SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K


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

For the Fiscal Year Ended December 31, 1997

OR

[  ]   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 0-15681


                         WESTMED VENTURE PARTNERS, L.P.
===============================================================================
             (Exact name of registrant as specified in its charter)


Delaware                                                             13-3443230
================================================================================
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
incorporation or organization)

CIBC Oppenheimer Tower, World Financial Center
New York, New York                                                     10281
==============================================================================
(Address of principal executive offices)                             (Zip Code)

Registrant's telephone number, including area code:  (212) 667-7000

Securities registered pursuant to Section 12(b) of the Act:

              Title of each class      Name of each exchange on which registered
                    None                                    None

Securities registered pursuant to Section 12(g) of the Act:

                      Units of Limited Partnership Interest
===============================================================================
                                (Title of class)


<PAGE>


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

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

At March 16, 1998, 66,929 units of limited  partnership  interest ("Units") were
held by non-affiliates of the registrant. There is no established public trading
market for such Units.



<PAGE>


                                     PART I

Item 1.       Business.

Formation

WestMed Venture  Partners,  L.P. (the  "Partnership"  or the  "Registrant") is a
Delaware  limited  partnership  organized  in February  1987.  In May 1987,  the
Partnership  elected  to operate as a  business  development  company  under the
Investment  Company Act of 1940, as amended (the "1940 Act"). The  Partnership's
investment  objective  is to achieve  long-term  capital  appreciation  from its
portfolio of venture capital investments, consisting of companies engaged in the
health-care industry.  The Partnership considers this activity to constitute the
single industry segment of venture capital investing.

The  general   partners  of  the  Partnership   include  two  individuals   (the
"Independent General Partners") and WestMed Venture Management, L.P., a Delaware
limited  partnership (the "Managing  General  Partner"),  the general partner of
which is Medical Venture Holdings,  Inc. ("MVH"), a Delaware  corporation and an
affiliate of CIBC Oppenheimer Corp., a Delaware corporation ("Opco").

In 1987, the Partnership  publicly offered 100,000 units of limited  partnership
interest (the  "Units") at $500 per Unit.  The Units were  registered  under the
Securities Act of 1933,  pursuant to a Registration  Statement on Form N-2 (File
No.  33-11926),  which was declared  effective on July 2, 1987. The  Partnership
held its initial  closing on  September  1, 1987 and  completed  the offering on
April 1, 1988, at which time it had accepted subscriptions for a total of 66,929
Units.  Gross capital  contributions to the Partnership from the public offering
totaled  $33,802,529,  including  $33,464,500  from the  limited  partners  (the
"Limited  Partners" and  collectively  with the Managing  General  Partner,  the
"Partners") and $338,029 from the Managing General Partner.

The Venture Capital Investments

From its inception through December 31, 1997, the Partnership had invested $28.6
million in 23  portfolio  companies  (including  venture  capital fees and other
acquisition costs totaling $2 million).  At December 31, 1997, the Partnership's
investment  portfolio  consisted of investments in 9 portfolio companies with an
aggregate  cost of $4.6  million  and a fair  value  of $3.5  million.  From its
inception through December 31, 1997, the Partnership had either fully liquidated
or partially  liquidated  portfolio  investments  with a cost of $24.0  million.
These liquidated investments returned $17.3 million to the Partnership for a net
realized loss of $6.7 million. Additionally,  from its inception to December 31,
1997,  the  Partnership  earned  $493,000 of interest  and other income from its
portfolio investments. As a result, as of December 31, 1997, the Partnership had
a cumulative  net realized  loss from its venture  capital  investments  of $6.2
million.  As discussed  below,  during 1997, the Partnership  sold its remaining
investments in HBO & Co. and Somatogen,  Inc. Also during 1997, the  Partnership
wrote-off its investment in Aprogenex,  Inc. These transactions and other events
affecting the Partnership's portfolio investments during 1997 are listed below.

      In  January  1997,  the  Partnership  received  partial  liquidating  cash
     distributions  of $120,425  from  Argonaut  Medical,  Inc. and $29,522 from
     Nimbus   Medical,   L.P.   realizing  a  gain  of  $28,887  on  the  Nimbus
     distribution.
      On February 27, 1997,  Oclassen  Pharmaceuticals,  Inc. merged into Watson
     Pharmaceuticals,  Inc. As a result of the merger, the Partnership exchanged
     its 292,955  preferred  shares of Oclassen  for  108,321  common  shares of
     Watson Pharmaceuticals, of which 8,124 shares were placed into escrow for a
     period of one year pursuant to the merger agreement.  During June 1997, the
     Partnership  sold  100,197  common  shares  of Watson  Pharmaceuticals  for
     $3,896,375,  realizing  a gain  of  $2,646,329.  In  October  1997,  Watson
     Pharmaceuticals  declared a 2-for-1 stock split for  shareholders of record
     on October 22, 1997. As a result, the Partnership held 16,248 common shares
     of Watson Pharmaceuticals as of December 31, 1997.

     The  Partnership's  warrants to purchase  7,500 common  shares of Ultramed,
Inc.  expired  unexercised in February  1997.  Also,  during  February 1997, the
Partnership  sold its  remaining  3,926 common shares of HBO & Co. for $244,385,
realizing a gain of $78,451.  In March 1997,  the  Partnership  sold its 294,953
ordinary shares of Pharmaction Holdings,  Ltd. for $36,509,  realizing a loss of
$213,491.  In May and June 1997,  the  Partnership  sold its  remaining  125,404
common  shares of  Somatogen,  Inc.  for  $666,660,  realizing a gain of $9,466.
During 1997,  the  Partnership  sold 100,000  common shares of UroCor,  Inc. for
$928,954, realizing a gain of $439,486.
      During the second half of 1997,  the  Partnership  wrote-off its remaining
     $1,683,927  investment  in  Aprogenex,  Inc. and  wrote-off  an  additional
     $21,872  of  accrued  interest  relating  to the  promissory  note due from
     Aprogenex, Inc.

Competition

The  Partnership  encounters  competition  from other  entities  having  similar
investment  objectives.  Primary competition for venture capital investments has
been from venture  capital  partnerships,  venture  capital  affiliates of large
industrial  and financial  companies,  small business  investment  companies and
wealthy  individuals.  Competition has also been from foreign investors and from
large industrial and financial  companies investing directly rather than through
venture  capital  affiliates.  The Partnership has frequently been a co-investor
with other professional  venture capital investors and these  relationships have
expanded the Partnership's access to investment opportunities.

Employees

The  Partnership  has no  employees.  The Managing  General  Partner,  under the
supervision  of the  Independent  General  Partners,  manages and  controls  the
Partnership's   venture  capital  investments.   The  Managing  General  Partner
performs,  or arranges for others to perform,  the management and administrative
services  necessary for the operation of the  Partnership and is responsible for
managing the Partnership's short-term investments.

Item 2.       Properties.

The Partnership does not own or lease physical properties.

Item 3.       Legal Proceedings.

The Partnership is not a party to any material pending legal proceedings.

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

A special  meeting (the  "Meeting") of Limited  Partners of the  Partnership was
held on September 30, 1997. The Meeting was held for the following purposes: (i)
to approve or disapprove a new management agreement between the Managing General
Partner  and  the  Partnership;   and  (ii)  to  approve  or  disapprove  a  new
sub-management  agreement  between  the  Managing  General  Partner  and Alsacia
Venture  Management,  Inc.  (the  "Sub-Manager").  At  the  Meeting,  both  such
proposals were approved.
<TABLE>

                                    Affirmative               Negative
                                       Votes                     Votes                    Abstentions

<S>      <C>                           <C>                        <C>                       <C>
Proposal 1                             32,426                     3,238                     2,333
Proposal 2                             31,940                     3,581                     2,476
</TABLE>

                                     PART II

Item 5.   Market for Registrant's Common Equity and Related Stockholder Matters.

There is no  established  public  trading  market  for the  Units  and it is not
anticipated  that a public  market  for the Units  will  develop.  The number of
individual holders of Units as of March 16, 1998 was approximately 5,500.

In August 1997, the General  Partners  approved a cash  distribution to Partners
totaling  $5,543,614.  The  distribution was paid on October 21, 1997 to Limited
Partners of record on September 30, 1997. Limited Partners received  $5,488,178,
or $82 per Unit, and the General Partner received $55,436. In November 1996, the
General Partners approved a cash  distribution to Partners totaling  $4,529,538.
The  distribution  was paid on January 30, 1997 to Limited Partners of record on
December 31, 1996.  Limited Partners received  $4,484,243,  or $67 per Unit, and
the General Partner received $45,295.  There were no cash  distributions paid to
Partners during the year ended December 31, 1995.  Cumulative cash distributions
paid to  Partners  from  inception  to December  31,  1997,  total  $15,783,921,
including  $15,626,082 to the Limited Partners,  or approximately  $233 per $500
Unit, and $157,839 to the Managing General Partner.

