WARNER LAMBERT CO, 10-K, 1994-03-23

WARNER LAMBERT CO
10-K, 1994-03-23
PHARMACEUTICAL PREPARATIONS

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K

<TABLE>
<S> <C>
(MARK ONE)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
</TABLE>

COMMISSION FILE NUMBER 1-3608

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WARNER-LAMBERT COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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<S> <C> <C>
DELAWARE 201 TABOR ROAD 22-1598912
(STATE OR OTHER JURISDICTION OF MORRIS PLAINS, NEW JERSEY 07950 (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) (ADDRESS OF PRINCIPAL IDENTIFICATION NO.)
EXECUTIVE OFFICES INCLUDING ZIP
CODE)
</TABLE>

201-540-2000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

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SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

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<CAPTION>
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
- --------------------------------------------------------------- ------------------------------------------------
<S> <C>
Common Stock (Par Value $1 Per Share) The New York Stock Exchange, Inc.
The Chicago Stock Exchange, Inc.
The Pacific Stock Exchange, Inc.
Rights to Purchase Series A The New York Stock Exchange, Inc.
Participating Cumulative Preferred Stock The Chicago Stock Exchange, Inc.
The Pacific Stock Exchange, Inc.
</TABLE>

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
None.

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]

The aggregate market value of the voting stock held by non-affiliates of
Warner-Lambert Company as of February 25, 1994 was approximately $8,412,264,882.

The number of shares outstanding of each of the registrant's classes of
Common Stock as of February 25, 1994 was 133,672,347 shares, Common Stock, par
value $1.00 per share.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Warner-Lambert Company Annual Report to Shareholders for
1993 -- Part I, Part II and Part IV.

Portions of the Proxy Statement for Annual Meeting of Stockholders of
Warner-Lambert Company to be held April 26, 1994 -- Part III.

________________________________________________________________________________

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PART I

ITEM 1. BUSINESS.

The term 'Warner-Lambert' or 'the Company' refers to Warner-Lambert
Company, a Delaware corporation organized in that state in 1920, and its
consolidated subsidiaries unless otherwise indicated or unless the context
otherwise requires.

Industry Segments and Geographic Areas. Financial information by industry
segment and geographic area for the years 1993, 1992 and 1991 is presented in
the Warner-Lambert 1993 Annual Report as set forth below.

The summary of Warner-Lambert's industry segments, geographic areas and
related financial information, set forth in Note 20 to the consolidated
financial statements on page 47 of the Warner-Lambert 1993 Annual Report, is
incorporated herein by reference.

All product names appearing in capitalized letters in this report on Form
10-K, with the exception of ZOVIRAX and ZANTAC, are trademarks of
Warner-Lambert, its affiliates, related companies or licensors. ZOVIRAX is a
registered trademark of Wellcome plc. ZANTAC is a registered trademark of Glaxo
Holdings plc.

BUSINESS SEGMENTS

A detailed description of Warner-Lambert's industry segments is as follows:

Pharmaceutical Products

The principal products of Warner-Lambert in its Pharmaceutical Products
segment are ethical pharmaceuticals, biologicals, specialty chemicals and
capsules.

Ethical Pharmaceuticals and Biologicals: Warner-Lambert manufactures and/or
sells, in the United States and/or internationally, an extensive line of ethical
pharmaceuticals, biologicals and specialty chemicals under trademarks and trade
names such as PARKE-DAVIS and GOEDECKE. Among these products are analgesics
(PONSTAN, PONSTEL, EASPRIN, VALORON, VALORON-N and VEGANIN), anesthetics
(KETALAR), anthelmintics (VANQUIN), anticonvulsants (DILANTIN, ZARONTIN and
NEURONTIN), anti-infectives (CHLOROMYCETIN, COLYMYCIN, DORYX, ERYC and
MANDELAMINE), antihistamines (BENADRYL), antivaricosities (HEPATHROMBIN),
anti-viral agents (VIRA-A), bronchodilators (CHOLEDYL and CHOLEDYL SA),
cardiovascular products (NOVADRAL, DILZEM, PROCAN SR, ACCUPRIL, ACCUZIDE,
ACCURETIC and NITROSTAT), cognition drugs for treatment of mild-to-moderate
Alzheimer's disease (COGNEX), dermatologics (BEBEN and UTICORT), prescription
hemorrhoidal preparations (ANUSOL HC), hemostatic agents (THROMBOSTAT), hormonal
agents (PITRESSIN), influenza vaccines (FLUOGEN), lipid regulators (LOPID),
nonsteroidal anti-inflammatories (MECLOMEN), oral contraceptives (LOESTRIN),
oxytocics (PITOCIN), psychotherapeutic products (CETAL RETARD, DEMETRIN and
NARDIL) and urinary analgesics (PYRIDIUM). These products are promoted for the
most part directly to health care professionals through personal solicitation of
doctors and other professionals by sales representatives with scientific
training, direct mail contact and advertising in professional journals. They are
sold either directly or through wholesalers to government agencies, chain and
independent retail pharmacies, physician supply houses, hospitals, clinics,
convalescent and nursing homes, mail order houses, health care professionals and
health maintenance organizations. For further discussion of Warner-Lambert's
ethical products, see 'Regulation' below.

On September 9, 1993, Warner-Lambert received marketing approval for COGNEX
(Warner-Lambert's trademark for tacrine or THA), the first effective treatment
for mild-to-moderate Alzheimer's disease, in the United States and began to ship
the product in late September. Warner-Lambert is attempting to obtain marketing
approval for COGNEX in other major markets such as Europe and Canada.

Warner-Lambert received clearance on December 30, 1993 to market NEURONTIN
(gabapentin capsules) in the United States as add-on therapy in the treatment of
certain types of adult epilepsy (i.e.,

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partial seizures, with and without secondary generalization). Warner-Lambert
began marketing NEURONTIN in the United Kingdom in 1993.

On January 4, 1993, the U.S. patent covering LOPID, a lipid regulator,
expired, subjecting LOPID to generic competition. In December 1992,
Warner-Lambert began marketing gemfibrozil, the generic equivalent of LOPID,
through its division, Warner Chilcott Laboratories, as described below. In the
third quarter of 1993, two competitive generic versions of gemfibrozil tablets
received marketing approval in the United States. Combined worldwide sales of
LOPID and gemfibrozil declined in 1993 and are expected to decline further in
1994.

Warner-Lambert has a separate division, Warner Chilcott Laboratories, which
is dedicated solely to the generic drug business. Warner Chilcott Laboratories
is a manufacturer and/or marketer of 80 generic drugs including gemfibrozil,
carbamazapine chewable, hydrocodone with acetaminophen, nitroglycerin patch,
potassium chloride ER, sulindac, and a line of generic antibiotics, including
ampicillin, amoxicillin, penicillin, cephalexin and minocycline. These products
are promoted directly to the pharmacy community and are sold principally to drug
wholesalers, chain and retail pharmacies and health maintenance organizations.

In January 1993, Warner-Lambert acquired a 34 percent equity interest in
Jouveinal S.A., a French pharmaceutical company, and entered into a license
option agreement that grants Warner-Lambert the right of first refusal as to the
licensing of future Jouveinal products outside of France, Canada and
French-speaking Africa.

Capsules: Warner-Lambert is the leading worldwide producer of empty
hard-gelatin capsules used by pharmaceutical companies for their production of
encapsulated products. These capsules are used by Warner-Lambert or manufactured
by Warner-Lambert according to the specifications of each of its customers and
are sold under such trademarks as CAPSUGEL, CONI-SNAP and SNAP-FIT.

Consumer Health Care Products

The principal products of Warner-Lambert in its Consumer Health Care
Products segment are over-the-counter products, shaving products and pet care
products.

Over-the-counter Products: Warner-Lambert manufactures and/or sells, in the
United States and/or internationally, a line of over-the-counter pharmaceuticals
and health care products, including antacids (ROLAIDS, SODIUM FREE ROLAIDS,
EXTRA STRENGTH ROLAIDS and GELUSIL), dermatological products (LUBRIDERM,
LUBRIDERM BODY BAR, LUBRIDERM LOOFA BAR, ROSKEN SKIN REPAIR, CORN HUSKERS and
LISTEREX), sinus preparations (SINUTAB), antihistamines and allergy products
(BENADRYL, BENADRYL-D, BENADRYL COLD, BENADRYL DAY & NIGHT and BENADRYL
ALLERGY/SINUS/HEADACHE), hemorrhoidal preparations (ANUSOL, ANUSOL HC-1 and
TUCKS), vaginal moisturizers (REPLENS), laxatives (AGORAL), cough
syrups/suppressants (BENYLIN, BENYLIN-DM, BENYLIN DECONGESTANT, BENYLIN
EXPECTORANT and BENYLIN PEDIATRIC), cough tablets (HALLS and HALLS-PLUS), throat
drops (HALLS SOOTHERS), vitamin C drops (HALLS), vitamins (MYADEC),
antipruritics (CALADRYL, BENADRYL spray and cream and STINGOSE), rubbing alcohol
(LAVACOL), hydrogen peroxide (PROXACOL), self-diagnostic early pregnancy test
kits (e.p.t'r' stick test), oral antiseptics (LISTERINE and COOL MINT
LISTERINE), mouthwash/anticavity dental rinses (LISTERMINT with fluoride),
effervescent denture cleaning tablets and denture cleanser pastes (EFFERDENT and
FRESH 'N BRITE) and denture adhesives (EFFERGRIP). These products are promoted
principally through consumer advertising and promotional programs and some are
promoted directly to health care professionals. They are sold principally to
drug wholesalers, chain and retail pharmacies, chain and independent food
stores, mass merchandisers, physician supply houses and hospitals.

In December 1993, Warner-Lambert signed separate agreements with Glaxo
Holdings plc ('Glaxo') and Wellcome plc ('Wellcome') to establish joint ventures
in various countries to develop and market non-prescription consumer health care
products.

Pursuant to the agreements with Glaxo, Warner-Lambert and Glaxo formed a
joint venture in the United States named Glaxo Warner-Lambert OTC G.P. The joint
venture will develop, seek approval

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of and market over-the-counter versions of Glaxo prescription drugs in the
United States, including ZANTAC, the leading prescription ulcer treatment
product. The joint venture will concentrate initially on developing ZANTAC for
sale as an over-the-counter product in the United States. Additional joint
ventures are expected to be formed with Glaxo in other major markets outside the
United States, excluding Japan. Direction of the joint ventures will be provided
by a management committee of representatives from each company. Day-to-day
operations will be the responsibility of Warner-Lambert, and the joint ventures'
over-the-counter products will be sold by Warner-Lambert's consumer health care
products sales and marketing organization, which in most countries will be a
Warner Wellcome joint venture, as described below. Warner-Lambert and Glaxo will
share development costs and profits equally, with Glaxo receiving a royalty on
all over-the-counter sales by the joint ventures.

Pursuant to the agreements with Wellcome, Warner-Lambert and Wellcome
formed a joint venture in the United States and a joint venture in Canada, each
named Warner Wellcome Consumer Health Products. Joint ventures are expected to
be established by Warner-Lambert and Wellcome in Europe, Australia and other
countries throughout the world. The alliance calls for both companies to
contribute to the joint ventures current and future over-the-counter products
(excluding HALLS and ROLAIDS products). Under the agreements, after a two-year
phase-in period, Warner-Lambert and Wellcome respectively will receive
approximately 70 percent and 30 percent of the profits generated in the United
States. A New Drug Application ('NDA') for the conversion to over-the-counter
use of Wellcome's anti-viral drug ZOVIRAX as an anti-herpes medication was filed
with the U.S. Food and Drug Administration ('FDA') in August 1993. Subject to
such conversion, over-the-counter profits on ZOVIRAX in the United States will
be shared in favor of the innovator, Wellcome.

Profits on current products will be shared equally in Canada and, when
joint ventures are established in such countries, in Australia and the European
countries. Profits on ZOVIRAX cream outside the United States will also be
shared equally, subject to a royalty to Wellcome if sales exceed a threshold
amount. Other future over-the-counter switch products will be subject to a
profit split favoring the innovator.

Warner-Lambert will be the managing partner of the joint ventures with
Wellcome (referred to herein as the 'Warner Wellcome' joint ventures or
organizations), with day-to-day operating responsibility. Each partner will
continue to manufacture products it contributes to the joint ventures.

Glaxo Warner-Lambert OTC G.P. commenced operations in December 1993. The
Warner Wellcome joint ventures in the United States and Canada commenced
operations in January 1994. Warner Wellcome organizations are expected to be
formed in Europe and Australia in 1994.

Shaving Products: Warner-Lambert manufactures and/or sells razors and
blades, both domestically and internationally. In March 1993, Warner-Lambert
acquired the European, U.S. and Canadian operations of Wilkinson Sword, an
international manufacturer and marketer of razors and blades. Shaving products
are manufactured and/or marketed under the SCHICK, WILKINSON, WILKINSON SWORD
and related trademarks. Permanent (nondisposable) products marketed under the
SCHICK trademark include TRACER/FX, SUPER II, SUPER II PLUS, ULTREX PLUS, SLIM
TWIN, ADVANTAGE, PERSONAL TOUCH and INJECTOR PLUS CHROMIUM. Disposable twin
blade products marketed under the SCHICK trademark include SCHICK DISPOSABLE,
SLIM TWIN, PERSONAL TOUCH, PERSONAL TOUCH SLIM and ULTREX DISPOSABLE. Products
marketed under the WILKINSON or WILKINSON SWORD trademarks include nondisposable
systems such as PROTECTOR, PROFILE, SYSTEM II and DUPLO, and disposable products
that include COLOURS, PRONTO, RETRACTOR, RETRACTOR TWIN, SHAVA II and ULTRA
CARESSE LADYSHAVER. These products are distributed directly to large retail
outlets, as well as to wholesalers for sale to smaller retailers, drugstores and
pharmacies. Retail outlets include pharmacies, food stores, department stores,
variety stores, mass merchandisers and other miscellaneous outlets.

Pet Care Products: Warner-Lambert manufactures and sells various products
on a worldwide basis for ornamental fish and for other small pets, as well as
books relating to various pets, under the trademark TETRA. In addition, in
September 1993 Warner-Lambert acquired Willinger Bros., Inc., a manufacturer and
distributor of aquarium products (including power filters and replacement
cartridges, air pumps, plastic plants and other accessories) that are marketed
largely under the WHISPER and SECONDNATURE trademarks. These pet care products
are promoted to consumers through

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cooperative advertising and to retailers through direct promotion and
advertising in trade publications. They are sold to wholesalers for sale to
smaller retailers and directly to larger chain stores and retailers, in each
case for ultimate sale to consumers.

Confectionery Products

The principal products of Warner-Lambert in its Confectionery Products
segment are chewing gums and breath mints.

Warner-Lambert manufactures and/or sells, in the United States and/or
internationally, a broad line of chewing gums and breath mints, as well as
specialty candies. Among these products are slab chewing gums (TRIDENT, DENTYNE
and DENTYNE SUGARFREE), chunk bubble gums (BUBBLICIOUS, BUBBLICIOUS MONDO and
TRIDENT SOFT), center-filled gums (FRESHEN-UP), candy-coated gums (CHICLETS,
CHICLETS TINY SIZE and CLORETS) and stick gums (CLORETS, CINN*A*BURST and
MINT*A*BURST). The breath mint line includes CERTS, SUGARFREE CERTS, SUGARFREE
CERTS MINI-MINTS, CERTS EXTRA FLAVOR and CLORETS. These products are promoted
directly to the consumer primarily through consumer advertising and in-store
promotion programs. They are sold directly to chain and independent food stores,
chain pharmacies and mass merchandisers or through candy and tobacco wholesalers
and to other miscellaneous outlets which in turn sell to consumers.

In the fourth quarter of 1993, Warner-Lambert sold the assets of its
chocolate/caramel business, including the Junior Mints'r', Sugar Daddy'r', Sugar
Babies'r', Charleston Chew!'r' and Pom Poms'r' product lines, in order to
refocus its resources on its core pharmaceutical and consumer products
businesses.

Novon Products Group

NOVON is the trademark for a family of specialty polymers based upon starch
and other fully biodegradable materials. Warner-Lambert discontinued the
operations of its Novon Products Group as of November 30, 1993, primarily in
order to focus its resources on its core business areas. Warner-Lambert has
entered into agreements with licensees and is currently in discussions with
respect to the sale of substantially all of the intellectual property and
certain other assets of the business. In the first quarter of 1993,
Warner-Lambert recorded a one-time charge of $70 million before tax or $45
million after-tax, in connection with the disposition of the Novon Products
Group. The charge included a write-down of Novon's physical assets to net
realizable value, as well as a provision for additional anticipated costs to be
incurred during the phase-out period.

INTERNATIONAL OPERATIONS

Although Warner-Lambert has globalized its organization on a segment basis,
Warner-Lambert's international businesses are carried on principally through
subsidiaries and branches, which are generally staffed and managed by citizens
of the countries in which they operate. Approximately 23,000 of Warner-Lambert's
employees are located outside the United States and only a small number of such
employees are United States citizens. Certain of the products discussed above
are manufactured and marketed solely in the United States and certain of such
products are manufactured and marketed solely in one or more foreign countries.

International sales to unaffiliated customers in 1993 amounted to
approximately 53% of worldwide sales. International sales do not include United
States export sales, which represent less than 1% of domestic sales. The seven
largest markets with respect to the distribution of Warner-Lambert products sold
outside the United States during 1993 were Japan, Germany, Canada, Mexico,
France, the United Kingdom and Italy. Sales in these markets accounted for
approximately 64% of Warner-Lambert's international sales, with no one country
accounting for more than 17% of international sales.

The international operations are subject to certain risks inherent in
carrying on business abroad, including possible nationalization, expropriation
and other governmental action, as well as fluctuations in currency exchange
rates.

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RESTRUCTURING

In November 1993, Warner-Lambert announced a program covering the
rationalization of manufacturing facilities, principally in North America,
including the eventual closing of seven plants, an organizational restructuring
and related workforce reductions of approximately 2,800 positions over the next
several years. The program was prompted by the combined impact of rapid and
profound changes in the Company's competitive environment, including the growing
impact of managed health care and other cost-containment efforts in the United
States, cost regulations in Europe and changes in U.S. tax law (discussed below
under the caption 'Regulation'). For further discussion of Warner-Lambert's
restructuring, see 'Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Restructuring Actions' and Note 3 to the Company's
consolidated financial statements, contained in the Warner-Lambert 1993 Annual
Report and incorporated herein by reference.

COMPETITION

Most markets in which Warner-Lambert is engaged are highly competitive and
characterized by substantial expenditures in the advertising and promotion of
new and existing products. In addition, there is intense competition in research
and development in all of Warner-Lambert's industry segments. No material part
of the business of any of Warner-Lambert's industry segments is dependent upon
one or a few customers. However, the Company cannot predict what effect, if any,
the health care proposals described below under the caption 'Regulation' may
have on its operations.

MATERIALS AND SUPPLIES

Warner-Lambert's products, in general, are produced and packaged at its own
facilities. Other than certain generic drug products, relatively few items are
manufactured in whole or in part by outside suppliers. Raw materials and
packaging supplies are purchased from a variety of outside suppliers. The loss
of any one source of supply would not have a material effect on the business of
any of Warner-Lambert's industry segments. Warner-Lambert seeks to protect
against fluctuating costs and to assure availability of raw materials and
packaging supplies by, among other things, locating alternative sources of
supply and, in some instances, making selective advance purchases.

TRADEMARKS AND PATENTS

Warner-Lambert's major trademarks are protected by registration in the
United States and other countries where its products are marketed.
Warner-Lambert believes these trademarks are important to the marketing of the
related products and acts to protect them from infringement. Warner-Lambert owns
many patents and has many patent applications pending in the patent offices of
the United States and other countries. Although a number of products and product
lines have patent protection that is significant in the marketing of such
products, the management of Warner-Lambert does not consider that any single
patent or related group of patents is material to Warner-Lambert's business as a
whole or any of its industry segments. On January 4, 1993, the United States
patent for LOPID expired, subjecting LOPID to generic competition, as discussed
above under the caption 'Business Segments -- Pharmaceutical Products'.

RESEARCH AND DEVELOPMENT

Warner-Lambert employs over 2,000 scientific and technical personnel in
research and development activities at various research facilities located in
the United States and in foreign countries. Warner-Lambert invested
approximately $465 million in research and development in 1993, compared with
$473 million in 1992 and $423 million in 1991. Approximately eighty-two percent
(82%) of Warner-Lambert's 1993 research and development spending was for
research and development related to pharmaceutical products. Warner-Lambert
believes research and development activities are essential to its business and
intends to continue such activities.

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EMPLOYEES

At December 31, 1993 approximately 35,000 people were employed by
Warner-Lambert throughout the world.

REGULATION

Warner-Lambert's business is subject to varying degrees of governmental
regulation in the countries in which it manufactures and distributes products,
and the general trend in these countries is toward more stringent regulation.

In the United States, the food, drug and cosmetic industries have been
subject to regulation by various federal, state and local agencies with respect
to product safety and effectiveness, manufacturing and advertising and labeling.
Accordingly, from time to time, with respect to particular products under
review, such agencies may require Warner-Lambert to participate in meetings,
whether public or private, to address safety, efficacy, manufacturing and/or
regulatory issues, to conduct additional testing or to modify its advertising
and/or labeling.

During the third quarter of 1993, a consent decree with the FDA was entered
into by Warner-Lambert and Melvin R. Goodes, Chairman and Chief Executive
Officer, and Lodewijk J. R. de Vink, President and Chief Operating Officer,
covering issues related to compliance with manufacturing and quality procedures.
The decree is a court-approved agreement that primarily requires Warner-Lambert
to certify that laboratory and/or manufacturing procedures at its pharmaceutical
manufacturing facilities in the United States and Puerto Rico meet current Good
Manufacturing Practices established by the FDA. Under the terms of the decree,
Warner-Lambert was permitted to ship inventory existing at the time of entry of
the decree of most of its products, and has been permitted to continue to
manufacture and ship prescription medications deemed medically necessary while
the certification process is ongoing. The manufacture and distribution of its
remaining products was suspended pending completion of certain certification
procedures. Warner-Lambert's manufacturing facilities in the mainland United
States quickly resumed substantially full operations. The bulk of the
prescription products manufactured at the two Puerto Rico facilities were deemed
medically necessary and had no significant interruption in supply, and the
production of certain other products has been transferred from such facilities
to mainland U.S. facilities or sourced from third parties. There are several
prescription products that have not yet returned to the market or have been
withdrawn. It is not possible to predict when the manufacturing facilities in
Puerto Rico will be fully operational, although Warner-Lambert is actively
working with outside experts and the FDA to accomplish this as soon as possible.
Compliance with FDA restrictions, including the consent decree, resulted in an
estimated aggregate loss of sales revenue of approximately $135 million in 1993.

Pursuant to the FDA's Application Integrity Policy, Warner-Lambert, through
independent experts in pharmaceutical manufacturing, is also conducting validity
assessments of FDA filings made with respect to products manufactured or to be
manufactured at its facilities in Vega Baja and Fajardo, Puerto Rico, due to
discrepancies found in data generated at those facilities. The FDA has deferred
substantive scientific reviews of pending NDA's and Abbreviated New Drug
Applications ('ANDA's') for products to be manufactured at these facilities
(including the oral contraceptive ESTROSTEP), and for supplements to NDA's or
ANDA's for products currently manufactured at these facilities, until further
assessments of Warner-Lambert filings are completed. The FDA did not suspend
review of two potentially medically important drugs, COGNEX (tacrine) and
NEURONTIN (gabapentin), discussed under the caption 'Business
Segments -- Pharmaceutical Products' above, both of which obtained U.S.
marketing approval in 1993. Warner-Lambert has pledged its full cooperation and
has actively worked with the FDA in order to resolve all issues relating to this
matter. Warner-Lambert expects to file shortly the expert validity assessments
that have not yet been filed. The FDA will review all of these filings, as well
as a Corrective Action Plan the Company is currently preparing, which outlines
mechanisms in place to prevent a recurrence of the data integrity issue. The FDA
will then inspect the two facilities prior to lifting the Application Integrity
Policy. It is not possible to predict when the Application Integrity Policy will
be lifted or whether the FDA will take additional action.

<PAGE>
Regulatory requirements concerning the research and development of drug
products have increased in complexity and scope in recent years. This has
resulted in a substantial increase in the time and expense required to bring new
products to market. At the same time, the FDA requirements for approval of
generic drugs (drugs containing the same active chemical as an innovator's
product) have been decreased by the adoption of abbreviated new drug approval
procedures for most generic drugs. Generic versions of many of Warner-Lambert's
products in the Pharmaceutical Products segment are being marketed, and generic
substitution legislation, which permits a pharmacist to substitute a generic
version of a drug for the one prescribed, has been enacted in some form in all
states. These factors have resulted in increased competition from generic
manufacturers in the market for ethical products. For example, LOPID has been
subject to this increased competition since its patent expired on January 4,
1993, as discussed above under the caption 'Business Segments -- Pharmaceutical
Products'.

Federal legislation enacted in late 1990 prohibits the expenditure of
federal Medicaid funds for outpatient drugs of manufacturers that do not agree
to pay specified rebates. Similar legislation has been enacted in several states
extending rebates to state administered non-Medicaid programs. Warner-Lambert
has been adhering to such rebate programs and other related rebate programs and
has incurred rebate expenses of $57 million, $37 million and $15 million in
1993, 1992 and 1991, respectively. However, Warner-Lambert does not believe such
rebate expenses have had, or will have, a material adverse effect upon its
financial position.

The Clinton Administration has identified the containment of health care
costs as a major priority. The Administration's proposed health care plan, along
with a number of alternative proposals, has negative implications for the
pharmaceutical industry. Although Warner-Lambert cannot predict at this time
which legislation, if any, will be enacted, it is likely that such legislation
would result in increased pressures on the operating results of Warner-Lambert.
In addition, primarily as a result of the passage by Congress of the Omnibus
Budget Reconciliation Act of 1993, including changes to Section 936 of the
Internal Revenue Code, Warner-Lambert estimates that its effective tax rate will
increase in 1994 by approximately 1.5 to 2.5 percentage points.

The regulatory agencies under whose purview Warner-Lambert operates have
administrative and legal powers that may subject Warner-Lambert and its products
to seizure actions, product recalls and other civil and criminal actions. They
may also subject the industry to emergency regulatory requirements.
Warner-Lambert's policy is to comply fully with all regulatory requirements. It
is impossible to predict, however, what effect, if any, these matters or any
pending or future legislation, regulations or governmental actions may have on
the conduct of Warner-Lambert's business in the future.

In most of the foreign countries where Warner-Lambert does business, it is
subject to a regulatory and legislative climate similar to or more restrictive
than that described above. Certain health care reform measures enacted in 1993
in Germany, including the imposition of price reductions on pharmaceutical
products and prescribing restrictions on doctors, had a negative impact on
Warner-Lambert's pharmaceutical operations in Germany in 1993 and are expected
to have a negative impact on such operations in 1994. The long-term impact of
such measures on Warner-Lambert's operations cannot be assessed at this time.

ENVIRONMENT

Warner-Lambert is responsible for compliance with a number of environmental
laws and regulations. While Warner-Lambert has maintained control systems
designed to assure compliance in all material respects with environmental laws
and regulations, during 1993 it initiated a worldwide audit program to assure
environmental compliance with a growing number of increasingly complex
environmental regulations. Warner-Lambert is involved in various environmental
matters, including actions initiated by the Environmental Protection Agency (the
'EPA') under the Comprehensive Environmental Response, Compensation and
Liability Act, also known as Superfund, by state agencies under similar state
legislation, or by other parties. The Company is presently remediating
environmental problems at certain sites, including sites it previously owned.
While it is not possible to predict the outcome of the proceedings described
above or the ultimate costs of remediation, the management of Warner-Lambert
believes it is unlikely that their ultimate disposition will have a material
adverse effect

<PAGE>
on Warner-Lambert's financial position, liquidity, cash flow or results of
operations for any year. Actions with respect to environmental programs and
compliance result in operating expenses and capital expenditures.
Warner-Lambert's capital expenditures with respect to environmental programs and
compliance in 1993 were not, and in 1994 are not expected to be, material to the
business of Warner-Lambert.

For additional information relating to environmental matters, see Note 14
to the consolidated financial statements, 'Environmental Liabilities', on page
43 of the Warner-Lambert 1993 Annual Report, incorporated herein by reference.

ITEM 2. PROPERTIES.

The executive offices of Warner-Lambert are located in Morris Plains, New
Jersey. In the United States, including Puerto Rico, Warner-Lambert owns
facilities aggregating approximately 6,464,000 square feet and leases facilities
having an aggregate of approximately 874,000 square feet.

Warner-Lambert's principal U.S. manufacturing plants are located in Lititz,
Pennsylvania (pharmaceuticals and consumer health care); Rockford, Illinois
(confectionery and consumer health care); Rochester, Michigan (pharmaceuticals);
Holland, Michigan (pharmaceuticals); Greenwood, South Carolina (capsules); and
Milford, Connecticut (razors and blades). Warner-Lambert Inc., a wholly owned
subsidiary of Warner-Lambert operating in Puerto Rico, has plants located in
Carolina (confectionery); Fajardo (pharmaceuticals); and Vega Baja
(pharmaceuticals, consumer health care and confectionery).

In November 1993, in connection with the restructuring discussed above
under the caption 'Business -- Restructuring', Warner-Lambert announced plans to
phase out and close its Carolina, Puerto Rico confectionery manufacturing plant
by the end of 1994.

In the United States, Warner-Lambert currently distributes its various
products through its manufacturing plants and two primary distribution centers
located in Lititz, Pennsylvania and Elk Grove, Illinois. Principal U.S. research
facilities are located in Ann Arbor, Michigan (pharmaceuticals) and Morris
Plains, New Jersey (pharmaceuticals, consumer health care and confectionery).

Internationally, Warner-Lambert owns, leases, or operates, through its
subsidiaries or branches, 72 production facilities in 35 countries. Principal
international manufacturing plants are located in Germany, the United Kingdom,
Belgium, Italy, Canada, Mexico, Hong Kong, Japan, Ireland, Spain, France,
Brazil, Venezuela and Australia. Principal international research facilities are
located in Germany, Japan, the United Kingdom and Canada.

In order to increase efficiency and to lower its cost of goods sold,
Warner-Lambert, over a number of years and at significant cost, has consolidated
many of its plants and facilities around the world. This has often resulted in
the production of pharmaceutical products, consumer health care products and/or
confectionery products at a single facility.

Warner-Lambert's facilities are generally in good operating condition and
repair and at present are adequately utilized within reasonable limits. Leases
are not material to the business of Warner-Lambert taken as a whole.

For information regarding the organizational restructuring and plant
rationalization announced by Warner-Lambert in November 1993, see
'Business -- Restructuring' above.

ITEM 3. LEGAL PROCEEDINGS.

Warner-Lambert and certain present and former employees have been served
with subpoenas by the U.S. Attorney's office in Maryland, which is conducting an
inquiry relating to compliance with FDA regulations, to produce records and/or
appear before a federal grand jury in Baltimore. Warner-Lambert is cooperating
with the inquiry and cannot predict what the outcome of the investigation will
be.

In September 1993, Warner-Lambert received a Complaint and Compliance Order
from the EPA seeking penalties of $268,000 for alleged violations of the
Resource Conservation and Recovery Act,

<PAGE>
Boilers and Industrial Furnace regulations. Warner-Lambert responded to the
complaint in October 1993. The Company is contesting the allegations and has
entered into negotiations with the EPA.

Warner-Lambert, along with numerous other pharmaceutical manufacturers and
wholesalers, has been sued in a number of state and federal antitrust lawsuits
by retail pharmacies seeking treble damages and injunctive relief. These actions
arise from alleged price discrimination by which the defendant drug companies,
acting alone or in concert, are alleged to have favored institutions, managed
care entities, mail order pharmacies and other buyers with lower prices for
brand name prescription drugs than those afforded to plaintiff retailers. The
federal cases have been consolidated by the Judicial Panel on Multidistrict
Litigation and transferred to the United States District Court for the Northern
District of Illinois for pre-trial proceedings. The state cases, which are
pending in California, are expected to be coordinated in the Superior Court of
California, County of San Francisco. Warner-Lambert believes that these actions
are without merit and will defend itself vigorously. Although it is too early to
predict the outcome of these actions, Warner-Lambert does not expect this
litigation to have a material adverse effect on its financial position,
liquidity, cash flow or results of operations.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Not Applicable.

EXECUTIVE OFFICERS OF THE REGISTRANT

Information with respect to the executive officers of Warner-Lambert as of
March 1, 1994 is set forth below:

(table continued on next page)

<PAGE>
(table continued from previous page)

<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATIONS
OFFICES HELD AND EMPLOYMENT
NAME AGE WITH REGISTRANT DURING PAST 5 YEARS
- ----------------------------------------- --- -------------------- --------------------------------------
<S> <C> <C> <C>
Ernest J. Larini......................... 50 Vice President and Vice President and Chief Financial
Chief Financial Officer (since November 1992); Vice
Officer President, Financial Administration
(June 1992 -- October 1992); Vice
President and Controller (May
1990 -- May 1992); Treasurer
(February 1988 -- April 1990)
Ronald M. Cresswell, Ph.D................ 59 Vice President Vice President (since May 1988);
Chairman, Parke-Davis Research
(since October 1989); President,
Parke-Davis Research (May
1988 -- October 1989)
Pedro M. Cuatrecasas, M.D. .............. 57 Vice President Vice President (since October 1989);
President, Parke-Davis Research
(since October 1989); Senior Vice
President, Research and Development,
Glaxo, Inc. (February 1986 -- August
1989)
Raymond M. Fino.......................... 51 Vice President Vice President, Human Resources (since
January 1985)
George L. Fotiades....................... 40 Vice President Vice President (since November 1992);
President, Warner Wellcome Consumer
Health Products (since January
1994); President, Consumer Health
Products Group (November
1992 -- January 1994); President,
Consumer Products, Japan,
Bristol-Myers Squibb Company
(January 1992 -- November 1992);
Senior Vice President, General
Manager, Clairol U.S., Bristol-Myers
Squibb (January 1991 -- January
1992); Senior Vice President,
Boyle-Midway, American Home Products
(August 1988 -- December 1990)
William F. Gilroy........................ 57 Vice President and Vice President (since February 1985);
Controller Controller (since June 1992); Vice
President, Finance Administration
(January 1992 -- June 1992); Vice
President, Finance Administration,
International Operations (February
1988 -- December 1991)
</TABLE>

(table continued on next page)

<PAGE>
(table continued from previous page)

<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATIONS
OFFICES HELD AND EMPLOYMENT
NAME AGE WITH REGISTRANT DURING PAST 5 YEARS
- ----------------------------------------- --- -------------------- --------------------------------------
<S> <C> <C> <C>
Philip M. Gross.......................... 52 Vice President Vice President (since January 1990);
Vice President, Strategic Management
Processes (since January 1994);
President, Novon Products Group
(January 1990 -- January 1994); Vice
President and General Manager, GE
Silicones, General Electric Company
(January 1987 -- December 1989)
Jay M. Gwynne............................ 56 Vice President Vice President (since January 1984);
President, American Chicle Group
(since July 1991); President,
Asia/Australia/Capsugel Group (March
1989 -- July 1991); President,
Europe/ Canada/Middle East/Africa
Group (July 1987 -- March 1989)
Gregory L. Johnson....................... 47 Vice President and Vice President and General Counsel
General Counsel (since October 1983)
Surinder Kumar, Ph.D..................... 49 Vice President Vice President (since October 1993);
President, Consumer Products
Research & Development (since
October 1992); Senior Vice
President, Research & Development,
Pepsico, Inc. (February 1990 --
October 1992); Vice President,
Research & Development, Pepsico,
Inc. (February 1988 -- February
1990)
Bertil R. Lang........................... 52 Vice President Vice President (since January 1992);
President, Parke-Davis, Europe
(since January 1992); Regional
President,
Germany/Austria/Switzerland (March
1989 -- December 1991); Regional
President, Germany (April
1986 -- March 1989)
J. Frank Lazo............................ 46 Vice President Vice President (since April 1990);
President, Latin
America/Asia/Australia/ Middle
East/Africa Group (since January
1992); President, Latin America/
Asia/Australia Group (July
1991 -- December 1991); President,
Canada/Latin America Group (April
1990 -- July 1991); Regional
President, Brazil/Chile/Peru/Uruguay
(October 1988 -- March 1990)
</TABLE>

(table continued on next page)

<PAGE>
(table continued from previous page)

<TABLE>
<CAPTION>
POSITIONS AND PRINCIPAL OCCUPATIONS
OFFICES HELD AND EMPLOYMENT
NAME AGE WITH REGISTRANT DURING PAST 5 YEARS
- ----------------------------------------- --- -------------------- --------------------------------------
<S> <C> <C> <C>
F. Phillip Milhomme...................... 57 Vice President Vice President (since January 1992);
President, Consumer Products, Europe
(since January 1992); President,
Middle East/Africa/Europe (September
1989 -- December 1991); Regional
President, Middle East/Africa/Europe
(March 1989 -- September 1989);
President, Benelux/ Mediterranean
Region (October 1987 -- March 1989)
S. Morgan Morton......................... 54 Vice President Vice President (since January 1994);
President, Shaving Products Group
(since September 1993); President,
Schick (January 1992 -- September
1993); President, Warner-Lambert
Canada (January 1988 -- January
1992)
Harold F. Oberkfell...................... 47 Vice President Vice President (since January 1992);
President, Parke-Davis, North
America (since January 1992); Vice
President, Parke-Davis Marketing and
Sales (July 1986 -- December 1991)
Joseph E. Smith.......................... 54 Vice President Vice President, External Relations
(since January 1994); Executive Vice
President (January 1991 -- January
1994); President, Pharmaceutical
Sector (January 1992 -- January
1994); Vice President (March
1989 -- December 1990); President,
Parke-Davis Group (March
1989 -- December 1991)
Fred G. Weiss............................ 52 Vice President Vice President (since August 1982);
Vice President, Planning, Investment
and Development (since August 1983)
William S. Woodson....................... 59 Vice President and Vice President and Treasurer (since
Treasurer December 1991); Vice President,
Finance, Novon Products Group
(September 1990 -- November 1991);
Vice President, Corporate Control
and Analysis (February 1988 --
September 1990)
Ronald E. Zier........................... 62 Vice President Vice President, Public Affairs (since
July 1977)
Rae G. Paltiel........................... 47 Secretary Secretary (since February 1986)
</TABLE>

All of the above-mentioned officers, with the exception of Dr. Cuatrecasas,
Mr. Fotiades, Mr. Gross and Dr. Kumar, have been employed by Warner-Lambert for
the past five years.

Dr. Cuatrecasas has been employed by Warner-Lambert since October 1989.
Prior to that time, Dr. Cuatrecasas had been employed as Senior Vice President,
Research and Development, at Glaxo, Inc. from February 1986 to August 1989.
Glaxo, Inc., a multinational pharmaceutical company, had sales of

<PAGE>
approximately $3.5 billion for the year ending June 1988. Prior to his
employment with Glaxo, Dr. Cuatrecasas had been employed since 1975 as Vice
President, Research, Development and Medical, at Burroughs Wellcome Company.
Burroughs Wellcome Company is a wholly owned subsidiary of The Wellcome
Foundation Ltd., a multinational pharmaceutical company which had sales of
approximately $1.5 billion in 1986.

Mr. Fotiades has been employed by Warner-Lambert since November 1992. Prior
to that time, Mr. Fotiades had been employed by Bristol-Myers Squibb Company.
From January 1992 to November 1992, Mr. Fotiades held the position of President,
Consumer Products, Japan and from January 1991 to January 1992 he served as
Senior Vice President, General Manager, Clairol U.S., Bristol-Myers Squibb
Company, a multinational health care and consumer products company with sales of
approximately $11.0 billion in 1992. Prior to his employment with Bristol-Myers
Squibb, he held the position of Senior Vice President, Marketing, Boyle-Midway,
American Home Products Corporation, from August 1988 to December 1990. American
Home Products Corporation, a multinational health care and food products
company, had sales of approximately $6.8 billion in 1990. From September 1987 to
July 1988, Mr. Fotiades held the position of General Manager,
Antiperspirant/Deodorant, the Proctor & Gamble Company, a multinational consumer
products company with sales of approximately $21.3 billion for the year ended
June 30, 1989.

Mr. Gross has been employed by Warner-Lambert since January 1990. Prior to
that time, Mr. Gross had been employed since 1963 by General Electric Company in
various executive positions. From January 1987 to March 1989, Mr. Gross held the
position of Vice President and General Manager, GE Silicones. General Electric
Company, a multinational diversified company, had sales in excess of $38.0
billion in 1988.

Dr. Kumar has been employed by Warner-Lambert since October 1992. Prior to
that time, Dr. Kumar had been employed since January 1986 by Pepsico, Inc. From
February 1990 to October 1992 Dr. Kumar held the position of Senior Vice
President, Research & Development, Pepsi Worldwide Beverage. From February 1988
to February 1990 he held the position of Vice President, Research & Development,
Pepsi Worldwide Beverage, and from January 1986 to February 1988, the position
of Vice President, Research & Development, Pepsi U.S.A. Pepsico, Inc. is in the
beverage, snack food and restaurant business, both domestically and
internationally, with sales of approximately $22 billion in 1992.

None of the above officers has any family relationship with any Director or
with any other officer. Officers are elected by the Board of Directors for a
term of office lasting until the next annual organizational meeting of the Board
of Directors or until their successors are elected and have qualified. No
officer listed above was appointed pursuant to any arrangement or understanding
between such officer and the Board of Directors or any member or members
thereof.

<PAGE>
PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

The information set forth under the caption 'Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Shareholder
Information' on page 33 of the Warner-Lambert 1993 Annual Report is incorporated
herein by reference.

ITEM 6. SELECTED FINANCIAL DATA.

The information set forth under the caption 'Five-Year Summary of Selected
Financial Data' on page 34 of the Warner-Lambert 1993 Annual Report is
incorporated herein by reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

The information set forth under the caption 'Management's Discussion and
Analysis of Financial Condition and Results of Operations' on pages 28 through
33 of the Warner-Lambert 1993 Annual Report is incorporated herein by reference
and should be read in conjunction with the consolidated financial statements and
the notes thereto contained on pages 34 through 47 of the Warner-Lambert 1993
Annual Report.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The consolidated financial statements of Warner-Lambert and its
subsidiaries, together with the report thereon of Price Waterhouse dated January
24, 1994, listed in Item 14(a)1 and included in the Warner-Lambert 1993 Annual
Report at pages 35 through 48, are incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

Not Applicable.

<PAGE>
PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The required information relating to the Warner-Lambert Directors and
nominees is incorporated herein by reference to pages 2 through 7 of the
Warner-Lambert Proxy Statement for the Annual Meeting of Stockholders to be held
on April 26, 1994. Information relating to executive officers of Warner-Lambert
is set forth in Part I of this Form 10-K on pages 9 through 13. Information
relating to compliance with Section 16(a) of the Securities Exchange Act of 1934
is contained in the Proxy Statement, referred to above, at page 8 and such
information is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION.

Information relating to executive compensation is contained in the Proxy
Statement, referred to above in Item 10, at pages 11 through 22 and such
information is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

(a) Information relating to the beneficial ownership of more than five
percent of Warner-Lambert's Common Stock is contained in the Proxy Statement,
referred to above in Item 10, at page 9 and such information is incorporated
herein by reference.

(b) Information relating to security ownership of management is contained
in the Proxy Statement, referred to above in Item 10, at page 8 and such
information is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Not Applicable.

<PAGE>
PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(A) 1. ALL FINANCIAL STATEMENTS

The following items are included in Part II of this report through
incorporation by reference to pages 35 through 48 of the Warner-Lambert
1993 Annual Report:

Consolidated Statements of Income for each of the three years in
the period ended December 31, 1993.

Consolidated Statements of Retained Earnings for each of the
three years in the period ended December 31, 1993.

Consolidated Balance Sheets at December 31, 1993 and 1992.

Consolidated Statements of Cash Flows for each of the three years
in the period ended December 31, 1993.

Notes to Consolidated Financial Statements.

Report of Independent Accountants.

2. FINANCIAL STATEMENT SCHEDULES

Included in Part IV of this report:

Report of Independent Accountants on Financial Statement Schedules.

Schedule I -- Marketable Securities -- Other Investments

Schedule II -- Amounts Receivable from Related Parties and
Underwriters, Promoters and Employees other than
Related Parties

Schedule V -- Property, Plant and Equipment

Schedule VI -- Accumulated Depreciation of Property, Plant and
Equipment

Schedule VIII -- Valuation and Qualifying Accounts and Reserves

Schedule IX -- Short-term Borrowings

Schedule X -- Supplementary Income Statement Information

Schedules other than those listed above are omitted because they are
either not applicable or the required information is included
through incorporation by reference to pages 35 through 48 of the
Warner-Lambert 1993 Annual Report.

3. EXHIBITS

(3) Articles of Incorporation and by-laws

(a) Restated Certificate of Incorporation of Warner-Lambert Company
filed November 10, 1972, as amended to April 24, 1990
(Incorporated by reference to Warner-Lambert's Current Report
on Form 8-K, dated April 24, 1990).

(b) By-Laws of Warner-Lambert Company, as amended to October 25,
1988 (Incorporated by reference to Warner-Lambert's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1988
(File No. 1-3608)).

(4) Instruments defining the rights of security holders, including
indentures

(a) Rights Agreement, dated as of June 28, 1988, and amended as of
June 27, 1989, between Warner-Lambert Company and First
Chicago Trust Company of New York, as Rights Agent
(Incorporated by reference to Warner-Lambert's Registration
Statement on Form 8-A, dated June 28, 1988, as amended by Form
8, dated July 5, 1989 (File No. 1-3608)).

<PAGE>
(b) Warner-Lambert agrees to furnish to the Commission, upon
request, a copy of each instrument with respect to issues of
long-term debt of Warner-Lambert. The principal amount of debt
securities authorized under each such instrument does not
exceed 10% of the total assets of Warner-Lambert.

(10) Material contracts

<TABLE>
<S> <C>
(a)* Warner-Lambert Company 1974 Stock Option and Alternate Stock Plan, as amended to November 26,
1991 (Incorporated by reference to Warner-Lambert's Form 10-K for the fiscal year ended
December 31, 1991).
(b)* Warner-Lambert Company 1983 Stock Option Plan, as amended to November 26, 1991 (Incorporated
by reference to Warner-Lambert's Form 10-K for the fiscal year ended December 31, 1991).
(c)* Warner-Lambert Company 1987 Stock Option Plan, as amended to November 26, 1991 (Incorporated
by reference to Warner-Lambert's Form 10-K for the fiscal year ended December 31, 1991).
(d)* Warner-Lambert Company 1989 Stock Plan, as amended to November 26, 1991 (Incorporated by
reference to Warner-Lambert's Form 10-K for the fiscal year ended December 31, 1991).
(e)* Warner-Lambert Company 1992 Stock Plan (Incorporated by reference to Warner-Lambert's Form
10-K for the fiscal year ended December 31, 1992).
(f)* Warner-Lambert Company Incentive Compensation Plan, as amended to June 26, 1990 (Incorporated
by reference to Warner-Lambert's Quarterly Report on Form 10-Q for the quarter ended June 30,
1990).
(g)* Warner-Lambert Company Supplemental Pension Income Plan, as amended to October 29, 1991
(Incorporated by reference to Warner-Lambert's Form 10-K for the fiscal year ended December
31, 1991).
(h)* Group Plan Participation by Non-employee Directors (Incorporated by reference to
Warner-Lambert's Form 10-K for the fiscal year ended December 31, 1991).
(i)* Warner-Lambert Company Directors' Retirement Plan, as amended to June 26, 1990 (Incorporated
by reference to Warner-Lambert's Quarterly Report on Form 10-Q for the quarter ended June 30,
1990).
(j)* Warner-Lambert Excess Savings Plan, formerly Warner-Lambert Supplemental Savings Plan, as
amended to October 29, 1991 (Incorporated by reference to Warner-Lambert's Form 10-K for the
fiscal year ended December 31, 1991).
(k)* Warner-Lambert Company Executive Severance Plan, as amended to June 26, 1990 (Incorporated by
reference to Warner-Lambert's Quarterly Report on Form 10-Q for the quarter ended June 30,
1990).
(l)* Restricted Stock Plan for Directors of Warner-Lambert Company, as amended to January 28, 1992
(Incorporated by reference to Warner-Lambert's Form 10-K for the fiscal year ended December
31, 1991).
(m)* Employment Agreement dated September 24, 1985 between Warner-Lambert Company and Melvin R.
Goodes, Chairman of the Board and Chief Executive Officer, as amended to August 1, 1991
(Incorporated by reference to Warner-Lambert's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1991).
(n)* Employment Agreement effective as of August 1, 1991 between Warner-Lambert Company and
Lodewijk J. R. de Vink, President and Chief Operating Officer (Incorporated by reference to
Warner-Lambert's Quarterly Report on Form 10-Q for the quarter ended September 30, 1991).
(o)* Consulting Agreement, dated as of September 1, 1991, between Warner-Lambert Company and Joseph
D. Williams, Director (Incorporated by reference to Warner-Lambert's Form 10-K for the fiscal
year ended December 31, 1991).
</TABLE>

<PAGE>
<TABLE>
<S> <C>
(p)* Consulting Arrangement between Warner-Lambert Company and B. Charles Ames, Director
(Incorporated by reference to Warner-Lambert's Form 10-K for the fiscal year ended December
31, 1991).
(q)* Consulting Arrangement between Warner-Lambert Company and Paul S. Russell, Director
(Incorporated by reference to Warner-Lambert's Form 10-K for the fiscal year ended December
31, 1991).
(r) Global Principles Agreement, dated as of December 10, 1993, between Warner-Lambert Company and
Glaxo Holdings plc.
(s) Global Principles Agreement, dated December 17, 1993, between Warner-Lambert Company and
Wellcome plc.
</TABLE>

(12) Computation of Ratio of Earnings to Fixed Charges.

(13) Copy of the Warner-Lambert Company Annual Report for the fiscal year
ended December 31, 1993. Such report, except for those portions
thereof which are expressly incorporated by reference herein, is
furnished solely for the information of the Commission and is not to
be deemed 'filed' as part of this filing.

(21) Subsidiaries of the registrant.

(23) Consent of Independent Accountants.

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

* Management contract or compensatory plan or arrangement required to be filed
as an exhibit to this Form 10-K pursuant to Item 14(c).

(B) REPORTS ON FORM 8-K

A Current Report on Form 8-K, dated December 13, 1993, was filed with the
Securities and Exchange Commission in connection with the announcement of
Warner Lambert's signing of separate agreements establishing joint ventures
with Glaxo Holdings plc and Wellcome plc.

Warner-Lambert will furnish to any holder of its securities, upon request
and at a reasonable cost, copies of the Exhibits listed in Item 14.

<PAGE>
WARNER-LAMBERT COMPANY AND CONSOLIDATED SUBSIDIARIES
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULES

To the Board of Directors and Shareholders of
WARNER-LAMBERT COMPANY

Our audits of the consolidated financial statements referred to in our
report dated January 24, 1994 appearing on page 48 of the 1993 Annual Report to
Shareholders of Warner-Lambert Company (which report and consolidated financial
statements are incorporated by reference in this Annual Report on Form 10-K)
also included an audit of the Financial Statement Schedules listed in Item
14(a)2 of this Form 10-K. In our opinion, these Financial Statement Schedules
present fairly, in all material respects, the information set forth therein when
read in conjunction with the related consolidated financial statements.

PRICE WATERHOUSE

Morristown, New Jersey
January 24, 1994

<PAGE>
SCHEDULE I

WARNER-LAMBERT COMPANY AND SUBSIDIARIES
MARKETABLE SECURITIES -- OTHER INVESTMENTS
DECEMBER 31, 1993

<TABLE>
<CAPTION>
NUMBER OF
SHARES OR
UNITS -- PRINCIPAL AMOUNT AT WHICH
NAME OF ISSUER AND AMOUNT OF CARRIED IN
TITLE OF EACH ISSUE BONDS AND NOTES COST MARKET VALUE BALANCE SHEET
- ---------------------------------------------------- ----------------- ------ ------------ ---------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Certificates of deposit and time deposits........... $ 392.3 $392.3 $392.6 $ 392.3
Puerto Rico collateralized mortgage obligations..... 56.4 56.4 56.9 56.4
Puerto Rico government securities................... 49.3 49.3 50.0 49.3
Puerto Rico repurchase agreements................... 30.0 30.0 30.0 30.0
Puerto Rico GNMA Securities guaranteed by the United
States government................................. 29.7 29.7 32.2 29.7
Other investments................................... 7.8 7.8 8.1 7.8
------- ------ ------------ -------
Total.......................................... $ 565.5 $565.5 $569.8 $ 565.5
------- ------ ------------ -------
------- ------ ------------ -------
</TABLE>

<PAGE>
SCHEDULE II

WARNER-LAMBERT COMPANY AND SUBSIDIARIES
AMOUNTS RECEIVABLE FROM RELATED PARTIES AND UNDERWRITERS,
PROMOTERS AND EMPLOYEES OTHER THAN RELATED PARTIES
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991

<TABLE>
<CAPTION>
BALANCE AT
DEDUCTIONS END OF YEAR
BALANCE AT -------------------------- ------------------
BEGINNING AMOUNTS AMOUNTS NOT
NAME OF DEBTOR OF YEAR ADDITIONS COLLECTED WRITTEN OFF CURRENT CURRENT
- -------------------------------------------- ---------- --------- --------- ------------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
1993
Joseph E. Smith(1).......................... $250 $-- $-- $-- $-- $ 250
Pedro M. Cuatrecasas, M.D.(1)............... 350 -- -- -- -- 350
1992
Joseph E. Smith(1).......................... $250 $-- $-- $-- $-- $ 250
Pedro M. Cuatrecasas, M.D.(1)............... 350 -- -- -- -- 350
1991
Joseph E. Smith(1).......................... $250 $-- $-- $-- $-- $ 250
Pedro M. Cuatrecasas, M.D.(1)............... 350 -- -- -- -- 350
</TABLE>

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

(1) In connection with the relocations of Mr. Joseph E. Smith and Dr. Pedro M.
Cuatrecasas, interest-free loans, secured by real estate, were granted. The
terms of the loans, including provisions relating to acceleration and
repayment, depend on various factors.

<PAGE>
SCHEDULE V

WARNER-LAMBERT COMPANY AND SUBSIDIARIES
PROPERTY, PLANT AND EQUIPMENT
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991

<TABLE>
<CAPTION>
FOREIGN
CURRENCY OTHER
BALANCE AT TRANSLATION CHANGES BALANCE
BEGINNING ADDITIONS SALES AND ADJUSTMENTS ADD AT END
DESCRIPTION OF YEAR AT COST RETIREMENTS ADD (DEDUCT) (DEDUCT)(a) OF YEAR
- --------------------------------------- ---------- --------- ----------- ------------ ----------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1993:
Land.............................. $ 31.5 $ 1.5 $-- $ (.2) $ 1.0 $ 33.8
Buildings......................... 839.5 84.9 (2.3) (12.7) 5.6 915.0
Machinery, furniture and
fixtures........................ 1,675.1 274.3 (31.3) (34.4) 1.7 1,885.4
---------- --------- ----------- ------------ ----------- --------
$2,546.1 $ 360.7(b) $ (33.6) $(47.3) $ 8.3 $2,834.2
---------- --------- ----------- ------------ ----------- --------
---------- --------- ----------- ------------ ----------- --------
Year ended December 31, 1992:
Land.............................. $ 28.4 $ 3.3 $-- $ (.2) $-- $ 31.5
Buildings......................... 763.2 87.3 (4.7) (7.6) 1.3 839.5
Machinery, furniture and
fixtures........................ 1,531.9 243.7 (59.4) (29.1) (12.0) 1,675.1
---------- --------- ----------- ------------ ----------- --------
$2,323.5 $ 334.3 $ (64.1) $(36.9) $ (10.7) $2,546.1
---------- --------- ----------- ------------ ----------- --------
---------- --------- ----------- ------------ ----------- --------
Year ended December 31, 1991:
Land.............................. $ 29.5 $ 1.0 $ (.8) $ (1.3) $-- $ 28.4
Buildings......................... 713.8 81.0 (9.1) (22.0) (.5) 763.2
Machinery, furniture and
fixtures........................ 1,384.6 244.0 (27.7) (64.1) (4.9) 1,531.9
---------- --------- ----------- ------------ ----------- --------
$2,127.9 $ 326.0 $ (37.6) $(87.4) $ (5.4) $2,323.5
---------- --------- ----------- ------------ ----------- --------
---------- --------- ----------- ------------ ----------- --------
</TABLE>

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

(a) Other Changes included reclassifications, activity related to restructuring
actions and assets of companies acquired.

(b) Additions in 1993 included capitalized leases of $13.6 million.

<PAGE>
SCHEDULE VI

WARNER-LAMBERT COMPANY AND SUBSIDIARIES
ACCUMULATED DEPRECIATION OF PROPERTY, PLANT AND EQUIPMENT
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991

<TABLE>
<CAPTION>
FOREIGN
ADDITIONS CURRENCY OTHER
BALANCE AT CHARGED TO TRANSLATION CHANGES BALANCE
BEGINNING COSTS AND SALES AND ADJUSTMENTS ADD AT END
DESCRIPTION OF YEAR EXPENSES RETIREMENTS ADD (DEDUCT) (DEDUCT)(a) OF YEAR
- -------------------------------------- ---------- ---------- ----------- ------------ ----------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Year ended December 31, 1993:
Buildings........................ $ 260.8 $ 26.9 $ (.6) $ (.7) $ 12.5 $ 298.9
Machinery, furniture and
fixtures....................... 778.2 132.1 (24.0) (17.1) 66.8 936.0
---------- ---------- ----------- ------------ ----------- --------
$1,039.0 $159.0 $ (24.6) $(17.8) $ 79.3 $1,234.9
---------- ---------- ----------- ------------ ----------- --------
---------- ---------- ----------- ------------ ----------- --------
Year ended December 31, 1992:
Buildings........................ $ 247.8 $ 23.0 $ (2.6) $ (7.3) $ (.1) $ 260.8
Machinery, furniture and
fixtures....................... 725.7 125.7 (43.6) (17.7) (11.9) 778.2
---------- ---------- ----------- ------------ ----------- --------
$ 973.5 $148.7 $ (46.2) $(25.0) $ (12.0) $1,039.0
---------- ---------- ----------- ------------ ----------- --------
---------- ---------- ----------- ------------ ----------- --------
Year ended December 31, 1991:
Buildings........................ $ 206.2 $ 21.0 $ (2.3) $ (6.0) $ 28.9 $ 247.8
Machinery, furniture and
fixtures....................... 620.3 108.4 (20.0) (36.6) 53.6 725.7
---------- ---------- ----------- ------------ ----------- --------
$ 826.5 $129.4 $ (22.3) $(42.6) $ 82.5 $ 973.5
---------- ---------- ----------- ------------ ----------- --------
---------- ---------- ----------- ------------ ----------- --------
</TABLE>

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

(a) As a result of the restructuring actions discussed in Note 3 to the
consolidated financial statements, accumulated depreciation was increased
by $108.5 million and $84.9 million in 1993 and 1991, respectively,
reflecting the write-down of assets to their net realizable values.

