the date the notice of termination has been
delivered to WARNER CHILCOTT, the right of WARNER CHILCOTT to place orders for
Product with FAULDING shall cease.

                  d.  In the event that WARNER CHILCOTT terminates this
Agreement in accordance with subsection (b)(i) because of FAULDING's failure to
deliver Product (for any reason other than force majeure) within thirty (30)
days after the delivery date specified in any Firm Order placed in accordance
with Sections 6(c) and (d), FAULDING agrees to refrain from, and to cause it
Affiliates to refrain from:

                           i.       marketing the Product or any Competing
                                    Product in the Territory; or

                           ii.      providing to any third party any right to
                                    market the Product or any Competing Product
                                    in the Territory

for a period of six (6) months from the date of termination.

                  e.  The parties acknowledge that any termination of this
Agreement shall be without prejudice to any rights of either party which may
have arisen prior to or as a result of such termination.

                                      -17-
<PAGE>
 
                  f.  Upon expiration of or termination of this Agreement, for
any reason whatsoever, WARNER CHILCOTT shall, at its own expense unless
otherwise specified:

                           i.       as soon as commercially practicable cease to
                                    promote, market, or sell Product in the
                                    Territory, except as to quantities of
                                    Product already in inventory or in transit,
                                    which may be sold; and

                           ii.      not engage in conduct, the likely result of
                                    which will be to indicate an affiliation or
                                    sponsorship with or approval from FAULDING.

         18.      FORCE MAJEURE

         Notwithstanding any other provision of this Agreement, neither party
will be deemed to be in breach of this Agreement, or otherwise be liable to the
other, for any delay in the performance, or the non-performance of any of its
obligations under this Agreement, to the extent that the delay or nonperformance
is outside the control of the parties including acts of God, strikes, fires,
floods, extreme drought, riot, war, embargoes, government actions or government
restrictions affecting production, formulation and/or registration of the
Product (including legislation specifically prohibiting the importation,
marketing or sale by anyone of the chemical compounds constituting the Product)
in the Territory, and the circumstances constituting the force majeure were
notified to the other party as soon as possible thereafter. The party subject to
force majeure will take all reasonable steps within its power to resolve the
circumstances constituting force majeure as soon as possible. Subject to clause
17(b)(iv), the time for performance of that obligation and any consequential
obligation will be extended accordingly.

         19       NOTICES

         Notices provided under this Agreement to be given or served by either
party on the other shall be given in writing and served personally or by prepaid
registered airmail post or by express mail or by means of facsimile to the
following respective addresses or to such other addresses as the parties may
hereafter advise each other in writing. It is agreed and understood by the
parties that any such notice shall be deemed given and served one day after it
is transmitted by facsimile or a date three (3) days after the date of express
mail or mail by courier.

TO:      FAULDING:

         F H FAULDING & CO LIMITED ACN 007 870 984
         115 Sherriff Street, Underdale 5032
         South Australia
         Attn: Company Secretary
         Fax: 61 8 8234 8380

                                      -18-
<PAGE>
 
         with a copy to:

         FAULDING INC.
         200 Elmora Avenue
         Elizabeth, New Jersey 07207
         Attn: General Counsel
         Fax: 908 659-2410

TO:      WARNER CHILCOTT:

         WARNER CHILCOTT plc.
         Lincoln House, Lincoln Place
         Dublin 2, Ireland
         Attn:
         Fax:

         with a copy to:

         WARNER CHILCOTT, INC.
         Rockaway 80 Corporate Center
         100 Enterprise Drive
         Suite 280
         Rockaway, New Jersey 07866
         Attn: President
         Fax: 973 442-3224


         20.      GOVERNING LAW.

         This Agreement shall be construed in accordance with and governed by
the internal laws of the State of New York, excluding such state's rules
relating to conflicts of laws, and its form, execution, validity, construction
and effect shall be determined in accordance with such internal laws. The
parties hereto irrevocably submit to the exclusive jurisdiction of the Federal
and State Courts located in the State of New York, County of New York.

         21.      EXECUTION OF ALL NECESSARY ADDITIONAL DOCUMENTS.

         Each party agrees that it will forthwith upon the request of the other
party execute and deliver all such instruments and agreements and will take all
such other actions as the other party may reasonably request from time to time
in order to effectuate the provision and purposes of this Agreement.

                                      -19-
<PAGE>
 
         22.      WAIVER.

         The failure of either of the parties to insist upon a strict
performance of any other terms and provisions therein shall not be deemed a
waiver of any subsequent breach of default in the terms or provisions of this
Agreement.

         23.      ASSIGNMENT AND AMENDMENT.

         Other than an assignment by FAULDING to any of its Affiliates, neither
this Agreement nor any rights arising hereunder shall be assigned by one party
without the prior written consent of the other and then only upon approval of
the other party and acceptance of such assignment in written form approved by
such party, which approval shall not be unreasonably withheld. Other than an
amendment by FAULDING to the price for the Product set forth in Section 7(a), no
amendment hereof shall be binding unless made in writing and signed by the
parties hereto.

         24.      ENTIRE AGREEMENT.

         This Agreement incorporates the entire understanding of the parties and
revokes and supersedes any and all agreements, contracts, understandings or
arrangements that might have existed heretofore between the parties regarding
the subject matter hereof.

         25.      SEVERABILITY.

         If any term or provision of this Agreement shall be held invalid or
unenforceable, the remaining terms hereof shall not be affected, but shall be
valid and enforced to the fullest extent permitted by law.

         26.      HEADINGS.

         The headings used in this Agreement are intended for guidance only and
shall not be considered part of this written understanding between the parties
hereto.


         IN WITNESS WHEREOF, this Agreement has been executed by the parties on
the date first above written.

                                     F H FAULDING & CO LIMITED
                                 
                                     By:  /s/ Scott Richards
                                         ------------------------------- 

                                     WARNER CHILCOTT plc
                                                                      
                                     By: /s/ Roger M. Boissoneault          
                                         -------------------------------    

                                      -20-