CENTOCOR INC, S-3/A, 1996-02-16

CENTOCOR INC
S-3/A, 1996-02-16
IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 16, 1996.
REGISTRATION NO. 333-00337
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------

AMENDMENT NO. 1

TO
FORM S-3

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------
CENTOCOR, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2117202
(State or other (I.R.S. Employer
jurisdiction of Identification
incorporation No.)
or
organization)
200 Great Valley Parkway Malvern, Pennsylvania 19355 (610) 651-6000
---------------
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
---------------
George D. Hobbs, Esquire Vice President, Corporate Counsel and Secretary
Centocor, Inc. 200 Great Valley Parkway Malvern, Pennsylvania 19355 (610) 651-
6000
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(Name, address, including zip code, and telephone number, including area code,
of agent for service)
---------------
Copies to:

Kathleen M. Shay, Esquire Bruce K. Dallas, Esquire Davis
Duane, Morris & Heckscher Polk & Wardwell 450 Lexington
One Liberty Place Avenue New York, NY 10017
Philadelphia, PA 19103-7396
---------------

Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.

If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please
check the following box and list the Securities Act of 1933 registration
number of the earlier effective registration statement for the same
offering. [_]

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act of 1933 registration statement number of the earlier effective
registration statement for the same offering. [_]

If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act of 1933, please check the following box. [_]

---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

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<PAGE>

EXPLANATORY NOTE

This Registration Statement contains a prospectus relating to a public
offering in the United States and Canada (the "United States Offering") of an
aggregate of 2,800,000 shares of common stock, par value $.01 per share
("Common Stock"), of Centocor, Inc., together with separate prospectus pages
relating to a concurrent offering outside the United States and Canada (the
"International Offering") of an aggregate of 700,000 shares of Common Stock.
The complete prospectus for the United States Offering follows immediately
after this Explanatory Note. After such prospectus is the alternate front
cover page for the International Offering. All other pages of the prospectus
for the United States Offering are to be used for both the United States
Offering and the International Offering.
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS (Subject to Completion)

Issued February 16, 1996

3,500,000 Shares

[LOGO OF CENTOCOR INC. CENTOCOR, INC.
APPEARS HERE] COMMON STOCK
-----------

OF THE 3,500,000 SHARES OF COMMON STOCK BEING OFFERED, 2,800,000 SHARES ARE
BEING OFFERED INITIALLY IN THE UNITED STATES AND CANADA BY THE U.S.
UNDERWRITERS AND 700,000 SHARES ARE BEING OFFERED INITIALLY OUTSIDE THE UNITED
STATES AND CANADA BY THE INTERNATIONAL UNDERWRITERS. SEE "UNDERWRITERS." ALL OF
THE SHARES OF COMMON STOCK OFFERED HEREBY ARE BEING SOLD BY THE COMPANY. THE
COMMON STOCK OF CENTOCOR, INC. IS QUOTED ON THE NASDAQ NATIONAL MARKET UNDER
THE SYMBOL "CNTO." ON FEBRUARY 14, 1996, THE REPORTED LAST SALE PRICE OF THE
COMMON STOCK ON THE NASDAQ NATIONAL MARKET WAS $32 1/4 PER SHARE.
-----------

SEE "RISK FACTORS" COMMENCING ON PAGE 7 HEREOF FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
-----------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
-----------
PRICE $ A SHARE
-----------

<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
-------- ------------- -----------
<S> <C> <C> <C>
Per Share................................... $ $ $
Total(3).................................... $ $ $
</TABLE>
- -----
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
(2) Before deducting expenses payable by the Company estimated at $400,000.
(3) The Company has granted to the U.S. Underwriters an option, exercisable
within 30 days of the date hereof, to purchase up to an aggregate of
525,000 additional Shares at the price to public less underwriting
discounts and commissions, for the purpose of covering over-allotments,
if any. If the U.S. Underwriters exercise such option in full, the total
price to public, underwriting discounts and commissions and proceeds to
Company will be $ , $ and $ , respectively.
See "Underwriters."
-----------

The Shares are offered, subject to prior sale, when, as and if accepted by
the Underwriters named herein, and subject to the approval of certain legal
matters by Davis Polk & Wardwell, counsel for the Underwriters. It is expected
that delivery of the Shares will be made on or about , 1996, at the
office of Morgan Stanley & Co. Incorporated, New York, N.Y. against payment
therefor in immediately available funds.
-----------

MORGAN STANLEY & CO.
Incorporated
HAMBRECHT & QUIST

J.P. MORGAN & CO.

, 1996
<PAGE>

NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR BY ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE COMMON
STOCK OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY
PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR
SOLICITATION TO SUCH PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
OFFER OR SALE MADE HEREBY SHALL UNDER ANY CIRCUMSTANCES IMPLY THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE
HEREOF.

FOR INVESTORS OUTSIDE THE UNITED STATES: NO ACTION HAS BEEN OR WILL BE
TAKEN IN ANY JURISDICTION BY THE COMPANY OR ANY UNDERWRITER THAT WOULD PERMIT
A PUBLIC OFFERING OF THE COMMON STOCK OR POSSESSION OR DISTRIBUTION OF THIS
PROSPECTUS IN ANY JURISDICTION WHERE ACTION FOR THAT PURPOSE IS REQUIRED,
OTHER THAN IN THE UNITED STATES. PERSONS INTO WHOSE POSSESSION THIS PROSPECTUS
COMES ARE REQUIRED BY THE COMPANY AND THE UNDERWRITERS TO INFORM THEMSELVES
ABOUT, AND TO OBSERVE ANY RESTRICTIONS AS TO, THE OFFERING OF THE COMMON STOCK
AND THE DISTRIBUTION OF THIS PROSPECTUS.
----------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................. 3
Risk Factors........................ 7
Use of Proceeds..................... 13
Price Range of Common Stock and
Dividend Policy.................... 13
Dilution............................ 14
Capitalization...................... 15
Selected Consolidated Financial Da-
ta................................. 16
Management's Discussion and Analysis
of Financial Condition and Results
of Operations...................... 17

<CAPTION>
PAGE
----
<S> <C>
Business............................ 23
Management.......................... 35
Description of Capital Stock........ 37
Certain U.S. Federal Tax
Considerations for Non-U.S.
Holders of Common Stock............ 40
Underwriters........................ 43
Legal Matters....................... 45
Experts............................. 46
Incorporation of Certain Documents
by Reference....................... 46
Available Information............... 46
</TABLE>

----------------
In this Prospectus, the terms "Centocor" and the "Company" include
Centocor, Inc. and its subsidiaries, and the term "Common Stock" refers to the
common stock, $.01 par value, of the Company, including the common stock
purchase rights attached thereto as described herein under the caption
"Description of Capital Stock--The Rights Agreement." The Company was
incorporated in Pennsylvania in 1979. The Company's corporate headquarters are
located at 200 Great Valley Parkway, Malvern, Pennsylvania 19355, and its
telephone number is (610) 651-6000.
----------------
Panorex, CenTNF, HA-1A, Myoscint, CA 125 II, CAPTIA Syphilis G, CA 19-9, CA
15-3, CA 72-4, P-glycoCHEK, CAPTIA CMV and RRED are trademarks of Centocor.
ReoPro is a trademark of Eli Lilly and Company. GeneVax is a trademark of
Apollon, Inc. Corsevin is a trademark of Corvas International, Inc. CYFRA 21-1
is a trademark of Boehringer Mannheim GmbH.
----------------

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS (IF ANY) MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE
COMMON STOCK OF THE COMPANY ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH
RULE 10B-6A UNDER THE SECURITIES EXCHANGE ACT OF 1934. SEE "UNDERWRITERS."

2
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements and notes thereto included or
incorporated by reference in this Prospectus. Unless otherwise indicated, the
information in this Prospectus assumes no exercise of the U.S. Underwriters'
over-allotment option.

THE COMPANY

Centocor is a biotechnology company that develops therapeutic and diagnostic
human health care products for cardiovascular, autoimmune and infectious
diseases and cancer. The Company's primary technological focus is on monoclonal
antibodies, with additional programs in genetic vaccines and peptides. The
Company's strategy is to identify proprietary high value-added product
opportunities, and to commercialize those opportunities by focusing on clinical
development, regulatory process, manufacturing and market development. The
Company seeks to license technology and product candidates from research
institutions and other biotechnology companies, in addition to conducting
selected basic research.

The Company has two therapeutic products approved for sale and several
product candidates in various stages of development. ReoPro is marketed and
sold in the United States and Europe for the reduction of acute ischemic
cardiac complications in patients undergoing angioplasty procedures who are at
high risk for abrupt artery closure. Panorex is marketed and sold in Germany as
an adjuvant therapy in the treatment of post-operative colorectal cancer. The
Company also markets several diagnostic products for cancer and infectious
disease in the United States, Europe and Japan.

ReoPro is effective in inhibiting blood clotting by inhibiting the
aggregation of platelets. Anticoagulation agents such as ReoPro are used in the
treatment of cardiovascular diseases to prevent blood clots. The three main
markets for these agents are angioplasty, unstable angina and myocardial
infarction (heart attack). Following the successful completion of the EPIC
Phase III clinical trial of ReoPro and subsequent Food and Drug Administration
("FDA") approval, the Company commenced commercial sales of ReoPro in January
1995 for patients who are at high risk for abrupt artery closure following
angioplasty. The Company estimates that in 1995 approximately 800,000
angioplasty procedures were conducted worldwide, with approximately 30% of
these procedures being performed in patients who are at high risk for abrupt
artery closure following the procedure. ReoPro is currently marketed in a
number of countries, including the United States, Germany, the United Kingdom
and France. Under a Sales and Distribution Agreement between Eli Lilly and
Company ("Lilly") and the Company, Lilly is the exclusive worldwide distributor
of ReoPro.

Due to positive findings at interim analyses, in December 1995 Centocor
halted two Phase III clinical trials of ReoPro, the EPILOG trial and the
CAPTURE trial. The EPILOG trial was a randomized, double-blind, placebo-
controlled trial to evaluate 30-day and 6-month clinical outcomes in all
patients following angioplasty procedures. Because an interim analysis of the
first 1,500 patients enrolled in the trial revealed approximately a 70%
reduction in death and heart attack rates within 30 days of the angioplasty
procedure for patients receiving ReoPro, the EPILOG study was halted on the
recommendation of the EPILOG independent Safety and Efficacy Monitoring
Committee. The CAPTURE trial was a randomized, double-blind, placebo-controlled
trial to evaluate ReoPro in patients scheduled for urgent angioplasty
procedures due to refractory unstable angina. Because of positive findings
after an analysis of the first 1,050 patients enrolled in the trial, the
CAPTURE study was halted on the recommendation of the CAPTURE independent
Safety and Efficacy Monitoring Committee. After completing data analyses for
these trials, the Company expects to seek additional regulatory approvals in
the United States and Europe for expanded indications. In addition, the Company
and Lilly have designed additional clinical trials to study the effects of
ReoPro in patients undergoing angioplasty procedures for acute myocardial
infarction and in conjunction with stents.

3
<PAGE>

In both the EPILOG and the CAPTURE trials, patient bleeding was markedly
lower than that experienced in the EPIC trial. The EPILOG and CAPTURE trials
were designed with a focus on reducing bleeding events by lowering the dosage
of heparin and implementing certain other procedures at the puncture site.
These adjustments resulted in a reduction of bleeding events in patients
receiving ReoPro to essentially the same level as in patients receiving
placebo.

Panorex is the first monoclonal antibody product approved for cancer.
Panorex binds to colon cancer cells and destroys them using various immunologic
mechanisms. In a Phase III trial conducted in Germany, Panorex showed a five-
year 30% mortality benefit and 27% reduction in tumor recurrences. In December
1994, the Paul Ehrlich Institute, the German regulatory body for vaccines and
antibodies, granted the Company marketing authorization for the use of Panorex
as an adjuvant therapy in the treatment of post-operative colorectal cancer.
Applications for marketing authorization have also been submitted in Austria,
Switzerland, Finland and Sweden. During 1993, the Company and Glaxo Wellcome
plc ("Glaxo Wellcome") entered into an alliance agreement for the development
and marketing of certain of the Company's monoclonal antibody-based cancer
therapeutic products, including Panorex. Pursuant to that agreement, Glaxo
Wellcome is the worldwide distributor of Panorex. Glaxo Wellcome is conducting
Phase III trials for Panorex in North America, Europe and certain other
countries. According to recent estimates, there are 380,000 cases of colorectal
cancer in the United States and Europe per year and 40,000 new colorectal
cancer patients per year in Germany.

The Company is currently developing CenTNF, a chimeric monoclonal antibody
that binds to tumor necrosis factor alpha, which is believed to be critical to
the human body's reaction to inflammation. The Company is conducting Phase II
clinical trials of CenTNF for the treatment of rheumatoid arthritis and the
inflammatory bowel condition known as Crohn's disease.

Sales of the Company's diagnostic products were approximately $43 million
and $40 million for the years ended December 31, 1995 and 1994, respectively.
These sales consisted principally of in-vitro diagnostic assays for ovarian,
pancreatic, breast and certain other cancers and for infectious diseases. On
January 26, 1996, Myoscint, a cardiac imaging agent currently sold in certain
European countries, was recommended for approval by the Cardiovascular and
Renal Drugs Advisory Committee of the FDA for imaging in the setting of chest
pain suspected to be caused by myocardial infarction. In addition, in February
1996, Myoscint was approved for sale by the Japanese Ministry of Health and
Welfare, subject to pricing approval.

Consistent with its strategy, the Company maintains and seeks strategic
alliances with major pharmaceutical companies for the commercialization and
marketing of each of its therapeutic products, pursuant to which the Company
and its respective partner jointly focus on the continued clinical and market
development for the product, while the Company's partner primarily conducts the
marketing, promotion and distribution of such product. The Company maintains
and seeks distribution agreements for its diagnostic products with companies
having established positions and distribution networks in applicable market
segments.

4
<PAGE>

THE OFFERING

<TABLE>
<CAPTION>
Common Stock offered:
<C> <S>
United States offering..................... 2,800,000 shares(1)
International offering..................... 700,000 shares
Total.................................... 3,500,000 shares(1)
Common Stock outstanding after the offering. 62,038,000 shares(1)(2)
Use of proceeds............................. Debt repayment, working capital
and other corporate purposes. See
"Use of Proceeds."
Nasdaq National Market symbol............... CNTO
</TABLE>
- --------
(1) Excludes up to 525,000 shares of Common Stock subject to the U.S.
Underwriters' over-allotment option.

(2) Based on approximately 58,538,000 shares of Common Stock outstanding on
December 31, 1995. Excludes (a) approximately 5,357,000 shares of Common
Stock issuable upon the exercise of outstanding stock options and warrants
with exercise prices ranging from $6.88 to $64.50 per share (b)
approximately 255,000 shares of Common Stock subject to unvested restricted
stock awards and (c) approximately 5,892,000 shares of Common Stock
issuable upon the conversion of the Company's 7 1/4% Convertible
Subordinated Notes Due February 1, 2001 (the "7 1/4% Convertible Notes")
and 6 3/4% Convertible Subordinated Debentures Due 2001 (the "6 3/4%
Convertible Debentures"). As of December 31, 1995, the Company had
outstanding options and warrants to purchase approximately 4,905,000 shares
of Common Stock at exercise prices below the assumed public offering price
of $32.875 per share (the closing price of the Common Stock on February 12,
1996) with a weighted average exercise price of $11.21 per share.

5
<PAGE>

SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------
1991 1992 1993 1994 1995
--------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenues:
Sales.................... $ 44,328 $ 58,394 $ 48,071 $ 39,984 $ 65,001
Contracts:
Related parties......... 4,902 16,071 10,109 1,652 --
Other................... 3,967 51,767 17,750 25,590 13,915
--------- --------- -------- --------- --------
Total revenues........... 53,197 126,232 75,930 67,226 78,916
Costs and expenses(1)..... 247,151 295,978 130,683 173,290 126,219
Other income (ex-
penses)(2)............... (1,601) (24,400) (19,626) (20,594) (9,829)
--------- --------- -------- --------- --------
Loss...................... $(195,555) $(194,146) $(74,379) $(126,658) $(57,132)
========= ========= ======== ========= ========
Loss per share............ $ (5.72) $ (4.90) $ (1.79) $ (2.55) $ (0.98)
========= ========= ======== ========= ========
Weighted average number of
shares outstanding(3).... 34,172 39,623 41,482 49,597 58,207
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, 1995
------------------------
ACTUAL AS ADJUSTED(5)
-------- --------------
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and investments(4)................................ $137,206 $136,039
Total assets........................................... 260,284 257,260
Long-term debt......................................... 231,640 125,000
Shareholders' equity (deficit)......................... (29,396) 74,220
</TABLE>
- --------

No dividends have been declared or paid during any of the periods presented.

(1) Costs and expenses include the following: (a) charges for acquired research
and development of $70,147 and $36,966 in 1991 and 1994, respectively, (b)
charges of $64,877 and $3,500 in 1992 and 1993, respectively, related to
HA-1A inventory, (c) restructuring charges of $15,266, $9,387 and $1,642 in
1992, 1993 and 1995, respectively, (d) a royalty buyout of $17,098 in 1994
and (e) a write-down of facilities and equipment of $7,870 in 1994.

(2) Other income (expenses) include charges of $11,245, $1,275 and $3,750 in
1992, 1994 and 1995, respectively, related to the settlement of certain
litigation.
(3) No shares of Common Stock issuable upon the exercise of stock options or
warrants or the vesting of restricted stock awards have been included as
their inclusion would have an antidilutive effect because the Company has
incurred a net loss in each period presented.

(4) Cash and investments at December 31, 1995 include equity investments
classified as available for sale of $5,769, and $27,500 of investments
maintained at certain banks as collateral for certain debt outstanding at
December 31, 1995.

(5) Adjusted to give effect to the sale of 3,500,000 shares of Common Stock
offered by the Company in this offering at an assumed public offering price
of $32.875 per share, and the application of the net proceeds therefrom,
after deducting estimated underwriting discounts and commissions and
estimated offering expenses. See "Use of Proceeds."

6
<PAGE>

RISK FACTORS

Before purchasing the shares of Common Stock offered hereby, prospective
investors should consider carefully the risk factors set forth below as well
as the other information set forth elsewhere in this Prospectus or
incorporated herein by reference in evaluating the Company and its business.

LIQUIDITY AND CAPITAL RESOURCES; NEED FOR AND UNCERTAINTY OF ADDITIONAL
CAPITAL

The Company has incurred significant operating expenses attempting to
develop therapeutic and diagnostic products. The Company's product sales have
not produced sufficient revenues to cover the Company's operating costs.
Consequently, the Company has experienced substantial net cash outflows, which
have been only partially offset by significant contract revenues received
through collaborative alliances with pharmaceutical companies and the
Company's financing activities.

The Company's future financial condition is highly dependent upon the
reduction of the Company's rate of net cash outflows and, ultimately, upon the
achievement of significant and sustained levels of therapeutic product sales.
For the year ended December 31, 1995, sales of the Company's products,
including ReoPro and Panorex, did not generate sufficient revenue to result in
positive cash flow for the year. Under the Company's strategy of entering into
collaborative alliances with established pharmaceutical companies, the Company
generally shares sales revenues from products covered by such arrangements
with its partners. There can be no assurance that those products, in
conjunction with the Company's therapeutic product candidates under
development and diagnostic products, will achieve a level of sales sufficient
to generate positive cash flow from operations for the Company, given the
current and currently anticipated future scope of the Company's operations.
The level of future sales of both diagnostic and therapeutic products will be
dependent upon several factors, including, but not limited to, the timing and
extent of future regulatory approvals of the Company's products, approval and
commercialization of competitive products and the degree of acceptance of the
Company's products in the marketplace. There can be no assurance that FDA or
other regulatory approvals expanding the authorized use of ReoPro and Panorex
or permitting the commercial sale of any of the Company's product candidates
under development will be obtained. Failure to obtain additional timely FDA or
other regulatory approvals for the use of ReoPro and Panorex or other product
candidates will have a material adverse effect on the Company.

Until significant and sustained levels of therapeutic product sales are
achieved, the Company expects that it will need to secure significant
additional funding in the future from collaborative arrangements with
pharmaceutical companies or from the capital markets. There can be no
assurance that sufficient additional funding will be available to the Company
or that the Company can obtain additional collaborations with established
pharmaceutical companies and receive payments for product rights and/or the
achievement of milestones under such collaborative agreements. Even if the
Company obtains such funding, there can be no assurance that such funding will
be sufficient to sustain the Company's operations until it generates positive
cash flows from operations.

Agreements covering $18,289,000 of Centocor's outstanding debt balances
contain certain financial and non-financial covenants, including the
maintenance of minimum equity and cash balances and compliance with certain
financial ratios. Centocor is currently not in compliance with certain of
these covenants; however, Centocor has obtained waivers of such covenants on
the condition that it maintains certain investments at the lending bank, which
at December 31, 1995 totalled $20,000,000. There can be no assurance that
Centocor will be able to continue to collateralize such loans and,
accordingly, Centocor has classified this $18,289,000 of debt as short-term.
Additionally, $7,500,000 of Centocor's short-term debt is secured by
investments maintained at the lending bank of $7,500,000. If cash flows
continue to be negative, Centocor's ability to service its debt may be
impaired.

HISTORY OF OPERATING LOSSES; RISKS ASSOCIATED WITH PRODUCTS UNDER DEVELOPMENT

Centocor has recorded significant losses from operations. Many of
Centocor's product candidates are in various stages of research, development
or clinical testing, and cannot be sold commercially without first

7
<PAGE>

obtaining a license for marketing from the FDA and, outside the United States,
other regulatory authorities. The process of obtaining such licenses usually
takes a number of years to complete and requires significant expenditures to
conduct clinical trials of the safety and efficacy of a potential product.
There can be no assurance that any of the Company's products currently under
development will obtain the required approvals or, if approved, will obtain
sufficient market acceptance to become commercially successful. Even if one or
more of its products under development is licensed for marketing by the FDA and
achieves substantial market acceptance, there can be no assurance that the
Company will achieve profitability. Additionally, the Company has in the past
recorded substantial special charges for acquired research and development,
inventory reserves for one of the Company's products that was withdrawn from
the market, restructurings, a royalty buyout, and a writedown of certain
facilities and equipment. There can be no assurance that Centocor will not
record additional special charges in the future or that product sales will be
sufficient to cover its future operating expenses.

LITIGATION

The Company is subject to litigation, including those matters described
elsewhere herein. See "Business-- Legal Proceedings." Litigation to which the
Company is currently or has been subjected relates to, among other things, the
Company's patent and intellectual property rights, licensing arrangements with
other persons and financing activities. The Company cannot predict with
certainty the eventual outcome of pending litigation, and could be required to
incur substantial expense in defending these lawsuits. The Company has in the
past taken substantial special charges relating to certain litigation, and
there can be no assurance that pending, or future, legal proceedings will not
result in additional special charges or have a material adverse effect on the
Company's financial condition and results of operations.

DEPENDENCE ON COLLABORATIVE PARTNERS; CUSTOMER CONCENTRATION

Centocor's strategy for research, development and commercialization of
certain of its products entails entering into various arrangements with
corporate partners and others, including those discussed below. The success of
these products is dependent, in part, upon the subsequent success of these
outside parties in performing their responsibilities. The Company's
collaborators may also compete with the Company. Although Centocor believes its
collaborators have an economic incentive to succeed in performing their
contractual responsibilities, the amount and timing of resources that they
devote to these activities is not within the control of Centocor. There can be
no assurance that such parties will perform their obligations as expected or
that any revenue will be derived from such arrangements. If any of Centocor's
collaborators breaches or terminates its agreement with the Company or
otherwise fails to conduct its collaborative activities in a timely manner, the
development or commercialization of the product candidate or research program
under such collaborative arrangement may be delayed, the Company may be
required to undertake unforeseen additional responsibilities or to devote
unforeseen additional funds or other resources to such development or
commercialization, or such development or commercialization could be
terminated. The termination or cancellation of collaborative arrangements could
also adversely affect the Company's financial condition, intellectual property
position and operations. In addition, disagreements between collaborators and
the Company could lead to delays in the collaborative research, development or
commercialization of certain products or could require or result in formal
legal process or arbitration for resolution. These consequences could be time-
consuming and expensive and could have material adverse effects on the Company.

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

8
<PAGE>

Centocor may be required to make a payment to Lilly of $40 million through
December 31, 1996, or decreasing amounts through December 31, 1999, in the
event of any change in control of Centocor or in the event of any governmental
action or determination that results in the Sales and Distribution Agreement
not being in full force and effect in all material respects in major
jurisdictions, excluding the United States, and the subsequent termination of
the Sales and Distribution Agreement by Lilly based solely on such events.