Note: Depreciation is calculated using estimated useful lives of 20 to 50 years
for buildings, and 3 to 15 years for machinery, furniture and fixtures.

<PAGE>
SCHEDULE VIII

WARNER-LAMBERT COMPANY AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991

<TABLE>
<CAPTION>
ADDITIONS
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND AT END
DESCRIPTION OF YEAR EXPENSES DEDUCTIONS(a) OF YEAR
- ---------------------------------------------------------------- ---------- ---------- ------------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Year ended December 31, 1993:
Allowance for doubtful accounts............................ $ 18.6 $ 2.9 $ 1.0 $ 20.5
Allowance for deferred tax assets.......................... -- 108.9(b) -- 108.9
---------- ---------- ----- -------
$ 18.6 $111.8 $ 1.0 $129.4
---------- ---------- ----- -------
---------- ---------- ----- -------
Year ended December 31, 1992:
Allowance for doubtful accounts............................ $ 15.3 $ 6.3 $ 3.0 $ 18.6
---------- ---------- ----- -------
---------- ---------- ----- -------
Year ended December 31, 1991:
Allowance for doubtful accounts............................ $ 14.4 $ 4.7 $ 3.8 $ 15.3
---------- ---------- ----- -------
---------- ---------- ----- -------
</TABLE>

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

(a) Primarily the write-off of accounts receivable considered uncollectible.

(b) The addition to allowance for deferred tax assets of $108.9 million
reflects $92.0 million for the adoption of Statement of Financial
Accounting Standards (SFAS) No. 109, 'Accounting for Income Taxes,' as of
January 1, 1993, and $16.9 million for 1993 additions (see Note 19 to the
consolidated financial statements).

<PAGE>
SCHEDULE IX

WARNER-LAMBERT COMPANY AND SUBSIDIARIES
SHORT-TERM BORROWINGS
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991

<TABLE>
<CAPTION>
WEIGHTED MAXIMUM AVERAGE WEIGHTED
AVERAGE AMOUNT AMOUNT AVERAGE
BALANCE INTEREST RATE OUTSTANDING OUTSTANDING INTEREST RATE
AT END AT END DURING THE DURING THE DURING THE
OF YEAR OF YEAR(g) YEAR(a) YEAR(b) YEAR(c)(g)
------- ------------- ----------- ----------- -------------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
December 31, 1993:
Notes payable -- banks(d)................. $120.9 9.9% $ 225.7 $ 105.3 9.7%
Commercial paper(e)....................... 507.5 3.3% 507.5 184.4 3.2%
Notes payable -- other.................... 2.6 9.9% 2.6 1.6 11.8%
------- -----------
$631.0 4.6% 631.0 $ 291.3 5.6%
------- -----------
------- -----------
December 31, 1992:
Notes payable -- banks(d)................. $ 44.0 16.9% $ 126.0 $ 73.4 27.6%
Notes payable -- other.................... 1.0 12.1% 1.0 1.0 17.5%
------- -----------
$ 45.0 16.8% 126.1 $ 74.4 27.3%
------- -----------
------- -----------
December 31, 1991:
Notes payable -- banks(d)................. $112.9 20.8% $ 191.9 $ 133.3 12.8%
Commercial paper(e)....................... -- -- 122.3 45.6 6.2%
Notes payable -- other(f)................. .8 12.8% 50.0 31.5 6.3%
------- -----------
$113.7 20.7% 267.3 $ 210.4 10.4%
------- -----------
------- -----------
</TABLE>

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

(a) At the end of any quarter.

(b) Average of month-end balances.

(c) The weighted average interest rate was calculated by relating appropriate
interest expense to monthly aggregate borrowings.

(d) Notes payable -- banks consist primarily of foreign currency short-term
loans, terms of which vary with each agreement.

(e) Commercial paper is issued in the United States with average maturities of
approximately one month and is supported by lines of credit.

(f) Other notes payable primarily include master notes which mature every six
months and are renewable at the option of Warner-Lambert.

(g) High interest rates on certain loans in South America increased the
weighted average interest rates. These rates exclude the effect of foreign
exchange gains attributable to the debt, which tend to offset the higher
interest costs in highly inflationary economies.

<PAGE>
SCHEDULE X

WARNER-LAMBERT COMPANY AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991

The amounts charged to costs and expenses in the consolidated statements of
income are:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1993 1992 1991
-------- -------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Advertising and promotion costs................................................ $1,306.7 $1,278.2 $1,156.2
Depreciation and amortization.................................................. $ 170.4 $ 155.6 $ 135.5
Maintenance and repairs........................................................ $ 110.2 $ 98.1 $ 90.6
</TABLE>

Taxes other than payroll and income taxes, and royalties were not
significant.

<PAGE>
SIGNATURES

PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.

WARNER-LAMBERT COMPANY
Registrant

<TABLE>
<S> <C>
Dated as of March 23, 1994 By /s/ MELVIN R. GOODES
.........................................................
Melvin R. Goodes
Chairman of the Board
and Chief Executive Officer
</TABLE>

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.

<TABLE>
<S> <C> <C>
/s/ MELVIN R. GOODES
By ................................................
Melvin R. Goodes
Chairman of the Board
and Chief Executive Officer
(Principal Executive Officer)
and Director
/s/ ERNEST J. LARINI
By ................................................
Ernest J. Larini
Vice President and Chief
Financial Officer
(Principal Financial Officer)
/s/ WILLIAM F. GILROY
By ................................................
William F. Gilroy
Vice President and Controller
(Principal Accounting Officer) March 23, 1994
/s/ B. CHARLES AMES
By ................................................
B. Charles Ames, Director
/s/ DONALD C. CLARK
By ................................................
Donald C. Clark, Director
/s/ LODEWIJK J. R. DE VINK
By ................................................
Lodewijk J. R. de Vink, Director
/s/ JOHN A. GEORGES
By ................................................
John A. Georges, Director
</TABLE>

<PAGE>

<TABLE>
<S> <C> <C>
/s/ WILLIAM H. GRAY III
By ................................................
William H. Gray III, Director
/s/ WILLIAM R. HOWELL
By ................................................
William R. Howell, Director
/s/ LASALLE D. LEFFALL, JR.
By ................................................
LaSalle D. Leffall, Jr., M.D. Director
/s/ PATRICIA SHONTZ LONGE
By ................................................
Patricia Shontz Longe, Ph.D. Director
/s/ LAWRENCE G. RAWL
By ................................................
Lawrence G. Rawl, Director March 23, 1994
/s/ PAUL S. RUSSELL
By ................................................
Paul S. Russell, M.D. Director
/s/ MICHAEL I. SOVERN
By ................................................
Michael I. Sovern, Director
/s/ KENNETH J. WHALEN
By ................................................
Kenneth J. Whalen, Director
/s/ JOSEPH D. WILLIAMS
By ................................................
Joseph D. Williams, Director
</TABLE>

28
STATEMENT OF DIFFERENCES

The registered trademark shall be expressed as 'r'.
Subscript numerics in chemistry notation shall be expressed as baseline
numerics, e.g., sulfur hexaflouride would be expressed as SF6.

<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- -------
<S> <C> <C>
(3) Articles of Incorporation and by-laws
(a) Restated Certificate of Incorporation of Warner-Lambert Company filed November 10, 1972, as amended
to April 24, 1990 (Incorporated by reference to Warner-Lambert's Current Report on Form 8-K, dated
April 24, 1990).
(b) By-Laws of Warner-Lambert Company, as amended to October 25, 1988 (Incorporated by reference to
Warner-Lambert's Quarterly Report on Form 10-Q for the quarter ended September 30, 1988 (File No.
1-3608)).
(4) Instruments defining the rights of security holders, including indentures
(a) Rights Agreement, dated as of June 28, 1988, and amended as of June 27, 1989, between Warner-Lambert
Company and First Chicago Trust Company of New York, as Rights Agent (Incorporated by reference to
Warner-Lambert's Registration Statement on Form 8-A, dated June 28, 1988, as amended by Form 8,
dated July 5, 1989 (File No. 1-3608)).
(b) Warner-Lambert agrees to furnish to the Commission, upon request, a copy of each instrument with
respect to issues of long-term debt of Warner-Lambert. The principal amount of debt securities
authorized under each such instrument does not exceed 10% of the total assets of Warner-Lambert.
(10) Material contracts
(a) Warner-Lambert Company 1974 Stock Option and Alternate Stock Plan, as amended to November 26, 1991
(Incorporated by reference to Warner-Lambert's Form 10-K for the fiscal year ended December 31,
1991).
(b) Warner-Lambert Company 1983 Stock Option Plan, as amended to November 26, 1991 (Incorporated by
reference to Warner-Lambert's Form 10-K for the fiscal year ended December 31, 1991).
(c) Warner-Lambert Company 1987 Stock Option Plan, as amended to November 26, 1991 (Incorporated by
reference to Warner-Lambert's Form 10-K for the fiscal year ended December 31, 1991).
(d) Warner-Lambert Company 1989 Stock Plan, as amended to November 26, 1991 (Incorporated by reference
to Warner-Lambert's Form 10-K for the fiscal year ended December 31, 1991).
(e) Warner-Lambert Company 1992 Stock Plan (Incorporated by reference to Warner-Lambert's Form 10-K for
the fiscal year ended December 31, 1992).
(f) Warner-Lambert Company Incentive Compensation Plan, as amended to June 26, 1990 (Incorporated by
reference to Warner-Lambert's Quarterly Report on Form 10-Q for the quarter ended June 30, 1990).
(g) Warner-Lambert Company Supplemental Pension Income Plan, as amended to October 29, 1991
(Incorporated by reference to Warner-Lambert's Form 10-K for the fiscal year ended December 31,
1991).
(h) Group Plan Participation by Non-employee Directors (Incorporated by reference to Warner-Lambert's
Form 10-K for the fiscal year ended December 31, 1991).
(i) Warner-Lambert Company Directors' Retirement Plan, as amended to June 26, 1990 (Incorporated by
reference to Warner-Lambert's Quarterly Report on Form 10-Q for the quarter ended June 30, 1990).
(j) Warner-Lambert Excess Savings Plan, formerly Warner-Lambert Supplemental Savings Plan, as amended to
October 29, 1991 (Incorporated by reference to Warner-Lambert's Form 10-K for the fiscal year ended
December 31, 1991).
(k) Warner-Lambert Company Executive Severance Plan, as amended to June 26, 1990 (Incorporated by
reference to Warner-Lambert's Quarterly Report on Form 10-Q for the quarter ended June 30, 1990).
(l) Restricted Stock Plan for Directors of Warner-Lambert Company, as amended to January 28, 1992
(Incorporated by reference to Warner-Lambert's Form 10-K for the fiscal year ended December 31,
1991).
(m) Employment Agreement dated September 24, 1985 between Warner-Lambert Company and Melvin R. Goodes,
Chairman of the Board and Chief Executive Officer, as amended to August 1, 1991 (Incorporated by
reference to Warner-Lambert's Quarterly Report on Form 10-Q for the quarter ended September 30,
1991).
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
- -------
<C> <S> <C>
(n) Employment Agreement effective as of August 1, 1991, between Warner-Lambert Company and Lodewijk J.
R. de Vink, President and Chief Operating Officer (Incorporated by reference to Warner-Lambert's
Quarterly Report on Form 10-Q for the quarter ended September 30, 1991).
(o) Consulting Agreement, dated as of September 1, 1991, between Warner-Lambert Company and Joseph D.
Williams, Director (Incorporated by reference to Warner-Lambert's Form 10-K for the fiscal year
ended December 31, 1991).
(p) Consulting Arrangement between Warner-Lambert Company and B. Charles Ames, Director (Incorporated by
reference to Warner-Lambert's Form 10-K for the fiscal year ended December 31, 1991).
(q) Consulting Arrangement between Warner-Lambert Company and Paul S. Russell, Director (Incorporated by
reference to Warner-Lambert's Form 10-K for the fiscal year ended December 31, 1991).
(r) Global Principles Agreement, dated as of December 10, 1993, between Warner-Lambert Company and Glaxo
Holdings plc.
(s) Global Principles Agreement, dated December 17, 1993, between Warner-Lambert Company and Wellcome
plc.
(12) Computation of Ratio of Earnings to Fixed Charges.
(13) Copy of the Warner-Lambert Company Annual Report for the fiscal year ended December 31, 1993. Such report,
except for those portions thereof which are expressly incorporated by reference herein, is furnished
solely for the information of the Commission and is not to be deemed 'filed' as part of this filing.
(21) Subsidiaries of the registrant.
(23) Consent of Independent Accountants.
</TABLE>

<PAGE>
CONFORMED COPY

GLOBAL PRINCIPLES AGREEMENT

between

WARNER-LAMBERT COMPANY

and

GLAXO HOLDINGS p.l.c.

______________________________

Dated as of December 10, 1993

______________________________

<PAGE>

TABLE OF CONTENTS

PRELIMINARY STATEMENT

ARTICLE I

Definitions
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 1.01. Definitions. . . . . . . . . . . . . 1
SECTION 1.02. Other Definitions. . . . . . . . . . 10
SECTION 1.03. Statutory Provisions . . . . . . . . 11
SECTION 1.04. Schedules. . . . . . . . . . . . . . 11

ARTICLE II

Closing

SECTION 2.01. Closing. . . . . . . . . . . . . . . 11
SECTION 2.02. Action at the Closing of This
Agreement. . . . . . . . . . . . . 12
SECTION 2.03. Other Action in Respect of
U.S. Partnership . . . . . . . . . 12
SECTION 2.04. Subsequent Closings. . . . . . . . . 13

ARTICLE III

Management of JV Entities; Funding

SECTION 3.01. General Manager. . . . . . . . . . . 13
SECTION 3.02. Governing Boards; Membership . . . . 13
SECTION 3.03. Responsibility of the Governing
Boards . . . . . . . . . . . . . . 14
SECTION 3.04. Actions of the Governing Boards. . . 15
SECTION 3.05. Meetings of the Governing
Boards; Notice; Quorum . . . . . . 15
SECTION 3.06. Deadlock . . . . . . . . . . . . . . 15
SECTION 3.07. Subcommittees of the Governing
Boards . . . . . . . . . . . . . . 16
SECTION 3.08. Development Committees . . . . . . . 16
SECTION 3.09. Removal of Representatives . . . . . 17
SECTION 3.10. No Remuneration. . . . . . . . . . . 17
SECTION 3.11. Other Positions of Representatives . 17
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 3.12. Annual Operating Plan. . . . . . . . 17
SECTION 3.13. Funding. . . . . . . . . . . . . . . 18
SECTION 3.14. Deliberations. . . . . . . . . . . . 18
SECTION 3.15. Reserved Matters . . . . . . . . . . 18

ARTICLE IV

Operations; JV Entities

SECTION 4.01. General. . . . . . . . . . . . . . . 18
SECTION 4.02. Establishment of Other
JV Entities. . . . . . . . . . . . 19
SECTION 4.03. Form and Structure of JV Entities. . 19
SECTION 4.04. Management of JV Entities. . . . . . 20
SECTION 4.05. Operations To Be Conducted in
Accordance with Annual Operating
Plan and Direction of Governing
Board. . . . . . . . . . . . . . . 20

ARTICLE V

JV Products

SECTION 5.01. General. . . . . . . . . . . . . . . 21
SECTION 5.02. Ranitidine Products in the
United States . . . . . . . . . . 21
SECTION 5.03. Other Products and/or
Other Countries. . . . . . . . . . 22
SECTION 5.04. Right of First Refusal . . . . . . . 25
SECTION 5.05. Glaxo Marketing Rights . . . . . . . 27
SECTION 5.06. Licenses and Services . . . . . . . 29
SECTION 5.07. Representations and Warranties . . . 32
SECTION 5.08. Non-Compete . . . . . . . . . . . . 33
SECTION 5.09. Japan . . . . . . . . . . . . . . . 34

ARTICLE VI

Related Transactions

SECTION 6.01. Development. . . . . . . . . . . . . 34
SECTION 6.02. Ranitidine OTC; Ownership of NDA;
Milestone Payments . . . . . . . . 35
SECTION 6.03. Services To Be Provided by W-L to
U.S. Partnership in Respect of
Ranitidine OTC Products. . . . . . 35
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 6.04. Other Services To Be Provided
by W-L . . . . . . . . . . . . . . 35
SECTION 6.05. Supply . . . . . . . . . . . . . . . 36
SECTION 6.06. Manufacture of JV Products . . . . . 36
SECTION 6.07. Financial Information; Audit . . . . 37
SECTION 6.08. U.S. Export Controls/
International Boycott. . . . . . . 37
SECTION 6.09. Technology . . . . . . . . . . . . . 38

ARTICLE VII
Further Covenants of W-L

SECTION 7.01. Allocation of Resources. . . . . . . 38
SECTION 7.02. W-L Affiliates . . . . . . . . . . . 38
SECTION 7.03. Safety Information . . . . . . . . . 38
SECTION 7.04. Approvals and Consents . . . . . . . 39
SECTION 7.05. Use of JV Regulatory Documentation . 39
SECTION 7.06. Tax Matters. . . . . . . . . . . . . 39
SECTION 7.07. Further Assurances . . . . . . . . . 39

ARTICLE VIII

Further Covenants of Glaxo

SECTION 8.01. Information Relating to Potential
JV Products . . . . . . . . . . . 40
SECTION 8.02. Regulatory. . . . . . . . . . . . . 40
SECTION 8.03. Glaxo Affiliates. . . . . . . . . . 40
SECTION 8.04. Safety Information. . . . . . . . . 40
SECTION 8.05. Approvals and Consents. . . . . . . 41
SECTION 8.06. Use of JV Regulatory Documentation. 41
SECTION 8.07. Tax Matters . . . . . . . . . . . . 41
SECTION 8.08. Further Assurances. . . . . . . . . 42

ARTICLE IX

Representations and Warranties of W-L

SECTION 9.01. Organization; Good Standing . . . . 42
SECTION 9.02. Authority; No Violation . . . . . . 42
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 9.03. Certificate of Incorporation
and By-Laws . . . . . . . . . . . 43
SECTION 9.04. Certain Litigation. . . . . . . . . 43
SECTION 9.05. Compliance. . . . . . . . . . . . . 43
SECTION 9.06. Finder. . . . . . . . . . . . . . . 44
SECTION 9.07. Transactions Contemplated by W-L
Relevant Agreements . . . . . . . 44

ARTICLE X

Representations and Warranties of Glaxo

SECTION 10.01. Organization; Good Standing . . . . 44
SECTION 10.02. Authority; No Violation . . . . . . 45
SECTION 10.03. Certificate of Incorporation and
Memorandum and Articles of
Association . . . . . . . . . . . 46
SECTION 10.04. Intellectual Property Rights. . . . 46
SECTION 10.05. Certain Litigation. . . . . . . . . 47
SECTION 10.06. Product Liability . . . . . . . . . 47
SECTION 10.07. Compliance. . . . . . . . . . . . . 48
SECTION 10.08. Finder. . . . . . . . . . . . . . . 48
SECTION 10.09. Glaxo Regulatory Documentation. . . 48
SECTION 10.10. Transactions Contemplated by Glaxo
Relevant Agreements . . . . . . . 48

ARTICLE XI

Conditions to Closing

SECTION 11.01. Certain Action. . . . . . . . . . . 49
SECTION 11.02. Governmental Approvals and
Consents. . . . . . . . . . . . . 49
SECTION 11.03. Representations and Warranties. . . 49
SECTION 11.04. Performance of Covenants. . . . . . 50
SECTION 11.05. Authorization of Agreements . . . . 50
SECTION 11.06. Operative Documents . . . . . . . . 51
SECTION 11.07. Certificate of Compliance . . . . . 51
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>

ARTICLE XII

Transfer of JV Interest;
Permitted Transfers

SECTION 12.01. Limitation on Right To Transfer
Parties' Interests. . . . . . . . 51
SECTION 12.02. Permitted Transfers . . . . . . . . 51
SECTION 12.03. Change of Control . . . . . . . . . 53

ARTICLE XIII

Indemnification

SECTION 13.01. Indemnification by the JV
Entities. . . . . . . . . . . . . 55
SECTION 13.02. Indemnification by W-L. . . . . . . 56
SECTION 13.03. Indemnification by Glaxo. . . . . . 56
SECTION 13.04. Indemnification Generally . . . . . 57
SECTION 13.05. Survival of Representations and
Warranties. . . . . . . . . . . . 58

ARTICLE XIV

Term and Termination

SECTION 14.01. Term of Agreement . . . . . . . . . 59
SECTION 14.02. Ranitidine OTC Not Approved . . . . 59
SECTION 14.03. Liquidation; Breach; Optional
Termination . . . . . . . . . . . 61
SECTION 14.04. Continued Arrangements. . . . . . . 63
SECTION 14.05. Winding Up and Liquidation. . . . . 64
SECTION 14.06. Survival of Rights. . . . . . . . . 64

ARTICLE XV

General

SECTION 15.01. Expenses. . . . . . . . . . . . . . 64
SECTION 15.02. Assignment and Binding Effect . . . 65
SECTION 15.03. Inability To Agree upon Value . . . 65
SECTION 15.04. Corporate Names . . . . . . . . . . 65
SECTION 15.05. Governing Law; Jurisdiction;
Consent to Service of
Process; Agent for Service. . . . 65
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 15.06. Notices . . . . . . . . . . . . . . 67
SECTION 15.07. Parties in Interest . . . . . . . . 68
SECTION 15.08. Press Releases. . . . . . . . . . . 68
SECTION 15.09. Headings. . . . . . . . . . . . . . 68
SECTION 15.10. Entire Agreement; Amendment;
Severability; Termination
of Existing Arrangements. . . . . 68
SECTION 15.11. Waiver and Compliance . . . . . . . 69
SECTION 15.12. Confidentiality . . . . . . . . . . 69
SECTION 15.13. Specific Enforcement. . . . . . . . 70
SECTION 15.14. Counterparts. . . . . . . . . . . . 70
</TABLE>

<PAGE>
GLOBAL PRINCIPLES AGREEMENT dated as of December 10, 1993 (the
'Agreement'), by and between WARNER-LAMBERT COMPANY, a Delaware corporation
('W-L') and GLAXO HOLDINGS p.l.c., a company incorporated in England and Wales
('Glaxo').

PRELIMINARY STATEMENT

W-L is engaged in the non-prescription consumer health care products
business. Glaxo or its Affiliates own certain rights in respect of the
pharmaceutical compound Ranitidine, which is currently marketed in prescription
form under the trademark Zantac'r'. W-L and Glaxo desire to agree upon certain
principles for the development and marketing of Ranitidine Products and the
development and marketing of certain other consumer health care products,
initially in the United States and at future dates in other countries throughout
the world. While the specific form of the joint ventures to be implemented may
vary in different countries, it is the intention of the Parties by this
Agreement to agree upon certain principles which will govern the worldwide
strategic development and marketing of all such products.

NOW, THEREFORE, in consideration of the premises and the mutual covenants,
agreements, representations and warranties herein contained, and for other good
and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the Parties, intending to be legally bound, hereby agree as
follows:

ARTICLE I
DEFINITIONS

SECTION 1.01. Definitions. The following capitalized terms shall have the
following definitions:

'Affiliate' with respect to any Person, shall mean any other Person
controlling, controlled by or under direct or indirect common control with such
Person. A Person shall be deemed, for the purposes of this Agreement, to control
a corporation (or other entity) if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of such corporation (or other entity), whether through the ownership of
voting securities, by contract or otherwise. For the purposes of this Agreement,
a JV Entity shall not be deemed to be an Affiliate of W-L or Glaxo.

'Business Day' shall mean a day of the year in which banks are not required
or authorized to close in New York City or in the City of London.

'Closing Documents' shall mean this Agreement, the Development Agreement,
the Partnership Agreement, the Ranitidine OTC License Agreement, the Ranitidine
Rights Agreement, the Standstill Agreement and the W-L Services Agreement.

'Development Agreement' shall mean the Development Agreement to be executed
at the Closing of this Agreement among Glaxo Inc., W-L and the U.S. Partnership
as the same may be amended or modified from time to time.

'FDA' shall mean the United States Federal Food and Drug Administration or
any successor agency of the United States.

'FDCA' shall mean the United States Federal Food, Drug and Cosmetic Act
approved on June 25, 1938, as amended and supplemented.

'Fully Allocated Cost' shall mean all costs, including materials, direct
and indirect labor, services and an appropriate allocation of fixed and variable
overhead expenses, but excluding any intercompany profits relating thereto, the
determination of which shall, in respect of manufacturing, be in accordance with
Schedule 1.01(a), and shall otherwise be as agreed between the Parties or their
Affiliates in the relevant Operative Document or otherwise.

'Glaxo Inc.' shall mean Glaxo Inc., a North Carolina corporation, which is
an indirect wholly owned Affiliate of Glaxo.

'Glaxo OTC' shall mean Glaxo OTC Inc., a Delaware corporation, which is an
indirect wholly owned Affiliate of Glaxo.

<PAGE>
'Glaxo Participant' shall mean, in respect of each JV Entity, Glaxo or such
direct or indirect wholly owned Affiliate of Glaxo as may from time to time be
the partner or other equity participant in such JV Entity in accordance with
this Agreement.

'Glaxo Products' shall mean, as at the Closing of this Agreement, Zantac in
the United States, and shall also have the meanings set forth in Section 5.07.

'Glaxo Regulatory Documentation' shall mean all regulatory documents,
clinical studies and tests in the possession or control of Glaxo or any of its
Affiliates relating to a particular product or compound including, without
limitation, all new drug applications, abbreviated new drug applications, drug
master files, correspondence with appropriate regulatory agencies (registrations
and licenses, regulatory drug lists, advertising and promotion documents)
adverse event files, complaint files and manufacturing records but excluding
proprietary chemical data.

'Glaxo Services' shall mean Glaxo Services Inc., a Nevada corporation,
which is an indirect wholly owned Affiliate of Glaxo.

'Going Concern Value' shall mean the value of a non-prescription consumer
health care product business, or an interest therein as the case may be, as if
such business were freely tradeable in the open market (and, for the avoidance
of doubt, taking into consideration any continuing arrangements pursuant to
Section 14.04 hereof). Such valuation will not reflect either a premium for
control or a discount for lack of marketability. The primary basis for arriving
at such valuation will be commonly employed valuation multiples of selected
non-prescription consumer health care product businesses generally deemed
comparable to such business.

'Governing Board' shall mean, in respect of any JV Entity, the Governing
Board established pursuant to Section 3.02 of this Agreement and the relevant
JV Implementation Agreements to oversee the management of that JV Entity.

'JV Business' shall mean, with respect to any JV Entity in any country, the
business of such JV Entity.

'JV Entity' shall mean, in respect of the United States, the U.S.
Partnership and in respect of any other country, such Person as the Parties may
establish for the purpose of conducting the JV Business in that country and
shall also mean such other Person as the Parties may otherwise establish in
connection with the relevant JV Business.

'JV Implementation Agreement' shall mean, in respect of any JV Entity, the
agreement (or agreements) that establish the structure of the JV Entity and
provide for the JV Business to be conducted in the relevant country, as the same
may be amended or modified from time to time.

'JV Products' shall mean all products developed, marketed, sold or
distributed by any JV Entity pursuant to the arrangements contemplated by this
Agreement and the other Operative Documents.

'JV Regulatory Documentation' shall mean all regulatory documents, clinical
studies and tests in the possession or control of any JV Entity, relating to a
particular product or compound, including without limitation all new drug
applications, abbreviated new drug applications, drug master files,
correspondence with appropriate regulatory agencies (registrations and licenses,
regulatory drug lists, advertising and promotion documents) adverse event files,
complaint files and manufacturing records.

'Launch Date' shall mean, in respect of any JV Product, the date of first
sale of that product by the relevant JV Entity for use or consumption by the
general public (other than sales resulting from regional test marketing);
provided, that if such date is not the first day of a calendar month, the Launch
Date shall mean the first day of the next following calendar month.

'License Agreements' shall mean the license agreements among the Parties,
their Affiliates and the JV Entities or any of them relating to the JV
Businesses, including the Ranitidine OTC License Agreement, as the same may be
amended or modified from time to time.

'Lien' shall mean any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind (including, without limitation, any conditional sales or
other title retention agreement, any lease in the nature thereof and any
agreement to give any security interest).

<PAGE>
'Net Sales' shall mean gross invoice amounts on sales of products to
customers less the following deductions: off invoice (i.e., non-performance
discounts), quantity (including bracket pricing) and cash discount and any other
adjustments, including but not limited to those granted on account of price
adjustments, billing errors, rejected goods, damaged goods, recalls, returns,
rebates, charge-backs and prime vendor rebates, reimbursements or similar
payments granted or given to wholesalers or other distributors, buying groups,
health care insurance carriers or other institutions, freight and insurance
charges billed to the customer, custom or excise duties, sales tax and other
taxes (except income taxes) or duties relating to sales of products, and any
bona fide payment made in respect of sale of products to any governmental or
quasi-governmental body or agency.

'NDA' shall mean a New Drug Application including any amendments or
supplements thereto filed with the FDA pursuant to 21 U.S.C. 355 (1970) or any
regulation thereunder.

'NDA Approval' shall mean the receipt of final approval from the FDA of an
NDA with labeling mutually acceptable to the Parties to make, use and sell in
the United States a subject product.

'Non-U.S. Country' shall mean any country other than the United States.

'Operating Profit or Loss' shall mean, with respect to any JV Entity, (i)
the Net Sales of such JV Entity and any other income of such JV Entity less (ii)
the sum of (x) the Fully Allocated Cost of goods sold by such JV Entity, (y) the
charges to such JV Entity provided for in Sections 5.06, 6.01, 6.03 and 6.04 and
(z) the Fully Allocated Cost of any other expenses of such JV Entity.

'Operative Documents' shall mean the Closing Documents, the JV
Implementation Agreements, the License Agreements, the Supply Agreements and
all ancillary documents referred to herein or therein.

'OTC Classification' shall mean, in respect of any version of a drug
product in any country, all classifications, approvals, permits and consents
necessary to enable such version of a drug product to be sold to consumers
without the necessity of prescription in that country.

'OTC Switch Product' shall mean, in respect of any country, a version of a
Prescription Product which may be sold to consumers without the necessity of
prescription other than a Ranitidine Product.

'Other Ranitidine Products' shall mean, in respect of any country, any
version of a drug product which contains Ranitidine, which may be sold to
consumers without a prescription in that country (other than Ranitidine OTC
Products).

'Partnership Agreement' shall mean the Partnership Agreement to be executed
at the Closing of this Agreement between W-L and Glaxo OTC as the same may be
amended or modified from time to time.

'Party' shall mean W-L or Glaxo or any other Person which becomes a party
to this Agreement.

'Permitted Liens' shall mean (i) any Lien for current taxes not delinquent
or taxes being contested in good faith by appropriate proceedings and (ii) other
Liens incidental to the conduct of the business or the ownership of the property
and assets which were not incurred in connection with the borrowing of money or
the obtaining of advances or credit, and which do not in the aggregate
materially detract from the value of the property or assets or materially impair
the use thereof in the operation of the business.

'Permitted Transfer' shall mean a transfer of all or part of a Party's or
its Affiliates' individual interest in this Agreement, any of the Operative
Documents, any JV Business or any JV Entity or in any entity which holds an
interest therein, made pursuant to and in accordance with Article XII of this
Agreement.

'Person' shall mean any individual or corporation, company, partnership,
trust, incorporated or unincorporated association, joint venture or other entity
of any kind.

'Prescription Product' shall mean, in respect of any country, any product
which is dispensed to consumers only against prescription and which has not been
given an OTC Classification in such country.

'Prescription Ranitidine Products' shall mean, in respect of any country,
any Prescription Product making use of Ranitidine.

<PAGE>
'Ranitidine' shall mean, the pharmaceutical compound N-[2-[[[5-
[(dimethylamino)methyl]-2-furanyl]methyl]thio]ethyl]-N'-methyl-2-nitro-1,
1-ethenediamine and its hydrochloride salt; provided, however, that for the
avoidance of doubt, this definition shall not encompass Ranitidine Bismuth
Citrate.

'Ranitidine Bismuth Citrate' shall mean N-[2-[[[5-[(dimethylamino)methyl]
- -2-furanyl]methylthio]ethyl]-N'-methyl-2-nitro-1, 1-ethenediamine
2-hydroxy-1,2,3-propanetricarboxylate bismuth (3+) complex.

'Ranitidine OTC' shall mean, in the case of a tablet, a formulation
containing less than 150 milligrams of Ranitidine or, in the case of other
presentations, a formulation containing less than the equivalent strength, in
either case in which Ranitidine alone is the active ingredient and having an
initial indication different from the principal indications of the Prescription
Ranitidine Product available in the United States as of the date of this
Agreement (e.g., healing of ulcers).

'Ranitidine OTC License Agreement' shall mean the Agreement to be executed
at the Closing of this Agreement between Glaxo Services and the U.S.
Partnership, as the same may be amended or modified from time to time.

'Ranitidine OTC Products' shall mean, in respect of any country, any drug
product which has been given an OTC Classification in such country and which
contains Ranitidine OTC.

'Ranitidine Products' shall mean Ranitidine OTC Products and Other
Ranitidine Products.

'Ranitidine Rights' shall mean all data, information and other results of
research and studies conducted for the purpose of securing NDA Approval of
Ranitidine OTC Products but excluding proprietary chemical data owned by Glaxo
or any of its Affiliates.

'Ranitidine Rights Agreement' shall mean the Agreement to be executed at
the Closing of this Agreement between W-L, Glaxo Inc., Glaxo OTC and the U.S.
Partnership, as the same may be amended or modified from time to time.

'Ranitidine Supply Agreement' shall mean the Ranitidine supply agreement to
be entered into in accordance with Section 2.03.

'Regulatory Approval' shall mean the receipt of final approval from all
relevant governmental and other authorities to make, use and sell in a relevant
territory a subject product together with all appropriate pricing approvals.

'Sandoz Agreement' shall mean the Amended and Restated Ranitidine License
Agreement between Glaxo Services and Sandoz Pharmaceuticals Corporation, a
Delaware corporation, dated as of October 1, 1991, and the Amended and Restated
Ranitidine Supply Agreement between Glaxo Supply Inc. and Sandoz Pharmaceuticals
Corporation, dated as of October 1, 1991.

'Standstill Agreement' shall mean the Standstill Agreement to be executed
at the Closing of this Agreement between W-L and Glaxo, in the form identified
as Exhibit A in the Supplemental Document Package as the same may be amended or
modified from time to time.

'Supplemental Document Package' shall mean those Schedules and Exhibits the
form of which has been agreed upon and marked for identification by the Parties.

'Supply Agreements' shall mean the bulk ingredient and finished product
supply agreements among the Parties, their Affiliates and, including the
Ranitidine Supply Agreement, the JV Entities or any of them relating to the JV
Businesses as the same may be amended or modified from time to time.

'Taxes' shall mean taxes or other levies and assessments including income,
excise, sales, use, transfer, registration, value added, franchise, capital,
withholding, property, payroll or other governmental levies, including any
penalties or interest thereon.

'Third Party' shall mean any Person other than a Party or an Affiliate
thereof but shall not include any JV Entity.

'United States' or 'U.S.' shall mean the fifty states of the United States
of America, the District of Columbia, Puerto Rico, and any territory thereof and
U.S. military bases worldwide.

'U.S. Partnership' shall mean Glaxo Warner-Lambert OTC G.P., a New York
general partnership to be established at the Closing of this Agreement pursuant
to the terms of the Partnership Agreement.

<PAGE>
'Valid Claim' means a claim which, but for licenses to be granted under the
Ranitidine OTC License Agreement, would be infringed by the U.S. Partnership's
manufacture, use or sale of Ranitidine OTC in any form, and which is in an
unexpired issued patent included within the Patent Rights (as defined in the
Ranitidine OTC License Agreement) which has not been held invalid or
unenforceable by a decision of a court of competent jurisdiction, unappealable
or unappealed within the time allowed for appeal, and which has not been
admitted to be invalid by the owner through reissue or disclaimer. If there
should be two or more decisions which are conflicting with respect to the
invalidity of the same claim, the decision of the higher or highest tribunal
shall thereafter control; however, should the tribunals be of equal dignity,
then the decision or decisions holding the claim valid shall prevail where the
conflicting decisions are equal in number, and the majority of decisions shall
prevail where the conflicting decisions are unequal in number.

'W-L CPR&D' shall mean W-L Consumer Products Research & Development, a
division of W-L, or any successor or additional research and development
division of W-L.

'W-L Participant' shall mean, in respect of each JV Entity, W-L or such of
W-L's direct or indirect wholly owned Affiliates, or W-WCHP, as may from time to
time be the partner or other equity participant in such JV Entity in accordance
with this Agreement.

'W-L Services Agreement' shall mean the Services Agreement to be executed
at the Closing of this Agreement between W-L and the U.S. Partnership, as the
same may be amended or modified from time to time.

'W-WCHP' shall mean any joint venture established in a particular country
pursuant to the W-WCHP Global Principles Agreement.

'W-WCHP Global Principles Agreement' shall mean the Global Principles
Agreement to be entered into between W-L and Wellcome plc, a company
incorporated under the laws of England, a copy of which shall be delivered by
W-L to Glaxo following execution thereof.

'Zantac' shall mean the product containing Ranitidine as sold by Glaxo or
its Affiliates under the Zantac Trademark.

'Zantac Trademark' shall mean (i) the trademark Zantac'r' and the
registrations thereof, (ii) in respect of the United States and the United
Kingdom, the distinctive five-sided form and the colors of the prescription
product sold by Glaxo and its Affiliates under the Zantac'r' trademark in the
United States or the United Kingdom, as the case may be, and (iii) to the extent
that Glaxo, at its sole discretion, agrees to license the same to the relevant
JV Entity or Entities, such other trade dress, brand marks, brand names and
logos relating thereto and such unregistered rights as may exist through use.

<PAGE>
SECTION 1.02. Other Definitions. The following terms are defined in the
Sections indicated:

<TABLE>
<CAPTION>
TERM SECTION
- --------------------------------------------------------------------------------------- -------------
<S> <C>
Acquisition Notice..................................................................... 12.03(a)
Affected Party......................................................................... 12.03(a)
Alternate Representative............................................................... 3.02
Annual Operating Plan.................................................................. 3.12
Change of Control...................................................................... 12.03(a)
Claim.................................................................................. 13.01
Closing................................................................................ 2.01
Closing Date........................................................................... 2.01
Comparable Product..................................................................... 5.05(a)(iii)
Continuation........................................................................... 14.04
Deadlock............................................................................... 3.06
Development Committee.................................................................. 3.08
Effective Date......................................................................... 14.03(a)(iv)
Entitled Party......................................................................... 14.03(b)
Existing Products...................................................................... 14.03(e)
Exited Party........................................................................... 15.04
Expiry Date............................................................................ 5.06(c)(ii)
General Manager........................................................................ 4.04
Glaxo Notice........................................................................... 5.04(a)
Glaxo Offer............................................................................ 5.03(b)
Glaxo Relevant Agreements.............................................................. 10.02
Glaxo Relevant Country................................................................. 5.05(a)(i)
Glaxo Rights........................................................................... 10.04
Identified Party....................................................................... 14.03(a)(i)
Indemnified Party...................................................................... 13.04(a)
Indemnifying Party..................................................................... 13.04(a)
JV Election............................................................................ 5.04(b)
JV Equity.............................................................................. 12.03(a)(x)
Legal Requirements..................................................................... 9.05
Management Fee......................................................................... 6.03
Marketing Notice....................................................................... 5.05(a)(i)
Mass Media............................................................................. 5.05(a)(ii)
NDA Notice............................................................................. 14.02(d)
Non-Affected Party..................................................................... 12.03(a)
Occurrence............................................................................. 10.06(b)
Permits................................................................................ 9.05
Permitted Affiliates................................................................... 5.05(a)
Potential JV Product................................................................... 8.01
Proceedings............................................................................ 9.04
Relevant Country....................................................................... 5.04(a)
Relevant Matters....................................................................... 6.07
Relevant Party......................................................................... 14.03(a)(ii)
Relevant Prescription Product.......................................................... 5.05(b)
Relevant Product....................................................................... 5.05(a)
Representative......................................................................... 3.02
Specified Country...................................................................... 5.03(b)(i)
W-L Relevant Agreements................................................................ 9.02
</TABLE>

SECTION 1.03. Statutory Provisions. References in this Agreement to any
provision of any enactment, statute or any other legislation or to any rules or
regulations promulgated thereunder or other subordinate legislation include any
modification, amendment or re-enactment of that provision for the time being in
force.

<PAGE>
SECTION 1.04. Schedules. References in this Agreement to any Schedule
shall, unless the context otherwise requires, mean the relevant Schedule
contained in the Supplemental Document Package.

ARTICLE II

SECTION 2.01. Closing. The execution of this Agreement, and the subsequent
closing or closings of the transactions contemplated by this Agreement (each
being a 'Closing') shall take place at the offices of either Cravath, Swaine &
Moore, Worldwide Plaza, 825 Eighth Avenue, New York, New York or McKenna & Co.,
Mitre House, 160 Aldersgate Street, London, England or at such other place as
the Parties may agree on a date or dates to be agreed upon by the Parties and,
in the case of such subsequent closing or closings, as promptly as practicable
following the satisfaction or waiver of all of the conditions set forth in
Article XI hereof, but in no event later than 10 Business Days thereafter, or
such later date as the Parties may agree (in respect of each Closing, the
'Closing Date').

SECTION 2.02. Action at the Closing of This Agreement. The Closing of this
Agreement shall take place immediately following the execution and delivery of
this Agreement whereupon:

(a) each of the Parties shall execute and deliver those of the other
Closing Documents to which it is specified to be a party and shall cause
each of their Affiliates and the U.S. Partnership to execute and deliver
the same to the extent that they are specified to be parties thereto;

(b) the U.S. Partnership shall be established by and on the terms set
forth in the Partnership Agreement;

(c) the Governing Board of the U.S. Partnership shall be established
by and on the terms set forth in this Agreement and the Partnership
Agreement;

(d) the Development Committee of the U.S. Partnership shall be
established by and on the terms set forth in this Agreement and the
Partnership Agreement; and

(e) W-L shall, and Glaxo shall cause Glaxo Inc. and Glaxo OTC to,
execute and deliver, and W-L and Glaxo OTC shall cause the U.S. Partnership
to execute and deliver, the Ranitidine Rights Agreement pursuant to which
each of W-L and Glaxo OTC shall acquire a 50% interest in the Ranitidine
Rights and shall contribute their respective 50% interests in the
Ranitidine Rights to the U.S. Partnership.

SECTION 2.03. Other Action in Respect of U.S. Partnership. Prior to the
marketing, sale or distribution of any Ranitidine OTC Product in the United
States and promptly upon the request of W-L the Parties shall, and shall cause
such of their Affiliates and the U.S. Partnership to the extent they are
specified to be parties thereto to, execute and deliver a Ranitidine supply
agreement to be in accordance with the principles set forth in Section 6.05 and
otherwise in such form as shall be negotiated between the Parties.

SECTION 2.04. Subsequent Closings. Subsequent Closings to establish,
pursuant to the terms hereof, additional JV Entities and the Governing Boards
and Development Committees thereof, and to contribute new products to existing
JV Entities, will be held, in accordance with Section 2.01, following
satisfaction of the closing conditions set forth in Article XI hereof in respect
of the relevant JV Entity and/or the relevant product.

ARTICLE III
MANAGEMENT OF JV ENTITIES; FUNDING

SECTION 3.01. General Manager. Subject to the oversight responsibilities of
each Governing Board set forth in Section 3.03, to the requirements of local law
and the rights reserved to the Parties pursuant to Section 3.15, the day-to-day
operations of each JV Entity shall be managed by a General Manager in accordance
with Section 4.04.

SECTION 3.02. Governing Boards; Membership. Each Governing Board shall
consist of six members. In respect of each Governing Board, each of the W-L
Participant and the Glaxo Participant shall, by written notice to the other,
designate three individuals to serve as members (being, in respect

<PAGE>
of that JV Entity, the 'Representatives') of that Governing Board and may from
time to time, by like notice, designate one or more alternate representatives to
act in the absence of any Representative (being, in respect of that JV Entity,
the 'Alternate Representatives'). Notwithstanding any Permitted Transfer
pursuant to Section 12.02(a), all such individuals appointed by the W-L
Participant or the Glaxo Participant shall be directors, officers or senior
employees of W-L or Glaxo, as the case may be, or their respective Affiliates
(excluding, in the case of W-L, W-WCHP). The participation and acts (including,
without limitation, the execution of any document) by any Alternate
Representative shall, for all purposes, be deemed to be the act of the
Representative for which the Alternate Representative is acting and references
herein to 'Representative' shall be construed accordingly. In the event of the
removal, resignation or death of any Representative or Alternate Representative,
the vacancy thereby created shall be filled, by written notice to the W-L
Participant, or the Glaxo Participant as the case may be, by the participant
which designated the Representative or Alternate Representative so removed,
resigning or deceased.

SECTION 3.03. Responsibility of the Governing Boards. Subject to the rights
reserved to the Parties pursuant to Section 3.15, the Governing Board of each JV
Entity shall be responsible for overseeing the JV Business and the operations of
that JV Entity and shall, in particular, have sole jurisdiction to approve the
following matters:

(a) the Annual Operating Plan for the JV Entity;

(b) material transactions between the JV Entity and W-L, Glaxo, or any
of their respective Affiliates, other than any transaction contemplated by
this Agreement, the relevant JV Implementation Agreements or any other
Operative Document;

(d) material acquisitions or divestitures by the JV Entity;

(e) appointments and removals of the General Manager and the other
senior officers or managers of the JV Entity and the scope of their
responsibilities;

(f) material capital expenditures by the JV Entity;

(g) subject to Section 3.13 and the terms of the relevant JV
Implementation Agreement, all proposals for the continuing financing of the
JV Entities;

(h) any distributions by the JV Entity;

(i) any license to be granted by any JV Entity to a Third Party or by
a Third Party to any JV Entity or the appointment by any JV Entity of any
distributor (other than W-WCHP); and

(j) such other matters as may be mutually agreed between the Parties
or which are specified in any Operative Document to be subject to such
approval.

SECTION 3.04. Actions of the Governing Boards. Each Governing Board shall
act only upon the unanimous written consent of the Representatives without a
meeting or upon the majority vote of the Representatives present at a duly
convened meeting thereof at which at least a quorum of the Representatives is
present and in respect of which at least one Representative appointed by each of
the W-L Participant and the Glaxo Participant voted in favor of the matter under
consideration.

SECTION 3.05. Meetings of the Governing Boards; Notice; Quorum. Meetings of
each Governing Board shall, unless otherwise determined by it, be held at least
quarterly on such dates as the relevant Governing Board may determine. In
addition, any Representative may call a meeting of the Governing Board of which
it is a member by giving written notice of such meeting (which may be waived by
the Persons who would otherwise receive such notice) to each of the other
Representatives (to the address of the W-L Participant or the Glaxo Participant
appointing such Representative) at least ten Business Days prior to the meeting
or such lesser period as to which all the Representatives may agree. Meetings
of each Governing Board may consist of a conference between Representatives who
are not all in one place, but in which each is able (directly or by telephonic
communication) to speak to the others, and to be heard by each of the others.
The presence of not less than four Representatives shall be necessary to
constitute a quorum for the transaction of business at any meeting of a
Governing Board.

<PAGE>
SECTION 3.06. Deadlock. If any Governing Board is unable to agree on a
course of action at a duly convened meeting at which at least a quorum of
Representatives is present (the 'Deadlock'), then the Chief Executive Officers
of W-L and Glaxo shall meet to attempt to resolve the Deadlock. If the Deadlock
is not resolved within 45 calendar days of the Governing Board meeting at which
such Deadlock arose, then, unless the relevant Governing Board otherwise agrees,
no action will be taken with respect to the matter which is the subject of the
Deadlock. In the event that the Deadlock relates to any proposed Annual
Operating Plan, then the relevant JV Business will continue to be operated on
the basis of the Annual Operating Plan last approved by the relevant Governing
Board.

SECTION 3.07. Subcommittees of the Governing Boards. Each Governing Board
may establish one or more subcommittees to advise it on such specific projects
or matters as shall be requested by the relevant Governing Board or to act on
such projects or matters as shall be delegated by action of the relevant
Governing Board to such subcommittees; provided, however, that representation of
each of the W-L Participant and the Glaxo Participant on each subcommittee shall
be equal. Subcommittees shall conduct their business on such terms as the
relevant Governing Board may determine.

SECTION 3.08. Development Committees. (a) Each JV Entity may establish a
committee to coordinate the development activities undertaken by the W-L
Participant, the Glaxo Participant or their respective Affiliates in connection
with the business of the JV Entity (each a 'Development Committee'). Each
Development Committee shall consist of eight members. In respect of each
Development Committee, the W-L Participant and the Glaxo Participant shall, by
written notice to the other, designate four individuals each to serve as members
on that committee. Notwithstanding any Permitted Transfer pursuant to Section
12.02(a), all such individuals appointed by the W-L Participant or the Glaxo
Participant shall be directors, officers or senior employees of W-L or Glaxo, as
the case may be, or their respective Affiliates (excluding, in the case of W-L,
W-WCHP). In the event of the removal, resignation or death of any member, the
vacancy thereby created shall be filled, by written notice to the W-L
Participant or the Glaxo Participant, as the case may be, by the participant who
designated the member so removed, resigning or deceased. Each Development
Committee shall conduct its business as it sees fit and shall report to the
relevant Governing Board on a regular basis or as that Governing Board may
direct. Each Development Committee shall have only those powers to bind the
relevant JV Entity as the Governing Board of that JV Entity may grant it, and
such Governing Board shall have absolute discretion as to whether to accept and
follow any reports or recommendations submitted by the Development Committee.

(b) At reasonable intervals, and in any event at least once in each
calendar year, each Development Committee shall meet to discuss and identify
potential Glaxo OTC Switch Products or Ranitidine Products for the relevant
country and shall prepare and present to the relevant Governing Board a report
thereon, and the Parties shall consult and cooperate fully with each Development
Committee in respect of such process; provided, however, that Glaxo shall not be
required to offer any OTC Switch Product or Ranitidine Product to any JV Entity
except pursuant to the provisions of Article V.

SECTION 3.09. Removal of Representatives. In respect of any JV Entity, the
W-L Participant and the Glaxo Participant may at any time, by written notice to
the other, remove (with or without cause) one or more of the members of the
Governing Board, any subcommittee thereof or the Development Committee
designated by it and may, by like notice, designate new members to serve in
their place.

SECTION 3.10. No Remuneration. Unless the Parties otherwise agree, no
Person shall be entitled to any fee, remuneration or compensation from any JV
Entity in connection with their serving as a member of any Governing Board, any
subcommittee thereof or any Development Committee.

SECTION 3.11. Other Positions of Representatives. Any Person may act in one
or more of the capacities of Representative, Alternate Representative, member of
any subcommittee or of any Development Committee or officer, director, manager
or employee of any JV Entity or any Party or any Affiliate of any Party,
notwithstanding that they act in any other such capacity.

SECTION 3.12. Annual Operating Plan. The W-L Participant in each JV Entity
shall cause to be submitted to the Governing Board of that JV Entity, not later
than December 1 (or such other date as the Parties may agree) in each year, for
review and approval, an annual operating plan for the forthcoming calendar year
covering, among other things, projections and budgets with respect to sales,

<PAGE>
operating and capital expenditures, financing, development and marketing (in
respect of each JV Entity, as so reviewed and approved, the 'Annual Operating
Plan'); provided, however, that Glaxo shall cause the proposed Annual Operating
Plan in respect of the U.S. Partnership for the calendar year ending on December
31, 1994, an outline draft of which is identified as Exhibit B in the
Supplemental Document Package, to be submitted by Glaxo OTC to the Governing
Board of the U.S. Partnership as promptly as practicable after the Closing of
this Agreement.

SECTION 3.13. Funding. W-L and Glaxo hereby agree to contribute, or to
cause the W-L Participant or the Glaxo Participant, as the case may be, to
contribute, in accordance with and subject to sound commercial principles,
equally (or as the Parties or such participants may otherwise agree), such funds
as may be necessary for the conduct of the relevant JV Business whether for
working capital or capital expenditures. All such funds shall, unless the
Parties otherwise agree, be contributed to the relevant JV Entity as additional
equity.

SECTION 3.14. Deliberations. The deliberations of each Governing Board,
Development Committee and each subcommittee thereof shall not extend to any
business activity of the Parties other than as may be necessary to perform their
responsibilities in connection with the relevant JV Business.

SECTION 3.15. Reserved Matters. Notwithstanding any other provision of this
Agreement or the other Operative Documents, and without prejudice to any other
such provision requiring the consent or agreement of both Parties, the following
matters shall be subject to the agreement of both Parties:

(a) expansion of the JV Business into any new country; and

(b) all prices for the sale of products between, or the provision of
services by either of, the Parties (or their Affiliates), on the one hand,
and any JV Entity, on the other hand, or between any two or more JV
Entities, with respect to the JV Businesses.

ARTICLE IV
OPERATIONS; JV ENTITIES

SECTION 4.01. General. The businesses contemplated by this Agreement and
by the other Operative Documents shall be implemented by JV Entities to be
established from time to time by the Parties in accordance with this Agreement.

SECTION 4.02. Establishment of Other JV Entities. Following (i) acceptance
by W-L, on behalf of the relevant JV Entity (formed or to be formed), of a Glaxo
Offer pursuant to Section 5.03, or (ii) the making by W-L of a JV Election
pursuant to Section 5.04(b), the Parties shall, if necessary, promptly establish
a JV Entity in the relevant Non-U.S. Country in order to conduct the JV Business
which is the subject of such acceptance or election in accordance with this
Article IV (unless, taking into account all relevant matters including those
set forth in Section 4.03(a), the Parties agree that a JV Entity in another
country should conduct such business).

SECTION 4.03. Form and Structure of JV Entities. The Parties agree that:

(a) the nature of the entity constituting each JV Entity shall be
determined by the Parties taking into consideration relevant tax,
accounting and legal issues;

(b) subject to Article XII, the equity of the U.S. Partnership shall
be owned by W-L and Glaxo OTC in the proportions provided in the
Partnership Agreement;

(c) subject to Article XII, the equity of each other JV Entity shall
be owned equally by W-L (or such of its direct or indirect wholly owned
Affiliates, or W-WCHP provided the requirements set forth in Section
12.02(b) are satisfied, as W-L may nominate) and Glaxo (or such of its
direct or indirect wholly owned Affiliates as Glaxo may nominate) and,
subject to such principle, the Parties shall use their reasonable efforts
to organize each such entity in such manner as will permit it to be
classified for U.S. Federal income tax purposes as a partnership or
otherwise permit it to avoid being classified as an 'uncontrolled Section
902 corporation' with respect to W-L within the meaning of Section
904(d)(2)(E)(i) of the Internal Revenue Code of 1986, as amended; provided,
however, that such action shall not, in Glaxo's reasonable judgment, have
an adverse financial effect on Glaxo or any of its Affiliates;

<PAGE>
(d) the Operating Profit and Loss with respect to each JV Entity shall
be shared equally by the Parties, and, to the extent necessary or
appropriate to achieve that objective, adjustments shall be made to the
interests of the W-L Participant and the Glaxo Participant in the profit or
loss of the JV Entity so as to take into account any amounts in excess of
Fully Allocated Cost realized by either Party (or any of its Affiliates)
from the supply of goods or services to, or use of property by, the JV
Entity, other than the charges provided for in Sections 5.06, 6.01, 6.02,
6.03 and 6.04, and after off setting such amounts by any fees, commissions,
allowances or other payments made pursuant to Section 6.05 in respect of
such supply of goods or services, or use of property, by such Party (or any
of its Affiliates). In addition, to the extent necessary to fully achieve
this objective, such adjustments as are necessary shall be made to such
amounts, fees, commissions, allowances or other payments;

(e) the amounts to be charged by the Parties and their Affiliates to
each JV Entity in respect of management fees and royalty payments shall be
determined in accordance with Sections 5.06(d) and 6.04 except that such
amounts, with respect to the U.S. Partnership, shall be determined in
accordance with Sections 5.06(c) and 6.03; and

(f) the membership of all statutory or legal governing bodies of each
JV Entity shall be kept to the minimum permitted by all applicable laws (or
as the relevant Governing Board may otherwise determine); provided,
however, that the relevant W-L Participant and Glaxo Participant shall be
equally represented on each such governing body.

SECTION 4.04. Management of JV Entities. The W-L Participant shall
nominate, subject to the approval of the relevant Governing Board pursuant to
Section 3.03(e), a General Manager of each JV Entity who will have day-to-day
operational responsibility for such JV Entity (each a 'General Manager').

SECTION 4.05. Operations To Be Conducted in Accordance with Annual
Operating Plan and Direction of Governing Board. The day-to-day operations of
each JV Entity shall be conducted by its General Manager in accordance with the
Annual Operating Plan and otherwise in accordance with the directions of the
relevant Governing Board. For the avoidance of doubt, the Parties agree that
none of the actions and matters referred to in Sections 3.03 and 3.15 shall be
taken without the prior consent of the relevant Governing Board or the Parties,
as the case may be, and the Parties shall ensure that the General Manager of
each JV Entity is fully aware of the actions which require such prior consent
and that his or her authority does not extend to such transactions or matters
and shall ensure that the General Manager does not take any such actions.

ARTICLE V
JV PRODUCTS

SECTION 5.01. General. Except as provided by this Article V, Glaxo and its
Affiliates shall be free to develop, manufacture, market, sell or distribute any
products in any country.

SECTION 5.02. Ranitidine Products in the United States. (a) At the Closing
of this Agreement W-L shall, and Glaxo shall cause Glaxo OTC to, establish,
pursuant to the Partnership Agreement, the U.S. Partnership for the purposes of
developing, manufacturing, marketing, selling and distributing Ranitidine OTC
Products in the United States.

(b) Glaxo may, in its sole discretion, from time to time offer to grant to
W-L on behalf of the U.S. Partnership the marketing, selling and distribution
rights (and, if the Parties agree, the development and manufacturing rights)
with respect to Other Ranitidine Products in the United States. In the event
that Glaxo decides, in its sole discretion, to offer to the U.S. Partnership the
rights to any such product, Glaxo shall offer, by written notice to W-L, to
grant to the U.S. Partnership the exclusive right (subject to Section 5.05(a)
and as provided by the Sandoz Agreement) to market, sell and distribute such
product in the United States (and, if the Parties agree, to develop and
manufacture such product therefor) and to grant the U.S. Partnership a license
in accordance with Section 5.06(a) and (b) in respect thereof, in each case in
consideration for the royalties payable in respect of the license to be
negotiated in accordance with Section 5.06(d) and it shall be a term of such
offer that W-L shall be

<PAGE>
entitled to provide the U.S. Partnership with services, and to be reimbursed
therefor, in each case in accordance with Section 6.04.