Pursuant to the Partnership's agreement of limited partnership,  as amended (the
"Partnership  Agreement"),  the  Partnership's net income and net realized gains
from all sources are allocated to all  Partners,  in proportion to their capital
contributions,  until all Partners have been allocated an amount equal to 6% per
annum, simple interest, on their total Adjusted Invested Capital; i.e., original
capital contributions reduced by previous distributions (the "Priority Return").
Thereafter,  net income and net realized gains from venture capital  investments
in excess of the amount used to cover the Priority  Return are  allocated 20% to
the  Managing  General  Partner and 80% to all Partners in  proportion  to their
capital  contributions.  Any net income from non-venture  capital investments in
excess of the  amount  used to cover the  Priority  Return is  allocated  to all
Partners in  proportion  to their  capital  contributions.  Realized  losses are
allocated to all Partners in proportion to their capital contributions. However,
if realized gains had been previously  allocated in the 80-20 ratio, then losses
are allocated in the reverse order in which profits were allocated.


<PAGE>


Item 6.       Selected Financial Data.

($ In Thousands, Except For Per Unit Information)
<TABLE>
                                                                           Years Ended December 31,
                                                           1997           1996            1995           1994           1993
                                                       -----------     -----------    -----------    -----------    --------
<S>                                                    <C>             <C>            <C>            <C>            <C>
Total assets                                           $     5,275     $    17,722    $    16,018    $    14,671    $    18,552

Net assets                                                   5,166          12,998         15,855         14,533         18,394

Cost of portfolio investments purchased                          -             212            292            693            177

Cumulative cost of portfolio investments                    28,619          28,619         28,407         28,115         27,422

Cash distributions to Partners                               5,544           4,530              -              -              -

Cumulative cash distributions to Partners                   15,784          10,240          5,711          5,711          5,711

Net investment loss                                           (190)           (341)          (375)          (421)          (540)

Net realized gain (loss) from investments                    1,305           1,706             65         (2,823)        (4,043)

Change in unrealized appreciation or
depreciation of investments                                 (3,404)            308          1,632           (618)         3,576

Change in net assets resulting from operations              (2,288)          1,672          1,323         (3,862)        (1,007)

PER UNIT OF LIMITED PARTNERSHIP INTEREST:*

Net asset value, including net unrealized
appreciation or depreciation of investments                 $   76         $   192        $   235         $  215        $   272

Net investment loss                                             (3)             (5)            (6)            (6)            (8)

Net realized gain (loss) on investments                         19              25              1            (42)           (60)

Change in unrealized appreciation or
depreciation of investments                                    (50)              5             24             (9)            53

Cash distributions                                              82              67              -              -              -

Cumulative cash distributions                                  233             151             84             84             84
</TABLE>

*   Limited Partners were admitted to the Partnership in eight separate closings
    from  September 1, 1987 to April 1, 1988.  Per Unit amounts  shown above are
    based on average  allocations  to all  Limited  Partners  and do not reflect
    specific Limited Partner  allocations,  which are determined by the original
    closing date associated with the Units held by each Limited Partner.


<PAGE>


Item 7.       Management's Discussion and Analysis of Financial Condition and
               Results of Operations.

Liquidity and Capital Resources

At December 31, 1997, the Partnership had invested an aggregate of $28.6 million
in 23 portfolio companies,  including acquisition costs and venture capital fees
totaling $2 million.  The  Partnership  has  invested  approximately  95% of its
original $30 million of net proceeds  received  from the offering of Units.  The
Partnership  will not make  investments in new portfolio  companies and does not
expect to make follow-on investments in its existing companies,  as it has begun
its  liquidation  process.  The  General  Partner  will  continue  to manage the
Partnership,  with continued focus on achieving  long-term capital  appreciation
from  the  Partnership's  remaining  investment  portfolio  through  the date of
liquidation,  which will occur when all liabilities and obligations to creditors
have been satisfied and all  investments in portfolio  companies have been sold,
distributed or otherwise disposed.

At December 31, 1997, the  Partnership  held $1.7 million in cash and short-term
investments,  including $1.5 million in short-term securities with maturities of
less than three months and $229,000 in an interest-bearing cash account. For the
years ended December 31, 1997,  1996 and 1995, the  Partnership  earned interest
from such investments  totaling $187,000,  $229,000 and $129,000,  respectively.
Interest  earned from  short-term  investments  in future  periods is subject to
fluctuations  in short-term  interest  rates and changes in funds  available for
investment.

During the year ended December 31, 1997, the  Partnership  received $5.9 million
in proceeds from the sale of certain portfolio investments,  as discussed below.
As a result,  on October 21, 1997, the Partnership  made a cash  distribution to
Partners totaling $5.5 million. Limited Partners of record on September 30, 1997
received $5,488,178,  or $82 per Unit, and the General Partner received $55,436.
Cumulative cash  distributions  paid to Partners from inception through December
31, 1997, total $15,626,082 to the Limited Partners,  or approximately  $233 per
$500 Unit, and $157,839 to the General Partner.

It is anticipated that funds needed to cover the Partnership's  future operating
expenses will be obtained from existing cash reserves,  interest from short-term
investments and proceeds received from the sale of portfolio investments.

Results of Operations

For the years  ended  December  31,  1997 and 1996,  the  Partnership  had a net
realized gain from  operations  of $1.1 million and $1.4 million,  respectively.
For the year ended  December 31, 1995, the  Partnership  had a net realized loss
from  operations  of $309,000.  Net  realized  gain or loss from  operations  is
comprised of (i) net realized gain or loss from portfolio  investments  and (ii)
net  investment  income or loss  (interest  and dividend  income less  operating
expenses).

Realized  Gains and  Losses  from  Portfolio  Investments  - For the year  ended
December 31,  1997,  the  Partnership  had a net  realized  gain from  portfolio
investments of $1.3 million.  During 1997, the  Partnership  sold certain of its
publicly-traded securities as follows: 100,000 common shares of UroCor, Inc. for
$928,954,  realizing a gain of $439,486;  its remaining 125,404 common shares of
Somatogen, Inc. for $666,660,  realizing a gain of $9,466; 100,197 common shares
of Watson Pharmaceuticals,  Inc. for $3,896,375, realizing a gain of $2,646,329;
its remaining  3,926 common shares of HBO & Co., Inc. for $244,385,  realizing a
gain of  $78,451;  and its  remaining  294,953  ordinary  shares of  Pharmaction
Holding, Ltd. for $36,509,  realizing a loss of $213,491.  Also during 1997, the
Partnership received cash distributions from Argonaut Medical.,  Inc. and Nimbus
Medical,  L.P.  totaling  $149,947,  resulting  in a realized  gain of  $28,887.
Finally,  during  1997,  the  Partnership  wrote-off  its  remaining  $1,683,927
investment in Aprogenex,  Inc., due to an announcement by the company indicating
additional  financing to support  continued  operations was not available to the
Company.

For the year ended  December 31, 1996, the  Partnership  had a net realized gain
from portfolio  investments of $1.7 million. In May 1996, in connection with the
merger of Corvita Corporation and a wholly-owned  subsidiary of Pfizer Inc., the
Partnership sold its investment in Corvita for $4.3 million, realizing a gain of
$1.9 million.  Additionally,  Nimbus Medical,  Inc. was sold during 1996 and the
surviving entity was renamed Argonaut Medical,  Inc. As a result of the sale and
transfer of the company's assets,  the Partnership  recorded a $230,000 realized
loss on its  investment  in  Argonaut,  reflecting  a partial  write-off  of its
original investment in the company.

For the year ended  December 31, 1995, the  Partnership  had a net realized gain
from portfolio  investments of $65,000  resulting from the sale of 51,000 common
shares of Aprogenex, Inc. in the public market for $276,000.

Investment  Income  and  Expenses  - Net  investment  loss for the  years  ended
December  31,  1997,  1996  and  1995  was  $190,000,   $341,000  and  $375,000,
respectively.  The $151,000 decrease in net investment loss for 1997 compared to
1996 primarily resulted from a $217,000 decrease in operating expenses offset by
a $65,000  decrease in  investment  income for 1997.  The reduction in operating
expenses includes a $125,000 decrease in the management fee, as discussed below,
and a $61,000  decrease in  professional  fees for the 1997  period  compared to
1996. Professional fees for the 1996 period, also discussed below, include legal
fees incurred in connection with the preparation of a Special Meeting of Limited
Partners  held in 1996.  The decrease in  investment  income  included a $42,000
decrease in interest income from short-term  investments,  primarily  related to
the  reduced  balance of funds  available  for such  investments  during 1997 as
compared  to 1996.  Additionally,  a negative  variance  of $23,000 in  interest
income from portfolio  investments for 1997 compared to 1996,  primarily was due
to the  write-off  in  1997 of  $22,000  of  accrued  interest  relating  to the
promissory  note due from  Aprogenex.  Such accrued  interest was written-off in
conjunction  with the  write-off of the  Partnership's  investment  in Aprogenex
during 1997, as discussed above.