In November 1993, Centocor and Glaxo Wellcome entered into an alliance
agreement for the development and marketing of certain of Centocor's
monoclonal antibody-based cancer therapeutic products, including Panorex. In
November 1994, Centocor and Glaxo Wellcome amended their alliance agreement
and Glaxo Wellcome became the exclusive worldwide distributor for Panorex.
Under the agreement, Glaxo Wellcome is responsible principally for the
continuing clinical development of Panorex, and Centocor is responsible
principally for manufacturing Panorex and securing regulatory approvals.

The Company may seek additional collaborative arrangements to develop and
commercialize its products in the future. There can be no assurance that the
Company will be able to negotiate acceptable collaborative arrangements in the
future or that any such collaborative arrangements will be successful. In
addition, there can be no assurance that the Company's collaborative partners
will not pursue alternative technologies or develop alternative compounds
independently or in collaboration with others as a means of developing
treatments for the diseases targeted by their collaborative programs with
Centocor.

During 1995, approximately 50% of the Company's total product sales were to
three customers: Lilly, Glaxo Wellcome and Toray-Fuji Bionics, Inc. During
1994, approximately 60% of the Company's total product sales were to four
customers: Abbott Laboratories, Boehringer Mannheim GmbH, CIS bio
International and Toray-Fuji Bionics, Inc.

PATENTS AND LICENSING ARRANGEMENTS; CPIII PURCHASE OPTION

Products currently being marketed, developed or considered for development
by the Company are in the area of biotechnology, an area in which there are
extensive patent filings. The patent position of biotechnology firms generally
is highly uncertain and involves complex legal and factual questions. To date,
no consistent policy has emerged regarding the breadth of claims allowed in
biotechnology patents. Accordingly, there can be no assurance that patent
applications owned or licensed by the Company will result in patents being
issued or that, if issued, such patents will afford protection against
competitors with similar technology. In addition, there can be no assurance
that products covered by such patents, or any other products developed by the
Company or subject to licenses acquired by the Company, will not be covered by
third party patents, in which case continued development and marketing of such
products would require a license under such patents. There can be no assurance
that such required licenses will be available to the Company or its licensees
on acceptable terms.

Other entities have filed applications for or have been issued patents and
are expected to obtain additional patents to which Centocor may need to
acquire rights. The extent to which Centocor may need to obtain rights to any
such patents or to contest their scope or validity will depend on final
product formulation and other factors. The ability to license any such patents
and the likelihood of successfully contesting the scope or validity of such
patents are uncertain and the costs associated therewith may be significant.
If Centocor is required to acquire rights to valid and enforceable patents but
cannot do so at a reasonable cost, Centocor's ability to manufacture or market
its products in the country of issuance of any such patent may be materially
adversely affected.

There has been substantial litigation regarding patent and other
intellectual property rights in the biotechnology industry. Litigation may be
necessary to enforce certain intellectual property rights of the Company. Any
such litigation could result in substantial cost to and diversion of effort by
the Company. See "--Litigation."

ReoPro is being developed by Centocor for Centocor Partners III, L.P.
("CPIII"). Centocor has an exclusive option to purchase the limited
partnership interests in CPIII. There can be no assurance that Centocor

9
<PAGE>

will exercise its option to purchase the limited partnership interests in
CPIII. If Centocor does not or is unable to exercise such option, it will have
no rights to the technology or products developed on behalf of CPIII,
including ReoPro. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital Resources."

GOVERNMENTAL REGULATION

Substantially all of the Company's products require regulatory approval by
governmental agencies. In particular, human therapeutic products are subject
to rigorous preclinical and clinical testing for safety and efficacy and
approval processes by the FDA, as well as regulatory authorities in foreign
countries. The process of obtaining such approvals is costly and time-
consuming. There can be no assurance that required approvals will be obtained.
Any failure to obtain, or delay in obtaining, such approvals could adversely
affect the ability of the Company or its collaborators to market products
successfully and to generate revenues from sales.

Any approved products are subject to continuing regulation, and non-
compliance with applicable requirements can result in fines, recall or seizure
of products, total or partial suspension of production, refusal of the
government to approve product license applications, restrictions on the
Company's ability to enter into supply contracts and criminal prosecution. The
FDA also has the authority to revoke product licenses and establishment
licenses previously granted. Further, the regulation of recombinant DNA
technologies and the regulation of manufacturing facilities by state, local
and other authorities is subject to change. See "Business--Governmental
Regulation."

UNCERTAINTIES REGARDING HEALTH CARE REIMBURSEMENT AND REFORM

The Company's ability to commercialize products successfully may depend in
part on the extent to which reimbursement for the costs of such products and
related treatments will be available from governmental health administration
authorities, private health insurers and other organizations. Significant
uncertainty exists as to the reimbursement status of newly approved health
care products, and there can be no assurance that adequate third party
coverage will be available for the Company to maintain price levels sufficient
for realization of an appropriate return on its investment in developing new
products. Government and other third party payors are increasingly attempting
to contain health care costs by limiting both coverage and the level of
reimbursement for new products approved for marketing by the FDA, and by
refusing, in some cases, to provide any coverage for uses of approved products
for indications for which the FDA has not granted marketing approval.
Currently Medicare reimburses for angioplasty procedures on a per procedure
basis regardless of whether additional drugs, such as ReoPro, are used in
conjunction with the therapy. Although the Company is seeking to have
angioplasty with ReoPro reimbursed at a higher rate than angioplasty without
ReoPro, the Company believes the benefits of using ReoPro will outweigh its
cost and accordingly believes that Medicare's current non-reimbursement policy
will not adversely affect sales of ReoPro. Recent initiatives to reduce
governmental deficits in the United States and elsewhere and to reform health
care delivery are increasing these cost containment efforts. As managed care
organizations continue to expand as a means of containing health care costs,
the Company believes there may be attempts by such organizations to restrict
use or delay authorization to use new products, such as those being developed
by the Company, pending completion of cost/benefit analyses of such products
by those managed care organizations. If adequate coverage and reimbursement
levels are not provided by government and other third party payors for uses of
the Company's products, the market acceptance of these products would be
adversely affected.

SIGNIFICANT COMPETITION AND TECHNOLOGICAL CHANGE

Monoclonal antibody, genetic vaccine and peptide technology and other
innovations in biotechnology are being examined, evaluated and practiced in
biology research laboratories throughout the United States and in many other
countries, including laboratories of other biotechnology companies and major
pharmaceutical firms, many of which have greater resources than Centocor.

Several established pharmaceutical companies have internal research and
development groups, and alliances with other biotechnology companies, and are
seeking to develop monoclonal antibody-based, genetic vaccine-based, peptide-
based and other biological products. In addition, a number of companies have
recently entered the biological products field, some through acquisition or
merger, and more may be expected to do so in the future. As a result, Centocor
anticipates that new biological products will be developed by others.

10
<PAGE>

Centocor's management believes that its ability to compete in its targeted
markets will depend upon, among other things, its ability to develop, produce
and market innovative products. Centocor's management also believes that
significant competition will come from established pharmaceutical companies
that have greater capital resources, manufacturing and marketing experience,
research and development staffs, sales forces and production facilities than
Centocor. Such competition is expected to be in the form of a variety of
therapeutic products, which may include monoclonal antibody-based, genetic
vaccine-based and peptide-based products. There can be no assurance that the
activities of others will not render Centocor's products or technologies
obsolete or uncompetitive.

EXPOSURE TO CURRENCY FLUCTUATIONS

Centocor maintains a pharmaceutical manufacturing facility in Leiden, The
Netherlands and an in-vitro diagnostic products manufacturing facility in
Guildford, England. In addition, product sales include sales in foreign
currencies. As a result, Centocor's operating results are subject to currency
fluctuations. Currency fluctuations may result in variations in the costs of
products produced which may affect the Company's gross margin from sales.
Furthermore, currency fluctuations may cause reported sales to fluctuate from
period to period regardless of the fluctuation in the volume of such sales in
foreign currencies.

CHANGE IN CONTROL

Certain provisions of Centocor's charter documents (including cumulative
voting provisions for electing directors and provisions permitting Centocor to
issue preferred stock in the future), the terms of Centocor's shareholders
rights plan, pursuant to which the holders of the Common Stock have certain
rights to purchase shares of the Company's preferred stock, the terms relating
to the acceleration of the exercisability of certain options and the vesting
of certain restricted stock awards and the terms of certain convertible
securities relating to the purchase of such securities by Centocor, may have
the effect of delaying, deferring or preventing a change in control of
Centocor, thereby possibly having the effect of depriving shareholders of
receiving a premium for their shares of Common Stock. Certain provisions of
Pennsylvania law relating to the acquisition of shares representing voting
control over 20% or more of Centocor's stock may have a similar effect. See
"Description of Capital Stock."

Additionally, in the event of a change in control of Centocor, Centocor may
be required to make a payment to Lilly of $40 million through December 31,
1996 or decreasing amounts through December 31, 1999. See "--Dependence on
Collaborative Partners; Customer Concentration."

KEY PERSONNEL AND RELATIONSHIPS

The success of Centocor will depend, in large part, on Centocor's continued
ability to attract and retain highly qualified management, scientific,
manufacturing and sales and marketing personnel, and on its ability to develop
and maintain important relationships with leading research institutions and
key distributors. Competition for such personnel and relationships is intense.
There can be no assurance that Centocor will be able to attract or retain such
personnel or maintain such relationships.

PRODUCT LIABILITY

The testing and marketing of medical products entail an inherent risk of
product liability. Centocor maintains limited product liability insurance
coverage. Centocor's business may be materially adversely affected by a
successful product liability claim in excess of any insurance coverage. There
can be no assurance that product liability insurance coverage will continue to
be available to Centocor in the future on reasonable terms or at all.

11
<PAGE>

VARIATION IN QUARTERLY OPERATING RESULTS

The Company's results of operations can be expected to be subject to
quarterly fluctuations. Quarterly results can fluctuate as a result of a
number of factors, including timing of research and development expenses, the
level of product sales, the completion or commencement of significant
contracts and foreign exchange fluctuations. The Company believes that
quarterly comparisons of its financial results should not be relied upon as an
indication of future performance.

VOLATILITY OF CENTOCOR COMMON STOCK PRICE; ABSENCE OF DIVIDENDS

The market prices for securities of biotechnology companies in general, and
Centocor in particular, have been highly volatile and may continue to be
highly volatile in the future. See "Price Range of Common Stock and Dividend
Policy." Announcements of technological innovations or new commercial products
by Centocor or its competitors, developments concerning proprietary rights,
including patents, publicity regarding actual or potential medical results
relating to products under development by Centocor, regulatory developments in
both the United States and foreign countries, public concern as to the safety
of biotechnology products and economic and other external factors or other
calamity or crisis, as well as period-to-period fluctuations in financial
results, may have a significant impact on the market price of the Common
Stock. Centocor has not paid any dividends and does not expect to pay any
dividends in the foreseeable future.

DILUTION

As of December 31, 1995, approximately 5,612,000 shares of Common Stock
were issuable upon exercise of outstanding options and warrants and upon
vesting of restricted stock awards. Additionally, approximately 3,843,000 and
2,049,000 shares of Common Stock were issuable upon conversion of Centocor's 7
1/4% Convertible Notes and 6 3/4% Convertible Debentures, respectively.
Centocor also holds an exclusive option under an arrangement with CPIII under
which Centocor may issue additional shares of Common Stock to effect the
purchase of the limited partnership interests in CPIII. To the extent such
options and warrants are exercised and such securities are converted, the
interests of holders of Common Stock will be diluted. As of December 31, 1995,
there were approximately 58,538,000 shares of Common Stock issued and
outstanding.

As of December 31, 1995, Centocor had a net tangible book value per share
of Common Stock of $(.77). Based on an assumed public offering price of
$32.875 per share, purchasers of Common Stock in this offering will experience
an immediate dilution of $31.905 per share. See "Dilution."

12
<PAGE>

USE OF PROCEEDS

The net proceeds to the Company from the sale of the shares of Common Stock
offered hereby are estimated to be $108,909,000 ($125,306,000 if the U.S.
Underwriters' over-allotment option is exercised in full), assuming a public
offering price of $32.875 per share and after deducting estimated underwriting
discounts and commissions and estimated offering expenses payable by the
Company.

Upon the completion of the offering, the Company intends to call for
redemption the 7 1/4% Convertible Notes at a redemption price of 103.222% of
the outstanding principal amount. At December 31, 1995, the outstanding
principal amount of the 7 1/4% Convertible Notes was $106,640,000. If, at the
time of redemption, the market price of Centocor's Common Stock exceeds the
$28.64 per share effective conversion price of the 7 1/4% Convertible Notes,
Centocor anticipates that some or all of the holders of the 7 1/4% Convertible
Notes will exercise their rights to convert the 7 1/4% Convertible Notes into
the Company's Common Stock. To the extent the holders do not exercise such
rights, the Company intends to use the proceeds from this offering to redeem
the 7 1/4% Convertible Notes remaining outstanding. If the U.S. Underwriters'
over-allotment option is not exercised and none of the 7 1/4% Convertible
Notes are converted, the Company intends to use approximately $1,167,000 of
cash on hand in addition to the net proceeds from the offering to redeem the 7
1/4% Convertible Notes.

The balance of the proceeds not used to redeem 7 1/4% Convertible Notes, if
any, will be utilized for working capital and other corporate purposes, which
may include expenses associated with the development and clinical testing of
therapeutic products, reduction of debt, purchase of the CPIII partnership
interests and other acquisitions. The Company is not currently in discussions
with respect to any acquisitions. Pending such uses, the Company intends to
invest the net proceeds from this offering in short-term, investment grade,
interest-bearing securities.

PRICE RANGE OF COMMON STOCK AND DIVIDEND POLICY

The Company's Common Stock is traded publicly on the Nasdaq National Market
under the trading symbol CNTO. The table below sets forth the high and low
sale prices for the Company's Common Stock for the periods indicated as
reported by the Nasdaq National Market.

<TABLE>
<CAPTION>
HIGH LOW
---- ----
<S> <C> <C>
Year ended December 31, 1994
First Quarter............................................... $ 14 $ 10
Second Quarter.............................................. 14 3/8 8 7/8
Third Quarter............................................... 18 1/2 9 5/8
Fourth Quarter.............................................. 18 3/4 15 1/2
Year ended December 31, 1995
First Quarter............................................... 21 14 1/2
Second Quarter.............................................. 16 3/8 12 1/8
Third Quarter............................................... 14 35/64 10 7/8
Fourth Quarter.............................................. 33 1/8 9 5/8
Year ended December 31, 1996
First Quarter (through February 14, 1996)................... 35 3/8 27 5/8
</TABLE>

On February 14, 1996, the reported last sale price for the Common Stock, as
reported on the Nasdaq National Market, was $32.25 per share. On December 31,
1995, there were approximately 4,520 holders of record of the Common Stock.

The Company has never declared or paid any dividends on its Common Stock.
The Company does not anticipate paying any dividends in the foreseeable future
and intends to retain future earnings for the development and expansion of its
business.

13
<PAGE>

DILUTION

The net tangible book value of the Company at December 31, 1995 was
$(45,090,000) or $(.77) per share of Common Stock. Net tangible book value per
share represents the amount of total tangible assets less total liabilities of
the Company, divided by the number of shares of Common Stock outstanding.
After giving effect to (a) the proposed sale by Centocor of 3,500,000 shares
of Common Stock in this offering at an assumed offering price of $32.875 per
share (calculated after deduction of estimated underwriting discounts and
commissions and estimated expenses associated with the offering and based on
the closing price of the Common Stock on the Nasdaq National Market on
February 12, 1996) and (b) the application of the net proceeds received from
this offering and approximately $1,167,000 of cash on hand to redeem all
$106,640,000 of outstanding 7 1/4% Convertible Notes, the pro forma net
tangible book value of the Common Stock at December 31, 1995 would have been
$60,383,000 or $.97 per share. This represents an immediate increase in net
tangible book value of $1.74 per share to existing shareholders and an
immediate dilution in net tangible book value of $31.905 per share to the
purchasers of the Common Stock in the offering.

The following table illustrates the calculation of the per share dilution
described above:

<TABLE>
<S> <C> <C>
Assumed offering price per share......................... $32.875
Net tangible book value per share prior to the offering.. $(.77)
Increase in net tangible book value per share
attributable
to new investors........................................ 1.74
-----
Pro forma net tangible book value per share after giving
effect to the offering.................................. .970
-------
Dilution per share to new investors in the offering...... $31.905
=======
</TABLE>

14
<PAGE>

CAPITALIZATION

The following table sets forth the consolidated capitalization of the
Company at December 31, 1995, and as adjusted to give effect to the sale of
the shares of Common Stock in this offering (at an assumed offering price of
$32.875 per share and after deducting estimated underwriting discounts and
commissions and estimated offering expenses). The following table assumes that
the proceeds of this offering are used to redeem the 7 1/4% Convertible Notes
and that no such notes are converted. See "Use of Proceeds."

<TABLE>
<CAPTION>
(IN THOUSANDS)
DECEMBER 31, 1995
-------------------------
ACTUAL AS ADJUSTED(1)
--------- --------------
<S> <C> <C>
Long-term debt including current portion:
7 1/4% Convertible Notes............................ $ 106,640 $ --
6 3/4% Convertible Debentures....................... 125,000 125,000
Other............................................... 18,289 18,289
--------- ---------
Total long-term debt including current portion..... 249,929 143,289
Minority interest.................................... 617 617
Shareholders' equity:
Preferred Stock, $.01 par value, 10,000,000 shares
authorized, none issued and outstanding............ -- --
Common Stock, $.01 par value, 100,000,000 shares
authorized, approximately 58,538,000 shares issued
and outstanding, 62,038,000 shares issued and
outstanding as adjusted(2)......................... 585 620
Additional paid-in capital........................... 770,068 878,942
Deficit.............................................. (808,839) (814,132)
Unrealized gain on marketable securities............. 2,342 2,342
Cumulative foreign currency translation adjustments.. 6,448 6,448
--------- ---------
Total shareholders' equity (deficit)............... (29,396) 74,220
--------- ---------
Total capitalization.............................. $ 221,150 $ 218,126
========= =========
</TABLE>
- --------

(1) Reflects the application of the net proceeds received from this offering
and approximately $1,167,000 of cash on hand to redeem all $106,640,000 of
outstanding 7 1/4% Convertible Notes. In the event some or all of the
holders elect to convert such 7 1/4% Convertible Notes into Common Stock,
which is probable if the market price of the Common Stock is above the
effective conversion price of $28.64 per share, then such funds will be
used for working capital and other corporate purposes. See "Use of
Proceeds."

(2) Based on approximately 58,538,000 shares of Common Stock outstanding on
December 31, 1995. Excludes (a) approximately 5,357,000 shares of Common
Stock issuable upon the exercise of outstanding stock options and
warrants, (b) approximately 255,000 shares of Common Stock subject to
unvested restricted stock awards and (c) approximately 5,892,000 shares of
Common Stock issuable upon the conversion of the 7 1/4% Convertible Notes
and 6 3/4% Convertible Debentures.

15
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The Consolidated Statement of Operations Data set forth below for each of
the years in the five-year period ended December 31, 1995 and the Consolidated
Balance Sheet Data set forth below as of the years ended December 31, 1991
through 1995 are derived from the consolidated financial statements of the
Company which have been audited by KPMG Peat Marwick LLP. The Consolidated
Statement of Operations Data for each of the years in the four-year period
ended December 31, 1995 and the Consolidated Balance Sheet Data as of December
31, 1993, 1994 and 1995 are derived from the audited consolidated financial
statements of the Company and notes thereto incorporated by reference in this
Prospectus. The selected consolidated financial data presented below should be
read in conjunction with the Company's audited consolidated financial
statements and notes thereto incorporated by reference herein and Management's
Discussion and Analysis of Financial Condition and Results of Operations
appearing elsewhere in this Prospectus.

(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------
1991 1992 1993 1994 1995
--------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenues:
Sales.................... $ 44,328 $ 58,394 $ 48,071 $ 39,984 $ 65,001
Contracts:
Related parties......... 4,902 16,071 10,109 1,652 --
Other................... 3,967 51,767 17,750 25,590 13,915
--------- --------- -------- --------- --------
Total revenues........... 53,197 126,232 75,930 67,226 78,916
Costs and expenses(1)..... 247,151 295,978 130,683 173,290 126,219
Other income
(expenses)(2)............ (1,601) (24,400) (19,626) (20,594) (9,829)
--------- --------- -------- --------- --------
Loss...................... $(195,555) $(194,146) $(74,379) $(126,658) $(57,132)
========= ========= ======== ========= ========
Loss per share............ $ (5.72) $ (4.90) $ (1.79) $ (2.55) $ (0.98)
========= ========= ======== ========= ========
Weighted average number of
shares outstanding (3)... 34,172 39,623 41,482 49,597 58,207
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------------
1991 1992 1993 1994 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE
SHEET DATA:
Cash and investments(4). $233,598 $163,083 $140,028 $184,507 $137,206
Total assets............ 472,929 349,268 281,039 305,915 260,284
Long-term debt.......... 259,368 238,166 238,100 231,640 231,640
Shareholders' equity
(deficit).............. 144,027 30,721 (19,194) 5,278 (29,396)
</TABLE>
- --------
No dividends have been declared or paid during any of the periods presented.

(1) Costs and expenses include the following: (a) charges for acquired
research and development of $70,147 and $36,966 in 1991 and 1994,
respectively, (b) charges of $64,877 and $3,500 in 1992 and 1993,
respectively, related to HA-1A inventory, (c) restructuring charges of
$15,266, $9,387 and $1,642 in 1992, 1993 and 1995, respectively, (d) a
royalty buyout of $17,098 in 1994, and (e) a write-down of facilities and
equipment of $7,870 in 1994.

(2) Other income (expenses) include charges of $11,245, $1,275 and $3,750 in
1992, 1994 and 1995, respectively, related to the settlement of certain
litigation.
(3) No shares of Common Stock issuable upon the exercise of stock options or
warrants or the vesting of restricted stock awards have been included, as
their inclusion would have an antidilutive effect because the Company has
incurred a net loss in each period presented.

16
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

General

Centocor is a biotechnology company, which, since inception, has incurred
significant operating expenses developing therapeutic and diagnostic products.
The Company has also incurred significant special charges. To date, product
sales have not produced sufficient revenues to cover the Company's operating
expenses. Consequently, the Company has experienced substantial operating
losses.

The Company commenced commercial sales of two therapeutic products in 1995:
ReoPro in January 1995 and Panorex in February 1995. Because of positive
findings at interim analyses, in December 1995 the Company halted two clinical
trials of ReoPro designed to expand its authorized use. After completing the
data analyses for these trials, the Company expects to seek additional
regulatory approvals in the United States and Europe for expanded indications.
The level of the Company's research and development expenses has been
primarily dependent upon the extent of clinical trial activity. The Company
does not anticipate that the termination of the two ReoPro clinical trials
will result in any significant reduction in 1996 research and development
expenses as compared to 1995 levels due principally to continued follow-up of
enrolled patients and analysis of clinical trial data. Further, the impact on
the level of sales of ReoPro of the early termination of these two trials will
depend upon the timing and extent of any future regulatory approvals and the
degree of market acceptance of ReoPro.

In June 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-lived Assets and for Long-lived Assets to Be Disposed of" ("Statement
121"), which requires companies to review long-lived assets and certain
identifiable intangibles to be held, used or disposed of, for impairment
whenever events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. The Company is required to adopt Statement
121 for 1996. The Company believes that the adoption of Statement 121 will not
have a significant effect on its financial statements.

Year ended December 31, 1995 compared to year ended December 31, 1994

The increase in sales for the year ended December 31, 1995 as compared to
the year ended December 31, 1994 is principally due to the commencement of
sales of ReoPro in January 1995 and Panorex in February 1995.

The Company is highly dependent upon the ability of its marketing partners
to develop and expand the markets for both ReoPro and Panorex. For the year
ended December 31, 1995, ReoPro sales to Lilly were $15,545,000 and Lilly's
announced sales to end-users were $22,800,000. During the same period, the
Company's sales of Panorex to Glaxo Wellcome were $6,531,000 and Glaxo
Wellcome reported to the Company that sales to end-users were approximately
$3,400,000. The level of the Company's sales of ReoPro to Lilly and of Panorex
to Glaxo Wellcome is dependent upon the orders placed and the levels of
inventory maintained by each of these marketing partners, which in 1995
included initial launch period quantities.

Diagnostic product sales for the year ended December 31, 1995 were
$42,859,000 as compared to $39,697,000 for the year ended December 31, 1994.
The increase in sales for the year ended December 31, 1995 as compared to the
year ended December 31, 1994 is primarily related to a third quarter reagent
sale to a new customer within the oncology product line.