(c) Following the making of an offer in accordance with Section 5.02(b),
W-L shall as soon as reasonably practicable and in any event within six months
either accept or decline such offer on behalf of the U.S. Partnership by written
notice to Glaxo, and:

(i) Glaxo shall, during such six month period, provide W-L with such
further information relating to the matters which are the subject of such
offer (including copies of all Glaxo Regulatory Documentation relating to
the relevant product which is the subject of such offer) as W-L may
reasonably request and shall update such information promptly from time to
time;

(ii) in the event of such offer being accepted by W-L, W-L, on behalf
of the U.S. Partnership, and Glaxo shall use their best efforts to
negotiate and execute as soon as reasonably practicable and in any event
within three months the relevant Operative Documents (to be in accordance
with the principles referred to in Section 5.03(b), Article VI and
otherwise as the Parties may agree); and

(iii) in the event of such offer being declined by W-L, W-L on behalf
of the U.S. Partnership, shall at the time the offer is declined provide
Glaxo with a full statement of reasons for declining such offer and shall
afford Glaxo the opportunity of discussing fully such reasons for refusal.

(d) Except as provided by Section 5.05(a) or as provided by the Sandoz
Agreement, Glaxo shall not, and shall ensure that its Affiliates do not, market,
sell or distribute or grant any license or other similar right to any Third
Party to market, sell or distribute any Ranitidine Product in the United States.

SECTION 5.03. Other Products and/or Other Countries. (a) General. Glaxo
may, in its sole discretion, from time to time offer to W-L to grant to a JV
Entity or Entities (formed or to be formed) in a particular country the
marketing, selling and distribution rights (and, if the Parties agree, the
development and manufacturing rights) with respect to a particular Ranitidine
Product in a Non-U.S. Country or any OTC Switch Product.

(b) The Glaxo Offer. If Glaxo desires to grant to any Third Party any right
to market, sell or distribute:

(i) any Ranitidine Product in any Non-U.S. Country other than the
countries set forth on Schedule 5.03(b)(i) (the 'Specified Countries') or
under the terms, as at the date of this Agreement, of the agreements set
forth on Schedule 5.03(d); or

(ii) any OTC Switch Product in any country other than the Specified
Countries;

Glaxo shall offer, by written notice to W-L (the 'Glaxo Offer'), to grant to a
JV Entity or Entities (formed or to be formed) the exclusive right (subject to
Section 5.05(a)) to market, sell and distribute such product in the relevant
country (and, if the Parties agree, to develop and manufacture such product
therefor) and to grant such JV Entity or Entities a license in accordance with
Section 5.06(a) and (b) in respect thereof, in each case in consideration for
the royalties payable in respect of the license to be negotiated in accordance
with Sections 5.06(d) and it shall be a term of such offer that W-L shall be
entitled to provide the relevant JV Entity or Entities with services, and to be
reimbursed therefor, in each case in accordance with Section 6.04; provided,
however, that no Glaxo Offer shall be required to be made, and the restrictions
in Sections 5.03(d) and 5.04 hereof shall not apply, if:

(x) at the time that a Glaxo Offer would be required to be made (or,
if Section 5.04(a)(ii) is applicable, at the time that a Glaxo Notice would
be required to be made) W-L or any of its Affiliates or any Third Party on
their behalf (other than pursuant to a license under which W-L or its
Affiliates are only entitled to receive royalties and otherwise only have
rights consistent with passive license arrangements) are developing,
manufacturing, marketing, selling or distributing (or have entered into any
agreement, other than such a license, to do the same with respect to) any
non-prescription product in such country which would in the reasonable
opinion of Glaxo directly compete with the Ranitidine Product or OTC Switch
Product which is the subject of the Glaxo Offer or the Glaxo Notice as the
case may be, it being agreed by the Parties that a non-prescription product
will directly compete with a Ranitidine OTC Product only if it contains an
H2 antagonist or a proton pump inhibitor and except as aforesaid, if the
Parties cannot agree whether any such

<PAGE>
non-prescription product will directly compete with a Ranitidine Product or
an OTC Switch Product the Parties shall seek to resolve the issue by
negotiation; and

(y) Glaxo shall have notified W-L in writing that a Glaxo Offer (or,
if Section 5.04(a)(ii) is applicable, a Glaxo Notice) would be made but for
the terms of paragraph (x) of this proviso and W-L shall not have
undertaken in writing to Glaxo, within three months of receipt of such
written notice, to terminate the development, manufacturing, marketing,
sale or distribution of any such competing product prior to the Launch Date
for the relevant Ranitidine Product or OTC Switch Product.

(c) Acceptance of Glaxo Offer. Following the making of a Glaxo Offer, W-L
shall as soon as reasonably practicable, and in any event within six months,
either accept or decline such offer on behalf of the relevant JV Entity or
Entities by written notice to Glaxo, and:

(i) Glaxo shall, during such six-month period, provide W-L with such
further information relating to the matters which are the subject of the
Glaxo Offer (including copies of all Glaxo Regulatory Documentation
relating to the relevant product which is the subject of the Glaxo Offer)
as W-L may reasonably request and shall update such information promptly
from time to time; and

(ii) in the event of the Glaxo Offer being accepted by W-L, W-L and
Glaxo shall use their best efforts to negotiate and execute as soon as
reasonably practicable, and in any event within three months, the relevant
Operative Documents (to be in accordance with the principles referred to in
Section 5.03(b), Article VI and otherwise as the Parties may agree); or

(iii) in the event of the Glaxo Offer being declined, or not being
accepted by W-L within six months of the Glaxo Offer, Glaxo or its
Affiliates shall then, and only then, be entitled to grant a license, on
terms no more favorable than those last offered to W-L pursuant to this
Section 5.03, to a Third Party to develop, manufacture, market, sell or
distribute the product which is the subject of the Glaxo Offer in the
country referred to therein.

(d) Restrictions on Glaxo and Glaxo Affiliates. Except as provided in
Section 5.05(a) or under the terms, as at the date of this Agreement, of the
agreements set forth on Schedule 5.03(d), Glaxo shall not and shall ensure that
its Affiliates do not themselves market, sell or distribute without the prior
written consent of W-L, and, except as further provided in Section 5.03(c)(iii)
and Section 5.04, Glaxo shall not and shall ensure that its Affiliates do not
grant any license or other similar right to any Third Party any rights to
market, sell or distribute:

(i) any Ranitidine Product in any Non-U.S. Country other than the
Specified Countries; or

(ii) any OTC Switch Product in any country other than the Specified
Countries;

SECTION 5.04. Right of First Refusal. (a) The Glaxo Notice. If:

(i) following the making of a Glaxo Offer which is not accepted by W-L
pursuant to Section 5.03(c), Glaxo desires to grant pursuant to Section
5.03(c)(iii) to any Third Party the right to market, sell or distribute the
products which are the subject of the Glaxo Offer in the country referred
to in the Glaxo Offer on terms more favorable than those last offered to
W-L pursuant to Section 5.03; or

(ii) Glaxo desires to grant a license to any Third Party to market,
sell or distribute any Ranitidine Product or OTC Switch Product in any
Specified Country;

Glaxo shall first give written notice (the 'Glaxo Notice') to W-L specifying the
relevant country ('Relevant Country'), a description of the products intended to
be marketed in such country and in respect of which such license is intended to
be granted and the principal terms on which such license is proposed to be
granted and Glaxo shall, and shall ensure that its Affiliates, only grant such a
license if permitted to do so by Section 5.04(d).

(b) The JV Election. W-L shall as soon as reasonably practicable, and in
any event within one month of receipt of a Glaxo Notice (if the Glaxo Notice is
given pursuant to Section 5.04(a)(i)) or three months of receipt of a Glaxo
Notice (if the Glaxo Notice is given pursuant to Section 5.04(a)(ii)), by notice
in writing to Glaxo, either elect that the marketing, sale and distribution of
the products specified in the Glaxo Notice in the Relevant Country shall be
exclusively conducted by a JV Entity (the 'JV

<PAGE>
Election') or waive its right to make such an election. Following the making of
a JV Election, the Parties shall use their best efforts to negotiate and execute
as soon as reasonably practicable, and in any event within three months,
Operative Documents having the same principal terms as those proposed in the
Glaxo Notice and otherwise as W-L and Glaxo shall agree.

(c) Information. Following the giving of a Glaxo Notice, Glaxo shall,
during the period in which W-L may make a JV Election pursuant to Section
5.04(b) but has not done so or waived its right to do so, provide W-L with such
further information relating to the matters required to be included therein
(including copies of all Glaxo Regulatory Documentation relating to the relevant
product which is the subject of the Glaxo Notice) as W-L may reasonably request
and shall update such information promptly from time to time.

(d) Glaxo's Rights If No JV Election. If W-L shall waive its right to make
a JV Election in accordance with Section 5.04(b) or, in any event, if following
the expiry of the one or three month period referred to in Section 5.04(b) W-L
shall not have made a JV Election, Glaxo and its Affiliates shall then, and only
then, be free to license (on terms no more favorable than those set forth in the
Glaxo Notice) the marketing, sale and distribution rights to the products
specified in the Glaxo Notice in the Relevant Country; provided, however, that
such marketing, selling or distribution commences within two years of (x) such
waiver or (y) the expiry of such one or three month period, as the case may be,
or such longer period as may be necessary solely because of any regulatory
delays not attributable to any omission, negligence or otherwise due to a lack
of reasonable diligence by Glaxo or the proposed licensee.

SECTION 5.05. Glaxo Marketing Rights. (a) Notwithstanding anything in this
Article V to the contrary, Glaxo, any direct or indirect wholly owned Affiliate
of Glaxo, any Affiliate set forth on Schedule 5.05(a) hereof and any future
Affiliate of Glaxo which is not a wholly owned Affiliate of Glaxo and which has
not been established and is not being used for the purpose of circumventing the
restrictions of this Agreement on the grant of licenses by Glaxo and its
Affiliates to Third Parties (all such Affiliates being 'Permitted Affiliates')
shall each be free to itself market, sell or distribute in the United States or
in any Non-U.S. Country, a version of a drug product (the 'Relevant Product')
having the same indications or dosage strength as a then existing Prescription
Product of Glaxo or its Affiliates marketed in the relevant country (the
'Relevant Prescription Product') if the Relevant Product is given an OTC
Classification in the relevant country and provided, however, that:

(i) Glaxo shall first have given written notice (a 'Marketing Notice')
to W-L of its intention so to market, sell or distribute the Relevant
Product, giving details of the Relevant Product including its indications,
dosage strength, brand names, tradenames and trademarks and the relevant
country (the 'Glaxo Relevant Country') not less than 90 calendar days prior
to the commencement of such marketing, selling or distribution;

(ii) such marketing, sale or distribution shall not involve the use of
Mass Media directed to consumers unless, in the Glaxo Relevant Country, use
of Mass Media with respect to the Relevant Prescription Product has been
lawfully carried out by Glaxo or its Affiliates prior to the Relevant
Product being given an OTC Classification in that country and such use of
Mass Media was not carried out with the purpose of avoiding the
restrictions of this paragraph (ii); for the purposes of this Section
5.05(a)(ii) and Section 5.05(b), 'Mass Media' shall mean television, radio,
outdoor advertising, direct mail or lay newspapers, magazines or journals;

(iii) in the event that a JV Entity has begun developing a Ranitidine
Product (if the Relevant Product is a Ranitidine Product) or (in any other
case) a product containing the same principal active ingredients as the
Relevant Product ('Comparable Products') for marketing, sale or
distribution in the Glaxo Relevant Country but has not begun marketing,
selling or distributing the Comparable Product in such country:

(A) W-L and Glaxo shall discuss in good faith the viability of
developing or continuing to develop a Ranitidine Product or a Comparable
Product, as the case may be, for marketing, sale or distribution by a JV
Entity in the Glaxo Relevant Country and/or the establishment of a
co-promotion or co-marketing arrangement with respect to the marketing,
sale or distribution of the Relevant Product in the Glaxo Relevant
Country,

<PAGE>
(B) if the Parties fail to agree on satisfactory arrangements for
such development of a Ranitidine Product or a Comparable Product or such
a co-promotion or co-marketing arrangement with respect to the Relevant
Product, Glaxo shall first have reimbursed, on an after-tax basis, (X)
all relevant JV Entities and/or W-L and the W-L Participant (with the
principle being that W-L and the W-L Participant be made whole) for all
costs (including reimbursement costs) expended or incurred by them or
for which they are, or will with the passage of time become, liable in
connection with the development of Ranitidine Products or Comparable
Products, as the case may be, specifically for marketing, sale or
distribution in the Glaxo Relevant Country and (Y) if the Marketing
Notice relates to Ranitidine Products in the United States, W-L for all
milestone payments made by W-L to Glaxo Inc. pursuant to the Ranitidine
Rights Agreement, and

(C) immediately following the reimbursement of development costs
and, if relevant, milestone payments in respect of any product pursuant
to clause (B) above, any license granted to any JV Entity in respect of
such product shall terminate without further action of the Parties;

(iv) in the event that a JV Entity shall have commenced marketing,
selling or distributing Ranitidine Products (if the Relevant Product is a
Ranitidine Product) or a Comparable Product (in any other case) in the
Glaxo Relevant Country, and without prejudice to Glaxo's and its Permitted
Affiliates' rights to market, sell or distribute the Relevant Product in
the Relevant Country, W-L and Glaxo shall discuss and negotiate in good
faith arrangements with respect to the marketing, sale and distribution of
the Relevant Product and the relevant Ranitidine Product or the Comparable
Product, as the case may be, in the Glaxo Relevant Country including the
establishment of co-promotion or co-marketing arrangements with respect to
such products; and

(v) in the event that a JV Entity shall have commenced marketing,
selling or distributing Ranitidine Products (if the Relevant Product is a
Ranitidine Product) or Comparable Products (in any other case), the
Relevant Product shall only be marketed, sold or distributed (by Glaxo or
its Permitted Affiliates) under trademarks, trade dress, brand marks, brand
names and logos being used by Glaxo or its Affiliates in respect of their
prescription business in the Relevant Country as it relates to the Relevant
Prescription Product or such other trademarks, trade dress, brand marks,
brand names or logos which are different than, and not confusingly similar
to, those granted to the JV Entity.

(b) In the event that Glaxo intends that it or any Permitted Affiliate will
market, sell or distribute any Relevant Product pursuant to Section 5.05(a) and
such product would be suitable for promotion by Mass Media but is not permitted
to be so promoted by Section 5.05(a)(ii), W-L and Glaxo shall discuss in good
faith the desirability of establishing a co-promotion or co-marketing
arrangement in respect of that product.

(c) For the avoidance of doubt, the provisions of this Section 5.05 do not
in any way apply to or restrict the marketing, selling or distribution by Glaxo
or any of its Affiliates on or after the date of this Agreement in any Specified
Country except to the extent that a JV Entity is developing, marketing, selling
or distributing an OTC version of the Relevant Prescription Product in any such
Specified Country.

SECTION 5.06. Licenses and Services. (a) Grant of License. In respect of
each country where any products are to be developed, manufactured, marketed,
sold or distributed by a JV Entity, Glaxo shall promptly on request by W-L
grant, or cause its Affiliates to grant, to the relevant JV Entity or JV
Entities an exclusive license (even as to Glaxo and its Affiliates, but in any
event subject to Section 5.05(a) but subject to the rights, if any, granted by
the terms, as at the date hereof, of the Agreements set forth on Schedule
5.03(d) or the Sandoz Agreement):

(i) to use, in the non-prescription health care market, all patent and
other intellectual property rights owned by Glaxo or any of its Affiliates
as may be necessary for the development, manufacture, marketing, sale and
distribution of such products by or on behalf of the relevant JV Entity or
JV Entities; and

<PAGE>
(ii) where any such product is a Ranitidine Product, to use the Zantac
Trademark (or, if the Zantac Trademark is not used in that country, the
prescription trademark so used in that country) in connection with
Ranitidine Products in the non-prescription health care market in the
relevant country; provided, however, that Glaxo shall not be required so to
grant or to cause the grant of an exclusive license to use in the
non-prescription health care market the Zantac Trademark (or such other
prescription trademark) in respect of any Non-U.S. Country if it can
demonstrate, to the reasonable satisfaction of W-L on behalf of the
relevant JV Entity (formed or to be formed), a compelling commercial reason
why such trademark should not be used in such Non-U.S. Country, in which
case, Glaxo shall not itself use the Zantac Trademark and shall not grant
to any Person a license to use the Zantac Trademark in connection with the
marketing, sale or distribution of any Ranitidine Product in the relevant
Non-U.S. Country.

(b) Terms of License. Each license shall provide for the payment by the
relevant JV Entities of royalties to be determined in accordance with Sections
5.06(c) and (d), shall continue until terminated in accordance with this
Agreement (under Section 5.05(a)(iii)(C) or Article XIV) and shall otherwise be
on such terms as Glaxo may in good faith offer to W-L or otherwise as the
Parties may agree; and provided, however, that unless Glaxo otherwise agrees, no
JV Entity shall promote, sample or sell JV Products through marketing channels
principally targeted at physicians, other medical practitioners or pharmacists
in the relevant country.

(c) Royalties Payable by the U.S. Partnership in Respect of Ranitidine OTC.
The Parties agree that in consideration for the grant, in accordance with
Sections 5.06(a) and (b), of a license by Glaxo Services to use patents and the
Zantac Trademark in connection with the development, manufacture, marketing,
sale and distribution of Ranitidine OTC and Ranitidine OTC Products in or in
respect of the United States, the U.S. Partnership and/or any other relevant JV
Entities shall pay to Glaxo Services a royalty at the following rates:

(i) in respect of the period beginning on the Launch Date of a
Ranitidine OTC Product to (but not including) the first anniversary
thereof, 15% of the U.S. Partnership's Net Sales of Ranitidine OTC
Products;

(ii) in respect of the period beginning on the date of the first
anniversary of such Launch Date to (but not including) the date upon which
both of Glaxo's U.S. patents (including all divisions, extensions,
reissues, renewals, continuations and continuations in part thereof) listed
on Schedule 5.06(c)(ii) shall have expired or shall cease to contain a
Valid Claim (the 'Expiry Date'), 20% of the U.S. Partnership's Net Sales of
Ranitidine OTC Products; and

(iii) in respect of the period beginning on the Expiry Date, 15% of
the U.S. Partnership's Net Sales of Ranitidine OTC Products;

provided, however, that the Parties shall renegotiate, in good faith, such
royalty in the event that such royalty when aggregated with the Fully Allocated
Cost of manufacturing (determined in accordance with Schedule 1.01(a)) bulk
Ranitidine supplied to any JV Entity in respect of the business of the U.S.
Partnership plus the Fully Allocated Cost incurred in manufacturing and
finishing Ranitidine OTC Products exceed, in respect of any twelve month period,
the amount representing the percentage of the U.S. Partnership's Net Sales of
Ranitidine OTC Products as follows: (i) in respect of the twelve month period
ending on the day preceding the first anniversary of the Launch Date of a
Ranitidine OTC Product by the U.S. Partnership, 26% of Net Sales; (ii) in
respect of each following twelve month period, or part thereof, prior to the
Expiry Date, 30% of Net Sales; and (iii) in respect of each following twelve
month period ending on the day prior to the anniversary of the Launch Date of a
Ranitidine OTC Product by the U.S. Partnership, 26% of Net Sales; and provided,
further, that if (following adjustments, if any, made in accordance with the
foregoing proviso) the U.S. Partnership incurs a loss (by reference to profit
before tax as calculated in accordance with United States generally accepted
accounting principles) in the twelve month period ending on the day preceding
the second anniversary of such Launch Date, the Parties shall discuss, in good
faith, an adjustment to the royalty and the Management Fee.

(d) Other Royalties. (i) The royalties to be charged to the relevant JV
Entities in respect of sales of Ranitidine OTC Products in Non-U.S. Countries
shall, with regard to the trademarks and patents

<PAGE>
licensed by Glaxo or its Affiliates to the relevant JV Entity or Entities,
be broadly similar to the trademark and patent royalties payable in
respect of sales of such products in the United States in accordance with
Section 5.06(c), subject only to such changes or modifications as Glaxo
and W-L may agree are necessary to reflect the relative value of the
rights being granted to the JV Entity or Entities and local market
conditions.

(ii) The royalties to be charged to all JV Entities (including the U.S.
Partnership) in respect of Other Ranitidine Products and OTC Switch
Products shall with regard to the trademarks and patents licensed by
Glaxo to the relevant JV Entity or Entities, be such royalties as Glaxo
may in good faith offer to W-L or otherwise as the Parties may agree.

(e) Services. W-L shall be entitled to provide each JV Entity with services
and shall be entitled to be reimbursed therefor in accordance with Sections 6.03
and 6.04.

SECTION 5.07. Representations and Warranties. With respect to any Ranitidine
Product or OTC Switch Product to be developed, marketed, sold or distributed by
any JV Entity pursuant to this Article V (other than Ranitidine OTC Products to
be developed, marketed, sold or distributed by the U.S. Partnership pursuant to
Section 5.02(a)), Glaxo shall deliver to W-L and the relevant JV Entity on the
date of execution of the relevant JV Implementation Agreement (if a new JV
Entity is being established) or the relevant License Agreement (in any other
case), a certificate confirming that the representations and warranties set
forth in Sections 10.02(b), 10.04 to 10.07 and 10.09 are true and correct as at
the date of such certificate subject only to such exceptions thereto as Glaxo
may detail in such certificate (such exceptions to be limited to specific
factual matters); provided, however, that:

(a) for the purposes of such certificate and the representations and
warranties made therein, references to 'Glaxo Products' as used in Sections
10.02(b), 10.04 to 10.07 and 10.09 shall mean the relevant Ranitidine
Product or OTC Switch Product to be developed, manufactured, marketed, sold
or distributed by the relevant JV Entity in the relevant country;

(b) where the participant in the relevant JV Entity is not a Party but
is an Affiliate of a Party, such representations and warranties shall, for
the purposes of this Section 5.07, be construed as if references therein to
such Party were references to both that Party and the Affiliate of such
Party which is the participant in the relevant JV Entity; and

(c) references therein to the 'Glaxo Relevant Agreements' shall mean
the JV Implementation Agreement (if a new JV Entity is being established)
or the relevant License Agreement (in any other case) in connection with
which such representations and warranties are being confirmed pursuant to
this Section 5.07, and all other Operative Documents being entered into in
connection therewith, in each case to which Glaxo or any of its Affiliates
is a party.

SECTION 5.08. Non-Compete. Except as expressly permitted by Article V, each
of W-L and Glaxo agrees that it will not, and will cause its Affiliates not to
introduce, or participate in the introduction of, any product in the
non-prescription consumer health care market (other than a JV Product pursuant
to the terms of this Agreement) in any country if such product would, in the
reasonable opinion of the other Party, directly compete with any JV Product
being marketed, sold or distributed in that country, or which is being developed
for marketing, sale or distribution, by a JV Entity in such country. The Parties
agree that a product will directly compete with a Ranitidine OTC Product only if
it contains an H2 antagonist or a proton pump inhibitor. Except as aforesaid, if
the Parties cannot agree whether any product will directly compete with a JV
Product they shall seek to resolve the issue by negotiation.

SECTION 5.09. Japan. The provisions of this Agreement do not in any way
apply to or restrict the development, marketing, selling or distribution by
either Party (or their respective Affiliates) of any product in Japan.

ARTICLE VI
RELATED TRANSACTIONS

SECTION 6.01. Development. The Parties agree (in respect of Ranitidine OTC
and Ranitidine OTC Products, subject to and as set forth in the Development
Agreement) that:

<PAGE>
(a) development costs in the United States shall be funded as set
forth in the Partnership Agreement;

(b) subject to clause (a) above, the relevant JV Entity shall
reimburse the Parties' and their Affiliates Fully Allocated Costs incurred
after the date of this Agreement in respect of the development of
Ranitidine Products and the development of OTC Switch Products which the
Parties have determined to develop in connection with the business of any
JV Entity;

(c) all development work in respect of Ranitidine Products and OTC
Switch Products which the Parties have determined to develop in connection
with the business of any JV Entity shall, following the grant of NDA
Approval, in the case of the United States, or Regulatory Approval, in the
case of any Non-U.S. Country, in respect thereof, be conducted by W-L
CPR&D, and W-L CPR&D shall be reimbursed by the relevant JV Entities its
Fully Allocated Costs incurred in such development; and

(d) amounts charged to any JV Entity in respect of the development of
JV Products shall be charged to the relevant JV Entity pursuant to this
Section 6.01 taking into account any special credits or any special tax
benefits in excess of a deduction for 100% of the expenditure to which the
Party making such charge is entitled (other than by flow-through of such
credit or tax benefit to such Party as a partner or owner of such JV
Entity) by virtue of the nature of the expenditure.

SECTION 6.02. Ranitidine OTC; Ownership of NDA; Milestone Payments. Subject
to and as set forth in the Ranitidine Rights Agreement, the Parties agree that:

(a) no NDA in respect of Ranitidine OTC shall be submitted by any of
the Parties or any of their Affiliates or by any JV Entity to the FDA
without the prior approval of the Governing Board of the U.S. Partnership;

(b) at the Closing of this Agreement W-L shall acquire a 50%
beneficial interest in the Ranitidine Rights owned by Glaxo Inc., in
consideration of which W-L shall pay to Glaxo Inc. upon each of (i) the
first submission of an NDA in respect of Ranitidine OTC to the FDA in
accordance with Section 6.02(a) and (ii) NDA Approval thereof, a milestone
payment in each case in the amount of $2.666 million; and

(c) following the acquisition referred to in clause (b) above, W-L
shall contribute its interests in the Ranitidine Rights to the U.S.
Partnership and Glaxo Inc. shall transfer its interest in the Ranitidine
Rights to Glaxo OTC, which shall contribute such interest to the U.S.
Partnership.

SECTION 6.03. Services To Be Provided by W-L to the U.S. Partnership in
Respect of Ranitidine OTC Products. Subject to and as set forth in the W-L
Services Agreement the Parties agree that in respect of the development,
marketing, selling and distribution by the U.S. Partnership of Ranitidine OTC
Products, W-L shall provide the U.S. Partnership with the services set forth on
Schedule 6.03(a) in consideration for the Fully Allocated Costs of such
services, other than the services marked with an asterisk on such Schedule, and
an additional fee to be calculated as set forth on Schedule 6.03(b) (the
aggregate of such Fully Allocated Costs and such fee being called the
'Management Fee'); provided, however, that in respect of the provision by W-L to
the U.S. Partnership of the services referenced on Schedule 6.03(a) under
'General Administration' and 'Corporate Allocations' prior to the Launch Date of
a Ranitidine OTC Product in the United States, W-L shall only be reimbursed its
Fully Allocated Costs to the extent such costs are direct and readily
identifiable.

SECTION 6.04. Other Services To Be Provided by W-L. With respect to the
development, marketing, selling and distribution by the U.S. Partnership of JV
Products (other than Ranitidine OTC Products) and with respect to the
development, marketing, selling and distribution of all JV Products by JV
Entities (other than the U.S. Partnership), the Parties shall negotiate in good
faith the services to be provided by W-L to the U.S. Partnership or the relevant
JV Entity and any costs to be reimbursed, and fees to be paid, to W-L in respect
thereof. The Parties agree that such services and related costs and fees shall
be broadly similar to the services provided by W-L, and the related costs and
fees receivable by W-L, pursuant to the W-L Services Agreement, subject to such
changes as W-L and Glaxo agree are appropriate to reflect the cost to W-L of the
services to be provided by it and local market conditions.

<PAGE>
SECTION 6.05. Supply. (a) In order to protect their respective interests in
the License Agreements and to assure the uniform quality of Ranitidine Products,
the Parties agree that, except in the circumstances set forth in Section
6.05(b), all Ranitidine required for the manufacture of Ranitidine Products to
be marketed, sold or distributed by any JV Entity in accordance with this
Agreement and the Operative Documents shall be supplied by Glaxo or its
Affiliates to the relevant JV Entity or JV Entities at prices to be agreed by
the Parties and, in consideration thereof, Glaxo or its Affiliates shall pay to
such JV Entity or JV Entities or to W-L or its Affiliates such fees,
commissions, allowances or similar payments as the Parties shall determine. All
other compounds and/or related finished products to be supplied by the Parties
or any of their Affiliates required for the manufacture of JV Products shall be
supplied to the relevant JV Entity on terms to be negotiated.

(b) It shall be a term of all License Agreements relating to Ranitidine
that, in the event that Glaxo or its Affiliates fail to supply Ranitidine in
accordance with Section 6.05(a) or the relevant Supply Agreement for a period of
three months, and for so long as such failure by Glaxo or its Affiliates
continues unbroken (except for periods of four weeks or less), the relevant JV
Entity or Entities shall be entitled to conduct bulk manufacturing of
Ranitidine.

SECTION 6.06. Manufacture of JV Products. Secondary manufacture from base
compounds (including tableting, labeling and packaging) of JV Products to be
marketed, sold or distributed by a JV Entity shall take place at such sites and
facilities (including, without limitation, facilities of the Parties or their
Affiliates) as the Governing Board of the relevant JV Entity may determine.

SECTION 6.07. Financial Information; Audit. In respect of any matters for
which the Parties, or their Affiliates, shall, under the terms of this Agreement
or any of the other Operative Documents, be entitled to any payment from any JV
Entity ('Relevant Matters'), (i) the Parties shall and shall cause their
Affiliates and the JV Entities to maintain such books, accounts and records as
may be necessary to determine rights to such payment, (ii) the JV Entities shall
give the other Party, its Affiliates, any relevant JV Entity and each of their
respective independent accountants, and the Parties and their respective
Affiliates shall give the independent accountants of the other Party, its
respective Affiliates and any relevant JV Entity, reasonable access thereto
(after written notice not in any event to be less than five Business Days, and
in the case of independent accountants, after execution of a confidentiality
agreement between the Party permitting such access and such independent
accountants) during normal business hours and allow such Person to audit such
books, accounts and records as the same relate to the Relevant Matters, at the
sole expense of the Party, Affiliate or JV Entity requesting such audit. Each
Party shall and shall cause its Affiliates and any relevant JV Entity to provide
information on a timely basis as required by each JV Entity to meet the
requirements of Section 4.03(d).

SECTION 6.08. U.S. Export Controls/International Boycott. The Parties
understand that the products to be sold by a JV Entity may be subject to export
controls to permit resales and/or transfers to other countries and parties,
including authorizations required from the appropriate U.S. government agency
under the laws and regulations of the United States. No JV Entity is, or shall
be, authorized to act in violation of Part 769 of the Export Administration
Regulations of the U.S. Department of Commerce and/or agree to engage in boycott
participation as defined in Section 999 of the U.S. Internal Revenue Code of
1986, as amended. Each of the Parties and their appropriate Affiliates will
assist the JV Entity, as requested and where practicable, in seeking U.S.
government authorizations for transactions subject to U.S. export control
regulations.

SECTION 6.09. Technology. Neither Party nor any of their Affiliates shall
be obligated to make available to any JV Entity any technology, data, patents or
other intellectual property rights owned by the relevant Party or its Affiliates
in connection with, and for the purposes of, the business of the relevant JV
Entity unless satisfactory terms therefor have been agreed between the relevant
Party or Affiliate and the relevant JV Entity.

ARTICLE VII
FURTHER COVENANTS OF W-L

SECTION 7.01. (a) Allocation of Resources. W-L agrees that, notwithstanding
any other commitments it may have under additional joint venture or other
arrangements relating to consumer

<PAGE>
health products, it will, in accordance with sound commercial principles, devote
sufficient resources to each JV Entity to maximize each JV Entity's potential in
accordance with its obligations hereunder and under the Operative Documents and
in accordance with its Annual Operating Plan and the determinations of the
relevant Governing Board.

(b) W-L shall use all reasonable efforts consistent with sound commercial
principles to assist the JV Entities in obtaining all Regulatory Approvals
required to market and sell Ranitidine OTC in the United States at the earliest
possible time.

SECTION 7.02. W-L Affiliates. Subject to Article XII, W-L shall, during the
term of this Agreement and for so long as any Affiliate of W-L (other than
W-WCHP) shall own equity in any JV Entity, own and continue to own, legally and
beneficially, directly or indirectly, a majority of the issued and outstanding
share capital or other equity interest of such Affiliate, and shall not permit
any Lien, other than Permitted Liens, to be created, granted or to arise in
respect of such share capital or equity interest and shall otherwise continue to
be able to exercise the direction of the management and policies of such
Affiliate.

SECTION 7.03. Safety Information. W-L shall cause the JV Entities to
promptly disclose in writing to Glaxo any information which they acquire which
relates to the safety of any JV Product or any constituent compounds including,
inter alia, all side effects, injury, toxicity or sensitivity reactions
including unexpected or increased incidence and severity thereof associated with
commercial or clinical uses, studies, investigations or tests with any such JV
Product or any such constituent compound. The Parties shall agree upon standard
operating procedures for reporting such information to each other and the
Development Committee of the relevant JV Entity.

SECTION 7.04. Approvals and Consents. W-L shall use its reasonable efforts
to (i) obtain all governmental approvals and consents (including all Regulatory
Approvals), if any, necessary or desirable for the consummation of the
transactions contemplated by this Agreement, the Partnership Agreement and the
other Operative Documents, and (ii) make or cause to be made any and all
declarations, filings and registrations with governmental authorities, which
approvals, consents, declarations, filings and registrations are necessary or
desirable for the consummation of the transactions contemplated hereby or
thereby.

SECTION 7.05. Use of JV Regulatory Documentation. W-L hereby agrees that it
and its Affiliates shall not be entitled to use for themselves or any Third
Party, for any purpose, any JV Regulatory Documentation unless and to the extent
Glaxo shall have agreed to allow the use of such JV Regulatory Documentation; it
being anticipated that the appropriate JV Entity shall be reasonably compensated
for any such use upon terms to be negotiated between Glaxo and W-L.

SECTION 7.06. Tax Matters. W-L will, and will cause each of its Affiliates
to, cooperate fully with and assist Glaxo, its Affiliates and each JV Entity (a)
in obtaining all desirable rulings or consents of the relevant and appropriate
tax authorities in order to obtain all appropriate tax benefits, exemptions or
exclusions for the Parties and the respective JV Entities as contemplated herein
and in the other Operative Documents; and (b) by doing all things necessary to
make all tax elections which would be beneficial to the respective JV Entities;
provided, however, that such actions described in (a) or (b) above do not in the
reasonable judgment of W-L have adverse tax consequences for W-L or its
Affiliates.

SECTION 7.07. Further Assurances. W-L shall use all reasonable efforts to
take or cause to be taken any appropriate action and to do or cause to be done
all things necessary, proper and advisable to consummate and make effective the
transactions contemplated hereby and by the Operative Documents and shall, in
particular, cause its Affiliates and the Persons designated by it to be
Representatives or Alternate Representatives on each Governing Board or
representatives on any subcommittee thereof or on any Development Committee to
take all such actions and to do all such things.

<PAGE>
ARTICLE VIII
FURTHER COVENANTS OF GLAXO

SECTION 8.01. Information Relating to Potential JV Products. In connection
with any Ranitidine Product or OTC Switch Product being considered for
development, marketing, sale or distribution by any JV Entity, or in respect of
which a Glaxo Offer or Glaxo Notice is served pursuant to Article V (a
'Potential JV Product') Glaxo shall promptly on request provide W-L with such
information as W-L may reasonably request in respect of the Potential JV
Product, including (without limitation) copies of all Glaxo Regulatory
Documentation relating thereto.

SECTION 8.02. Regulatory. (a) Glaxo shall use all reasonable efforts
consistent with sound commercial principles to assist the JV Entities in
obtaining all Regulatory Approvals required to market and sell Ranitidine OTC in
the United States at the earliest possible time.

(b) Glaxo shall give the relevant JV Entity access to, and the right to
reference, all of the Glaxo Regulatory Documentation in respect of the JV
Products.

SECTION 8.03. Glaxo Affiliates. Subject to Article XII Glaxo shall, during
the term of this Agreement, and for so long as any Affiliate of Glaxo shall own
equity in any JV Entity, own and continue to own, legally and beneficially,
directly or indirectly, a majority of the issued and outstanding share capital
or other equity interest of such Affiliate and shall not permit any Lien, other
than a Permitted Lien, to be created, granted or to arise in respect of such
share capital or equity interest and shall otherwise continue to be able to
exercise the direction of the management and policies of such Affiliate.

SECTION 8.04. Safety Information. Glaxo shall promptly disclose in writing
to W-L any information it, or its Affiliates, acquires which relates to the
safety of any prescription product sold by Glaxo and/or its Affiliates, a
version of which is a JV Product or is being developed by any JV Entity, or any
constituent compound including, inter alia, all side effects, injury, toxicity
or sensitivity reactions including unexpected or increased incidence and
severity thereof associated with commercial or clinical uses, studies,
investigations or tests with any such product or any constituent compounds. The
Parties shall agree upon standard operating procedures for reporting such
information to each other and the Development Committee of the relevant JV
Entity.

SECTION 8.05. Approvals and Consents. Glaxo shall use its reasonable
efforts to (i) obtain all governmental approvals and consents including all
Regulatory Approvals, if any, necessary or desirable for the consummation of the
transactions contemplated by this Agreement, the Partnership Agreement and the
other Operative Documents, and (ii) make or cause to be made any and all
declarations, filings and registrations with governmental authorities, which
approvals, consents, declarations, filings and registrations are necessary or
desirable for the consummation of the transactions contemplated hereby or
thereby.

SECTION 8.06. Use of JV Regulatory Documentation. Glaxo and its Affiliates
shall be entitled to use JV Regulatory Documentation for support of their
Prescription Products without compensation to the relevant JV Entity. Glaxo and
its Affiliates shall also be entitled to use for themselves any JV Regulatory
Documentation for the purpose of developing any product other than a
Prescription Product provided, however that, prior to the Launch Date of such
product, the appropriate JV Entity shall be reasonably compensated by Glaxo or
its Affiliates for any such use upon terms to be negotiated between Glaxo and
W-L; and provided, further, that this Section 8.06 shall not restrict the use by
Glaxo and its Affiliates of any Glaxo Regulatory Documentation other than any
such documentation which has been purchased by W-L or any JV Entity or which has
been contributed to any JV Entity pursuant to the Ranitidine Rights Agreement or
otherwise.

SECTION 8.07. Tax Matters. Glaxo will, and will cause each of its
Affiliates to, cooperate fully with and assist W-L, its Affiliates and each JV
Entity (a) in obtaining all desirable rulings or consents of the relevant and
appropriate tax authorities in order to obtain all appropriate tax benefits,
exemptions or exclusions for the Parties and the respective JV Entities as
contemplated herein and in the other Operative Documents; and (b) by doing all
things necessary to make all tax elections which would be beneficial to the
respective JV Entities; provided, however that such actions described in (a) or
(b)

<PAGE>
above do not in the reasonable judgment of Glaxo have adverse tax consequences
for Glaxo or its Affiliates.

SECTION 8.08. Further Assurances. Glaxo shall use all reasonable efforts to
take or cause to be taken any appropriate action and to do or cause to be done
all things necessary, proper and advisable to consummate and make effective the
transactions contemplated hereby and by the Operative Documents and shall, in
particular, cause its Affiliates and the Persons designated by it to be
Representatives or Alternate Representatives on each Governing Board or
representatives on any subcommittee thereof or on any Development Committee to
take all such actions and to do all such things.

ARTICLE IX
REPRESENTATIONS AND WARRANTIES OF W-L

W-L hereby represents and warrants to Glaxo as follows:

SECTION 9.01. Organization; Good Standing. W-L is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware. No order has been made or petition presented or
resolution passed for the winding up of W-L and no distress, execution or
other process has been levied on any of its assets.

SECTION 9.02. Authority; No Violation. (a) Each of W-L and its
Affiliates has full corporate power and authority to execute, deliver and
perform its obligations under this Agreement and each of the other
Operative Documents to which it is party (this Agreement and all such
Operative Documents being the 'W-L Relevant Agreements') and the execution
and delivery of each of the W-L Relevant Agreements and the consummation of
the transactions contemplated thereby have been duly and validly approved
by the Board of Directors of W-L or such of its Affiliates which is a party
thereto, as the case may be, and no other corporate proceedings on the part
of W-L, or any such Affiliate, are necessary in connection with the
consummation of the transactions contemplated hereby and thereby. Each of
the W-L Relevant Agreements has been duly and validly executed and
delivered by W-L or such of its Affiliates which is a party thereto, as the
case may be, and, assuming due authorization, execution and delivery by
each of the other parties thereto, constitutes a valid and binding
obligation of W-L or such Affiliate, as the case may be, enforceable
against W-L or such Affiliate, as the case may be, in accordance with its
terms.

(b) Neither the execution and delivery of the W-L Relevant Agreements
by W-L, or such of its Affiliates which is a party thereto, nor the
consummation by W-L, or such Affiliate, of the transactions contemplated
thereby, nor compliance by W-L, or such Affiliate, with any of the terms or
provisions thereof, will (i) violate any provision of its certificate of
incorporation or by-laws or (ii) violate any material statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to W-L or such Affiliate.

SECTION 9.03. Certificate of Incorporation and By-laws. A complete and
correct copy of W-L's certificate of incorporation and by-laws in effect as
of the date of this Agreement are attached hereto as Schedule 9.03.

SECTION 9.04. Certain Litigation. Except as set forth on Schedule 9.04
there is no claim, action, suit, proceeding, arbitration, investigation,
inquiry, or hearing or notice of hearing (collectively, the 'Proceedings')
which is existing, pending or, to the best knowledge of W-L, threatened,
before any court, arbitrator, panel, agency or other governmental,
administrative or judicial authority or private arbitration tribunal
against or relating to the transactions contemplated by the W-L Relevant
Agreements which could materially adversely affect the transactions
contemplated thereby.

SECTION 9.05. Compliance. Except as set forth in Schedule 9.05, W-L
and its Affiliates possess all franchises, licenses, permits, waivers,
registrations, certificates, consents, approvals or authorizations
(collectively, 'Permits') required by any applicable laws, ordinances,
codes, rules, statutes, policy, guidelines, regulations, standards,
judgments, decrees, writs, rulings, injunctions, orders or any other
requirements of any governmental, administrative or judicial entities
('Legal Requirements') relating in any way or applicable in any manner to
the execution and delivery of

<PAGE>
the W-L Relevant Agreements or the performance by W-L and its Affiliates of
their obligations thereunder, and W-L has no reason to believe that it or
its Affiliates will be unable to obtain any Permits which are required for
the performance of their future obligations thereunder except, in each
case, where the failure to do so would not have a materially adverse effect
on the transactions contemplated by the W-L Relevant Agreements.

SECTION 9.06. Finder. Except for Bear Stearns & Co., Inc., neither
W-L, its Affiliates nor any of their respective officers or directors has
employed any broker or finder or other firm, corporation, agency or other
Person that is entitled to a finder's fee or any type of brokerage
commission or fee in relation to or in connection with the transactions
contemplated by the W-L Relevant Agreements.

SECTION 9.07. Transactions Contemplated by W-L Relevant Agreements. In
connection with the Closing of this Agreement only, references in this
Article IX to transactions contemplated by, or the performance of
obligations under, the W-L Relevant Agreements or this Agreement, or
similar references, shall be construed to mean all transactions or
obligations contemplated by this Agreement (other than transactions or
obligations contemplated by this Agreement which will arise under Operative
Documents other than the Closing Documents), each of the other Closing
Documents, and the Ranitidine Supply Agreement.

ARTICLE X
REPRESENTATIONS AND WARRANTIES OF GLAXO

Glaxo hereby represents and warrants to W-L as follows:

SECTION 10.01. Organization; Good Standing. Glaxo is a corporation
duly organized and validly existing under the laws of England and Wales and
has complied, in all material respects, with the provisions of the United
Kingdom's Companies Acts 1985 and 1989 and all returns, particulars,
resolutions and other documents required to be filed with or delivered to
the registrar of companies or to any other authority whatsoever by Glaxo
have been correctly and properly prepared and so filed or delivered. No
order has been made or petition presented or resolution passed for the
winding up of Glaxo and no distress, execution or other process has been
levied on any of its assets.

SECTION 10.02. Authority; No Violation. (a) Each of Glaxo and its
Affiliates has full corporate power and authority to execute, deliver and
perform its obligations under this Agreement and each of the other
Operative Documents to which it is party (this Agreement and all such
Operative Documents being together the 'Glaxo Relevant Agreements') and the
execution and delivery of each of the Glaxo Relevant Agreements and the
consummation of the transactions contemplated thereby have been duly and
validly approved by the Board of Directors of Glaxo or such of its
Affiliates which is a party thereto, as the case may be, and no other
corporate proceedings on the part of Glaxo, or any such Affiliate, are
necessary in connection with the consummation of the transactions
contemplated thereby. Each of the Glaxo Relevant Agreements has been duly
and validly executed and delivered by Glaxo or such of its Affiliates which
is a party thereto, as the case may be, and, assuming due authorization,
execution and delivery by each of the other parties thereto, constitutes a
valid and binding obligation of Glaxo or such Affiliate, as the case may
be, enforceable against Glaxo or such Affiliate, as the case may be, in
accordance with its terms.

(b) Neither the execution and delivery of the Glaxo Relevant
Agreements by Glaxo, or such of its Affiliates which is a party thereto,
nor the consummation by Glaxo, or such Affiliate, of the transactions
contemplated thereby, nor compliance by Glaxo, or such Affiliate, with any
of the terms or provisions thereof, will (i) violate any provision of its
memorandum of association, articles of association or other organizational
documents; (ii) violate any material statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to
Glaxo, or such Affiliate, any of the Glaxo Products or the Glaxo Rights; or
(iii) violate, conflict with, result in a breach of any provision of,
constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, result in the termination of,
accelerate the performance required

<PAGE>
by, or result in the creation of any Lien upon the Glaxo Products or the
Glaxo Rights or any of them under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, collective bargaining agreement, agreement or other instrument or
obligation or by which the Glaxo Products or the Glaxo Rights or any of
them may be bound or affected.

SECTION 10.03. Certificate of Incorporation and Memorandum and
Articles of Association. A complete and correct copy of Glaxo's certificate
of incorporation, memorandum of association and articles of association in
effect as of the date of this Agreement is attached hereto as Schedule
10.03.

SECTION 10.04. Intellectual Property Rights. (a) Schedule 10.04
contains a complete and correct list of all patents, patent applications,
licenses, trademarks, trade names, and similar rights currently owned, used
or proposed to be used in connection with the Glaxo Products (collectively,
'Glaxo Rights') indicating the registered and beneficial owner, the
registration number and the expiration date thereof. Except as set forth in
Schedule 10.04, Glaxo or its Affiliates owns or possesses exclusive
licenses and all other valid rights to use (without the making of any
payment to any Person or the obligation to grant rights to any Person) all
Glaxo Rights and the Glaxo Rights constitute all such rights which are
presently used in, or necessary to the conduct of Glaxo's or its
Affiliates' business relating to the Glaxo Products; neither the validity
of such items nor the use thereof by Glaxo or its Affiliates is the subject
of any litigation to which Glaxo or an Affiliate is a party; nor, to the
best knowledge of Glaxo, is any such litigation threatened nor do any facts
exist which may have any material adverse effect on the use of, or the
validity of, the Glaxo Rights; the use by Glaxo or its Affiliates of the
Glaxo Rights does not conflict with valid rights of others in any way which
materially adversely effects or could materially adversely effect the Glaxo
Products or any of them or the transactions contemplated by the Glaxo
Relevant Agreements.

(b) Except as set forth on Schedule 10.04, Glaxo does not know of any
use that has been or is now being made of any Glaxo Rights, except by Glaxo
and by its Affiliates.

(d) Except as set forth on Schedule 10.04, to the best knowledge of
Glaxo, none of the Glaxo Rights are under threat of cancellation or
suspension for any reason nor is there any basis for cancellation or
suspension. The Glaxo Rights and the consummation of the transactions
contemplated by the Glaxo Relevant Agreements do not infringe any
trademark, patent, trade name, copyright or other right of any Third Party.
There are no unexpired patents owned by a Third Party having claims
covering any Glaxo Products or covering any method employed by Glaxo in
developing or manufacturing the Glaxo Products or which could materially
adversely effect the Glaxo Products or the transactions contemplated by the
Glaxo Relevant Agreements.

SECTION 10.05. Certain Litigation. Except as set forth on Schedule
10.05, are no Proceedings which are existing, pending or, to the best
knowledge of Glaxo, threatened, before any court, arbitrator, panel, agency
or other governmental, administrative or judicial authority or private
arbitration tribunal against or relating to the Glaxo Rights, the Glaxo
Products or the transactions contemplated by the Glaxo Relevant Agreements
which could materially adversely affect the Glaxo Products or the
transactions contemplated by the Glaxo Relevant Agreements.

SECTION 10.06. Product Liability. (a) Except as set forth on Schedule
10.06, (i) there is no notice, demand, claim, action, suit, inquiry,
hearing, proceeding, notice of violation or investigation of a civil,
criminal or administrative nature by or before any court or governmental or
other regulatory or administrative agency, commission or authority against
or involving Glaxo or any of its Affiliates (past or present) concerning
any Glaxo Product which is pending or, to the best knowledge of Glaxo,
threatened, relating to or resulting from an alleged defect in design,
manufacture, materials, or workmanship of any Glaxo Product, or any alleged
failure to warn, or from an alleged breach of express or implied warranties
or representations; (ii) there has not been any Occurrence (as hereinafter
defined), which could materially adversely affect the Glaxo Products; and
(iii) there has not been any Glaxo Product recall, rework, retrofit or
post-sale

<PAGE>
warning by Glaxo or any of its Affiliates (past or present), or, to the
best of Glaxo's knowledge, any investigation or consideration relating
thereto.

(b) For purposes of this Section 10.06 the term 'Occurrence' shall
mean any accident, happening or event which is caused or allegedly caused
by any alleged hazard or alleged defect in manufacture, design, materials
or workmanship including, without limitation, any alleged failure to warn
or any breach of express or implied warranties or representations with
respect to, or any such accident, happening or event otherwise involving, a
Glaxo Product which results or is alleged to have resulted in injury or
death to any person or damage to or destruction of property, or other
consequential damages, at any time.

SECTION 10.07. Compliance. (a) Except as set forth on Schedule 10.07,
Glaxo and its Affiliates possess all Permits required by any Legal
Requirements relating in any way or applicable in any manner to the
execution and delivery of the Glaxo Relevant Agreements or the performance
by Glaxo and its Affiliates of their obligations thereunder contemplated to
be performed at the date these representations and warranties are given,
and Glaxo has no reason to believe that it or its Affiliates will be unable
to obtain any Permits which are required for the performance of their
future obligations thereunder except, in each case, where the failure to do
so would not have a materially adverse effect on the transactions
contemplated by the Glaxo Relevant Agreements.

(b) Except as set forth on Schedule 10.07, all of the Glaxo Products,
all of the formulae and ingredients processes, and know-how used in
connection with the manufacture by Glaxo and its Affiliates of any of the
Glaxo Products conform in all material respects to all Legal Requirements.

SECTION 10.08. Finder. Neither Glaxo, its Affiliates nor any of their
respective officers or directors has employed any broker or finder or other
firm, corporation, agency or other Person that is entitled to a finder's
fee or any type of brokerage commission or fee in relation to or in
connection with the transactions contemplated by the Glaxo Relevant
Agreements.

SECTION 10.09. Glaxo Regulatory Documentation. Glaxo has afforded W-L
full access to all Glaxo Regulatory Documentation relating to the Glaxo
Products.

SECTION 10.10. Transactions Contemplated by Glaxo Relevant Agreements.
In connection with the Closing of this Agreement only, references in this
Article X to transactions contemplated by, or the performance of
obligations under, the Glaxo Relevant Agreements or this Agreement, or
similar references, shall be construed to mean all transactions or
obligations contemplated by this Agreement (other than transactions or
obligations contemplated by this Agreement which will arise under Operative
Documents other than the Closing Documents), each of the other Closing
Documents and the Ranitidine Supply Agreement.

ARTICLE XI
CONDITIONS TO CLOSING

Closing of the transactions contemplated by this Agreement and by each JV
Implementation Agreement or other Operative Document shall be subject to the
satisfaction at or prior to such Closing of the following conditions:

SECTION 11.01. Certain Action. At the Closing Date, no suit, action,
investigation or other proceeding will have been instituted by any
governmental agency of any country or any Person in which it is sought to
restrain, prohibit, invalidate or set aside the transaction contemplated by
the relevant JV Implementation Agreement and/or other Operative Documents.

SECTION 11.02. Governmental Approvals and Consents. At the Closing
Date, all necessary notifications and filings, if any, required to be made
in or with respect to any relevant country will have been made and all
necessary governmental approvals, if any, shall have been received and the
prescribed waiting periods will have expired or been terminated. No
government entity shall have indicated its objection to, or its intent to
challenge as violative of any federal, state or foreign laws, any of the
transactions contemplated by the relevant JV Implementation Agreement
and/or other Operative Documents. In the event a government entity places a
condition on its approval of the

<PAGE>
transactions as contemplated by any of the Operative Documents which has a
material effect on the proposed business of the relevant JV Entity or the
transactions contemplated by the Operative Documents, the Parties shall
attempt to negotiate a mutually agreeable modification to the appropriate
Operative Documents.

SECTION 11.03. Representations and Warranties. As of the relevant
Closing Date, the representations and warranties of the Parties contained
in this Agreement shall (subject to the schedules referred to in Articles
IX and X as the relevant Party may deliver to the other Party prior to such
Closing under cover of a notice specifying that such delivery is made with
reference to such Closing and pursuant to this Section 11.03) be true and
correct in all material respects and the W-L Participant and the Glaxo
Participant shall represent and warrant in writing to the other to the
effect set forth in Articles IX and X; provided, however, that:

(a) references to 'Glaxo Products' as used in Article X shall mean
the relevant Ranitidine Product or OTC Switch Product to be developed,
manufactured, marketed, sold or distributed by the relevant JV Entity in
the relevant country;

(b) where the participant in the relevant JV Entity is not a Party
but is an Affiliate of a Party, such representations and warranties
shall, for the purposes of this Section 11.03, be construed as if
references therein to such Party were references to both that Party and
the Affiliate of such Party which is the participant in the relevant JV
Entity; and

(c) references in Articles IX and X to 'W-L Relevant Agreements' or
'Glaxo Relevant Agreements' shall mean the Operative Documents to which
W-L or Glaxo, as the case may be, or its Affiliates is a party which are
being entered into in connection with the relevant Closing.

SECTION 11.04. Performance of Covenants. Each Party, and each of their
respective Affiliates, shall have performed and complied in all material
respects with each and every covenant, agreement and condition contemplated
by the relevant JV Implementation Agreement and/or other Operative
Documents to be performed or complied with by it prior to or on the Closing
Date.

SECTION 11.05. Authorization of Agreements. All action on the part of
each Party and their respective Affiliates necessary to authorize the
execution, delivery and performance of the relevant JV Implementation
Agreement and/or other Operative Documents, and the consummation of the
transactions contemplated therein, shall have been duly and validly taken
by each of W-L and Glaxo and their respective Affiliates and each Party
shall have been furnished with a certificate of the Secretary or an
Assistant Secretary of the other Party, setting forth copies of the
resolutions or other instruments authorizing the relevant JV Implementation
Agreements and the Operative Documents and the transactions contemplated
therein.

SECTION 11.06. Operative Documents. All Operative Documents required
in order to permit the appropriate JV Entity to conduct JV Business in the
relevant country shall have been executed and delivered and shall be fully
effective in all respects.

SECTION 11.07. Certificate of Compliance. Each of the Parties shall
have delivered to the other Party a certificate signed by an authorized
officer of such Party, representing, warranting and certifying compliance
with the conditions set forth in Sections 11.03, 11.04 and 11.05.

ARTICLE XII
TRANSFER OF JV INTEREST;
PERMITTED TRANSFERS

SECTION 12.01. Limitation on Right To Transfer Parties' Interests. No Party
or any Affiliate may sell, assign, pledge, hypothecate or otherwise transfer in
any manner, all or any part of its individual interest in this Agreement, any of
the Operative Documents, any JV Business, or any JV Entity or in any entity
which holds an interest therein unless such transfer (i) is consented to in
writing by each of the other Parties (in their sole discretion), with specific
reference to this Section 12.01 or (ii) is

<PAGE>
otherwise permitted under this Article XII or Article XIV of this Agreement. For
the avoidance of doubt, in this Article XII, references to 'transfer' shall not
include the appointment of any distributor.

SECTION 12.02. Permitted Transfers. (a) Nothing in this Article XII shall
prevent the transfer:

(i) by any Party of all of its individual interest in this Agreement,
any of the Operative Documents, any JV Business or any JV Entity if such
individual interest is transferred to, and for so long as such transferee
is, a direct or indirect wholly owned Affiliate of W-L or Glaxo, as the
case may be, (or, in the case of W-L, if such transferee is W-WCHP and the
requirements set forth in clause (b) below are satisfied); or

(ii) by any Person to whom a transfer is made pursuant to clause (i)
above to W-L or Glaxo, as the case may be, or to, and for so long as such
Person is, a direct or indirect wholly owned Affiliate of W-L or Glaxo, as
the case may be, (or, in the case of W-L, if such Person is W-WCHP and the
requirements set forth in clause (b) below are satisfied);

provided, however, that:

(v) notwithstanding the provisions of clause (x) below, following any
transfer permitted by this Section 12.02(a), the references in clauses (i)
and (ii) above to W-L and to Glaxo shall not be construed as being
references to any Person other than the respective parties to this
Agreement at the date hereof;

(w) no transfer may be made pursuant to this Section 12.02(a) unless
the proposed transferee shall have agreed to assume, by express written
agreement with the other Parties (in form and substance satisfactory to
them), all of the obligations of the transferor in respect of the interest
being transferred, and no such transfer shall relieve the transferor of its
obligations under this Agreement or the Operative Documents or otherwise in
respect of the JV Businesses and the JV Entities;

(x) any Person to whom a transfer is made pursuant to and in
accordance with this Section 12.02(a) shall be joined as an additional
party hereto and to the relevant Operative Documents and shall be deemed to
have irrevocably covenanted with the other Parties hereto to transfer to a
Person who is a permitted transferee under clauses (i) and (ii) of this
Section 12.02(a) all of its interest in this Agreement, the Operative
Documents, all JV Businesses and all JV Entities immediately prior to such
Person ceasing to be such a permitted transferee;

(y) not less than all of a Party's interest in any particular JV
Entity may be transferred pursuant to this Section 12.02(a); and

(z) the Parties may agree to restrict such transfers to the extent
they deem necessary or appropriate to allow a JV Entity to be classified as
a partnership for U.S. Federal income tax purposes.

(b) W-L shall only be able to exercise its rights with respect to W-WCHP
under Section 4.03(c) and Section 12.02(a)(i) and (ii) if, (x) W-L holds or
controls a majority of the votes exercisable on the Governing Board of W-WCHP,
(y) W-L has sole authority to exercise the rights to be exercised hereunder or
under the Operative Documents or in relation hereto or thereto and (z) no Person
other than W-L, Wellcome plc or their respective Affiliates holds any equity
interest in W-WCHP.