The $34,000 decrease in net investment loss for 1996 compared to 1995,  included
a $114,000  increase in  investment  income  offset by an increase in  operating
expenses  of $81,000 for 1996.  The  increase in  investment  income  reflects a
$100,000  increase in interest from short-term  investments for 1996 as compared
to 1995,  resulting  from an increase in funds  available for investment in such
securities  during 1996.  The increase in operating  expenses for 1996 primarily
resulted from a $47,000  increase in the management fee, as discussed below, and
a $40,000  increase in  professional  fees for 1996 as compared to 1995,  due to
legal costs relating to the  preparation of a proxy statement in connection with
the Special  Meeting of Limited  Partners  held on June 21, 1996.  Pursuant to a
management  agreement  between the Partnership and the Managing General Partner,
the Managing  General Partner is responsible for the management,  administrative
and certain  investment  advisory  services  necessary  for the operation of the
Partnership.  For  such  services,  the  Managing  General  Partner  receives  a
management  fee at the annual  rate of 2% of the lesser of the net assets of the
Partnership  or the net  contributed  capital of the  Partnership;  i.e.,  gross
capital  contributions  of the  Partnership,  net  of  selling  commissions  and
organizational expenses, reduced by capital distributed.  Such fee is determined
and payable  quarterly.  The compensation of the Sub-Manager is paid directly by
the Managing  General  Partner.  For the years ended December 31, 1997, 1996 and
1995, the management fee was $190,000, $315,000 and $268,000,  respectively. The
reduced  management fee for 1997 compared to 1996 reflects the reduced net asset
value of the Partnership,  primarily  resulting from the cash distributions paid
to Partners  during 1997.  The management fee will continue to decline in future
periods as the Partnership's  remaining portfolio investments are liquidated and
subsequent  distributions  are paid to  Partners.  To the extent  possible,  the
management  fee and other  operating  expenses are paid with funds provided from
operations.  Funds provided from operations are obtained from interest  received
from  short-term  investments,  interest  and  dividend  income  from  portfolio
investments and proceeds received from the sale of portfolio investments.

Unrealized   Gains  and  Losses  and  Changes  in  Unrealized   Appreciation  or
Depreciation  of Portfolio  Investments - For the year ended  December 31, 1997,
the Partnership had a $2.4 million net unrealized loss, primarily resulting from
the net downward revaluation of its publicly-traded  portfolio securities during
1997.  Additionally,  $1.0  million  was  transferred  from  unrealized  gain to
realized gain in connection with the portfolio securities  liquidated during the
year, as discussed above.
As a result,  net unrealized  appreciation of investments  declined $3.4 million
for 1997.

For the year ended  December  31,  1996,  the  Partnership  had a  $437,000  net
unrealized  gain,  resulting  from the net upward  revaluation  of its portfolio
investments  during  1996.  Additionally,  $129,000 of net  unrealized  gain was
transferred  to  realized  gain  relating  to  the  sale  of  the  Partnership's
investment in Corvita and the partial write-off of the Partnership's  investment
in Argonaut,  as discussed  above. As a result,  net unrealized  appreciation of
investments increased $308,000 for 1996.

For the year  ended  December  31,  1995,  the  Partnership  had a $1.6  million
unrealized gain from the net upward  revaluation of its publicly-held  portfolio
investments, primarily Somatogen, Inc. and Corvita Corporation.

Net Assets - Changes to net assets resulting from operations is comprised of (i)
net realized gains and losses from operations and (ii) changes to net unrealized
appreciation or depreciation of portfolio investments.

At December 31, 1997, the Partnership's net assets were $5.2 million, reflecting
a decrease  of $7.8  million  from $13.0  million at  December  31,  1996.  This
decrease in net assets reflects the $5.5 million cash  distribution and the $2.3
million net decrease in net assets from  operations  for 1997.  The $2.3 million
decrease  in net  assets  from  operations  was  comprised  of the $3.4  million
decrease to net unrealized  appreciation of investments  partially offset by the
$1.1 million net realized gain from operations for 1997.

At  December  31,  1996,  the  Partnership's  net  assets  were  $13.0  million,
reflecting a decrease of $2.8  million from $15.8  million at December 31, 1995.
This  decrease  reflects the $4.5 million cash  distribution  exceeding the $1.7
million net increase in net assets from operations for 1996.

At  December  31,  1995,  the  Partnership's  net  assets  were  $15.8  million,
reflecting  an increase of $1.3 million from $14.5 million at December 31, 1994.
This  increase  resulted  from the $1.3  million  increase  in net  assets  from
operations for 1995.

At  December  31,  1997,  1996 and  1995,  the net asset  value  per $500  Unit,
including an  allocation  of net  unrealized  appreciation  or  depreciation  of
portfolio  investments,  was $76,  $192 and  $235,  respectively.  Such per Unit
amounts  are based on average  allocations  to all Limited  Partners  and do not
reflect  specific  Limited  Partner  allocations,  which are  determined  by the
original closing date associated with the Units held by each Limited Partner.



<PAGE>


Item 8.       Financial Statements and Supplementary Data.


                         WESTMED VENTURE PARTNERS, L.P.
                                      INDEX


Independent Auditors' Report

Balance Sheets as of December 31, 1997 and 1996

Schedule of Portfolio Investments as of December 31, 1997

Schedule of Portfolio Investments as of December 31, 1996

Statements of Operations for the years ended December 31, 1997, 1996 and 1995

Statements of Cash Flows for the years ended December 31, 1997, 1996 and 1995

Statements of Changes in Partners' Capital for the years ended December 31,
1995, 1996 and 1997

Notes to Financial Statements

NOTE - All other  schedules  are omitted  because of the  absence of  conditions
under which they are required or because the required information is included in
the financial statements or the notes thereto.



<PAGE>


INDEPENDENT AUDITORS' REPORT



WestMed Venture Partners, L.P.:

We have audited the  accompanying  balance sheets of WestMed  Venture  Partners,
L.P. (the "Partnership"),  including the schedules of portfolio investments,  as
of December 31, 1997 and 1996, and the related  statements of  operations,  cash
flows,  and  changes in  partners'  capital  for each of the three  years in the
period  ended   December  31,  1997.   These   financial   statements   are  the
responsibility of the Partnership's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned at December 31, 1997 and 1996 by correspondence
with the custodian;  where  confirmation  was not possible,  we performed  other
audit  procedures.  An audit also includes  assessing the accounting  principles
used and  significant  estimates made by  management,  as well as evaluating the
overall financial statement  presentation.  We believe that our audits provide a
reasonable basis for our opinion.

In our  opinion,  such  financial  statements  present  fairly,  in all material
respects,  the financial position of WestMed Venture Partners,  L.P. at December
31,  1997 and 1996,  and the results of its  operations,  its cash flows and the
changes in its partners' capital for each of the three years in the period ended
December 31, 1997 in conformity with generally accepted accounting principles.

As explained in Note 2, the financial  statements  include  securities valued at
$1,458,809  and  $6,150,162  at  December  31,  1997  and  1996,   respectively,
representing  28% and 47% of net assets,  respectively,  whose  values have been
estimated   by  the  Managing   General   Partner  in  the  absence  of  readily
ascertainable  market  values.  We  have  reviewed  the  procedures  used by the
Managing General Partner in arriving at its estimate of value of such securities
and have  inspected  underlying  documentation,  and, in the  circumstances,  we
believe  the  procedures  are  reasonable  and  the  documentation  appropriate.
However,  because of the inherent  uncertainty  of  valuation,  those  estimated
values may differ  significantly from the values that would have been used had a
ready market for the securities existed, and the differences could be material.