The level of future sales of both diagnostic and therapeutic products will
be dependent upon several factors, including, but not limited to, the timing
and extent of future regulatory approvals of the Company's products, approval
and commercialization of competitive products and ultimately the degree of
acceptance of the Company's products in the marketplace. For the Company's
diagnostic products, the level of sales is also dependent upon the extent of
and timing of reagent sales to marketing partners developing new automated
instruments, as well as the mix of completed diagnostic kit sales and sales of
antibody to collaborative partners who pay the Company for such antibody upon
sales of their respective diagnostic kits incorporating the Company's
antibody. The Company is currently attempting to expand its diagnostic
distribution channels to

17
<PAGE>

include additional distributors on a non-exclusive basis, which the Company
expects will result in reduced sales prices on certain diagnostic products.
The Company's gross margins from sales of antibodies to partners are higher
than its gross margin from sales of its completed diagnostic kits.

The decrease in contract revenues for the year ended December 31, 1995 as
compared to the year ended December 31, 1994 was primarily due to the
achievement of certain milestones and expansion of certain marketing and
distribution rights with Glaxo Wellcome in 1994, which in the aggregate
amounted to $14,000,000. Contract revenues for the year ended December 31,
1995 and 1994 included $10,000,000 and $9,500,000, respectively, recognized
pursuant to the Company's agreements with Lilly as a result of the Company's
achievement of milestones in the development of ReoPro. Contract revenues for
the year ended December 31, 1994 also included $1,652,000 recognized pursuant
to the Company's development agreement with Tocor II, Inc. ("Tocor II"). As a
result of an exchange offer which was completed in March 1994 and pursuant to
which the Company acquired all of the outstanding callable common stock of
Tocor II (the "Exchange Offer"), the revenues under the Tocor II research
program terminated in 1994. The level of contract revenues in future periods
will depend primarily upon the extent to which the Company enters into other
collaborative contractual arrangements, if any, and its achievement of
milestones under current arrangements.

Cost of sales increased for the year ended December 31, 1995 as compared to
the year ended December 31, 1994 due to the initiation of sales of ReoPro and
Panorex. The Company is required to make certain royalty payments, based on
sales of products, which payments represent a significant percentage of cost
of sales. The Company expects an increase in cost of sales in 1996, the extent
of which will depend primarily on the amount and mix of products sold.
Beginning in 1997, the Company is required to make certain royalty payments to
Lilly up to a designated level of sales of ReoPro. See "Business--Marketing
and Sales." The Company's gross margins from sales of its therapeutic products
were approximately 45% of such sales for the year ended December 31, 1995.
There were no sales of therapeutic products in 1994. The Company's gross
margins from sales of its diagnostic products were approximately 60% of such
sales for the years ended December 31, 1995 and 1994, respectively.

Research and development expenses for the year ended December 31, 1995
decreased as compared to the year ended December 31, 1994 due principally to
the capitalization as inventory in 1995 of certain costs associated with the
manufacture of ReoPro and Panorex. In 1994, such costs were not associated
with the production of inventory and therefore were expensed as research and
development expenses. Clinical trial expenses increased in 1995 as compared to
1994 because of the Company's efforts to obtain regulatory approvals for
additional indications of therapeutic products and further developing other
therapeutic and diagnostic product opportunities. The level of the Company's
total research and development expenses in future periods is dependent upon
the extent of clinical trial-related activities.

Marketing, general and administrative expenses for the year ended December
31, 1995 increased as compared to the year ended December 31, 1994 due
principally to increases in facilities, insurance and market development
expenses. The levels of the Company's marketing, general and administrative
expenses may increase in future periods as compared to 1995 levels if the
Company expands its market development activities in connection with sales of
therapeutic and diagnostic products.

Interest income increased for the year ended December 31, 1995 as compared
to the year ended December 31, 1994 due principally to an increase in interest
rates on investments and an increase in the Company's average cash and
investment balances. Interest income in future periods will depend primarily
on the level of the Company's investments and the rates of return obtained on
such investments.

Interest expense decreased for the year ended December 31, 1995 as compared
to the year ended December 31, 1994 due principally to a one-time adjustment
of $2,200,000 on a loan which was renegotiated with the Commonwealth of
Pennsylvania. Interest expense in future periods will depend upon the level of
debt outstanding. If the offering made hereby is consummated and the 7 1/4%
Convertible Notes are redeemed by the Company and/or the holders of the 7 1/4%
Convertible Notes elect to convert the 7 1/4% Convertible Notes into Common
Stock, the Company's interest expense will be reduced.

18
<PAGE>

Other income increased for the year ended December 31, 1995 as compared to
the year ended December 31, 1994 due to the Company's equity in earnings of a
company in which Centocor has invested. The Company does not expect any
significant additional income from this investment in the near future.

Other income (expenses) also includes a charge to operations of $3,750,000
for the year ended December 31, 1995 relating to the settlement of certain
class action securities litigation. The results of operations for the year
ended December 31, 1995 also included a charge to costs and expenses of
$1,642,000 for severance costs related to a reduction in the level of the
Company's personnel in the fourth quarter of 1995.

Year ended December 31, 1994 compared to year ended December 31, 1993

The decrease in sales for the year ended December 31, 1994 as compared to
the year ended December 31, 1993 is principally due to lower sales of certain
diagnostic reagents and the discontinuance of certain diagnostic product
lines.

Contract revenues for the year ended December 31, 1994 included $1,652,000
recognized pursuant to the Company's agreements with Tocor II, as compared to
$10,109,000 for the year ended December 31, 1993. As a result of the Exchange
Offer, the revenues under the Tocor II research program terminated in 1994.
The decrease in contract revenue from Tocor II was principally offset by an
increase in contract revenues recognized from Lilly and Glaxo Wellcome in
connection with the achievement of milestones and the expansion of certain
marketing and distribution rights. Contract revenues for the year ended
December 31, 1994 included $9,500,000, as compared to $5,000,000 for the year
ended December 31, 1993, recognized pursuant to the Company's agreements with
Lilly. The Company recorded $14,000,000 and $10,000,000 of contract revenues
for the years ended December 31, 1994 and 1993, respectively, pursuant to the
Company's agreements with Glaxo Wellcome.

Cost of sales increased for the year ended December 31, 1994 as compared to
the year ended December 31, 1993 due to the mix of diagnostic products sold.
The Company is required to make certain royalty payments based on sales of
products, which payments represent a significant percentage of cost of sales.
Gross margins decreased from 67% in 1993 to 60% in 1994. Such decrease was due
to the higher percentage of diagnostic reagent sales in 1993 as compared to
1994, on which the Company realizes higher margins than on sales of its
diagnostic kits.

Research and development expenses increased for the year ended December 31,
1994 as compared to the year ended December 31, 1993 due principally to costs
associated with increased clinical trials and regulatory activities related to
products under development.

Marketing, general and administrative expenses for the year ended December
31, 1994 decreased as compared to the year ended December 31, 1993 due
principally to reductions in sales and administrative staffs, marketing
expenses and other cost reductions.

The results of operations for the year ended December 31, 1994 included a
charge to earnings of $36,966,000 for acquired research and development in
connection with the Exchange Offer. The results of operations for the year
ended December 31, 1994 also included charges of $7,870,000 related to the
writedown of certain facilities and equipment and $17,098,000 representing a
royalty buyout relating to ReoPro. Additionally, a charge of $1,275,000
related to a litigation settlement was recorded in the fourth quarter of 1994.

The results of operations for the year ended December 31, 1993 included
restructuring charges of $4,273,000 related to reserves for certain fixed
assets no longer used or subsequently disposed of and $5,114,000 principally
related to severance. A charge of $3,500,000 related to HA-1A inventory was
recorded in the fourth quarter of 1993. The Company commenced sales of HA-1A,
a therapeutic product intended for the treatment of patients with severe
sepsis resulting from Gram-negative bacterial infections, in Europe in 1990.
The Company voluntarily discontinued sales of HA-1A in 1993, as a result of
data from a U.S. clinical trial of HA-1A.

Interest income increased in the year ended December 31, 1994 as compared
to the year ended December 31, 1993 due principally to an increase in the
Company's cash and investment balances as a result of the Exchange Offer.
During 1994, the Company recorded unrealized losses of $3,649,000 compared to
$2,477,000

19
<PAGE>

for 1993, due to other than temporary reductions in the market value of
marketable equity investments below the Company's cost for such investments.

QUARTERLY RESULTS

The following table sets forth certain unaudited consolidated statement of
operations data for the three years ended December 31, 1995:

<TABLE>
<CAPTION>
(IN THOUSANDS)
QUARTER ENDED
-------------------------------------------------------------
MARCH 31, JUNE 30, SEPT. 30, DEC. 31, MARCH 31, JUNE 30,
1993 1993 1993 1993 1994 1994
--------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Total revenues... $ 14,978 $ 13,753 $ 16,729 $30,470 $ 15,273 $ 16,384
Cost and
expenses:
Cost of sales... 3,894 3,983 3,842 4,100 3,630 4,471
Research and
development.... 18,711 16,760 15,964 14,678 14,389 16,666
Marketing,
general and
administrative. 9,630 9,664 8,420 8,150 6,818 6,809
Special charges. 4,273 5,114 -- 3,500 36,966 --
-------- -------- -------- ------- -------- --------
Total costs and
expenses........ 36,508 35,521 28,226 30,428 61,803 27,946
Other income
(expense)....... (3,999) (4,254) (4,307) (7,066) (4,107) (3,856)
-------- -------- -------- ------- -------- --------
Net loss......... $(25,529) $(26,022) $(15,804) $(7,024) $(50,637) $(15,418)
======== ======== ======== ======= ======== ========
<CAPTION>
(IN THOUSANDS)
QUARTER ENDED
-------------------------------------------------------------
SEPT. 30, DEC. 31, MARCH 31, JUNE 30, SEPT. 30, DEC. 31,
1994 1994 1995 1995 1995 1995
--------- -------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Total revenues... $ 12,927 $ 22,642 $ 23,995 $ 20,754 $ 19,155 $15,012
Cost and
expenses:
Cost of sales... 3,652 4,231 8,625 8,071 7,271 5,199
Research and
development.... 15,701 23,247 13,501 17,008 18,376 17,350
Marketing,
general and
administrative. 7,159 4,583 7,494 7,120 7,643 6,919
Special charges. -- 24,968 -- -- -- 1,642
-------- -------- -------- -------- -------- --------
Total costs and
expenses........ 26,512 57,029 29,620 32,199 33,290 31,110
Other income
(expense)....... (3,994) (8,637) (2,617) (5,864) 1,980 (3,328)
-------- -------- -------- -------- -------- --------
Net loss......... $(17,579) $(43,024) $ (8,242) $(17,309) $(12,155) $(19,426)
======== ======== ======== ======== ======== ========
</TABLE>

The Company's losses, as a percentage of total revenues, have fluctuated on a
quarterly basis and can be expected to continue to be subject to quarterly
fluctuations. Quarterly results can fluctuate as a result of a number of
factors, including the timing of research and development expenses, the level of
product sales, the completion or commencement of significant contracts, and
foreign exchange fluctuations. See "Risk Factors--Variation in Quarterly
Operating Results."

LIQUIDITY AND CAPITAL RESOURCES

20
<PAGE>

At December 31, 1995, the Company had cash, cash equivalents and
investments of $137,206,000, including equity investments of $5,769,000. For
the year ended December 31, 1995, the Company had negative cash flows from
operations of $56,551,000. The Company's total cash flows for the year ended
December 31, 1995 included the receipt of $18,557,000 from the exercise of
warrants and options to purchase shares of the Company's Common Stock. The
extent and timing of future warrant and option exercises, if any, are
primarily dependent upon the market price of the Company's Common Stock and
general financial market conditions, as well as the exercise prices and
expiration dates of the warrants and options. The Company's total cash, cash
equivalents and investments decreased by $47,301,000 from December 31, 1994,
principally as a result of cash used for operations, debt repayments, and
purchases of fixed assets partially offset by cash received from the exercise
of warrants and options as discussed above. The Company believes that its
cash, cash equivalents and investments will be sufficient to fund its
operations through at least the end of 1996.

Agreements covering $18,289,000 of the Company's outstanding debt balances
contain certain financial and non-financial covenants, including the
maintenance of minimum equity and cash balances and compliance with certain
financial ratios. The Company is currently not in compliance with certain of
these covenants; however, the Company has obtained waivers of such covenants
on the condition that it maintain certain investments at the lending bank,
which at December 31, 1995 totaled $20,000,000. The Company has classified
this $18,289,000 of debt as short-term. Additionally, $7,500,000 of the
Company's short-term debt is secured by investments at the lending bank of
$7,500,000. If cash flows continue to be negative, the Company's ability to
service its debt may be impaired.

Inventory at December 31, 1995 increased as compared to December 31, 1994
due primarily to the production of ReoPro and Panorex.

Gross fixed assets at December 31, 1995 increased as compared to December
31, 1994, principally due to the investment of $4,845,000 for the purchase of
fixed assets, in addition to the impact of exchange rates on fixed assets
denominated in foreign currencies. The Company expects to make investments in
fixed assets of approximately $4,100,000 in 1996. At the Company's present
level of operations, the Company currently maintains idle facilities and
equipment. The Company continually evaluates the future needs for its
facilities and equipment. There can be no assurance that reserves to reduce
the carrying value of certain fixed assets will not be required in the future.

Long-term investments at December 31, 1995 increased as compared to
December 31, 1994, principally due to the increase in market value of a
certain equity investment classified as available for sale.

Centocor has an exclusive option to purchase the limited partnership
interests in CPIII. Centocor's option to purchase the limited partnership
interests in CPIII is exercisable upon the earlier of (a) each limited partner
having received distributions related to sales of the CPIII products equal to
15% of the total capital contributions of such limited partner (approximately
$7,926,000 in the aggregate) and the expiration of at least 24 months after
the first commercial sale of a CPIII product or (b) the expiration of at least
48 months after the first commercial sale of a CPIII product; but, in any
event, not prior to the expiration of the then applicable long-term capital
gains holding period after the expenditure by the Company of all funds paid to
it pursuant to the

21
<PAGE>

Development Agreement with CPIII. Centocor commenced commercial sales of
ReoPro in January 1995 and, as of December 31, 1995, the limited partners of
CPIII had received cumulative distributions of approximately $1,796,000. If
the Company elects to exercise this option, the Company must make an advance
payment of approximately $13,598,000 in cash or, at the Company's election,
approximately $15,229,000 in shares of the Company's Common Stock, and future
payments generally of six percent of sales of products developed by CPIII. If
Centocor does not exercise this option, it will have no rights to the
technology or products developed on behalf of CPIII, including ReoPro.

Upon the completion of this offering, the Company anticipates calling the 7
1/4% Convertible Notes for redemption. See "Use of Proceeds." Interest on
these notes will cease to accrue from the date fixed for redemption, and the
Company's cash outflows in future periods will be reduced accordingly.

FOREIGN CURRENCY

Certain of the Company's sales are denominated in currencies other than the
U.S. dollar. Additionally, the Company conducts operations in countries other
than the United States, primarily its manufacturing facility in Leiden, The
Netherlands. The Company's consolidated financial statements are denominated
in U.S. dollars, and, accordingly, changes in the exchange rate between
foreign currencies and the U.S. dollar will affect the translation of
financial results of foreign subsidiaries into U.S. dollars for purposes of
reporting the Company's consolidated financial results. To date, exchange rate
fluctuations have not had a material net effect on the Company's financial
results. The Company does not currently engage in any derivatives transactions
as a hedge against foreign currency fluctuations.

INFLATION

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

22
<PAGE>

BUSINESS

GENERAL

Centocor is a biotechnology company that develops therapeutic and
diagnostic human health care products for cardiovascular, autoimmune and
infectious diseases and cancer. The Company concentrates on research and
development, manufacturing and market development, with a primary
technological focus on monoclonal antibodies, with additional programs in
genetic vaccines and peptides.

The Company has two therapeutic products approved for sale and several
product candidates in various stages of development. ReoPro is marketed and
sold in the United States and Europe for the reduction of acute ischemic
cardiac complications in patients undergoing angioplasty procedures who are at
high risk for abrupt artery closure. Panorex is marketed and sold in Germany
as an adjuvant therapy in the treatment of post-operative colorectal cancer.
The Company also markets several diagnostic products for cancer and infectious
disease in the United States, Europe and Japan.

COMPANY STRATEGY

The Company's strategy is to identify proprietary high value-added product
opportunities, and to commercialize those opportunities by focusing on
clinical development, regulatory process, manufacturing and market
development. The Company seeks to license technology and product candidates
from research institutions and other biotechnology companies, in addition to
conducting selected basic research.

In an effort to reach the market in an expeditious manner, create
competitive barriers and establish itself as the market leader, the Company's
clinical development and regulatory strategy for its therapeutic products is
to pursue initial approval for a narrowly defined indication. The Company also
seeks to expand the indications for which the products may be marketed by
conducting additional clinical trials. The Company maintains and seeks
strategic alliances with major pharmaceutical companies for the
commercialization and marketing of each of its therapeutic products, pursuant
to which the Company and its respective partner jointly focus on the continued
clinical and market development for the product, while the Company's partner
primarily conducts the marketing, promotion and distribution of such product.

In the diagnostics area, the Company seeks to expand the markets for its
existing products while focusing on the development of unique assays that
complement the automated diagnostic instruments developed by its marketing
partners. The Company believes that experience it acquires in developing
therapeutic products may help it define diagnostic product opportunities and
vice versa. Based on this experience, the Company is seeking to develop
diagnostic products that can increase the effectiveness, and thereby the
utilization of, its therapeutic products. The Company maintains and seeks
distribution agreements for its diagnostic products with companies having
established positions and distribution networks in applicable market segments.

23
<PAGE>

PRODUCTS AND PRODUCTS UNDER DEVELOPMENT

The following table summarizes Centocor's products and selected product
candidates. This table is qualified in its entirety by reference to the more
detailed descriptions included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
DEVELOPMENT
AND/OR
MARKETING
PRODUCT/PRODUCT CANDIDATE INDICATION STATUS(1) PARTNER(2)
- ------------------------- ------------------------ ------------------------ --------------
<S> <C> <C> <C>
THERAPEUTIC:
ReoPro.................. High-risk angioplasty Marketed (U.S., Europe) Lilly
Phase II (Japan) Lilly
All angioplasty Phase III Lilly
Unstable angina Phase III Lilly
Acute myocardial Phase III Lilly
infarction
Adjuvant therapy with Phase III planned Lilly
stents
Panorex................. Adjuvant therapy for Marketed (Germany) Glaxo Wellcome
post-operative Phase III Glaxo Wellcome
colorectal cancer Phase IA planned (Japan) Glaxo Wellcome
CenTNF.................. Rheumatoid arthritis Phase II --
Phase I (Japan) Tanabe
Crohn's disease Phase II --
Phase I (Japan) Tanabe
Corsevin M.............. Deep vein thrombosis Phase I --
GeneVax................. Colorectal cancer Phase I planned --
Prostate cancer Phase I planned --
DIAGNOSTIC:
CA 125 II............... Ovarian cancer detection Marketed (U.S., Europe, (3)
Japan)
CA 19-9................. Pancreatic cancer Marketed (Europe, Japan) (3)
monitoring
CA 15-3................. Breast cancer monitoring Marketed (Europe, Japan) (3)
CA 72-4................. Gastrointestinal cancer Marketed (Europe, Japan) (3)
monitoring
P-glycoCHEK............. Resistance to chemo- Sold for investigational (3)
therapeutic drug use (Europe, Japan)
detection
CYFRA 21-1.............. Non-small cell lung Marketed (Europe, Japan) (3)
cancer
CAPTIA Syphilis G....... Syphilis antibody Marketed (U.S., Europe, (3)
detection South America)
CAPTIA CMV.............. Cytomegalovirus antibody Marketed (U.S., Europe) (3)
detection
Myoscint................ Cardiac imaging Marketed (Europe) Mallinckrodt
FDA review pending --
Approved (Japan) Daiichi
</TABLE>

(Footnotes on following page)

24
<PAGE>

- --------
(Footnotes for preceding page)
(1) Phase III clinical trial indicates that the product is being tested in
humans for safety and efficacy in an expanded patient population at
multiple clinical sites. Phase I and Phase II clinical trials indicate
that the product is being tested in humans to evaluate safety, dosage and
to some extent, efficacy, in a limited patient population.
(2) Diagnostic products generally are only marketed and sold by the Company's
marketing partners. With respect to therapeutic products, the Company's
strategic alliance partners play an extensive role in the clinical and
market development of the Company's products in addition to selling and
marketing those products.
(3) This product is sold by the Company to established diagnostic companies,
the most significant of which are: Abbott Laboratories, Boehringer
Mannheim GmbH, CIS bio International, Toray-Fuji Bionics, Inc. and
Hoffmann-La Roche.

THERAPEUTIC PRODUCTS

ReoPro. Anticoagulation agents such as ReoPro are used in the treatment of
cardiovascular disease to prevent blood clots. The three main markets for
these agents are angioplasty, unstable angina and myocardial infarction (heart
attack). Better platelet mediation is needed in angioplasty to prevent abrupt
reclosure and restenosis and in unstable angina to prevent the serious
complications of heart attacks and death. Abrupt reclosure, which occurs in
about 5-8% of angioplasty cases and in 12-14% of more complicated high-risk
cases, can result in death, myocardial infarction or the need for emergency
bypass surgery. More powerful agents are also needed to enhance treatment of
myocardial infarction by more effectively opening the clotted artery and
preventing reocclusion following drug therapy. ReoPro is effective in
inhibiting blood clotting by inhibiting the aggregation of platelets. When
platelets are stimulated, a number of different types of surface receptors are
exposed that cause further platelet aggregation, including the glycoprotein
("GP") IIb/IIIa receptors. ReoPro is a chimeric monoclonal antibody fragment
that binds to GP IIb/IIIa receptors on the surface of platelets, thereby
inhibiting platelet aggregation.

Following the successful completion of the EPIC Phase III clinical trial of
ReoPro and subsequent FDA approval, the Company commenced commercial sales of
ReoPro in January 1995 for patients who are at high risk for abrupt artery
closure following angioplasty. ReoPro is currently marketed in a number of
countries, including the United States, Germany, the United Kingdom and
France. Under a Sales and Distribution Agreement between Lilly and the
Company, Lilly is the exclusive worldwide distributor of ReoPro. See
"Business--Marketing and Sales." Pursuant to that agreement, Lilly is
assisting the Company in the regulatory filings and continuing development of
ReoPro for additional clinical indications. ReoPro is being developed by
Centocor for CPIII.

The following summarizes the results of pivotal clinical trials to date:

EPIC Trial for High-Risk Angioplasty. Based on the results of a Phase
III clinical trial known as "EPIC," in December 1994 the FDA approved
ReoPro as a product indicated for the reduction of acute ischemic cardiac
complications in patients undergoing angioplasty procedures who are at high
risk for abrupt artery closure. High-risk patients are characterized as
those suffering a recent heart attack, experiencing severe unstable angina,
or having certain high-risk clinical characteristics or features of their
coronary arteries. Also in December 1994, the Committee for Proprietary
Medicinal Products of the European Union issued a positive opinion
regarding the granting of marketing authorization for ReoPro for the same
indication.

In the EPIC trial, a randomized, double-blind, placebo-controlled trial
involving approximately 2,100 patients who were at high risk of abrupt
artery closure, administration of ReoPro resulted in a 35% reduction in
serious complications such as heart attacks, death or the need for
emergency repeat procedures within 30 days following the angioplasty
procedure. This benefit was sustained at 6 months. By reducing the risk of
acute cardiac ischemic complications, ReoPro reduces the occurrence of
post-angioplasty heart attacks, as well as the need for emergency coronary
bypass surgery or repeat angioplasty.

The primary side-effect associated with ReoPro in the EPIC trial was an
increase in bleeding compared to patients who received placebo, typically
at the puncture site where the catheter is inserted. Because of

25
<PAGE>

this side-effect, the Company, in designing the next two clinical trials of
ReoPro, focused on a reduction of the bleeding events, through a
combination of: (i) lowering the dosage of heparin, an anticoagulant which
is part of the conventional therapy for patients scheduled for the
angioplasty procedure; (ii) better remedial treatment of the puncture site
and (iii) earlier removal of the arterial sheath inserted at the puncture
sight. In subsequent trials, these adjustments have resulted in a reduction
of bleeding events in patients receiving ReoPro to essentially the same
level as in patients receiving placebo.