(c) Notwithstanding the terms of this Section 12.02 and the ability of the
Parties to make Permitted Transfers hereunder, the Parties hereby agree that, if
the terms of this Section 12.02 have disadvantageous tax consequences to one or
both of the Parties in respect of its or their interest in any JV Entity, the
Parties shall negotiate with each other in good faith modifications to this
Section 12.02 insofar as it applies to such JV Entity.

SECTION 12.03. Change of Control. (a) In the event that (i) a Third Party
acquires beneficial ownership (as defined below) of 30% or more of the voting
capital of either Glaxo on the one hand or W-L on the other hand (the 'Affected
Party') or, in the event that all or any part of W-L's JV Interest is held by
W-WCHP, either (ii) W-L ceases at any time to hold or control a majority of the
votes exercisable on the governing board of W-WCHP, or (iii) W-L ceases to have
sole authority to exercise the rights to be exercised hereunder or under the
Operative Documents or in relation hereto or thereto or (iv) any Person other
than W-L, Wellcome plc or their respective Affiliates holds any equity interest

<PAGE>
in W-WCHP ('Change of Control'), then W-L or Glaxo (as the case may be) (the
'Non-Affected Party') shall, if it believes in good faith that such Change of
Control is prejudicial to such Affected Party's JV Interest, have the right
within 30 calendar days following receipt of written notice of, or public
announcement of, the occurrence of the Change in Control at its option and in
its sole and absolute discretion by written notice (the 'Acquisition Notice')
either:

(x) to require the Affected Party to, and to cause its Affiliates to,
sell, transfer and convey the whole of the Affected Party's and such
Affiliates' equity interest in all JV Entities (together the 'JV Equity')
(or if the change of control arises under clause (ii), (iii) or (iv) of
Section 12.03(a), such of its JV Equity as was held by W-WCHP immediately
prior to the Change of Control and which was not subsequently transferred
to W-L or a direct or indirect wholly owned Affiliate of W-L) to the
Non-Affected Party, or as it may direct, at a price to be agreed between
Glaxo and W-L or, if they are unable to agree upon such price within 90
calendar days, at the Going Concern Value of the relevant JV Equity
determined in accordance with Section 15.03 and taking into account the
arrangements contemplated by Section 12.03(b) provided, however, that for
the purposes of calculating such Going Concern Value, each Operative
Document shall be deemed to continue for a period of 5 years from the
acquisition pursuant to this clause (x); or

(y) to require the Affected Party to purchase and accept conveyance
from the Non-Affected Party and its Affiliates of the whole of their JV
Equity at a price to be agreed between Glaxo and W-L or, if they are unable
to agree upon such price within 90 calendar days, at the Going Concern
Value of the relevant JV Equity determined in accordance with Section 15.03
and taking into account the arrangements contemplated by Section 12.03(b)
and Section 14.04.

For the purposes of this Section 12.03(a), a Person shall be deemed to have
'beneficial ownership' of, and shall be deemed to 'beneficially own', any
securities which such Person or any of its Affiliates is deemed to 'beneficially
own' within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934
and the rules and regulations thereunder.

(b) In the event that the Non-Affected Party elects to exercise its option
under either clause (x) or clause (y) of Section 12.03(a) then:

(i) subject to Section 14.04 hereof, the Parties shall negotiate in
good faith such arrangements as may be required to ensure the continued
operation of the JV Businesses;

(ii) the Affected Party shall, as the case may be, be bound either (A)
to, and to cause its Affiliates to, sell, transfer and convey the Affected
Party's, and such Affiliates', JV Equity (or if the change of control
arises under clause (ii) or (iii) of Section 12.03(a), such of its JV
Equity as was held by W-WCHP immediately prior to the Change of Control and
which was not subsequently transferred to W-L or a direct or indirect
wholly owned Affiliate of W-L) to the Non-Affected Party, or as it may
direct, pursuant to clause (x) above or (B) to purchase and accept
conveyance from the Non-Affected Party and its Affiliates of their JV
Equity pursuant to the terms of clause (y) above;

(iii) each of the Operative Documents (other than this Agreement)
shall, to the extent they relate to any Ranitidine Product or OTC Switch
Product which is then being marketed by any JV Entity or is being developed
therefor, continue in full force and effect and shall be binding upon each
of the Parties or their respective Affiliates, as the case may be, subject
only to the provisions of Section 14.04; and

(iv) this Agreement, and (save as provided in clause (iii) above) the
other Operative Documents, and the Parties rights and obligations hereunder
and thereunder shall, save as provided by Sections 14.06 and 15.12,
immediately be terminated.

(c) Without prejudice to the generality of Section 15.12 of this Agreement
but in accordance with the terms thereof, the Parties agree to keep confidential
the terms of this Section 12.03. Each Party further agrees (i) not to give any
indication to any Third Party as to whether any action, or what circumstances,
would give rise to a Change of Control, (ii) not to inform, directly or
indirectly, any Third Party of what action such Party would or would not take in
the event of a Change of Control, until such time as such Change of Control has
occurred and (iii) to inform the other Party immediately

<PAGE>
of any request by any Third Party for information which it would be prohibited
by this Section from divulging.

ARTICLE XIII
INDEMNIFICATION

SECTION 13.01. Indemnification by the JV Entities. W-L and Glaxo shall be
indemnified and held harmless by each JV Entity in respect of all claims,
liabilities, damages, losses, expenses (including, without limitation, legal
fees), obligations, liens, assessments, judgments and fines (all of the
foregoing being a 'Claim') made by or owed to any Person to the extent any of
the foregoing are for bodily injuries or damages suffered, or for obligations or
liabilities, which arose out of the conduct of the JV Business of the relevant
JV Entity. Such Claims shall also include, but not be limited to, all Taxes of
any kind, interest, penalties, fines due by any JV Entity in relation to which
W-L or Glaxo may be jointly liable for payment with such JV Entity and it shall
be a term of each JV Implementation Agreement that the relevant JV Entity agrees
to indemnify the Parties under the terms of this Section 13.01.

SECTION 13.02. Indemnification by W-L. (a) W-L agrees to indemnify and hold
Glaxo harmless from all Claims suffered or paid as a result of (i) the failure
of any of the representations or warranties made by W-L in this Agreement, any
other Operative Document or pursuant to Section 11.07 to be true and correct in
all material respects as of the relevant Closing Date, (ii) any breach by W-L or
any of its Affiliates of the terms of this Agreement or any of the Operative
Documents, or (iii) Claims made by a Third Party which, if successful, would
constitute a breach of a representation, warranty, covenant or agreement made by
W-L or any of its Affiliates in this Agreement, any Operative Document or
pursuant to Section 11.07.

(b) W-L agrees to indemnify and hold Glaxo and each of the JV Entities
harmless in respect of Claims made by or owed to any Person to the extent such
Claims are for bodily injuries or damages suffered, or for obligations or
liabilities which arose, in connection with products developed, marketed, sold
or distributed by W-L or any of its Affiliates (other than products so
developed, marketed, sold or distributed as part of the JV Businesses) except to
the extent that any JV Entity is liable to indemnify the Parties in respect
thereof pursuant to Section 13.01.

SECTION 13.03. Indemnification by Glaxo. (a) Glaxo agrees to indemnify and
hold W-L harmless from all Claims suffered or paid as a result of (i) the
failure of any of the representations or warranties made by Glaxo in this
Agreement, any other Operative Document or pursuant to Sections 5.07 or 11.07 to
be true and correct in all material respects as of the relevant Closing Date,
(ii) any breach by Glaxo or any of its Affiliates of any terms of this Agreement
or any of the Operative Documents, and (iii) Claims made by a Third Party which,
if successful, would constitute a breach of a representation, warranty, covenant
or agreement made by Glaxo or any of its Affiliates in this Agreement or any
Operative Document or pursuant to Sections 5.07 or 11.07.

(b) Glaxo agrees to indemnify and hold W-L and each of the JV Entities
harmless in respect of Claims made by or owed to any Person to the extent such
Claims are for bodily injuries or damages suffered, or for obligations or
liabilities which arose, in connection with products developed, marketed, sold
or distributed by Glaxo or any of its Affiliates (other than products so
developed, marketed, sold or distributed as part of the JV Businesses) except to
the extent that any JV Entity is liable to indemnify the Parties in respect
thereof pursuant to Section 13.01.

SECTION 13.04. Indemnification Generally. (a) Any indemnification of W-L,
Glaxo, the JV Entities or their Affiliates hereunder or under any other
Operative Document, shall include and extend to the benefit of their respective
Affiliates and their respective directors and employees. Any Person that may be
entitled to indemnification under this Agreement or under any other Operative
Document (an 'Indemnified Party') shall give notice to the Person obligated to
indemnify it (an 'Indemnifying Party') with reasonable promptness upon becoming
aware of the claim or other facts upon which a claim for indemnification will be
based; the notice shall set forth such information with respect thereto as is
then reasonably available to the Indemnified Party. The Indemnifying Party
shall, upon agreeing irrevocably in a form and substance reasonably satisfactory
to the Indemnified Party to be liable for all Claims in respect thereof, have
the right to undertake the defense of any such Claim asserted by a Third

<PAGE>
Party with counsel satisfactory to the Indemnified Party and the Indemnified
Party shall cooperate in such defense and make available all records and
materials requested by the Indemnifying Party in connection therewith at the
Indemnifying Party's expense. If the Indemnifying Party shall have assumed the
defense of the claim with counsel reasonably satisfactory to the Indemnified
Party, the Indemnifying Party shall not be liable to the Indemnified Party for
any legal or other expenses (other than for reasonable costs of investigation)
subsequently incurred by the Indemnified Party in connection with the defense
thereof. The Indemnifying Party shall not be liable for any Claim settled
without its consent, which consent may not be unreasonably withheld or delayed.

(b) Where any indemnity is claimed by a Party hereunder, or under any other
Operative Document, and the indemnity is in respect of any claim, loss,
liability or obligation owed by one Party to the other, the Party claiming such
indemnity shall take all reasonable steps (the cost of which shall be borne by
the Indemnifying Party) to mitigate such claim, loss, liability or obligation.

(c) Any indemnification hereunder, or under any other Operative Document,
shall be made on an after tax basis and net of any insurance proceeds recovered
by the relevant Indemnified Party; provided, however, that if, following the
payment to an Indemnified Party of any amount under this Article XIII, or under
any other Operative Document, such Indemnified Party recovers any insurance
proceeds in respect of the Claim for which such indemnification payment was
made, the Indemnified Party shall promptly pay an amount equal to the amount of
such proceeds (but not exceeding the amount of such indemnification payment) to
the Indemnifying Party.

SECTION 13.05. Survival of Representations and Warranties. The
representations and warranties contained herein shall survive (i) in respect of
the representations and warranties set forth in Sections 10.02(b), 10.04, 10.05,
10.06, 10.07 and 10.09, to the extent such representations and warranties relate
to Glaxo Products or Glaxo Rights, one year from the relevant Launch Date or, if
development work in respect of that Ranitidine Product or OTC Switch Product in
connection with which such representations and warranties were given is
terminated prior to any such sale, one year from such termination or (ii) in
respect of all other representations and warranties two years from the date of
this Agreement; provided, however, that a claim may be brought in respect of any
breach of representation or warranty after the date which is one year from the
date of such commercial sale or termination or two years from the date of this
Agreement, as the case may be, if the Person seeking to make such claim shall
have given written notice to the person against whom such claim is sought to be
made prior to such date specifying the breach complained of.

ARTICLE XIV
TERM AND TERMINATION

SECTION 14.01. Term of Agreement. Except in those circumstances referred to
in Sections 12.03(b)(iv), 14.02 and 14.03 it is understood and agreed by each of
the Parties that this Agreement is intended to continue without interruption
until specifically terminated by unanimous consent of the Parties, and that upon
termination the rights and obligations of the Parties hereunder shall continue
to be in effect until the final distribution of the assets of all JV Entities to
the Parties.

SECTION 14.02. Ranitidine OTC Not Approved. (a) In the event:

(i) an NDA Approval for Ranitidine OTC is not received from the FDA by
the earlier of (x) five years from the date of submission of such NDA or
(y) January 1, 1998, if such NDA has not then been filed; or

(ii) W-L and Glaxo agree in writing, with specific reference to this
Section 14.02(a)(ii), that there is no reasonable likelihood that an NDA
Approval for Ranitidine OTC will be received from the FDA within the period
specified in clause (i);

then either Party may give written notice to the other of its intention to
terminate this Agreement, such notice if given pursuant to clause (i) above to
be given within six months of the fifth anniversary of the date of submission of
such NDA or January 1, 1998, as the case may be, or if given pursuant to clause
(ii) above, such notice to be given within six months of such written agreement.

<PAGE>
(b) If notice is given pursuant to Section 14.02(a) and no Ranitidine Product or
OTC Switch Product is then under development (other than Ranitidine OTC being
developed for the purposes of the Ranitidine NDA) or being marketed by any JV
Entity:

(i) all Ranitidine Rights and any NDA filed with respect to a
Ranitidine OTC Product shall revert to Glaxo; and

(ii) following the winding up of the JV Entities pursuant to Section
14.05 this Agreement and the relevant Operative Documents shall immediately
be terminated subject only to Sections 14.02(d), 14.06 and 15.12.

(c) If notice is given pursuant to Section 14.02(a) and any Ranitidine
Product or OTC Switch Product is then being marketed by any JV Entity or is
being developed therefor:

(i) the JV Entities, the JV Businesses, this Agreement and the other
Operative Documents shall continue (subject to Section 14.04) in respect of
all such products until such time as the arrangements or agreements are
terminated pursuant to this Agreement or until such time as both Parties
agree otherwise and this Agreement shall in all other respects immediately
be terminated; and

(ii) the Parties shall negotiate in good faith such arrangements as
may be required to ensure the continued operation of the JV Businesses with
respect to such products.

(d) Should Glaxo or any Affiliate of Glaxo receive NDA Approval for an NDA
for Ranitidine OTC prior to the third anniversary of the termination of this
Agreement (in whole or in part) pursuant to this Section 14.02 Glaxo shall
promptly notify W-L of receipt of the NDA Approval for Ranitidine OTC (the 'NDA
Notice') and W-L shall have the option exercisable, by notice in writing to
Glaxo, at any time during the 90 calendar day period following W-L's receipt of
the NDA Notice to reconstitute this Agreement and the JV Entities, as of, and on
the terms existing as of, the date of termination, and in the event of W-L's
exercise of such option, each of the Parties shall be deemed to be parties to a
global principles agreement identical to this Agreement as of the date of its
termination without any further action on the part of any party hereto or
thereto.

(e) Without prejudice to the requirements and provisions of Section
14.02(d), prior to the third anniversary of the termination of this Agreement
(in whole or in part) pursuant to this Section 14.02 neither Party shall enter
into any arrangements which would be inconsistent with, or which would obstruct
or prevent, the exercise of, or the consummation of W-L's rights under, the
option set forth in Section 14.02(d).

SECTION 14.03. Liquidation; Breach; Optional Termination. (a) W-L or Glaxo
may terminate this Agreement by written notice to the other:

(i) if proceedings shall be commenced or a petition shall be filed in
a court of competent jurisdiction seeking (x) relief in respect of Glaxo
(in the case of a notice given by W-L) or W-L (in the case of a notice
given by Glaxo) as the case may be (in this clause (i) the 'Identified
Party'), or of a substantial part of the property or assets of the
Identified Party, under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other provision of Federal or
state bankruptcy, insolvency, receivership or similar law in any
jurisdiction (including Part II of the United Kingdom's Insolvency Act
1986), (y) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official of the Identified Party, or a substantial
part of its property or assets or (z) the winding-up or liquidation of the
Identified Party; and such proceedings or petition shall continue
undismissed for 60 days, or an order or decree approving or ordering any of
the foregoing shall be entered;

(ii) if a Party (in this clause (ii) and Section 14.03(b) the
'Relevant Party') shall be in breach or default in the performance of any
obligation under this Agreement or any of the Operative Agreements and such
breach is not remedied within six months of receipt by the Relevant Party
of written notice specifying, in reasonable detail, the breach or default
complained of, referring specifically to this Section 14.03 and requiring
that such breach or default be remedied within six months of receipt;
provided, however, that such notice is given within 60 calendar days of the
date on which the Party giving such notice first knew, or should, in all
the circumstances, reasonably

<PAGE>
have known of the relevant breach; and provided, further, that failure to
remedy such breach or default would have a materially adverse affect on the
JV Businesses as a whole;

(iii) effective on the 20th anniversary of the Launch Date of a
Ranitidine Product by the U.S. Partnership or any subsequent fifth
anniversary thereof; provided, however, that such written notice of
termination shall have been provided not less than 5 years and not more
than 6 years prior to the effective date of such termination; or

(iv) effective on the 25th anniversary of the Launch Date of a
Ranitidine Product by the U.S. Partnership or any subsequent fifth
anniversary thereof (the 'Effective Date'); provided however that such
written notice of termination shall have been provided not less than 5
years and not more than 6 years prior to the Effective Date.

(b) In the event that a Party is entitled to terminate this Agreement
pursuant to Section 14.03(a)(ii) and, at that time, any Ranitidine Product or
OTC Switch Product is then being marketed by any JV Entity or is being developed
therefore, such Party (the 'Entitled Party') shall be entitled to elect, in the
written notice given pursuant to Section 14.03(a), that the JV Entities and the
JV Businesses in respect of such products and this Agreement and the other
Operative Documents shall continue (subject to Section 14.04) only in respect of
such products and this Agreement and the other Operative Documents shall
otherwise immediately be terminated.

(c) In connection with the making of an election pursuant to Section
14.03(b), the Parties shall negotiate in good faith such arrangements as may be
required to ensure the continued operation of the JV Businesses.

(d) If notice is given pursuant to Section 14.03(a)(iii) and any Ranitidine
Product or OTC Switch Product is then being marketed by any JV Entity or is
being developed therefor:

(i) the JV Entities and the JV Businesses, this Agreement and the
other Operative Documents shall continue in respect of all such products
until such time as the arrangements or agreements are terminated pursuant
to this Agreement or until such time as both Parties may agree otherwise
and this Agreement shall in all other respects immediately be terminated;
and

(ii) the Parties shall negotiate in good faith such arrangements to
ensure the continued operation of the JV Businesses with respect to such
products.

(e) if notice is given pursuant to Section 14.03(a)(iv) by Glaxo and any
Ranitidine Product or OTC Switch Product (the 'Existing Product') is then being
marketed by any JV Entity or is being developed therefor, Glaxo shall, on the
Effective Date, purchase and accept conveyance from W-L and its Affiliates of
the whole of Glaxo's and its Affiliates' JV Equity at a price to be agreed
between the Parties or, if they are unable to agree upon such price within 90
calendar days, at the Going Concern Value of the relevant JV Equity as of the
Effective Date determined in accordance with Section 15.03, provided, however,
that for the purposes of calculating such Going Concern Value, each Operating
Document relating to the Existing Product or Products and the JV Business
relating thereto shall be deemed to continue for a period of 15 years from the
Effective Date.

(f) if notice is given pursuant to Section 14.03(a)(iv) by W-L, all JV
Entities, JV Businesses and all Operative Documents shall immediately terminate
and W-L shall not be entitled to any compensation therefor.

SECTION 14.04. Continued Arrangements. If any JV Entities or JV Businesses,
and the provisions of any Operative Documents, are to continue in accordance
with Sections 12.03(b), 14.02(c) or 14.03(b) (a 'Continuation') the then
existing Operative Documents relating to the Ranitidine Products and OTC Switch
Products then being marketed by any JV Entity or being developed therefor shall
continue as set forth in those Sections except as may otherwise be agreed by the
relevant Parties and except that:

(a) in the case of any Continuation pursuant to Section 12.03(b) or
14.03(b), each existing license agreement, services agreement, supply
agreement or other Operative Document which is so to continue shall only
continue, for a period of 5 years from the date of the Acquisition Notice
or the notice given pursuant to Section 14.03(a) provided, however, that
any such Operative Documents may be terminated by the Non-Affected Party or
the Entitled Party, as the case may be, at any time on reasonable notice
(not to be less than 3 months); and

<PAGE>
(b) in the case of any continuation pursuant to Section 14.02(c), all
Operative Documents which are so to continue shall terminate 10 years from
the date of the notice given pursuant to Section 14.02(c).

SECTION 14.05. Winding Up and Liquidation. During the six-month period
following receipt of a notice of termination pursuant to Sections 14.02 or
14.03, and pending the distribution and payments required by the relevant
Section and subject to any continuing business under Sections 12.03(b),
14.02(c), 14.03(b) and the other rights of the Parties under those Sections, the
JV Entities shall continue solely for the purposes of winding up their affairs
in an orderly manner, liquidating such JV Entities and their respective assets,
and satisfying the claims of their creditors and no Party shall take any action
that is inconsistent with, unnecessary to or inappropriate for such purposes.
During the period of winding up, the rights and obligations set forth in this
Agreement with respect to the management of the JV Entities will continue and
the Governing Board of each JV Entity shall continue to make all decisions
relating to the conduct of any business or operations, including, without
limitation, any decisions relating to the sale or other disposition of that JV
Entity's assets.

SECTION 14.06. Survival of Rights. For the avoidance of doubt any exercise
by any of the Parties of their rights to terminate this Agreement and/or the
Operative Documents under Article XII or this Article XIV shall be without
prejudice to any other rights (including, without limitation, any of the
remedies set forth in Section 15.13) the Parties may have in respect of any
breach or default by the other Party or any of its Affiliates of its obligations
hereunder or under the Operative Documents, or otherwise.

ARTICLE XV
GENERAL

SECTION 15.01. Expenses. Except as expressly provided herein, each Party
shall bear its own expenses, fees, costs and disbursements, and those of its
Affiliates, incurred in connection with this Agreement and the Operative
Documents and the consummation of the transactions contemplated hereby and
thereby and preparation therefor including:

(a) in respect of W-L all expenses, fees, costs and disbursements of
Bear Stearns & Co. Inc. arising in connection with the transactions
contemplated by this Agreement; and

(b) all Taxes incurred in connection with the assignment and transfer
of assets to any JV Entity; provided, however, that, to the extent legally
able to do so, each Party shall, and shall cause its Affiliates and the JV
Entities to, deliver to any other Party or any Affiliate of any Party or JV
Entity that is required by law to collect any Taxes exemption certificates
in form and substance satisfactory to such Party, Affiliate or JV Entity,
as the case may be, with respect to such Taxes.

SECTION 15.02. Assignment and Binding Effect. Except as provided in Article
XII or 14.03(e) and any of the rights or obligations hereunder shall not be
assignable by any Party without the prior written consent of the other Parties.
This Agreement shall be binding upon and inure to the benefit of the Parties and
their respective permitted successors and assigns.

SECTION 15.03. Inability To Agree upon Value. In the event the Parties
cannot agree on any determination of compensation or value required by Section
12.03(a) or 14.03(e) within such period as this Agreement may provide for such
agreement to be reached by the Parties, each of W-L and Glaxo shall choose an
investment banker to determine such compensation or value, which value shall be
the average of the two values determined by such investment bankers, unless such
values vary by more than ten percent, in which case the compensation or value
shall be one or the other of such values as decided by an investment banker
selected by the first two investment bankers.

SECTION 15.04. Corporate Names. In the event of the transfer by any Party
(the 'Exited Party') of the whole of its and its Affiliates' JV Interest to any
Third Party or to the other Party or its Affiliates pursuant to Section 12.02 or
to the other Party or its Affiliates pursuant to Article XIV, the successor to
such JV Interest and the other Party shall cease, and shall ensure that each of
their Affiliates and each of the JV Entities cease, to use any corporate name or
logo of the Exited Party, or any colorable imitation thereof, in connection with
the JV Businesses or otherwise.

<PAGE>
SECTION 15.05. Governing Law; Jurisdiction; Consent to Service of Process;
Agent for Service. (a) This Agreement shall be governed, construed and enforced
in accordance with the law of the State of New York without regard to principles
of conflicts of law.

(b) Each of the Parties hereby irrevocably and unconditionally submits, for
itself and its property, to the jurisdiction of any New York State court sitting
in New York or any Federal court of the United States sitting in the Borough of
Manhattan in the City of New York, and any appellate court from any such court,
in any suit, action or proceeding arising out of or relating to this Agreement
or any of the Operative Documents, or for recognition or enforcement of any
judgment, and each of the Parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such suit, action or proceeding may be
heard and determined in such New York State court or, to the extent permitted by
law, by removal or otherwise, in such Federal court. It shall be a condition
precedent to each Party's right to bring any such suit, action or proceeding
that such suit, action or proceeding, in the first instance, be brought in such
New York State court or, to the extent permitted by law, by removal or
otherwise, in such Federal court (unless such suit, action or proceeding is
brought solely to obtain discovery or to enforce a judgment), and if each of
such New York state court and such Federal court refuses to accept jurisdiction
with respect thereto, such suit, action or proceeding may be brought in any
other court with jurisdiction. Neither Party may move to (i) transfer any such
suit, action or proceeding from such New York State court or Federal court to
another jurisdiction, (ii) consolidate any such suit, action or proceeding
brought in such New York State court or Federal court with a suit, action or
proceeding in another jurisdiction or (iii) dismiss any such suit, action or
proceeding brought in such New York State court or Federal court for the purpose
of bringing the same in another jurisdiction. Each Party agrees that a final
judgment in any such suit, action or proceeding shall be conclusive and may be
enforced in any other jurisdiction by suit on the judgment or in any other
manner provided by law.

(c) Each of the Parties hereby irrevocably and unconditionally waives, to
the fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any of the Operative
Documents in any New York State court sitting in New York or any Federal court
sitting in the Borough of Manhattan in the City of New York. Each Party hereby
irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such suit, action or proceeding in any
such court and further waives the right to object, with respect to such suit,
action or proceeding, that such court does not have jurisdiction over such
Party.

(d) Each Party irrevocably consents to service of process on it or any
agent for service appointed from time to time (including agents for service
appointed pursuant to clause (e) of this Section 15.05) in the manner provided
for notices in Section 15.06. Nothing in this Agreement shall affect the right
of either Party to serve process in any other manner permitted by law.

(e) Glaxo hereby designates and appoints Glaxo Americas Inc., and such
other persons (reasonably satisfactory to W-L) hereafter selected by it,
irrevocably agreeing in writing so to serve, as its agent to receive on its
behalf service of all process in any proceedings referred to in clause (b) of
this Section 15.04, such service being hereby acknowledged by Glaxo to be
effective and binding service in every respect.

SECTION 15.06. Notices. All notices, demands, requests and other
communications required or permitted to be given hereunder shall be in writing
and deemed duly given on the date delivered by hand, mailed by registered or
certified mail, postage prepaid, or by overnight courier or by facsimile
transmission the receipt of which is confirmed by telephone, to the respective
Parties at the following addresses (or at such other address for a Party as
shall be specified by like notice):

if to W-L or any W-L Participant:

Warner-Lambert Company
201 Tabor Road
Morris Plains, New Jersey 07950
United States

<PAGE>
Attn: (1) Vice President, Planning
Investment and Development

and (2) Vice President and
General Counsel

Facsimile: 201-540-3927

if to Glaxo or any Glaxo Participant:

The Company Secretary
Glaxo Holdings p.l.c.
Lansdowne House
Berkeley Square
London WIX GBP
England
Facsimile 071-408-0228

SECTION 15.07. Parties in Interest. Nothing in this Agreement, express or
implied, is intended or shall be construed to confer upon or give to any Person
other than the Parties any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement, all of which shall be for the sole and
exclusive benefit of the Parties.

SECTION 15.08. Press Releases. All press releases or other public
communication relating to the terms of this Agreement, the JV Entities and the
other Operative Documents (other than announcements, summaries or reports of
previously disclosed information) shall be subject, except as otherwise required
by law (in which case the relevant Party will if practicable allow the other
Party an opportunity to review a draft thereof prior to release), to the prior
approval of each of W-L and Glaxo, which approval shall not be unreasonably
withheld.

SECTION 15.09. Headings. The headings of the Sections and Articles of this
Agreement are inserted as a matter of convenience and for reference purposes
only, and are of no binding effect.

SECTION 15.10. Entire Agreement; Amendment; Severability; Termination of
Existing Arrangements. (a) As at the Closing Date of this Agreement, this
Agreement (including the Schedules hereto) and the Operative Documents represent
the entire understanding and agreement between the Parties with respect to the
subject matter hereof. This Agreement can be amended, modified, supplemented,
extended, terminated (except as provided in Articles XII or XIV hereof),
discharged or charged only by an agreement in writing which makes specific
reference to this Section and which is signed by all the Parties.

(b) If and to the extent that any court of competent jurisdiction holds any
provision (or any part thereof) of this Agreement to be invalid or
unenforceable, such holding shall not affect the validity of the remainder of
this Agreement.

(c) The Parties hereby agree to terminate as of the Closing Date of this
Agreement, the Confidentiality Agreement between them dated June 15, 1992 and
the Standstill Agreement between them dated June 15, 1992.

SECTION 15.11. Waiver and Compliance. Any failure of Glaxo or W-L to comply
with any obligation, covenant, agreement or condition herein contained may be
expressly waived, in writing only, by the other Parties and such waiver shall be
effective only in the specific instance and for the specific purpose for which
made or given.

SECTION 15.12. Confidentiality. (a) Neither Party shall, or shall permit
their Affiliates to, disclose to any Third Party any information (that is not
publicly available or generally known other than by breach of the provisions of
this Agreement or made available by a Third Party which is not in breach of an
obligation of confidentiality):

(i) regarding the terms of this Agreement and of the other Operative
Documents and in particular the terms of the provisions relating to a
Change of Control contained in Section 12.03 hereof or in any other of the
Operative Documents; or

<PAGE>
(ii) obtained by such Party or its Affiliates pursuant to or in
connection with the negotiation, delivery and performance of this Agreement
or the other Operative Documents or the consummation of the transactions
contemplated thereby to any Person, other than its Affiliates;

except in each case:

(w) with the prior written consent of the other Party;

(x) to the extent necessary to comply with law or the valid order of a
court of competent jurisdiction, in which event the Party making such
disclosure shall so notify the other Party as promptly as practicable (and
if possible, prior to making such disclosure) and shall seek confidential
treatment of such information;

(y) in connection with enforcement of such Party's rights hereunder;
or

(z) to a professional advisor to such Party or its Affiliates in
connection with the performance by such Party or its Affiliates of its
obligations hereunder or thereunder;

provided, however, that any disclosure which is otherwise permitted hereunder
may be made to W-WCHP which shall not disclose such information to any Person
except as may be necessary to deal with the subject of the disclosure.

(b) Upon termination of this Agreement or any Permitted Transfer to a Third
Party, each Party will return all documents, work papers and other material of
the other Party, specifically requested to be returned by a Party in writing,
relating to the transactions contemplated hereby and by the Operative Documents,
and all copies of such materials, whether so obtained before or after the
execution hereof, to the Party furnishing the same. The obligations of the
Parties under this Section 15.12 shall survive the termination of this
Agreement.

SECTION 15.13. Specific Enforcement. Each Party acknowledges and agrees
that the other Party would be irreparably damaged in the event any of the
provisions of this Agreement or the Operative Documents were not performed by it
in accordance with their specific terms or were otherwise breached. It is
accordingly agreed that each Party shall be entitled to an injunction or
injunctions to prevent breaches of such provisions and specifically to enforce
such provisions, in addition to any other remedy to which such Party may be
entitled, at law or in equity.

SECTION 15.14. Counterparts. This Agreement may be executed in
counterparts, and by different Parties on separate or the same counterparts,
each of which shall be deemed an original, but all of which shall constitute one
and the same instrument.

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly
executed in their respective names and on their behalf, all as of the date first
above written.

WARNER-LAMBERT COMPANY,

by /s/ Fred G. Weiss
...................................
Name: Fred G. Weiss
Title: Vice President

GLAXO HOLDINGS p.l.c.,

by /s/ Jeremy A. W. Strachan
...................................
Name: Jeremy A. W. Strachan
Title: Executive Director

<PAGE>
CONFORMED COPY

GLOBAL PRINCIPLES AGREEMENT

between

WARNER-LAMBERT COMPANY

and

WELLCOME PLC

________________________

Dated December 17, 1993

________________________

<PAGE>

TABLE OF CONTENTS

ARTICLE I

Definitions
<TABLE>
<S> <C> <C>
SECTION 1.01. Definitions. . . . . . . . . . . . . . . . 1
SECTION 1.02. Terms Generally. . . . . . . . . . . . . . 14

ARTICLE II

Closings

SECTION 2.01. Closings . . . . . . . . . . . . . . . . . 15
SECTION 2.02. Core Territory . . . . . . . . . . . . . . 15
SECTION 2.03. Subsequent Closings . . . . . . . . . . . 16
SECTION 2.04. Deemed Closing Date of U.S. Partnership. . 16

ARTICLE III

Management of JV Entities; Funding

SECTION 3.01. Management of the JV Entities .. . . . . . 17
SECTION 3.02. Governing Boards; Membership; Powers . . . 17
SECTION 3.03. Quorum; Notice; Meetings . . . . . . . . . 20
SECTION 3.04. Designation of New Representatives
or Alternative Representatives . . . . . 20
SECTION 3.05. Other Positions of Representatives . . . . 21
SECTION 3.06. Annual Operating Plans; Incentive
Compensation Plans; Initial Plans;
Plan Compliance . . . . . . . . . . . . 21
SECTION 3.07. No Remuneration . . . . . . . . . . . . . 22
SECTION 3.08. Funding . . . . . . . . . . . . . . . . . 22
SECTION 3.09. Governance; Percentage Interest of
Wellcome in U.S. Partnership . . . . . . 23
SECTION 3.10. Expenses of JV Entities; Adjustments . . . 24
SECTION 3.11. Deliberations . . . . . . . . . . . . . . 25
SECTION 3.12. Bank Accounts . . . . . . . . . . . . . . 25

ARTICLE IV

Operations; JV Entities

SECTION 4.01. General . . . . . . . . . . . . . . . . . 25
SECTION 4.02. Form and Structure of JV Entities . . . . 25
</TABLE>
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SECTION 4.03. Equitable Adjustment . . . . . . . . . . . 30
SECTION 4.04. Zovirax Arrangements . . . . . . . . . . . 31
SECTION 4.05. Management of JV Entities . . . . . . . . 33
SECTION 4.06. Operations to be Conducted in Accordance
with Annual Operating Plan and
Direction of the Relevant Governing
Board . . . . . . . . . . . . . . . . . 33
SECTION 4.07. Asset Contributions. . . . . . . . . . . . 33
SECTION 4.08. Management Standards . . . . . . . . . . . 34

ARTICLE V

Glaxo Arrangement and Wellcome Profit Participation

SECTION 5.01. Treatment of Glaxo Arrangement . . . . . . 34
SECTION 5.02. Payments . . . . . . . . . . . . . . . . . 35
SECTION 5.03. Wellcome Profit Participation and
Development Costs Obligations. . . . . . 36
SECTION 5.04. Control of Glaxo Arrangement
Products . . . . . . . . . . . . . . . . 37

ARTICLE VI

New Products

SECTION 6.01. Products Developed by the Parties . . . . 38
SECTION 6.02. OTC Switch Candidates . . . . . . . . . . 38
SECTION 6.03. Acquisition by a Party . . . . . . . . . . 40
SECTION 6.04. Acquisition by a JV Entity . . . . . . . . 41
SECTION 6.05. Continuing Development . . . . . . . . . . 41
SECTION 6.06. Use of Information . . . . . . . . . . . . 41

ARTICLE VII

Manufacturing; Supply; Services

SECTION 7.01. Manufacturing and Supply . . . . . . . . . 42
SECTION 7.02. Services . . . . . . . . . . . . . . . . . 42
SECTION 7.03. Operating Issues . . . . . . . . . . . . . 43
SECTION 7.04. Alternate Manufacturing Sites. . . . . . . 43
SECTION 7.05. Audits and Inspections . . . . . . . . . . 43

</TABLE>
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ARTICLE VIII

Change of Control

SECTION 8.01. Definition of Change of Control;
Response to Third Parties . . . . . . . 44
SECTION 8.02. Effect of Change of Control . . . . . . . 45

ARTICLE IX

Covenants of Wellcome and W-L

SECTION 9.01. Access . . . . . . . . . . . . . . . . . . 45
SECTION 9.02. Financial Information . . . . . . . . . . 45
SECTION 9.03. Books and Records . . . . . . . . . . . . 46
SECTION 9.04. Conduct of Business . . . . . . . . . . . 46
SECTION 9.05. Approvals and Consents . . . . . . . . . . 47
SECTION 9.06. Regulatory . . . . . . . . . . . . . . . . 47
SECTION 9.07. Further Assurances . . . . . . . . . . . . 48
SECTION 9.08. Tax Matters . . . . . . . . . . . . . . . 48
SECTION 9.09. Employees; Sharing of Certain Costs. . . . 48

ARTICLE X

Post Closing Covenants of Wellcome and W-L

SECTION 10.01. Treatment of OTC Zovirax; Regulatory . . . 49
SECTION 10.02. Further Assurances . . . . . . . . . . . . 50
SECTION 10.03. Tax Matters. . . . . . . . . . . . . . . . 51
SECTION 10.04. U.S. Export Controls Compliance;
Restrictive Trade Practices Act 1976 . . 51
SECTION 10.05. JV Entity Books and Records; Audits. . . . 52
SECTION 10.06. Intellectual Property Rights . . . . . . . 52
SECTION 10.07. Access . . . . . . . . . . . . . . . . . . 53
SECTION 10.08. Benefit of Contracts . . . . . . . . . . . 53
SECTION 10.09. Use of Parent Names. . . . . . . . . . . . 54
SECTION 10.10. Competition. . . . . . . . . . . . . . . . 54
SECTION 10.11. Insurance. . . . . . . . . . . . . . . . . 55
SECTION 10.12. JV Prescription Zovirax. . . . . . . . . . 56
SECTION 10.13. Scope of JV Business; Non-Violation
of Existing Obligations. . . . . . . . 56
SECTION 10.14. Conduct of Business. . . . . . . . . . . . 56
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ARTICLE XI

Conditions to Wellcome's and W-L's Obligations

SECTION 11.01. Certain Action . . . . . . . . . . . . . . 57
SECTION 11.02. Government Approvals and Consents . . . . 57
SECTION 11.03. Tax Rulings . . . . . . . . . . . . . . . 58
SECTION 11.04. Representations and Warranties . . . . . . 58
SECTION 11.05. Performance of Covenants . . . . . . . . . 58
SECTION 11.06. Authorization of Agreements . . . . . . . 59
SECTION 11.07. Execution of Operative Documents . . . . . 59
SECTION 11.08. Certificate of Compliance . . . . . . . . 59
SECTION 11.09. Assignment of Certain Contracts
and Licenses . . . . . . . . . . . . . . 59

ARTICLE XII

Transfer of Joint Venture Interest

SECTION 12.01. Limitation on Right to Transfer . . . . . 60
SECTION 12.02. Permitted Transfers . . . . . . . . . . . 60

ARTICLE XIII

Indemnification

SECTION 13.01. Responsibility for Liabilities and
Expenses . . . . . . . . . . . . . . . . 61
SECTION 13.02. Indemnification . . . . . . . . . . . . . 63

ARTICLE XIV

Term and Termination

SECTION 14.01. Term of JV Entity . . . . . . . . . . . . 65
SECTION 14.02. OTC Zovirax Not Approved . . . . . . . . . 65
SECTION 14.03. Wellcome Events of Termination;
Remedies . . . . . . . . . . . . . . . . 68
SECTION 14.04. W-L Events of Termination; Remedies . . . 72
SECTION 14.05. W-L's Option to Purchase Wellcome's
Interest in the Glaxo Arrangement;
Wellcome Tag-Along Right . . . . . . . . 75
SECTION 14.06. Waiver of Right to Terminate . . . . . . . 76
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SECTION 14.07. Winding Up and Transfer of Assets;
Liquidation. . . . . . . . . . . . . . . 76
SECTION 14.08. Rationalization of Interests; Tax
Indemnification. . . . . . . . . . . . . 77
SECTION 14.09. Termination of Related Agreements. . . . . 77
SECTION 14.10. Failure to Satisfy Required Conditions . . 78
SECTION 14.11. Definitional Clarification . . . . . . . . 78

ARTICLE XV

General

SECTION 15.01. Expenses . . . . . . . . . . . . . . . . . 78
SECTION 15.02. Assignment and Binding Effect . . . . . . 79
SECTION 15.03. Inability to Agree Upon Value . . . . . . 79
SECTION 15.04. Financial Consolidation. . . . . . . . . . 79
SECTION 15.05. Notices. . . . . . . . . . . . . . . . . . 79
SECTION 15.06. Parties in Interest. . . . . . . . . . . . 80
SECTION 15.07. Press Releases . . . . . . . . . . . . . . 80
SECTION 15.08. Headings; Schedules; Counterparts . . . . 80
SECTION 15.09. Entire Agreement; Amendment;
Severability . . . . . . . . . . . . . . 81
SECTION 15.10. Waiver; Compliance . . . . . . . . . . . . 81
SECTION 15.11. Confidentiality. . . . . . . . . . . . . . 81
SECTION 15.12. Governing Law; Jurisdiction; Consent
to Service of Process; Agent for
Service. . . . . . . . . . . . . . . . . 82

Schedules

Schedule 1 Format for Calculating Certain Profits
and Losses

</TABLE>

<PAGE>
CONFORMED COPY

GLOBAL PRINCIPLES AGREEMENT dated December 17, 1993 (the 'Agreement'), by
and between WARNER-LAMBERT COMPANY, a Delaware corporation ('W-L') and WELLCOME
plc, a company incorporated in England ('Wellcome').

W-L and Wellcome are each engaged in the non-prescription consumer health
care products business. It is the desire of W-L and Wellcome, directly or
through their respective affiliates, to establish joint ventures in which their
respective non-prescription consumer health care businesses will be combined in
the United States, Canada, Australia and member states of the European Union and
countries in the Other European Territory (as hereinafter defined) and, at
future dates, in other countries throughout the world, including countries
within Eastern Europe, to which the Parties agree to extend their joint
ventures. While the specific form of the joint ventures may vary in different
countries, it is the intention of the parties, by this Agreement, to agree upon
certain principles which will govern the management and strategic development of
the joint ventures as agreed and implemented by the Parties.

NOW, THEREFORE, in consideration of the premises and the mutual covenants,
agreements, representations and warranties herein contained, and for other good
and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto intending to be legally bound hereby agree as
follows:

ARTICLE I
DEFINITIONS

SECTION 1.01. Definitions.

'Administrative Services Allocation' shall mean, for purposes of
calculating Special Profit and Loss, an amount equal to 2% of Net Sales by a JV
Entity of (a) OTC Zovirax in the United States or (b) any OTC Switch Product in
the United States or the Remainder of the World, such Administrative Services
Allocation amount not to exceed U.S. $5 million in respect of each product in
each country (non-U.S. Dollar currencies to be converted to U.S. Dollars
pursuant to the Procedure for Converting Net Sales) in any Fiscal Year. Such
U.S. $5 million allocation limitation will be adjusted for each product for each
relevant Fiscal Year following the year in which such limitation is reached by a
percentage which shall equal the percentage change from the previous year in the
Consumer Price Index (1982-84=100), all items less energy, published by the
Bureau of Labor Statistics of the United States Department of Labor, or any
replacement index.

'Affiliate' with respect to any Person, shall mean any other Person
controlling, controlled by or under direct or indirect common control with such
Person but shall be deemed not to include a JV Entity. A Person shall be deemed
to control a corporation (or other entity) if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of such corporation (or other entity), whether through the ownership of
voting securities, by contract or otherwise.

'Annual Operating Plan' shall have the meaning set forth in Section 3.06.

'Base Business Profit and Loss' shall mean, in the case of each JV Entity,
its Profit and Loss less its Export Profit and Loss, Glaxo Profit and Loss,
Special Profit and Loss and any items allocated pursuant to Section 4.02(c)(vi),
the result of which, if positive, would be Base Business Profit or, if negative,
would be Base Business Loss.

'Benchmark Direct Profit Contribution Target' shall have the meaning set
forth in Schedule 2 to the Supplemental Document Package.

'Business Day' shall mean, with respect to any particular Territory, a day
of the year in which banks are neither required nor authorized to close in such
Territory.

'Change of Control' shall have the meaning set forth in Section 8.01.

'Certified Public Accountants' shall mean the independent certified public
accountants of Wellcome, W-L or any JV Entity, as the case may be.

<PAGE>
'Closing' shall have the meaning set forth in Section 2.01.

'Closing Date' shall have the meaning set forth in Section 2.01.

'Core Territory' shall mean Australia, Canada, the EC Territory, the Other
European Territory and the United States. For the purpose of this Agreement,
references to Australia shall also be deemed to include New Zealand.

'Cost of Goods Sold' shall have the meaning set forth in Schedule 1 hereto.

'Direct Profit Contribution' shall mean (i) Net Sales of JV Prescription
Zovirax and OTC Zovirax less (ii) the sum of Cost of Goods Sold, Promotion and
Advertising applicable thereto.

'EC Territory' shall mean the Territory made up of the following countries:
Belgium, Denmark, France, Germany, Greece, Ireland, Italy, Luxembourg, the
Netherlands, Portugal, Spain and the United Kingdom.

'Exclusivity' shall mean having the exclusive right to make, use and sell a
compound in the United States non-prescription consumer health care market due
to the existence of a valid compound patent relating to such compound or the
granting of exclusivity under the Drug Price Competition and Patent Term
Restoration Act of 1984, Pub. L. No. 98-417, 98 Stat. 1585-1605 (1984) or
similar legislation enacted in the United States.

'Existing Products' shall mean products presently included in the Wellcome
Contributed Business and W-L Contributed Business as identified on Schedule
1.01(a) and 1.01(b), respectively, in the Supplemental Document Package.

'Excess Sales' shall mean the amount, if any, by which Net Sales for the
two calendar months prior to a Closing Date exceed the product of (a) Net Sales
for the comparable two-month period for the prior year multiplied by (b) a
fraction, the numerator of which is Net Sales for the ten-month period preceding
the two-month period preceding such Closing Date, and the denominator of which
is Net Sales for the comparable ten-month period for the prior year.

'Export Profit and Loss' shall mean, in the case of each JV Entity, its Net
Sales to customers outside its Territory (both third-party customers and, for
purposes of this definition, JV Entities), less the items of (income)/expense
identified on Schedule 1 hereto relating to such extra-territorial Net Sales,
the result of which, if positive, would be Export Profit or, if negative, would
be Export Loss.

'FDA' shall mean the United States Federal Food and Drug Administration or
any successor agency of the United States.

'Fiscal Quarter' shall mean in the United States, a three-month period
ending on March 31, June 30, September 30 and December 31, and in the Remainder
of the World, a three-month period ending on February 28 (or 29), May 31, August
31 and November 30.

'Fiscal Year' shall mean in the United States the calendar year, and in the
Remainder of the World, the twelve-month period ending November 30.

'Fully Allocated Cost' shall mean (i) in the case of products, all directly
attributable costs for materials and labor plus an appropriate allocation of
indirect costs which support the manufacturing of such products, or (ii) in the
case of the lease of property or the provision of services, all directly
attributable costs plus an appropriate allocation of indirect costs (including
depreciation and amortization) which support the provision of such property or
services, all as more fully described for products, property and services in the
Operative Documents.

'General Manager' shall have the meaning set forth in Section 4.05.

'Glaxo' shall mean Glaxo Holdings plc, a company incorporated under the
laws of England.

'Glaxo Arrangement' shall mean the worldwide arrangements between Glaxo and
W-L established pursuant to the principles set forth in the Global Principles
Agreement between W-L and Glaxo dated as of December 10, 1993, and as initially
implemented by the Partnership Agreement between W-L and Glaxo OTC Inc. dated as
of December 10, 1993.

'Glaxo Development Costs' shall mean the costs incurred by Glaxo, W-L, an
entity established pursuant to the Glaxo Arrangement or a JV Entity as
development costs of obtaining any required

<PAGE>
regulatory approval of claims, indications or dosage forms of products
attributable to the Glaxo Arrangement, as determined in accordance with U.S.
GAAP.

'Glaxo Management Fee' shall mean any amounts paid by Glaxo, an Affiliate
of Glaxo or an entity established pursuant to the Glaxo Arrangement in respect
of (i) the fixed percentage fee for field selling, detail field selling,
operations, general administration, corporate allocation and other
(income)/expense and (ii) any reimbursement of a JV Entity for the provision of
services to any such joint venture by a JV Entity at Fully Allocated Cost.

'Glaxo Profit and Loss' shall mean any profit or loss (for the avoidance of
doubt excluding income received by a JV Entity as a Glaxo Management Fee), net
of income tax, if any, payable by the JV Entity, attributable to any interest or
right in the Glaxo Arrangement held or owned by a JV Entity, W-L or an Affiliate
of W-L.

'Going Concern Value' shall mean the value determined in accordance with
Section 15.03 of a product or business of a JV Entity as if such product or
business were freely tradeable in the open market. Such valuation will not
reflect a premium for control or a discount for lack of marketability or
control.

'Governing Board' shall mean each Governing Board established in accordance
with Section 3.02 of this Agreement to manage the relevant JV Entity.

'Indebtedness' shall mean, for any Party or JV Entity (without
duplication): (a) obligations of such JV Entity for borrowed money (whether by
loan, the issuance and sale of debt securities or the sale of property to
another Person subject to an understanding or agreement, contingent or
otherwise, to repurchase such property from such Person); (b) obligations of
such JV Entity to pay the deferred purchase or acquisition price of property or
services, other than trade accounts payable (other than for borrowed money)
arising, in the ordinary course of business and accrued expenses so incurred, so
long as such trade accounts payable are payable within 120 days of the date the
respective goods are delivered or the respective services are rendered; (c)
indebtedness of others secured by a Lien on the property of such JV Entity,
whether or not the indebtedness so secured has been assumed by such JV Entity;
(d) obligations (contingent or otherwise) of such JV Entity in respect of
letters of credit, bankers' acceptances or similar instruments issued or
accepted by banks and other financial institutions for the account of such
Person; (e) capitalized lease obligations of such JV Entity; and (f)
indebtedness of others guaranteed by such JV Entity.

'JV Business' shall mean the combined Wellcome Contributed Business and W-L
Contributed Business in respect of any JV Entity, and the development,
marketing, distribution and selling by a JV Entity of such other consumer health
care products as may be added to such business from time to time in accordance
with the terms of this Agreement.

'JV Entity' shall mean in respect of the United States the U.S.
Partnership, and in respect of any other country such other organization as the
Parties may determine for the purpose of conducting the JV Business in that
country, it being understood that to the extent holding company structures are
utilized, the holding company and any entities it controls shall each be deemed
a JV Entity.

'JV Implementation Agreement' shall mean the agreement (or agreements) that
establish the structure of the JV Entity and provide for the JV Business to be
conducted in a relevant Territory in a form reflecting the provisions of this
Agreement with such alterations or additions as may be required by law or agreed
to by the Parties.

'JV Management' shall mean the General Manager and those persons appointed
by the General Manager to manage each of the JV Entities.

'JV Prescription Zovirax' shall mean a product sold by prescription having
Zovirax as its sole active ingredient in a cream form in three gram or less
packaging in the Remainder of the World.

'Launch Date' shall mean, in respect of OTC Zovirax, the earlier of (i) the
date of the first commercial sale of OTC Zovirax by the U.S. Partnership (other
than sales resulting from regional test marketing) or (ii) the date following an
NDA Approval that Wellcome approves in writing for the commercial distribution
of OTC Zovirax in the United States.

<PAGE>
'Lien' shall mean any lien, mortgage, pledge, security interest, charge or
encumbrance of any kind (including, without limitation, any conditional sales or
other title retention agreement, any lease in the nature thereof and any
agreement to give any of the foregoing).

'Line Extension' shall mean any extensions of Existing Products in any
Territory (or products hereafter contributed by a Party other than OTC Switch
Products) which (i) utilize the same trademark as an Existing Product (or a
product hereafter contributed by a Party) or (ii) are of the same or similar
class, category or formulation as an Existing Product (or a product hereafter
contributed by a Party other than OTC Switch Products) which is marketed by a JV
Entity.

'NDA' shall mean a New Drug Application, including any amendments or
supplements thereto, filed with the FDA pursuant to 21 U.S.C. 355 (1970), as
such statute may be amended at any time in the future, or any regulation
thereunder.

'NDA Approval' shall mean the receipt of final approval from the FDA of an
NDA or a supplemental NDA to make, use and sell in the United States a subject
product with labeling reasonably acceptable to the Parties which in the case of
OTC Zovirax shall include as an indication the treatment of recurrent genital
herpes.

'NDA Disapproval' shall have the meaning set forth in Section 5.03(g).

'Net Sales' shall mean gross invoice amounts on sales of products to third
party customers less the following deductions reasonably and properly incurred
in the ordinary course of business and paid or given: off invoice (i.e.,
non-performance discounts), quantity (including bracket pricing) and cash
discounts and any other adjustments, including but not limited to those granted
on account of price adjustments, billing errors, rejected goods, damaged goods,
recalls, returns, rebates, chargebacks and prime vendor rebates, fees,
reimbursements or similar payments granted or given to wholesalers or other
distributors, buying groups, health care insurance carriers or other
institutions, freight and insurance charges billed to the customer, custom or
excise duties, sales tax, value added tax and other taxes (except income taxes)
or duties relating to sales of products, any payment made in respect of sales of
products to any governmental or quasi-governmental body or agency.

'Non-Core Territory' shall mean all countries other than those countries
that constitute the Core Territory.

'Non-Originating Party' shall mean (a) with respect to a product, the Party
which did not make available to a JV Entity such product or any Line Extension
thereof, (b) with respect to any OTC Switch Product, the Party that did not (i)
offer the OTC Switch Candidate or (ii) acquire an OTC Switch Candidate that
resulted in such OTC Switch Product, (c) with respect to any product resulting
from the Glaxo Arrangement, any Party other than W-L and (d) with respect to a
product described in Section 6.03, the Party which has not acquired the product
or is not considering the acquisition of the product described therein.

'Operative Documents' shall mean this Agreement, the Wellcome Standstill
Agreement, the W-L Standstill Agreement, the Representations and Warranties
Agreement, the JV Implementation Agreements and all ancillary documents referred
to herein and therein to be executed pursuant to this Agreement.

'Originating Party' shall mean (a) with respect to a product, the Party
which made available to a JV Entity such product or any Line Extension thereof,
(b) with respect to any OTC Switch Product, the Party that (i) offered the OTC
Switch Candidate or (ii) acquired an OTC Switch Candidate that resulted in such
OTC Switch Product, (c) with respect to any product resulting from the Glaxo
Arrangement, W-L and (d) with respect to a product described in Section 6.03,
the Party which has acquired the product or is considering the acquisition of
the product described therein.

'OTC Switch Candidate' shall mean a prescription drug product, a form of
which may potentially be sold, in the opinion of the Originating Party and for
one or more specified indications, without the necessity of a prescription, but
shall not include OTC Zovirax, JV Prescription Zovirax or any product resulting
from the Glaxo Arrangement.

<PAGE>
'OTC Switch Product' shall mean a product (including line extensions
thereto) developed from an OTC Switch Candidate or which may otherwise be sold
without the necessity of a prescription other than OTC Zovirax or any product
resulting from the Glaxo Arrangement.

'OTC Zantac' shall mean a form of Zantac which may be sold without the
necessity of a prescription.

'OTC Zovirax' shall mean a form of Zovirax which may be sold without the
necessity of a prescription.

'Other European Territory' shall mean the Territory made up of the
following countries: Austria, Finland, Iceland, Lichtenstein, Norway, Sweden and
Switzerland.

'Party' shall mean Wellcome or W-L or any other Person which becomes a
party hereto.

'Permitted Liens' shall mean (i) any Lien for current taxes not delinquent
or taxes being contested in good faith by appropriate proceedings and (ii) other
Liens incidental to the conduct of a business or the ownership of property and
assets which were not incurred in connection with the incurrence of
Indebtedness, and which do not in the aggregate materially detract from the
value of the property or assets or materially impair the use thereof in the
operation of the business.

'Permitted Transfer' shall mean a transfer of a Party's interest in a JV
Entity or this Agreement in accordance with Article XII hereof.

'Person' shall mean any individual or corporation, company, partnership,
trust, incorporated or unincorporated association, joint venture or other entity
of any kind.

'Procedure for Converting Net Sales' shall mean, for the purposes of this
Agreement, the following method for converting Net Sales of JV Prescription
Zovirax, OTC Zovirax and any OTC Switch Product (or any other amount) in any
Territory other than the United States into U.S. Dollars. Net Sales shall be
first determined in the currency of the country in which they are recorded and
then converted to its equivalent in U.S. Dollars. An average monthly exchange
rate shall be utilized for conversion of major non-U.S. currencies which shall
be the sum of the 8:00 AM offered rates of exchange for each Business Day during
the month as quoted by Bank of New York (or its successor, or other bank to be
agreed if Bank of New York does not have a market in such currency) divided by
the number of Business Days in the month. In the case of minor non-U.S.
currencies, the 8:00 AM offered rate of exchange on the last Business Day of the
current and previous monthly period in which the Net Sales were recorded as
quoted by the aforesaid bank shall be used to compute an average monthly
exchange rate.

'Profit and Loss' shall mean, in the case of each JV Entity, collectively,
(i) Net Sales, less (ii) the aggregate of the items of (income)/expense
identified on Schedule 1 hereto, the result of which, if positive, would be
Profit or, if negative, would be Loss.

'Ranitidine' shall mean, the pharmaceutical compound
N-[2-[[[5-[(demethylamino)methyl]-2-furanyl]methyl]thio]ethyl]-N'
- -methyl-2-nitro-1, 1-ethenediamine and its hydrochloride salt; provided,
however, that for the avoidance of doubt, this definition shall not encompass
Ranitidine Bismuth Citrate.

'Ranitidine Bismuth Citrate' shall mean the pharmaceutical compound
N-[2-[[[5-[(dimethylamino)methyl]2-furanyl]methyl]thio]ethyl]-N'
- -methyl-2-nitro-1, 1-ethenediamine 2-hydroxy-1,2,3-propanetricarboxylate bismuth
(3+) complex.

'Regulatory Approval' shall mean the receipt of final approval from all
relevant governmental and other authorities to make, use and sell in a relevant
Territory the product in respect of which approval was sought, together with all
appropriate and reasonably acceptable pricing approvals.

'Remainder of the World' shall mean all countries other than the United
States.

'Representations and Warranties Agreement' shall mean the Representations
and Warranties Agreement entered into by W-L and Wellcome, dated the date hereof
and identified as Exhibit A in the Supplemental Document Package or such other
agreement containing representations and warranties as may be entered into by
the Parties or any of their respective Affiliates in substantially the form
thereof with such alterations thereto as may be contemplated herein or therein,
as the case may be.

<PAGE>
'Special Profit and Loss' shall mean, in the case of each JV Entity, with
respect to OTC Zovirax in the United States or any OTC Switch Product in the
United States or the Remainder of the World, each individually, Net Sales of
such product less the sum of (i) the items of (income)/expense identified on
Schedule 1 hereto relating to such product (except those items delineated with
the letter 'A') and (ii) the Administrative Services Allocation, the result of
which, if positive, would be Special Profit or, if negative, would be Special
Loss.

'Strategic Plan' shall have the meaning set forth in Section 3.06.