Deloitte & Touche LLP


New York, New York
February 17, 1998


<PAGE>


WESTMED VENTURE PARTNERS, L.P.
BALANCE SHEETS
December 31,


<TABLE>
                                                                                                1997                1996
                                                                                          ----------------    ----------

ASSETS

Portfolio investments, at fair value
   (cost $4,630,040 at December 31, 1997 and $9,247,669 at
<S>         <C> <C>                                                                       <C>                  <C>
   December 31, 1996)                                                                     $      3,511,745     $     11,533,351
Cash and cash equivalents                                                                        1,725,666            6,135,508
Prepaid expenses                                                                                    37,451               39,419
Accrued interest receivable                                                                            635               13,659
                                                                                          ----------------     ----------------

TOTAL ASSETS                                                                              $      5,275,497     $     17,721,937
                                                                                          ================     ================




LIABILITIES AND PARTNERS' CAPITAL

Liabilities:
Cash distribution payable                                                                 $              -     $      4,529,538
Accounts payable and accrued expenses                                                               73,487              120,823
Due to Managing General Partner                                                                     25,960               63,428
Due to Independent General Partners                                                                 10,000               10,000
                                                                                          ----------------     ----------------
   Total liabilities                                                                               109,447            4,723,789
                                                                                          ----------------     ----------------

Partners' Capital:
Managing General Partner                                                                            51,664              129,985
Limited Partners (66,929 Units)                                                                  5,114,386           12,868,163
                                                                                          ----------------     ----------------
   Total Partners' Capital                                                                       5,166,050           12,998,148
                                                                                          ----------------     ----------------

TOTAL LIABILITIES AND PARTNERS' CAPITAL                                                   $      5,275,497     $     17,721,937
                                                                                          ================     ================
</TABLE>


See notes to financial statements.



<PAGE>


WESTMED VENTURE PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS
December 31, 1997

<TABLE>
Active Portfolio Investments:
                                                                     Initial Investment
Company / Position                                                          Date                   Cost              Fair Value
Cortex Pharmaceuticals, Inc.(A)
<S><C>                                                                          <C>             <C>                <C>
140,833 shares of Common Stock                                           May 1988            $       504,038    $       211,250
75,000 shares of Preferred Stock(B)                                                                   53,030             11,039
                                                                                             ---------------    ---------------
                                                                                                     557,068            222,289
-------------------------------------------------------------------------------------------------------------------------------
Exocell, Inc.*
598,083 shares of Preferred Stock                                        Feb. 1988                   714,266            100,000
Convertible note due upon demand                                                                      53,030             50,000
                                                                                             ---------------    ---------------
                                                                                                     767,296            150,000
-------------------------------------------------------------------------------------------------------------------------------
MNI Group Inc.(A)
211,973 shares of Common Stock                                           Sept. 1987                  451,457             64,684
-------------------------------------------------------------------------------------------------------------------------------
Argonaut Medical, Inc. (C)
200,709 shares of Common Stock                                           Apr. 1988                    30,107             30,107
   Nimbus Medical, L.P. (C)
   38,340 units of limited partnership interest                                                            0                  0
                                                                                             ---------------    ---------------
                                                                                                      30,107             30,107
-------------------------------------------------------------------------------------------------------------------------------
Pharmaction Holdings, Ltd.(A) (D)
Option to purchase 147,476 shares of Common Stock
   at $.20 per share, expiring 3/31/99                                   Sept. 1987                        0                  0
-------------------------------------------------------------------------------------------------------------------------------
Ultramed, Inc.(E)
1,850,904 shares of Common Stock                                         Oct. 1987                   492,500            150,000
12% promissory note                                                                                    7,500              7,500
                                                                                              --------------    ---------------
                                                                                                     500,000            157,500
-------------------------------------------------------------------------------------------------------------------------------
UroCor, Inc.(A) (F)
284,982 shares of Common Stock                                           May 1991                    607,790          1,763,468
Warrant to purchase 8,000 shares of Common Stock
   at $1.25 per share, expiring 2/13/01                                                                    0             39,504
Warrant to purchase 8,995 shares of Common Stock
   at $4.30 per share, expiring 10/18/98                                                                   0             16,983
Warrant to purchase 9,000 shares of Common Stock
   at $5.00 per share, expiring 6/2/00                                                                     0             10,692
                                                                                             ---------------    ---------------
                                                                                                     607,790          1,830,647
-------------------------------------------------------------------------------------------------------------------------------
Watson Pharmaceuticals, Inc. (A) (G)
16,248 shares of Common Stock                                            Jan. 1989                   101,359            474,347
-------------------------------------------------------------------------------------------------------------------------------
Xenova Group plc* (A)
304,403 Ordinary shares                                                  Aug. 1988                 1,614,963            582,171
-------------------------------------------------------------------------------------------------------------------------------
Totals From Active Portfolio Investments                                                      $    4,630,040    $     3,511,745
                                                                                              =================================
</TABLE>


<PAGE>


WESTMED VENTURE PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS - continued
December 31, 1997


SUPPLEMENTAL INFORMATION: LIQUIDATED PORTFOLIO INVESTMENTS(H)

<TABLE>
                                                                                   Cost         Realized Loss            Return

<S>                                                                      <C>                  <C>               <C>
Totals From Liquidated Portfolio Investments(I)                          $   23,988,874       $   (6,683,150)   $    17,305,724
                                                                         ======================================================

                                                                                                Combined               Combined
                                                                                             Unrealized and          Fair Value
                                                                                 Cost       Realized Net Loss        and Return

Totals From Active and Liquidated Portfolio Investments                  $   28,618,914       $   (7,801,445)   $    20,817,469
                                                                         ======================================================
</TABLE>


(A) Public company
(B) The 75,000  preferred  shares of Cortex  Pharmaceuticals,  Inc.  held by the
    Partnership are convertible into 7,359 shares of the company's common stock.
(C) In  January  1997,  the  Partnership   received  partial   liquidating  cash
    distributions  of $120,425  from  Argonaut  Medical,  Inc.  and $29,522 from
    Nimbus Medical, L.P., realizing a gain of $28,887.
(D) In March 1997, the Partnership sold its 294,953 ordinary shares of
     Pharmaction Holdings,  Ltd. for $36,509,  realizing a loss of $213,491.
(E) The Partnership's warrants to purchase 7,500 common shares of Ultramed, Inc.
expired  unexercised in February 1997.  (F) During 1997,  the  Partnership  sold
100,000  common  shares  of  UroCor,  Inc.  for  $928,954,  realizing  a gain of
$439,486. (G) On February 27, 1997, Oclassen  Pharmaceuticals,  Inc. merged into
Watson Pharmaceuticals, Inc. As a result of the merger,
    the  Partnership  exchanged  its 292,955  preferred  shares of Oclassen  for
    108,321 common shares of Watson  Pharmaceuticals  of which 8,124 shares were
    placed  into  escrow  for a  period  of one  year  pursuant  to  the  merger
    agreement.  During June 1997, the Partnership  sold 100,197 common shares of
    Watson  Pharmaceuticals for $3,896,375,  realizing a gain of $2,646,329.  In
    October  1997,  Watson  Pharmaceuticals  declared a 2-for-1  stock split for
    shareholders of record on October 22, 1997.
(H) Amounts  provided  for  "Supplemental   Information:   Liquidated  Portfolio
    Investments" are cumulative from inception through December 31, 1997.
(I) During February 1997, the Partnership sold its remaining 3,926 common shares
    of HBO & Co. for  $244,385,  realizing  a gain of  $78,451.  In May and June
    1997, the Partnership sold its remaining 125,404 common shares of Somatogen,
    Inc. for $666,660,  realizing a gain of $9,466. During 1997, the Partnership
    wrote-off  its  remaining  $1,683,927  investment  in  Aprogenex,  Inc.  and
    wrote-off  an  additional  $21,872  of  accrued  interest  relating  to  the
    promissory note due from Aprogenex, Inc.


* May be deemed  an  affiliated  person of the  Partnership  as  defined  in the
Investment Company Act of 1940.

See notes to financial statements.


<PAGE>


WESTMED VENTURE PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS
December 31, 1996

Active Portfolio Investments:

<TABLE>
                                                                     Initial Investment
Company / Position                                                          Date                   Cost              Fair Value
Aprogenex, Inc.(A)
<S><C>                                                                           <C>            <C>                <C>
476,739 shares of Common Stock                                           Jan. 1989           $     1,471,807    $       202,614
10% convertible promissory note due 5/29/98                              `                           212,120            212,120
Warrant to purchase 21,450 shares of Common Stock
   at $5.67 per share, expiring 10/15/98                                                                   0                  0
Warrant to purchase 13,000 shares of Common Stock
   at $1.10 per share, expiring 5/29/99                                                                    0                  0
                                                                                             ---------------    ---------------
                                                                                                   1,683,927            414,734
-------------------------------------------------------------------------------------------------------------------------------
Cortex Pharmaceuticals, Inc.(A)
140,833 shares of Common Stock                                           May 1988                    504,038            519,392
75,000 shares of Preferred Stock(B)                                                                   53,030             27,140
                                                                                             ---------------    ---------------
                                                                                                     557,068            546,532
-------------------------------------------------------------------------------------------------------------------------------
Exocell, Inc.*
598,083 shares of Preferred Stock                                        Feb. 1988                   714,266            464,266
Convertible note due 3/31/97                                                                          53,030             53,030
                                                                                             ---------------    ---------------
                                                                                                     767,296            517,296
-------------------------------------------------------------------------------------------------------------------------------
HBO & Co.(A)
3,926 shares of Common Stock                                             Dec. 1987                   165,934            233,106
-------------------------------------------------------------------------------------------------------------------------------
MNI Group Inc.(A)
211,973 shares of Common Stock                                           Sept. 1987                  451,457             78,918
-------------------------------------------------------------------------------------------------------------------------------
Argonaut Medical, Inc.
200,709 shares of Common Stock                                           Apr. 1988                   150,532            150,532
   Nimbus Medical, L.P.
   38,340 units of limited partnership interest                                                          635             29,522
                                                                                             ---------------    ---------------
                                                                                                     151,167            180,054
-------------------------------------------------------------------------------------------------------------------------------
Oclassen Pharmaceuticals, Inc.
292,955 shares of Preferred Stock                                        Jan. 1989                 1,351,405          3,400,000
-------------------------------------------------------------------------------------------------------------------------------
Pharmaction Holdings, Ltd.(A)
294,953 Ordinary shares                                                  Sept. 1987                  250,000                  0
Option to purchase 147,476 Ordinary shares
   at $.20 per share, expiring 3/31/99                                                                     0                  0
                                                                                             ---------------    ---------------
                                                                                                     250,000                  0
-------------------------------------------------------------------------------------------------------------------------------
Somatogen, Inc.(A)
125,404 shares of Common Stock                                           Dec. 1988                   657,194          1,379,444
-------------------------------------------------------------------------------------------------------------------------------
Ultramed, Inc.
1,850,904 shares of Common Stock                                         Oct. 1987                   492,500            150,000
12% promissory note                                                                                    7,500              7,500
Warrant to purchase 7,500 shares of Common Stock
   at $.05 per share, expiring 2/1/97                                                                      0                  0
                                                                                              --------------    ---------------
                                                                                                     500,000            157,500
-------------------------------------------------------------------------------------------------------------------------------


<PAGE>


WESTMED VENTURE PARTNERS, L.P.
SCHEDULE OF PORTFOLIO INVESTMENTS - continued
December 31, 1996

Active Portfolio Investments:
                                                                     Initial Investment
Company / Position                                                          Date                   Cost              Fair Value
UroCor, Inc.(A)
384,982 shares of Common Stock                                           May 1991             $    1,097,258    $     3,638,549
Warrant to purchase 8,000 shares of Common Stock
   at $1.25 per share, expiring 2/13/01                                                                    0             66,504
Warrant to purchase 8,995 shares of Common Stock
   at $4.30 per share, expiring 10/18/98                                                                   0             47,341
Warrant to purchase 9,000 shares of Common Stock
   at $5.00 per share, expiring 6/2/00                                                                     0             32,460
                                                                                             ---------------    ---------------
                                                                                                   1,097,258          3,784,854
-------------------------------------------------------------------------------------------------------------------------------
Xenova Group plc* (A)
304,403 Ordinary shares                                                  Aug. 1988                 1,614,963            840,913
-------------------------------------------------------------------------------------------------------------------------------

Totals From Active Portfolio Investments                                                      $    9,247,669    $    11,533,351
                                                                                              =================================

SUPPLEMENTAL INFORMATION: LIQUIDATED PORTFOLIO INVESTMENTS(C)

                                                                                  Cost          Realized Loss            Return

Totals From Liquidated Portfolio Investments                              $ 19,371,245        $   (7,988,351)   $    11,382,894
                                                                          =====================================================

                                                                                                     Combined          Combined
                                                                                               Unrealized and        Fair Value
                                                                                  Cost      Realized Net Loss        and Return

Totals From Active and Liquidated Portfolio Investments                   $ 28,618,914        $   (5,702,669)   $    22,916,245
                                                                          =====================================================
</TABLE>


(A) Public company
(B) The 75,000  preferred  shares of Cortex  Pharmaceuticals,  Inc.  held by the
    Partnership are convertible into 7,359 shares of Cortex's common stock.
(C) Amounts  provided  for  "Supplemental   Information:   Liquidated  Portfolio
    Investments" are cumulative from inception through December 31, 1996.


* May be deemed  an  affiliated  person of the  Partnership  as  defined  in the
Investment Company Act of 1940.









See notes to financial statements.


<PAGE>


WESTMED VENTURE PARTNERS, L.P.
STATEMENTS OF OPERATIONS
For the Years Ended December 31,


<TABLE>
                                                                                 1997             1996               1995
                                                                           --------------     --------------    ---------

INVESTMENT INCOME AND EXPENSES

   Income:
<S>                                                                       <C>                 <C>               <C>
   Interest from short-term investments                                   $       187,003     $      229,112    $       128,996
   Interest and dividend income from portfolio investments                        (11,346)            11,741             (2,351)
                                                                          ---------------     --------------    ---------------
     Total investment income                                                      175,657            240,853            126,645
                                                                          ---------------     --------------    ---------------

   Expenses:
   Management fee                                                                 189,704            315,201            267,975
   Professional fees                                                               60,898            121,916             81,665
   Mailing and printing                                                            29,718             49,381             43,526
   Insurance expense                                                               72,169             74,579             85,240
   Custodial fees                                                                   2,626              5,280              5,865
   Independent General Partners' fees                                              10,000             12,377             15,000
   Miscellaneous                                                                      250              3,372              2,239
                                                                          ---------------     --------------    ---------------
     Total investment expenses                                                    365,365            582,106            501,510
                                                                          ---------------     --------------    ---------------

NET INVESTMENT LOSS                                                              (189,708)          (341,253)          (374,865)

Net realized gain from investments                                              1,305,201          1,705,622             65,470
                                                                          ---------------     --------------    ---------------

NET REALIZED GAIN (LOSS) FROM OPERATIONS                                        1,115,493          1,364,369           (309,395)

Net change in unrealized appreciation or depreciation
   of investments                                                              (3,403,977)           307,960          1,632,227
                                                                          ---------------     --------------    ---------------

NET (DECREASE) INCREASE IN NET ASSETS
   RESULTING FROM OPERATIONS                                              $    (2,288,484)    $    1,672,329    $     1,322,832
                                                                          ===============     ==============    ===============
</TABLE>


See notes to financial statements.



<PAGE>


WESTMED VENTURE PARTNERS, L.P.
STATEMENTS OF CASH FLOWS
For the Years Ended December 31,


<TABLE>
                                                                                 1997                1996            1995
                                                                            -------------      --------------   ---------

CASH FLOWS USED FOR OPERATING ACTIVITIES

<S>                                                                         <C>                <C>              <C>
Net investment loss                                                         $     (189,708)    $     (341,253)  $      (374,865)

Adjustments  to  reconcile  net  investment  loss to  cash  used  for  operating
   activities:

Decrease (increase) in prepaid expenses and
   accrued interest receivable                                                      14,992            (13,990)            9,928
(Decrease) increase in payables                                                    (84,804)            31,567            24,477
                                                                            --------------     --------------   ---------------
Cash used for operating activities                                                (259,520)          (323,676)         (340,460)
                                                                            --------------     --------------   ---------------

CASH FLOWS PROVIDED FROM INVESTING ACTIVITIES

Proceeds from the sale of portfolio investments                                  5,772,883          4,330,318           275,850
Cost of portfolio investments purchased                                                  -           (212,120)         (291,665)
Cash distribution from investment in Limited Partnership                           149,947             30,289            57,944
                                                                            --------------     --------------   ---------------
Cash provided from investing activities                                          5,922,830          4,148,487            42,129
                                                                            --------------     --------------   ---------------

CASH FLOWS USED FOR FINANCING ACTIVITIES

Cash distributions paid to Partners                                            (10,073,152)                 -                 -
                                                                            --------------     --------------   ---------------

(Decrease) increase in cash and cash equivalents                                (4,409,842)         3,824,811          (298,331)
Cash and cash equivalents at beginning of year                                   6,135,508          2,310,697         2,609,028
                                                                            --------------     --------------   ---------------

CASH AND CASH EQUIVALENTS AT END
   OF YEAR                                                                  $    1,725,666     $    6,135,508   $     2,310,697
                                                                            ==============     ==============   ===============
</TABLE>


See notes to financial statements.