EPILOG Trial for All Angioplasty. The EPILOG trial was a randomized,
double-blind, placebo-controlled trial, originally designed to enroll 4,800
patients at 65 sites in the United States and Canada, to evaluate 30-day
and 6-month clinical outcomes in all patients following angioplasty
procedures. This trial excluded the heart attack and unstable angina
patient groups that were evaluated in the EPIC trial because ReoPro had
already demonstrated efficacy in these patients and was already approved
for use in these groups. Because an interim analysis of the first 1,500
patients enrolled in the trial revealed approximately a 70% reduction in
death and heart attack rates within 30 days of the angioplasty procedure
for patients receiving ReoPro, the EPILOG study was halted in December 1995
on the recommendation of the EPILOG independent Safety and Efficacy
Monitoring Committee. This result was highly statistically significant
(p<.0001). Additionally, the EPILOG independent Safety and Efficacy
Monitoring Committee concluded that major bleeding events in patients
receiving ReoPro were at essentially the same level as patients receiving
placebo. After completing data analyses for this trial, the Company expects
to seek additional regulatory approvals in the United States and Europe for
expanded indications.

CAPTURE Trial for Unstable Angina. Unstable angina is a condition that
commonly precedes a heart attack. It is caused by inadequate blood supply
to the heart due to the build-up of atherosclerotic plaque in the coronary
artery. The CAPTURE trial was a randomized, double-blind, placebo-
controlled trial originally designed to enroll 1,400 patients at 75 sites
in Europe, to evaluate ReoPro in patients scheduled for urgent angioplasty
procedures due to refractory unstable angina. Because of positive findings
after an analysis of the first 1,050 patients enrolled in the trial, the
CAPTURE study was halted in December 1995 on the recommendation of the
CAPTURE independent Safety and Efficacy Monitoring Committee. The CAPTURE
independent Safety and Efficacy Monitoring Committee determined that
efficacy exceeded the predetermined stopping point, p<.0072, on the trial's
primary end-point, which was defined as a reduction in a composite of
death, heart attacks and the need for urgent intervention within 30 days.
Additionally, in patients receiving ReoPro, the rate of major bleeding was
markedly lower than in the EPIC trial. After completing data analyses for
this trial, the Company expects to seek additional regulatory approvals in
the United States and Europe for expanded indications.

The Company and Lilly are evaluating other potential indications for
ReoPro, including acute myocardial infarction, peripheral vascular disease,
patients suffering thrombotic strokes and patients suffering deep vein
thrombosis. The Company and Lilly have designed the RAPPORT Phase III trial to
study the effect of ReoPro in patients undergoing angioplasty procedures for
acute myocardial infarction. Additionally, the Company and Lilly have designed
the ERASER Phase III trial to evaluate the effects of ReoPro in conjunction
with stents. The Company is also currently conducting Phase II clinical trials
of ReoPro in Japan.

The Company estimates that in 1995 approximately 800,000 angioplasty
procedures were conducted worldwide, with approximately 30% of these
procedures being performed in patients who are at high risk for abrupt artery
closure following the procedure. The Company estimates that approximately
2,000,000 patients annually are admitted to hospitals worldwide for treatment
of unstable angina, and approximately 20% of these patients are refractory to
conventional therapy for unstable angina.

Although some patients with unstable angina will be referred for immediate
angioplasty and therefore may be eligible for ReoPro under the already
approved high-risk indication, the Company believes that current treatment of
many of these patients consists of a period of medical stabilization before
referral to angioplasty. The CAPTURE trial provides data that supports the use
of ReoPro during such period of medical stabilization and therefore may
potentially broaden the use of ReoPro in the treatment of unstable angina.

26
<PAGE>

In addition to conducting studies to test the efficacy of ReoPro, the
Company has conducted a health economic study, based on the EPIC trial, which
has been approved by the FDA and which indicates that the use of ReoPro is
cost effective and may allow hospitals to manage their resources more
effectively and reduce the amount of time patients spend in the hospital. The
health economic study included the cost of blood transfusions required by
ReoPro-treated patients in the EPIC trial. In the recently halted EPILOG
trial, major bleeding events in patients receiving ReoPro were at essentially
the same level as in patients receiving placebo. The decreased need for blood
transfusions may result in additional cost savings to hospitals.

Panorex. Panorex is a monoclonal antibody that targets metastatic colon
cancer cells. The Panorex antibody binds to colon cancer cells and destroys
them using various immunologic mechanisms including complement and/or antibody
dependent cellular cytotoxicity. Both mechanisms result in the death of the
cancer cells. In patients with colorectal cancer, it is thought that small
numbers of cells break away from the primary tumor and spread to other sites
such as bone marrow, where they can be detected as "micrometastatic cells." It
is thought that the Panorex antibody binds to these "micrometastatic cells"
and destroys them, leading to the prolonged survival observed in patients
treated with Panorex. Panorex is the first monoclonal antibody product
approved for cancer. In December 1994, the Paul Ehrlich Institute, the German
regulatory body for vaccines and antibodies, granted the Company marketing
authorization for the use of Panorex as an adjuvant therapy in the treatment
of post-operative colorectal cancer. Applications for marketing authorization
have also been submitted in Austria, Switzerland, Finland and Sweden. During
1993, the Company and Glaxo Wellcome entered into an alliance agreement for
the development and marketing of certain of the Company's monoclonal antibody-
based cancer therapeutic products, including Panorex. Pursuant to that
agreement Glaxo Wellcome is the worldwide distributor of Panorex. See "--
Marketing and Sales." The Company commenced commercial sales of Panorex in
Germany in February 1995.

In a Phase III trial conducted in Germany, Panorex showed a five-year 30%
mortality benefit and 27% reduction in tumor recurrences. Glaxo Wellcome is
conducting additional Phase III trials for Panorex, with a three-year survival
end-point, in North America, Europe and certain other countries, evaluating
patients with colorectal cancer, and also is conducting earlier stage trials
in Japan. According to recent estimates, there are 150,000 cases of colorectal
cancer and 58,000 deaths in the United States and 230,000 cases and 87,000
deaths in Europe per year. There are approximately 40,000 new colorectal
cancer patients per year in Germany. Preliminary studies indicate that Panorex
may also prove useful in the treatment of solid tumors associated with
pancreatic cancer and certain types of lung, breast, ovary and gastric cancer.

CenTNF. The Company is currently developing CenTNF, a chimeric monoclonal
antibody that binds to tumor necrosis factor alpha, which is believed to be
critical to the human body's reaction to inflammation. CenTNF primarily is
targeted for the treatment of rheumatoid arthritis and inflammatory bowel
diseases such as Crohn's disease. In addition, the Company also believes
CenTNF may also prove useful as an immuno-suppressant in transplant patients.

In rheumatoid arthritis, the membrane surrounding the joints becomes
inflamed, causing swelling, pain, disfigurement, and in severe cases,
destruction of the joints. Results of a Phase II randomized, placebo-
controlled, double-blind trial of 73 patients were published in December 1994.
The data showed the rapid onset of a highly significant (p=0.001) clinical
response in 44% of patients receiving a single infusion of low dose CenTNF and
in 79% of patients receiving a high dose of CenTNF. The beneficial clinical
response persisted for eight weeks following the single high dose infusion.
The Company is currently conducting advanced placebo-controlled, multi-dose
Phase II trials in the United States and Europe.

Phase I/II open label trials of CenTNF in patients with severe Crohn's
disease requiring steroid therapy showed the rapid onset of clinical benefit
which persisted for over two months following a single infusion. Randomized,
placebo-controlled, Phase II trials are being completed in the United States
and Europe. The Company expects to initiate Phase III trials during 1996.

27
<PAGE>

The Company has entered into an agreement with Tanabe Seiyaku Co., Ltd.
("Tanabe") under which Tanabe has commenced Phase I clinical testing and has
the right to distribute CenTNF in Japan. Additionally, the Company is seeking
to enter into an alliance arrangement with a partner regarding CenTNF for
other parts of the world.

According to recent estimates, in the United States and Western Europe
there are approximately six million patients undergoing treatment for
rheumatoid arthritis. The Company believes that up to one-third of these
patients may be candidates for treatment with CenTNF. The Company believes
that in the United States and Western Europe there are approximately 250,000
Crohn's patients who may benefit from treatment with CenTNF.

Corsevin M. The Company is developing Corsevin M, an anti-factor VII
chimeric monoclonal antibody product intended to be used as an anticoagulant.
Factor VII is one of the primary factors that play a role in the blood
clotting process. The Company has completed a Phase I clinical trial and is
evaluating protocols for additional clinical trials.

GeneVax. The Company is developing genetic DNA-based vaccines employing
commonly available methods to direct the injected DNA to its target site. The
Company has licensed this GeneVax technology from Apollon, Inc., in which the
Company holds a significant equity investment. Under that license, the Company
has rights to develop the GeneVax technology in the cancer field. The Company
expects to initially focus its development efforts on vaccines for prostate,
breast and colorectal cancer. In 1996, the Company expects to commence Phase I
clinical trials to evaluate vaccines for colorectal and prostate cancer.

DIAGNOSTIC PRODUCTS

Sales of the Company's diagnostics products were approximately $43 million
and $40 million for the years ended December 31, 1995 and 1994, respectively.

In-vitro diagnostic products are used to test patient blood samples outside
the body to detect or monitor disease. In this area, the Company has focused
principally on developing cancer diagnostic assays, and other in-vitro
diagnostic products for infectious disease. The Company currently manufactures
and sells the following in-vitro diagnostic products:

CA 125 II Ovarian Cancer Test. CA 125 II, a second generation assay which
aids in the detection of residual epithelial ovarian cancer following first-
line therapy, is sold in the United States, certain European countries and
Japan. CA 125 II is one of only five cancer diagnostics products approved for
sale in the United States.

CA 19-9 Pancreatic Cancer Test. CA 19-9, which aids in the monitoring of
pancreatic cancer, is sold in certain European countries and Japan.

CA 15-3 Breast Cancer Test. CA 15-3, which aids in the monitoring of breast
cancer, is sold in certain European countries and Japan.

CA 72-4 Gastric Cancer Test. CA 72-4, which aids in the monitoring of
gastrointestinal cancer, is sold in certain European countries and Japan.

P-glycoCHEK Multidrug Resistance Test. P-glycoCHEK, which detects a
cellular protein associated with resistance to chemotherapeutic drugs, is sold
for investigational use in certain European countries and Japan.

CYFRA 21-1 Non-Small Cell Lung Cancer Test. CYFRA 21-1, which aids in the
monitoring of non-small cell lung cancer, is sold in certain European
countries and Japan.

28
<PAGE>

CAPTIA Syphilis G. In 1995, the Company received clearance from the FDA to
market CAPTIA Syphilis G, an infectious disease serology test for use as a
primary screening method for the detection of Treponema pallidum antibodies in
human serum or plasma, as performed in blood bank or plasma center testing
laboratories. CAPTIA Syphilis G is offered for sale in the United States and
certain European and South American countries.

CAPTIA CMV. In 1995, the Company received clearance from the FDA to market
CAPTIA CMV, an infectious serology test for use as a primary screening method
for the detection of cytomegalovirus antibodies in human serum or plasma, as
performed in blood bank or plasma center testing laboratories. CAPTIA CMV is
offered for sale in the United States and certain European countries.

The Company has developed techniques for modifying monoclonal antibodies so
that they may be coupled with radioactive isotopes and used as contrast agents
in diagnostic imaging procedures. After injection, antibodies labelled with a
radioactive isotope travel to the disease site, allowing the site to be
visualized or "imaged" with nuclear medicine equipment in a procedure similar
to an X-ray. The Company's focus in this area is primarily on developing
imaging agents for cardiovascular disease.

Myoscint. Myoscint is an anti-myoscin monoclonal antibody that, when radio-
labeled, may be useful in the detection of damage to heart tissue caused by
transplantation, myocardial infarction, chemotherapy and viral infection. The
Company has received marketing approvals for Myoscint in several European
countries. A product license application ("PLA") for Myoscint was submitted to
the FDA in July 1995, and on January 26, 1996, the Cardiovascular and Renal
Drugs Advisory Committee of the FDA recommended approval of Myoscint for
imaging in the setting of chest pain suspected to be caused by myocardial
infarction. In addition, in February 1996, Myoscint was approved for sale by
the Japanese Ministry of Health and Welfare, subject to pricing approval.
Revenues from the sale of Myoscint in Europe have not been significant. There
can be no assurance that Myoscint will be approved by the FDA or that sales,
if any, in the United States will be significant.

CELLULAR DIAGNOSTICS

Based upon the Company's experience with Panorex, the Company believes that
the ability to rapidly detect rare cancer cells in blood, bone marrow and
other tissues could be useful to oncologists as a tool to enable them to
select appropriate treatments for cancer patients and then monitor the
effectiveness of those treatments. To the Company's knowledge no such tool is
currently available in the market. The Company is collaborating with a
computer software company to develop a computer-driven high-powered microscope
known as the Rapid Rare Event Detection ("RRED") System that utilizes reagents
developed by the Company. The Company and its partner have developed a working
prototype of the RRED System that will enter clinical trials in 1996 for
validation. In addition, the Company has commenced discussions with other
diagnostic companies that may be interested in manufacturing and marketing the
RRED System.

Although the Company's initial focus with respect to the RRED System is the
oncology field, the Company believes that the RRED System technology may be
equally useful in the fields of infectious disease and prenatal testing. There
can be no assurances that the Company will be able to complete the development
of the RRED System or obtain the regulatory approvals necessary for the sale
of the RRED System.

PLATELET FUNCTION DIAGNOSTICS

In connection with the development and marketing of ReoPro, the Company has
recognized the importance of platelet assessment in cardiovascular disease.
Based upon its knowledge in this area, the Company is developing a point-of-
care test that is intended to enable interventional cardiologists to rapidly
assess platelet function at the bedside. This device will permit medical
experts to monitor platelet activity and the effect of drugs such as ReoPro
with the same precision with which they currently evaluate other aspects of
blood coagulation and treatment. The Company believes that the availability of
this type of monitoring therefore addresses a currently unmet medical need.

MARKETING AND SALES

In the therapeutic area, the Company maintains a separate strategic
alliance with a major pharmaceutical company for each of its two
commercialized products, pursuant to which, in each case, the Company and its
respective partner jointly focus on the continued clinical and market
development for the product, while the

29
<PAGE>

Company's partner primarily conducts the marketing, promotion and distribution
of such product. In the diagnostics area, the Company maintains distribution
agreements with companies having established positions and distribution
networks in applicable market segments for the Company's products. The Company
is highly dependent upon the ability of its marketing partners to develop and
expand markets for the Company's products.

Pursuant to its Sales and Distribution Agreement with Lilly, Lilly is the
exclusive worldwide distributor of ReoPro. The Company sells ReoPro to Lilly
for Lilly's further sale to the end market. The Company is principally
responsible for developing and manufacturing ReoPro and for securing
regulatory approvals. Lilly is principally responsible for the marketing,
selling and distribution of ReoPro. Beginning in 1997, the Company is required
to make certain royalty payments to Lilly up to a designated level of sales of
ReoPro.

Pursuant to its alliance agreement with Glaxo Wellcome, Glaxo Wellcome is
the exclusive worldwide distributor for Panorex. The Company sells Panorex to
Glaxo Wellcome for Glaxo Wellcome's further sale to the end market. Glaxo
Wellcome is responsible for the continuing clinical development, marketing,
sales and distribution of Panorex. The Company is principally responsible for
manufacturing Panorex and securing regulatory approvals.

RESEARCH AND DEVELOPMENT

Centocor's research and development activities focus primarily on
monoclonal antibody technology and proprietary techniques to modify monoclonal
antibodies in search of optimal therapeutic agents. Centocor believes that
there is significant potential for using monoclonal antibodies to develop
human health care products. While the specificity of monoclonal antibodies
makes them attractive candidates for therapeutic product development,
antibody-based products generally must be administered by injection, usually
in a hospital setting, and are therefore used principally to treat acute
diseases. The Company's ability to select effective hybridomas and to produce
antibodies from them is central to its business. An understanding of the
structure and function of antibodies is necessary in order to modify them for
incorporation into diagnostic or therapeutic products. The Company has
developed techniques for characterizing an antibody with respect to its
structure, specificity and binding ability which are used in an effort to
select the best antibody for a particular application.

The Company carries out research efforts in the use of recombinant DNA
techniques to manipulate the genetic structure of antibody-producing cells.
These efforts are intended to create re-engineered antibodies that combine the
desired properties of more than one antibody, or the desired properties of
antibodies and other system-regulating biochemicals such as enzymes.

The Company has also expanded its research platform to include the field of
genetic vaccines and peptides. Efforts in the genetic cancer vaccine field are
currently in the pre-clinical stage. Phase I trials are planned for 1996 for
colorectal and prostate cancer vaccines.

PATENTS AND LICENSING ARRANGEMENTS

30
<PAGE>

subject to licenses acquired by the Company, will not be covered by third
party patents, in which case continued development and marketing of such
products would require a license under such patents. There can be no assurance
that such required licenses will be available to the Company or its licensees
on acceptable terms.

Other entities have filed applications for or have been issued patents and
are expected to obtain additional patents to which the Company may need to
acquire rights. The extent to which the Company may need to obtain rights to
any such patents or to contest their scope or validity will depend on final
product formulation and other factors. The ability to license any such patents
and the likelihood of successfully contesting the scope or validity of such
patents are uncertain and the costs associated therewith may be significant.
If the Company is required to acquire rights to valid and enforceable patents
but cannot do so at a reasonable cost, the Company's ability to manufacture or
market its products in the country of issuance of any such patent may be
materially adversely affected.

Centocor currently licenses the majority of the cell lines used to produce
its monoclonal antibodies from research institutions pursuant to long-term
licenses for which it is generally obligated to pay royalties based upon sales
of products incorporating such antibodies. There can be no assurance that
others will not acquire rights to such cell lines in the future.

The Company has been informed by the Research Foundation of the State
University of New York ("SUNY"), which licensed certain rights to the Company
with respect to ReoPro, that SUNY does not agree with the Company regarding
the amount of royalties due to SUNY. The Company is engaged in discussions
with SUNY with respect to this matter and does not believe that the outcome
thereof will have a material adverse effect on the Company's financial
position.

The Company organized CPIII, Tocor II and other entities to fund the
research and development of certain products and/or technology. Under
agreements with each of these entities, Centocor licensed certain technology
to the entity and performed or continues to perform research and development
in such technology areas on behalf of the entity. The Company purchased the
ownership interests of all of these entities prior to 1995, with the exception
of CPIII, to which the Company has granted an exclusive license to use all
patent rights, know-how, technical information and biological materials owned
or controlled by the Company within CPIII's field of activity, which includes
ReoPro. CPIII also retains the rights to the results of research and
development efforts conducted on its behalf. The Company has the ability to
acquire such rights through an exclusive option to purchase the partnership
interests in CPIII for cash or shares of Common Stock. See "Risk Factors--
Patents and Licensing Arrangements; CPIII Purchase Option" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources."

GOVERNMENTAL REGULATION

Regulation by governmental authorities in the United States and other
countries is a significant factor in the manufacture and marketing of the
Company's products and in ongoing research and product development activities.
All of the Company's therapeutic products and most of the Company's diagnostic
products will require regulatory approval by governmental agencies prior to
commercialization. In particular, human therapeutic products are subject to
rigorous preclinical and clinical testing and other premarket approval
requirements by the FDA and regulatory authorities in other countries. Various
statutes and regulations also govern or influence the manufacturing, safety,
labeling, storage, recordkeeping and marketing of such products. The lengthy
process of seeking these approvals, and the subsequent compliance with
applicable statutes and regulations, require the expenditure of substantial
resources. Any failure by the Company to obtain, or any delay in obtaining,
regulatory approvals could materially adversely affect the Company and the
Company's marketing partners' ability to market the Company's products.

31
<PAGE>

The activities required before a pharmaceutical product may be marketed in
the United States begin with preclinical testing. Preclinical tests include
laboratory evaluation of product chemistry and animal studies to assess the
potential safety and efficacy of the product and its formulations. The results
of these studies must be submitted to the FDA as part of an Investigational
New Drug application, which must be reviewed by the FDA before proposed
clinical testing can begin. Typically, clinical testing involves a three-phase
process. In Phase I, clinical trials are conducted with a small number of
subjects to determine the early safety profile and the pattern of drug
distribution and metabolism. In Phase II, clinical trials are conducted with
groups of patients afflicted with a specified disease in order to determine
preliminary efficacy, optimal dosages and expanded evidence of safety. In
Phase III, large scale, multicenter, comparative clinical trials are conducted
with patients afflicted with a target disease in order to provide enough data
to statistically evaluate the efficacy and safety of the product, as required
by the FDA. The results of the preclinical and clinical testing of a chemical
pharmaceutical product are then submitted to the FDA in the form of a New Drug
Application ("NDA"), or for a biological pharmaceutical product in the form of
a PLA, for approval to commence commercial sales. In responding to an NDA or
PLA, the FDA may grant marketing approval, request additional information or
deny the application if it determines that the application does not satisfy
its regulatory approval criteria. There can be no assurance that any approval
required by the FDA will be obtained on a timely basis, if at all.

Among the conditions for NDA or PLA approval is the requirement that the
prospective manufacturer's quality control and manufacturing procedures
conform on an ongoing basis with Good Manufacturing Practices ("GMP"). Before
approval of the PLA, the FDA will perform a prelicensing inspection of the
facility to determine its compliance with GMP and other rules and regulations.
In complying with GMP, manufacturers must continue to expend time, money and
effort in the area of production and quality control to ensure full
compliance. After the establishment is licensed for the manufacture of any
product, it is subject to periodic inspections by the FDA.

The requirements such as those described above which the Company must
satisfy to obtain regulatory approval by governmental agencies in other
countries prior to commercialization of its products in such countries can be
as rigorous, costly and uncertain.

The Company is also subject to various laws and regulations relating to
safe working conditions, laboratory and manufacturing practices, the
experimental use of animals and the use and disposal of hazardous or
potentially hazardous substances, including radioactive compounds and
infectious disease agents, used in connection with the Company's research. The
extent of governmental regulation which might result from any legislative or
administrative action cannot be accurately predicted.

The levels of revenues and profitability of biopharmaceutical companies may
be affected by the continuing efforts of government and third party payors to
contain or reduce the costs of health care through various means. For example,
in certain foreign markets pricing or profitability of therapeutic and other
pharmaceutical products is subject to governmental control. In the United
States, there have been, and the Company expects that there will continue to
be, a number of federal and state proposals to implement similar governmental
control. While the Company cannot predict whether any such legislative or
regulatory proposals will be adopted, the adoption of such proposals could
have a material adverse effect on the Company's business, financial condition
and profitability. In addition, in both the United States and elsewhere, sales
of therapeutic and other pharmaceutical products are dependent in part on the
availability of reimbursement to the consumer from third party payors, such as
government and private insurance plans. Third party payors are increasingly
challenging the prices charged for medical products and services. There can be
no assurance that either of the therapeutic products the Company has brought
to market or any therapeutic product candidates the Company may bring to
market in the future will be considered cost effective and that reimbursement
to the consumer will be available or will be sufficient to allow the Company
to sell its products on a competitive and profitable basis.

PROPERTIES AND MANUFACTURING

The Company owns four buildings in Malvern, Pennsylvania, and leases space
in other buildings at this location. These buildings contain Centocor's
corporate offices, research and development laboratories, marketing offices,
and certain manufacturing facilities. Space is available in these buildings
for future expansion.

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<PAGE>

The Company owns a biopharmaceutical manufacturing facility in Leiden, The
Netherlands, for the production of monoclonal antibody-based products using a
proprietary cell-culture system. This facility has been inspected and approved
by the FDA and the equivalent European regulatory agencies. The Company also
leases research and development laboratories and office space at this
location. The Company manufactures diagnostics products at its facilities in
Malvern, Pennsylvania and at a facility which it leases in Guildford, England.
Each of the Company's diagnostic manufacturing facilities has received ISO-
9001 certification.

At the Company's present level of operations, portions of the Company's
facilities and equipment in Malvern are idle. The Company continually
evaluates the future needs for its facilities and equipment.

EMPLOYEES

At December 31, 1995, Centocor had approximately 500 full-time employees.
To complement its own expertise in various fields, Centocor utilizes
scientific consultants and other advisors, many of whom have formal consulting
agreements with Centocor.