'Supplemental Document Package' shall mean those Operative Documents
substantially the form of which has been agreed upon by the Parties and certain
schedules referred to herein.

'Taxes' shall mean taxes or other levies and assessments, including income,
profits, capital gain, franchise, excise, sales, use, transfer, registration,
customs, value added, withholding, occupation, property, payroll or other
governmental levies, including any penalties or interest thereon.

'Territory' shall mean the country, countries or territory in which a JV
Entity may operate or in which the Parties have agreed in principle to form a JV
Entity.

'U.K. GAAP' shall mean generally accepted accounting principles as
prevailing from time to time in the United Kingdom.

'United States' shall mean the fifty states of the United States of
America, the District of Columbia and U.S. military bases worldwide.

'U.S. GAAP' shall mean generally accepted accounting principles as
prevailing from time to time in the United States.

'U.S. Partnership' shall mean Warner Wellcome Consumer Health Products, a
Delaware general partnership formed by W-L and BW Consumer Products Inc., a
Delaware corporation and indirect wholly-owned subsidiary of Wellcome, as the JV
Entity in the United States.

'Variable Profit Contribution' shall mean (i) Net Sales less (ii) the sum
of Cost of Goods Sold, Freight, Promotional Allowances (as those terms are
defined in Schedule 1) and broker or other sales commissions.

'Wellcome Contributed Business' shall mean the business presently engaged
in by Wellcome and its Affiliates in the relevant Territories of developing,
marketing, distributing and selling the non-prescription consumer health care
products currently marketed or under development by it and which, as to the Core
Territory, are set forth in Schedule 1.01(a) (including JV Prescription Zovirax
to the extent set forth therein) to the Supplemental Document Package and which
will be identified in each JV Implementation Agreement to the extent appropriate
for the relevant JV Entity, together with all Line Extensions thereof, but
excluding export business to a Territory with respect to which there is no JV
Implementation Agreement.

'Wellcome Intellectual Property Agreement' shall mean any agreement under
which Wellcome or any of its Affiliates makes available patents, trademarks,
know-how and other intellectual property rights in substantially the forms
identified as Exhibits B and C in the Supplemental Document Package, as the same
may be amended or modified from time to time.

'Wellcome Manufacturing and Supply Agreement' shall mean any Manufacturing
and Supply Agreement to be entered into by Wellcome or any of its Affiliates and
a JV Entity in substantially the form identified as Exhibit D in the
Supplemental Document Package, as the same may be amended from time to time.

'Wellcome Marketing, Services and Development Agreement' shall mean any
Marketing, Services and Development Agreement to be entered into by Wellcome or
any of its Affiliates and a JV Entity in substantially the form identified as
Exhibit E in the Supplemental Document Package, as the same may be amended from
time to time.

'Wellcome Regulatory Documentation' shall mean all regulatory documents,
clinical studies and tests, including without limitation, all new drug
applications, abbreviated new drug applications, drug master files,
correspondence with appropriate regulatory agencies (registrations and licenses,
regulatory drug lists, advertising and promotion documents), adverse event
files, complaint files and manufacturing

<PAGE>
records relating to products in the Wellcome Contributed Business and OTC
Zovirax which are reasonably necessary or appropriate to the conduct of the
business of the JV Entity.

'Wellcome Standstill Agreement' shall mean the Wellcome Standstill
Agreement dated as of the date hereof, as the same may be amended or modified
from time to time.

'W-L Contributed Business' shall mean the business presently engaged in by
W-L and its Affiliates in the relevant Territories of developing, marketing,
distributing and selling the non-prescription consumer health care products
currently marketed or under development by it and which, as to the Core
Territory, are set forth in Schedule 1.01(b) to the Supplemental Document
Package and which will be identified in each JV Implementation Agreement to the
extent appropriate for the relevant JV Entity, together with all Line Extensions
thereof, but excluding export business to a Territory with respect to which
there is no JV Implementation Agreement.

'W-L Intellectual Property Agreement' shall mean any agreement under which
W-L or any of its Affiliates makes available patents, trademarks, know-how and
other intellectual property rights relating to a JV Entity in substantially the
form identified as Exhibits B and C in the Supplemental Document Package, as the
same may be amended or modified from time to time.

'W-L Manufacturing and Supply Agreement' shall mean any Manufacturing and
Supply Agreement to be entered into by W-L or any of its Affiliates and a JV
Entity in substantially the form identified as Exhibit D in the Supplemental
Document Package, as the same may be amended or modified from time to time.

'W-L Marketing, Services and Development Agreement' shall mean any
Marketing, Services and Development Agreement to be entered into by W-L or any
of its Affiliates and a JV Entity in substantially the form identified as
Exhibit E in the Supplemental Document Package, as the same may be amended or
modified from time to time.

'W-L Regulatory Documentation' shall mean all regulatory documents,
clinical studies and tests, including, without limitation, all new drug
applications, abbreviated new drug applications, drug master files,
correspondence with appropriate regulatory agencies (registrations and licenses,
regulatory drug lists, advertising and promotion documents), adverse event
files, complaint files and manufacturing records relating to products in the W-L
Contributed Business which are reasonably necessary or appropriate to the
conduct of the business of the JV Entity.

'W-L Standstill Agreement' shall mean the W-L Standstill Agreement dated as
of the date hereof, as the same may be amended or modified from time to time.

'Zantac' shall mean a product containing Ranitidine; provided, however,
that for the avoidance of doubt, this definition shall not encompass Ranitidine
Bismuth Citrate.

'Zovirax' shall mean a product containing 9-(2-hydroxyethoxymethyl) guanine
and all pharmaceutically acceptable salts thereof.

'Zovirax Intellectual Property' shall have the meaning provided in the
Zovirax License Agreement.

'Zovirax License Agreement' shall mean any license agreement to be entered
into by Wellcome or any of its Affiliates and a JV Entity in substantially the
form identified as Exhibit F in the Supplemental Document Package, as the same
may be amended or modified from time to time.

'Zovirax Patent Expiration' shall mean April 22, 1997, or such earlier
date, if any, that the claim(s) relating to the compound itself contained in
United States Patent Number 4,199,574 relating to Zovirax shall be declared
invalid by a court of competent jurisdiction, which declaration shall be final
and not the subject of further appeal.

SECTION 1.02. Terms Generally. The definitions in Section 1.01 and
elsewhere herein shall apply equally to both the singular and plural forms of
the terms defined. The words 'include', 'includes' and 'including' shall be
deemed to be followed by the phrase 'without limitation'. All references herein
to Articles, Sections, paragraphs, clauses, Exhibits and Schedules shall be
deemed references to Articles, Sections, paragraphs and clauses of this
Agreement and Exhibits and Schedules included in the

<PAGE>
Supplemental Document Package (except for Schedule 1 which shall be a Schedule
to this Agreement) unless the context shall otherwise require.

ARTICLE II
CLOSINGS

SECTION 2.01. Closings. Each closing of the transactions contemplated by
this Agreement in respect of a Territory (each a 'Closing') shall take place at
the offices of either Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth
Avenue, New York, New York or McKenna & Co., Mitre House, 160 Aldersgate Street,
London, England, or at such other place as the Parties may agree on dates to be
agreed upon by the Parties, as promptly as practicable following agreement by
the Parties on the form and content of a JV Implementation Agreement and all
Operative Documents relating thereto for that Territory and the satisfaction or
waiver of all of the conditions set forth in Article XI hereof in respect of
such Territory, but in no event later than ten Business Days (as measured in the
jurisdiction of the Closing) thereafter (the 'Closing Date').

SECTION 2.02. Core Territory. (a) This Agreement, the Wellcome Standstill
Agreement, the W-L Standstill Agreement, the Representations and Warranties
Agreement relating to JV Business to be conducted in the United States, Canada
and Australia, and the U.S. Partnership Agreement and the Operative Documents
referred to therein (such Partnership Agreement and Operative Documents to be
effective January 1, 1994) are being signed on the date hereof. In addition, a
Closing in respect of Australia and Canada will be effected as soon as
practicable following January 1, 1994.

(b) Upon the Parties' agreement, if any, as to the form and content of the
relevant JV Implementation Agreement and other Operative Documents, the receipt
of any rulings required prior to the execution of such JV Implementation
Agreement and the required transfer of any business, the relevant Operative
Documents shall be executed and thereafter there shall be a Closing upon the
satisfaction or waiver of the conditions to Wellcome's and W-L's obligations set
forth in Article XI hereof for each of the other countries in the Core
Territory, at which time the relevant JV Implementation Agreements shall be
executed and delivered and the relevant Governing Boards of such JV Entities
shall be established.

(c) In the event that a Closing has not occurred in respect of each of the
countries in the EC Territory and the Other European Territory prior to December
31, 1995, the Parties will explore alternative methods of conducting JV Business
in those countries. In the event alternative methods cannot be agreed upon, the
Parties shall consider whether the JV Entities previously established shall
continue and the appropriateness of modifying existing arrangements. In the
event the Parties agree to withdraw from the JV Entities previously established,
the methodology by which that shall be accomplished will be negotiated in good
faith by the Parties.

(d) Notwithstanding any provision in this Agreement to the contrary (but
without prejudice to Article IX), the Parties are not entering into any legally
binding arrangements in relation to the establishment of the JV Entities in the
EC Territory and Other European Territory. It is the intention of the Parties
that any JV Implementation Agreement with regard to the aforementioned
Territories will be entered into in accordance with the principles set forth in
this Agreement where practicable.

SECTION 2.03. Subsequent Closings. (a) JV Entities shall be established by
the Parties in such countries in the Non-Core Territory as and when agreed by
the Parties from time to time at such time as the relevant JV Implementation
Agreements have been executed and delivered and the conditions set forth in
Article XI herein and any other conditions set forth in the relevant JV
Implementation Agreements have been satisfied or waived.

(b) The Parties shall investigate the formation of JV Entities in the
countries in the Non-Core Territory during the period ending December 31, 1995.
The Parties intend, without being legally bound, to maintain their businesses in
those countries as they relate to the marketing of non-prescription consumer
health care products reasonably intact through such date or such earlier time as
the Parties may agree for the purpose of facilitating such investigation.

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SECTION 2.04. Deemed Closing Date of U.S. Partnership. For purposes of this
Agreement, references to a Closing Date shall be deemed to refer to January 1,
1994, in the case of the U.S. Partnership.

ARTICLE III
MANAGEMENT OF JV ENTITIES; FUNDING

SECTION 3.01. Management of the JV Entities. Subject to the oversight
responsibilities of the relevant Governing Board and the requirements of local
law, the day-to-day operations of each JV Entity shall be managed by a General
Manager.

SECTION 3.02. Governing Boards; Membership; Powers. (a) The Governing Board
of each JV Entity shall consist of seven members, four of whom shall be
representatives of W-L and three of whom shall be representatives of Wellcome,
and in the case of the Governing Board for the JV Entity operating in each of
the United States and Canada and the holding company for the JV Entities
operating in the EC Territory and the Other European Territory, the members
shall be the same individuals, unless otherwise agreed by the Parties. Subject
to local law, such representatives shall serve or designate others to serve on
the relevant Governing Boards of JV Entities to be formed in all other
Territories to be agreed upon by the Parties in accordance with this Agreement.
Each Governing Board will be responsible for the strategic direction and
oversight of the operations of the relevant JV Entity. Each Governing Board
shall have a Chairman who shall be designated by W-L from among its
representatives. Subject to local law, each Party may designate one or more
alternate representatives by notice to the other Party to act in the absence of
a representative. The participation and acts (including the execution of any
document) by any alternate representative shall be deemed to be the act of the
representative for whom the alternate representative is acting (and any
alternate representative of the Chairman of the Governing Board shall have all
the powers of the Chairman of the Governing Board in each case) without any
evidence of the absence or unavailability of such representative (or the
Chairman of the Governing Board). In the event of the removal, resignation or
death of any representative of either Party, the vacancy thereby created shall
be filled by the Party which designated the representative so removed, resigning
or deceased.

(b) Subject to local law, the Governing Boards shall act only upon the
unanimous written consent of the representatives without a meeting or upon the
majority vote of the representatives at a meeting thereof at which a quorum of
the representatives is present; provided, however, that:

(i) subject in the case of subparagraphs (A) and (B) to Section 5.04,
the following issues shall, subject to local law, be decided only by the
vote of at least 85% of all representatives:

(A) material acquisitions (subject to each Party's rights under
Article VI) or divestitures by any JV Entity, or a series of related
divestitures which taken together would be material, it being understood
that the divestiture of any single product brand in any country shall be
deemed material;

(B) material transactions, or a series of related transactions
which taken together would be material, between any JV Entity and either
Party or their Affiliates, other than a transaction described in
subparagraph (A) of this Section 3.02(b)(i), any JV Implementation
Agreement or any other Operative Document;

(C) subject to Section 3.06(a), that component of any Strategic
Plan or Annual Operating Plan or amendment thereto affecting the
manufacture, development, sale or marketing of JV Prescription Zovirax,
OTC Zovirax or any OTC Switch Product as to which Wellcome was the
Originating Party;

(D) admission to any JV Entity of any Person other than W-L or
Wellcome or any of their wholly owned (directly or indirectly)
Affiliates;

(E) the issuance of any equity interest in a JV Entity to any
Person (other than qualifying shares required by local law to be held by
a member of the Governing Board of a JV Entity);

<PAGE>
(F) any act to dissolve any JV Entity or to terminate any JV
Business other than pursuant to Article XIV hereof;

(G) the dismissal or appointment of a Certified Public Accountant
or auditor with respect to a JV Entity or a change in Fiscal Year for a
JV Entity; and

(H) any amendment to the memorandum or articles of association or
similar constituent document of a JV Entity, or any material amendment
to an Operative Document to which a JV Entity is a party.

For purposes of subparagraphs (A) and (B) of this clause (i) only those
acquisitions, divestitures or transactions (other than a divestiture (including
out licenses) of a single product brand as set forth in subparagraph (A) of this
Section 3.02(b)(i)) involving a purchase price, or, in the case of a license
transaction, payments other than those calculated on the basis of product sales
(e.g., up-front fees and milestone payments), in excess of 5% of Net Sales of
the relevant JV Entity for the preceding Fiscal Year shall be deemed material.

(ii) Subject to local law and clause (i) above, each Governing Board
by simple majority vote shall have the power to, among other things:

(A) approve the nomination by W-L of the General Manager and the
chief financial officer of each JV Entity for the purpose of conducting
the day-to-day operations of such JV Entity;

(B) subject to Section 3.02(b)(i)(C), approve the Annual Operating
Plan and Strategic Plan or any amendment thereto of a JV Entity as
proposed by JV Management;

(D) consistent with Section 4.02(b), approve the making of any
distribution by a JV Entity to any of its partners, shareholders or
parties in interest; and

(E) consider and coordinate any cross-border issues, including
sales of products between JV Entities, the utilization of alternative
manufacturing sites (subject to the terms of any relevant W-L
Manufacturing and Supply Agreement or Wellcome Manufacturing and Supply
Agreement), reliance on another JV Entity's regulatory licenses and
other sales, marketing and regulatory issues.

(c) No JV Entity shall be charged for any expense based on the depreciation
of a capital expenditure (within the meaning of U.S. GAAP or U.K. GAAP, as the
case may be) relating to the JV Business which capital expenditure shall have
been incurred with respect to a project or a series of related projects
commenced by either Party after the date of this Agreement which expenditure
exceeds $5 million unless such expenditure has been approved by the other Party.
For the avoidance of doubt, any capital expenditures in respect of a project or
a series of related projects commenced prior to the date hereof shall be deemed
approved by the other Party.

SECTION 3.03. Quorum; Notice; Meetings. The governing documents of each JV
Entity shall require, subject to local law, the personal presence of not fewer
than three representatives including at least one representative designated by
Wellcome and two representatives designated by W-L to constitute a quorum for
the transaction of business at any meeting of the Governing Board for such JV
Entity. In addition, any representative may call a meeting of such Governing
Board, and written notice specifying any matters to be considered at such
meeting and accompanied by supporting documentation (which notice may be waived
by any representative representing the other Party consenting thereto in
writing), shall be given to all representatives at least ten Business Days prior
to such meeting or such longer period as may be required by law. For all
purposes, subject to local law, each representative shall have one vote.
Meetings of each Governing Board shall be held not less often than once each
Fiscal Quarter. Each Party shall use reasonable efforts to ensure the existence
of a quorum at any duly convened meeting of a Governing Board and that no other
steps are taken which might reasonably be expected to impede the proper
management of any JV Entity.

SECTION 3.04. Designation of New Representatives or Alternate
Representatives. Any Party may at any time, by written notice to the other Party
and to the relevant Governing Board of any JV Entity,

<PAGE>
remove (with or without cause) one or more of its representatives or alternate
representatives on any such Governing Board and designate new representatives or
alternate representatives. No representative or alternate representative may be
removed except by the Party designating the same.

SECTION 3.05. Other Positions of Representatives. Any Person may act in one
or more of the capacities of representative or alternate representative, member
of any committee or officer, director, manager or employee of any JV Entity or
any Party, notwithstanding that such Person acts in any other such capacity.

SECTION 3.06. Annual Operating Plans; Incentive Compensation Plans; Initial
Plans; Plan Compliance. (a) The General Manager of each JV Entity shall cause to
be submitted to the Governing Board of each JV Entity, (i) not later than
December 1 in each year or such date as may be otherwise agreed by the Governing
Board, for review and approval, an annual operating plan for the following
Fiscal Year including, among other things, projections and budgets with respect
to Cost of Goods Sold, sales, operating income, cash flows, capital
expenditures, financing, developing and marketing activities for the relevant JV
Business and integrating each product line therein (each an 'Annual Operating
Plan') and (ii) not later than April 1 in each year, for a three-year period
commencing with the following Fiscal Year, a strategic plan covering strategic
business issues to be addressed for such period (each a 'Strategic Plan', with
the Annual Operating Plan and the Strategic Plan being hereinafter collectively
referred to as the 'Plans'). Notwithstanding the foregoing, the initial Annual
Operating Plan and Strategic Plan, respectively, for a JV Entity shall be
prepared and submitted to the Governing Board within three months and six
months, respectively, following the Closing of the relevant JV Implementation
Agreement. Notwithstanding Section 3.02(b)(i)(C) and subject to Section
10.01(b), in the event of a disagreement between W-L and Wellcome as to any
aspect of the Plans for any period affecting the supply, development, sale or
marketing of JV Prescription Zovirax in the Remainder of the World, OTC Zovirax
or any OTC Switch Product as to which Wellcome was the Originating Party, only
those provisions of such Plans as shall have been approved or proposed by the
representatives of Wellcome on the Governing Board of the relevant JV Entity
shall be implemented.

(b) Notwithstanding anything in this Agreement to the contrary (including,
without limitation, Sections 3.06(a) and 5.04), no Plan or component thereof
shall be approved or implemented which unreasonably discriminates among the
following product categories: (i) products resulting from the Glaxo Arrangement,
(ii) OTC Zovirax and JV Prescription Zovirax, (iii) OTC Switch Products and (iv)
all other products included in the respective Contributed Businesses or acquired
or developed by the relevant JV Entity subsequent to the date hereof.

(c) With respect to each JV Entity, there shall be an incentive
compensation plan for all management employees whose principal responsibilities
relate to operations of such JV Entity. Such plan shall be based on the
performance of the JV Entity and shall set forth, among other things, monetary
incentives for such employees for the purpose of increasing the productivity and
profitability of such JV Entity.

(d) The provisions of the first such Strategic and Annual Operating Plans
insofar as they relate to OTC Zovirax shall be prepared by the relevant JV
Entity and insofar as they relate to JV Prescription Zovirax or an OTC Switch
Product of which Wellcome is the Originating Party shall be prepared by or for
Wellcome.

(e) Where any obligation in this Agreement or any Operative Document is
expressed to be of an Affiliate of W-L or Wellcome, then W-L or Wellcome, as the
case may be, shall assure that such Affiliate complies with such obligation and,
in the case of financial obligations, hereby guarantees to the other Party the
performance thereof (or, in lieu of its guarantee, Wellcome may procure the
guarantee of The Wellcome Foundation Limited). Each Party shall take all
reasonable steps to ensure, insofar as it is able, that each JV Entity complies
with all approved Plans and Operative Documents, including this Agreement.

SECTION 3.07. No Remuneration. Unless the Parties otherwise agree, no
Person shall be entitled to any fee, remuneration or compensation in connection
with their service as a representative, alternate representative or as a member
of any committee of the Governing Board.

<PAGE>
SECTION 3.08. Funding. (a) W-L and Wellcome hereby agree to make available
such funds or other property as may be agreed upon to be necessary for the
conduct of the JV Business by each JV Entity in accordance with the relevant JV
Implementation Agreement and sound commercial principles.

(b) No JV Entity shall incur or suffer to exist any Indebtedness except
borrowings to finance net working capital needs as contemplated by the JV
Entity's Annual Operating Plan, or borrowings in accordance with Section
4.02(b). Such financing needs may be changed from time to time as agreed by the
Parties. In the case of the U.S. Partnership, to the extent practicable, W-L
shall make such Indebtedness available as loans bearing interest at W-L's
commercial paper rate. In the case of the JV Entities in the EC Territory and
the Other European Territory, W-L and Wellcome will make such Indebtedness
available through appropriate bank facilities. In the case of all other
countries, to the extent practicable, the Party making treasury services
available shall make such Indebtedness available as loans bearing interest at
the rate incurred by the Party in respect of short-term debt in the country in
which the JV Entity operates. In the event either Party is able to make
Indebtedness available at a lower rate than that offered by the other Party, it
shall have the right to do so.

(c) The incurrence of a Loss by a JV Entity for any period shall not
require any capital or other contribution by a Party to such a JV Entity, unless
required by local law or the relevant JV Implementation Agreement.

SECTION 3.09. Governance; Percentage Interest of Wellcome in U.S.
Partnership. If Wellcome's share of the Profits (including Wellcome's share of
Glaxo Profits and Losses) of the U.S. Partnership equals or exceeds 50% of the
total Profits (including all Glaxo Profits and Losses) of the U.S. Partnership
over a period consisting of eight consecutive Fiscal Quarters, Wellcome may give
written notice to W-L within 90 days after the end of such eighth Fiscal Quarter
that it wishes to renegotiate the provisions for governance of the JV Entities
as set forth herein. Following receipt of such notice, W-L and Wellcome shall
negotiate in good faith for a period of up to 60 days an appropriate amendment
to the provisions of this Article III to permit a greater role for Wellcome in
the governance of the JV Entities. If the Parties are unable to agree within
such 60-day period, Wellcome shall have (as its exclusive remedy) the right to
exercise the remedies contained in Sections 14.04(a)(i) and (ii), as applicable
(treating the U.S. Partnership and all JV Entities in the Remainder of the World
as Affected JV Entities), using the time periods set forth therein and as if any
period specified for the cure of dissatisfaction had expired.

SECTION 3.10. Expenses of JV Entities; Adjustments. (a) In connection with
products and services to be supplied pursuant to the various Operative
Documents, each of the JV Entities shall be charged with the items of expense
identified as items one through ten of Schedule 1 hereto (as those items are
more fully explained in said Schedule and the relevant JV Implementation
Agreements and the Operative Documents relating thereto).

(b) Except as provided in Section 6.03(b), to the extent that a Party or
any of its Affiliates provides products, services, or the use of property to a
JV Entity or makes charges at a price that includes (i) in the case of products
or services, a mark-up over the Fully Allocated Cost of such products or
services, (ii) royalties (other than third-party royalties and the royalty
payable to Wellcome pursuant to Section 4.04 hereof) or lease payments in
respect of the use of property in excess of Fully Allocated Cost, or (iii) any
other charge in excess of the Fully Allocated Cost thereof, the respective
interests of the Parties in the Profits and Losses of such JV Entity shall be
adjusted in such manner that, when combined with such mark-ups, royalties, lease
payments, or other charges in excess of Fully Allocated Cost, the total amount
received by and allocated to each Party in excess of Fully Allocated Cost (the
'Actual Allocation') shall conform to the allocation principles prescribed in
Section 4.02 (the 'Prescribed Allocation'). In the event the Parties have been
unable to agree within 90 days after the end of any Fiscal Year upon the amount
of adjustment to conform the Actual Allocation to the Prescribed Allocation, the
Parties shall submit the matter for resolution to an accounting firm selected by
the then Certified Public Accountants for each Party. The decision of that firm
shall be binding upon, and non-appealable by, the Parties. Based on that
decision (or in the event the Parties shall have agreed, their decision) the
Parties shall negotiate to determine the appropriate method of adjustment and,
failing agreement, within 30 days the Party that has received or has been
allocated an amount greater than it should have received or should have been
allocated (the 'Adjusting Party') shall pay to the

<PAGE>
appropriate JV Entity the excess of such Party's Actual Allocation over the
amount it would have received under the Prescribed Allocation for distribution
in accordance with Section 4.02 and this Section. The Parties agree, to the
extent practicable, to minimize and balance such mark-ups, royalties, lease
payments, and other charges to minimize variances in any Fiscal Year from the
allocation principles set forth in Section 4.02 and this Section.

SECTION 3.11. Deliberations. The deliberations of each Governing Board
shall not extend to any business activity of the Parties other than as may be
necessary to perform their responsibilities in connection with the JV
Businesses.

SECTION 3.12. Bank Accounts. To the greatest extent practicable, each JV
Entity shall keep its funds separate from those of any other Person (other than
another JV Entity) maintaining its own depositary, banking and similar accounts.
Unless otherwise agreed by the Parties, to the extent that funds of any JV
Entity are held by one of the Parties or an Affiliate as a result of collection
or otherwise, such Party or Affiliate shall pay over the funds to the JV Entity
within 5 Business Days of receipt and shall pay to such JV Entity interest on
such funds beginning the date following receipt by such Party or Affiliate. The
rate paid will be an appropriate and equitable publicly available rate for short
term investments in the relevant currency in the respective country which is
agreed to by the JV Entity and the Parties. In the United States, the rate to be
used will be the Goldman Sachs 30 Day Commercial Paper Index in effect on the
days the funds are held.

ARTICLE IV
OPERATIONS; JV ENTITIES

SECTION 4.01. General. The JV Business shall be conducted by JV Entities to
be established from time to time by the Parties in accordance with this
Agreement and the relevant JV Implementation Agreements and Operative Documents.

SECTION 4.02. Form and Structure of JV Entities. The Parties hereto agree
that:

(a) The JV Entity which will conduct the JV Business in the United
States will be the U.S. Partnership, in the EC Territory and in the Other
European Territory it is intended that the JV Entities will be held
principally through a U.K. holding company and it is intended that such JV
Entities and holding company will where possible under local law be capable
on the relevant Closing Date of being classified as partnerships for United
States Federal income tax purposes, in Canada will be a partnership and in
Australia will be a corporation, and the nature of the entity constituting
each JV Entity in the Non-Core Territory shall be determined by the Parties
taking into consideration relevant tax, accounting and legal issues and
shall be in accordance with Section 15.04 and the Operative Documents.

(b) Subject to applicable requirements of law, tax considerations and
the provisions of the Operating Plan, unless otherwise agreed, the U.S.
Partnership will distribute an amount equal to Profits quarterly, and in
other countries in the Remainder of the World, the relevant JV Entity will
distribute or otherwise make available an amount equal to Profits annually,
all in accordance with the order of priority and allocation of profits and
losses set forth in paragraph (c). Additional cash on hand may be
distributed or otherwise made available as agreed upon by the Parties. In
the event that there is insufficient cash to fully distribute an amount
equal to Profits, such cash may be borrowed if agreed by the Parties or the
Parties may agree upon an alternative arrangement.

(c) Profits and Losses of each JV Entity shall be allocated between
the Parties in accordance with the provisions in the relevant JV
Implementation Agreement. The principles (except as may be modified by the
applicable JV Implementation Agreement) governing such allocation, shall be
as follows:

(i) Except to the extent adjusted pursuant to Article V, Glaxo
Profits and Losses shall be allocated as follows:

(A) In the United States, 100% to W-L unless and until, pursuant
to Article V, they shall be allocated 90% to W-L and 10% to Wellcome;
and

<PAGE>
(B) In the Remainder of the World, 90% to W-L and 10% to
Wellcome.

(ii) Special Profits and Losses attributable to OTC Zovirax in the
United States shall be allocated as follows:

(A) In the event an NDA Approval for OTC Zovirax is received
prior to Zovirax Patent Expiration with at least one year of
Exclusivity from the Launch Date (which Launch Date must occur prior
to such Patent Expiration), in any Fiscal Year:

(1) Special Profits shall be allocated (x) 75% to Wellcome
and 25% to W-L to the extent that such Special Profits do not
exceed 20% of the Net Sales of OTC Zovirax in the United States;
and (y) 66-2/3% to Wellcome and 33-1/3% to W-L to the extent that
such Special Profits exceed 20% of the Net Sales of OTC Zovirax
in the United States; and

(2) Special Losses shall be allocated 75% to Wellcome and
25% to W-L.

(B) In the event (1) an NDA Approval for OTC Zovirax is not
received prior to Zovirax Patent Expiration with at least one year of
Exclusivity from the Launch Date (which Launch Date must occur prior
to such Patent Expiration), or (2) the Parties agree that there are
not reasonable prospects for the prospective Launch Date of OTC
Zovirax occurring prior to Zovirax Patent Expiration with at least
one year of Exclusivity, as the case may be, either Party may give to
the other Party written notice within 90 days after the occurrence of
either of such events that it wishes to commence negotiations of the
allocation set forth in subparagraph (c)(ii)(A) of this Section to
provide for an increased allocation of Special Profits or a decreased
allocation of Special Losses to W-L. The determination of an
increased allocation of Special Profits or a decreased allocation of
Special Losses to W-L shall be negotiated with reference to the
extent to which the value of OTC Zovirax has been impaired by the
failure (x) to have obtained such approval prior to Zovirax Patent
Expiration or (y) to have enjoyed at least one year of Exclusivity
from the Launch Date, as the case may be. In the event that OTC
Zovirax is not expected to be approved in the United States in the
foreseeable future following receipt of the aforesaid notice, the
Parties shall renegotiate an increased allocation of Base Business
Profits or a decreased allocation of Base Business Losses with
reference to the extent to which the projected value of OTC Zovirax
will be impaired by the failure to be so approved.

(C) In the event the Cost of Goods Sold (excluding intercompany
markups) of the U.S. Partnership for OTC Zovirax exceeds 25% of Net
Sales in the United States of OTC Zovirax for any Fiscal Year, the
Parties shall negotiate in good faith a different allocation from
that set forth in subparagraph (c)(ii)(A) for that Fiscal Year in
order to provide an increased allocation of Special Profits or a
decreased allocation of Special Losses to W-L for that Fiscal Year.

(iii) Special Profits and Losses attributable to the OTC Switch
Products of a JV Entity shall be allocated as follows:

(A) Special Profits shall be allocated (x) 75% to the
Originating Party and 25% to the Non-Originating Party to the extent
that such Special Profits do not exceed 20% of the Net Sales of the
OTC Switch Product; and (y) 66-2/3% to the Originating Party and 33-
1/3% to the Non-Originating Party to the extent such Special Profits
exceed 20% of the Net Sales of the OTC Switch Product; and

(B) Special Losses shall be allocated 75% to the Originating
Party and 25% to the Non-Originating Party.

(C) Any form of Zovirax to the extent that it is changed from
prescription to non-prescription status (other than a three-gram-or-
less cream formulation in the countries of the Core Territory (other
than the United States)) will be treated, if Wellcome determines that
such product is to be marketed as a consumer health care product, as
an OTC Switch Candidate in the Remainder of the World and Special
Profits and Losses therefrom shall be allocated in accordance with
subparagraphs (A) and (B) above, respectively, except

<PAGE>
that a cream formulation larger than three grams having an indication
for use with cold sores in the Remainder of the World shall be
contributed by Wellcome to the relevant JV Entity upon change from
prescription to non-prescription status and the Special Profits and
Losses attributable thereto shall be allocated 50% to W-L and 50% to
Wellcome, subject to the royalty obligations set forth in Section
4.04 hereof.

(D) In the event the Cost of Goods Sold (excluding intercompany
markups) of a JV Entity for an OTC Switch Product exceeds 25% of Net
Sales of the OTC Switch Product for any Fiscal Year, the Parties
shall negotiate in good faith a different allocation from that set
forth in subparagraph (A) or (B) above for that Fiscal Year in order
to provide an increased allocation of Special Profits or a decreased
allocation of Special Losses to the Non-Originating Party for that
Fiscal Year.

(iv) Base Business Profits and Losses of the JV Entities shall be
allocated to the Parties as follows:

(A) In the case of the U.S. Partnership, Base Business Profits
and Losses shall be allocated 67% to W-L and 33% to Wellcome during
the two-year period ending on the day prior to the second anniversary
of the Closing Date for the U.S. JV Implementation Agreement.
Thereafter, Base Business Profits and Losses shall be allocated 70%
to W-L and 30% to Wellcome.

(B) In the case of the JV Entities in the other countries in the
Core Territory, Base Business Profits and Losses shall be allocated
50% to W-L and 50% to Wellcome. W-L shall have, directly or
indirectly, 51% of the voting power and Wellcome shall have, directly
or indirectly, 49% of the voting power of each such JV Entity.

(C) Subject to Section 4.03, in the case of JV Entities in the
Remainder of the World, excluding those in the Core Territory, Base
Business Profits and Losses shall be allocated 50% to W-L and 50% to
Wellcome. W-L shall have 51% of the voting power and Wellcome shall
have 49% of the voting power of each such JV Entity.

(v) The Export Profit and Loss realized by a JV Entity shall be
allocated between the Parties in accordance with the allocation ratio
applicable to the profit and loss on such product in the Territory or
Territories in which the ultimate sale to a third party takes place.

(vi) The income, gain, deduction or loss of each JV Entity from a
sale, exchange or other disposition of Wellcome Contributed Business, or
any portion thereof, or W-L Contributed Business, or any portion
thereof, shall be allocated 30% to Wellcome and 70% to W-L to the extent
that such sale, exchange or other disposition is of such businesses in
the United States, 50% to Wellcome and 50% to W-L to the extent that
such sale, exchange or other disposition is of such business in any
other country in the Core Territory and shall be allocated in proportion
to the allocation of Base Business Profits and Losses to the extent that
such sale, exchange or other disposition is of such businesses in the
Remainder of the World (other than the Core Territory). The income,
gain, deduction or loss of each JV Entity from a sale, exchange or other
disposition of OTC Switch Products shall be allocated 75% to the
Originating Party and 25% to the Non-Originating Party. The income,
gain, deduction or loss of the U.S. Partnership from a sale, exchange or
other disposition of OTC Zovirax in the United States shall be allocated
75% to Wellcome and 25% to W-L. To the extent that any interest in the
Glaxo Arrangement is held by a JV Entity, the income, gain, deduction or
loss of such JV Entity from a sale, exchange or other disposition of
such interest in the Glaxo Arrangement, or any portion thereof, shall be
allocated 90% to W-L and 10% to Wellcome (unless such profit allocation
shall have previously been adjusted pursuant to Article V), other than
any product which utilizes the Zantac trademark but does not contain
Ranitidine which shall be allocated in accordance with the allocation of
Base Business Profits and Losses set forth in Section 4.02(c)(iv) of
this Agreement.

SECTION 4.03. Equitable Adjustment. (a) To the extent Closings in the
countries in the Core Territory (other than the United States) do not occur
simultaneously resulting in an inequitable division

<PAGE>
of Profits and Losses, the Parties agree to negotiate in good faith an
appropriate adjustment to account for such difference in timing of such
Closings.

(b) In the event that the profits projected by either Party to be generated
from the Wellcome Contributed Business and the W-L Contributed Business for any
JV Entity in the Remainder of the World, excluding the EC Territory, the Other
European Territory, Australia and Canada, are such that an approximately 50-50
profit split with respect to such JV Entity would be inequitable, then upon the
proposed formation of the relevant JV Entity, the Parties shall attempt to
negotiate an appropriate division of Base Business Profits and Losses and the
relevant JV Entity shall not be formed unless and until such division of Base
Business Profits and Losses is agreed upon by the Parties. In determining such
an appropriate division pursuant to this Section 4.03, the Parties shall take
into account such considerations as may be deemed to be relevant, including,
without limitation, any Net Sales of OTC Zovirax and JV Prescription Zovirax on
which no royalties were payable pursuant to Section 4.04.

SECTION 4.04. Zovirax Arrangements. (a) To the extent that Direct Profit
Contribution of OTC Zovirax and JV Prescription Zovirax in the EC Territory and
Other European Territory, collectively, calculated solely for purposes of this
clause, for each of the two twelve-month periods following the Closing Date for
the JV Implementation Agreement for the EC Territory and Other European
Territory,

(i) is 110% or more than the relevant twelve-month period's Benchmark
Direct Profit Contribution Target, 50% of the difference between (x) the
actual amount of such Direct Profit Contribution and (y) 110% of the
Benchmark Direct Profit Contribution Target, shall be paid by the
appropriate JV Entity to Wellcome; or

(ii) is 90% or less than the relevant twelve-month period's Benchmark
Direct Profit Contribution Target, 50% of the difference between (x) 90% of
the Benchmark Direct Profit Contribution Target and (y) the actual amount
of such Direct Profit Contribution, shall be paid by Wellcome to the
appropriate JV Entity.

The Benchmark Direct Profit Contribution Target for any Fiscal Year shall
be adjusted to pro rate the dollar amount thereof over the applicable
twelve-month period.

(b) Commencing with each full Fiscal Year following the second twelve-month
period referred to in paragraph (a), or any stub period following the end of
such twelve-month period until the commencement of the first Fiscal Year, to the
extent that the aggregate Net Sales of OTC Zovirax (including cream formulations
as to which Profits and Losses are allocated 50% to W-L and 50% to Wellcome
pursuant to Section 4.02(c)(iii)(C)) and JV Prescription Zovirax by all JV
Entities collectively in the Remainder of the World exceed U.S. $125 million in
any Fiscal Year (pro rated in the case of any stub period), as calculated
pursuant to the Procedure for Converting Net Sales, Wellcome shall be entitled
to a royalty of 15% on Net Sales of OTC Zovirax and JV Prescription Zovirax in
the Remainder of the World for any such Net Sales in excess of U.S. $125
million. The obligation to pay any such royalty shall be apportioned among the
various JV Entities in such reasonable manner as the Parties may agree. The
aforesaid $125 million sales base shall be changed in each Fiscal Year following
the Fiscal Year in which OTC Zovirax and JV Prescription Zovirax sales in the
Remainder of the World exceed such amount by a percentage which shall equal the
percentage change in the Nominal Price Index (1985=100), Expenditure on Medical
Goods -- Total Pharmaceutical Value in Current Prices (NCV) (or any replacement
index) published by the Organization for Economic Cooperation and Development or
any successor organization after adjusting such index to exclude (to the extent
practicable) the component attributable to the United States and any country in
which no JV Entity operates.

(c) In the event of termination in Canada pursuant to Section 14.02(b)(i),
the U.S. $125 million threshold set forth in Section 4.04(a) shall be reduced by
application of the following formula: (i) the Net Sales of OTC Zovirax and JV
Prescription Zovirax in Canada during the immediately preceding Fiscal Year,
shall be divided by (ii) the total Net Sales of OTC Zovirax and JV Prescription
Zovirax in the Remainder of the World during the immediately preceding Fiscal
Year with the result being multiplied by (iii) U.S. $125 million, provided,
however, that no such reduction shall exceed $25 million.

<PAGE>
SECTION 4.05. Management of JV Entities. W-L will nominate, and the
relevant Governing Board may appoint pursuant to Section 3.02(b) hereof, a
General Manager and a chief financial officer of each JV Entity. The General
Manager shall have day-to-day operational responsibility for the JV Entity to
which his appointment relates.

SECTION 4.06. Operations to be Conducted in Accordance with Annual
Operating Plan and Direction of the Relevant Governing Board. The day-to-day
operations of each JV Entity shall be conducted by the relevant General Manager
in accordance with the Annual Operating Plan of such JV Entity and otherwise as
directed by the relevant Governing Board. For the avoidance of doubt, the
Parties agree that none of the actions referred to in Section 3.02(b) shall be
taken by any JV Entity without the approval of the relevant Governing Board in
accordance with that Section.

SECTION 4.07. Asset Contributions. In order to permit JV Business to be
conducted by the JV Entities, the Parties have agreed or will agree in the
relevant JV Implementation Agreements as to the manner in which certain assets
to be employed in the JV Business will be made available to the relevant JV
Entities. For such purposes in respect of a country in the Non-Core Territory or
to the extent not previously agreed upon in respect of a country in the Core
Territory, the Parties agree that such assets shall be made available on the
following basis:

(a) only those tangible assets agreed by W-L and Wellcome to be
necessary to conduct such JV Business shall be made available;

(b) intellectual property rights shall be made available pursuant to
the Wellcome Intellectual Property Agreement and the W-L Intellectual
Property Agreement;

(c) to the extent commercially practicable, registrations, licenses
and similar rights from governmental authorities relating to a product
included in the Wellcome Contributed Business or the W-L Contributed
Business, as the case may be, shall be assigned to a JV Entity or will
otherwise be made available to such entity to permit it to conduct the JV
Business in the relevant Territory subject to the payment of the costs of
such transfer by the relevant JV Entity, provided, however, that where
either Party or its Affiliates makes available any such registration,
license or other similar right, it shall use reasonable efforts to maintain
the same in full force and effect subject to compliance in full therewith
by the relevant JV Entity and the payment by the relevant JV Entity of all
costs relating thereto and the provision of such data and other information
as may be necessary or required by any authority in order to maintain such
status;

(d) all contracts to the extent a part of or related to the Wellcome
or W-L Contributed Businesses shall be assigned or the benefits thereof
otherwise made available in accordance with Section 10.08 unless identified
in an Operative Document as not being assigned or made available; and

(e) no inventory or receivables shall be transferred to a JV Entity
except to the extent required to minimize tax on the transferring party in
connection with the organization of the JV Entity or to satisfy other legal
requirements, and in any such case the Parties shall agree upon an
equitable method by which the JV Entity's acquisition thereof shall be
funded, if necessary.

SECTION 4.08. Management Standards. Subject to the supervision of the
relevant Governing Board, W-L will use its reasonable best efforts to assure
that the administration and management of each JV Entity is carried out in a
competent, professional and timely manner with reasonable skill and care. With
respect to any Operative Document between a JV Entity and W-L or one of its
Affiliates, any decision made or consent given by or on behalf of the JV Entity
shall be made or given on an arm's-length basis.

ARTICLE V

GLAXO ARRANGEMENT AND WELLCOME PROFIT PARTICIPATION

SECTION 5.01. Treatment of Glaxo Arrangement. W-L has entered into the
Glaxo Arrangement and Wellcome shall determine within 45 days from the date
hereof whether it objects to participation in the Glaxo Arrangement. In the
absence of a written objection, Wellcome shall acquire the rights and
obligations to participate in the development, marketing and sale of products
pursuant to the Glaxo

<PAGE>
Arrangement, including, without limitation, the payment obligations set forth in
Section 5.02 and shall participate in Glaxo Profits and Losses in accordance
with Section 5.03. In the event such written objection is given, Wellcome shall
have no right to participate in the Glaxo Arrangement. Absent such objection in
respect of the United States, the Glaxo Arrangement will be assigned to the U.S.
Partnership and in all other Territories the Parties' participation in the Glaxo
Arrangement will be in a form and manner to be agreed upon by the Parties.

SECTION 5.02. Payments. (a) Upon the transfer of the OTC Zantac rights in
the United States pursuant to Section 5.01(a), Wellcome shall fund an amount
equal to 30% of W-L's share of all Glaxo Development Costs incurred prior to NDA
Approval of OTC Zantac for the development of OTC Zantac in the United States.
Wellcome shall also be responsible for 30% of and W-L shall be responsible for
70% of the milestone payments of U.S. $2.666 million and U.S. $2.666 million
paid pursuant to the Glaxo Arrangement by the U.S. Partnership or W-L, as the
case may be, in connection with the development of OTC Zantac in the United
States pursuant to the Glaxo Arrangement. Any amounts payable by Wellcome
pursuant to this Section 5.02 shall be increased to reflect the financing costs
of any payments previously made by W-L pursuant to the Glaxo Arrangement at an
assumed annual interest rate on such payments from the date of payment by W-L
through the date of payment by Wellcome pursuant to this Section equal to the
prime rate charged from time to time by Citibank, N.A. In the event Wellcome
shall so elect pursuant to Section 5.02(b), amounts payable by Wellcome pursuant
to this Section 5.02(a) shall not exceed U.S. $6.5 million.

(b) At such time as Wellcome payments pursuant to Section 5.02(a) equal
U.S. $6.5 million, Wellcome shall have the right, exercisable by delivery of
written notice to W-L within 60 days of its last payment and following receipt
from W-L of such information as shall be necessary to reach an informed
decision, to renegotiate Wellcome's liability for Glaxo Development Costs and
Wellcome's participation in Glaxo Profits and Losses attributable to OTC Zantac
in the United States. Absent the delivery of written notice of such election,
Wellcome shall continue to be responsible for 30% of W-L's share of all Glaxo
Development Costs incurred for the development of OTC Zantac in the United
States (including line extensions, other dosage forms and other indications) and
shall be entitled to the allocation of Glaxo Profits and Losses set forth in the
first sentence of Section 5.03(b) hereof.

SECTION 5.03. Wellcome Profit Participation and Development Costs
Obligations. The participation by Wellcome in the Glaxo Arrangement will be upon
the following terms:

(a) With respect to OTC Zantac in the United States, all income tax
deductions and credits attributable to the costs of development shall be
allocated to W-L and Wellcome in proportion to their respective funding of
such costs as provided in the U.S. Partnership Agreement.

(b) With respect to OTC Zantac in the United States in the event of
NDA Approval of OTC Zovirax and NDA Approval of OTC Zantac, Glaxo Profits
and Losses shall thereafter be allocated 90% to W-L and 10% to Wellcome;
provided, however, in the event Wellcome shall renegotiate, or failing to
have reached an agreement within 60 days of the commencement of such
renegotiation, elect, pursuant to Section 5.02(b) to cap its Glaxo
Development Cost obligations, the aforesaid 10% Glaxo Profit and Loss
allocation shall be reduced by the negotiated percentage or, failing
agreement, the result (the 'Profit Percentage') of multiplying such
allocation by a fraction equal to the ratio which U.S. $6.5 million bears
to the total Glaxo Development Costs incurred and paid by W-L, Wellcome and
the JV Entity up to the date of NDA Approval of OTC Zantac, if any.
Wellcome's obligation to fund Glaxo Development Costs incurred after the
date of NDA Approval of OTC Zantac shall also be reduced by the same
proportion.

(c) With respect to all products which utilize Ranitidine sold by a JV
Entity pursuant to the Glaxo Arrangement in the Remainder of the World,
Wellcome shall fund an amount equal to 30% of W-L's share of all Glaxo
Development Costs, and Glaxo Profits and Losses attributable thereto shall
be allocated 90% to W-L and 10% to Wellcome.

(d) With respect to all products which do not contain Ranitidine sold
by a JV Entity pursuant to the Glaxo Arrangement, Wellcome shall fund an
amount equal to 10% of W-L's share of all Glaxo Development Costs
attributable thereto and shall be entitled to the allocation of Glaxo
Profits and Losses set forth in Section 5.03(c) hereof unless the Zantac
trademark is utilized in

<PAGE>
connection with the sale of any product which does not contain Ranitidine,
in which case the Glaxo Profits and Losses attributable thereto shall be
allocated in accordance with the allocation of Base Business Profits and
Losses set forth in Section 4.02(c)(iv) of this Agreement and Glaxo
Development Costs shall be shared on the same basis.

(e) Except as provided in paragraph (f) below, in the event of NDA
Disapproval of OTC Zantac, Wellcome shall not be entitled to reimbursement
of any amounts paid to W-L or contributed to a JV Entity as Glaxo
Development Costs and milestone payments pursuant to Section 5.02 hereof
but shall retain its interest in the Glaxo Arrangement, including its
interest in Glaxo Profits and Losses attributable to OTC Zantac in the
United States which shall be allocated in the manner set forth in paragraph
(b) above.

(f) With respect to OTC Zantac and any other product resulting from
the Glaxo Arrangement in the United States, in the event of NDA Disapproval
of OTC Zovirax, Wellcome shall relinquish any further interest in the Glaxo
Arrangement, and, except as hereafter provided, Wellcome shall be entitled
to reimbursement by W-L of all amounts paid by it pursuant to Section 5.02
hereof, such amounts to be increased to reflect the financing costs of any
such payments from the date of original payment by Wellcome at an assumed
annual interest rate on such payments equal to the prime rate charged from
time to time by Citibank, N.A., provided, however, that if NDA Disapproval
of OTC Zovirax shall occur after NDA Disapproval of OTC Zantac, Wellcome
shall not be entitled to reimbursement by W-L of any amounts paid by it
pursuant to Section 5.02 hereof.

(g) For purposes of this Section 5.03, NDA Disapproval of either OTC
Zovirax or OTC Zantac shall mean the absence of any reasonable prospects
for the issuance of NDA Approval prior to January 1, 1999, or such other
date as may be mutually agreed upon by the Parties. In the event W-L
commences termination proceedings pursuant to Section 14.02, Wellcome shall
have no further right to participate in OTC Zantac in the United States.

SECTION 5.04. Control of Glaxo Arrangement Products. Notwithstanding any
provision in this Agreement to the contrary, it is expressly understood that all
decisions or determinations by any JV Entity relating to the development,
marketing and sale by a JV Entity of a product resulting from the Glaxo
Arrangement including, without limitation, OTC Zantac, shall be made by the
Governing Board of the JV Entity with the representatives of W-L having the
determinative vote.

ARTICLE VI

NEW PRODUCTS

SECTION 6.01. Products Developed by the Parties. Within six months of the
Closing Date for each JV Entity, the General Manager of such JV Entity shall
present, for the review and approval of the relevant Governing Board the budget
for development and the key development projects to be undertaken by such JV
Entity. The expenses for such development shall be borne by each JV Entity
unless discontinued by decision of its Governing Board and the Base Business
Profits and Losses of such products shall be allocated in accordance with
Section 4.02(c)(iv).

SECTION 6.02. OTC Switch Candidates. (a) The Parties may each develop other
prescription drug products as OTC Switch Candidates at each Party's sole
discretion and cost. Prior to the date, or not later than ten days after the
date that the Originating Party files for Regulatory Approval for an OTC Switch
Candidate or within ten days following notification after the date of this
Agreement that a prescription drug product may be offered without the necessity
of a prescription, the Originating Party shall offer to the appropriate JV
Entity, by written notice, such OTC Switch Candidate for inclusion in the JV
Business of such JV Entity. The Non-Originating Party shall, within six months
after receipt of such notice or promptly following notice given to it by the
Originating Party of Regulatory Approval, whichever is earlier, decide whether
or not to accept such OTC Switch Candidate as JV Business on behalf of the
appropriate JV Entity. If the Non-Originating Party accepts the product as JV
Business on behalf of the JV Entity, the Originating Party shall supply such
product at its Fully Allocated Cost plus a reasonable mark-up agreed upon by the
Parties and such product shall be added to the relevant Manufacturing and Supply
Agreement and Intellectual Property Agreement (subject to pre-existing rights
of, and contractual arrangements with third parties), as the case may be, and to
such other

<PAGE>
Operative Documents as may be required and the Originating Party shall deliver a
certificate to the Non-Originating Party confirming such matters as the
Non-Originating Party may reasonably request with respect to the OTC Switch
Candidate. The Special Profit and Loss with respect to such OTC Switch Candidate
shall be allocated between the Parties in the manner set forth in Section
4.02(c)(iii) and as provided for in the relevant JV Implementation Agreement. If
the Non-Originating Party does not accept such product or does not give notice
within the applicable time period referred to above and such product does not
become part of JV Business, the Originating Party may, for its own account,
license such product to a third party for distribution or sell its rights to
such product to a third party. If the Originating Party, after reasonable
efforts to license or sell such product on reasonable commercial terms, is
unable to do so, such Party may market such product pursuant to the procedures
set forth in Section 6.03(b)(i). W-L and Wellcome shall discuss OTC Switch
Candidates with each other on a periodic basis throughout the term of the JV
Entities, such discussions to be limited solely to the potential of such OTC
Switch Candidates to become OTC Switch Products.

(b) Notwithstanding the foregoing paragraph 6.02(a), an Originating Party
may propose to a Governing Board that an OTC Switch Candidate be developed by a
JV Entity. In the event the representatives of the Non-Originating Party on the
relevant Governing Board shall approve such development, the appropriate JV
Entity shall thereafter be responsible for funding the development of the OTC
Switch Candidate upon such terms (including funding) as shall be mutually
agreeable to the Parties.

(c) Except as provided in Sections 6.03 and 6.04, neither Party shall
license or dispose of the rights to market over-the-counter a prescription
product except in connection with the bona fide disposition or licensing of all
rights to the prescription product without the prior written consent, which
consent shall not be unreasonably withheld or delayed, of the other Party.

(d) In the event any prescription product which is owned by a Party or as
to which it holds the distribution rights is the subject of regulatory action
which permits the product to be sold without the necessity of a prescription, or
if sold without the necessity of a prescription but enjoying cost reimbursement
advantages loses such reimbursement advantages, the Parties shall negotiate in
good faith the treatment of such product as an OTC Switch Candidate to be
subject to the provisions of Section 6.02(a).

SECTION 6.03. Acquisition by a Party. (a) After either Party acquires, or,
at the discretion of the Originating Party, before such Party acquires, directly
or indirectly, any business which includes non-prescription drugs or other
consumer health care products, such Party shall as promptly as possible inform
the other Party and the relevant Governing Board by written notice of such
acquisition or proposed acquisition, and the appropriate JV Entity shall have
the exclusive right to acquire such non-prescription drugs or other consumer
health care products included in such business by indicating its desire to
acquire such products within 30 days after receipt of such notice. In the event
that the JV Entity delivers written notice to the Originating Party that the JV
Entity wishes to acquire any such products, the JV Entity shall negotiate with
the Originating Party to acquire such products on an arm's-length basis but in
any event on terms no less favorable than the terms on which they were acquired
(to the extent determinable).

(b) If the JV Entity declines to acquire such products or is unable to
reach agreement within 30 days after the date on which such notice was given,
the Originating Party may acquire (if it has not already acquired) the products
and shall (i) offer to supply the JV Entity with such products at Fully
Allocated Cost plus an appropriate mark-up agreed upon by the Parties and
request that the JV Entity market such products on a basis which assures the JV
Entity receipt of its Fully Allocated Cost in connection with the marketing of
such products, plus an appropriate mark-up determined by reference to similar
products sold or supplied in the same market or markets, or (ii) sell or license
such products to a third party; provided, however, that if the Originating Party
offers to sell or license such products as set forth in clause (ii) to any third
party, the Originating Party shall offer such terms to the JV Entity in writing
prior to entering into any agreement with such third party on terms more
favorable than last offered to the JV Entity. The JV Entity shall then have 30
days to accept or reject such offer. If accepted, the Parties shall proceed to
execute a marketing agreement, a purchase and sale agreement or a license
agreement, as the case may be, and if rejected or if no response is given within
the 30-day

<PAGE>
period, the Originating Party may enter into an agreement with the third party
on such terms. If the Originating Party is unable to agree with the JV Entity on
marketing terms pursuant to clause (i) above or to agree with a third party on
sales or license terms pursuant to clause (ii) above, the Originating Party may
market such products itself.

For the purposes of this Section 6.03, any actions to be taken by the JV
Entity shall be taken by the Non-Originating Party on behalf of such JV Entity.

SECTION 6.04. Acquisition by a JV Entity. If a JV Entity is considering the
acquisition of, directly or indirectly, any business which includes
non-prescription drugs or other consumer health care products, and if the
relevant Governing Board approves such acquisition for such JV Entity, such
business and products shall become part of the JV Business. If the Governing
Board determines that the JV Entity will not purchase such products and a Party
thereafter acquires such products, the provisions of Section 6.03(b) shall
apply.

SECTION 6.05. Continuing Development. If a product becomes part of the JV
Business pursuant to Section 6.02, 6.03 or 6.04, (i) any continuing development
of such product including, without limitation, any post-marketing surveillance,
shall be funded by the JV Entity and (ii) each of the Parties shall make
available to the JV Entity such licenses related to and required for the
marketing and sale of such product in the relevant Territory as such Party may
hold.

SECTION 6.06. Use of Information. For purposes of evaluating an OTC Switch
Candidate or developing and marketing an OTC Switch Product, OTC Zovirax or JV
Prescription Zovirax, the Originating Party (or Wellcome in the case of OTC
Zovirax and JV Prescription Zovirax) shall (as required elsewhere in this
Agreement or as reasonably required to make an informed decision in respect of
an OTC Switch Candidate) provide information relating to the formulation,
manufacture, use, safety, marketing or otherwise concerning such product to a JV
Entity or to the Non-Originating Party (or W-L in the case of OTC Zovirax and JV
Prescription Zovirax). Such information shall be so provided solely for the
purposes and business of the JV Entities as contemplated hereby (i.e., the non-
prescription consumer health care business and, in the case of JV Prescription
Zovirax, prescription pharmaceutical business outside the United States to the
extent specifically contemplated hereby) and for no other use and shall be held
confidential in accordance with Section 15.11 of this Agreement (but without
regard to the term of such Section 15.11).

ARTICLE VII

MANUFACTURING; SUPPLY; SERVICES

SECTION 7.01. Manufacturing and Supply. (a) The Parties agree that (i) all
products will be manufactured by the Originating Party or its designee (each the
'Manufacturer'), and (ii) upon shipment, the Manufacturer shall invoice the JV
Entity for its Fully Allocated Cost of the products sold plus a mark-up, all as
more specifically set forth in the relevant Wellcome Manufacturing and Supply
Agreement or the W-L Manufacturing and Supply Agreement, as the case may be. The
Fully Allocated Cost of any product manufactured by any Person unrelated to a
Party shall be the invoiced cost of such product.

(b) Any other materials required for the wholesale or retail distribution
of products included in JV Business shall, subject to any provisions of this
Agreement or the other Operative Documents to the contrary, be purchased by the
appropriate JV Entity from such sources and upon such terms as the JV Management
shall determine.

(c) To the extent there is a material adverse impact on a JV Entity or
either Party due to a material change in manufacturing production volumes as a
result of a marketing decision, regulatory action or other event, the Parties
agree to negotiate in good faith whether and to the extent an adjustment to the
Fully Allocated Cost of products sold to mitigate such material adverse impact
is appropriate.

(d) The Parties agree to negotiate in good faith a method for reimbursing
the Parties for an amount in excess of normal depreciation charges on capital
expenditures related to JV Business incurred on projects initiated after the
date of this Agreement.

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SECTION 7.02. Services. The Parties agree that (i) all services shall be
provided by W-L, Wellcome or a third party as designated by the Governing Board
of the JV Entity (each the 'Provider'), and (ii) monthly the Provider shall
invoice the JV Entity for the Fully Allocated Cost of such services provided
pursuant to the relevant Marketing, Services and Development Agreement plus a
mark-up based on such costs, all as more specifically set forth in the relevant
Wellcome Marketing, Services and Development Agreement or the W-L Marketing,
Services and Development Agreement, as the case may be. The Fully Allocated Cost
of any services provided by any Person unrelated to a Party shall be the
invoiced cost of such service.