<PAGE>


WESTMED VENTURE PARTNERS, L.P.
STATEMENTS OF CHANGES IN PARTNERS' CAPITAL
For the Years Ended December 31, 1995, 1996 and 1997


<TABLE>
                                                             Managing
                                                             General                   Limited
                                                             Partner                  Partners                      Total

<S>                 <C> <C>                               <C>                      <C>                        <C>
Balance at December 31, 1994                              $    145,329             $    14,387,196            $     14,532,525

Net increase in net assets resulting
    from operations                                             13,228                   1,309,604                   1,322,832
                                                          ------------             ---------------            ----------------

Balance at December 31, 1995                                   158,557                  15,696,800(A)               15,855,357

Net increase in net assets resulting
    from operations                                             16,723                   1,655,606                   1,672,329

Accrued cash distribution, paid
    January 30, 1997                                           (45,295)                 (4,484,243)                 (4,529,538)
                                                          ------------             ---------------            ----------------

Balance at December 31, 1996                                   129,985                  12,868,163(A)               12,998,148

Net decrease in net assets resulting
    from operations                                            (22,885)                 (2,265,599)                 (2,288,484)

Cash distribution, paid October 21, 1997                       (55,436)                 (5,488,178)                 (5,543,614)
                                                          ------------             ---------------            ----------------

Balance at December 31, 1997                              $     51,664             $     5,114,386(A)         $      5,166,050
                                                          ============             ===============            ================
</TABLE>


(A)  The net asset value per unit of limited partnership interest,  including an
     allocation of net unrealized  appreciation  or depreciation of investments,
     was $76, $192, and $235 at December 31, 1997, 1996 and 1995,  respectively.
     Such per unit  amounts  are based on  average  allocations  to all  limited
     partners and do not reflect specific limited partner allocations, which are
     determined  by the  original  closing  date  associated  with the  units of
     limited partnership interest held by each limited partner.


See notes to financial statements.


<PAGE>


WESTMED VENTURE PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS

1.     Organization and Purpose

WestMed Venture Partners, L.P. (the "Partnership") was formed under Delaware law
on February 5, 1987. The Partnership  operates as a business development company
under the  Investment  Company Act of 1940,  as amended.  The  Partnership  is a
closed-end  investment  fund and  accordingly  its units of limited  partnership
interest  ("Units")  are not  redeemable.  A total of 66,929  Units were sold to
limited partners (the "Limited  Partners" and together with the Managing General
Partner (as hereinafter defined), the "Partners") at $500 per Unit.

     The  general  partners of the  Partnership  include  two  individuals  (the
"Independent  General  Partners")  and the  managing  general  partner,  WestMed
Venture Management,  L.P., a Delaware limited partnership (the "Managing General
Partner" and collectively with the Independent  General  Partners,  the "General
Partners").  The  general  partner of the  Managing  General  Partner is Medical
Venture Holdings,  Inc., a Delaware corporation affiliated with CIBC Oppenheimer
Corp.  ("Opco")  (formerly  Oppenheimer  & Co.,  Inc.).  Opco  is the  successor
corporation to Oppenheimer & Co., Inc., following the acquisition and subsequent
merger of  Oppenheimer & Co.,  Inc. and CIBC Wood Gundy Corp. in November  1997.
Opco is a subsidiary of Canadian Imperial Bank of Commerce. The limited partners
of the Managing  General  Partner are Opco, MVP Holdings,  Inc. and BSW, Inc., a
Delaware corporation owned by John A. Balkoski, Philippe L. Sommer and Howard S.
Wachtler.  Alsacia Venture Management,  Inc. (the "Sub-Manager"),  a corporation
controlled by Philippe L. Sommer,  serves as the  sub-manager of the Partnership
pursuant to a sub-management  agreement between the Managing General Partner and
the  Sub-Manager.  The  Sub-Manager  has been  retained by the Managing  General
Partner to assist the Managing  General Partner in the performance of certain of
its duties to the Partnership.
The Partnership's  objective is to achieve  long-term capital  appreciation from
its portfolio of venture capital investments, consisting of companies engaged in
the health care industry.  The Partnership's  originally  scheduled  termination
date was December 31, 1997,  with provision for extension for two additional two
year periods.  The General Partners have elected not to extend the Partnership's
termination date. However, pursuant to the Partnership Agreement (as hereinafter
defined) and  Delaware  Law,  the General  Partner  will  continue to manage the
Partnership  through  its date of  liquidation,  which  will  occur  when it has
satisfied all liabilities and obligations to creditors and has sold, distributed
or otherwise disposed of its investments in portfolio companies.

2.     Summary of Significant Accounting Policies

Valuation of  Investments - Portfolio  investments  are carried at fair value as
determined  quarterly by the Managing  General  Partner under the supervision of
the Independent  General  Partners.  The fair value of  publicly-held  portfolio
securities  is adjusted to the closing  public market price for the last trading
day of the accounting period discounted for sales restrictions,  if any. Factors
considered in the determination of an

<PAGE>


WESTMED VENTURE PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - continued

appropriate   discount   include   underwriter   lock-up  or  Rule  144  trading
restrictions,  insider status where the Partnership  either has a representative
serving on the board of directors of the portfolio  company under  consideration
or is greater than a 5% shareholder thereof, and other liquidity factors such as
the  size of the  Partnership's  position  in a given  company  compared  to the
trading history of the public security.  Privately-held portfolio securities are
carried at cost until significant  developments  affecting the portfolio company
provide a basis for change in valuation. The fair value of private securities is
adjusted  (i) to reflect  meaningful  third-party  transactions  in the  private
market and (ii) to reflect  significant  progress or slippage in the development
of the  company's  business such that cost no longer  reflects fair value.  As a
venture capital investment fund, the Partnership's portfolio investments involve
a high  degree of business  and  financial  risk that can result in  substantial
losses.  The Managing  General  Partner  considers such risks in determining the
fair value of the Partnership's portfolio investments.

Use of Estimates - The  preparation of financial  statements in conformity  with
generally accepted  accounting  principles requires management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates.

Investment  Transactions - Investment  transactions  are recorded on the accrual
method. For portfolio  investments,  transactions are recorded on the date which
the Partnership obtains an enforceable right to demand the securities or payment
thereof.  Realized  gains  and  losses on  investments  sold are  computed  on a
specific identification basis.

Statements  of  Cash  Flows  - Cash  and  cash  equivalents  include  short-term
interest-bearing   investments  in  commercial  paper  and  other  money  market
investments. The Partnership also considers its interest-bearing cash account to
be cash equivalents.

Income Taxes - No provision  for income taxes has been made since all income and
losses are  allocable  to the partners for  inclusion  in their  respective  tax
returns.  The Partnership's net assets for financial  reporting  purposes differ
from its net assets for tax purposes. Net unrealized  depreciation of $1,118,295
at December 31, 1997, which was recorded for financial statement  purposes,  was
not  recognized for tax purposes.  Additionally,  from inception to December 31,
1997, other timing differences totaling $8.8 million, relating to

net realized losses,  original sales commissions paid and other costs of selling
the Units, have been recorded on the Partnership's financial statements but have
not yet been deducted for tax purposes.

3.     Allocations of Partnership Profits and Losses

Pursuant to the Partnership's agreement of limited partnership,  as amended (the
"Partnership  Agreement"),  the  Partnership's net income and net realized gains
from all sources are allocated to all Partners, in proportion to

<PAGE>


WESTMED VENTURE PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - continued


their capital  contributions,  until all Partners have been  allocated an amount
equal to 6% per  annum,  simple  interest,  on  their  total  Adjusted  Invested
Capital;  i.e., original capital contributions reduced by previous distributions
(the  "Priority  Return").  Thereafter,  net income and net realized  gains from
venture  capital  investments in excess of the amount used to cover the Priority
Return are allocated 20% to the Managing General Partner and 80% to all Partners
in proportion to their capital  contributions.  Any net income from  non-venture
capital investments in excess of the amount used to cover the Priority Return is
allocated to all Partners in proportion to their capital contributions. Realized
losses  are   allocated  to  all  Partners  in   proportion   to  their  capital
contributions.  However, if realized gains had been previously  allocated in the
80-20 ratio,  then losses are  allocated in the reverse  order in which  profits
were  allocated.  From its inception to December 31, 1997, the Partnership has a
$6.2 million net realized loss from its venture  capital  investments  including
interest and other income from portfolio investments totaling $493,000.

4.     Related Party Transactions

Pursuant to the Partnership Agreement,  the Managing General Partner is entitled
to receive a one-time venture capital fee equal to 5% of the gross proceeds from
the sale of Units. Such fee is incurred as portfolio investments are made in the
proportion to the cost of each portfolio investment to the net proceeds from the
sale of Units. Venture capital fees incurred are recorded as a cost of acquiring
the portfolio  investments.  There were no venture  capital fees incurred during
the year ended  December  31,  1997.  For the years ended  December 31, 1996 and
1995,  the  Partnership  incurred  venture  capital fees of $12,000 and $17,000,
respectively.  Cumulative  venture  capital  fees  incurred  from  inception  to
December 31, 1997 totaled $1.6 million.