LEGAL PROCEEDINGS

In October 1992, the Company was served with a complaint filed by the Velos
Group, a Maryland partnership ("Velos"), in the U.S. District Court for the
District of Maryland. The complaint primarily alleged that the Company
breached certain provisions of a license agreement between Velos and the
Company pursuant to which the Company has exclusive rights to U.S. Patent No.
5,057,598, as well as various patent applications and foreign patents. The
patents and applications include claims relating to monoclonal antibodies used
in treating manifestations of Gram-negative bacterial infections, the targeted
indication of HA-1A. The complaint sought declaratory relief and monetary
relief in excess of $100,000,000, and requested that the Company place in
escrow one-half of the amounts received by the Company in 1992 pursuant to its
agreements with Lilly. The complaint did not seek to terminate or rescind any
of the Company's rights under the license agreement. The Company answered the
complaint and asserted affirmative defenses and counterclaims on January 7,
1993, but the counterclaims and certain affirmative defenses were dismissed on
June 22, 1993 with leave to replead. On July 28, 1993, the Court permitted
plaintiff to file an amended complaint that updated some of the claims in the
original complaint but otherwise reasserted the basic factual allegations and,
with one minor exception, relied upon the same legal theories. On August 27,
1993, the Company filed its Answer, Affirmative Defenses and Counterclaim for
Damages and Equitable Relief, to the amended complaint (the "Amended Answer").
In the Amended Answer, the Company again denied all of the allegations made by
Velos and stated certain affirmative defenses and counterclaims against Velos
with respect to the license agreement, based on theories of (i) failure of
consideration, (ii) fraud in the inducement and (iii) unilateral mistake as to
facts, which mistake was induced by the fraudulent misrepresentation of Velos.
On September 22, 1993, plaintiff moved to dismiss the Company's counterclaims
and to strike certain of the Company's affirmative defenses. On February 6,
1995, the motion was denied. Discovery is in progress, and trial is scheduled
for November 1996. The Company has moved for partial summary judgment with
respect to the plaintiff's claim that under its license agreement, Lilly is
allegedly a sublicensee of Centocor, thereby purportedly entitling plaintiff
to a significant part of the funds paid by Lilly to Centocor. The Company
believes that the allegations of Velos are without merit and intends to
vigorously defend this suit and to pursue its counterclaim.

On December 23, 1993, a purported class action captioned Peter Cordaro v.
Hubert J.P. Schoemaker, Stelios Papadopoulos, Marc Feldmann, David Golden,
Centocor and Tocor II was filed in the Court of Common Pleas for Chester
County, Pennsylvania. The complaint alleges that the defendants breached their
fiduciary duties to Tocor II Unitholders by, among other things, making an
offer to exchange shares of the Company's Common Stock for Tocor II Units,
recommending acceptance of the exchange offer, and failing to maximize
shareholder value. The complaint sought, among other relief, an injunction
against consummation of the exchange offer, the establishment of a "truly
independent" special committee and the retention of a financial advisor to
consider the exchange offer, and an award of damages (including rescissionary
damages), costs and plaintiff's counsel fees. Plaintiff took no additional
action to obtain an injunction and the exchange offer was made and
consummated. A motion for class certification is pending. No trial date has
been fixed. The Company believes that the allegations set forth in the
complaint are without merit and intends to vigorously defend this suit.

33
<PAGE>

In July 1995, PaineWebber Development Corporation ("PaineWebber"), a
wholly-owned subsidiary of Paine Webber Group Inc., caused suits to be filed
against the Company by two research and development partnerships formed in the
mid-1980s by PaineWebber and managed by it since then. The two PaineWebber
partnerships (PaineWebber R&D Partners, L.P. and PaineWebber R&D Partners II,
L.P.) were, respectively, investors in Centocor Partners II, L.P. ("CPII") and
CPIII, research partnerships for which PaineWebber acted as the sales agent
and in other capacities. The Company purchased the limited partners' interests
in CPII in February 1992 and that partnership was then dissolved. The suit by
PaineWebber R&D Partners, L.P., was filed in the Supreme Court of the State of
New York, County of New York, and purports to be a class action on behalf of
all former limited partners of CPII. The complaint charges that some portion
of the $100 million paid by Lilly to the Company in July 1992 constituted
revenues to the Company for the licensing, sublicensing or sale of HA-1A and
that the Company is obligated to pay a percentage thereof to the former
limited partners of CPII, in addition to amounts already paid. The theories of
recovery are similar to those asserted by Velos in 1992, as described above.
The Company has moved to dismiss the New York suit on the ground that it was
brought in an inconvenient forum. The suit by PaineWebber R&D II, L.P., was
filed in the Court of Chancery of the State of Delaware. In the complaint in
this action, the plaintiff seeks to sue derivatively on behalf of CPIII. CPIII
is named as a nominal defendant and the Company and Centocor Development
Corporation III ("CDC III"), a wholly owned subsidiary of the Company which
acts as the general partner of CPIII are named as defendants against whom
relief is sought. The claim in this case is that at least $25 million of the
money paid by Lilly to the Company in 1992 represented profits from the
marketing of ReoPro, obligating the Company to pay a portion thereof to CPIII,
and that the Company is obligated to pay an increased percentage of the
profits from ReoPro to CPIII going forward. The Company answered the complaint
in the Delaware action and filed a cross-claim against nominal defendant CPIII
and a third-party complaint against PaineWebber Group Inc. and PaineWebber. On
November 1, 1995, an additional suit was commenced in the Delaware Court of
Chancery by John E. Abdo, a limited partner of CPIII, against the Company, CDC
III and certain of their officers and directors. The complaint, filed
derivatively on behalf of CPIII, asserts claims, inter alia, for breach of
contract, breach of fiduciary duty, common law fraud, and conspiracy and
aiding and abetting. The Company answered this complaint and also filed a
cross-claim against nominal defendant CPIII and a third party complaint
against PaineWebber Group Inc. and PaineWebber. The two Delaware suits have
been consolidated and discovery is proceeding. No trial date has been fixed.
In addition, on February 13, 1996, an additional suit was filed in the Court
of Common Pleas for Chester County, Pennsylvania by an alleged former limited
partner in CPII, against the Company, Lilly and an officer and a director of
the Company. The complaint purports to be a class action on behalf of former
limited partners of CPII and limited partners of PaineWebber R&D Partners,
L.P. and asserts claims of breach of contract, breach of fiduciary duty and
breach of a duty of good faith and fair dealing and states theories of
recovery similar to those asserted by PaineWebber R&D Partners, L.P., as
described above. The Company believes that the allegations of the plaintiffs
in these suits are without merit and intends to vigorously defend them.

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

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<PAGE>

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The executive officers and directors of the Company are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
David P. Holveck........ 50 President, Chief Executive Officer and Director
Warren C. Bogard........ 46 Senior Vice President and General Manager--Diagnostics Division
Martin R. Page.......... 51 Senior Vice President--Regulatory Affairs and Quality Assurance
James N. Woody.......... 53 Senior Vice President--Research and Development and
Chief Scientific Officer
Dominic J. Caruso....... 38 Vice President--Finance and Chief Financial Officer
Hubert J.P. Schoemaker.. 45 Chairman of the Board
Anthony B. Evnin(1)(2).. 54 Director
William F. Hamil- 56 Director
ton(1)(2)..............
Antonie T. Knoppers(2).. 80 Director
Ronald A. Matricaria(2). 53 Director
Richard D. Spizzirri.... 62 Director
Lawrence Steinman....... 48 Director
Jean C. Tempel(1)....... 52 Director
</TABLE>
- --------
(1) Member of Audit Committee
(2) Member of Compensation Committee

Mr. Holveck has been associated with the Company since June 1983. Mr.
Holveck has served as President and Chief Executive Officer of the Company
since November 1992. Mr. Holveck held the position of President and Chief
Operating Officer from April 1992 to October 1992 and Executive Vice President
and President--Diagnostics Division from December 1988 to April 1992. Mr
Holveck also has served as a director of the Company since 1994.

Dr. Bogard has been associated with the Company since January 1982. Dr.
Bogard has served as Senior Vice President and General Manager--Diagnostics
Division since October 1994. Previously, Dr. Bogard held the position of Vice
President, Program Management from April 1992 to October 1994 and Director,
Scientific Affairs--Pharmaceutical Division from November 1990 to April 1992.

Mr. Page has been associated with the Company since September 1987. Mr.
Page has served as Senior Vice President--Regulatory Affairs and Quality
Assurance since March 1994. Previously, Mr. Page held the position of Senior
Vice President--Worldwide Regulatory Affairs from August 1992 to March 1994,
Vice President--Worldwide Regulatory Affairs from June 1990 to August 1992,
and Vice President--International Regulatory Affairs from September 1987 to
June 1990.

Dr. Woody has been associated with the Company since August 1991. Dr. Woody
has served as Senior Vice President--Research and Development and Chief
Scientific Officer since August 1992, and Senior Vice President--Research and
Development since August 1991. Previously, Dr. Woody served as Commanding
Officer of the United States Navy Medical Research and Development Command
from 1988 to 1991.

Mr. Caruso has been associated with the Company since November 1985. Mr.
Caruso has served as Vice President--Finance and Chief Financial Officer of
the Company since December 1994. Previously, Mr. Caruso held the position of
Vice President and Corporate Controller from January 1991 to November 1994.

Dr. Schoemaker has been associated with the Company since 1980 and has
served as a director of the Company since 1983. Dr. Schoemaker has been
Chairman of the Board of the Company since November 1987 and served as Chief
Executive Officer of the Company from November 1987 to October 1992 and
President of the Company from 1983 to 1987. Dr. Schoemaker is also a director
of Apollon, Inc., Avitech, Inc., Myco Pharmaceuticals, Inc. and Safeguard
Scientifics Inc.

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<PAGE>

Dr. Evnin has served as a director of the Company since 1980. Dr. Evnin is
currently General Partner of Venrock Associates, a venture capital limited
partnership. Dr. Evnin is also a director of AgriDyne Technologies Inc, Arris
Pharmaceutical Corporation, Athena Neurosciences, Inc., Genetics Institute,
Inc., IDEXX Laboratories, Inc., Intelligent Surgical Lasers, Inc., Kopin
Corporation, Opta Food Ingredients, Inc. and Sugen, Inc.

Dr. Hamilton has served as a director of the Company since 1985. Dr.
Hamilton is currently the Landau Professor of Management and Technology at the
Wharton School of the University of Pennsylvania. Dr. Hamilton is also a
director of Hunt Manufacturing Co., Marlton Technologies, Inc. and Neose
Pharmaceuticals, Inc.

Dr. Knoppers has served as a director of the Company since 1986. Dr.
Knoppers is currently a self-employed business consultant. Dr. Knoppers
previously served as President, Chief Operating Officer and Vice Chairman of
Merck & Co., Inc., a research-based health products company. Dr. Knoppers is
also a director of Agouron Pharmaceuticals, Inc. and a Trustee of the Salk
Institute.

Mr. Matricaria has served as a director of the Company since 1994. Mr.
Matricaria has served as President and Chief Executive Officer of St. Jude
Medical, Inc., a medical products company, since April 1993 and Chairman of
the Board since 1995. From 1970 to 1993, Mr. Matricaria was employed by Eli
Lilly and Company, Inc., a research-based pharmaceutical company, where he
served in a variety of capacities, including President of the Medical Devices
and Diagnostics Division, Executive Vice President of the Pharmaceutical
Division and President of its North American operations. Mr. Matricaria is
also a director of St. Jude Medical, Inc., Diametrics Medical, Inc.,
InControl, Inc. and the Health Industry Manufacturers Association.

Mr. Spizzirri has served as a director of the Company since 1994. Mr.
Spizzirri has served as Senior Counsel to the law firm of Davis Polk &
Wardwell since January 1995. He was previously a Partner with Davis Polk &
Wardwell from 1967 to 1994. Mr. Spizzirri is also a director of Sugen, Inc.

Dr. Steinman has served as a director of the Company since 1991. Dr.
Steinman has been Professor of Immunology, Weizmann Institute of Science,
Rehovot, Israel since 1994, and Professor of Neurology and Neurological
Sciences and Pediatrics at Stanford University School of Medicine since 1991.
Dr. Steinman was previously Associate Professor of Neurology, Pediatrics and
Genetics at Stanford University School of Medicine from 1985 to 1991.

Ms. Tempel has served as a director of the Company since 1993. Ms. Tempel
has served as General Partner of Technology Leaders, L.P., an affiliate of
Safeguard Scientifics Inc., an entrepreneurial technology company, since
November 1993. Ms. Tempel previously served as President and Chief Operating
Officer of Safeguard Scientifics Inc. from January 1992 to November 1993. Ms.
Tempel was also a Principal of Tempel Partners Inc., a management consulting
firm, from 1991 to January 1992 and Executive Vice President of The Boston
Company, a bank trust company, from 1985 to 1990. Ms. Tempel is also a
director of Cambridge Technology Partners Inc., Safeguard Scientifics Inc. and
Sonesta International, Inc. and a Trustee of the Scudder Family of Mutual
Funds.

The standing committees of the Board of Directors are the Audit Committee
and the Compensation Committee. The Audit Committee is responsible for
determining the adequacy of the Company's internal accounting and financial
controls. The Compensation Committee is responsible for reviewing matters
pertaining to the compensation of the executive officers of the Company.

The directors and executive officers of the Company as a group, as of
December 31, 1995, owned an aggregate of 3,557,523 shares of Common Stock,
including shares that they have the right to acquire upon vesting of
restricted stock awards and the exercise of stock options as follows: David P.
Holveck--678,200; Warren C. Bogard--101,790; Martin R. Page--212,700; James N.
Woody--359,800; Dominic J. Caruso--72,067; Hubert J.P. Schoemaker--1,028,600;
Anthony B. Evnin--130,000; William F. Hamilton--145,000; Antonie T. Knoppers--
125,000; Ronald A. Matricaria--27,500; Richard D. Spizzirri--20,000; Lawrence
Steinman--120,000; and Jean C. Tempel--43,850.

36
<PAGE>

DESCRIPTION OF CAPITAL STOCK

The authorized capital stock of the Company consists of 100,000,000 shares
of Common Stock, par value $.01 per share, and 10,000,000 shares of Preferred
Stock, par value $.01 per share, 2,000,000 of which have been designated as
Series A Preferred Stock, par value $.01 per share (the "Series A Preferred
Stock").

Under the Company's Articles of Incorporation, as amended, the Board of
Directors is authorized to make divisions of authorized shares of the capital
stock of the Company into classes and into series within any class and to make
determinations of the designation and the number of shares of any class or
series and the voting rights, preferences, limitations and special rights, if
any, of the shares of any class or series, including the power to increase the
previously determined number of shares of any class or series to a number not
greater than the aggregate number of shares of all classes and series that the
Company is authorized to issue and to decrease the previously determined
number of shares of any class or series to a number not less than that then
outstanding. Accordingly, the issuance of Preferred Stock or new classes or
series of Common Stock, while promoting flexibility in connection with
possible acquisitions and other corporate purposes, could adversely affect the
voting rights of holders of Common Stock and, under certain circumstances,
make it more difficult for a third party to gain control of the Company or
remove incumbent members of the Company's Board of Directors.

COMMON STOCK

As of December 31, 1995, there were approximately 58,538,000 shares of
Common Stock outstanding held of record by approximately 4,520 shareholders.

The holders of shares of Common Stock are entitled to one vote per share on
all matters to be voted on by shareholders, except that the holders of shares
of Common Stock are entitled to cumulate their votes in the election of
directors. The holders of shares of Common Stock are entitled to receive such
dividends, if any, as may be declared from time to time by the Board of
Directors, in its discretion, from funds legally available therefor. See
"Price Range of Common Stock and Dividend Policy."

Except as described below under "The Rights Agreement," the holders of
Common Stock are not entitled to preemptive, subscription or conversion
rights, and there are no redemption or sinking fund provisions applicable to
the Common Stock. Upon the liquidation, dissolution or winding up of the
Company, the holders of shares of Common Stock are entitled to receive all
assets available for distribution to shareholders, subject to the rights of
any holders of shares of the Company's Preferred Stock that may be then
outstanding. The holders of Common Stock are not subject to further calls or
assessments by the Company. All outstanding shares of Common Stock are validly
issued, fully paid and non-assessable.

PREFERRED STOCK

The Company currently has no shares of Preferred Stock outstanding. Of the
10,000,000 shares of Preferred Stock authorized, 2,000,000 shares have been
designated as Series A Preferred Stock.

SERIES A PREFERRED STOCK

The Series A Preferred Stock was designated in connection with the
Company's stock rights plan. See "The Rights Agreement" below. Holders of
Series A Preferred Stock are entitled to receive a quarterly dividend at a
rate per share equal to the greater of (i) $1.00 or (ii) 100 times the
aggregate per share amount of all cash dividends, and 100 times the aggregate
amount of all non-cash dividends or distributions (payable in kind) except for
a dividend payable in shares of Common Stock or a subdivision of the
outstanding Common Stock, declared on the Common Stock since the preceding
quarterly dividend payment date for the Series A Preferred Stock. The amount
set forth in the preceding clause (ii) is subject to adjustment in the event
of any dividend on the Common Stock payable in shares of Common Stock and any
subdivision or combination of the outstanding Common Stock. In the event of
any liquidation, dissolution or winding up of the Company, the holders of
Series

37
<PAGE>

A Preferred Stock then outstanding are entitled to be paid out of the assets
and funds of the Company legally available for distribution, before any
payment shall be made to holders of Common Stock, the amount of $100 per share
plus any accrued but unpaid dividends on the Series A Preferred Stock. Upon
any consolidation, merger, combination or other transaction in which shares of
Common Stock are exchanged for or changed into other securities, cash or other
property, the shares of the Series A Preferred Stock shall at the same time be
similarly exchanged or changed into an amount per share (subject to adjustment
in the events described above) equal to 100 times the aggregate amount of
securities, cash or other property into which or for which the Common Stock is
changed or exchanged.

The holders of the Series A Preferred Stock are entitled to vote together
with the holders of the Common Stock as a single class on all matters
presented to the Company's shareholders, including the election of directors,
and each share of Series A Preferred Stock is entitled to 100 votes on all
matters submitted to the shareholders. This number of votes is subject to
adjustment in the event of any dividend on the Common Stock payable in shares
of Common Stock and any subdivision or combination of the outstanding Common
Stock, such that the number of votes per share of Series A Preferred Stock
after such event shall equal the number of votes per share before such event
multiplied by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock outstanding immediately prior to
such event. In the event dividends on the Series A Preferred Stock fall in
arrears in an amount equal to six quarterly dividend payments, the holders of
the Series A Preferred Stock, together with the holders of any other
outstanding Preferred Stock of the Company, have certain rights to elect two
persons as directors of the Company. In addition, the Company is restricted
from taking certain actions with respect to dividends or other distributions
on, or acquisitions or redemptions of, any shares of stock ranking junior to
or on a parity with the Series A Preferred Stock, whenever any dividends or
distributions payable on the Series A Preferred Stock are in arrears.

The Series A Preferred Stock is not redeemable, and will rank junior with
respect to payment of dividends and on liquidation to all other series of the
Company's Preferred Stock, except to the extent that any such series
specifically provides that it shall rank on a parity with or junior to the
Series A Preferred Stock.

CERTAIN ARTICLES OF INCORPORATION AND BY-LAW PROVISIONS AND PENNSYLVANIA ANTI-
TAKEOVER PROVISIONS

The Articles of Incorporation and By-laws of the Company and Pennsylvania
law contain certain provisions that may enhance the likelihood of continuity
and stability in the composition of the Board of Directors and may discourage
a future unsolicited takeover of the Company. These provisions could have the
effect of discouraging certain attempts to acquire the Company or remove
incumbent management, including incumbent members of the Board of Directors,
even if some or a majority of the Company's shareholders deemed such an
attempt to be in their best interests.

The Company's Articles of Incorporation, as amended, or By-laws, as
applicable, among other things (i) provide that the number of directors will
not be fewer than five nor more than eleven, with the exact number of
directors to be determined from time to time by resolution adopted by a
majority of the Board of Directors; (ii) permit vacancies on the Board of
Directors that may occur between annual meetings and newly created seats to be
filled only by the Board of Directors and not by the shareholders; (iii) do
not permit the shareholders to call special meetings of shareholders; (iv)
prohibit the shareholders from taking action by less than unanimous written
consent; and (v) provide that the Board of Directors, without action by the
shareholders, may issue and fix the rights and preferences of shares of
Preferred Stock and new classes or series of Common Stock. These provisions
may have the effect of delaying, deferring or preventing a change of control
of the Company without further action by the shareholders, may discourage bids
for the Common Stock at a premium over the market price of the Common Stock
and may adversely affect the market price of, and the voting or other rights
of the holders of, the Common Stock.

The Pennsylvania Business Corporation Law ("BCL") contains certain
statutory "anti-takeover" provisions. The BCL provides that a merger,
consolidation, share exchange or sale of assets between a public

38
<PAGE>

corporation, or a subsidiary thereof, and a shareholder be approved by a
majority of voting shares outstanding other than those held by the "interested
shareholder" (which includes a shareholder who is a party to the proposed
transaction or who is treated differently from other shareholders) unless (i)
the transaction has been approved by a majority of the corporation's directors
who are not affiliated with the interested shareholder and first elected to
the board within 24 months of the vote to approve such transaction, or (ii)
the transaction results in the payment to all other shareholders of an amount
not less than the highest amount paid for the same class of shares by the
interested shareholder. In addition, subject to certain exceptions, a
"business combination" with a shareholder or group of shareholders
beneficially owning more than 20% of the voting power of a public corporation
(excluding certain shares) is prohibited for a five-year period following the
date on which the holder acquired the 20% or greater voting power and, unless
certain other conditions are satisfied, requires approval of a majority of
voting shares outstanding other than those held by such interested
shareholder. Moreover, the BCL entitles shareholders to vote upon a change in
control resulting from the acquisition of shares representing voting control
over 20% or more of a corporation's stock, by providing that the voting rights
of such "control shares" are, in certain circumstances, suspended until the
shareholders approve a resolution to restore the voting rights of such control
shares, and provides that any profit realized from the disposition of an
equity security of a corporation by a shareholder who disposes of such
security within 18 months after obtaining control must be returned to the
corporation. These and other related BCL provisions may discourage open market
purchases of a corporation's stock or a non-negotiated tender or exchange
offer for such stock and, accordingly, may limit a shareholder's ability to
realize a premium over the market price of the Common Stock in connection with
any such transaction.

THE RIGHTS AGREEMENT

Each outstanding share of the Common Stock is, and each share of Common
Stock to be issued prior to the earliest of (i) the Distribution Date (as
defined below), (ii) the date on which the Rights (as defined below) are
redeemed or (iii) the expiration of the Rights on September 26, 1998, will be,
accompanied by one-half of one right (a "Right") to purchase one one-hundredth
of a share of Series A Preferred Stock, in accordance with the terms and
conditions of the Rights Agreement (the "Rights Agreement"), dated as of
September 26, 1988, between the Company and The First National Bank of Boston,
as Rights Agent. The Rights are attached to the certificates representing
shares of the Common Stock and will continue to be so attached until the date
(the "Distribution Date") that is the earlier to occur of (i) ten days
following a public announcement that a person or group has acquired beneficial
ownership of 20% or more of the outstanding shares of Common Stock (an
"Acquiring Person") or (ii) ten business days following the commencement of a
tender offer or exchange offer that would, if consummated, result in a person
or group owning 30% or more of the outstanding shares of Common Stock.

In the event a Distribution Date occurs, each holder of a Right will be
entitled to purchase one one-hundredth of a share of Series A Preferred Stock
at a price of $170 (the "Rights Exercise Price"). If, following an acquisition
of 20% or more of the outstanding shares of Common Stock by an Acquiring
Person, the Company is acquired by any person or group, or sells 50% or more
of its assets or earning power to any person or group, the holder of each
Right will be entitled to purchase, at the Rights Exercise Price, shares of
common stock of such person or group having a market value equal to twice the
Rights Exercise Price. In addition, if any person or group acquires 30% or
more of the outstanding shares of Common Stock or if an Acquiring Person
merges into the Company or engages in certain self-dealing transactions, then
the holder of each Right, other than the Acquiring Person, will be entitled to
purchase, at the Rights Exercise Price, shares of Common Stock having a market
value equal to twice the Rights Exercise Price.

The Rights will become exercisable only upon the terms and conditions set
forth in the Rights Agreement and may be redeemed by the Company at $.02 per
Right at any time prior to the tenth day following a public announcement that
an Acquiring Person has acquired beneficial ownership of 20% or more of the
outstanding shares of Common Stock (which date may be extended under certain
conditions set forth in the Rights Agreement). Until a Right is exercised, the
holder thereof will have no additional rights as a shareholder of the Company.
The offering made by this Prospectus will not cause the Rights to become
exercisable.

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<PAGE>

Prior to a Distribution Date, the terms of the Rights Agreement may be
amended by the Board of Directors without the approval of the holders of
shares of Common Stock, including an amendment to lower the thresholds for
exercisability of the Rights to not less than the greater of (i) the largest
percentage of the outstanding shares of Common Stock then known to the Company
to be beneficially owned by any person or group or (ii) 10%. After the
Distribution Date, the terms of the Rights Agreement may be amended by the
Board of Directors without the approval of the holders of the Rights, except
that no such amendment may change the redemption price, the final expiration
date of the Rights Agreement, the Rights Exercise Price or the number of the
one-hundredths of a share of Series A Preferred Stock for which a Right is
exercisable or otherwise adversely affect the interests of the holders of the
Rights (other than an Acquiring Person or an affiliate or associate thereof).