SECTION 7.03. Operating Issues. Each Manufacturer will enter into a
Manufacturing and Supply Agreement substantially in the form identified as
Exhibit D in the Supplemental Document Package, completed, among other things,
by the addition of schedules specifying certain terms including the following:
(i) credit terms, (ii) currency, (iii) forecasting, (iv) carriage insurance, (v)
mode of transport, (vi) place and time of deemed delivery and (vii) interest
payable on overdue invoices, such terms to be based, to the extent deemed
appropriate by the Parties, on existing operating practices of the Manufacturer
or its Affiliate subject to subsequent agreement of the Parties and reflecting
the requirements of applicable local law. It is the intention of the Parties
that a Manufacturer or its Affiliate supplying Existing Products to a particular
Territory prior to the Closing shall continue to do so subsequent to the
Closing, it being understood that such products may be sold to a JV Entity in
the Territory of manufacture for resale by another JV Entity outside the
Territory of manufacture. A Manufacturer may solicit and receive technical
support and assistance from W-L or Wellcome or an Affiliate or its own personnel
pursuant to and as contemplated by the relevant W-L or Wellcome Marketing
Services and Development Agreement.

SECTION 7.04. Alternate Manufacturing Sites. Subject to the relevant
Manufacturing and Supply Agreement, any decision to specify an alternative site
for the manufacturing by Manufacturer or an Affiliate of Manufacturer of one or
more Products shall be made by the Party to this Agreement which is the
Manufacturer or an Affiliate of the Manufacturer in question.

SECTION 7.05. Audits and Inspections. In accordance with the provisions set
forth in the relevant Manufacturing and Supply Agreement or the Marketing,
Services and Development Agreement, as the case may be, the Party to this
Agreement that is neither Manufacturer nor Provider nor an Affiliate thereof
shall be entitled to conduct all audits and inspections contemplated by such
agreement on behalf of the Purchaser.

ARTICLE VIII

CHANGE OF CONTROL

SECTION 8.01. Definition of Change of Control; Response to Third Parties.
(a) In the event that a third party acquires after the date hereof beneficial
ownership (as defined below) of 30% or more of the voting capital of Wellcome or
W-L or, after acquiring 30% or more, thereafter acquires additional voting
capital resulting in beneficial ownership of 50% or more of the voting capital
of Wellcome or W-L, as the case may be (the 'Affected Party'), a Change of
Control will be deemed to have occurred. For the purposes of this Section
8.01(a) with respect to a Change of Control of W-L, a Person shall be deemed to
have 'beneficial ownership' of, and shall be deemed to 'beneficially own', any
securities which such Person or any of its Affiliates is deemed to 'beneficially
own' within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934
and the rules and regulations thereunder. For the purposes of this Section
8.01(a), a Change of Control of Wellcome will be deemed to have occurred in the
event that any Person acquires, whether by a series of transactions or not,
shares in the capital of Wellcome which (taken together with shares held or
acquired by persons acting in concert with such Person) carry 30% or more or 50%
or more, as the case may be, of the voting rights of Wellcome, all within the
meaning of Rule 9 of the City Code on Takeovers and Mergers issued by the Panel
on Takeovers and Mergers in London. It is expressly understood that the present
share ownership of The Wellcome Trust does not constitute a Change of Control
for purposes of this Section 8.01, provided, however, that any acquisition of
beneficial ownership by a third party of shares hereafter acquired from The
Wellcome Trust shall be subject in all respects to the Change of Control
provisions of this Agreement.

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(b) Under no circumstances shall the Non-Affected Party inform, directly or
indirectly, any third party of what action the Non-Affected Party would or would
not take in the event of a Change of Control until such time as such Change of
Control has occurred. The Non-Affected Party shall promptly notify the Affected
Party of any inquiries made by a third party (other than a regulatory authority)
relating to the subject of the preceding sentence.

SECTION 8.02. Effect of Change of Control. In the event a Change of Control
of either Wellcome or W-L shall occur, and the Non-Affected Party believes in
good faith that such Change of Control is prejudicial to its interest in the JV
Entities, such Party shall have the option, within 30 days following the
occurrence of the event listed in Section 8.01(a), to exercise the rights with
respect to all JV Entities set forth under Section 14.03(a)(i), (ii) and (iii)
as if the cure periods of such Sections had expired in the case in which W-L was
the Affected Party and to exercise the rights with respect to all JV Entities
set forth in Section 14.04(a)(i) and (ii) as if the cure periods of such
Sections had expired in the case in which Wellcome was the Affected Party.

ARTICLE IX

COVENANTS OF WELLCOME AND W-L

From and after the date of the execution of a JV Implementation Agreement
through the Closing Date with respect to thereto, Wellcome and W-L shall comply
with the following covenants for the Territory covered by such JV Implementation
Agreement; provided, however, that with respect to the United States, the EC
Territory, the Other European Territory, Australia and Canada, W-L and Wellcome
shall comply with the following covenants (other than Sections 9.04 and 9.07 in
the case of the EC Territory and the Other European Territory) from and after
the execution of this Agreement through the Closing Date of the JV
Implementation Agreements relating thereto.

SECTION 9.01. Access. Each Party shall give to the other Party and its
representatives reasonable access during normal business hours to the
properties, books and records of the other to the extent relating to the conduct
of the Wellcome Contributed Business or the W-L Contributed Business, as the
case may be, and furnish each other with all such information concerning the
Wellcome Contributed Business and the W-L Contributed Business, as the case may
be, as such Party may reasonably request.

SECTION 9.02. Financial Information. Each Party shall give to the other
Party and its representatives the balance sheets, profit and loss statements and
other financial statements as are prepared in the normal course of such Party's
business to the extent relating to the Wellcome Contributed Business and the W-L
Contributed Business, as the case may be, and such other information concerning
the financial condition of the Wellcome Contributed Business and the W-L
Contributed Business, as the case may be, as W-L or Wellcome, respectively, may
reasonably request. In addition, each Party shall allow the other Party, at
reasonable times and with reasonable notice, to have a Certified Public
Accountant audit such other Party's books and accounts, at the sole expense of
the Party requesting such audit, to the extent relating to the Wellcome
Contributed Business or the W-L Contributed Business, as the case may be.

SECTION 9.03. Books and Records. Wellcome and W-L shall continue to
maintain the books, accounts and records of the Wellcome Contributed Business
and the W-L Contributed Business, as the case may be, in the usual, regular and
ordinary manner on a basis consistent with prior years and periods, except as
required by law or U.S. GAAP or U.K. GAAP, as the case may be.

SECTION 9.04. Conduct of Business. (a) Each Party shall (i) except in the
ordinary course of its business or pursuant to this Agreement or any other
Operative Documents or with the prior written consent of the other Party, not
sell or transfer or create a Lien on any of the Wellcome Contributed Business or
the W-L Contributed Business, as the case may be, or enter into any agreement or
arrangement to do the foregoing, (ii) except in the ordinary course of its
business or pursuant to the prior written consent of the other Party, not enter
into or renew any material contract or commitment, or engage in any material
transaction, relating to the Wellcome Contributed Business or the W-L
Contributed Business, as the case may be, (iii) except in the ordinary course of
its business or pursuant to the prior written consent of the other Party, not
consent to the material amendment or termination of any material contract
relating to the Wellcome Contributed Business or the W-L Contributed Business,

<PAGE>
as the case may be, (iv) except in the ordinary course of its business or
pursuant to the prior written consent of the other Party, not grant any material
new licenses under any of the products to be transferred to a JV Entity, (v) use
its reasonable best efforts to preserve for the JV Business the business
relations of the Wellcome Contributed Business or the W-L Contributed Business,
as the case may be, with suppliers, customers and others, and (vi) promptly
notify the other Party of any event which may have a material adverse effect on
the Wellcome Contributed Business or the W-L Contributed Business, as the case
may be, including, without limitation, any material governmental complaint,
investigation or hearing of which Wellcome or W-L has been advised.

(b) Any reference in this Section 9.04 to the written consent of a Party
shall be deemed to require that such consent not be unreasonably withheld.

SECTION 9.05. Approvals and Consents. Each of the Parties shall use its
reasonable best efforts to (i) obtain all governmental approvals and consents,
if any, necessary or desirable for the consummation of the transactions
contemplated by this Agreement and (ii) make or cause to be made any and all
declarations, filings and registrations with governmental authorities, which
approvals, consents, declarations, filings and registrations are agreed by the
Parties to be reasonably necessary or desirable for the consummation of the
transactions contemplated hereby.

SECTION 9.06. Regulatory. (a) Wellcome shall use its reasonable best
efforts to obtain all Regulatory Approvals required to market and sell all oral
solid forms of Zovirax without a prescription in the United States indicated for
the management of recurrent genital herpes and in the other countries of the
Core Territory for the cream form of OTC Zovirax in three gram or less packaging
for the treatment of cold sores and shall bear all development expenses related
thereto. Wellcome shall promptly notify W-L each time it submits an application
for government registration or marketing approval for any Zovirax formulation to
be sold without a prescription, shall promptly notify W-L of any significant
action taken on any such application, shall promptly advise W-L when any
Regulatory Approval has been obtained and shall keep W-L generally informed of
such regulatory efforts by Wellcome.

(b) Each of the Parties shall, to the extent necessary or appropriate, in
its reasonable opinion, give the other Party and any appropriate JV Entity
access to all of the Wellcome Regulatory Documentation and the W-L Regulatory
Documentation, as the case may be.

SECTION 9.07. Further Assurances. Each of Wellcome and W-L shall take all
reasonable steps to do or cause to be done such further acts and things and
deliver or cause to be delivered to each JV Entity and/or its designees such
additional assignments, agreements, powers and instruments as the JV Entity
and/or its designees may reasonably require or deem advisable to carry into
effect the purpose of this Agreement and the Operative Documents or to better
assure and confirm unto each JV Entity and/or its designees its rights, powers
and remedies hereunder and thereunder.

SECTION 9.08. Tax Matters. Each Party and its Affiliates shall render
reasonable cooperation to and assist the other Party and its Affiliates and each
JV Entity in obtaining all desirable rulings or consents of the relevant and
appropriate tax authorities agreed by the Parties to be reasonably necessary in
order to obtain all appropriate tax benefits for the Parties and their
Affiliates, and the respective JV Entities as contemplated herein and in the
other Operative Documents.

SECTION 9.09. Employees; Sharing of Certain Costs. (a) The identity of the
employees working for or to be charged to each JV Entity shall be determined
mutually by the Parties; provided, however, that in the event of any
disagreement between the Parties, the decision of W-L shall control.

(b) If, solely as a result of the formation of a JV Entity in the Remainder
of the World, the employment of an employee of either Party or an Affiliate is
terminated (whether by the Party or the Affiliate or a JV Entity) or otherwise
ceases by operation of law on or immediately after such formation, the Parties
shall share equally all severance and termination costs or compensation of the
employer in respect of such termination or cessation. For the avoidance of
doubt, the employment of any employee who is transferred to an employer which is
an Affiliate of either Party (including for this purpose any JV Entity) shall
not be deemed to have been terminated. All other costs or expenses relating to
the formation and operation of JV Entities which are incurred by either Party
shall be borne by such Party.

<PAGE>
ARTICLE X

POST CLOSING COVENANTS OF WELLCOME AND W-L

From and after the Closing Date with respect to each JV Entity, Wellcome
and W-L shall comply with the following covenants for the Territory in which
such JV Entity operates.

SECTION 10.01. Treatment of OTC Zovirax; Regulatory. (a) Wellcome shall use
its reasonable best efforts to obtain all Regulatory Approvals required to
market and sell all oral solid forms of Zovirax without a prescription in the
United States indicated for the management of recurrent genital herpes and in
each country in the Core Territory in the Remainder of the World for the cream
form of OTC Zovirax in three gram or less packaging for the treatment of cold
sores and shall bear all development expenses related thereto. The relevant JV
Entity shall be responsible for all pre-launch marketing and selling costs. For
the avoidance of doubt, expenses incurred during periods when there are no Net
Sales shall be treated as Losses. Following NDA Approval or Regulatory Approval,
as the case may be, of OTC Zovirax, any further development of such product
shall be funded by the relevant JV Entity.

(b) The Parties shall use their reasonable best efforts to achieve launch
for OTC Zovirax in the United States subsequent to NDA Approval. It is
understood that Wellcome shall be responsible for obtaining Regulatory Approval
for OTC Zovirax and shall have final approval of any decisions relating thereto
(including the Launch Date thereof). Wellcome shall promptly notify W-L each
time it submits an application for government registration or marketing approval
for any OTC Zovirax formulation to be sold without a prescription, shall
promptly notify W-L of any significant action taken on any such application, and
shall promptly advise W-L when any Regulatory Approval has been obtained and
shall keep W-L generally informed of such regulatory efforts by Wellcome.

(c) Subject to Section 10.12, the rights disclosed pursuant to Section
10.01(e), and the rights of third parties in Non-Core Territories to be
disclosed prior to the Closing Date of the relevant JV Implementation Agreement,
Wellcome shall cause to be granted to the relevant JV Entity an exclusive
license to use the Zovirax trademark (or, if the Zovirax trademark is not used
in the relevant country, the prescription trademark used in that country) in
connection with the marketing, selling or distribution of OTC Zovirax; provided,
however, that Wellcome shall not be bound to grant a license to use the Zovirax
trademark in respect of any Territory if it can demonstrate, to the reasonable
satisfaction of W-L's representatives on the Governing Board of the relevant JV
Entity, a regulatory or compelling commercial reason why such trademark should
not be used in such Territory and Wellcome shall not itself use the Zovirax
trademark or such alternative prescription trademark in connection with OTC
Zovirax, and shall not grant to any other Person a license to use the Zovirax
trademark in either case for the non-prescription sale of consumer health care
products. In the event the Zovirax trademark is not used in a Territory pursuant
to the proviso of the preceding sentence, the Parties shall consult with respect
to the selection, development and use of a suitable alternative trademark the
form and use of which shall be subject to Wellcome's approval.

(d) Wellcome will not, and will assure that its Affiliates do not, do
anything which is likely to derogate from the rights to be granted pursuant to
the Zovirax License Agreements to enjoy the benefits of OTC Zovirax thereby
conveyed or to impede the JV Entity's ability to realize such rights.

(e) Subject to the rights of third parties in Core Territories existing at
the date of this Agreement which have been disclosed to W-L prior to the date
hereof, it is expressly understood by the Parties that any Zovirax formulation
or indication to be marketed and sold without a prescription in a country in
which a JV Entity has been established shall be marketed and sold only through
such JV Entity; provided, however, that Wellcome shall not be required to switch
any products from the prescription to the non-prescription market except to the
extent set forth in Section 9.06(a) of this Agreement.

SECTION 10.02. Further Assurances. (a) Each of Wellcome and W-L shall take
all reasonable steps to do or cause to be done such further acts and things and
deliver or cause to be delivered to each JV Entity and/or its designees such
additional assignments, agreements, powers and instruments as the JV Entity
and/or its designees may reasonably require or deem advisable to carry into
effect the purpose of this Agreement and the Operative Documents or to better
assure and confirm unto each JV Entity and/or its designees its rights, powers
and remedies hereunder and thereunder.

<PAGE>
(b) Each of Wellcome and W-L shall continue to comply with the covenant set
forth in Section 9.06(b) of this Agreement.

SECTION 10.03. Tax Matters. Each Party and its Affiliates shall cooperate
fully with and assist the other Party and its Affiliates and each JV Entity in
obtaining all desirable rulings or consents of the relevant and appropriate tax
authorities agreed by the Parties to be reasonably necessary in order to obtain
all appropriate tax benefits for the Parties, their Affiliates and the
respective JV Entities as contemplated herein and in the other Operative
Documents. Neither Party shall cause any tax election to be made by a JV Entity
which would have the effect of imposing a disproportionate liability for any tax
on the other Party or any of its Affiliates.

SECTION 10.04. U.S. Export Controls Compliance; Restrictive Trade Practices
Act 1976. (a) The Parties acknowledge that the products to be sold by a JV
Entity may be subject to export controls on resales and/or transfers to other
countries and parties including authorizations required from the appropriate
U.S. government agency under the laws and regulations of the United States of
America. No JV Entity shall be authorized to act in violation of any law,
including, without limitation, Part 769 of the Export Administration Regulations
of the U.S. Department of Commerce and/or agree to participate in a boycott as
defined in Section 999 of the U.S. Internal Revenue Code of 1986, as amended.
Each of the Parties and their appropriate Affiliates shall assist the JV Entity,
as requested and where practicable, in seeking U.S. government authorizations
for transactions subject to U.S. export control regulations.

(b) If there is any provision of this Agreement, or of any JV
Implementation Agreement or other Operative Document which causes or would cause
this Agreement or that Agreement or other Operative Document to be subject to
registration under the Restrictive Trade Practices Act 1976 ('RTPA'), then that
provision shall not take effect until the day after particulars of such
Agreement or Operative Document (as the case may be) have been furnished to the
Director General of Fair Trading pursuant to Section 24 RTPA.

SECTION 10.05. JV Entity Books and Records; Audits. (a) Each of the JV
Entities shall maintain its books and records in accordance with U.S. GAAP and
in sufficient detail to permit their conversion to U.K. GAAP by Wellcome and in
accordance with such other accounting principles as may be required by the law
of the jurisdiction in which such JV Entity is organized.

(b) Each of W-L and Wellcome, on such occasions as it may request, shall
have the right to have its Certified Public Accountants or its internal auditors
audit, examine or review the books, records and operations of each other to the
extent relevant to the JV Business and of each JV Entity, but at the cost of the
Party requesting such audit, examination or review.

(c) Policies with respect to internal audit functions of each JV Entity
shall be as determined by the General Manager of such JV Entity.

(d) Each Party and its Affiliates shall provide, on a timely basis, each JV
Entity with information necessary to meet the requirements of Section 3.10(b).

SECTION 10.06. Intellectual Property Rights. With respect to the
intellectual property rights included in the Wellcome and W-L Contributed
Business, Wellcome, W-L and each JV Entity (i) shall, promptly following their
becoming aware thereof, notify the relevant Governing Board of (A) any adverse
determination in any proceeding in the United States Patent and Trademark Office
or United States Copyright Office or comparable foreign bodies or (B) the
institution of any proceeding or any adverse determination in any Federal,
state, local or foreign court or administrative body regarding Wellcome's or
W-L's claim of ownership in or right to use any of the Wellcome or W-L
trademarks, patents, know-how or other intellectual property rights, their right
to register the same, or to keep and maintain such registration, (ii) shall
properly maintain and care for the Wellcome and W-L trademarks, patents,
know-how or other intellectual property rights owned by such Party or its
Affiliates to the extent necessary for the conduct of the JV Businesses
(including, without limitation, by taking all reasonable legal action necessary
to protect the Wellcome and W-L trademarks, patents, know-how or other
intellectual property rights owned by such Party or its Affiliates against
infringement by third parties) and (iii) shall not permit to lapse or become
abandoned, settle or compromise any pending or future material litigation or
material administrative proceeding without first having consulted with W-L

<PAGE>
or Wellcome, as the case may be, as to the impact of the same on the relevant JV
Business, all as more fully set forth in the relevant W-L or Wellcome
Intellectual Property Agreement.

SECTION 10.07. Access. Each Party shall give to the other Party and its
representatives reasonable access during normal business hours to the
properties, books and records of the other to the extent relating to the conduct
of the Wellcome Contributed Business or the W-L Contributed Business, as the
case may be, and furnish each other with all such information to the extent
concerning the Wellcome Contributed Business and the W-L Contributed Business,
as the case may be, as such Party may reasonably request and which shall be
necessary for the conduct of the JV Business of any JV Entity after the Closing
Date.

SECTION 10.08. Benefit of Contracts. Wellcome and W-L recognize and agree
that, notwithstanding other provisions of this Agreement to the contrary, the
Parties may identify contracts the assignment of which are not commercially
practicable and third party consents to the transfer, in whole or in part, of
licenses, intellectual property rights and contracts which are necessary to the
conduct of the Wellcome Contributed Business or the W-L Contributed Business,
which consents may not be obtainable or may not be obtainable on commercially
reasonable terms by the Party responsible therefor. Such contracts will be
identified to each of the Parties and in such circumstances, Wellcome or W-L, as
the case may be, or their appropriate Affiliate, shall for the benefit and
account of the appropriate JV Entity, act under such licenses, rights and
contracts in the manner most effective under the circumstances so as to provide
their value and benefit to such JV Entity, in each case to the extent permitted
by law, and will evidence or confirm such arrangement to the extent requested by
the other Party or the JV Entity. Nothing in this Agreement shall be construed
as an attempt to assign any such license, right or contract to the extent such
assignment is not permitted by law or by the terms of the license, right or
contract in question.

SECTION 10.09. Use of Parent Names. (a) Except as otherwise agreed by each
of the Parties, the name of each JV Entity shall be Warner Wellcome Consumer
Health Products, together with such identifier as may be required by law. Each
of the Parties acknowledges that a JV Entity may in its conduct of the JV
Business be required or may desire to use the corporate names of such Party, its
subsidiaries and its divisions and the corporate logos of each and correlatives
of the same in labelling products included in the JV Business, and on stationery
and promotional materials of the JV Entity. Upon agreement as to such use, such
Party shall extend to each JV Entity a royalty free license for these purposes;
provided, however, that (i) the manner of use made of such name or logos shall
have been approved in writing in advance of its use by the relevant Party and
(ii) in the event a Party and its Affiliate cease to be participants in the JV
Entity, whether pursuant to Article XIV hereof or otherwise, (x) the license
contemplated by this Section 10.09 shall immediately terminate, subject only to
a right of the JV Entity to use existing stocks of labelling materials for a
period of not more than one year from the date of such termination unless
otherwise required by either Party which will undertake to bear the expense of
any more restrictive limitation and (y) the name of the JV Entity shall be
changed as promptly as commercially practicable to eliminate the name of the
Party which has ceased to be a participant.

(b) Subject to Section 10.09(a), to the extent the Parties agree to
register the name 'Warner Wellcome' in any jurisdiction, such name shall be
registered jointly in the names of W-L and Wellcome (or any respective
Affiliates designated by each) if authorized by applicable law or regulation. In
any jurisdiction where joint registration is not authorized by applicable law or
regulation, registration of the name 'Warner Wellcome' shall be made only
pursuant to such agreements relating to joint ownership, registration and the
use thereof as are mutually agreed to by the Parties.

SECTION 10.10. Competition. (a) Subject to the provisions of any agreements
which exist on the date hereof and local law in a particular country, Wellcome
and W-L each covenant and agree that for the term of this Agreement and each
Operative Document, neither it nor any of its Affiliates shall, directly or
indirectly, compete with the JV Business of a JV Entity in the Territory in
which it operates by engaging in the non-prescription consumer health care
business by manufacturing, marketing, selling or distributing products
competitive with those of the relevant JV Business, in each case except as
otherwise provided or contemplated by this Agreement or any other Operative
Agreement; provided, however, that this provision shall not apply to (i)
non-prescription consumer health care products

<PAGE>
manufactured by either Party on the date hereof which have not been included in
Schedules 1.01(b) and (c) to the Supplemental Document Package and line
extensions thereof (so long as such line extensions are not competitive with any
JV Business then conducted by a JV Entity; (ii) any products developed pursuant
to the Glaxo Arrangement; (iii) manufacturing products for a third party by a
Party to the extent no information which is proprietary to, or exclusively
licensed under an Intellectual Property Agreement, to a JV Entity is used in the
manufacturing of such products; or (iv) the development, manufacturing,
marketing, selling or distribution of any non-prescription generic health care
product that is principally marketed, sold or distributed through non-consumer
marketing channels. Except as specifically provided herein with respect to JV
Prescription Zovirax in the Remainder of the World, nothing in this Agreement
shall be deemed to hinder, restrain or limit the ability of either Party or any
of its Affiliates to engage in the business of developing, manufacturing,
marketing, selling and distributing prescription pharmaceutical products in any
Territory, as such business is now carried on or may hereafter develop.

(b) Assets have been or will be conveyed and licenses have been or will be
granted by W-L, Wellcome and/or their respective Affiliates to each of the JV
Entities for the purpose of permitting sales of the products representing JV
Business in certain Territories. Accordingly, each of W-L and Wellcome shall
take such actions as are necessary to prevent the JV Entities from selling such
products outside of the relevant Territories.

SECTION 10.11. Insurance. (a) Each Party shall maintain insurance in
respect of its equity interest in the U.S. Partnership that is both adequate and
appropriate for the conduct of the JV Business with reputable insurers
(including, where the Party believes it appropriate, through self-insurance
programs) against loss or damage, including fire, loss, theft, casualty, recall,
product liability and general insurance and no costs of such insurance shall be
charged to any JV Entity. W-L shall provide directors and officers insurance and
any other forms of insurance required to be obtained by a JV Entity (e.g.,
automobile insurance) and shall charge the cost thereof to the relevant JV
Entity.

(b) Without prejudice to Section 2.02(d), the provisions of this Section
10.11 as applicable to the U.S. Partnership and as it may be extended to other
Territories, shall be subject to such amendment as may be desirable, including
in relation to the EC Territory and Other European Territory, to take account of
all relevant factors, including, without limitation, taxation.

(c) Each Party shall maintain insurance in relation to any real property
owned by it, whether freehold or leasehold, occupied by a JV Entity and the
costs thereof shall be charged to the relevant JV Entity.

SECTION 10.12. JV Prescription Zovirax. To the extent Wellcome markets and
sells JV Prescription Zovirax in a specific Territory, such marketing and sales
will be undertaken by Wellcome on behalf of the relevant JV Entity pursuant to
marketing arrangements to be agreed upon by the Parties and reflected in the
appropriate Marketing, Services and Development Agreement. Wellcome shall market
such products with at least the same degree of effort as is currently utilized
(subject to any change in circumstances) and use its reasonable best efforts to
maximize the profits of the JV Entity attributable to any such marketing by
Wellcome of JV Prescription Zovirax in the Territory. In the event that Wellcome
introduces another form of Zovirax or combination product thereof for the
treatment of cold sores to be sold by prescription which results in a material
diversion of profits from JV Prescription Zovirax, the Parties agree to discuss
in good faith whether any adjustment to the allocation of Base Business Profits
and Losses or other action is appropriate.

SECTION 10.13. Scope of JV Business; Non-Violation of Existing Obligations.
The Parties shall not, and shall not permit any JV Entity to, knowingly expand
the intended scope of the JV Businesses and shall not knowingly, through the
activities of a JV Entity, violate any valid provision of a non-compete
obligation of either Party which exists on the date of this Agreement or which
is hereafter agreed to by the Governing Board of the relevant JV Entity.

SECTION 10.14. Conduct of Business. (a) With respect to each JV Entity, to
the extent Net Sales made by the Parties in the two calendar months prior to the
Closing Date (or its effective date in the case of the U.S. Partnership) in
respect of the JV Entity (i) are deemed to be Excess Sales, and (ii) the
Variable Profit Contribution of such Excess Sales results in an allocation of
profits other than that which

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would have resulted if such profits had been earned by the JV Entity and the
Variable Profit Contribution had been Base Business Profit, the Parties shall
negotiate to determine the extent to which the advantaged Party shall compensate
the disadvantaged party for such differential profit allocation. In the case of
the U.S. Partnership, any determination under this Section 10.14(a) shall be
based on the use of sales as normally reported by the Parties in accordance with
U.S. GAAP rather than Net Sales in all calculations.

(b) To the extent sales orders for Existing Products of the Parties remain
unfilled as of the Closing Date, such orders shall be transferred to the JV
Entity.

ARTICLE XI

CONDITIONS TO WELLCOME'S AND W-L'S OBLIGATIONS

The Closing of the transactions contemplated by each JV Implementation
Agreement shall be subject to the satisfaction at or prior to the Closing of
such transactions of the following conditions; provided, however, that after
December 31, 1995, either Party may terminate this Agreement if these conditions
have not been met or waived with respect to the countries in the Core Territory
in which a JV Entity has not been established (it being understood that such
period may be extended by mutual written consent of the Parties).

SECTION 11.01. Certain Action. At the Closing Date for each JV
Implementation Agreement, no suit, action, investigation or other proceeding
will have been instituted and be pending by any governmental agency of the
relevant Territory or any other Person in which it is sought to restrain,
prohibit, invalidate or set aside generally the transactions contemplated by the
relevant JV Implementation Agreement and the other Operative Documents referred
to therein.

SECTION 11.02. Government Approvals and Consents. At the Closing Date for
each JV Implementation Agreement, all necessary filings (other than in relation
to marketing approvals) required, if any, in or for the relevant Territory with
the appropriate governmental or other authorities in or for such Territory will
have been made and all necessary governmental approvals (other than in relation
to marketing approvals), if any, will have been received and any prescribed
waiting periods will have expired or been terminated. No government entity shall
have indicated its objection to, or its intent to challenge as violative of any
federal, state or foreign laws, any of the transactions contemplated by this
Agreement or the relevant JV Implementation Agreements. In the event a
government entity places a condition on its approval of the transactions as
contemplated by the Operative Documents which has a material effect on the
Wellcome Contributed Business or the W-L Contributed Business, the Parties shall
attempt to negotiate a mutually agreeable modification to the relevant JV
Implementation Agreement and the other appropriate Operative Documents.

SECTION 11.03. Tax Rulings. The Parties shall have applied for and received
all rulings or consents of the appropriate tax authorities which either Party
reasonably believes to be necessary or desirable in order to implement the JV
Implementation Agreement in the relevant Territory as contemplated herein and in
the other Operative Documents.

SECTION 11.04. Representations and Warranties. The representations of
Wellcome and W-L contained in the Representations and Warranties Agreement in
respect of certain countries in the Core Territory shall continue to be true and
correct in all material respects as of the date the representations were
originally given. In addition, there shall have been no material adverse change
in the condition of the Wellcome or W-L Contributed Business since the original
date of such representations. In connection with the execution of a JV
Implementation Agreement for a country in the Non-Core Territory, the Parties
shall agree upon such representations and warranties as shall be appropriate.

SECTION 11.05. Performance of Covenants. Each Party shall have performed
and complied in all material respects with each and every covenant, agreement
and condition contemplated by this Agreement and the relevant JV Implementation
Agreement to be performed or complied with by it prior to or on the Closing Date
for the relevant JV Implementation Agreement.

SECTION 11.06. Authorization of Agreements. All action on the part of each
Party necessary to authorize the execution, delivery and performance of this
Agreement, the relevant JV Implementation

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Agreements and the Operative Documents, and the consummation of the transactions
contemplated herein and therein, shall have been duly and validly taken by each
Party, and each Party shall have furnished to the other Party a certificate of
the Secretary or an Assistant Secretary of W-L or Wellcome, as the case may be,
setting forth copies of the resolutions or other instruments authorizing this
Agreement, the relevant JV Implementation Agreements and the Operative Documents
and the transactions contemplated herein and therein.

SECTION 11.07. Execution of Operative Documents. All Operative Documents
required by the relevant JV Implementation Agreement in order to permit the
appropriate JV Entity to conduct JV Business in the appropriate country shall
have been executed and delivered and shall be fully effective in all respects.

SECTION 11.08. Certificate of Compliance. Each Party shall deliver to the
other Party a certificate of an authorized officer of such Party, certifying
compliance with the conditions set forth in this Article XI.

SECTION 11.09. Assignment of Certain Contracts and Licenses. Each Party
shall have obtained the consent, as appropriate, in form and substance
satisfactory to the other Party, to the assignment to the JV Entity in the
relevant Territory of all material contracts, product licenses and other
instruments which are part of the Wellcome Contributed Business or the W-L
Contributed Business, as the case may be, for the relevant Territory, or either
alternative arrangements shall have been made in accordance with Section 10.08
or undertakings reasonably acceptable to the Parties shall have been entered
into. Notwithstanding the provisions of Section 4.07(d), a JV Entity shall not
become responsible for any contract which is a part of or related to the
Wellcome or W-L Contributed Business except to the extent such contract is
specifically identified in an Operative Document as being assigned in whole or
in part or made available in accordance with Section 10.08.

ARTICLE XII
TRANSFER OF JOINT VENTURE INTEREST

SECTION 12.01. Limitation on Right to Transfer. A Party or any of its
Affiliates may not sell, assign, pledge, hypothecate or otherwise delegate,
subcontract or transfer in any manner, all or any part of its interest in the JV
Business, any JV Entity, this Agreement or the Operative Documents unless such
transfer (i) is permitted under Section 12.02 of this Agreement, (ii) is
consented to in writing by the other Party in its sole discretion, with specific
reference to this Section 12.01, (iii) is permitted in accordance with Article
XIV or (iv) is permitted by an Operative Document. In addition, to the extent
necessary to be classified as a partnership for United States Federal income tax
purposes, the interest in a JV Entity held principally by a JV Entity which is a
holding company shall be non-transferable except between Persons owning
interests in such JV Entity.

SECTION 12.02. Permitted Transfers. Nothing in this Article XII shall
prevent the transfer by any Party of all or part of its interest in any JV
Business, any JV Entity, this Agreement or the Operative Documents if such
interest is transferred to an organization which is an Affiliate and
wholly-owned (subject to directors' qualifying shares), directly or indirectly,
by Wellcome or W-L, as the case may be, but only for so long as it shall remain
an Affiliate of, and wholly-owned, directly or indirectly by, Wellcome or W-L;
provided, however, that (i) the JV Implementation Agreement for a JV Entity that
is capable of being classified as a partnership for United States Federal income
tax purposes shall not permit a transfer of an interest in such JV Entity if it
would prejudice such classification of such entity; (ii) that no such transfer
shall be effective unless the transferee of any interest so transferred under
this Section 12.02 shall have assumed by express agreement with the Parties
hereto (in form and substance satisfactory to the relevant Governing Board) all
of the obligations of the transferor under this Agreement and that no such
transfer shall relieve the transferor of its obligations under this Agreement in
the event the transferee fails to perform its obligations hereunder and (iii) a
Party (or any of its Affiliates) shall not transfer its interest in a JV Entity
which is classified as a partnership for United States Federal income tax
purposes in a manner which would constitute a termination of such partnership
under Section 708(b)(1)(B) of the Internal Revenue Code of 1986, as amended from
time to time, and any successor statute. Upon such transfer such transferee
shall be admitted as a Party, in

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addition to the Party which was the transferor. In the event that any Affiliate
shall cease to be an Affiliate within the meaning of this Section, Wellcome or
W-L, as the case may be, shall assure that immediately prior thereto such
interest is transferred back to Wellcome or W-L or one of their respective
Affiliates as appropriate.

ARTICLE XIII
INDEMNIFICATION

SECTION 13.01. Responsibility for Liabilities and Expenses. (a) Each of W-L
and Wellcome shall be separately responsible for, and hereby indemnifies the
other Party and each JV Entity (on an after-tax basis) against all claims,
liabilities, damages, losses, expenses (including reasonable legal fees),
obligations, liens, assessments, judgments and fines (all of the foregoing being
a 'Claim') made by or owed to any Person to the extent attributable to death,
bodily injuries, pain or damages suffered, or obligations or liabilities and
which arose out of such Party's ownership or operation of the W-L Contributed
Business or the Wellcome Contributed Business, as the case may be, prior to the
Closing Date for the Territory in question. Such Claims shall also include, but
not be limited to, all Taxes due by such Party and as to which a JV Entity may
be jointly liable for payment with such Party. If the use of the product giving
rise to the Claim occurred prior to the Closing Date, such Claim shall be the
responsibility of W-L or Wellcome, as the case may be (depending on whether such
product was part of the W-L Contributed Business or the Wellcome Contributed
Business).

(b) Subject to Section 13.01, each JV Entity shall indemnify and hold W-L
and Wellcome and their respective Affiliates harmless (on an after-tax basis)
for all product liability Claims arising out of the JV Business conducted by
that JV Entity on or after the Closing Date of the JV Implementation Agreement
for such JV Entity; provided, however, that (i) as to any Claims arising out of
defects in the manufacture of any product included in JV Business conducted by
that JV Entity, W-L or Wellcome, whichever shall have manufactured such product,
shall indemnify and hold harmless (on an after-tax basis) the JV Entity and the
Party which did not manufacture such product to the extent agreed to in the
relevant Manufacturing and Supply Agreement and (ii) W-L shall not be entitled
to any indemnification under this Section 13.01(b) to the extent a court of
competent jurisdiction shall have finally determined that the product liability
Claim in question arose from the failure of W-L to have used reasonable best
efforts to satisfy the standard of conduct set forth in Section 4.08 of this
Agreement.

(c) To the extent any Claim is based on use of any product or damages
sustained over a period of time beginning prior to the Closing Date for the
relevant JV Implementation Agreement and continuing after such Closing Date, the
liability and costs of a JV Entity relating to such Claim shall be for the
account of Wellcome, W-L or the JV Entity, as the case may be. Damages based on
the time prior to such Closing Date, if any, shall be for the account of W-L or
Wellcome, as the case may be, and for the time on and after such Closing Date
for the relevant JV Entity.

(d) To the extent sales returns occurring on or after the Closing Date in
respect of sales prior thereto are deemed by the Parties to be in the ordinary
course of business, the cost of such returns shall be borne by the relevant JV
Entities. To the extent the Parties agree that such sales returns occurring on
or after the Closing Date are outside the ordinary course of business, the cost
of such returns shall be borne by the responsible Party provided, however, that
for purposes of this Section 13.01(d), product discontinuations and product
withdrawals shall be deemed to be outside the ordinary course of business.
Products returned in a re-salable condition shall be returned to the inventory
of the relevant JV Entities.

(e) Where any claim, litigation or arbitration is contemplated, commenced
or brought (a) by any JV Entity against any Party or any Affiliate or (b)
against any JV Entity by any Party or any Affiliate, irrespective of the amount
involved therein, the Party shall ensure that any officer, director,
representative or agent of it or any Affiliate shall not be involved in such
claim, litigation or arbitration on behalf of the JV Entity and shall have no
vote in determining whether such claim, litigation or arbitration is commenced
or is made or in any matters relating to the conduct or settlement thereof. The
provisions of this Section 13.01(e) shall apply, mutatis mutandis, to the making
of any decision by a

<PAGE>
JV Entity to terminate any agreement between a Party or any Affiliate and the
relevant JV Entity other than one entered into by the relevant Party or
Affiliate solely as a partner or shareholder and not in any other capacity.

SECTION 13.02. Indemnification. (a) W-L shall indemnify and hold Wellcome
and each JV Entity harmless (on an after-tax basis) from all Claims suffered or
paid as a result of (i) the failure of any of the representations or warranties
made by W-L in this Agreement or any other Operative Document to be true and
correct in all material respects as of the date hereof or any applicable Closing
Date, (ii) any breach by W-L of any covenant made by W-L in this Agreement or
any of the Operative Documents and (iii) any Claim made by a third party which,
if successful, would constitute a breach of a warranty, covenant or agreement
made by W-L in this Agreement or any other Operative Document, subject in all
cases to any limitations set forth in this Agreement or any Operative Document.

(b) Wellcome shall indemnify and hold W-L and each JV Entity harmless (on
an after-tax basis) from all Claims suffered or paid as a result of (i) the
failure of any of the representations or warranties made by Wellcome in this
Agreement or any other Operative Document to be true and correct in all material
respects as of the date hereof or any applicable closing date, (ii) any breach
by Wellcome of any covenant made by Wellcome in this Agreement or any of the
other Operative Documents, (iii) any Claims made by a third party which, if
successful, would constitute a breach of a warranty, covenant or agreement made
by Wellcome in this Agreement or any other Operative Document, subject in all
cases to any limitations set forth in this Agreement or any Operative Document
and (iv) the termination of any broker previously engaged by Wellcome in the
United States the services of which have not been continued by the U.S.
Partnership after January 31, 1994.

(c) Subject to the requirements of Section 13.02(a) or (b) as applicable,
in the event a judgment shall be rendered by a court of competent jurisdiction
against only one of the Parties or another liability is incurred and paid by a
Party in its capacity as a partner of any JV Entity conducting JV Business in
partnership form (except any judgment obtained by a third party as a result of
the negligence of that Party or breach by that Party of the terms of this
Agreement or any Operative Document), the other Party shall reimburse such Party
for that percentage of such judgment or liability as shall correspond to the
appropriate profit and loss allocation to the reimbursing Party applicable to
the product giving rise to the judgment, or if the judgment is not related to a
specific product, the Base Business Profit and Loss allocation for the relevant
JV Entity.

(d) If a JV Entity incurs liability for any Tax in connection with any
actual or deemed contribution or transfer to a JV Entity at the time of its
formation of any tangible or intangible assets, property or business, including
the grant of any license, lease or similar right (collectively, 'Assets') or
with respect to a Party's prior ownership or operation of such Assets, the Party
transferring or contributing (or causing such transfer or contribution of) such
Assets will indemnify and hold harmless (on an after-tax basis) the JV Entity
from any liability (net of any refund or similar recovery) in respect of any
such Tax, including all costs and expenses directly or indirectly related to the
final determination of the JV Entity's liability for such Tax. In the event an
Affiliate of a Party shall be involved in the transfer or contribution of the
Assets, the Party and the Affiliate shall be jointly and severally liable for
the indemnification set forth in the preceding sentence.

(e) Any indemnification of a JV Entity, W-L or Wellcome hereunder shall
include and extend to the benefit of their respective directors, officers,
employees and representatives or alternative representatives of the Governing
Board and Affiliates (other than any indemnification by Wellcome of an officer
or director which is proscribed by law). Any person that may be entitled to
indemnification under this Agreement (an 'Indemnified Party') shall give notice
to the Person obligated to indemnify it (an 'Indemnifying Party') with
reasonable promptness upon becoming aware of any claim or other facts upon which
a claim for indemnification will be based; the notice shall set forth such
information with respect thereto as is then reasonably available to the
Indemnified Party. The Indemnifying Party shall have the right to undertake the
defense of any such Claim asserted by a third party with counsel satisfactory to
the Indemnified Party and the Indemnified Party shall cooperate in such defense
and make available all records, materials and witnesses reasonably requested by
the Indemnifying Party in connection therewith at the Indemnifying Party's
expense. If the Indemnifying Party shall have assumed the defense of the claim
with counsel reasonably satisfactory to the Indemnified Party, the Indemnifying

<PAGE>
Party shall not be liable to the Indemnified Party for any legal or other
expenses (other than for reasonable costs of investigation) subsequently
incurred by the Indemnified Party in connection with the defense thereof. The
Indemnifying Party shall not be liable for any claim settled without its
consent, which consent may not be unreasonably withheld or delayed.

(f) To the extent that either Party is involved in any proceeding which
arose prior to the establishment of a JV Entity and books, records or former
employees of the Party shall be under the dominion and control of a JV Entity,
the JV Entity shall cooperate with the Party and make available all records,
materials and witnesses reasonably requested by the Party in connection with its
prosecution or defense of such proceeding at the Party's expense.

ARTICLE XIV
TERM AND TERMINATION

SECTION 14.01. Term of JV Entity. Each JV Entity shall commence as of the
Closing Date for the relevant JV Implementation Agreement for such JV Entity and
shall continue until it is dissolved and terminated pursuant to the terms of the
Operative Documents or pursuant to law. Except in those circumstances referred
to in Sections 8.02, 14.02, 14.03 and 14.04 and except for circumstances causing
dissolution or liquidation of a JV Entity set forth in a JV Implementation
Agreement it is understood and agreed that each JV Entity is intended to
continue without interruption until such relationship is specifically dissolved
by unanimous consent of the partners or shareholders, as the case may be, and
that upon dissolution the rights and obligations of the Parties under this
Agreement shall continue to be in effect, until the final distribution of the
assets of each JV Entity to the Parties.

SECTION 14.02. OTC Zovirax Not Approved. (a) Notwithstanding any other
provision of this Agreement, if an event set forth in Section 4.02(c)(ii)(B) has
occurred and the Parties have been unable to agree upon increased or decreased
allocations pursuant to that Section within six months from the delivery of the
written notice referred to in that Section, W-L may, in its sole discretion (as
its exclusive remedy), commence the termination procedures set forth in clause
(b) of this Section by giving written notice thereof to Wellcome.

(b) Notwithstanding any other provision of this Agreement, in the event W-L
delivers a notice pursuant to paragraph (a) of its intention to commence
termination, the Parties shall have the following rights and obligations with
respect to all, but not fewer than all, of the JV Entities in the United States
and Canada:

(i) Wellcome may, in its sole discretion, elect to withdraw from the
JV Entities in the United States and Canada all products included in the
Wellcome Contributed Business together with OTC Zovirax, JV Prescription
Zovirax and any OTC Switch Product as to which Wellcome was the Originating
Party, that constitute JV Business in the United States and Canada;

(ii) Wellcome may, in its sole discretion, elect to require W-L to
purchase all right, title and interest of Wellcome in the JV Entities in
the United States and Canada, including the JV Entities' rights in the
Operative Documents, but excluding any interest of such JV Entities in OTC
Zovirax, JV Prescription Zovirax, any OTC Switch Product as to which
Wellcome was the Originating Party, for an amount equal to 30% of the value
of the JV Entity in the United States and 50% of the value of the JV Entity
in Canada as of the end of the most recent Fiscal Quarter as valued at
their Going Concern Value; provided, however, that for purposes of
determining Going Concern Value for this Section, no value shall be
ascribed to OTC Zovirax, JV Prescription Zovirax, any such OTC Switch
Product; or

(iii) Wellcome may, in its sole discretion, elect to sell any of the
products included in the Wellcome Contributed Business withdrawn from the
JV Business pursuant to clause (i) to one or more third parties, provided,
however, that if Wellcome offers or negotiates to sell such products with
any third party Wellcome shall offer such terms to W-L in writing prior to
entering into any agreement with such third party. W-L shall thereafter
have 30 days to accept or reject such offer. If accepted, the Parties shall
proceed to execute a purchase and sale agreement, and if rejected or if no
response is given within the 30-day period, Wellcome may enter into a
purchase and sale agreement with the third party on such terms.

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(c) It is expressly understood that in the event of any election of rights
by Wellcome pursuant to Section 14.02(b), (i) Wellcome shall receive all rights
to the marketing of OTC Zovirax, JV Prescription Zovirax and any OTC Switch
Products as to which Wellcome was the Originating Party,(ii) Wellcome will be
promptly compensated by W-L for its interest in the Going Concern Value of any
products developed by the JV Entity (other than Line Extensions) and any
products acquired by the JV Entity pursuant to Sections 6.03 and 6.04, (iii)
Wellcome will promptly pay to W-L the Going Concern Value of its interest in OTC
Zovirax and JV Prescription Zovirax in Canada and in all OTC Switch Products as
to which Wellcome was the Originating Party in the United States and Canada,
(iv) Wellcome will not retain any interest in the Glaxo Arrangement in the
United States and Canada and will not be compensated for the loss of its
interest (other than, with respect to Canada, as included in the calculation of
the Going Concern Value of the JV Entity in Canada set forth above in
subparagraph (b)(ii) and other than as provided in Section 5.03(f) and (v)
Wellcome shall have no further interest in the JV Entities in the United States
and Canada. An election permitted by Wellcome pursuant to the foregoing clauses
(i), (ii) and (iii) shall be made within six months of Wellcome's receipt of
W-L's notice of intention to commence termination and shall be recorded by
written notice delivered by Wellcome to W-L. Any such notice by Wellcome shall
be irrevocable and not subject to change except by agreement of the Parties.

(d) In the event W-L delivers a notice pursuant to paragraph (a) of its
intention to commence termination, Wellcome may, in its sole discretion and in
addition to the rights set forth in paragraph (b), elect to withdraw from the JV
Entities in the Remainder of the World (other than Canada). In such case
Wellcome shall have the right to elect either of the options set forth in
Section 14.03(a) below. An election permitted by Wellcome pursuant to this
paragraph (d) shall be made within six months of Wellcome's receipt of W-L's
notice of intention to commence termination and shall be recorded by written
notice delivered by Wellcome to W-L. Any such notice by Wellcome shall be
irrevocable and not subject to change except by agreement of the parties. It is
expressly understood that any election by Wellcome pursuant to this paragraph
(d) shall mean that Wellcome shall have commenced termination of the relevant JV
Entities in the Remainder of the World (other than Canada) for purposes of the
penultimate sentence of Section 14.08.

SECTION 14.03. Wellcome Events of Termination; Remedies. In the event that
(x) there is an NDA Approval for OTC Zovirax within the time periods set forth
in Section 4.02(c)(ii)(B), (y) there has been a successful renegotiation of an
increased allocation of Special Profits or a decreased allocation of Special
Losses to W-L pursuant to Section 4.02(c)(ii)(B) or (z) W-L has not commenced
the termination procedures set forth in Section 14.02 within the time periods
set forth therein, and Wellcome is dissatisfied with the performance of any of
the JV Entities in (1) the United States and Canada or (2) the Remainder of the
World (other than Canada), as the case may be, Wellcome may give written notice
to W-L setting forth in reasonable detail the basis for Wellcome's
dissatisfaction with such JV Entities (all of such JV Entities in (1) the United
States and Canada or (2) the Remainder of the World (other than Canada), the
'Affected JV Entities'), it being understood that Wellcome's dissatisfaction may
not relate to the Plans for OTC Zovirax, JV Prescription Zovirax or any OTC
Switch Product as to which Wellcome was the Originating Party, but such
dissatisfaction may relate to a material breach of any provision of this
Agreement or any of the other Operative Documents by W-L or the implementation
by the relevant JV Entity (other than through Wellcome or its employees) of any
Plan for OTC Zovirax, JV Prescription Zovirax or any OTC Switch Product as to
which Wellcome was the Originating Party. Following receipt of such notice, W-L
shall have one year to attempt to cure the cause of Wellcome's dissatisfaction.
W-L shall use its reasonable efforts to attempt to cure the cause of Wellcome's
dissatisfaction unless W-L does not intend to cure such dissatisfaction within
such one year period. In the latter case, W-L shall notify Wellcome in writing
and such one year period shall be deemed to terminate as of the date of such
notice. If, in the reasonable opinion of Wellcome, the cause of Wellcome's
dissatisfaction has not been cured within one year of W-L's receipt of such
written notice and such one year cure period expires or has terminated pursuant
to the previous sentence, then

(a) After the second anniversary and prior to the fifth anniversary of
the Closing Date for the initial JV Implementation Agreement in (1) the
United States or Canada if the Affected JV Entity is located in the United
States or Canada or (2) any other Territory if the Affected JV Entity is
located in the Remainder of the World (other than Canada), as the case may
be, Wellcome shall

<PAGE>
have the right to, within 30 days after expiration or termination of such
one year cure period by written notice (which shall be irrevocable as to
the election made) sent to W-L:

(i) elect to withdraw from the Affected JV Entities any products
included in the Wellcome Contributed Business together with OTC Zovirax,
JV Prescription Zovirax and any OTC Switch Product as to which Wellcome
was the Originating Party, that constitute JV Business of such Affected
JV Entities. In such event W-L shall compensate Wellcome for the loss of
its interest in the Affected JV Entities' JV Business represented by the
Going Concern Value of any OTC Switch Product as to which W-L was the
Originating Party and any products developed by the JV Entity (other
than Line Extensions) and any products acquired by the JV Entity
pursuant to Sections 6.03 and 6.04. Wellcome shall compensate W-L for
the loss of its interest in the affected JV Business represented by the
Going Concern Value of (1) OTC Zovirax, if the affected JV Entity is in
the United States and (2) any OTC Switch Product as to which Wellcome
was the Originating Party. In the event Wellcome transfers its interest
in OTC Zovirax (if the Affected JV Entity is in the United States) or
any OTC Switch Product as to which Wellcome was the Originating Party to
a third party within twelve months after Wellcome has withdrawn its
products from such JV Entities pursuant to this clause (i), Wellcome
shall pay to W-L an amount equal to W-L's appropriate share of any
amounts so received (calculated on an after-tax basis) in excess of
Going Concern Value of OTC Zovirax or such OTC Switch Product, as the
case may be. In the event of any election pursuant to this clause (i),
Wellcome will retain its rights and obligations in the Glaxo Arrangement
but shall relinquish any and all remaining interest in such Affected JV
Entities;

(ii) elect to withdraw from the Affected JV Entities all rights to
JV Prescription Zovirax, OTC Zovirax and any OTC Switch Products as to
which Wellcome was the Originating Party. W-L shall pay to Wellcome an
amount equal to the Going Concern Value of the remainder of Wellcome's
interest in such Affected JV Entities (excluding any value attributable
to JV Prescription Zovirax, OTC Zovirax and any such OTC Switch Products
but including the value of the Glaxo Arrangement and all OTC Switch
Products as to which W-L was the Originating Party) as of the most
recently completed Fiscal Quarter. Wellcome shall compensate W-L for the
loss of its interest in the JV Business of the Affected JV Entities
represented by the Going Concern Value of JV Prescription Zovirax, OTC
Zovirax and any such OTC Switch Products. In addition, Wellcome shall
pay to W-L an amount equal to the minimal necessary costs of reducing
the scope of such JV Entities' activities due to Wellcome's withdrawal
of JV Prescription Zovirax, OTC Zovirax and any other OTC Switch
Products as to which Wellcome was the Originating Party. In the event
Wellcome transfers its interest in OTC Zovirax, JV Prescription Zovirax
and any OTC Switch Product as to which Wellcome was the Originating
Party to a third party within twelve months after Wellcome has withdrawn
OTC Zovirax, JV Prescription Zovirax and any such OTC Switch Product
from any JV Entities pursuant to this clause (ii), Wellcome shall pay to
W-L an amount equal to W-L's appropriate share of any amounts so
received (calculated on an after-tax basis) in excess of Going Concern
Value for OTC Zovirax, JV Prescription Zovirax or such OTC Switch
Product, as the case may be. In the event of any election pursuant to
this clause (ii), Wellcome shall not retain any interest in the Glaxo
Arrangement and shall not be compensated for such loss of interest
(other than as included in the calculation of the Going Concern Value of
the Affected JV Entities set forth above in the event and to the extent
Wellcome participates in the Glaxo Arrangement pursuant to Article V);
or

(iii) elect to sell its entire economic interest, including the
Glaxo Arrangement, JV Prescription Zovirax, OTC Zovirax and all OTC
Switch Products as to which Wellcome was the Originating Party, in the
Affected JV Entities to W-L at a price to be negotiated by the Parties.
If the Parties are unable to agree upon a price within a period of three
months, Wellcome may offer to sell its entire economic interest in such
Affected JV Entities to a third party, including JV Prescription
Zovirax, OTC Zovirax and all OTC Switch Products as to which Wellcome
was the Originating Party but excluding the Glaxo Arrangement which
shall be acquired by W-L pursuant to Section 14.05; provided, however,
that if Wellcome negotiates the sale of its entire economic interest in
such Affected JV Entities to a third party on price

<PAGE>
and other material commercial terms that are more favorable than those
last offered to W-L, Wellcome shall offer the terms of such third party
offer to W-L in writing prior to entering into any agreement with such
third party. W-L shall then have 30 days to accept or reject such offer.
If accepted, the Parties shall proceed to finalize such sale and
purchase, and if rejected or if no response is given within the 30 day
period, Wellcome may sell such interest to the third party on such
terms; provided, however, that the identity of such third party shall
have been approved by W-L with any such approval not to be unreasonably
withheld and not to be withheld based solely on the fact that the third
party is a competitor of W-L or of a JV Entity;

(b) At any time on or after the fifth anniversary and prior to the
tenth anniversary of the Closing Date for the initial JV Implementation
Agreement in (1) the United States or Canada if the Affected JV Entity is
located in the United States or Canada or (2) any other Territory if the
Affected JV Entity is located in the Remainder of the World (other than
Canada), as the case may be, Wellcome shall have the right, within 30 days
after expiration or termination of such one year cure period by written
notice (which shall be irrevocable as to the election made) sent to W-L, to
elect either of the options set forth in Section 14.03(a)(ii) and (iii)
above;

(c) At any time on or after the tenth anniversary of the Closing Date
for the initial JV Implementation Agreement in (1) the United States or
Canada if the Affected JV Entity is located in the United States or Canada
or (2) any other Territory if the Affected JV Entity is located in the
Remainder of the World (other than Canada), as the case may be, Wellcome
shall have the right, within 30 days after expiration or termination of
such one year cure period by written notice sent to W-L, to elect the
option set forth in Section 14.03(a)(iii);

provided, however, that in the event that Wellcome elects any of the above with
respect to a JV Entity in (1) the United States or Canada, such election shall
also apply to all JV Entities in the United States or Canada or (2) the
Remainder of the World (other than Canada), such election shall also apply to
all other JV Entities in the Remainder of the World (other than Canada). In the
event of an election by Wellcome pursuant to Section 14.03(a)(i) or (ii) the
affected JV Entities may cause arrangements to be effected whereby Wellcome will
acquire the relevant products.

Wellcome may, in its discretion, elect the option set forth in clause
(a)(iii) at any time after the receipt of the NDA Approval referred to in
Section 4.02(c)(ii)(A)(1) or there has been a successful renegotiation pursuant
to Section 4.02(c)(ii)(B); provided, however, that W-L has not commenced the
termination procedures set forth in Section 14.02 or 14.04 for the Affected JV
Entities.