Pursuant to a  management  agreement  between the  Partnership  and the Managing
General Partner, the Managing General Partner is responsible for the management,
administrative  and  certain  investment  advisory  services  necessary  for the
operation of the  Partnership.  For such services,  the Managing General Partner
receives  a  management  fee at the  annual  rate of 2% of the lesser of the net
assets of the  Partnership or the net  contributed  capital of the  Partnership;
i.e., gross capital contributions to the Partnership (net of selling commissions
and  organizational  expenses)  reduced  by  capital  distributed.  Such  fee is
determined and payable  quarterly.  The  compensation of the Sub-Manager is paid
directly by the Managing General Partner.


For services  rendered to the Partnership,  each of the two Independent  General
Partners  receives a $5,000 annual fee and  reimbursement  for all out-of-pocket
expenses relating to attendance at meetings of the General Partners.


<PAGE>


WESTMED VENTURE PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS - continued


5.     Cash Distributions

Cash  distributions  paid or accrued during the periods presented and cumulative
cash  distributions  to  Partners  from  inception  of the  Partnership  through
December 31, 1997 are listed below:


<TABLE>

                                                              General                      Limited               Per $500*
Distribution Date                                            Partners                     Partners                 Unit
------------------------------------------------          ---------------            ----------------         ---------
<S>                   <C> <C>                             <C>                        <C>                        <C>
Inception to December 31, 1994                            $        57,108            $      5,653,661           $      84
January 30, 1997 (accrued at 12/31/96)                             45,295                   4,484,243                  67
October 21, 1997                                                   55,436                   5,488,178                  82
                                                          ---------------            ----------------           ---------
Cumulative totals at December 31, 1997                    $       157,839            $     15,626,082           $     233
                                                          ===============            ================           =========
</TABLE>

*   Such per Unit  amounts  are  based on  average  allocations  to all  limited
    partners and do not reflect specific limited partner allocations,  which are
    determined by the original closing date associated with the Units of limited
    partnership interest held by each limited partner.

6.     Classification of Investments

As of December 31, 1997, the Partnership's investments were categorized as
follows:

<TABLE>
                                                                                                          Percentage of
Type of Investments                                        Cost                    Fair Value                of Net Assets*
-------------------                                  ----------------           ---------------             ---------------
<S>                                                  <C>                        <C>                           <C>
Common Stock                                         $      3,802,214           $     3,343,206               64.72%
Preferred Stock                                               767,296                   111,039                2.15%
Debt Securities                                                60,530                    57,500                1.11%
                                                     ----------------           ---------------              -------
                                                     $      4,630,040           $     3,511,745               67.98%
                                                     ================           ===============               ======
Country/Geographic Region
Eastern U.S.                                         $      1,718,753           $       372,184                7.20%
Midwestern U.S.                                               607,790                 1,830,647               35.44%
Western U.S.                                                  688,534                   726,743               14.07%
United Kingdom                                              1,614,963                   582,171               11.27%
                                                     ----------------           ---------------              -------
                                                     $      4,630,040           $     3,511,745               67.98%
                                                     ================           ===============               ======
Industry
Biotechnology                                        $      2,939,327           $       954,460               18.48%
Medical Devices                                               530,107                   187,607                3.63%
Medical Services                                              607,790                 1,830,647               35.44%
Nutritional Products                                          451,457                    64,684                1.25%
Pharmaceuticals                                               101,359                   474,347                9.18%
                                                     ----------------           ---------------              -------
                                                     $      4,630,040           $     3,511,745               67.98%
                                                     ================           ===============               ======
</TABLE>

* Percentage of net assets is based on fair value.


<PAGE>


Item 9.       Disagreements on Accounting and Financial Disclosure.

None.

                                    PART III

Item 10.      Directors and Executive Officers.

The Independent General Partners

The Independent  General Partners have full authority over the management of the
Partnership  and provide overall  guidance and  supervision  with respect to the
operations  of the  Partnership  and perform the various  duties  imposed on the
general  partners  of  business  development  companies  under the 1940 Act.  In
addition to general fiduciary duties,  the Independent  General Partners,  among
other things,  supervise the management  arrangements  of the  Partnership,  the
custody  arrangement  with respect to  portfolio  securities,  the  selection of
accountants,  fidelity  bonding  and  the  activities  of the  Managing  General
Partner. As required by the 1940 Act, a majority of the general partners must be
individuals  who are not  "interested  persons" of the Partnership as defined in
the 1940  Act.  In 1987,  the  Securities  and  Exchange  Commission  issued  an
exemptive  order  declaring  that  Messrs.  Elliott and White,  the  Independent
General  Partners  of the  Partnership,  are  not  "interested  persons"  of the
Partnership  as defined in the 1940 Act solely by reason of their being  general
partners of the Partnership.  Such individuals also comprise the Audit Committee
of the Partnership.

Presented below is information  concerning the Independent  General  Partners of
the Partnership as of March 16, 1998:

Thomas E. White, Age 64, Independent General Partner since 1987
260 Barnard Road
Larchmont, New York 10538
     Mr.  White is an  attorney in private  practice in New York.  He is also an
independent  general partner of WestMed Venture Partners 2, L.P. ("WVP2").  From
1974 to 1983,  Mr. White was Senior Vice  President  and Director of  Howmedica,
Inc.  with  responsibility  for  various  health-care  operations  in the United
States, Europe and Latin America.

Robert A. Elliott, Age 58, Independent General Partner since 1987
Elliott Investment Co.
5000 Birch Street, Suite 6200
Newport Beach, California 92660
     Mr.  Elliott,  currently a private  investor,  was the  Chairman  and Chief
Executive  Officer of VLI Corporation  from 1983 to 1987. Mr. Elliott is also an
independent  general  partner  of WVP2,  a member  of the Board of  Trustees  of
Chapman   University   and  a  member  of  the  Board  of   Directors  of  three
privately-held  medical device companies and one public company.  He is a former
Director of the Health  Industries  Manufacturers  Association.  From 1979 until
1983,  Mr.  Elliott was Vice  President  and Director of  Howmedica,  Inc.  with
responsibility for the Medical Specialty  Products Division,  including domestic
and international manufacturing and distribution.

The Managing General Partner

The Managing  General  Partner,  subject to the  supervision of the  Independent
General  Partners,  has exclusive  power and authority to manage and control the
Partnership's  venture  capital  investments.  Subject to the supervision of the
Independent General Partners, the Managing General Partner is authorized to make
all decisions regarding the Partnership's  venture capital investment portfolio,
including,  among  other  things,  to find,  evaluate,  structure,  monitor  and
liquidate  such  investments  and to provide,  or arrange for the  provision of,
managerial  assistance  to the  portfolio  companies  in which  the  Partnership
invests.

The  general  partner  of the  Managing  General  Partner  is  MVH,  a  Delaware
corporation   affiliated  with  CIBC  Oppenheimer   Corp.   ("Opco")   (formerly
Oppenheimer & Co., Inc.).  The limited  partners of the Managing General Partner
are (i) Opco, (ii) MVP Holdings,  Inc.,  ("MVP"),  a Delaware  corporation,  and
(iii)  BSW,  Inc.,  ("BSW"),  a  Delaware  corporation  wholly-owned  by John A.
Balkoski,  Philippe L. Sommer and Howard S. Wachtler, the individuals originally
responsible for the Partnership's venture capital investments.

     In  June  1996,  the  Managing  General  Partner  engaged  Alsacia  Venture
Management,  Inc. (the  "Sub-Manager") to assist the Managing General Partner in
the performance of its duties to the Partnership.  The Sub-Manager is controlled
by Phillipe L. Sommer.  The  compensation of the Sub-Manager is paid directly by
the Managing General Partner. No additional  management fees are incurred by the
Partnership as a result of the Managing General Partner's  relationship with the
Sub-Manager.

     Presented  below  is  information  as of  March  16,  1998  concerning  the
directors and officers of MVH that are principally  involved with the operations
of the Partnership.  Mr. McGrath has been a director and/or officer of MVH since
June 1990.  Mr.  Rothstein  and Ms. Fusco have been  officers of MVH since April
1996 and June  1996,  respectively.  The  address  of each  such  person is CIBC
Oppenheimer Tower, World Financial Center, New York, New York 10281.

Stephen M. McGrath, Sr., Age 62, Vice President and Director
     Mr.  McGrath has been a Managing  Director of Opco since the merger of Opco
in November  1997.  Prior to the merger,  he was the Executive Vice President of
Opco and  director of its  Investment  Banking  Group  since July 1985.  He also
served as President of Oppenheimer Strategic Investments,  Inc. between May 1983
and  April  1985.  Mr.  McGrath  was  Senior  Vice  President  of  Planning  and
Development  at  Warner-Lambert  until 1985 and has been a director  of Alliance
Pharmaceutical  Corp.  since June 1989 and of Petro Corp.  since  1992.  He also
serves as an executive  officer and director of certain  current  and/or  former
affiliates of Opco.