The Rights may have certain anti-takeover effects. The Rights are designed
to cause substantial dilution to a person or group that attempts to acquire
the Company on terms not approved by the Board of Directors. The Company does
not believe that the Rights will interfere with any merger or other business
combination approved by the Board of Directors since the Rights may be
redeemed by the Company as described above. To the extent the Rights may
discourage potential acquirors from obtaining equity positions in the Company,
shareholders may be deprived of receiving a premium for their shares of Common
Stock.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Common Stock is The First National
Bank of Boston c/o Boston EquiServe. Its address for such purposes is Mail
Stop: 45-02-09, Blue Hills Office Park, 150 Royall Street, Canton,
Massachusetts 02021, and its telephone number at that address is (617) 575-
2900.

CERTAIN U.S. FEDERAL TAX CONSIDERATIONS
FOR NON-U.S. HOLDERS OF COMMON STOCK

The following discussion describes certain U.S. federal income and estate
tax consequences of the ownership and disposition of shares of Common Stock
applicable to Non-U.S. Holders of such shares of Common Stock. In general, a
"Non-U.S. Holder" is any person holding shares of Common Stock other than (i)
a citizen or resident, as specifically defined for U.S. federal income and
estate tax purposes, of the United States; (ii) a corporation, partnership or
any entity treated as a corporation or partnership for U.S. federal income tax
purposes created or organized in the United States or under the laws of the
United States or of any state of the United States; or (iii) an estate or
trust whose income is includible in gross income for U.S. federal income tax
purposes regardless of its source. The discussion is based on current law,
which is subject to change retroactively and prospectively, and is for general
information only. The discussion does not address all aspects of U.S. federal
income and estate taxation and does not address any aspects of state, local or
foreign taxation. The discussion does not consider any specific facts or
circumstances that may apply to a particular Non-U.S. Holder. Accordingly,
prospective investors are urged to consult their tax advisors regarding the
U.S. federal, state and local and foreign income, estate and other tax
consequences of holding and disposing of shares of Common Stock.

DIVIDENDS

In general, dividends paid to a Non-U.S. Holder will be subject to U.S.
withholding tax at a 30% rate (or a lower rate as may be prescribed by an
applicable tax treaty) unless the dividends are effectively connected with a
trade or business carried on by the Non-U.S. Holder within the United States
and the Non-U.S. Holder files certain forms annually with the payor of the
dividends. Effectively connected dividends will generally be subject to U.S.
federal income tax on a net income basis at the regular applicable rates. In
the case of effectively connected dividends paid to a Non-U.S. Holder which is
a corporation, such dividends also may be subject to the branch profits tax
(which is generally imposed on a foreign corporation on the repatriation from
the United States of effectively connected earnings and profits). The branch
profits tax may not apply if the recipient is a qualified resident of a
country with which the United States has an income tax treaty.

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<PAGE>

Under current Treasury Regulations, in determining whether withholding is
required where a payor of dividends has no definite knowledge of the status of
a shareholder, the payor must assume that a shareholder is a Non-U.S. Holder
if the shareholder has an address outside the United States. If the
shareholder has an address inside the United States, the payor may assume the
shareholder is a person other than a Non-U.S. Holder. Moreover, in determining
whether to withhold at a lower rate under a treaty, a payor may be permitted
under the treaty or the regulations thereunder to assume that a shareholder
with an address in a foreign country is a resident of that country. Treasury
Regulations proposed in 1984, if finally adopted, however, would require Non-
U.S. Holders to file certain forms to obtain the benefit of any applicable tax
treaty providing for a lower rate of withholding tax on dividends. Such forms
would be required to contain the holder's name and address and, subject to a
de minimis payment exception, a statement by the competent authority in the
foreign country (as designated in the applicable tax treaty) attesting to the
holder's status as a resident thereof.

Under current regulations, the Company must report annually to the Internal
Revenue Service and to each Non-U.S. Holder the amount of dividends paid to,
and the tax withheld with respect to, each Non-U.S. Holder. These reporting
requirements apply regardless of whether withholding was reduced or eliminated
under an exemption or a tax treaty. If the United States and a foreign country
have entered into an income tax treaty that provides for the mutual exchange
of information, the Internal Revenue Service may also transmit the foregoing
information to the appropriate authority of such foreign country designated in
the treaty.

SALE OF COMMON STOCK

Generally, a Non-U.S. Holder will not be subject to U.S. federal income tax
on any gain realized upon the disposition of such holder's shares of Common
Stock unless (i) the gain is effectively connected with a trade or business
carried on by the Non-U.S. Holder within the United States and, if a tax
treaty applies, attributable to a permanent establishment maintained by the
Non-U.S. Holder in the United States; (ii) the Non-U.S. Holder is an
individual who holds the shares of Common Stock as a capital asset and is
present in the United States for 183 days or more in the taxable year of the
disposition, and the gain from the disposition is from sources in the United
States; (iii) the Non-U.S. Holder is subject to tax pursuant to the provisions
of U.S. tax law applicable to certain U.S. expatriates; or (iv) the Company is
or has been during certain periods a "U.S. real property holding corporation"
(which the Company does not believe that it is or is likely to become).

ESTATE TAX

Shares of Common Stock owned or treated as owned by an individual who is
not a citizen or resident (as specially defined for U.S. federal estate tax
purposes) of the United States at the time of death will be includible in the
individual's gross estate for U.S. federal estate tax purposes, unless an
applicable tax treaty provides otherwise, and may be subject to U.S. federal
estate tax.

BACKUP WITHHOLDING AND INFORMATION REPORTING

Under current U.S. federal income tax law, a backup withholding tax (which
generally is a withholding tax imposed at the rate of 31% on certain payments
to persons that fail to furnish certain information to the payor of such
payments) and information reporting requirements apply to payments of
dividends made to certain non-corporate U.S. persons. The U.S. backup
withholding tax and information reporting requirements will generally not
apply to dividends paid on Common Stock to a holder at an address outside the
United States.

The payment of the proceeds from the disposition of shares of Common Stock
to or through the U.S. office of a broker will be subject to information
reporting and backup withholding unless the holder, under penalties of
perjury, certifies, among other things, its status as a Non-U.S. Holder.
Generally, the payment of the proceeds from the disposition of shares of
Common Stock to or through a foreign office of a broker will not be subject to
backup withholding and will not be subject to information reporting if the
broker has evidence in its files that the holder is a Non-U.S. Holder,
provided the broker has no actual knowledge to the contrary. The backup
withholding and information reporting rules are currently under review by the
Treasury Department, and their

41
<PAGE>

application to the shares of Common Stock is subject to change. Non-U.S.
Holders should consult their tax advisors regarding the application of these
rules to their particular situations, the availability of an exemption
therefrom and the procedure for obtaining such an exemption, if available.

Any amounts withheld from a payment to a Non-U.S. Holder under the backup
withholding rules will be allowed as a credit against such holder's U.S.
federal income tax liability, if any, and may entitle such holder to a refund,
provided that the required information is furnished to the Internal Revenue
Service.

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<PAGE>

UNDERWRITERS

Under the terms and subject to the conditions in the Underwriting Agreement
dated the date hereof (the "Underwriting Agreement"), the U.S. Underwriters
named below, for whom Morgan Stanley & Co. Incorporated, Hambrecht & Quist LLC
and J.P. Morgan Securities Inc. are serving as U.S. Representatives, and the
International Underwriters named below, for whom Morgan Stanley & Co.
International Limited, Hambrecht & Quist LLC and J.P. Morgan Securities Ltd.
are serving as International Representatives, have severally agreed to
purchase, and the Company has agreed to sell to them, the respective number of
shares of Common Stock set forth opposite the names of such Underwriters
below:

<TABLE>
<CAPTION>
NAME NUMBER OF SHARES
---- ----------------
<S> <C>
U.S. Underwriters:
Morgan Stanley & Co. Incorporated.............................
Hambrecht & Quist LLC.........................................
J.P. Morgan Securities Inc....................................
---------
Subtotal...................................................... 2,800,000
---------
International Underwriters:
Morgan Stanley & Co. International Limited....................
Hambrecht & Quist LLC.........................................
J.P. Morgan Securities Ltd....................................
---------
Subtotal...................................................... 700,000
---------
Total........................................................ 3,500,000
=========
</TABLE>

The U.S. Underwriters and the International Underwriters, and the U.S.
Representatives and the International Representatives, are collectively
referred to herein as the "Underwriters" and the "Representatives,"
respectively. The Underwriting Agreement provides that the obligations of the
several Underwriters to pay for and accept delivery of the shares of Common
Stock offered hereby are subject to the approval of certain legal matters by
their counsel and to certain other conditions. The Underwriters are obligated
to take and pay for all the shares of Common Stock offered hereby (other than
those covered by the U.S. Underwriters' over-allotment option described below)
if any such shares are taken.

Pursuant to the Agreement Between U.S. and International Underwriters, each
U.S. Underwriter has represented and agreed that, with certain exceptions, (a)
it is not purchasing any U.S. Shares (as defined below) for the account of
anyone other than a United States or Canadian Person (as defined below) and
(b) it has not offered or sold, and will not offer or sell, directly or
indirectly, any U.S. Shares or distribute any prospectus relating to the U.S.
Shares outside the United States or Canada or to anyone other than a United
States or Canadian Person. Pursuant to the Agreement Between U.S. and
International Underwriters, each International Underwriter has represented and
agreed that, with certain exceptions, (i) it is not purchasing any
International

43
<PAGE>

Shares (as defined below) for the account of any United States or Canadian
Person and (ii) it has not offered or sold, and will not offer or sell,
directly or indirectly, any International Shares or distribute any prospectus
relating to the International Shares within the United States or in any
province or territory of Canada or to any United States or Canadian Person.
The foregoing limitations do not apply to stabilization transactions or to
certain other transactions specified in the Agreement Between U.S. and
International Underwriters. As used herein, "United States or Canadian Person"
means any national or resident of the United States or of any province or
territory of Canada, or any corporation, pension, profit-sharing or other
trust or other entity organized under the laws of the United States or Canada
or of any political subdivision thereof (other than a branch located outside
the United States and Canada of any United States or Canadian Person) and
includes any United States or Canadian branch of a person who is otherwise not
a United States or Canadian Person. All shares of Common Stock to be purchased
by the U.S. Underwriters and the International Underwriters are referred to
herein as the U.S. Shares and the International Shares, respectively.

Pursuant to the Agreement Between U.S. and International Underwriters,
sales may be made between the U.S. Underwriters and International Underwriters
of any number of shares of Common Stock to be purchased pursuant to the
Underwriting Agreement as may be mutually agreed. The per share price of any
shares sold shall be the public offering price set forth on the cover page
hereof, in U.S. dollars, less an amount not greater than the per share amount
of the concession to dealers set forth below.

Pursuant to the Agreement Between U.S. and International Underwriters, each
U.S. Underwriter has represented that it has not offered or sold, and has
agreed not to offer or sell, any shares of Common Stock, directly or
indirectly, in any province or territory of Canada in contravention of the
securities laws thereof and has represented that any offer of Common Stock in
Canada will be made only pursuant to an exemption from the requirement to file
a prospectus in the province or territory of Canada in which such offer is
made. Each U.S. Underwriter has further agreed to send to any dealer who
purchases from it any shares of Common Stock a notice stating in substance
that, by purchasing such Common Stock, such dealer represents and agrees that
it has not offered or sold, and will not offer or sell, directly or
indirectly, any of such Common Stock in Canada or to, or for the benefit of,
any resident of any province or territory of Canada in contravention of the
securities laws thereof and that any offer of Common Stock in any province or
territory of Canada will be made only pursuant to an exemption from the
requirement to file a prospectus in the province or territory of Canada in
which such offer is made, and that such dealer will deliver to any other
dealer to whom it sells any of such Common Stock a notice to the foregoing
effect.

Pursuant to the Agreement Between U.S. and International Underwriters, each
International Underwriter has represented and agreed that: (i) it has not
offered or sold and during the period of six months after the issuance of the
Common Stock will not offer or sell any shares of Common Stock to persons in
the United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or
agent) for the purposes of their businesses or otherwise in circumstances
which have not resulted and will not result in an offer to the public in the
United Kingdom within the meaning of the Public Offers of Securities
Regulations 1995 (the "Regulations"); (ii) it has complied and will comply
with all applicable provisions of the Financial Services Act 1986 and the
Regulations with respect to anything done by it in relation to the shares of
Common Stock in, from or otherwise involving the United Kingdom; and (iii) it
has only issued or passed on and will only issue or pass on to any person in
the United Kingdom any document received by it in connection with the issue of
the shares of Common Stock if that person is of a kind described in Article
11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1995 or is a person to whom such document may otherwise
lawfully be issued or passed on.

The Underwriters initially propose to offer part of the Common Stock
directly to the public at the public offering price set forth on the cover
page hereof and part to certain dealers at a price which represents a
concession not in excess of $ a share under the public offering price.
Any Underwriter may allow, and such dealers may reallow, a concession not in
excess of $ a share to other Underwriters or to certain dealers. After
the initial offering of the shares of Common Stock, the offering price and
other selling terms may from time to time be varied by the Representatives.

44
<PAGE>

Pursuant to the Underwriting Agreement, the Company has granted the U.S.
Underwriters an option, exercisable for 30 days from the date of this
Prospectus, to purchase up to an additional 525,000 shares of Common Stock at
the public offering price set forth on the cover page hereof, less
underwriting discounts and commissions. The U.S. Underwriters may exercise
such option to purchase solely for the purpose of covering over-allotments, if
any, made in connection with this offering. To the extent such option is
exercised, each U.S. Underwriter will become obligated, subject to certain
conditions, to purchase approximately the same percentage of such additional
shares as the number set forth next to such U.S. Underwriter's name in the
preceding table bears to the total number of shares of Common Stock offered by
the U.S. Underwriters hereby.

The Company, all of the Company's executive officers and directors, and two
other shareholders of the Company who own in the aggregate approximately
3,640,000 shares of Common Stock, have agreed that, without the prior written
consent of Morgan Stanley & Co. Incorporated, they will not (a) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock (whether such shares or any such securities are then owned by
such person or are thereafter acquired directly from the Company), or (b)
enter into any swap or similar agreement that transfers, in whole or in part,
any of the economic consequences of ownership of the Common Stock, whether any
such transaction described in clause (a) or (b) of this paragraph is to be
settled by delivery of such Common Stock or such other securities, in cash or
otherwise, for a period of 90 days after the date of this Prospectus, other
than (i) the sale to the Underwriters of the shares of Common Stock under the
Underwriting Agreement, (ii) the issuance by the Company of shares of Common
Stock upon the exercise of an option or warrant or the conversion of a
security outstanding on the date of this Prospectus, (iii) any shares of
Common Stock issued upon the exercise of any Right, (iv) any options granted
or shares of Common Stock issued pursuant to existing benefit plans of the
Company, or (v) the sale by the Company's executive officers and directors of
up to an aggregate of 200,000 shares of Common Stock.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act").

Pursuant to regulations promulgated by the Commission, market makers in the
Common Stock who are Underwriters or prospective underwriters ("passive market
makers") may, subject to certain limitations, make bids for or purchases of
shares of Common Stock until the earlier of the time of commencement (the
"Commencement Date") of offers or sales of the Common Stock contemplated by
this Prospectus or the time at which a stabilizing bid for such shares is
made. In general, on and after the date two business days prior to the
Commencement Date (1) such market maker's net daily purchases of the Common
Stock may not exceed 30% of the market maker's average daily trading volume in
such stock for the two full consecutive calendar months immediately preceding
the filing date of the registration statement of which this Prospectus forms a
part, (2) such market maker may not effect transactions in, or display bids
for, the Common Stock at a price that exceeds the highest independent bid for
the Common Stock by persons who are not passive market makers and (3) bids
made by passive market makers must be identified as such.

LEGAL MATTERS

Certain legal matters in connection with this offering will be passed upon
for the Company by Duane, Morris & Heckscher, One Liberty Place, Philadelphia,
Pennsylvania 19103-7396. Certain legal matters in connection with this
offering will be passed upon for the Underwriters by Davis Polk & Wardwell,
450 Lexington Avenue, New York, New York 10017. Richard D. Spizzirri, a
director of the Company, is Senior Counsel to the firm of Davis Polk &
Wardwell and owns 112,444 shares of Common Stock, including 20,000 shares that
he has the right to acquire upon exercise of stock options. Davis Polk &
Wardwell represented the Company in connection with the Exchange Offer and
certain independent members of the Board of Directors of the Company in
connection with an investigation of the Company by the FDA that was completed
in December 1992 and, from time to time, has acted as counsel to Paine Webber
Group Inc., including in connection with the organization of CPII and CPIII.

45
<PAGE>

EXPERTS

The consolidated financial statements and schedule of the Company as of
December 31, 1995, 1994 and 1993, and for each of the years in the four-year
period ended December 31, 1995 have been incorporated by reference herein and
in the registration statement in reliance upon the report of KPMG Peat Marwick
LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The Company's Annual Report on Form 10-K for the year ended December 31,
1994, the Company's Quarterly Reports on Form 10-Q for the quarters ended
March 31, 1995, June 30, 1995 and September 30, 1995 and the Company's Current
Reports on Form 8-K dated July 12, 1995, January 26, 1996 and February 15,
1996 filed with the Securities and Exchange Commission (the "Commission") and
the description of the Company's Common Stock contained in its Registration
Statements on Form 8-A as filed with the Commission on April 28, 1983, as
amended, and October 11, 1988 are hereby incorporated by reference in this
Prospectus except as superseded or modified herein. All documents filed with
the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") after the date of this
Prospectus and prior to the termination of the offering shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from
the date of filing of such documents. Any statement contained in any document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent
that a statement contained herein or in any other subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus. The Company will provide without charge to each person,
including any beneficial owner, to whom this Prospectus is delivered, upon
written or oral request of such person, a copy of any and all of the documents
that have been or may be incorporated by reference herein (other than exhibits
to such documents which are not specifically incorporated by reference into
such documents). Such requests should be directed to the Company's Corporate
Secretary at its principal executive offices at 200 Great Valley Parkway,
Malvern, Pennsylvania 19355, or by telephone at (610) 651-6000.
AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith, files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information filed by the Company may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549-1004, and at the
Commission's following Regional Offices: New York Regional Office, 7 World
Trade Center, New York, New York 10048; and Chicago Regional Office, Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511.
Copies of such material may also be obtained at prescribed rates from the
Public Reference Branch of the Commission at 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549-1004. Quotations relating to the Company's
Common Stock appear on the Nasdaq National Market and such reports and other
information concerning the Company can also be inspected at the offices of the
Nasdaq Stock Market, 1735 K Street, N.W., Washington, D.C. 20006-1506.

The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act with respect to the Common Stock offered hereby.
This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto, certain
portions of which have been omitted as permitted by the rules and regulations
of the Commission. Statements contained in this Prospectus as to the contents
of any contract or other document referred to are not necessarily complete;
and with respect to each such contract or document filed as an exhibit to the
Registration Statement, reference is made to such exhibit for a more complete
description of the matters involved, each such statement being qualified in
all respects by such reference. For further information with respect to the
Company and the Common Stock, reference is made to the Registration Statement
and exhibits thereto. The information so omitted, including exhibits, may be
obtained from the Commission at its principal office in Washington, D.C. upon
payment of the prescribed fees, or may be inspected without charge at the
public reference facilities of the Commission at 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549-1004.

46
<PAGE>

[LOGO OF CENTOCOR APPEARS HERE]
<PAGE>

PROSPECTUS (Subject to Completion)

Issued February 16, 1996

3,500,000 Shares

[LOGO OF CENTOCOR CENTOCOR, INC.
INC. APPEARS HERE]
COMMON STOCK

-----------

OF THE 3,500,000 SHARES OF COMMON STOCK BEING OFFERED, 700,000 SHARES ARE BEING
OFFERED INITIALLY OUTSIDE THE UNITED STATES AND CANADA BY THE INTERNATIONAL
UNDERWRITERS AND 2,800,000 SHARES ARE BEING OFFERED INITIALLY IN THE UNITED
STATES AND CANADA BY THE U.S. UNDERWRITERS. SEE "UNDERWRITERS." ALL OF THE
SHARES OF COMMON STOCK OFFERED HEREBY ARE BEING SOLD BY THE COMPANY. THE COMMON
STOCK OF CENTOCOR, INC. IS QUOTED ON THE NASDAQ NATIONAL MARKET UNDER THE
SYMBOL "CNTO". ON FEBRUARY 14, 1996, THE REPORTED LAST SALE PRICE OF THE COMMON
STOCK ON THE NASDAQ NATIONAL MARKET WAS $32 1/4 PER SHARE.

-----------

SEE "RISK FACTORS" COMMENCING ON PAGE 7 HEREOF FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
-----------

</TABLE>
- ----------
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
(2) Before deducting expenses payable by the Company estimated at $400,000.
(3) The Company has granted to the U.S. Underwriters an option, exercisable
within 30 days of the date hereof, to purchase up to an aggregate of
525,000 additional Shares at the price to public less underwriting
discounts and commissions, for the purpose of covering over-allotments,
if any. If the U.S. Underwriters exercise such option in full, the total
price to public, underwriting discounts and commissions and proceeds to
Company will be $ , $ and $ , respectively.
See "Underwriters."
-----------

MORGAN STANLEY & CO.
International
HAMBRECHT & QUIST
J.P. MORGAN SECURITIES LTD.

, 1996
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14.OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
SEC Registration Fee................................................... $ 39,730
NASD Filing Fee........................................................ 12,022
Nasdaq National Market Fee............................................. 17,500
Blue Sky Qualification Fees and Expenses............................... 20,000*
Registrar and Transfer Agent Fees...................................... 15,000*
Legal Fees and Expenses................................................ 125,000*
Accounting Fees and Expenses........................................... 75,000*
Printing and Engraving................................................. 80,000*
Miscellaneous.......................................................... 15,748*
--------
Total................................................................. $400,000*
========
</TABLE>
- --------
*Estimated.

The Company will bear all of the foregoing expenses.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The form of Underwriting Agreement filed as Exhibit 1.1 hereto contains
certain provisions relating to indemnification. The Pennsylvania Business
Corporation Law authorizes the registrant to grant indemnities to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act.

Article 5 of Centocor's By-laws provides as follows:

"INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHER PERSONS

5.1 INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHER PERSONS. The
Corporation shall indemnify any director or officer of the Corporation or any
of its subsidiaries who was or is an "authorized representative" of the
Corporation (which shall mean, for the purposes of Paragraphs 5.1 through 5.7,
a director or officer of the Corporation, or a person serving at the request
of the Corporation as a director, officer, partner, fiduciary or trustee of
another corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise) and who was or is a "party" (which shall include for
purposes of Paragraphs 5.1 through 5.7 the giving of testimony or similar
involvement) or is threatened to be made a party to any "proceeding" (which
shall mean for purposes of Paragraphs 5.1 through 5.7 any threatened, pending
or completed action, suit, appeal or other proceeding of any nature, whether
civil, criminal, administrative or investigative, whether formal or informal,
and whether brought by or in the right of the Corporation, its shareholders or
otherwise) by reason of the fact that such person was or is an authorized
representative of the Corporation to the fullest extent permitted by law,
including without limitation indemnification against expenses (which shall
include for purposes of Paragraphs 5.1 through 5.7 attorneys' fees and
disbursements), damages, punitive damages, judgments, penalties, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such proceeding unless the act or failure to act giving rise
to the claim is finally determined by a court to have constituted willful
misconduct or recklessness. If an authorized representative is not entitled to
indemnification in respect of a portion of any liabilities to which such
person may be subject, the Corporation shall nonetheless indemnify such person
to the maximum extent for the remaining portion of the liabilities.

5.2 ADVANCEMENT OF EXPENSES. The Corporation shall pay the expenses
(including attorneys' fees and disbursements) actually and reasonably incurred
in defending a proceeding on behalf of any person entitled to indemnification
under Paragraph 5.1 in advance of the final disposition of such proceeding
upon receipt of an

II-1
<PAGE>

undertaking by or on behalf of such person to repay such amount if it shall
ultimately be determined that such person is not entitled to be indemnified by
the Corporation as authorized in Paragraphs 5.1 through 5.7 and may pay such
expenses in advance on behalf of any employee or agent on receipt of a similar
undertaking. The financial ability of such authorized representative to make
such repayment shall not be prerequisite to the making of an advance.