SECTION 14.04. W-L Events of Termination; Remedies. In the event that (x)
there is an NDA Approval for OTC Zovirax within the time periods set forth in
Section 4.02(c)(ii)(B), (y) there has been a successful renegotiation of an
increased allocation of Special Profits or a decreased allocation of Special
Losses to W-L pursuant to Section 4.02(c)(ii)(B) or (z) W-L has not commenced
the termination procedures set forth in Section 14.02 within the time periods
set forth therein, and W-L is dissatisfied with the performance of any of the
Affected JV Entities in (i) the United States and Canada or (ii) the Remainder
of the World (other than Canada) as the case may be, W-L may give written notice
to Wellcome setting forth in reasonable detail the basis for W-L's
dissatisfaction with the Affected JV Entities, it being understood that W-L's
dissatisfaction may only relate to the Plans for JV Prescription Zovirax, OTC
Zovirax or any OTC Switch Product as to which Wellcome was the Originating Party
except to the extent that the aforementioned Plans were prepared by the affected
JV Entity other than at the direction of Wellcome (W-L's dissatisfaction not
being based solely on implementation of such Plan other than by Wellcome or its
employees), or a material breach of any provision of this Agreement or any of
the other Operative Documents by Wellcome. Following receipt of such notice,
Wellcome shall have one year to attempt to cure the cause of W-L's
dissatisfaction. Wellcome shall use reasonable efforts to attempt to cure the
cause of W-L's dissatisfaction unless Wellcome does not intend to cure such
dissatisfaction within such one-year period. In the latter case, Wellcome shall
notify W-L in writing and such one year period shall be deemed to terminate as
of the date of such notice. If Wellcome, in the reasonable opinion of W-L, has
failed to cure such dissatisfaction within one year of receipt of such written
notice, and such one year cure period expires or has terminated pursuant to the
previous sentence, then

<PAGE>
(a) After the second and prior to the fifth anniversary of the Closing
Date for the initial JV Implementation Agreement in (A) the United States
and Canada if the Affected JV Entity is located in the United States or
Canada, or (B) the Remainder of the World (other than Canada) if the
Affected JV Entity is in the Remainder of the World (other than Canada), as
the case may be, W-L shall have the right to, within 30 days after
expiration or termination of such one year cure period by written notice
(which shall be irrevocable as to the election made) sent to Wellcome:

(i) return to Wellcome all of the products included in the Wellcome
Contributed Business together with OTC Zovirax, JV Prescription Zovirax
and any OTC Switch Product as to which Wellcome was the Originating
Party, that constitute JV Business of the Affected JV Entities, and
Wellcome shall pay to W-L an amount equal to 50% of the Going Concern
Value of W-L's interest in OTC Zovirax in the United States and any OTC
Switch Products as to which Wellcome was the Originating Party as of the
most recently completed Fiscal Quarter preceding the date of W-L's
election. W-L shall compensate Wellcome for the loss of its interest in
the JV Business of the Affected JV Entities represented by the Going
Concern Value of any OTC Switch Product as to which W-L was the
Originating Party and any products developed by the JV Entity (other
than the Line Extensions) and any products acquired by the JV Entity
pursuant to Sections 6.03 and 6.04. In the event of any election
pursuant to this clause (i), Wellcome shall retain its rights and
obligations in the Glaxo Arrangement; or

(ii) return to Wellcome JV Prescription Zovirax, OTC Zovirax and
any OTC Switch Products as to which Wellcome was the Originating Party
and, in such event, W-L shall compensate Wellcome for the remainder of
its interest in the Affected JV Entities (excluding any value
attributable to JV Prescription Zovirax, OTC Zovirax, any such OTC
Switch Products or the Glaxo Arrangement but including any value
attributable to any OTC Switch Product as to which W-L was the
Originating Party) on a basis to be negotiated by the Parties. In
addition, Wellcome shall pay W-L an amount equal to 50% of the Going
Concern Value of its interest in JV Prescription Zovirax, OTC Zovirax
and any such OTC Switch Products as of the most recently completed
Fiscal Quarter. In the event of any election pursuant to this clause
(b), Wellcome shall retain its rights and obligations in the Glaxo
Arrangement;

(b) At any time on or after the fifth anniversary of the Closing Date
for the initial JV Implementation Agreement in (A) the United States and
Canada, if the Affected JV Entity is in the United States or Canada or (B)
the Remainder of the World (other than Canada) if the Affected JV Entity is
in the Remainder of the World (other than Canada), as the case may be, W-L
shall have the right to, within 30 days after expiration or termination of
such one year cure period by written notice (which shall be irrevocable as
to the election made) sent to Wellcome to elect the option set forth in
Section 14.04(a)(ii);

provided, however, that in the event that W-L elects any of the above with
respect to a JV Entity in (i) the United States or Canada such election shall
also apply to all other JV Entities in the United States or Canada or (ii) the
Remainder of the World (other than Canada), such election shall also apply to
all other JV Entities in the Remainder of the World (other than Canada).

In the event W-L exercises the option set forth in clause (a)(i), Wellcome
may elect to sell its interest in the Affected JV Entities to W-L at Going
Concern Value (excluding any value attributable to JV Prescription Zovirax, OTC
Zovirax, any OTC Switch Products as to which Wellcome was the Originating Party
and the Glaxo Arrangement) and retain JV Prescription Zovirax, OTC Zovirax, any
OTC Switch Products as to which Wellcome was the Originating Party and its
interest in the Glaxo Arrangement and compensate W-L as set forth in and to the
extent required by clause (a)(ii) above. If the Parties are unable to agree upon
a price within a period of three months, Wellcome may offer to sell its entire
economic interest in the Affected JV Entities excluding any value attributable
to OTC Zovirax, JV Prescription Zovirax and any OTC Switch Products as to which
Wellcome was the Originating Party to a third party; provided, however, that if
Wellcome offers such interest to a third party on price and other material terms
that are more favorable than those last offered to W-L, Wellcome shall offer the
terms of such third party offer to W-L in writing prior to entering into any
agreement with such third party. W-L shall then have 30 days to accept or reject
such offer. If accepted, the Parties shall proceed to finalize such sale and
purchase, and if rejected or if no response is given

<PAGE>
within the 30-day period, Wellcome may sell such interest to the third party
only on such terms. In the event of any election pursuant to Section 14.04(a)(i)
as a result of which Wellcome has retained rights and obligations in the Glaxo
Arrangement, that retained interest shall be limited to the extent of any prior
affirmative elections made by Wellcome pursuant to Section 5.01(b) and Wellcome
shall have no continuing right to make any further elections pursuant to that
Section.

SECTION 14.05. W-L's Option to Purchase Wellcome's Interest in the Glaxo
Arrangement; Wellcome Tag-Along Right. (a) Notwithstanding the provisions set
forth in Sections 14.03 and 14.04, and in the event that Wellcome or W-L, as the
case may be, has elected to exercise any of the provisions for termination set
forth in Sections 14.03 or 14.04, W-L, at its sole option, after giving Wellcome
written notice of its intention to purchase Wellcome's entire interest in the
Glaxo Arrangement, shall negotiate in good faith to purchase such interest for a
price to reflect the value thereof but without ascribing any value to Wellcome's
interest in the Glaxo Arrangement except for products currently being marketed
or under development. If, after 60 days, the Parties cannot agree on such a
price, W-L shall send written notice to Wellcome that W-L still intends to
purchase Wellcome's interest in the Glaxo Arrangement, and W-L shall pay
Wellcome the Going Concern Value of Wellcome's interest as determined pursuant
to Section 15.03 within 30 days following receipt of the calculation of such
amount.

(b) In the event W-L shall assign, sell or otherwise transfer its entire
interest in the Glaxo Arrangement to a third party, W-L will assure that
Wellcome's interest in the Glaxo Arrangement is assigned, sold or otherwise
transferred on equivalent terms, and, in such event, Wellcome hereby agrees to
any such sale, assignment or transfer.

SECTION 14.06. Waiver of Right to Terminate. Notwithstanding the foregoing,
in the event that a Party fails to give a notice of termination within the time
periods set forth in Section 14.03 or 14.04, as the case may be, such Party
shall be deemed to have waived its right to terminate with respect to the event
or events which gave rise to such right to terminate.

SECTION 14.07. Winding Up and Transfer of Assets; Liquidation. Upon the
occurrence of an event of termination set forth in Section 8.02, 14.01, 14.02,
14.03 or 14.04, the relevant JV Entity shall continue to exist solely for the
purposes of winding up its affairs in an orderly manner, liquidating its assets
and satisfying the claims of its creditors and its shareholders. No Party shall
take any action that is inconsistent with, or not necessary to or appropriate
for, winding up the business and affairs of any JV Entity. During the period of
winding up, the rights and obligations set forth in this Agreement with respect
to the management of any JV Entity shall continue and, subject to Section 5.04
hereof, the relevant Governing Board shall continue to make all decisions
relating to the conduct of any remaining business or operations, including any
decisions relating to the sale or other disposition of any assets of any JV
Entity; provided, however, that if dissolution occurs as a result of an election
of a Party pursuant to Section 8.02, 14.01, 14.02, 14.03 or 14.04, then W-L and
its representatives on the relevant Governing Board, unless other arrangements
are agreed to by the Parties, shall have the exclusive right to wind up the
business of the Affected JV Entities and to liquidate their assets and may also
elect to exercise the right to continue the business of the Affected JV Entities
in accordance with relevant law.

SECTION 14.08. Rationalization of Interests; Tax Indemnification. In the
event of any restructuring event which occurs pursuant to Section 8.02 or this
Article XIV, the capital accounts or capital stock accounts of the Parties in
the JV Entities affected by the restructuring event shall be dealt with in the
manner provided by the relevant JV Implementation Agreement. In the event a
Party shall commence termination of a JV Entity pursuant to 14.02, 14.03 or
14.04 or shall have undergone a Change of Control pursuant to Section 8.02, that
Party shall indemnify the JV Entity on an after-tax basis for any income tax
liability of the JV Entity attributable to such termination. The Parties shall
cooperate to minimize any adverse tax consequences resulting from the
application of the provisions of this Article XIV.

SECTION 14.09. Termination of Related Agreements. In the event that
Wellcome withdraws any products or W-L returns any products to Wellcome in
accordance with this Article XIV, the Wellcome Operative Documents with respect
to such products shall terminate with respect to such products following an
orderly transition period, except to the extent such termination is agreed not
to be necessary based on the commercial requirements of the Parties. With
respect to any products not withdrawn or returned, the Wellcome Operative
Documents shall survive in accordance with their

<PAGE>
respective terms upon any termination of this Agreement; provided, however, that
in the event W-L purchases Wellcome's interest in any JV Entities pursuant to
Article XIV, such Operative Documents shall terminate unless otherwise agreed by
the Parties, and Wellcome shall assign, without additional consideration, its
entire right, title and interest in and to the affected products or otherwise
make such products available to W-L on an irrevocable, exclusive, royalty-free
(subject to any applicable third party royalties) and perpetual basis, it being
understood that the valuation of Wellcome's interest shall reflect the transfers
contemplated by this proviso. Any payment by W-L for Wellcome's interest shall
be made to Wellcome or its Affiliates as their interests may appear. In the
event products are returned to Wellcome, the Parties shall use reasonable
efforts to accommodate each other's needs in respect of transition arrangements,
including, without limitation, the transfer of any regulatory approvals or
licenses with respect to such products.

SECTION 14.10. Failure to Satisfy Required Conditions. In the event that
any transaction contemplated by the provisions of this Article XIV cannot be
consummated by reason of the inability to satisfy any governmental, statutory or
regulatory approval or consent which may be required as a condition to the
consummation thereof, including, without limitation, any required approval of
Wellcome shareholders having been sought and not given, the Parties agree to
negotiate in good faith, subject to their respective fiduciary duties (and any
required approvals or consents), an alternative to the transaction which cannot
be so consummated with a view to obtaining for each of the Parties (in the
manner most effective under the circumstances) the economic benefits desired
under the application provisions of this Article XIV.

SECTION 14.11. Definitional Clarification. For purposes of Sections 14.02,
14.03 and 14.04 of this Article XIV, the term Wellcome Contributed Business
shall be deemed to exclude OTC Zovirax and JV Prescription Zovirax.

ARTICLE XV
GENERAL

SECTION 15.01. Expenses. Wellcome and W-L shall bear their own expenses
incurred in connection with this Agreement and the Operative Documents and the
consummation of the transactions contemplated hereby and thereby and preparation
therefor, including, without limitation, all expenses of their respective
representatives on each Governing Board and all Taxes incurred in connection
with the assignment and transfer of any assets to a JV Entity; provided,
however, that each Party shall, and shall cause such JV Entity, to the extent
legally able to do so, to deliver to any other Party that is required by law to
collect any such transfer or similar taxes an exemption certificate, in form and
substance satisfactory to such Party, with respect to such Taxes. In connection
with the application of this Section 15.01, the Parties shall cooperate within
reason to minimize any tax consequences to both Parties.

SECTION 15.02. Assignment and Binding Effect. Subject to the provisions of
Article XII, this Agreement and any of the rights or obligations hereunder shall
not be assignable by any Party without the prior written consent of the other
Party hereto. This Agreement shall be binding upon and inure to the benefit of
the Parties hereto and their respective permitted successors and assigns.

SECTION 15.03. Inability to Agree Upon Value. In the event the Parties
cannot agree on any determination of Going Concern Value, the fair market value
of a product or the fair market value of a contribution to a JV Entity within a
period of 90 days following the event requiring the determination of such value,
each Party shall choose an investment banker to determine such Going Concern
Value or other value, which Going Concern Value or other value shall be the
average of the two values determined by such investment bankers, unless the
higher value exceeds the lower value by more than ten percent, in which case the
Going Concern Value or other value shall be one or the other of such values as
decided by an investment banker selected by the first two investment bankers.

SECTION 15.04. Financial Consolidation. To the extent presently permitted
by U.S. GAAP, the Parties intend that W-L shall consolidate the sales of each JV
Entity for U.S. GAAP financial reporting purposes.

<PAGE>
SECTION 15.05. Notices. All notices, demands, requests and other
communications required or permitted to be given hereunder shall be in writing
and deemed duly given on the date delivered by hand, mailed by registered or
certified mail, postage prepaid, or by overnight courier or by facsimile
transmission the receipt of which is confirmed by telephone and, pending the
designation of another address, addressed as follows:

If to Wellcome:

Wellcome plc
Unicorn House
160 Euston Road
London NW1 2BP ENGLAND

Attn: Company Secretary

With a copy to:

Burroughs Wellcome Co.
3030 Cornwallis Road
Research Triangle Park, NC 27709

Attn: Company Secretary

If to W-L:

Warner-Lambert Company
201 Tabor Road
Morris Plains, NJ 07950

(1) Attn: Vice President, Planning,
Investment and Development

(2) Attn: Vice President and General Counsel

SECTION 15.06. Parties in Interest. Nothing in this Agreement, express or
implied, is intended or shall be construed to confer upon or give to any Person,
firm or corporation other than the Parties hereto any remedy or claim under or
by reason of this Agreement, all of which shall be for the sole and exclusive
benefit of the Parties hereto.

SECTION 15.07. Press Releases. All press releases or other public
communication relating to the terms of this Agreement, the JV Entities and the
other Operative Documents (other than announcements, summaries or reports of
previously disclosed information) shall be subject, except as otherwise required
by law or the rules of any regulatory authority, to the prior approval of each
of Wellcome and W-L, which approval shall not be unreasonably withheld.

SECTION 15.08. Headings; Schedules; Counterparts. The headings of the
Sections and Articles of this Agreement are inserted as a matter of convenience
and for reference purposes only, and are of no binding effect.

All Exhibits or Schedules delivered pursuant to this Agreement shall be
deemed part of this Agreement and incorporated herein, where applicable, as if
fully set forth herein. All statements contained in any Exhibit or Schedule
delivered by or on behalf of the parties hereto, or in connection with the
transactions contemplated hereby, are an integral part of this Agreement. It is
also understood that the forms included in the Supplemental Document Package may
require alteration to conform to local custom, practice or usage. Variations in
those forms will be negotiated in good faith by the Parties.

This Agreement may be signed in any number of counterparts, each of which
for all purposes shall be deemed to be an original and all of which together
shall constitute the same agreement.

SECTION 15.09. Entire Agreement; Amendment; Severability. (a) This
Agreement, including the Exhibits and Schedules hereto and the other Operative
Documents represent the entire understanding and agreement between the Parties
hereto with respect to the subject matter hereof. This Agreement can be amended,
modified, supplemented, extended, terminated (except as provided in Article XIV
hereof), discharged or changed only by an agreement in writing which makes
specific reference to this Agreement and which is signed by all Parties.

<PAGE>
(b) If and to the extent that any court of competent jurisdiction holds any
provision (or any part thereof) of this Agreement to be invalid or
unenforceable, such holding shall in no way affect the validity of the remainder
of the Agreement.

(c) If and to the extent compliance with any provision of this Agreement or
any other Operative Document, in the reasonable opinion of a Party, would result
in a violation of law or regulation, such Party need not comply with such
provision, provided that such Party shall provide, to the extent practicable,
prior written notice to the other Party and, where not practicable, prompt
notice following such non-compliance.

SECTION 15.10. Waiver; Compliance. Any failure of Wellcome or W-L to comply
with any obligation, covenant, agreement or condition herein contained may be
expressly waived, in writing only, by the other Party hereto and such waiver
shall be effective only in the specific instance and for the specific purpose
for which made or given.

SECTION 15.11. Confidentiality. (a) No Party shall, during the period while
any provision of this Agreement is in effect and for a period of five years
after all other provisions of this Agreement have ended or been terminated,
disclose any information (that is not publicly available or generally known
other than by breach of the provisions of this Agreement or made available by a
third party which is not in breach of an obligation of confidentiality) (i)
regarding the terms of this Agreement and of the other Operative Documents and
in particular the terms of the provisions relating to a Change of Control
contained in Article VIII hereof or in any other of the Operative Documents or
(ii) obtained by such Party pursuant to or in connection with the negotiation,
delivery and performance of this Agreement or the other Operative Documents or
the consummation of the transactions contemplated thereby to any Person, other
than its Affiliates; except (v) with the prior written consent of the other
Party; (w) to the extent necessary to comply with the requirements of the
Securities and Exchange Commission, the London Stock Exchange and other
regulatory authorities: (x) to the extent necessary to comply with law or
regulatory authority or the valid order of a court of competent jurisdiction, in
which event the Party making such disclosure shall so notify the other Party as
promptly as practicable (and if possible, prior to making such disclosure) and
shall seek confidential treatment of such information; (y) in connection with
enforcement of such Party's rights hereunder or (z) disclosures to a
professional advisor to such Party in connection with the performance by such
Party of its obligations hereunder.

(b) To the extent practicable, upon any termination of this Agreement, each
Party hereto will redeliver all documents, work papers and other material of any
other Party, specifically requested to be returned by a Party in writing,
relating to the transactions contemplated hereby, and all copies of such
materials, whether so obtained before or after the execution hereof, to the
Party furnishing the same.

SECTION 15.12. Governing Law; Jurisdiction; Consent to Service of Process;
Agent for Service. (a) This Agreement shall be governed, construed and enforced
in accordance with the laws of the State of New York without regard to the
applicable principles of conflicts of laws that might otherwise govern.

(b) Each of the Parties hereby irrevocably and unconditionally submits, for
itself and its property, to the jurisdiction of any New York State court sitting
in New York or any Federal court of the United States sitting in the Borough of
Manhattan in the City of New York, and any appellate court from any such court,
in any suit, action or proceeding arising out of or relating to this Agreement
or any of the Operative Documents, or for recognition or enforcement of any
judgment, and each of the Parties hereto hereby irrevocably and unconditionally
agrees that all claims in respect of any such suit, action or proceeding may be
heard and determined in such New York State court or, to the extent permitted by
law, by removal or otherwise, in such Federal court. It shall be a condition
precedent to each Party's right to bring any such suit, action or proceeding
that such suit, action or proceeding, in the first instance, be brought in such
New York State court or, to the extent permitted by law, by removal or
otherwise, in such Federal court (unless such suit, action or proceeding is
brought solely to obtain discovery or to enforce a judgment), and if each of
such New York state court and such Federal court refuses to accept jurisdiction
with respect thereto, such suit, action or proceeding may be brought in any
other court with jurisdiction. Neither Party may move to (i) transfer any suit,
action or proceeding from such New York State court or Federal court to another
jurisdiction, (ii) consolidate any such suit, action or proceeding brought in
such New York State court or Federal court with a suit, action or proceeding in
another jurisdiction or (iii) dismiss any such suit, action or proceeding
brought in such New York

<PAGE>
State court or Federal court for the purposes of bringing the same in another
jurisdiction. Each Party agrees that a final judgment in any such suit, action
or proceeding shall be conclusive and may be enforced in any other jurisdiction
by suit on the judgment or in any other manner provided by law.

(d) Each Party irrevocably consents to service of process on it or any
agent for service appointed from time to time (including agents for service
appointed pursuant to clause (e) of this Section 15.12) in the manner provided
for notices in Section 15.05. Nothing in this Agreement shall affect the right
of either Party to serve process in any other manner permitted by law.

(e) Wellcome hereby designates and appoints Cahill Gordon & Reindel and
such other persons (reasonably satisfactory to W-L) hereafter selected by it,
irrevocably agreeing in writing so to serve, as its agent to receive on its
behalf service of all process in any proceedings referred to in clause (b) of
this Section 15.12, such service being hereby acknowledged by Wellcome to be
effective and binding service in every respect.

IN WITNESS WHEREOF, each of the Parties hereto has caused this Agreement to
be duly executed in its name and on its behalf, all as of the date first above
written.

WARNER-LAMBERT COMPANY,

by /s/ Fred G. Weiss
...................................
Name: Fred G. Weiss
Title: Vice President

WELLCOME plc,

by /s/ James M. T. Cochrane
...................................
Name: James M.T. Cochrane
Title: Director

<PAGE>
SCHEDULE 1

FORMAT FOR CALCULATING
CERTAIN PROFITS AND LOSSES

JV Entity Items of Revenue:

1. Net Sales
Less JV Entity Items of Expense:
<TABLE>
<S> <C> <C>

1. Cost of Goods Sold
*2. Promotion
Allowances
Consumer
Other
*3. Advertising
Media
Production
Market Research
Other Advertising
*4. Selling
Field Selling
Detail Field Selling
Other Selling
*5. Distribution Operations
Freight
Operations............................................................................ A
*6. General Administration and Corporate Allocations........................................... A
*7. R&D
8. Other (Income)/Expense..................................................................... A
9. Royalties
10. JV Entity Taxes
Income Based Taxes
Excise, Sales, Transfer and Other Taxes............................................... A
</TABLE>

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

(A) Indicates an item of JV Entity expense which shall not be allocated with
respect to OTC Zovirax in the United States or any OTC Switch Product for
purposes of calculating Special Profit or Loss, but instead shall be
provided for by the Administrative Services Allocation.

* Many of these services will be provided pursuant to a Marketing Services and
Development Agreement

DEFINITIONS FOR ITEMS OF EXPENSE

1. Cost of Goods Sold: The JV Entity's purchased cost of products sold or
otherwise disposed. Cost of goods sold shall include: the purchase price
invoiced to the JV Entity by the Manufacturer pursuant to Section 7.01 or in the
case of third party invoices, by such third party plus any freight, duty, third
party royalties or other such charges, as applicable, loss on returned goods,
obsolete or damaged goods, other merchandise expense and other such inventory
costs, all as determined in accordance with U.S. GAAP on a first in, first out
('FIFO') basis.

2. Promotion: The summation of allowances, consumer and other.

Allowances: Costs include market and trade development funds and any
performance monies given to trade accounts to incentivize promotion at the
retail level.

Consumer: The costs of promotional efforts directed at the consumer
which includes samples, couponing, sweepstakes and premiums.

<PAGE>
Other: Miscellaneous promotional costs which include displays,
promotional packaging costs, trade literature, public relations, etc.

3. Advertising: The summation of Media, Production, Market Research and
Other Advertising.

Media: Placement expenses associated with different forms of
advertising, i.e. television, radio, magazine, billboard, agency fees, etc.

Production: Expenses associated with the development of the different
forms of advertising, i.e. talent, filming, commercial development, etc.

Market Research: The cost to undertake studies to gain an
understanding of consumer preferences and behavior as well as the cost of
purchasing syndicated data.

Other Advertising: Costs associated with programs directed at
professionals (dentists/doctors). These costs include convention, sampling,
educational brochures, etc.

4. Selling: The summation of Field Selling, Detail Field Selling and Other
Selling.

Field Selling: Field sales force salaries, benefits, incentive
bonuses, travel and entertainment, training, sales office expense, car
stock, relocation, auto, etc. Allocated to brand based on sales.

Detail Field Selling: Salaries, benefits, incentive bonuses, travel
and entertainment, auto, conventions, samples, supplies, etc. Allocated to
brand based on number of details.

Other Selling: Costs related to sales meeting for launch of a new
product or line extension and similar related costs.

5. Distribution Operations: The summation of freight and distribution
operations.

Freight: Cost of shipping product to the customer.

Operations: Cost of operating distribution centers and warehouses,
customer services and order entry.

6. General Administration: For Marketing Administration, Sales
Administration, Finance, Human Resources, other General Administration
departments serving the relevant JV Entity, includes salaries, benefits,
temporary help and departmental expenses including travel and entertainment,
supplies, conventions, telephone, consultant fees, depreciation of furniture and
fixtures, etc. In addition, allocation for administrative expenses from other
areas include Credit and Collection, Office Services, Cafeteria, Purchasing,
Library, Accounting, Health Services, Computer System Support, building
occupancy.

Corporate Allocations: Expenses to be allocated to the relevant JV
Entity such as Legal, Security, Management bonuses.

7. R & D: Costs, including normal allocations related to OTC Research,
Product Development, Process Development and Packaging Development performed by
W-L's Consumer Products Research and Development Division.

8. Other (Income)/Expense: Major items include any Glaxo Management Fee,
amortization expense for JV Entity patents, trademarks and goodwill, interest
income or expense, (gain)/loss on sales of fixed assets and bad debt expense.

9. Royalties: Includes the royalty payable to Wellcome pursuant to Section
4.04 and other amounts payable pursuant to license agreements entered into, or
assigned to, by a JV Entity.

10. JV Entity Taxes:

Income Based Taxes: Taxes, governmental license fees and turnover
taxes based on the income or sales of a JV Entity, including any penalties
or interest thereon.

Excise, Sales, Transfer and Other Taxes: Non-product specific taxes,
Taxes or other levies and assessments payable by a JV Entity, such as
certain excise, sales taxes on purchases, transfer, registration, value
added, withholding, property, payroll or other governmental levies,
including any penalties or interest thereon.

<PAGE>
EXHIBIT 12

WARNER-LAMBERT COMPANY AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------
1993 1992 1991 1990 1989
------ ------ ------ ------ ------
(Dollars in millions)
<S> <C> <C> <C> <C> <C>
Earnings before income taxes and accounting changes......... $318.5 $858.2 $221.5 $680.7 $591.6
Add:
Interest on indebtedness -- excluding amount
capitalized............................................ 64.2 80.8 58.2 68.7 55.6
Amortization of debt expense.............................. .5 .6 .4 .3 1.0
Interest factor in rent expense(a)........................ 25.4 23.4 22.3 20.6 17.9
------ ------ ------ ------ ------
Adjusted Earnings...................................... $408.6 $963.0 $302.4 $770.3 $666.1
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Fixed Charges:
Interest on indebtedness.................................. $ 64.2 $ 80.8 $ 58.2 $ 68.7 $ 55.6
Capitalized interest...................................... 8.6 8.1 9.4 5.2 6.3
Amortization of debt expense.............................. .5 .6 .4 .3 1.0
Interest factor in rent expense(a)........................ 25.4 23.4 22.3 20.6 17.9
------ ------ ------ ------ ------
Total Fixed Charges.................................... $ 98.7 $112.9 $ 90.3 $ 94.8 $ 80.8
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Ratio of earnings to fixed charges.......................... 4.1(b) 8.5 3.3(c) 8.1 8.2
------ ------ ------ ------ ------
------ ------ ------ ------ ------
</TABLE>

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

(a) One third of rental expense (which the company believes to be a reasonable
approximation of the interest factor of such rental expense).

(b) The company's ratio of earnings to fixed charges for 1993 would have been
9.5 excluding the restructuring charge of $525.2 million.

(c) The company's ratio of earnings to fixed charges for 1991 would have been
9.4 excluding the restructuring charge of $544.0 million.

<PAGE>

Management's Discussion and Analysis
of Financial Condition and Results of Operations

Overview
- --------

Warner-Lambert continued to take actions in 1993 to strengthen
its overall competitive position and to address changing market
conditions and customer needs. During the year, the company
recorded net restructuring charges of $525 million pretax (after
tax $360 million or $2.67 per share), that included a charge for
a worldwide restructuring and plant rationalization program, a
gain on the sale of its chocolate/caramel business and a charge
for discontinuance of the Novon specialty polymers business. Also
in 1993, the company made several strategic acquisitions and
formed joint ventures with both Wellcome plc and Glaxo Holdings
plc that will develop and market a broad range of consumer health
care products.

The company reported net sales in 1993 of $5,794 million, an
increase of 4 percent over 1992, reflecting a difficult operating
environment in the pharmaceutical business. Net income in 1993
was $331 million or $2.45 per share compared to $644 million or
$4.78 per share in 1992. In addition to the restructuring
charges, 1993 net income includes the impact of the adoption of
Statement of Financial Accounting Standards (SFAS) No. 109,
"Accounting for Income Taxes" and SFAS No. 112, "Employers'
Accounting for Postemployment Benefits." The Board of Directors
approved a 7 percent increase in the quarterly dividend rate,
payable in the first quarter of 1994.

Net Sales
- ---------

Worldwide sales for 1993 were $5,794 million compared to $5,598
million in 1992, a 4 percent increase. Unit volume gains and
price increases were each 3 percent. Foreign exchange rate
changes had an unfavorable impact of 2 percent on 1993 sales. In
1992, sales increased 11 percent, led by a 6 percent gain in unit
volume and a 4 percent gain in price, with the remaining 1
percent gain attributable to net favorable foreign exchange rate
changes.

On a geographic basis, U.S. sales decreased $67 million or 2
percent to $2,747 million, principally due to a decrease in
pharmaceutical segment sales of 10 percent for reasons discussed
below. International sales increased $263 million or 9 percent
to $3,047 million. At constant exchange rates, international
sales increased 14 percent from 1992. In 1992, U.S. sales
increased $199 million or 8 percent to $2,814 million and
international sales increased $340 million or 14 percent to
$2,784 million. After adjusting for the impact of exchange rate
changes, 1992 international sales increased 12 percent over 1991
levels.
<PAGE>
Pharmaceutical Products
- -----------------------
<TABLE>
<CAPTION>
1993 1992 1991
------------ ------------- -------
(Dollars in millions)
<S> <C> <C> <C>
Net Sales $ 2,114 -7% $ 2,280 +13% $ 2,014
</TABLE>
Worldwide sales of pharmaceutical products in 1993 decreased 7
percent compared to 1992, with U.S. sales down 10 percent to
$1,083 million and international sales down 4 percent to $1,031
million. At constant exchange rates, international sales
increased 2 percent from 1992. U.S. sales of pharmaceutical
products were $118 million less than 1992 primarily due to U.S.
Food and Drug Administration (FDA) regulatory issues related to
the company's pharmaceutical manufacturing. Compliance with FDA
restrictions (including the consent decree described below),
resulted in an estimated aggregate loss of sales revenue of
approximately $135 million in 1993. In addition, Medicaid
rebates, which began in 1991, state programs and other related
rebate programs reduced net sales (and income before taxes) by
$57 million in 1993, compared to $37 million in 1992 and $15
million in 1991.

In addition to the negative impact of foreign exchange rates,
international pharmaceutical sales were affected by the impact of
1993 health care reform measures in Germany, reflecting
restrictive government cost containment regulations.

Pharmaceutical products with worldwide sales growth during the
year included the cardiovascular drug ACCUPRIL, CAPSUGEL empty
hard-gelatin capsules and COGNEX, which was introduced in the
U.S. during the third quarter of 1993 for the treatment of mild-
to-moderate Alzheimer's disease.

On December 30, 1993, the company received FDA authorization to
market NEURONTIN (gabapentin) as a new add-on epilepsy therapy.
In 1993, the company launched NEURONTIN in the United Kingdom and
is attempting to obtain marketing approval in other major
European markets in 1994. In addition, three studies are under
way in the U.S. and Europe on the potential of NEURONTIN as a
first-line therapy.

During the third quarter of 1993, the company entered into a
consent decree with the FDA, covering issues related to
compliance with manufacturing and quality procedures. The decree
is a court-approved agreement that primarily requires the company
to certify that laboratory and/or manufacturing procedures at its
pharmaceutical manufacturing facilities in the U.S. and Puerto
Rico meet current Good Manufacturing Practices established by the
FDA. Warner-Lambert has made significant progress in resolving
many of the issues relating to this matter and most of its
pharmaceutical products have returned to full manufacture and
distribution.
<PAGE>
In conjunction with the FDA, Warner-Lambert is also conducting
validity assessments of FDA filings made with respect to products
manufactured or to be manufactured at its facilities in Puerto
Rico, due to discrepancies found in data generated at these
facilities. The FDA has deferred substantive scientific reviews
of pending New Drug Applications (NDA) and Abbreviated New Drug
Applications for products to be manufactured at those facilities
(including the oral contraceptive ESTROSTEP), and for
supplements to such applications for products currently
manufactured at those facilities, until further assessment of
Warner-Lambert filings are completed. Warner-Lambert has pledged
its full cooperation and has actively worked with the FDA to
resolve all issues relating to this matter. However, it is not
possible to predict when these issues will finally be resolved or
whether the FDA will take additional action.

The U.S. patent for LOPID, a lipid-regulator, expired in January
1993, subjecting LOPID to generic competition. In December 1992,
the company, through its division, Warner Chilcott Laboratories,
began marketing gemfibrozil, the generic equivalent of LOPID. In
the third quarter of 1993, competitive generic versions of
gemfibrozil tablets were authorized for U.S. marketing. Combined
worldwide sales of LOPID and gemfibrozil declined 10 percent from
1992 and further erosion is anticipated in 1994.

In 1992, worldwide sales of pharmaceutical products increased 13
percent over 1991 levels, with U.S. and international sales
increasing 12 percent and 14 percent, respectively. Products
with U.S. sales growth included LOPID, ACCUPRIL, the oral
contraceptive LOESTRIN and CAPSUGEL. International sales growth
reflected gains achieved by ACCUPRIL, LOPID, the cardiovascular
drug DILZEM, and CAPSUGEL.

Consumer Health Care Products
- -----------------------------
<TABLE>
<CAPTION>
1993 1992 1991
------------ ------------ -------
(Dollars in millions)
<S> <C> <C> <C>
Net Sales $ 2,374 +12% $ 2,129 +9% $ 1,960
</TABLE>
Worldwide sales of consumer health care products grew $245
million or 12 percent over 1992. The growth was partly due to
the March 1993 acquisition of the principal operations of
WILKINSON SWORD that increased the year-to-year comparison by 6
percentage points. U.S. sales grew 3 percent to $1,159 million,
while international sales rose 21 percent to $1,215 million. At
constant exchange rates, international sales increased 25 percent
from 1992. Products that achieved growth in the U.S. during 1993
were HALLS cough tablets, BENADRYL antihistamine and E.P.T. pregnancy
test kits. Major contributors to international sales growth were
HALLS, TETRA pet care products, SCHICK and WILKINSON
shaving products.

<PAGE>
In December 1993, Warner-Lambert signed separate agreements with
both Wellcome plc and Glaxo Holdings plc to establish joint
ventures in various countries to develop and market a broad range
of non-prescription consumer health care products. Warner-
Lambert's agreement with Wellcome calls for both companies to
contribute to the joint ventures current and future over-the-
counter (OTC) products. Warner Wellcome joint ventures in both
the U.S. and Canada commenced operations in January 1994. Joint
ventures are expected to be established in Europe and Australia
in 1994 and ultimately in other countries throughout the world.
After a two-year phase-in period, Warner-Lambert will receive
approximately 70 percent and Wellcome 30 percent of the profits
generated in the U.S. An NDA for the conversion to OTC use of
Wellcome's anti-viral drug ZOVIRAX as an anti-herpes medication
was filed with the FDA in August 1993. Subject to such
conversion, OTC profits on ZOVIRAX in the U.S. will be shared in
favor of Wellcome. Profits on current products will be shared
equally in Canada, Australia and Europe. Profits on ZOVIRAX
cream outside the U.S. will also be shared equally, subject to a
royalty to Wellcome if sales exceed a threshold amount. Other
future OTC switch products will be subject to a profit split in
favor of the innovator. Warner-Lambert will have voting control
of each joint venture with Wellcome and will consolidate the
financial results beginning in 1994.

Warner-Lambert and Glaxo formed a joint venture in the U.S. that
commenced operations in December 1993. The joint venture will
develop, seek approval of and market OTC versions of Glaxo
prescription drugs in the U.S., including ZANTAC, its leading
pharmaceutical product. Additional joint ventures are expected
to be formed with Glaxo in other major markets outside the U.S.,
excluding Japan. Warner-Lambert and Glaxo will share development
costs and profits equally, with Glaxo receiving a royalty on all
OTC sales by the joint ventures.

In 1992, worldwide sales of consumer health care products
increased 9 percent over 1991. U.S. sales grew 5 percent and
international sales rose 13 percent. Key brands achieving growth
in the U.S. were COOL MINT LISTERINE Antiseptic mouthwash
(introduced in June 1992) and LUBRIDERM skin lotion.
International sales growth was led by LISTERINE mouthwash, HALLS,
SCHICK and TETRA.
<PAGE>
Confectionery Products
- ----------------------
<TABLE>
<CAPTION>
1993 1992 1991
------------- ------------- -------
(Dollars in millions)
<S> <C> <C> <C>
Net Sales $ 1,306 +10% $ 1,189 +10% $ 1,085
</TABLE>

Worldwide sales of confectionery products increased 10 percent in
1993. U.S. sales increased 3 percent to $505 million while
international sales rose 14 percent to $801 million. At constant
exchange rates, international sales increased 17 percent from
1992. U.S. sales growth was led by TRIDENT sugarless gum, the
new MINT*A*BURST mint chewing gum (introduced in December 1993)
and CINN*A*BURST cinnamon chewing gum. International sales
growth was led by TRIDENT, CLORETS gums and mints, CINN*A*BURST
and MENTOS mints. In addition, sales increased due to product
expansion into new markets and partly due to the acquisition of
the remaining 51 percent interest in an Italian confectionery
joint venture.

In the fourth quarter of 1993 the company sold its
chocolate/caramel business, which included the Junior Mints,
Sugar Daddy, Sugar Babies, Charleston Chew! and Pom Poms product
lines. These products accounted for less than 4 percent of 1993
confectionery sales.

In 1992, worldwide sales of confectionery products increased 10
percent over 1991, with U.S. and international sales increasing
3 percent and 15 percent, respectively. U.S. sales growth was
led by CINN*A*BURST, BUBBLICIOUS chewing gum and TRIDENT.
International sales growth reflected the continued success of
CLORETS, TRIDENT and BUBBLICIOUS.

Cost and Expenses
- -----------------

Cost of goods sold increased 6 percent to $1,918 million in 1993
following a 12 percent increase to $1,814 million in 1992. In
addition to increased volume, the increase was due to costs
related to regulatory compliance issues in the pharmaceutical
segment combined with the inclusion of acquired companies'
results in both the consumer health care and confectionery
segments. In 1992, cost of goods sold increased due to higher
production costs at the company's Puerto Rico manufacturing
locations. Cost of goods sold as a percentage of net sales
increased to 33.1% in 1993 from 32.4% in 1992. The increase was
primarily attributable to the pharmaceutical segment. The 1992
ratio increased .3 percentage point from 32.1% in 1991, primarily
due to higher costs at the Puerto Rico manufacturing locations.

<PAGE>
Marketing expense rose 5 percent to $2,196 million in 1993
following an 11 percent increase and a $2,099 million investment
in 1992. The increase in 1993 was due to the inclusion of
acquired companies' results, the introduction of new products
such as COGNEX and MINT*A*BURST and sales force expansions in
international markets. In 1992, marketing expenses increased due
to continued support of new and existing products. As a
percentage of net sales, these expenses were 37.9% in 1993 and
37.5% in both 1992 and 1991.

Administrative and general expense of $400 million increased 6
percent from $377 million in 1992 mainly due to costs associated
with corrective actions aimed at regulatory compliance issues at
certain manufacturing facilities, coupled with the inclusion of
acquired companies' results. 1992 expenses were 2 percent lower
than 1991, reflecting lower stock appreciation rights expense and
a decrease in the cost of certain employee benefits and savings
related to 1991 restructuring actions, which included a voluntary
retirement incentive program.

Research and development expense totaled $465 million in 1993,
decreasing 2 percent from 1992, following a 12 percent increase
in 1992. The decrease reflected the absence of spending on the
Novon business due to its discontinuance and more focused R&D
spending on selected pharmaceutical projects. In 1992, the
increase primarily reflected the company's commitment to expand
research efforts in pharmaceutical products.

Other (income) expense, net of $(29) million increased $(4)
million over 1992, partially reflecting lower financial expense
in Brazil, due to improved cash flow. For 1992, other (income)
expense, net of $(25) million declined $13 million, primarily
attributable to higher debt levels and financial expense in
Brazil, reflecting the country's restrictive monetary policy and
economic conditions.

Restructuring Actions
- ---------------------

A net restructuring charge of $525 million pretax ($360 million
after tax or $2.67 per share) is included in 1993 results, (see
Note 3 to the consolidated financial statements.)

<PAGE>
The pretax charge reflects a provision of $70 million in the
first quarter for the disposition of the Novon Products Group.
In November, the company discontinued the operations of the Novon
Products Group. The pretax charge also reflects a gain of $13
million in the fourth quarter on the sale of the
chocolate/caramel business and a charge of $468 million in the
fourth quarter for a program covering the rationalization of
manufacturing facilities, principally in North America, including
the eventual closing of seven plants, and for organizational
restructuring and related workforce reductions of about 2,800
positions over the next several years. This program was prompted
by the combined impact of rapid and profound changes in the
company's competitive environment. These changes include the
growing impact of managed health care and other cost-containment
efforts in the U.S., cost regulations in Europe and changes in
U.S. tax law.

The company estimates that on completion of these actions it will
generate average annual pretax savings of approximately $150
million by the year 1997. The company will invest these savings
in its core businesses to further strengthen its overall
competitive position and enhance its long-term profitability.

Accounting Changes
- ------------------

The company adopted, effective January 1, 1993, Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes," which increased net income by $63 million or $.47
per share; and SFAS No. 112, "Employers' Accounting for
Postemployment Benefits," which decreased net income by $17
million ($27 million pretax)or $.13 per share.

Income Taxes
- ------------
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Effective tax rate before
accounting changes:
As reported 10.5% 25.0% 36.4%
Excluding restructuring 23.5% 25.0% 27.0%
</TABLE>

<PAGE>
The 1993 effective tax rate before accounting changes and
excluding restructuring declined to 23.5 percent due to the
retroactive extension of the research tax credit enacted as part
of the passage of the Omnibus Budget Reconciliation Act of 1993
by Congress, as well as an overall lower international tax rate.
The decline in the 1993 reported effective tax rate compared to
1992, was principally due to the effect of a 31.4 percent tax
benefit rate associated with the 1993 restructuring actions, (see
Note 19 to the consolidated financial statements). In 1992, the
decrease in the effective tax rate excluding restructuring from
the 1991 rate was primarily a result of an overall lower
international tax rate.

Primarily as a result of the passage of the above legislation,
including changes to Section 936 of the Internal Revenue Code,
the company estimates that its effective tax rate will increase
in 1994 by approximately 1.5 to 2.5 percentage points.

Net Income
- ----------

Net income in 1993 was $331 million or $2.45 per share compared
to $644 million or $4.78 per share in 1992. The decrease
primarily reflects the restructuring actions partially offset by
the net favorable impact of the adoption of the accounting
changes. Excluding the 1993 one-time net restructuring charge of
$360 million or $2.67 per share and the net impact of the
accounting changes of $46 million or $.34 per share, net income
was $645 million, in line with 1992. Earnings per share was
$4.78, unchanged from 1992 principally due to the pharmaceutical
segment, where regulatory issues related to the company's
pharmaceutical manufacturing had a negative impact on both sales
and profits. In 1992, net income and earnings per share
increased 15 percent, excluding the 1991 impact of the one-time
charges and the impact of the adoption of SFAS No. 106.

Inflation
- ---------

Inflation has not been a significant factor in Warner-Lambert's
business because of the modest rates of inflation in the U.S. and
the principal foreign countries in which the company maintains
operations. However, the company operates in certain Latin
American countries that have continued to experience currency
exchange rate deterioration and high rates of inflation,
principally Brazil and Venezuela. The company has continued to
mitigate the impact of inflation and devaluation in such
countries through the use of working capital management, cost
containment measures, financing and, to the extent possible,
price increases.

<PAGE>
Liquidity and Capital Resources
- -------------------------------

Selected financial data presented below:
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Return on average shareholders'
equity
As reported 23% 48% 3%
Excluding restructuring and
accounting changes 40% 48% 36%
Return on average total assets
As reported 7% 17% 1%
Excluding restructuring and
accounting changes 14% 17% 16%
</TABLE>

Total cash and cash equivalents amounted to $441 million at
December 31, 1993, a decrease of $278 million from 1992. The
company generated $466 million from operating activities and
received $436 million in net borrowings in 1993. These funds
were used for acquisitions of businesses of $429 million, to pay
dividends of $308 million, to finance purchases of property,
plant and equipment of $347 million and to repurchase company
stock in the amount of $112 million. The company also holds $161
million in securities and time deposits that do not qualify as
cash equivalents. Net debt (total debt less total cash and cash
equivalents, a portion of investments and other assets) of $598
million at December 31, 1993 changed from a net cash position of
$77 million at December 31, 1992.

At December 31, 1992, total cash and cash equivalents amounted to
$718 million, an increase of $183 million from 1991. The increase
primarily reflected cash flows from operations exceeding
expenditures for investing and financing activities. Net cash of
$77 million at December 31, 1992 improved from $27 million at
December 31, 1991.

Trade receivables days sales outstanding (DSO) increased to 45
days in 1993 compared to 42 days in 1992. The increase was
primarily attributable to the consumer health care segment. This
segment had higher DSO due to increased international sales,
which traditionally have a higher DSO than the company overall,
combined with the impact of acquired companies, which also have
higher DSO than the company. The inventory turnover rate
decreased to 3.9 from the previous year's 4.2, reflecting the
impact of regulatory compliance issues in the pharmaceutical
segment.

<PAGE>
Expenditures for property, plant and equipment were $347 million
in 1993, $334 million in 1992 and $326 million in 1991. Capital
expenditures planned by the company include $455 million to be
spent over the next several years for the consolidation and
upgrading of manufacturing, distribution and research facilities,
and for organizational restructuring in connection with the
company's restructuring plans announced in 1993 and 1991. The
company estimates that 1994 expenditures for property, plant and
equipment will be approximately $360 million.

Acquisitions/Investments
- ------------------------

During 1993, Warner-Lambert completed the following acquisitions
and investments:

o September 1993 - Acquired Willinger Bros., Inc., a
privately owned manufacturer and distributor of
aquarium products; and acquired CACHOU LAJAUNIE, a
French manufacturer of breath freshening
confectioneries.

o July 1993 - Acquired the consumer health products
business of Fisons plc in Australia and New Zealand.
The Fisons operations include the ROSKEN line of
therapeutic skin care products.

o March 1993 - Acquired the European, U.S. and Canadian
operations of WILKINSON SWORD, an international
manufacturer and marketer of razors and blades.

o January 1993 - The company purchased a 34 percent
equity interest in Jouveinal S.A., a French
pharmaceutical company; and acquired the remaining 51
percent interest in an Italian confectionery joint
venture.

The cash consideration for all of the above acquisitions and
investments totaled $429 million.

Liquidity and the availability of adequate credit provide the
company with a high degree of flexibility to meet its obligations
and allow it to take advantage of growth opportunities. The
company has unused available lines of credit from banks totaling
$1.0 billion.

The company's bond ratings by Standard and Poor's Corporation
(AA), and Moody's Investor Services (Aa3) did not change during
1993.

Through December 31, 1993, the company has purchased
approximately 88 percent of the 20 million shares of common stock
authorized for repurchase from shareholders.

<PAGE>
Insurance
- ---------

Consistent with trends in the pharmaceutical industry, the
company self-insures, up to certain threshold amounts, against
certain types of risk. The company also has in place risk
management programs to minimize exposure to loss. Management
believes its overall risk management programs are adequate to
protect its assets and earnings against significant loss.

Environment
- -----------

The company maintains control systems designed to assure
compliance in all material respects with applicable environmental
laws and regulations. During 1993, management initiated a
worldwide audit program to enhance environmental compliance with
a growing number of increasingly complex environmental
regulations. The company is involved in various environmental
matters, including actions initiated by the Environmental
Protection Agency under the Comprehensive Environmental Response,
Compensation and Liability Act, also known as Superfund, or by
state authorities under similar state legislation or other
parties. It is not possible to predict with certainty the
outcome of such matters or the total cost of remediation. In the
opinion of management, such proceedings will not result in a
material adverse effect on the company's financial position,
liquidity, cash flow or results of operations for any year.

Other
- -----

Shareholder Information
- -----------------------

Book value per share of common stock at year-end 1993 was $10.36
compared with $11.29 in 1992, reflecting the impact of the 1993
restructuring charges. Cash dividends paid in 1993 totaled $308
million, or $2.28 per share, a 12 percent increase over the $2.04
annual dividend paid in 1992. In January 1994, the Board of
Directors approved a 7 percent increase in the quarterly dividend
rate to $.61 cents per share payable in the first quarter of
1994.

<PAGE>

Dividend payments per share in 1993 and 1992 were as follows:
<TABLE>
<CAPTION>
1993 1992
----- -----
<S> <C> <C>
First quarter $ .57 $ .51
Second quarter .57 .51
Third quarter .57 .51
Fourth quarter .57 .51
----- -----
$2.28 $2.04
</TABLE>

Dividends have been paid on Warner-Lambert's common stock since
its listing on the New York Stock Exchange in 1951. Annual
dividend payments per share have increased for 42 consecutive
years.

Warner-Lambert's common stock ticker symbol is WLA. The principal
market on which the stock is traded is the New York Stock
Exchange, but it is also listed and traded on the following
domestic and international stock exchanges: Chicago, Pacific,
London and Zurich. The average number of common shares
outstanding in 1993 and 1992 was 135,000,000 and 134,717,000,
respectively. Shareholders of record totaled approximately 46,000
as of December 31, 1993 and 47,300 as of December 31, 1992.
First Chicago Trust Company of New York serves as the sole stock
transfer agent, registrar and dividend disbursing agent for
Warner-Lambert.

The high and low prices for Warner-Lambert's common stock for the
periods indicated were as follows:

<TABLE>
<CAPTION>
1993 1992
----------------- ------------------
High Low High Low
------- ------- ------- -------
<S> <C> <C> <C> <C>
First quarter $70 3/4 $59 3/4 $79 1/4 $62 1/8
Second quarter 76 3/8 67 65 7/8 58 3/8
Third quarter 71 3/4 62 1/2 68 1/8 60 3/4
Fourth quarter 72 63 3/8 72 3/8 62 1/8
</TABLE>
Warner-Lambert common stock closed at $67 1/2 on December 31,
1993.

<PAGE> Warner-Lambert Company and Subsidiaries
Five-year Summary of Selected Financial Data
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
1993 1992 1991 1990 1989
- ------------------------------------------------------------------------------------------
(Dollars in millions, except per share amounts)
<S> <C> <C> <C> <C> <C>
RESULTS FOR YEAR:
Net sales $ 5,794 $ 5,598 $ 5,059 $ 4,687 $ 4,196
Cost of goods sold 1,918 1,814 1,626 1,515 1,383
Research and development
expense 465 473 423 379 309
Income before income taxes
and accounting changes 318 (a) 858 222 (c) 681 592
Income before accounting
changes 285 (a) 644 141 (c) 485 413
Net income 331 (a,b) 644 35 (c,d) 485 413
Per common share (e):
Income before accounting
changes 2.11 (a) 4.78 1.05 (c) 3.61 3.05
Net income $ 2.45 (a,b)$ 4.78 $ .26 (c,d)$ 3.61 $ 3.05
- ------------------------------------------------------------------------------------------
YEAR-END FINANCIAL POSITION:
Current assets $ 2,219 $ 2,176 $ 1,844 $ 1,559 $ 1,366
Current liabilities 2,016 1,333 1,250 1,101 1,031
Working capital 203 843 594 458 335
Property, plant and
equipment 1,599 1,507 1,350 1,301 1,133
Total assets 4,828 4,077 3,602 3,261 2,860
Long-term debt 546 565 448 307 303
Total debt 1,199 736 576 537 506
Shareholders' equity $ 1,390 $ 1,528 $ 1,171 $ 1,402 $ 1,130
- ------------------------------------------------------------------------------------------
COMMON STOCK INFORMATION (e):
Average number of common
shares outstanding
(in millions) 135.0 134.7 134.4 134.3 135.3
Common stock price per share:
High $76 3/8 $79 1/4 $82 1/4 $70 3/8 $59 3/8
Low 59 3/4 58 3/8 61 3/4 49 5/8 37 1/4
Year-end 67 1/2 69 1/8 77 5/8 67 1/2 57 3/4
Book value per common share 10.36 11.29 8.70 10.44 8.38
Cash dividends per
common share $ 2.28 $ 2.04 $ 1.76 $ 1.52 $ 1.28
- ------------------------------------------------------------------------------------------
OTHER DATA:
Capital expenditures $ 347 $ 334 $ 326 $ 240 $ 218
Cash dividends paid 308 275 237 204 173
Depreciation and amortization $ 170 $ 156 $ 135 $ 120 $ 105
Number of employees
(in thousands) 35 34 34 34 33
- ------------------------------------------------------------------------------------------
(a) Includes a net restructuring charge of $525 pretax ($360 after tax or $2.67 per
share).
(b) Includes a credit of $63 or $.47 per share for the adoption of SFAS No. 109,
"Accounting for Income Taxes" and a charge of $17 after tax or $.13 per share to
adopt SFAS No. 112, "Employers' Accounting for Postemployment Benefits."
(c) Includes a restructuring charge of $544 pretax ($418 after tax or $3.11 per share).
(d) Includes a charge of $106 after tax or $.79 per share to adopt SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than Pensions."
(e) Common stock data for 1989 have been restated to reflect a two-for-one stock split
effected in May 1990.
</TABLE>
<PAGE>
Warner-Lambert Company and Subsidiaries
Segment Information

Industry Segments
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Research and
Net Sales (1) Operating Profit (3) Development Expense
- -----------------------------------------------------------------------------------------------
1993 1992 1991 1993 1992 1991 1993 1992 1991
- -----------------------------------------------------------------------------------------------
(Millions of dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Pharmaceutical $2,114 $2,280 $2,014 $ 384 $ 842 $ 488 $ (382) $ (383) $ (327)
Consumer Health Care 2,374 2,129 1,960 440 459 336 (61) (70) (75)
Confectionery 1,306 1,189 1,085 201 227 134 (22) (20) (21)
-------------------------
Research and Develop-
ment Expense (465) (473) (423) $ (465) $ (473) $ (423)
- -----------------------------------------------------------------------------------------------
Net sales and
Operating Profit $5,794 $5,598 $5,059 560 1,055 535
- --------------------------------------------
Corporate Expense (2) (242) (197) (313)
- --------------------- ----------------------
Income before income
taxes and accounting
changes $ 318 $ 858 $ 222
- --------------------- ----------------------

- ----------------------------------------------------------------------------------------------
Depreciation and
Identifiable Assets Amortization Capital Expenditures
- ----------------------------------------------------------------------------------------------
1993 1992 1991 1993 1992 1991 1993 1992 1991
- ----------------------------------------------------------------------------------------------
(Millions of dollars)

Pharmaceutical $1,769 $1,476 $1,307 $ 72 $ 67 $ 56 $ 160 $ 151 $ 150
Consumer Health Care 1,491 1,088 982 61 53 43 115 109 117
Confectionery 680 620 574 29 26 24 60 54 46
- ----------------------------------------------------------------------------------------------
Subtotal 3,940 3,184 2,863 162 146 123 335 314 313
Corporate 888 893 739 8 10 12 12 20 13
- ----------------------------------------------------------------------------------------------
Total $4,828 $4,077 $3,602 $ 170 $ 156 $ 135 $ 347 $ 334 $ 326
- ----------------------------------------------------------------------------------------------
Geographic Areas
- -----------------------------------------------------------------------------------------------
Net Sales (1) Operating Profit (3) Identifiable Assets
- -----------------------------------------------------------------------------------------------
1993 1992 1991 1993 1992 1991 1993 1992 1991
- -----------------------------------------------------------------------------------------------
(Millions of dollars)

United States $2,747 $2,814 $2,615 $ 441 $ 871 $ 723 $1,705 $1,616 $1,463
Europe, Middle East
and Africa 1,390 1,339 1,181 231 322 22 1,305 826 767
Americas and Far
East 1,657 1,445 1,263 353 335 213 930 742 633
- -----------------------------------------------------------------------------------------------
Subtotal 5,794 5,598 5,059 1,025 1,528 958 3,940 3,184 2,863
Research and develop-
ment expense (465) (473) (423)
- -----------------------------------------------------------------------------------------------
Total $5,794 $5,598 $5,059 $ 560 $1,055 $ 535 $3,940 $3,184 $2,863
- -----------------------------------------------------------------------------------------------
(1) Export sales, intersegment sales and intergeographic area sales were not material.
(2) Corporate expense included general corporate income and expense, corporate investment
income, interest expense and net foreign currency adjustments.
(3) Operating profit (loss) by industry segments and geographic areas included restructuring
charges (see Note 3 to the consolidated financial statements) as follows:
</TABLE>
Restructuring
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Industry Segments Geographic Areas
- ------------------------------------- -------------------------------------------
1993 1991 1993 1991
- ------------------------------------- -------------------------------------------
(Millions of dollars) (Millions of dollars)
<S> <C> <C> <C> <C> <C>
Pharmaceutical $(314) $(258) United States $(314) $(112)
Consumer Health Europe, Middle East
Care (105) (103) and Africa (119) (240)
Confectionery (46) (50) Americas and Far East (32) (59)
- ------------------------------------- -------------------------------------------
Operating loss (465) (411) Operating loss $(465) $(411)
Corporate expense (60) (133) -------------------------------------------
- -------------------------------------
Loss before
Income taxes $(525) $(544)
- -------------------------------------
</TABLE>
<PAGE> Warner-Lambert Company and Subsidiaries
Consolidated Statements of Income

<TABLE>
<CAPTION>
- --------------------------------------------------------------------
Years Ended December 31, 1993 1992 1991
- --------------------------------------------------------------------
(Millions of dollars,
except per share amounts)
<S> <C> <C> <C>
Net sales $5,793.7 $5,597.6 $5,059.0
- --------------------------------------------------------------------
Costs and expenses:
Cost of goods sold 1,918.1 1,814.3 1,626.4
Marketing 2,196.5 2,099.1 1,895.6
Administrative and general 399.6 377.4 385.7
Research and development 464.9 473.5 423.2
Other (income) expense, net (29.1) (24.9) (37.4)
Restructuring 525.2 - 544.0
- --------------------------------------------------------------------
Total costs and expenses 5,475.2 4,739.4 4,837.5
- --------------------------------------------------------------------
Income before income taxes and
accounting changes 318.5 858.2 221.5
Provision for income taxes 33.5 214.5 80.7
- --------------------------------------------------------------------
Income before accounting changes 285.0 643.7 140.8
Accounting changes (net of tax) 46.0 - (106.0)
- --------------------------------------------------------------------
Net income $ 331.0 $ 643.7 $ 34.8
- --------------------------------------------------------------------
Per common share:
Income before accounting changes $ 2.11 $ 4.78 $ 1.05
Accounting changes .34 - (.79)
- --------------------------------------------------------------------
Net income $ 2.45 $ 4.78 $ .26
- --------------------------------------------------------------------

Consolidated Statements of Retained Earnings

- --------------------------------------------------------------------
Years Ended December 31, 1993 1992 1991
- --------------------------------------------------------------------
(Millions of dollars,
except per share amounts)

Retained earnings at beginning
of year $2,264.6 $1,895.7 $2,097.5
Net income 331.0 643.7 34.8
Cash dividends paid
on common shares (307.9) (274.8) (236.6)
- --------------------------------------------------------------------
Retained earnings at end of year $2,287.7 $2,264.6 $1,895.7
- --------------------------------------------------------------------
Cash dividends per common share $ 2.28 $ 2.04 $ 1.76
- --------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.