Gerald A. Rothstein, Age 55 Vice President
     Mr.  Rothstein  has been a  Managing  Director  of Opco since  1983.  He is
primarily  responsible  for Opco's  private  equity efforts and focuses upon the
emerging  markets of Latin  America  and India.  Mr.  Rothstein  is a member and
chairperson  of Opco's  Commitment  committee  and also,  a member of Opco's Due
Diligence committee.

Ann O. Fusco, Age 43, Vice President
     Ms.  Fusco has been  Director  of Opco since the merger of Opco in November
1997. Prior to the merger she was Vice President of Oppenheimer Properties, Inc.
since July 1986 and has been employed by Opco since April 1984. In June 1996 Ms.
Fusco became Vice President of MVH. Ms. Fusco is a Certified  Public  Accountant
in the state of New York.  There  are no family  relationships  among any of the
Independent  General  Partners  and the  officers  and  directors  of MVH or the
Sub-Manager. MVH is owned 100% by Opco.

The Sub-Manager

The  Sub-Manager is  wholly-owned  by Phillipe L. Sommer.  Presented  below is
information  concerning Mr. Sommer as of March 16, 1998.

Philippe L. Sommer, Age 46, Sole Director, Officer and Stockholder
     Mr. Sommer is a Managing Director of BSW, Inc. and a member of the Board of
     Directors of BSW and two portfolio  companies of WVP2. He has been involved
     in health-care  industry  management for the past 18 years.  From June 1990
     until July 1996,  Mr.  Sommer served as an Executive  Vice  President and a
     Managing Director of MVH. He was a Managing Director of MVP Holdings,  Inc.
     from April 1987 to June 1990. From January 1982 to September 1986, he was a
     Director of Business Development for Pfizer Hospital Products Group ("HPG")
     and in such  capacity  was  responsible  for  directing  HPG's  merger  and
     acquisition  activities  for  medium  to  larger  acquisitions  and for the
     financial evaluation and valuation of all of HPG's acquisition, venture and
     licensing projects.

Item 11.      Executive Compensation.

Each Independent  General Partner receives an annual fee from the Partnership of
$5,000  together  with all  out-of-pocket  expenses  relating to  attendance  at
meetings of the General Partners.

The description of the allocation and distribution of the Partnership's  profits
and  losses to the  Managing  General  Partner  set forth in Item 5.  Market for
Registrant's  Common  Equity and  Related  Stockholder  Matters is  incorporated
herein by reference.

For the year ended December 31, 1997, the Managing General Partner was allocated
$22,900 of the Partnership's net decrease in net assets from operations. For the
years  ended  December  31,  1996 and 1995,  the  Managing  General  Partner was
allocated  $16,700 and $13,200 of the  Partnership's  net increase in net assets
from operations, respectively.

Pursuant to a management  agreement,  the Managing General Partner performs,  or
arranges  for others to  perform,  the  management,  administrative  and certain
investment advisory services necessary for the operation of the Partnership. For
such services,  the Managing  General  Partner  received a management fee at the
annual rate of 2% of the lesser of the net assets of the  Partnership or the net
contributed capital of the Partnership; i.e., gross capital contributions to the
Partnership (net of selling commissions and organizational  expenses) reduced by
capital distributed. Such fee is determined and payable quarterly. For the years
ended December 31, 1997, 1996 and 1995, the Managing  General  Partner  received
management fees of $190,000, $315,000, and $268,000, respectively.

     In  June  1996,  the  Managing  General  Partner  engaged  Alsacia  Venture
Management,  Inc. (the  "Sub-Manager") to assist the Managing General Partner in
the performance of its duties to the Partnership.  The Sub-Manager is controlled
by Phillipe L. Sommer.  The  compensation of the Sub-Manager is paid directly by
the Managing General Partner. No additional  management fees are incurred by the
Partnership as a result of the Managing General Partner's  relationship with the
Sub-Manager.

Pursuant to the Partnership Agreement,  the Managing General Partner is entitled
to receive a one-time venture capital fee equal to 5% of the gross proceeds from
the sale of Units. Such fee is incurred as portfolio investments are made in the
proportion of the cost of each portfolio investment to the net proceeds from the
sale of Units. Venture capital fees incurred are recorded as a cost of acquiring
the portfolio investments. For the years ended December 31, 1997, 1996 and 1995,
the Managing General Partner  received venture capital fees of $0, $12,000,  and
$17,000, respectively.

Item 12.      Security Ownership of Certain Beneficial Owners and Management.

Security Ownership

As of March 16, 1998, no person or group is known by the  Partnership  to be the
beneficial owner of more than 5% of the Units. The Independent  General Partners
and the directors,  officers and employees of MVH, and the  Sub-Manager own as a
group ten  Units,  or less than  one-tenth  of one  percent  of the total  Units
outstanding.

Item 13.      Certain Relationships and Related Transactions.

The  description of the management fee and the venture  capital fee set forth in
Item 11, Executive Compensation, is incorporated herein by reference.

The description of the allocation and distribution of the Partnership's  profits
and  losses to the  Managing  General  Partner  set forth in Item 5.  Market for
Registrant's  Common  Equity and  Related  Stockholder  Matters is  incorporated
herein by reference.



<PAGE>


                                     PART IV

Item 14.      Exhibits, Financial Statements, Schedules and Reports on Form 8-K.

(a)    1.     Financial Statements.

              Independent Auditors' Report

              Balance Sheets as of December 31, 1997 and 1996

              Schedule of Portfolio Investments as of December 31, 1997

              Schedule of Portfolio Investments as of December 31, 1996

              Statements of Operations for the years ended December 31, 1997,
               1996 and 1995

              Statements of Cash Flows for the years ended December 31, 1997,
               1996 and 1995

              Statements of Changes in Partners' Capital for the years ended
               December 31, 1995, 1996 and 1997

              Notes to Financial Statements

       2.     Exhibits

              3.1   Amended and Restated Certificates of Limited Partnership(3)

              3.2     Amendment to Amended and Restated Certificate of Limited
                         Partnership(3)

              3.3     Partnership Agreement(1)

              3.4     Amendment No. 1 to the Partnership Agreement(2)

              4     Articles Five through Eleven of the Partnership Agreement(1)

              10.1    Management  Agreement  dated as of September  30, 1997
                      between the  Partnership  and the Managing  General
                      Partner(4)

              10.2    Sub-Management  agreement  dated as of  September  30,
                         1997 among the  Partnership,  the  Managing  General
                      Partner and the Sub-Manager(5)

              27      Financial Data Schedule

              28.1    Custodian Agreement between the Partnership and Investors
                         Fiduciary Trust Company(1)

(b)           No reports on Form 8-K have been filed during the quarter for
               which this report is filed.

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

(1)    Filed as an exhibit to the  Partnership's  Registration  Statement  on
       Form N-2  (33-11926),  and  incorporated  herein by reference.

(2)    Filed as an exhibit to the Partnership's Report on Form 8-K dated July
     10, 1990 and incorporated herein by reference.

(3)    Filed as an exhibit to the Partnership's Report on Form 10-K for the year
      ended December 31, 1990.

(4)    Filed as Exhibit A to the Partnership's proxy statement dated August 29,
          1997 and incorporated herein by reference.

(5)    Filed as Annex I to the Partnership's proxy statement dated August 29,
          1997 and incorporated herein by reference.


<PAGE>


                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the  Registrant  has duly  caused  this report to be signed on its behalf by the
undersigned, thereunto duly authorized on the 30th day of March 1998.

WESTMED VENTURE PARTNERS, L.P.

By:  WestMed Venture Management, L.P.,
     Managing General Partner

By:  Medical Venture Holdings, Inc.,
     General Partner

By:  /s/   Stephen McGrath
     Stephen McGrath
     Executive Vice President

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this report has been signed by the following persons on behalf of the registrant
and in the capacities and on the dates indicated on the 30th day of March 1998.
<TABLE>

WESTMED VENTURE
<S>     <C>    <C>    <C>    <C>    <C>    <C>
MANAGEMENT, L.P.                                 Managing General Partner of WestMed Venture Partners, L.P.

By:  Medical Venture Holdings, Inc.              General Partner of WestMed Venture Management, L.P.


By:  /s/ Stephen McGrath                         Executive Vice President (principal executive officer) of Medical
Stephen McGrath                                  Venture Holdings, Inc.


By:  /s/ Ann Oliveri Fusco                       Vice President (principal financial and accounting officer) of Medical    Ann
Oliveri Fusco                                    Venture Holdings, Inc.


By:  /s/ Thomas E. White                         General Partner of WestMed Venture Partners, L.P.
     Thomas E. White


By:  /s/ Robert A. Elliott                       General Partner of WestMed Venture Partners, L.P.
     Robert A. Elliott
</TABLE>