5.3 EMPLOYEE BENEFIT PLANS. For purposes of Paragraphs 5.1 through 5.7, the
Corporation shall be deemed to have requested an officer or director to serve
as fiduciary with respect to an employee benefit plan where the performance by
such person of duties to the Corporation also imposes duties on, or otherwise
involves services by, such person as a fiduciary with respect to the plan;
excise taxes assessed on an authorized representative with respect to any
transaction with an employee benefit plan shall be deemed "fines"; and action
taken or omitted by such person with respect to an employee benefit plan in
the performance of duties for a purpose reasonably believed to be in the
interest of the participants and beneficiaries of the plan shall be deemed to
be for a purpose which is not opposed to the best interests of the
Corporation.

5.4 SECURITY FOR INDEMNIFICATION OBLIGATIONS. To further effect, satisfy or
secure the indemnification obligations provided herein or otherwise, the
Corporation may maintain insurance, obtain a letter of credit, act as self-
insurer, create a reserve, trust, escrow, cash collateral or other fund or
account, enter into indemnification agreements, pledge or grant a security
interest in any assets or properties of the Corporation, or use any
other mechanism or arrangement whatsoever in such amounts, at such costs, and
upon such other terms and conditions as the Board of Directors shall deem
appropriate.

5.5 RELIANCE UPON PROVISIONS. Each person who shall act as an authorized
representative of the Corporation shall be deemed to be doing so in reliance
upon the rights of indemnification provided by these Paragraphs 5.1 through
5.7.

5.6 AMENDMENT OR REPEAL. All rights of indemnification under Paragraphs 5.1
through 5.7 shall be deemed a contract between the Corporation and the person
entitled to indemnification under these Paragraphs 5.1 through 5.7 pursuant to
which the Corporation and each such person intend to be legally bound. Any
repeal, amendment or modification hereof shall be prospective only and shall
not limit, but may expand, any rights or obligations in respect of any
proceeding whether commenced prior to or after such change to the extent such
proceeding pertains to actions or failures to act occurring prior to such
change.

5.7 SCOPE. The indemnification, as authorized by these Paragraphs 5.1
through 5.7, shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under any
statute, agreement, vote of shareholders or disinterested directors or
otherwise, both as to action in an official capacity and as to action in any
other capacity while holding such office. The indemnification and advancement
of expenses provided by, or granted pursuant to, these Paragraphs 5.1 through
5.7 shall continue as to a person who has ceased to be an officer or director
in respect of matters arising prior to such time, and shall inure to the
benefit of the heirs, executors and administrators of such person."

The Board of Directors of Centocor has determined to provide liability
insurance for each director and officer for certain losses arising from claims
or charges made against them while acting in their capacity as directors or
officers of Centocor.

II-2
<PAGE>

ITEM 16.EXHIBITS.

1.1 Form of Underwriting Agreement.
4.1 Specimen Certificate for Common Stock (incorporated by reference to
Exhibit 4 to Amendment No. 1 to Form S-1 Registration Statement, File
No. 2-80098).
4.2 Rights Agreement between Centocor, Inc. and the First National Bank of
Boston as Rights Agent dated September 26, 1988 (incorporated by
reference to Exhibit 4 to Registrant's Current Report on Form 8-K
dated September 26, 1988).

5.1 Opinion of Duane, Morris & Heckscher.*

23.1 Consent of Duane, Morris & Heckscher (included in their opinion filed
as Exhibit 5.1).*
23.2 Consent of KPMG Peat Marwick LLP.

24.1 Power of Attorney.**

- --------

* Previously filed under this Registration Statement.

**Incorporated by reference to page II-4 of Part II of the Company's Form S-3
Registration Statement No. 333-00337 filed with the Commission on January
22, 1996.

ITEM 17.UNDERTAKINGS.

The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be
a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act of 1933 shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-3
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Malvern, Pennsylvania on February 15, 1996.

CENTOCOR, INC.

By: /s/ David P. Holveck
---------------------------------
David P. Holveck,
President and Chief Executive
Officer

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.

SIGNATURES TITLE DATE
---------- ----- ----
<S> <C>
/s/ Hubert J. P. Schoemaker Chairman of the Board February 15, 1996
- -------------------------------------
HUBERT J. P. SCHOEMAKER

/s/ David P. Holveck President, Chief February 15, 1996
- ------------------------------------- Executive Officer
DAVID P. HOLVECK and Director
(principal
executive officer)

/s/ Dominic J. Caruso Vice President-- February 15, 1996
- ------------------------------------- Finance and Chief
DOMINIC J. CARUSO Financial Officer
(principal
financial and
accounting officer)

* Director February 15, 1996
- -------------------------------------
ANTHONY B. EVNIN

* Director February 15, 1996
- -------------------------------------
WILLIAM F. HAMILTON

* Director February 15, 1996
- -------------------------------------
ANTONIE T. KNOPPERS

* Director February 15, 1996
- -------------------------------------
RONALD A. MATRICARIA

* Director February 15, 1996
- -------------------------------------
LAWRENCE STEINMAN

* Director February 15, 1996
- -------------------------------------
RICHARD D. SPIZZIRRI

* Director February 15, 1996
- -------------------------------------
JEAN C. TEMPEL
</TABLE>

*By: /s/ Dominic J. Caruso
---------------------------
DOMINIC J. CARUSO,
ATTORNEY-IN-FACT

II-4
<PAGE>

EXHIBIT INDEX
(Pursuant to Item 601 of Regulation S-K)

<TABLE>
<CAPTION>
XHIBITE
NO. EXHIBIT PAGE
- ------- ------- ----
<S> <C> <C>
1.1 Form of Underwriting Agreement.
4.1 Specimen Certificate for Common Stock (incorporated by reference to Exhibit 4 to
Amendment No. 1 to Form S-1 Registration Statement, File No. 2-80098).
4.2 Rights Agreement between Centocor, Inc. and the First National Bank of Boston as
Rights Agent dated September 26, 1988 (incorporated by reference to Exhibit 4 to
Registrant's Current Report on Form 8-K dated September 26, 1988).
5.1 Opinion of Duane, Morris & Heckscher.*
23.1 Consent of Duane, Morris & Heckscher (included in their opinion filed as Exhibit 5.1).*
23.2 Consent of KPMG Peat Marwick LLP.
24.1 Power of Attorney.**
</TABLE>
- --------

* Previously filed under this Registration Statement.

** Incorporated by reference to page II-4 of Part II of the Company's Form S-3
Registration Statement No. 333-00337 filed with the Commission on January
22, 1996.

<PAGE>

3,500,000 Shares

CENTOCOR, INC.

COMMON STOCK, $.01 PAR VALUE

UNDERWRITING AGREEMENT

__________, 1996
<PAGE>

_____________, 1996

Morgan Stanley & Co.
Incorporated
Hambrecht & Quist LLC
J.P. Morgan Securities Inc.
c/o Morgan Stanley & Co.
Incorporated
1585 Broadway
New York, New York 10036

Morgan Stanley & Co. International Limited
Hambrecht & Quist LLC
J.P. Morgan Securities Ltd.
c/o Morgan Stanley & Co.
International Limited
25 Cabot Square
Canary Wharf
London E14 4QA
England

Dear Sirs and Mesdames:

Centocor, Inc., a Pennsylvania corporation (the "Company"), proposes to
issue and sell to the several Underwriters (as defined below) 3,500,000 shares
of its Common Stock, $.01 par value (the "Firm Shares").

It is understood that, subject to the conditions hereinafter stated,
2,800,000 Firm Shares (the "U.S. Firm Shares") will be sold to the several U.S.
Underwriters named in Schedule I hereto (the "U.S. Underwriters") in connection
with the offering and sale of such U.S. Firm Shares in the United States and
Canada to United States and Canadian Persons (as such terms are defined in the
Agreement Between U.S. and International Underwriters of even date herewith),
and 700,000 Firm Shares (the "International Shares") will be
<PAGE>

sold to the several International Underwriters named in Schedule II hereto (the
"International Underwriters") in connection with the offering and sale of such
International Shares outside the United States and Canada to persons other than
United States and Canadian Persons. Morgan Stanley & Co. Incorporated, Hambrecht
& Quist LLC and J.P. Morgan Securities Inc., shall act as representatives (the
"U.S. Representatives") of the several U.S. Underwriters, and Morgan Stanley &
Co. International Limited, Hambrecht & Quist LLC and J.P. Morgan Securities
Ltd., shall act as representatives (the "International Representatives") of the
several International Underwriters. The U.S. Underwriters and the International
Underwriters are hereinafter collectively referred to as the Underwriters.

The Company also proposes to issue and sell to the several U.S.
Underwriters not more than an additional 525,000 shares of its Common Stock,
$.01 par value (the "Additional Shares") if and to the extent that the U.S.
Representatives shall have determined to exercise, on behalf of the U.S.
Underwriters, the right to purchase such shares of common stock granted to the
U.S. Underwriters in Section 2 hereof. The Firm Shares and the Additional
Shares are hereinafter collectively referred to as the "Shares". The shares of
Common Stock, $.01 par value of the Company to be outstanding after giving
effect to the sales contemplated hereby are hereinafter referred to as the
"Common Stock". Each share of Common Stock, including the Shares, will have
attached thereto one-half of one right (collectively, the "Rights") to purchase
one-hundredth of a share of Series A Preferred Stock, $.01 par value of the
Company (the "Series A Preferred Stock"). The Rights have been issued pursuant
to a Rights Agreement (the "Rights Agreement") dated as of September 26, 1988
between the Company and The First National Bank of Boston, as Rights Agent.

The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (File No. 333-00337),
including a prospectus, relating to the Shares. The registration statement
contains two prospectuses to be used in connection with the offering and sale of
the Shares: the U.S.

2
<PAGE>

prospectus, to be used in connection with the offering and sale of Shares in the
United States and Canada to United States and Canadian Persons, and the
international prospectus, to be used in connection with the offering and sale of
Shares outside the United States and Canada to persons other than United States
and Canadian Persons. The international prospectus is identical to the U.S.
prospectus except for the outside front cover page. The registration statement
as amended at the time it becomes effective, including the information (if any)
deemed to be part of the registration statement at the time of effectiveness
pursuant to Rule 430A under the Securities Act of 1933, as amended (the
"Securities Act"), is hereinafter referred to as the "Registration Statement";
the U.S. prospectus and the international prospectus in the respective forms
first used to confirm sales of Shares are hereinafter collectively referred to
as the "Prospectus" (including in the case of all references to the Registration
Statement and the Prospectus, documents incorporated therein by reference). If
the Company files a registration statement to register a portion of the Shares
and relies on Rule 462(b) under the Securities Act for such registration
statement to become effective upon filing with the Commission (the "Rule 462
Registration Statement"), then any reference to the "Registration Statement"
shall be deemed to refer to both the registration statement referred to above
and the Rule 462 Registration Statement, in each case as amended from time to
time.

1. Representations and Warranties of the Company.
---------------------------------------------
The Company represents and warrants to each of the Underwriters that:

(a) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or threatened by the
Commission.

(b) (i) Each document, if any, filed or to be filed pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and
incorporated by

3
<PAGE>

reference in the Prospectus complied or will comply when so filed in all
material respects with the Exchange Act and the applicable rules and
regulations of the Commission thereunder, (ii) each part of the
Registration Statement, when such part became effective, did not contain
and each such part, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading, (iii) the Registration Statement and the Prospectus
comply and, as amended or supplemented, if applicable, will comply in all
material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder and (iv) the Prospectus does not
contain and, as amended or supplemented, if applicable, will not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that the representations
and warranties set forth in this paragraph 1(b) do not apply to statements
or omissions in the Registration Statement or the Prospectus based upon
information relating to any Underwriter furnished to the Company in writing
by such Underwriter through you expressly for use therein.

(c) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the failure
to be so qualified or be in good standing would not have a material adverse
effect on the Company and its Subsidiaries (as defined below), taken as a
whole. The Company has all requisite corporate power and authority

4
<PAGE>

to execute, deliver and perform its obligations under this Agreement and to
issue, sell and deliver the Shares to be sold by it to the Underwriters as
provided herein.

(d) Each Subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority to
own its property and to conduct its business as described in the Prospectus
and is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that
the failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its Subsidiaries, taken as a
whole.

(e) The Company has no direct or indirect subsidiaries other than the
subsidiaries (the "Subsidiaries") listed in Exhibit 21 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1994 (the "Form
10-K"). The Company owns all of the outstanding capital stock or other
securities evidencing equity ownership of each such Subsidiary, free and
clear of any security interest, claim, lien or encumbrance. All of such
securities have been duly authorized, validly issued and are fully paid and
nonassessable and were not issued in violation of any preemptive or similar
rights. There are no outstanding rights, warrants or options to acquire,
or instruments convertible into or exchangeable for, any shares of capital
stock or other equity interest of any such Subsidiary.

(f) The authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus.

5
<PAGE>

(g) The shares of Common Stock outstanding prior to the issuance of
the Shares have been duly authorized and are validly issued, fully paid and
non-assessable.

(h) The Rights Agreement has been duly authorized, executed and
delivered by the Company; the Rights have been duly authorized by the
Company and, when issued upon issuance of the Shares, will be validly
issued, and the Series A Preferred Stock has been duly authorized by the
Company and validly reserved for issuance upon the exercise of the Rights
and, when issued upon such exercise in accordance with the terms of the
Rights Agreement, will be validly issued, fully paid and non-assessable.

(i) The Common Stock, including the Shares, has been approved for
quotation and trading on the Nasdaq National Market under the symbol
"CNTO".

(j) The Shares have been duly authorized and, when issued, delivered
and paid for in accordance with the terms of this Agreement, will be
validly issued, fully paid and non-assessable, and the issuance of such
Shares will not be subject to any preemptive or similar rights.

(k) This Agreement has been duly authorized, executed and delivered
by the Company.

(l) (i) Neither the Company nor any of its Subsidiaries is (A) in
violation of its respective certificate of incorporation or bylaws, (B) in
default in the performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of
indebtedness or in any indenture, mortgage or deed of trust or other
material agreement to which it is a party or by which it is bound or to
which any of its properties is subject, other than any defaults that have
been waived in writing as described in the Prospectus or (C) in violation
of any law, statute, rule, regulation, judgment or court decree applicable
to it, which violation or default under

6
<PAGE>

clause (A), clause (B) or clause (C), singly or in the aggregate, would
have a material adverse effect on the Company and its Subsidiaries, taken
as a whole. There exists no condition that, with notice, the passage of
time or otherwise, would constitute such a violation or default under any
such document or instrument.

(m) The execution and delivery by the Company of, and the performance
by the Company of its obligations under, this Agreement will not contravene
any provision of applicable law or the certificate of incorporation or by-
laws of the Company or any agreement or other instrument binding upon the
Company or any of its Subsidiaries that is material to the Company and its
Subsidiaries, taken as a whole, or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Company or
any Subsidiary, and no consent, approval, authorization or order of or
qualification with any governmental body or agency is required for the
performance by the Company of its obligations under this Agreement, except
such as may be required by the securities or Blue Sky laws of the various
states in connection with the offer and sale of the Shares.

(n) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its Subsidiaries, taken as a whole, from that
set forth in the Prospectus.

(o) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its Subsidiaries is a party or to
which any of the properties of the Company or any of its Subsidiaries is
subject that are required to be described in the Registration Statement or
the Prospectus and are not so described or any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the

7
<PAGE>

Registration Statement that are not described or filed as required.

(p) Each of the Company and its Subsidiaries has all necessary
consents, authorizations, approvals, orders, certificates and permits of
and from, and has made all declarations and filings with, all federal,
state, local and other governmental authorities, all self-regulatory
organizations and all courts and other tribunals, to own, lease, license
and use its properties and assets and to conduct its business in the manner
described in the Prospectus, except to the extent that the failure to
obtain or file would not have a material adverse effect on the Company and
its Subsidiaries, taken as a whole.

(q) The accountants who have audited or shall audit the financial
statements filed or to be filed with the Commission as part of the
Registration Statement are independent accountants as required by the
Securities Act. The financial statements, together with the related
schedules and notes thereto set forth in the Registration Statement comply
in all material respects with the requirements of the Securities Act and
have been prepared, and fairly present the financial condition of the
Company and its Subsidiaries and the consolidated financial condition and
results of operations of the Company and its Subsidiaries at the respective
dates and for the respective periods indicated, in accordance with
generally accepted accounting principles consistently applied throughout
such periods.

(r) The Company and its Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or
specific authorizations and (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets.

8
<PAGE>

(s) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 or Rule 462 under the Securities Act, complied when so
filed in all material respects with the Securities Act and the rules and
regulations of the Commission thereunder.

(t) The Company is not an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended.

(u) Except as disclosed in the Prospectus, the Company and each of
the Subsidiaries owns, or possesses adequate rights to use, all material
patents, patent rights, inventions, trade secrets, licenses, know-how,
proprietary techniques, including processes and substances, trademarks,
service marks, trade names and copyrights described or referred to in the
Prospectus as owned or used by it or which are necessary for the
conduct of its business as described in the Prospectus, except to the
extent that the Company has granted licenses to Eli Lilly & Co., Glaxo
Wellcome plc and Centocor Partners III, L.P. To the knowledge of the
Company, all such material patents, patent rights, licenses, trademarks,
service marks and copyrights are (i) valid and enforceable and (ii) not
being infringed by any third parties which infringement could, whether
singly or in the aggregate, materially and adversely affect the Company and
its Subsidiaries, taken as a whole. Neither the Company nor any of the
Subsidiaries have knowledge of, nor have they received any notice of,
infringement of or conflict with, asserted rights of others with respect to
any material patents, patent rights, inventions, trade secrets, licenses,
know-how, proprietary techniques, including processes and substances,
trademarks, service marks, trade names or copyrights which, singly or in
the aggregate, if the subject of an unfavorable decision, ruling or finding
could materially and adversely affect the Company and its Subsidiaries,
taken as a whole.

9
<PAGE>

(v) To the knowledge of the Company, the product license applications
("PLAs") filed with the United States Food and Drug Administration (the
"FDA") with respect to ReoPro and Myoscint comply in all material respects
with the rules and regulations of the FDA regarding the filing of PLAs.
All information and data submitted to the FDA as part of such PLAs were
true and accurate when so filed. To the knowledge of the Company, the
application filed by the Company with the Paul Ehrlich Institute with
respect to Panorex complies in all material respects with the rules and
regulations governing such application and data submitted to the Paul
Ehrlich Institute as part of such application were true and accurate when
so filed. The Company reasonably believes that the clinical data submitted
as part of the PLA with respect to Myoscint are sufficient to support
approval of the PLA with respect to Myoscint in the United States.

(w) The Company and its Subsidiaries are (i) in compliance with any
and all applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals would not, singly or in
the aggregate, have a material adverse effect on the Company and its
Subsidiaries, taken as a whole.

(x) In the ordinary course of its business, the Company conducts a
periodic review of the effect of Environmental Laws on the business,
operations and properties of the Company and its Subsidiaries, in the
course of which it identifies and evaluates associated

10
<PAGE>

costs and liabilities (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval, any
related constraints on operating activities and any potential liabilities
to third parties). On the basis of such review, the Company has reasonably
concluded that such associated costs and liabilities would not, singly or
in the aggregate, have a material adverse effect on the Company and its
Subsidiaries, taken as a whole.

(y) The Company and its Subsidiaries have complied with all
provisions of Florida H.B. 1771, codified as Section 517.075 of the Florida
Statutes, and all regulations promulgated thereunder relating to issuers
doing business with the Government of Cuba or with any person or any
affiliate located in Cuba.

2. Agreements to Sell and to Purchase. The Company hereby agrees to
----------------------------------
sell to the several Underwriters, and the Underwriters, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agree, severally and not jointly, to purchase from the
Company at $ a share (the "Purchase Price") the number of Firm Shares
-----
(subject to such adjustments to eliminate fractional shares as you may
determine) that bears the same proportion to the number of Firm Shares to be
sold by the Company as the number of Firm Shares set forth in Schedule I or
Schedule II hereto opposite the name of such Underwriter bears to the total
number of Firm Shares.

On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the U.S. Underwriters the Additional Shares, and the U.S. Underwriters shall
have a one-time right to purchase, severally and not jointly, up to 525,000
Additional Shares at a purchase price per share equal to the Purchase Price. If
the U.S. Representatives, on behalf of the U.S. Underwriters, elect to exercise
such option, the U.S.

11
<PAGE>

Representatives shall so notify the Company in writing not later than 30 days
after the date of this Agreement, which notice shall specify the number of
Additional Shares to be purchased by the U.S. Underwriters and the date on which
such shares are to be purchased. Such date may be the same as the date of the
Closing Date (as defined below) but not earlier than the Closing Date nor later
than ten business days after the date of such notice. Additional Shares may be
purchased as provided in Section 4 hereof solely for the purpose of covering
over-allotments made in connection with the offering of the Firm Shares. If any
Additional Shares are to be purchased, each U.S. Underwriter agrees, severally
and not jointly, to purchase the number of Additional Shares (subject to such
adjustments to eliminate fractional shares as the U.S. Representatives may
determine) that bears the same proportion to the total number of Additional
Shares to be purchased as the number of U.S. Firm Shares set forth in Schedule I
hereto opposite the name of such U.S. Underwriter bears to the total number of
U.S. Firm Shares.

The Company hereby agrees that, without the prior written consent of
Morgan Stanley & Co. Incorporated on behalf of the Underwriters, it will not,
during the period ending 90 days after the date of the Prospectus, (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase or otherwise transfer or dispose of, directly or indirectly, any shares
of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (ii) enter into any swap or other agreement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction described in
clause (i) or (ii) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The foregoing sentence shall not apply
to (A) the Shares (including the Rights attached thereto) to be sold hereunder;
(B) any shares of Common Stock issued upon the exercise of an option or warrant
or the conversion of a security outstanding on the date of the Prospectus; (C)
any shares of Common Stock issued upon the exercise of any Right; (D) any
options granted or shares of Common Stock

12
<PAGE>

issued pursuant to existing benefits plans of the Company; or (E) the sale by
the Company's executive officers and directors of up to an aggregate of 200,000
shares of Common Stock.

3. Terms of the Public Offering. The Company is advised by you that
----------------------------
the Underwriters propose to make a public offering of their respective portions
of the Shares as soon after the Registration Statement and this Agreement have
become effective as in your judgment is advisable. The Company is further
advised by you that the Shares are to be offered to the public initially at
U.S.$ a share (the "Public Offering Price") and to certain dealers selected
-----
by you at a price that represents a concession not in excess of U.S.$ a
----
share under the Public Offering Price, and that any Underwriter may allow, and
such dealers may re-allow, a concession, not in excess of U.S.$ a share, to
----
any Underwriter or to certain other dealers.

Each U.S. Underwriter hereby makes to and with the Company the
representations and agreements of such U.S. Underwriter contained in the fifth
and sixth paragraphs of Article III of the Agreement Between U.S. and
International Underwriters of even date herewith. Each International
Underwriter hereby makes to and with the Company the representations and
agreements of such International Underwriter contained in the seventh, eighth,
ninth and tenth paragraphs of Article III of such Agreement.

4. Payment and Delivery. Payment for the Firm Shares shall be made
--------------------
to the Company in Federal or other funds immediately available in New York City
against delivery of such Firm Shares for the respective accounts of the several
Underwriters at the office of Davis Polk & Wardwell, 450 Lexington Avenue, New
York, New York, at 10:00 A.M., local time, on , 1996, or at such other
---------
time on the same or such other date, not later than , 1996 as shall be
----------
designated in writing by you. The time and date of such payment are
hereinafter referred to as the "Closing Date".

13
<PAGE>

Payment for any Additional Shares shall be made to the Company in
Federal or other funds immediately available in New York City against delivery
of such Additional Shares for the respective accounts of the several
Underwriters at the office of Davis Polk & Wardwell, 450 Lexington Avenue, New
York, New York, at 10:00 A.M., local time, on the date specified in the notice
described in Section 2 or on such other date, in any event not later than
, 1996, as shall be designated in writing by the U.S. Representatives.
- ---------
The time and date of such payment are hereinafter referred to as the "Option
Closing Date".

Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than two full business days prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Shares to the Underwriters duly paid,
against payment of the purchase price therefor.

5. Conditions to the Company's and the Underwriters' Obligations.
-------------------------------------------------------------
The obligation of the Company to sell the Firm Shares to the Underwriters and
the several obligations of the Underwriters to purchase and pay for the Firm
Shares on the Closing Date are subject to the condition that the Registration
Statement shall have become effective not later than 2 p.m. (New York time) on
the date hereof and that no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or threatened.