<PAGE>
Warner-Lambert Company and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>

- ---------------------------------------------------------------------
December 31, 1993 1992
- ---------------------------------------------------------------------
(Millions of dollars)
<S> <C> <C>
Assets:
Cash and cash equivalents $ 440.5 $ 718.4
Receivables, less allowances of
$20.5 in 1993 and $18.6 in 1992 890.8 752.8
Inventories 476.5 424.6
Prepaid expenses and other current
assets 410.9 280.5
- ---------------------------------------------------------------------
Total current assets 2,218.7 2,176.3

Investments and other assets 487.4 214.9
Equity investments in
affiliated companies 208.6 22.6
Property, plant and equipment 1,599.3 1,507.1
Intangible assets 314.1 156.5
- ---------------------------------------------------------------------
Total assets $4,828.1 $4,077.4
- ---------------------------------------------------------------------

Liabilities and shareholders' equity:
Commercial Paper $ 507.5 $ -
Notes payable - banks and other 145.3 171.5
Accounts payable, trade 427.1 399.4
Accrued compensation 116.9 112.3
Other current liabilities 638.8 493.3
Federal, state and foreign income taxes 180.3 156.8
- ---------------------------------------------------------------------
Total current liabilities 2,015.9 1,333.3

Long-term debt 546.2 564.6
Deferred income taxes 69.2 52.2
Other noncurrent liabilities 807.2 598.8
- ---------------------------------------------------------------------
Total liabilities 3,438.5 2,548.9
- ---------------------------------------------------------------------

Shareholders' equity:
Preferred stock - none issued - -
Common stock - 160,330,268 shares
issued 160.3 160.3
Capital in excess of par value 120.1 114.5
Retained earnings 2,287.7 2,264.6
Cumulative translation adjustments (224.8) (159.7)
Treasury stock, at cost:
1993 - 26,190,513 shares;
1992 - 24,990,170 shares (953.7) (851.2)
- ---------------------------------------------------------------------
Total shareholders' equity 1,389.6 1,528.5
- ---------------------------------------------------------------------
Total liabilities and
shareholders' equity $4,828.1 $4,077.4
- ---------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
<PAGE>
Warner-Lambert Company and Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------
Years Ended December 31, 1993 1992 1991
- ----------------------------------------------------------------------
(Millions of dollars)
<S> <C> <C> <C>
Operating Activities:
Net income $ 331.0 $ 643.7 $ 34.8
Adjustments to reconcile
net income to net cash
provided by operating activities:
Depreciation and amortization 170.4 155.6 135.5
Restructuring 525.2 - 544.0
Accounting changes (net of tax) (46.0) - 106.0
Deferred income taxes (129.6) 5.6 (122.1)
Changes in assets and liabilities,
net of effects from acquisitions/
dispositions of businesses:
Receivables (134.1) (172.6) (45.9)
Inventories (70.3) (19.8) (16.6)
Accounts payable and accrued
liabilities (87.3) 27.6 53.1
Federal, state and foreign
income taxes 8.1 (3.0) 64.9
Pension contributions (100.0) (18.5) (24.8)
Other items, net (1.2) 17.8 6.9
- ----------------------------------------------------------------------
Net cash provided by operating
activities 466.2 636.4 735.8
- ----------------------------------------------------------------------
Investing Activities:
Purchase of investments (236.5) (76.0) (212.5)
Proceeds from sale of investments 166.2 56.6 223.8
Purchase of property, plant and equipment (347.1) (334.3) (326.0)
Acquisitions of businesses (429.0) - (2.5)
Proceeds from disposition of businesses 83.4 - -
Other 4.4 18.2 11.7
- ----------------------------------------------------------------------
Net cash used by investing
activities (758.6) (335.5) (305.5)
- ----------------------------------------------------------------------
Financing Activities:
Proceeds from borrowings 627.6 332.8 281.5
Principal payments on borrowings (192.1) (161.9) (230.6)
Purchase of treasury stock (112.4) (22.8) (20.6)
Cash dividends paid (307.9) (274.8) (236.6)
Proceeds from exercise of stock options 14.5 22.7 11.1
- ----------------------------------------------------------------------
Net cash provided (used) by
financing activities 29.7 (104.0) (195.2)
- ----------------------------------------------------------------------
Effect of exchange rate changes on
cash and cash equivalents (15.2) (14.2) (5.5)
- ----------------------------------------------------------------------
Net (decrease) increase in cash and
cash equivalents (277.9) 182.7 229.6
Cash and cash equivalents at beginning
of year 718.4 535.7 306.1
- ----------------------------------------------------------------------
Cash and cash equivalents at end of year $ 440.5 $ 718.4 $ 535.7
- ----------------------------------------------------------------------
</TABLE>

See notes to consolidated financial statements.

<PAGE>
Warner-Lambert Company and Subsidiaries
Notes to Consolidated Financial Statements

(Dollars in millions, except per share amounts)

Note 1 - Significant Accounting Policies:

Basis of consolidation - The consolidated financial statements include
the accounts of Warner-Lambert Company and all controlled,
majority-owned subsidiaries ("Warner-Lambert"). Substantially all
foreign subsidiaries and branches are consolidated on the basis of
fiscal years ending on November 30. Investments in companies in which
Warner-Lambert's interest is between 20 percent and 50 percent are
accounted for using the equity method.

Cash equivalents - Cash equivalents include nonequity short-term
investments with original maturity dates of 90 days or less.

Inventories - Inventories are valued at the lower of cost or market.
Cost is determined principally on the basis of first-in, first-out or
standards which approximate average cost.

Property, plant and equipment - Property, plant and equipment are
recorded at cost. The cost of maintenance, repairs, minor renewals
and betterments and minor equipment items is charged to income; the
cost of major renewals and betterments is capitalized. Depreciation
is calculated for financial statement purposes generally by use of the
straight-line method based on the estimated useful lives of the
various classes of assets.

Intangible assets - Intangible assets are recorded at cost and are
amortized using the straight-line method over appropriate periods not
exceeding 40 years.

Income taxes - Statement of Financial Accounting Standards (SFAS) No.
109 was adopted effective January 1, 1993. Under SFAS No. 109,
deferred taxes are based on temporary differences between assets and
liabilities for financial reporting purposes and for tax purposes.
Deferred taxes are measured using the enacted tax rates expected to
apply when temporary differences are settled or are realized. Prior
to 1993, deferred taxes were computed based on Accounting Principles
Board Opinion (APB) No. 11.

Net income per share - Net income per share is computed based on the
average number of common shares outstanding during the year. The
dilutive effect of common stock equivalents is immaterial. The
average number of shares used in the determination of net income per
share was 135,000,000 in 1993, 134,717,000 in 1992 and 134,441,000 in
1991.

<PAGE>
Note 2 - Interest Income and Interest Expense:

Interest income and interest expense are included in other (income)
expense, net. Interest income totaled $39.7, $53.1 and $32.3 and
interest expense totaled $64.2, $80.8 and $58.2 in 1993, 1992 and
1991, respectively. Total interest paid was $65.4, $78.4 and $53.7 in
1993, 1992 and 1991, respectively. Interest costs of $8.6, $8.1 and
$9.4 in 1993, 1992 and 1991, respectively, have been capitalized and
included in property, plant and equipment.

<PAGE>
Note 3 - Restructuring:

In the first quarter of 1993, the company recorded a one-time charge
of $70.0 relating to the disposition of its Novon Products Group. The
charge included $26.0 for the write-down of property, plant and
equipment to its net realizable value and $44.0 for operating losses
and other expenses anticipated to be incurred during the phase-out
period. In November 1993, the company discontinued the operations of
the Novon Products Group.

In October 1993, Warner-Lambert sold the assets of its
chocolate/caramel business associated with its plant in Cambridge,
Massachusetts. The sale was made to Chicago-based Tootsie Roll
Industries, Inc. for consideration of approximately $82.0, resulting
in a pretax gain of $13.1. The sale included the Junior Mints, Sugar
Daddy, Sugar Babies, Charleston Chew! and Pom Poms product lines.

In response to rapid and profound changes taking place in the global
health care environment, the company announced in November 1993, a
program of plant rationalization and organizational restructuring.
This program resulted in a pretax charge of $468.3 which included
$210.9 for the rationalization of manufacturing facilities,
principally in North America and $257.4 for organizational
restructuring and related workforce reductions. Noncash charges
included in the overall provision amounted to $117.4 mainly for the
write-down of property, plant and equipment to its net realizable
value.

The restructuring line on the 1993 consolidated statement of income
reflects a net pretax charge of $525.2 ($360.4 after tax or $2.67 per
share) for all of the above actions. Other current liabilities
included $180.8 and other noncurrent liabilities included $178.4 for
these actions as of December 31, 1993.

In the fourth quarter of 1991, Warner-Lambert adopted a series of
actions as a result of falling trade barriers primarily in Europe,
North America and the Andean region. These actions resulted in a
fourth quarter pretax charge of $544.0 ($418.0 after tax or $3.11 per
share). The pretax provision included a charge of $422.3 for the
worldwide rationalization of manufacturing and distribution
facilities, a charge of $76.0 for a worldwide staff reduction program,
including a voluntary retirement incentive program, and a charge of
$45.7 for other issues. The provision included $84.9 for the write-
down of property, plant and equipment to its net realizable value.

<PAGE>
Note 4 - Investments, Acquisitions and Alliances:

In January 1993, Warner-Lambert purchased a 34 percent equity interest
in Jouveinal S.A., a French pharmaceutical company, and entered into a
license option agreement which grants Warner-Lambert the right of
first refusal to license future Jouveinal products outside of France,
Canada and French-speaking Africa. The investment in Jouveinal
increased the equity investments in affiliated companies line on the
consolidated balance sheets. Warner-Lambert also acquired the
remaining 51 percent interest in an Italian confectionery joint
venture. Total consideration approximated $225 for these
transactions.

In March 1993, Warner-Lambert acquired the European, U.S. and Canadian
operations of WILKINSON SWORD, an international manufacturer and
marketer of razors and blades, for consideration of approximately $145
including debt assumed.

In July 1993, Warner-Lambert acquired the assets of the consumer
health products business of Fisons plc in Australia and New Zealand
for a total consideration of $23. The Fisons operations include the
ROSKEN line of therapeutic skin care products.

In September 1993, two acquisitions were completed. Warner-Lambert
acquired Willinger Bros., Inc., a privately owned manufacturer of
aquarium products. Willinger, based in New Jersey, markets products
largely under the WHISPER and SECOND NATURE trade names. It has four
major product lines: power filters and replacement cartridges, air
pumps, plastic plants and aquarium accessory products. In addition,
Warner-Lambert acquired CACHOU LAJAUNIE, a French manufacturer of
breath freshening confectioneries. Total consideration including debt
assumed for these acquisitions approximated $67.

Cash consideration for all the above acquisitions totaled $429.0
excluding cash acquired and debt assumed. Reported results of
operations for 1993 and 1992 would not have differed significantly had
all of the above acquisitions taken place at the beginning of 1992.
The above acquisitions have been accounted for by the purchase method
of accounting, and accordingly, the net assets and results of
operations have been included in the accompanying consolidated
financial statements since the dates of acquisition. The excess of
purchase price over the estimated fair values of the net assets
acquired for the above investments has been treated as goodwill and is
being amortized over 40 years.

In December 1993, Warner-Lambert signed separate agreements with Glaxo
Holdings plc ("Glaxo") and Wellcome plc ("Wellcome") to establish
joint ventures in various countries to develop and market non-
prescription consumer health care products.

Warner-Lambert established the first of these joint ventures in the
U.S. with Glaxo, whereby the two parties have formed Glaxo Warner-
Lambert OTC G.P. The joint venture will develop, seek approval of and
market OTC versions of Glaxo prescription drugs in the U.S., including
ZANTAC, the leading prescription ulcer treatment product. The joint
venture will concentrate initially on developing ZANTAC for sale as an
OTC product in the U.S. Additional joint ventures are expected to be
formed in other major markets outside the U.S., excluding Japan.
Development costs, profits and voting control will be shared equally.
Glaxo will receive a royalty on all OTC sales by the joint ventures.
Warner-Lambert will use the equity method of accounting for its share
of profits and losses.

<PAGE>

Warner-Lambert and Wellcome have also formed joint ventures in the
U.S. and Canada, each named Warner Wellcome Consumer Health Products,
and expect to form joint ventures in Europe and Australia in 1994.
The alliance calls for both companies to contribute to the joint
ventures current and future OTC products excluding HALLS and ROLAIDS.
After a two-year phase-in period, Warner-Lambert and Wellcome
respectively will receive approximately 70 percent and 30 percent of
the profits generated in the U.S. A new drug application for the
conversion to OTC use of Wellcome's anti-viral drug ZOVIRAX as an
anti-herpes medication was filed with the FDA in August 1993. Subject
to such conversion, OTC profits on ZOVIRAX in the U.S. will be shared
in favor of Wellcome. Profits on current products will be shared
equally in Canada and, when joint ventures are established, in Europe
and Australia. Profits on ZOVIRAX cream outside the U.S. will also be
shared equally, subject to a royalty to Wellcome if sales exceed a
threshold amount. Other future OTC switch products will be subject to
a profit split favoring the innovator. Warner-Lambert has and will
have voting control of each joint venture with Wellcome and will
consolidate the financial results as joint ventures are established
beginning in 1994.

<PAGE>
Note 5 - International Operations:

In translating foreign currency financial statements, local currencies
of foreign subsidiaries and branches have generally been determined to
be the functional currencies, except for those in hyperinflationary
economies (principally Brazil and Venezuela). Net aggregate
transaction gains and losses amounted to a $9.8 loss in 1993 and gains
of $1.1 and $2.9 in 1992 and 1991, respectively.

Amounts relative to foreign subsidiaries and branches included in the
consolidated balance sheets were as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
December 31, 1993 1992
- ---------------------------------------------------------------------
<S> <C> <C>
Total assets $2,235.1 $1,567.6
Total liabilities 1,234.7 976.3
- ---------------------------------------------------------------------
Net assets $1,000.4 $ 591.3
- ---------------------------------------------------------------------

</TABLE>

<PAGE>

Note 6 - Inventories:
<TABLE>
<CAPTION>

- ---------------------------------------------------------------------
December 31, 1993 1992
- ---------------------------------------------------------------------
<S> <C> <C>
Raw materials $ 88.6 $ 77.2
Finishing supplies 38.6 36.4
Goods in process 79.3 64.6
Finished goods 270.0 246.4
- ---------------------------------------------------------------------
$476.5 $424.6
- ---------------------------------------------------------------------
</TABLE>

<PAGE>

Note 7 - Property, Plant and Equipment:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
December 31, 1993 1992
- ---------------------------------------------------------------------
<S> <C> <C>
Land $ 33.8 $ 31.5
Buildings 915.0 839.5
Machinery, furniture and fixtures 1,885.4 1,675.1
- ---------------------------------------------------------------------
2,834.2 2,546.1
Less accumulated depreciation (1,234.9) (1,039.0)
- ---------------------------------------------------------------------
$ 1,599.3 $ 1,507.1
- ---------------------------------------------------------------------
</TABLE>

Depreciation expense totaled $159.0, $148.7 and $129.4 in 1993, 1992
and 1991, respectively.

As a result of the Novon charge and fourth quarter 1993 restructuring
charge discussed in Note 3, accumulated depreciation was increased
$108.5 in 1993, reflecting the write-down of assets to their net
realizable values.

<PAGE>

Note 8 - Intangible Assets:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
December 31, 1993 1992
- ---------------------------------------------------------------------
<S> <C> <C>
Purchased patents, trademarks and other
intangibles $179.9 $145.0
Goodwill 181.5 66.0
- ---------------------------------------------------------------------
361.4 211.0
Less accumulated amortization (47.3) (54.5)
- ---------------------------------------------------------------------
$314.1 $156.5
- ---------------------------------------------------------------------
</TABLE>

Amortization expense totaled $11.4, $6.9 and $6.1 in 1993, 1992 and
1991, respectively.

As a result of the acquisitions discussed in Note 4, patents,
trademarks and other intangibles increased $98.8 and goodwill
increased $127.4. As a result of the sale of the chocolate/caramel
business discussed in Note 3, trademarks and other intangibles
decreased $54.6, goodwill decreased $8.0 and accumulated amortization
decreased $14.3.

<PAGE>

Note 9 - Long-Term Debt:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
December 31, 1993 1992
- ---------------------------------------------------------------------
<S> <C> <C>
6 5/8% notes due 2002 $199.6 $ 199.5
8% notes due 1998 150.0 150.0
8 1/8% notes due 1996 100.0 100.0
7 1/2% notes due 1993 - 100.0
Industrial revenue bonds due 2014 24.7 24.7
Other 93.7 116.9
- ---------------------------------------------------------------------
568.0 691.1
Current maturities (21.8) (126.5)
- ---------------------------------------------------------------------
$546.2 $ 564.6
- ---------------------------------------------------------------------
</TABLE>

In September 1992, Warner-Lambert issued $200.0 of unsecured 6 5/8
percent notes due September 15, 2002. The notes were issued at a
discount and are not callable prior to maturity.

The industrial revenue bonds due 2014 have a stated interest rate of
7.6 percent and an effective interest rate of 7.2 percent.

The aggregate annual maturities of long-term debt at December 31,
1993, payable in each of the years 1995 through 1998, are $21.1,
$113.7, $3.9 and $163.0, respectively.

Warner-Lambert has lines of credit arrangements with numerous banks
with interest rates generally equal to the prime rate for domestic
banks and the best prevailing rate for foreign banks. At December 31,
1993, worldwide unused lines of credit amounted to $1.0 billion.

<PAGE>
Note 10 - Financial Instruments:

The company had forward exchange contracts at December 31, 1993 and
1992 totaling $209.4 and $266.9, respectively. These contracts mature
at various dates through 1996. Gains or losses on these contracts
primarily serve to mitigate the impact of foreign exchange
fluctuations on foreign currency denominated transactions, assets and
liabilities. These contracts were in an unrealized loss position of
$16.1 and $10.7 as of December 31, 1993 and December 31, 1992,
respectively.

The company has entered into a series of interest rate swap agreements
having a notional principal amount of $450.0. The swap agreements
have maturity dates ranging from 1995 to 2002 and require the company
to make floating rate payments in exchange for fixed rate payments.
As of December 31, 1993, the floating rates on these swaps ranged from
3.5 to 5.9 percent. The company is exposed to credit risk in the
unlikely event of nonperformance by the counterparties. Interest to
be paid or received is accrued over the life of the agreements at the
net effective interest rates for the swap and corresponding debt
instruments.

The cash flows associated with forward exchange contracts and the
interest rate swap agreements are classified as operating in the
consolidated statements of cash flows.

Financial instruments that potentially subject the company to
concentrations of credit risk are trade receivables and
interest-bearing investments. The company sells a broad range of
products in the health care and confectionery businesses worldwide.
Due to the large number and diversity of the company's customer base,
concentrations of credit risk with respect to trade receivables are
limited. The company does not normally require collateral. The
company places substantially all of its interest-bearing investments
with major banks throughout the world in high-quality short-term
liquid instruments, and limits the amount of credit exposure to any
one financial institution.

The estimated fair values of financial instruments, based on quotes on
similar instruments, were as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
December 31, 1993 1992
- ---------------------------------------------------------------------
Carrying Fair Carrying Fair
Value Value Value Value
- ---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Marketable securities
and other investments $ 565.5 $ 569.8 $ 777.4 $ 780.6
Long-term debt (546.2) (575.9) (564.6) (575.6)
Interest rate swaps 5.1 8.8 - -
- ---------------------------------------------------------------------
</TABLE>

The carrying values of all other financial instruments on the
consolidated balance sheets approximate their estimated fair values.

<PAGE>
Note 11 - Leases:

Warner-Lambert rents various facilities and equipment. Rental costs
charged to income under all operating leases totaled $76.3, $70.1 and
$66.9 in 1993, 1992 and 1991, respectively.

The future minimum rental commitments under noncancellable capital and
operating leases at December 31, 1993 are summarized below:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
Capital Operating
- ---------------------------------------------------------------------
<S> <C> <C>
1994 $ 4.7 $ 29.4
1995 4.5 23.6
1996 3.7 13.7
1997 3.5 11.7
1998 3.0 9.3
Remaining years 22.1 90.2
- -------------------------------------------------------------------
Total minimum lease payments 41.5 177.9
Less minimum sublease income (.5) (28.9)
---------------------
Net minimum lease payments 41.0 $149.0
-------
Less amount representing interest (16.8)
- -----------------------------------------------------
Present value of minimum lease payments $24.2
- -----------------------------------------------------
</TABLE>
Property, plant and equipment included capitalized leases of $33.0,
less accumulated depreciation of $11.7, at December 31, 1993 and
$19.9, less accumulated depreciation of $9.8, at December 31, 1992.
Long-term debt included $22.3 and $12.4, respectively, at those dates
relating to capital leases.

<PAGE>

Note 12 - Stock Options and Awards:

Warner-Lambert has stock plans established in 1992, 1989, 1987 and
1983 which provide for the granting of options to employees to
purchase shares of common stock within prescribed periods at a price
equal to the fair market value on the date of the grant. There are
outstanding options under the 1989, 1987 and 1983 plans. However, no
additional options will be granted under the 1987 and 1983 plans. In
1992, the company implemented SuccesShare, a program which expanded
the granting of options to substantially all employees worldwide.

All plans contain provisions for the granting of rights which permit
the optionee to receive an amount equal to the excess of the market
price of the common stock over the option price when the rights are
exercised and receive payment in shares of common stock, cash or a
combination of both. Options and rights granted generally become
exercisable after one year in 25 percent increments per annum and
expire ten years from the date of grant. The value of rights granted
is charged to income over the vesting period from the date the market
price first exceeds the option price, with adjustments made based on
market fluctuations to the date of exercise. At December 31, 1993,
rights with respect to 769,000 shares of common stock were
outstanding.

The aggregate number of shares of common stock which may be awarded
under the 1992 Stock Plan in any year during the five-year term of the
1992 Stock Plan is not more than 1.75 percent of the company's issued
shares of common stock on January 1 of the year of grant. Eight
million shares of common stock have been reserved for the granting of
all awards under the 1989 Stock Plan until April 25, 1994. The 1992
and 1989 Stock Plans also provide for the granting of restricted stock
and performance awards. Restricted shares granted to employees are
delivered upon the expiration of restricted periods established at the
time of grant. The value of the shares at the date of grant is being
amortized to compensation expense over the restricted periods, with
the unamortized portion representing unearned compensation reflected
as a reduction of shareholders' equity. Performance awards provide
for the recipient to receive payment in shares, cash or any
combination thereof equivalent to the award being granted.

<PAGE>

Transactions involving stock options, rights and awards are summarized
as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
Number Price
of Shares Per Share
- ---------------------------------------------------------------------
<S> <C> <C>
Stock options, rights and awards
outstanding, December 31, 1991 7,586,484 $13.38 - $77.75

Stock options and rights:
Granted 2,665,910 62.31 - 76.38
Exercised (1,122,157) 13.38 - 73.69
Cancelled (321,723) 18.03 - 73.69

Stock awards:
Granted 29,185 59.75 - 76.98
Delivered (61,780) 44.56 - 77.06
Cancelled (28,586) 44.56 - 73.94
- ---------------------------------------------------------------------
Stock options, rights and awards
outstanding, December 31, 1992 8,747,333 14.81 - 77.75

Stock options and rights:
Granted 1,519,725 65.06 - 75.25
Exercised (439,454) 14.81 - 73.69
Cancelled (282,951) 14.81 - 77.75

Stock awards:
Granted 51,270 65.69 - 75.75
Delivered (55,875) 44.56 - 77.06
Cancelled (13,453) 44.16 - 77.75
- ---------------------------------------------------------------------
Stock options, rights and awards
outstanding, December 31, 1993 9,526,595 17.00 - 76.98
- ---------------------------------------------------------------------
Stock options and rights
exercisable, December 31, 1993 4,263,891 $17.00 - $76.38
- ---------------------------------------------------------------------
Shares available for annual grants:
December 31, 1992 4,422,938
December 31, 1993 3,108,171
- ------------------------------------------------
</TABLE>

<PAGE>
Note 13 - Contingencies:

Various claims, suits and complaints, such as those involving
government regulations, patents and trademarks and product liability,
arise in the ordinary course of Warner-Lambert's business. In the
opinion of Warner-Lambert, all such pending matters are without merit
or are of such kind, or involve such amounts, as would not have a
material adverse effect on the consolidated financial position of
Warner-Lambert if disposed of unfavorably.

<PAGE>
Note 14 - Environmental Liabilities:

The company accrues for estimated environmental liabilities under SFAS
No. 5, "Accounting for Contingencies." Costs are accrued when
management becomes aware that a liability exists and is able to
reasonably estimate the amount, generally no later than the completion
of studies to determine the feasibility and cost of remedial
techniques. Outside consultants are generally used to assess the cost
of remediation.

The company is involved in various environmental matters including
actions initiated by the Environmental Protection Agency under the
Comprehensive Environmental Response, Compensation and Liability Act
(i.e., CERCLA or Superfund legislation and similar legislation),
various state environmental organizations and other parties. The
company is presently remediating environmental problems at certain
sites, including sites it previously owned. For most sites, there are
other potentially responsible parties (PRPs); for these sites, all
PRPs may be jointly and severally liable to pay all cleanup costs.

Some portion of the liabilities associated with the company's
environmental actions may be covered by insurance. The company is
currently in litigation with respect to the scope and extent of
liability coverage from certain insurance companies; however,
recoveries will not be recorded as income until there is assurance
that recoveries are forthcoming.

In management's opinion, the liabilities for all matters mentioned
above which are probable and reasonably estimable are adequately
accrued for including remediation costs, penalties and legal fees.
The amount accrued for environmental liabilities is not considered
material. While it is not possible to predict with certainty the
outcome of the matters described above or the ultimate costs of
remediation, management believes it is unlikely that their ultimate
disposition will have a material adverse effect on the company's
financial position, liquidity, cash flows or results of operations for
any year.

<PAGE>
Note 15 - Shareholders' Equity:

The authorized preferred stock of Warner-Lambert Company is 5 million
shares with a par value of $1.00 per share, of which there are no shares issued.

The authorized common stock of Warner-Lambert Company is 300 million
shares with a par value of $1.00 per share.

Changes in certain components of shareholders' equity are summarized as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Capital in Cumulative Treasury Stock
Common Excess of Translation -----------------------
Stock Par Value Adjustments Shares Cost
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1990 $160.3 $ 71.0 $ (87.7) (25,988,851) $(838.8)
Shares repurchased, at cost - - - (292,080) (20.6)
Employee benefit plans - 21.6 - 544,923 10.4
Translation adjustment - - (41.2) - -
- -----------------------------------------------------------------------------------------------
Balance at December 31, 1991 160.3 92.6 (128.9) (25,736,008) (849.0)
Shares repurchased, at cost - - - (325,118) (22.8)
Employee benefit plans - 21.9 - 1,070,956 20.6
Translation adjustment - - (30.8) - -
- -----------------------------------------------------------------------------------------------
Balance at December 31, 1992 160.3 114.5 (159.7) (24,990,170) (851.2)
Shares repurchased, at cost - - - (1,680,290) (112.4)
Employee benefit plans - 5.6 - 479,947 9.9
Translation adjustment - - (65.1) - -
- -----------------------------------------------------------------------------------------------
Balance at December 31, 1993 $160.3 $120.1 $(224.8) (26,190,513) $(953.7)
- -----------------------------------------------------------------------------------------------

</TABLE>
<PAGE>
Pursuant to the Stockholder Rights Plan of the company, a right is
attached to each outstanding share of the company's common stock. In
the event that any person or group acquires 20 percent or more of the
company's outstanding common shares, or acquires the company in a
merger or other business combination, or engages in certain
self-dealing transactions, each right (other than those held by the
"Acquiring Person") will entitle its holder to purchase, for a
specified purchase price, stock of the company or the Acquiring Person
having a market value of twice such purchase price. The rights expire
on July 8, 1998 and can be redeemed for $.005 per right at any time by
the Board of Directors prior to the time the rights become
exercisable.

<PAGE>
Note 16 - Other Postretirement Benefits:

The company provides other postretirement benefits, primarily health
insurance, for domestic employees who retired prior to January 1, 1992
and their dependents. Although the plans are currently
noncontributory, the company has implemented a cap which limits the
future company contributions for medical and dental coverage under
these plans. The company is generally self-insured for these costs
and the plans are unfunded. It is the company's policy to fund these
benefits on a pay-as-you-go basis. Domestic employees who retire
after December 31, 1991 are no longer eligible to receive these
benefits; rather, they will receive additional pension benefits based
on years of service.

In 1991, the company adopted the provisions of SFAS No. 106,
"Employers' Accounting for Postretirement Benefits Other Than
Pensions," for its domestic plans, effective January 1, 1991 as an
accounting change. This standard requires accrual accounting for
these benefits rather than the cash basis of accounting. Upon
adoption, the company elected to record the transition obligation of
$146.0 pretax ($106.0 after tax or $.79 per share) as a one-time
charge against earnings, rather than amortize it over a longer period.
Because of the plan change noted above, the transition obligation
represented the present value of estimated future benefits payable to
employees who retired before January 1, 1992.

The annual cost of providing other postretirement benefits for
domestic retirees under SFAS No. 106 amounted to $14.0, $13.4 and
$14.1 in 1993, 1992 and 1991, respectively. These amounts primarily
represent the accrual of interest on the present value obligation.

A reconciliation from the plans' benefit obligation to the liabilities
recognized in the consolidated balance sheets at December 31, 1993 and
1992, as of the latest actuarial valuations, was as follows:

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
1993 1992
- ---------------------------------------------------------------------
<S> <C> <C>
Accumulated postretirement benefit
obligation $180.2 $161.3
Unrecognized prior service cost 2.0 -
Unrecognized net actuarial loss (45.9) (19.5)
- ---------------------------------------------------------------------
Accrued postretirement benefit cost
recognized in the consolidated
balance sheets $136.3 $141.8
- ---------------------------------------------------------------------

</TABLE>
<PAGE>
The health care cost trend rate used to develop the accumulated
postretirement benefit obligation for those retirees under age 65 was
12.9 percent in 1993 declining to 6 percent over 13 years. For those
65 and over, a rate of 8.3 percent was used in 1993 declining to 6
percent over 8 years. The health care cost trend rate has a
significant effect on the amounts reported. To illustrate, increasing
the rate by one percentage point in each year would increase the
accumulated postretirement benefit obligation as of December 31, 1993
by $5.4 and the interest cost component of postretirement benefit cost
for the year then ended by $.5. The weighted average discount rate
used to develop the accumulated postretirement benefit obligation was
7.5 percent, 8.8 percent and 9.5 percent for 1993, 1992 and 1991,
respectively.

Other postretirement benefit costs for the company's foreign plans
expensed in 1993, 1992 and 1991 under the cash method were not
material.

<PAGE>
Note 17 - Postemployment Benefits:

The company adopted the provisions of SFAS No. 112, "Employers'
Accounting for Postemployment Benefits," effective January 1, 1993.
This accounting change resulted in a cumulative effect adjustment
which decreased net income upon adoption by $17.0 ($27.0 pretax) or
$.13 per share. SFAS No. 112 requires employers to recognize an
obligation for postemployment benefits to former or inactive employees
after employment but before retirement. This one-time charge
primarily represented the present value of medical and life insurance
costs for employees receiving long-term disability benefits. Amounts
included in expense do not differ significantly from the prior cash
method.
<PAGE>
Note 18 - Pensions:

Warner-Lambert has various pension plans covering substantially all
of its employees in the U.S. The company's current policy is to
fund these plans in an amount that ranges from the minimum contribution
required by ERISA to the maximum tax deductible contribution. Certain
foreign subsidiaries also have various plans, many of which are correlated
to the statutory requirements of the particular countries. Benefits
covering most employees are based on years of service and average
compensation during the last years of employment.

Pension costs for the plans included the following components:

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Domestic Plans Foreign Plans
- ----------------------------------------------------------------------------------------------
1993 1992 1991 1993 1992 1991
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Service cost - benefits earned
during the year $ 25.7 $ 23.2 $ 21.4 $ 19.2 $ 18.8 $ 15.4
Interest cost on projected
benefit obligation 94.6 92.6 83.2 35.5 30.0 27.3
Return on assets (127.4) (107.1) (148.9) (71.8) (20.1) (45.5)
Net amortization and deferral 24.4 5.0 45.5 35.0 (10.5) 15.9
- ----------------------------------------------------------------------------------------------
Net pension expense $ 17.3 $ 13.7 $ 1.2 $ 17.9 $ 18.2 $ 13.1
- ----------------------------------------------------------------------------------------------
</TABLE>

The 1993 restructuring charge discussed in Note 3 included a $4.6
curtailment loss representing a decrease in unrecognized prior service
costs resulting from a reduction in domestic plan participants.

The 1991 restructuring charge discussed in Note 3 included an $18.1
charge reflecting pension enhancements included in the voluntary
retirement incentive program.

<PAGE>
The funded status of the plans and amounts recognized in the
consolidated balance sheets at December 31, 1993 and 1992, as of
the latest actuarial valuations, are as follows:

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
Plans in which Assets Plans in which Accumulated
Exceed Accumulated Benefits Benefits Exceed Assets
- ----------------------------------------------------------------------------------------------
Domestic Foreign Domestic Foreign
Plans Plans Plans Plans
- ----------------------------------------------------------------------------------------------
1993 1992 1993 1992 1993 1992 1993 1992
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Plan assets at fair value
(invested primarily in
equities and bonds) $1,111.9 $ 983.2 $494.0 $181.8 $ 50.5 $ 49.6 $ 30.1 $131.2
- ----------------------------------------------------------------------------------------------
Accumulated benefit
obligation:
Vested 1,080.6 945.3 384.3 133.1 87.1 80.5 54.5 158.0
Nonvested 20.1 15.2 10.2 7.0 1.0 .4 9.4 5.8
- ----------------------------------------------------------------------------------------------
1,100.7 960.5 394.5 140.1 88.1 80.9 63.9 163.8
Estimated future
salary increases 117.7 109.0 53.8 18.0 11.7 3.5 24.0 59.2
- ----------------------------------------------------------------------------------------------
Projected benefit
obligation 1,218.4 1,069.5 448.3 158.1 99.8 84.4 87.9 223.0
- ----------------------------------------------------------------------------------------------
Funded status (106.5) (86.3) 45.7 23.7 (49.3) (34.8) (57.8) (91.8)
Unrecognized net (asset)
obligation at December
31, 1993 and 1992 (30.8) (46.4) (7.3) (7.9) 4.2 4.6 3.6 4.5
Unrecognized prior service
cost 41.0 51.6 .8 (.6) 3.0 3.3 - -
Unrecognized net actuarial
loss (gain) 224.1 156.8 (15.6) (2.2) 22.8 8.6 5.9 9.6
Adjustment required to
recognize minimum
liability - - - - (18.3) (13.0) (.7) (.3)
- ----------------------------------------------------------------------------------------------
Net pension asset
(liability) recognized
in the consolidated
balance sheets $ 127.8 $ 75.7 $ 23.6 $ 13.0 $(37.6) $(31.3) $(49.0) $(78.0)
- ----------------------------------------------------------------------------------------------

</TABLE>
<PAGE>
The assumptions used to develop the actuarial present value of
benefit obligations were as follows:

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Domestic Plans Foreign Plans
- ---------------------------------------------------------------------------------------
1993 1992 1991 1993 1992 1991
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Expected long-term rate of return
on plan assets 10.5% 10.5% 10.5% 8.6% 9.0% 9.6%
Expected increase in salary levels 4.0% 5.0% 6.0% 5.1% 5.7% 5.9%
Weighted average discount rate 7.5% 8.8% 9.5% 7.7% 8.1% 8.4%
- ---------------------------------------------------------------------------------------
</TABLE>

<PAGE>

Note 19 - Income Taxes:

Effective January 1, 1993, the company changed its method of
accounting for income taxes from the deferred method to the liability
method required by SFAS No. 109, "Accounting for Income Taxes." This
accounting change resulted in a cumulative effect adjustment which
increased net income upon adoption by $63.0 or $.47 per share.
Valuation allowances as of January 1, 1993 of $92.0 primarily relate
to the potential inability to utilize foreign operating loss and
capital loss carryforwards. Valuation allowances increased $16.9
primarily due to the potential inability to realize deferred tax
assets associated with the 1993 restructuring.

The components of income before income taxes and accounting changes
were:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
Years Ended December 31, 1993 1992 1991
- ---------------------------------------------------------------------
<S> <C> <C> <C>
U.S. and Puerto Rico $ 15.8 $473.6 $197.6
Foreign 302.7 384.6 23.9
- ---------------------------------------------------------------------
$318.5 $858.2 $221.5
- ---------------------------------------------------------------------
</TABLE>

The 1993 income before income taxes and accounting changes included a
restructuring charge of $374.6 for U.S. and Puerto Rico and $150.6 for
foreign, see Note 3.

The 1991 income before income taxes and accounting change included a
restructuring charge of $245.4 for U.S. and Puerto Rico and $298.6 for
foreign, see Note 3.

The provision (benefit) for income taxes consisted of:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
Liability Deferred Deferred
Method Method Method
- ---------------------------------------------------------------------
Years Ended December 31, 1993 1992 1991
- ---------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ 22.0 $ 54.2 $ 36.8
Foreign 123.4 127.3 139.9
State and Puerto Rico 17.7 27.4 26.1
- ---------------------------------------------------------------------
163.1 208.9 202.8
- ---------------------------------------------------------------------
Deferred:
Federal (95.0) (14.5) (33.6)
Foreign (19.6) 14.4 (76.4)
State and Puerto Rico (15.0) 5.7 (12.1)
- ---------------------------------------------------------------------
(129.6) 5.6 (122.1)
- ---------------------------------------------------------------------
Provision for income taxes $ 33.5 $214.5 $ 80.7
- ---------------------------------------------------------------------
</TABLE>

The principal timing differences included in the deferred tax
provision (benefit) for 1992 and 1991 were restructuring items of
$26.7 and $(96.3), respectively.

<PAGE>
The tax effects of significant temporary differences which comprise
the deferred tax assets and liabilities at December 31, 1993, were as
follows:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------
Assets Liabilities
- --------------------------------------------------------------------
<S> <C> <C>
Restructuring reserves $ 287.9 $ -
Postretirement/postemployment
obligations 64.6 -
Pensions 25.2 55.9
Compensation/benefits 61.3 -
Property, plant and equipment 47.8 162.4
Research tax credit carryforwards 27.0 -
Other 103.8 13.0
- -------------------------------------------------------------------
617.6 231.3
Valuation allowances (108.9) -
- -------------------------------------------------------------------
$ 508.7 $ 231.3
- -------------------------------------------------------------------
</TABLE>

The company's research tax credit carryforwards of $27.0 will be
available until the years 2007 and 2008.

The company paid income taxes of $155.0, $211.8 and $139.4 during
1993, 1992 and 1991, respectively. Prepaid expenses and other current
assets included deferred income taxes amounting to $218.0 and $129.9
at December 31, 1993 and 1992, respectively. Investments and other
assets included deferred income taxes of $135.8 at December 31, 1993.

The earnings of Warner-Lambert's subsidiary operating in Puerto Rico
are subject to tax pursuant to a grant, effective through December
2003. The grant provides for certain tax relief and for reduced
withholding tax rates upon repatriation of Puerto Rico earnings
provided that certain conditions are met. The company continued to be
in compliance with these conditions at December 31, 1993. The
combined income and withholding taxes are accrued at the applicable
rates as income is earned.

Earnings of foreign subsidiaries considered to be reinvested for an
indefinite period at December 31, 1993 totaled approximately $353.4.
Accordingly, no additional U.S. income taxes or foreign withholding
taxes have been provided on these earnings. It would be impractical
to compute the estimated deferred tax liability on these reinvested
earnings.

As of December 31, 1993, Warner-Lambert's U.S. federal income tax
returns through 1986 had been examined and settled with the Internal
Revenue Service.

<PAGE>
Warner-Lambert's effective income tax rate before accounting changes
differed from the U.S. statutory tax rate as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
Liability Deferred Deferred
Method Method Method
- ---------------------------------------------------------------------
Years Ended December 31, 1993 1992 1991
- ---------------------------------------------------------------------
<S> <C> <C> <C>
U.S. statutory tax rate 35.0% 34.0% 34.0%
Income earned in Puerto Rico (5.5) (6.8) (6.7)
Foreign income subject to
reduced tax rates including
taxes on repatriation (4.6) (1.4) (.4)
U.S. research tax credit, net (1.8) (.5) (1.0)
State and local taxes, net .9 1.3 1.2
Other items, net (.5) (1.6) (.1)
Effect of restructuring (13.0) - 9.4
- ---------------------------------------------------------------------
Effective tax rate before
accounting changes 10.5% 25.0% 36.4%
- ---------------------------------------------------------------------
</TABLE>

The 1993 effective tax rate of 10.5 percent included the effect of a
31.4 percent tax benefit rate on the restructuring charge discussed in
Note 3. Excluding the effect of the restructuring charge, the
effective tax rate was 23.5 percent. The lower effective tax rate for
1993 also reflected the retroactive extension of the research tax
credit enacted as part of The Omnibus Budget Reconciliation Act of
1993 and a decrease in the overall international tax rate, due to
changes in certain affiliates' operating results, coupled with a $3.0
tax effect of applying the one percentage point increase in the U.S.
statutory tax rate to existing net deferred tax assets. There was a
separate 37.0 percent tax benefit rate on the $27.0 charge for the
change in accounting principle discussed in Note 17 regarding SFAS No.
112.

The company's 1991 restructuring charge resulted in a 9.4 percentage
point increase in the effective tax rate, which reflected the
inability to fully recognize the tax benefits of this charge in
accordance with APB No. 11. These benefits were more fully recognized
upon the adoption of SFAS No. 109. The company's 1993 restructuring
charge resulted in a 13.0 percentage point decrease in the effective
tax rate, which reflected the ability to more fully recognize tax
benefits of this charge in accordance with SFAS No. 109.

The 1991 effective tax rate of 36.4 percent included the effect of a
23.2 percent tax benefit rate on the $544.0 restructuring charge
discussed in Note 3. There was a separate 27.4 percent tax benefit
rate on the $146.0 charge for the change in accounting principle
discussed in Note 16 regarding SFAS No. 106.

<PAGE>

Note 20 - Segment Information:

Financial information by industry segment and geographic area for
1993, 1992 and 1991 is presented on page 35 of this report under the
caption "Segment Information."

Industry segments are comprised as follows: Pharmaceutical -
consisting of ethical pharmaceuticals, biologicals, specialty
chemicals and empty hard-gelatin capsules; Consumer Health Care -
consisting of over-the-counter products, razors and blades, pet care
products and the Novon Products Group which was discontinued in 1993,
see Note 3; Confectionery - consisting of chewing gums, breath mints
and, until their disposition in the fourth quarter of 1993,
chocolate/caramel brands, see Note 3.

<PAGE>
Note 21 - Quarterly Financial Information - Unaudited:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
1993 Quarters 1992 Quarters
- -----------------------------------------------------------------------------------------------
First Second Third Fourth First Second Third Fourth
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $1,331.7 $1,449.7 $1,478.5 $1,533.8 $1,311.5 $1,373.4 $1,438.3 $1,474.4
Gross profit 920.8 977.8 980.2 996.8 910.6 939.9 956.9 975.9
Income (loss)
before accounting
changes 136.1 189.9 155.9 (196.9) 163.6 177.9 164.5 137.7
Net income (loss) 182.1 189.9 155.9 (196.9) 163.6 177.9 164.5 137.7
Per common share:
Income (loss)
before accounting
changes 1.01 1.40 1.16 (1.46) 1.22 1.32 1.22 1.02
Net income (loss) $ 1.35 $ 1.40 $ 1.16 $ (1.46)$ 1.22 $ 1.32 $ 1.22 $ 1.02
- -----------------------------------------------------------------------------------------------
</TABLE>

First quarter 1993 results included a pretax restructuring charge
of $70.0 or $45.0 after tax for the disposition of the Novon Products
Group as discussed in Note 3 and a charge of $17.0 after tax or $.13
per share to adopt SFAS No. 112, "Employers' Accounting for
Postemployment Benefits," and a credit of $63.0 or $.47 per share for
the adoption of SFAS No. 109, "Accounting for Income Taxes." The third
quarter 1993 effective tax rate was 19.6 percent compared with 23.3 percent
for the first half of 1993 due to the retroactive extension of the research
tax credit enacted in August 1993. Fourth quarter 1993 results included a net
pretax restructuring charge of $455.2 or $315.4 after tax, see Note 3. Compared
to previous quarters of 1993, the fourth quarter results of 1993 reflected
reduced gross profit primarily related to regulatory compliance issues in the
pharmaceutical segment.

Compared to previous quarters of 1992, the fourth quarter results of 1992
reflected increased investment in marketing and research and development,
partially offset by the impact of a reduction in the effective tax rate.

<PAGE>
Report by Management

The management of Warner-Lambert Company has prepared the accompanying
consolidated financial statements and related information in
conformity with generally accepted accounting principles and is
responsible for the information and representations in such financial
statements, including estimates and judgments required for their
preparation. Price Waterhouse, independent accountants, has audited
the consolidated financial statements and their report appears herein.

In order to meet its responsibilities, management maintains a system
of internal controls designed to provide reasonable assurance that
assets are safeguarded and that financial records properly reflect all
transactions. The internal control system is augmented by an ongoing
internal audit program, an organizational structure that provides for
appropriate division of responsibility and communication programs that
explain the company's policies and standards.

The Audit Committee of the Board of Directors, composed entirely of
nonemployee directors, meets periodically with the independent
accountants, management and internal auditors to review auditing,
internal accounting controls and other financial reporting matters.
Both the independent accountants and internal auditors have full
access to the Audit Committee.

Management also recognizes its responsibility for fostering a strong
ethical climate so that the company's affairs are conducted according
to the highest standards of personal and corporate conduct. This
responsibility is characterized and reflected in the company's Creed,
which summarizes Warner-Lambert's commitment to its customers,
colleagues, shareholders, business partners and society.

<PAGE>

Report of Independent Accountants

PRICE WATERHOUSE

To the Board of Directors and Shareholders of Warner-Lambert Company

In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of income and retained earnings and of
cash flows present fairly, in all material respects, the financial
position of Warner-Lambert Company and its subsidiaries at December
31, 1993 and 1992, and the results of their operations and their cash
flows for each of the three years in the period ended December 31,
1993, in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the company's
management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of
these statements in accordance with generally accepted auditing
standards which 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, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide
a reasonable basis for the opinion expressed above.

As discussed in Notes 17 and 19 to the financial statements, effective
January 1, 1993 the company adopted Statement of Financial Accounting
Standards No. 112, "Employers' Accounting for Postemployment Benefits"
and Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes," respectively. As discussed in Note 16 to the
financial statements, effective January 1, 1991, the company adopted
Statement of Financial Accounting Standards No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions."

Price Waterhouse
- ----------------

4 Headquarters Plaza North
Morristown, New Jersey
January 24, 1994

<PAGE>
Exhibit 21

The following is a list of subsidiaries of Warner-Lambert showing the state
or country of incorporation and the percentage of voting securities owned by
Warner-Lambert or by subsidiaries of Warner-Lambert as of December 31, 1993.
Except as otherwise indicated, such subsidiaries are included in the
consolidated financial statements.

STATE OR COUNTRY
NAME OF CORPORATION OF ORGANIZATION PERCENTAGE OF OWNERSHIP

<S> <C> <C>
Adams, S.A.................................................. Spain 100
Adams Brands, Inc........................................... Philippines 100
American Chicle Company..................................... Delaware 100
Chicle Adams, S.A........................................... Venezuela 100
Compania Farmaceutica Parke-Davis, S.A...................... Guatemala 100 (Indirect)
Euronett, Inc............................................... Delaware 100
International Affiliated Corporation........................ Delaware 100
Warner-Lambert GmbH..................................... Germany 100 International Affiliated Corporation
Parke, Davis GmbH.............................. Germany 100 Warner-Lambert GmbH
Goedecke AG.................................... Germany 88.31 Warner-Lambert GmbH
11.69
Adenylchemie GmbH....................... Germany 100 Goedecke AG
Goedecke GmbH........................... Austria 100 Goedecke AG
International Company for Gum and
Confectionery (INCOGUM) S.A.E............ Egypt 57 Warner-Lambert GmbH
PanServ-Anzeigen-Service GmbH.................. Germany 100 Warner-Lambert GmbH
Warner-Lambert Consumer Products GmbH, Berlin.. Germany 100 Warner-Lambert GmbH
Warner-Lambert Consumer Products GmbH,
Frankfurt........................... Germany 100 Warner-Lambert Consumer Products GmbH, Berlin
Eemland Management Services GmbH......... Germany 100 Warner-Lambert Consumer Products GmbH, Berlin
Wilkinson Sword GmbH................ Austria 100 Eemland Management Services
NV Wilkinson Sword S.A.............. Belgium 99.89 Eemland Management Services GmbH
.11 Wilkinson Sword Europe GmbH
Wilkinson Sword S.A................. France 99 Eemland Management Services GmbH
.95 Wilkinson Sword Verwaltungs GmbH
Wilkinson Sword Europe GmbH......... Germany 100 Eemland Management Services GmbH
Wilkinson Sword SpA ............. Italy 98.97 Wilkinson Sword Europe GmbH
1.03 Wilkinson Sword Limited
Wilkinson Sword S.A.E............ Spain 85 Wilkinson Sword Europe GmbH
Wilkinson Sword Verwaltungs
GmbH........................... Germany 100 Wilkinson Sword Europe GmbH
W&A Grundstuckverwaltungs
GbR........................ Germany 97 Wilkinson Sword Verwaltungs GmbH
3 Warner-Lambert Consumer Products GmbH, Berlin
</TABLE>

Page 2 of 4
<TABLE>
<CAPTION>

STATE OR COUNTRY
NAME OF CORPORATION OF ORGANIZATION PERCENTAGE OF OWNERSHIP

<S> <C> <C> <C>
Warner-Lambert Europaische Beteiligungs GmbH... Germany 100 Warner-Lambert GmbH
Parke-Davis GmbH........................... Austria 100 Warner-Lambert Europaische Beteiligungs GmbH
Warner-Lambert (Schweiz) AG................ Switzerland 100 Warner-Lambert Europaische Beteiligungs GmbH
Parke-Davis Sendirian Berhad.............................. Malaysia 100 International Affiliated Corporation
Wilkinson Sword GmbH...................................... Germany 51 International Affiliated Corporation
49 Warner-Lambert Consumer Products GmbH, Berlin
Latin American Holdings Inc................................... Delaware 100
Laboratorios Laprofa, Sociedad Anonima.................... Guatemala 100 Latin American Holdings Inc.
Warner-Lambert Industria e Comercio Limitada.............. Brazil 100 Latin American Holdings Inc.
Keystone Chemurgic Corp....................................... Delaware 100
Exchic C.A. Limited....................................... Bermuda 57.5
42.5 Keystone Chemurgic Corp.
Warner-Lambert Guatemala, S.A............................. Guatemala 100 Keystone Chemurgic Corp.
Laboratorios Substantia, C.A.................................. Venezuela 80
Lambert & Feasley, Inc........................................ New York 100
Med-Tech Ventures, Inc........................................ Delaware 100
Meito Adams Co., Ltd.* ....................................... Japan 50
Parke-Davis Sales Corporation................................. Virgin Islands 100
Parke, Davis & Company ("Parke-Davis")........................ Michigan 100
Parke-Davis Korea Limited................................. Korea 100 Parke-Davis
Warner-Lambert de Puerto Rico, Corp....................... Puerto Rico 100 Parke-Davis
P-D Co., Inc.............................................. Delaware 100 Parke-Davis
Warner-Lambert (Belgium) N.V.................... Belgium 100 P-D Co., Inc.
Capsugel AG..................................... Switzerland 100 P-D Co., Inc.
Empresas Warner Lambert S.A..................... Chile 90 P-D Co., Inc.
10 Tabor Corporation
Parke-Davis (Thailand) Limited.................. Thailand 100 P-D Co., Inc.
Parke-Davis ("Parke-Davis France").............. France 100 P-D Co., Inc.
Adams France................................. France 100 Parke-Davis France
Cachou Lajaunie.............................. France 100 Parke-Davis France
Capsugel France.............................. France 100 Parke-Davis France
Societe Nouvelle des Pastilles de Vichy...... France 100 Parke-Davis France
C.M.S. Diffusion......................... France 99 Societe Nouvelle des Pastilles de Vichy
1 Parke-Davis France
</TABLE>

* Subsidiary not consolidated
Page 3 of 4
<TABLE>
<CAPTION>

STATE OR COUNTRY
NAME OF CORPORATION OF ORGANIZATION PERCENTAGE OF OWNERSHIP

<S> <C> <C> <C>
Warner-Lambert Company AG....................... Switzerland 100 P-D Co., Inc.
Adams (Thailand) Limited................... Thailand 100 Warner-Lambert Company AG
Warner-Lambert (East Africa) Limited....... Kenya 100 Warner-Lambert Company AG
Warner-Lambert Pottery Road Limited........ Ireland 100 Warner-Lambert Company AG
Parke, Davis & Company, Inc............................... Philippines 100 Parke-Davis
Parke, Davis & Company, Limited........................... Pakistan 75 Parke-Davis
Parke Davis International Limited......................... Bahamas 100 Parke-Davis
Parke Davis Pty. Limited.................................. Australia 100 Parke-Davis
Warner-Lambert Pty. Limited..................... Australia 100 Parke Davis Pty. Limited
Parke Davis de Venezuela, C.A............................. Venezuela 100 Parke-Davis
Warner-Lambert (UK) Limited............................... United Kingdom 100 Parke-Davis
Lambert Chemical Company Limited................ United Kingdom 100 Warner-Lambert (UK) Limited
Parke Davis & Co. Limited....................... Jersey, Channel Islands 100 Warner-Lambert (UK) Limited
Wilkinson Sword Limited......................... United Kingdom 100 Warner-Lambert (UK) Limited
Trummer & Co. Successors Limited........... United Kingdom 100 Wilkinson Sword Limited
Warner-Lambert Canada Inc................................. Canada 100 Parke-Davis
Chilcott Laboratories Canada Inc................ Canada 100 Warner-Lambert Canada Inc.
Parke-Davis Afrique de l'Ouest.................. Senegal 100 Warner-Lambert Canada Inc.
Renrall K.K..................................... Japan 100 Warner-Lambert Canada Inc.
Parke Davis, S.A.............................................. Spain 65
35 Warner-Lambert Company AG
Parke-Davis S.p.A............................................. Italy 100 (Indirect)
Parke-Davis Scandinavia AB.................................... Sweden 100
Schick Interamericana, S.A.................................... Venezuela 100
Suzhou Capsugel'r' Ltd. * .................................... People's Republic of China 50
Tabor Corporation............................................. Delaware 100
Tetra-Werke Dr. rer. nat. Ulrich Baensch GmbH................. Germany 100 (Indirect)
Tetra Heimtierbedarf GmbH................................. Germany 100 Tetra-Werke Dr. rer. nat.
Ulrich Baensch GmbH
Biorell GmbH.................................... Germany 100 Tetra Heimtierbedarf GmbH
HILENA Biologische und Chemische
Erzeugnisse GmbH......................... Germany 100 Biorell GmbH
Zoomedica Frickhinger GmbH...................... Germany 100 Tetra Heimtierbedarf GmbH
Warner-Chilcott Inc........................................... Delaware 100
Warner Lambert de Mexico, S.A. de C.V......................... Mexico 100
Chicle Adams, S.A. de C.V................................. Mexico 100 Warner Lambert de Mexico, S.A.
de C.V.
Compania Medicinal La Campana, S.A. de C.V................ Mexico 100 Warner Lambert de Mexico, S.A.
de C.V.
Warner-Lambert de Venezuela S.A............................... Venezuela 100
</TABLE>

* Subsidiary not consolidated
Page 4 of 4
<TABLE>
<CAPTION>
STATE OR COUNTRY
NAME OF CORPORATION OF ORGANIZATION PERCENTAGE OF OWNERSHIP

<S> <C> <C> <C>
Warner-Lambert Europe N.V..................................... Belgium 100
Warner-Lambert Holland B.V.................................... Netherlands 100
Parke-Davis B.V......................................... Netherlands 100 Warner-Lambert Holland B.V.
Substantia - Produtos Farmaceuticos, Limitada... Portugal 97.5 Parke-Davis B.V.
2.5 Parke-Davis France
Schick Nederland B.V.................................... Netherlands 100 Warner-Lambert Holland B.V.
Warner Lambert A.E.............................. Greece 98.97 Schick Nederland B.V.
1.03 Warner-Lambert Holland B.V.
Perma Sharp Boudros Hellas S.A............ Greece 100 Warner Lambert A.E.
W-L Distributie N.V............................. Belgium 100 Schick Nederland B.V.
Warner-Lambert Inc............................................ Nevada 100
Warner-Lambert Ireland Limited................................ Ireland 100 (Indirect)
Warner-Lambert Distributors (Ireland) Ltd............... Ireland 100 Warner-Lambert Ireland Limited
Warner-Lambert Export Limited........................... Ireland 100 Warner-Lambert Ireland Limited
Warner-Lambert KK............................................. Japan 100
Warner-Lambert Ltd............................................ Delaware 100
Warner-Lambert de Panama, Sociedad Anonima.............. Panama 100 Warner-Lambert Ltd.
Warner-Lambert Manufacturing (Ireland) Ltd.................... Cayman Islands, 100
British West Indies
Warner-Lambert (Manufacturing) Sdn. Berhad.................... Malaysia 100 (Indirect)
Warner Lambert (NZ) Limited................................... New Zealand 100
Warner-Lambert Philippines, Inc............................... Philippines 100
Warner-Lambert (Portugal) Comercio e Industria, Limitada...... Portugal 100
Warner-Lambert S.A. (Proprietary) Limited..................... South Africa 100
Wilcox Sweets (Proprietary) Limited..................... South Africa 100 Warner-Lambert S.A. (Proprietary)
Limited
Warner-Lambert (Thailand) Limited............................. Thailand 100 (Indirect)
Willinger Bros., Inc.......................................... Delaware 100
JWI..................................................... New Jersey 100 Willinger Bros., Inc.
</TABLE>

The foregoing list omits 9 domestic subsidiaries and 50 foreign subsidiaries
which, considered in the aggregate, would not constitute a significant
subsidiary.

<PAGE>
WARNER-LAMBERT COMPANY AND CONSOLIDATED SUBSIDIARIES
CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectuses
constituting part of the Registration Statements on Form S-8 (Registration
Nos. 2-53423, 33-21123, 2-86826, 33-17584, 33-283275, 33-12209, 33-49244 and
33-57918) and on Form S-3 (Registration Nos. 33-4049, 33-38725 and 33-55692) of
Warner-Lambert Company of our report dated January 24, 1994 appearing on
page 48 of Warner-Lambert Company's 1993 Annual Report to Shareholders which
is incorporated in this Annual Report on Form 10-K. We also consent to the
incorporation by reference of our report on the Financial Statement Schedules,
which appears on page of this Form 10-K.

PRICE WATERHOUSE

4 Headquarters Plaza North
Morristown, New Jersey 07962
March 23, 1994