The several obligations of the Underwriters hereunder are subject to
the following further conditions:

(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:

14
<PAGE>

(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of
any review for a possible change that does not indicate the direction
of the possible change, in the rating accorded any of the Company's
securities by any "nationally recognized statistical rating
organization," as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act; and

(ii) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations, of the Company
and its subsidiaries, taken as a whole, from that set forth in the
Registration Statement, that, in your judgment, is material and
adverse and that makes it, in your judgment, impracticable to market
the Shares on the terms and in the manner contemplated in the
Prospectus.

(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of
the Company, to the effect set forth in clause (a) (ii) above and to the
effect that the representations and warranties of the Company contained in
this Agreement are true and correct as of the Closing Date and that the
Company has complied with all of the agreements and satisfied all of the
conditions on its part to be performed or satisfied hereunder on or before
the Closing Date.

(c) The Underwriters shall have received on the Closing Date an
opinion of Duane, Morris & Heckscher, counsel for the Company, dated the
Closing Date, to the effect that

(i) the Company has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the jurisdiction
of its incorporation, has the corporate power and

15
<PAGE>

authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse
effect on the Company and its Subsidiaries taken as a whole;

(ii) each Subsidiary of the Company has been duly incorporated,
is validly existing as a corporation in good standing under the laws
of the jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries taken as a whole;

(iii) the Company owns all of the outstanding capital stock or
other securities evidencing equity ownership of each such Subsidiary,
free and clear of any security interest, claim, lien or encumbrance.
All of such securities have been duly authorized, validly issued and
are fully paid and nonassessable and were not issued in violation of
any preemptive or similar rights. To the best of such counsel's
knowledge, there are no outstanding rights, warrants or options to
acquire, or instruments convertible into or exchangeable for, any
shares of capital stock or other equity interest of any such
Subsidiary;

16
<PAGE>

(iv) the authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus;

(v) the shares of Common Stock outstanding prior to the issuance
of the Shares have been duly authorized and are validly issued, fully
paid and non-assessable;

(vi) the Shares have been duly authorized and, when issued,
delivered and paid for in accordance with the terms of this Agreement,
will be validly issued, fully paid and non-assessable, and the
issuance of such Shares will not be subject to any preemptive or
similar rights;

(vii) this Agreement has been duly authorized, executed and
delivered by the Company;

(viii) the Rights Agreement has been duly authorized, executed and
delivered by the Company; the Rights have been duly authorized by the
Company and, when issued upon issuance of the Shares, will be validly
issued, and the Series A Preferred Stock has been duly authorized by
the Company and validly reserved for issuance upon the exercise of the
Rights and, when issued upon such exercise in accordance with the
terms of the Rights Agreement, will be validly issued, fully paid and
non-assessable;

(ix) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement
will not contravene any provision of applicable law or the certificate
of incorporation or by-laws of the Company or, to the best of such
counsel's knowledge, any agreement or other instrument binding upon
the Company or any of its Subsidiaries that is material to the Company
and its Subsidiaries, taken as a whole, or, to the best of such
counsel's knowledge, any judgment, or

17
<PAGE>

decree of any governmental body, agency or court having jurisdiction
over the Company or any Subsidiary, and no consent, approval,
authorization or order of or qualification with any governmental body
or agency is required for the performance by the Company of its
obligations under this Agreement, except such as may be required by
the securities or Blue Sky laws of the various states in connection
with the offer and sale of the Shares by the U.S. Underwriters;

(x) the statements (1) in the Prospectus under the captions
"Description of Capital Stock", "Certain United States Federal Tax
Considerations to Non-United States Holders of Common Stock" and
"Underwriters" and (2) in the Registration Statement in Item 15, in
each case insofar as such statements constitute summaries of the legal
matters, documents or proceedings referred to therein, fairly present
the information called for with respect to such legal matters,
documents and proceedings and fairly summarize the matters referred to
therein;

(xi) (i) neither the Company nor any of its Subsidiaries is (A)
in violation of its respective certificate of incorporation or bylaws,
(B) to the best of such counsel's knowledge, in default in the
performance of any obligation, agreement or condition contained in any
bond, debenture, note or any other evidence of indebtedness or in any
indenture, mortgage or deed of trust or other material agreement to
which it is a party or by which it is bound or to which any of its
properties is subject, other than any defaults that have been waived
in writing as described in the Prospectus or (C) in violation of any
law, statute, rule, regulation, judgment or court decree applicable to
it, which violation or default under clause (A), clause (B) or clause
(C), singly or in the aggregate, would have a material adverse effect
on the Company and its

18
<PAGE>

Subsidiaries, taken as a whole. To the best of such counsel's
knowledge, there exists no condition that, with notice, the passage of
time or otherwise, would constitute such a violation or default under
any such document or instrument;

(xii) after due inquiry, to the best of such counsel's knowledge,
there are no legal or governmental proceedings pending or threatened
to which the Company or any of its Subsidiaries is a party or to which
any of the properties of the Company or any of its subsidiaries is
subject that are required to be described in the Registration
Statement or the Prospectus and are not so described or of any
statutes, regulations, contracts or other documents that are required
to be described in the Registration Statement or the Prospectus or to
be filed as exhibits to the Registration Statement that are not
described or filed as required;

(xiii) the Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in
the Investment Company Act of 1940, as amended;

(xiv) such counsel is of the opinion that the Company is (i) in
compliance with any and all applicable Environmental Laws, (ii) has
received all permits, licenses or other approvals required of it under
applicable Environmental Laws to conduct its business and (iii) is in
compliance with all terms and conditions of any such permit, license
or approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits,
licenses or approvals would not, singly or in the aggregate, have a
material adverse effect on the Company and its Subsidiaries, taken as
a whole;

19
<PAGE>

(xv) the Registration Statement has become effective under the
Securities Act and any required filing of the Prospectus, or any
supplement thereto, pursuant to Rule 424 or Rule 462 under the
Securities Act has been made in a manner and within the time period
required thereunder and no stop order suspending the effectiveness of
the Registration Statement or post-effective amendment thereto has
been issued and, to such counsel's knowledge, no proceedings for that
purpose are pending or threatened by the Commission; and

(xvi) such counsel (1) is of the opinion that each document, if
any, filed pursuant to the Exchange Act and incorporated by reference
in the Registration Statement and the Prospectus (except for financial
statements and schedules as to which such counsel need not express any
opinion) complied when so filed as to form in all material respects
with the Exchange Act and the rules and regulations of the Commission
thereunder, (2) is of the opinion that the Registration Statement and
Prospectus (except for financial statements and schedules included
therein as to which such counsel need not express any opinion) comply
as to form in all material respects with the Securities Act and the
rules and regulations of the Commission thereunder, (3) believes that
(except for financial statements and schedules as to which such
counsel need not express any belief) the Registration Statement and
the prospectus included therein at the time the Registration Statement
became effective did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (4)
believes that (except for financial statements and schedules as to
which such counsel need not express any belief) the Prospectus does
not contain any untrue statement of a material fact or omit to state a
material

20
<PAGE>

fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.

(d) The Underwriters shall have received on the Closing Date an
opinion of George D. Hobbs, Corporate Counsel for the Company, dated the
Closing Date, to the effect that:

(i) there is a strong likelihood that the Company will obtain
patents in respect of the several patent applications relating to the
Company's ReoPro and Panorex products set forth in Attachment A to
such opinion (the "Patent Applications");

(ii) patents which issue upon the Patent Applications will
provide significant patent protection to the Company;

(iii) the Company has obtained issued patents relating to ReoPro
and Panorex in , , and (the "Existing
----- -------- ---------
Patents") and maintained the Existing Patents in good standing;

(iv) such counsel does not know of any pending or threatened
legal or government proceedings relating to patents or proprietary
know-how owned or used by the Company to which the Company is a party
or to which the properties of the Company are subject which, if
adversely decided, would have a material adverse effect on the
business, financial condition or results of the operations of the
Company and its Subsidiaries, taken as a whole; and

(v) such counsel has no knowledge of any infringement or alleged
infringement by the Company of patent rights of others which would
have a material adverse effect on the business, financial condition or
results of operations of

21
<PAGE>

the Company and its Subsidiaries, taken as a whole.

(vi) the statements in the Prospectus with respect to the receipt
of FDA approval of the Company's PLA regarding ReoPro are true,
correct and complete and such counsel is not aware of any facts that
would lead such counsel to believe that such approval will be
withdrawn by the FDA; and

(vii) the statements in the Prospectus under the captions
"Business -- Governmental Regulation" and "Business -- Legal
Proceedings" and in each case insofar as such statements constitute
summaries of the legal matters, documents or proceedings referred to
therein, fairly present the information called for with respect to
such legal matters, documents and proceedings and fairly summarize the
matters referred to therein.

(e) You shall have received on the Closing Date an opinion of Davis
Polk & Wardwell, special counsel for the Underwriters, dated the Closing
Date, covering the matters referred to in subparagraphs (xv) and clauses
(3) and (4) of subparagraph (xvi) of paragraph (c) above, and to the effect
that the statements in the Prospectus under the caption "Underwriters,"
insofar as such statements constitute summaries of the legal matters or
documents referred to therein, are accurate in all material respects and
fairly present the matters referred to therein.

With respect to subparagraph (xvi) of paragraph (c) above, Duane,
Morris & Heckscher may state that their opinion and belief are based upon their
participation in the
preparation of the Registration Statement and Prospectus and any amendments or
supplements thereto and documents incorporated therein by reference and review
and discussion of the contents thereof, but is without independent check or
verification except as specified. With respect to paragraph (c) above, Duane,
Morris & Heckscher may rely as to matters of the laws of The Netherlands upon
the opinion of Ekelmans

22
<PAGE>

Den Hollander; provided that (A) a copy of such opinion is delivered to you and
--------
is form and substance satisfactory to your counsel, and (B) Duane, Morris &
Heckscher shall state in their opinion that they are justified in relying on
such opinion. With respect to paragraph (d) above, George D. Hobbs may rely upon
the opinion or opinions of other counsel; provided that (A) a copy of each such
--------
opinion is delivered to you and is in form and substance satisfactory to your
counsel, and George D. Hobbs shall state in his opinion that he is justified in
relying upon such opinion. With respect to clauses (3) and (4) of subparagraph
(xvi) of paragraph (c) above, Davis Polk & Wardwell may state that their opinion
and belief are based upon their participation in the preparation of the
Registration Statement and Prospectus and any amendments or supplements thereto
(other than the documents incorporated by reference) and review and discussion
of the contents thereof (including documents incorporated therein by reference),
but are without independent check or verification except as specified.

The opinion of Duane, Morris & Heckscher described in paragraph (c)
above shall be rendered to the Underwriters at the request of the Company and
shall so state therein.

(f) You shall have received, on each of the date hereof and the
Closing Date, a letter dated the date hereof or the Closing Date, as the
case may be, in form and substance satisfactory to you, from KPMG Peat
Marwick LLP, independent public accountants, containing statements and
information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain financial information contained in or incorporated by reference
into the Registration Statement and the Prospectus.

(g) The "lock-up" agreements between you and certain shareholders,
officers and directors of the Company in the form of Exhibit A hereto
relating to sales of shares of common stock of the Company or certain other
securities, delivered to you on or before

23
<PAGE>

the date hereof, shall be in full force and effect on the Closing Date.

The several obligations of the U.S. Underwriters to purchase
Additional Shares hereunder are subject to the delivery to the U.S.
Representatives on the Option Closing Date of such documents as they may
reasonably request with respect to the good standing of the Company, the due
authorization and issuance of the Additional Shares and other matters related to
the issuance of the Additional Shares.

6. Covenants of the Company. In further consideration of the
------------------------
agreements of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:

(a) To furnish to you, without charge, seven signed copies of the
Registration Statement (including exhibits thereto and documents
incorporated therein by reference) and to each other Underwriter a copy of
the Registration Statement (without exhibits thereto but including
documents incorporated therein by reference) and, during the period
mentioned in paragraph (c) below, as many copies of the Prospectus, any
documents incorporated therein by reference, and any supplements and
amendments thereto as you may reasonably request. The terms "supplement"
and "amendment" or "amend" as used in this Agreement shall include all
documents subsequently filed by the Company with the Commission pursuant to
the Securities Exchange Act of 1934, as amended, that are deemed to be
incorporated by reference in the Prospectus. In the case of the
Prospectus, to furnish copies of the Prospectus in New York City and London
prior to 5:00 p.m. (New York City time) on the business day following the
date of this Agreement in such quantities as you reasonably request.

(b) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to you a copy of each such proposed amendment or

24
<PAGE>

supplement and to file no such proposed amendment or supplement to which
you reasonably object.

(c) If, during such period after the first date of the public
offering of the Shares as in the opinion of your counsel the Prospectus is
required by law to be delivered in connection with sales by an Underwriter
or dealer, any event shall occur or condition exist as a result of which it
is necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the Prospectus
is delivered to a purchaser, not misleading, or if, in the opinion of your
counsel, it is necessary to amend or supplement the Prospectus to comply
with law, forthwith to prepare, file with the Commission and furnish, at
its own expense, to the Underwriters and to the dealers (whose names and
addresses you will furnish to the Company) to which Shares may have been
sold by you on behalf of the Underwriters and to any other dealers upon
request, either amendments or supplements to the Prospectus so that the
statements in the Prospectus as so amended or supplemented will not, in the
light of the circumstances when the Prospectus is delivered to a purchaser,
be misleading or so that the Prospectus, as amended or supplemented, will
comply with law.

(d) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request.

(e) To make generally available to the Company's security holders and
to you as soon as practicable an earning statement covering the twelve-
month period ending March 31, 1997 that satisfies the provisions of Section
11(a) of the Securities Act and the rules and regulations of the Commission
thereunder.

(f) To pay all expenses, incident to the performance of its
obligations under this Agreement, including: (i) the preparation and
filing of the Registration Statement and the Prospectus and all

25
<PAGE>

amendments and supplements thereto; (ii) the preparation, issuance and
delivery of the Shares, including any transfer taxes payable in connection
with the transfer of the Shares to the Underwriters; (iii) the fees and
disbursements of the Company's counsel and accountants; (iv) the
qualification of the Shares under the securities or Blue Sky laws in
accordance with the provisions of paragraph (d) above, including filing
fees and the fees and disbursements of counsel for the Underwriters in
connection therewith and in connection with the preparation of any Blue Sky
Memorandum; (v) the printing and delivery to the Underwriters, in
quantities as hereinabove stated, of copies of the Registration Statement
and all amendments thereto and of each preliminary prospectus and the
Prospectus and any amendments or supplements thereto; (vi) the printing and
delivery to the Underwriters of copies of any Blue Sky Memorandum; (vii)
the filing fees and expenses, if any, incurred with respect to any filing
with the National Association of Securities Dealers, Inc. made in
connection with the offering of the Shares; (viii) expenses incurred in
connection with a "road show" presentation to potential investors
consistent with customary practices and in accordance with past practices
and (ix) any expenses incurred in connection with the approval of the
Shares for quotation on the Nasdaq National Market.

7. Indemnity and Contribution. The Company agrees to indemnify and
--------------------------
hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred by any Underwriter or any such controlling person
in connection with defending or investigating any such action or claim) caused
by any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or any amendment thereof, any preliminary
prospectus or the Prospectus (as amended or supplemented if the Company shall
have furnished any amendments

26
<PAGE>

or supplements thereto), or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use therein.

Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, its directors, its officers who sign the Registration
Statement and each person, if any, who controls the Company within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act to
the same extent as the foregoing indemnity from the Company to such Underwriter,
but only with reference to information relating to such Underwriter furnished to
the Company in writing by such Underwriter through you expressly for use in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendments or supplements thereto.

In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to either of the two preceding paragraphs, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing and the
indemnifying party, upon request of the indemnified party, shall retain counsel
reasonably satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any indemnified party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the

27
<PAGE>

indemnifying party and the indemnified party and representation of both parties
by the same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the indemnifying party shall not,
in respect of the legal expenses of any indemnified party in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all such indemnified parties and that all such fees and expenses
shall be reimbursed as they are incurred. In the case of any such separate firm
for the Underwriters and such control persons of Underwriters, such firm shall
be designated in writing by Morgan Stanley & Co. Incorporated. In the case of
any such separate firm for the Company, and such directors, officers and control
persons of the Company, such firm shall be designated in writing by the Company.
The indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. Notwithstanding the foregoing sentence, if at
any time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel as contemplated
by the second and third sentences of this paragraph, the indemnifying party
agrees that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into more than 30
days after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all

28
<PAGE>

liability on claims that are the subject matter of such proceeding.

If the indemnification provided for in the first or second paragraph
of this Section 7 is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages or liabilities referred to therein, then
each indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Underwriters on the
other hand from the offering of the Shares or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and of the
Underwriters on the other hand in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other hand in connection
with the offering of the Shares shall be deemed to be in the same respective
proportions as the net proceeds from the offering of the Shares (before
deducting expenses) received by the Company and the total underwriting discounts
and commissions received by the Underwriters, in each case as set forth in the
table on the cover of the Prospectus, bear to the aggregate public offering
price of the Shares. The relative fault of the Company on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Underwriters' respective obligations to contribute
pursuant to this Section 7 are several in proportion to the

29
<PAGE>

respective number of Shares they have purchased hereunder, and not joint.

The Company and the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 7 were determined by pro rata
--- ----
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages that such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section 7 are
not exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.

The indemnity and contribution provisions contained in this Section 7
and the representations and warranties of the Company contained in this
Agreement shall remain operative and in full force and effect regardless of (i)
any termination of this Agreement, (ii) any investigation made by or on behalf
of any Underwriter or any person controlling any Underwriter or by or on behalf
of the Company, its officers or directors or any person controlling the Company
and (iii) acceptance of and payment for any of the Shares.

30
<PAGE>

8. Termination. This Agreement shall be subject to termination by
-----------
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses (a)(i) through (iv), such event singly or
together with any other such event makes it, in your judgment, impracticable to
market the Shares on the terms and in the manner contemplated in the Prospectus.

9. Effectiveness; Defaulting Underwriters. This Agreement shall
--------------------------------------
become effective upon the execution and delivery hereof by the parties hereto.

If, on the Closing Date or the Option Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase Shares
that it or they have agreed to purchase hereunder on such date, and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed or refused to purchase is not more than one-tenth of the
aggregate number of the Shares to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the number of
Firm Shares set forth opposite their respective names in Schedule I or Schedule
II bears to the aggregate number of Firm Shares set forth opposite the names of
all such non-defaulting Underwriters, or in such other proportions as you may
specify, to purchase the Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; provided
--------
that in

31
<PAGE>

no event shall the number of Shares that any Underwriter has agreed to
purchase pursuant to Section 2 be increased pursuant to this Section 9 by an
amount in excess of one-ninth of such number of Shares without the written
consent of such Underwriter. If, on the Closing Date or the Option Closing
Date, as the case may be, any Underwriter or Underwriters shall fail or refuse
to purchase Shares and the aggregate number of Shares with respect to which such
default occurs is more than one-tenth of the aggregate number of Shares to be
purchased on such date, and arrangements satisfactory to you and the Company for
the purchase of such Shares are not made within 36 hours after such default,
this Agreement shall terminate without liability on the part of any non-
defaulting Underwriter or the Company. In any such case either you or the
Company shall have the right to postpone the Closing Date or the Option Closing
Date, as the case may be, but in no event for longer than seven days, in order
that the required changes, if any, in the Registration Statement and in the
Prospectus or in any other documents or arrangements may be effected. Any
action taken under this paragraph shall not relieve any defaulting Underwriter
from liability in respect of any default of such Underwriter under this
Agreement.

If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.

10. Counterparts. This Agreement may be signed in two or more
------------
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

32
<PAGE>

11. Applicable Law. This Agreement shall be governed by and
--------------
construed in accordance with the internal laws of the State of New York.

12. Headings. The headings of the sections of this Agreement have
--------
been inserted for the convenience of reference only an shall not be deemed a
part of this Agreement.

Very truly yours,

CENTOCOR, INC.

By
----------------------------
Name:
Title:

33
<PAGE>

Accepted as of the date hereof
MORGAN STANLEY & CO.
INCORPORATED
HAMBRECHT & QUIST LLC
J.P. MORGAN SECURITIES INC.

Acting severally on behalf of themselves
and the several U.S. Underwriters
named in Schedule I hereto.

By Morgan Stanley & Co.
Incorporated

By
------------------------------
Name:
Title:

MORGAN STANLEY & CO. INTERNATIONAL LIMITED
HAMBRECHT & QUIST LLC
J.P. MORGAN SECURITIES LTD.

Acting severally on behalf of themselves
and the several International Underwriters
named in Schedule II hereto.

By Morgan Stanley & Co.
International Limited

By
------------------------------
Attorney-in-fact

34
<PAGE>

Schedule I

U.S. Underwriters
-----------------

Number of
Firm Shares
Underwriter To Be Purchased
----------- ---------------

Morgan Stanley & Co. Incorporated
Hambrecht & Quist LLC
J.P. Morgan Securities Inc.

---------------
Total U.S. Firm Shares .............. 2,800,000
================

35
<PAGE>

Schedule II

International Underwriters
--------------------------

Number of
Firm Shares
Underwriter To Be Purchased
----------- ---------------

Morgan Stanley & Co.
International Limited
Hambrecht & Quist LLC
J.P. Morgan Securities Ltd.

--------------
Total International Firm Shares .... 700,000
==============

36
<PAGE>

Exhibit A
---------

[Form of Lock-up Contract]
--------------------------

, 1996
------------

Morgan Stanley & Co.
Incorporated
Hambrecht & Quist LLC
J.P. Morgan Securities Inc.
c/o Morgan Stanley & Co.
Incorporated
1585 Broadway
New York, New York 10036

Morgan Stanley & Co. International Limited
Hambrecht & Quist LLC
J.P. Morgan Securities Ltd.
c/o Morgan Stanley & Co.
International Limited
25 Cabot Square
Canary Wharf
London E14 4QA
England

Dear Sirs and Mesdames:

The undersigned understands that you, as Representatives of the
several Underwriters, propose to enter into an Underwriting Agreement with
Centocor, Inc., a Pennsylvania corporation (the "Company") providing for the
public offering (the "Public Offering") by the several Underwriters, including
yourselves, of 3,500,000 shares (the "Shares") of the Common Stock, $.01 par
value of the Company (the "Common Stock").

1
<PAGE>

In consideration of the Underwriters' agreement to purchase and make
the Public Offering of the Shares, and for other good and valuable consideration
receipt of which is hereby acknowledged, the undersigned hereby agrees that,
without the prior written consent of Morgan Stanley & Co. Incorporated on behalf
of the Underwriters, it will not, during the period ending 90 days after the
date of the Prospectus, (1) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock (whether such shares or any
such securities are now owned by the undersigned or are hereafter acquired), or
(2) enter into any swap or other agreement that transfers to another, in whole
or in part, any of the economic consequences of ownership of the Common Stock,
whether any such transaction described in clause (1) or (2) above is to be
settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to the Shares to be sold
pursuant to the Public Offering or to the sale by the Company's executive
officers and directors of up to an aggregate of 200,000 shares of Common Stock.
If the undersigned is an executive officer or director of the Company and
intends to sell any shares of Common Stock pursuant to the immediately preceding
sentence, then the undersigned hereby agrees to effect such sale in accordance
with instructions received from the V.P., Finance and Chief Financial Officer of
the Company. In addition, the undersigned agrees that, without the prior written
consent of Morgan Stanley & Co. Incorporated on behalf of the Underwriters, it
will not, during the period ending 90 days after the date of the Prospectus,
make any demand for or exercise any right with respect to, the registration of
any shares of Common Stock or any security convertible into or exercisable or
exchangeable for Common Stock.

Very truly yours,

2
<PAGE>

----------------------------------
- ------------------------- (Name)

----------------------------------
(Address)
- -------------------------

3
<PAGE>

Accepted as of the date
first set forth above:
MORGAN STANLEY & CO.
INCORPORATED
HAMBRECHT & QUIST LLC
J.P. MORGAN SECURITIES INC.

Acting severally on behalf of themselves
and the several U.S. Underwriters
named in Schedule I to the Underwriting
Agreement referred to above.

By Morgan Stanley & Co.
Incorporated

By
------------------------------

MORGAN STANLEY & CO. INTERNATIONAL LIMITED
HAMBRECHT & QUIST LLC
J.P. MORGAN SECURITIES LTD.

Acting severally on behalf of themselves
and the several International Underwriters
named in Schedule II to the Underwriting
Agreement referred to above.

By Morgan Stanley & Co.
International Limited

By
------------------------------
Attorney-in-fact

<PAGE>

The Board of Directors
Centocor, Inc.

We consent to the use of our reports incorporated herein by reference and to the
references to our firm under the headings "Selected Consolidated Financial Data"
and "Experts" in the prospectus.

/s/ KPMG Peat Marwick LLP

Philadelphia, Pennsylvania
February 15, 1996