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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

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FORM 10-K

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

FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997

COMMISSION FILE NO. 0-27698

CHIREX INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 04-3296309
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION)

300 ATLANTIC STREET, SUITE 402
STAMFORD, CONNECTICUT 06901
(ADDRESS OF PRINCIPLE EXECUTIVE OFFICE) (ZIP CODE)

(203) 351-2300
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

TITLE OF EACH CLASS SECURITIES
REGISTERED PURSUANT TO SECTION 12(g)
OF THE SECURITIES EXCHANGE ACT NAME OF EXCHANGE
OF 1934 ON WHICH REGISTERED
___________________________ __________________________________
COMMON STOCK, $.01 PAR VALUE THE NASDAQ STOCK MARKET'S NATIONAL
MARKET

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE SECURITIES EXCHANGE ACT
OF 1934: NONE.

Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [_]

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

The aggregate market value of the voting stock held by non-affiliates of the
registrant was approximately $197,632,965 as of March 4, 1998.

APPLICABLE ONLY TO CORPORATE REGISTRANTS

As of March 4, 1998 there were 11,798,983 shares outstanding (excluding as
of such date 1,491,295 shares of common stock issuable upon exercise of
options with a weighted average price of $10.78 per share).

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CHIREX INC.

TABLE OF CONTENTS

PAGE
----
PART I

ITEM 1. BUSINESS....................................................... 1
ITEM 2. PROPERTIES..................................................... 11
ITEM 3. LEGAL PROCEEDINGS.............................................. 11
ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS........... 11

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS........................................................ 12
ITEM 6. SELECTED FINANCIAL DATA........................................ 13
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS...................................... 15
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.................... 15
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE........................................... 15

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT............. 15
ITEM 11. EXECUTIVE COMPENSATION......................................... 15
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS................ 15
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS................. 15

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS........... 16

PART I

ITEM 1. BUSINESS

GENERAL

ChiRex Inc. (the "Company" or "ChiRex") is a contract manufacturing
organization ("CMO") serving the outsourcing needs of the pharmaceutical
industry through its extensive pharmaceutical fine chemical manufacturing and
process development capabilities and proprietary technologies. The Company
supports and supplements the in-house development and manufacturing
capabilities of its pharmaceutical and biotechnology customers with a broad
range of fully-integrated services, accelerating the time from drug discovery
to commercialization. The Company currently manufactures over 50 products at
its manufacturing facilities located in Dudley, England and Annan, Scotland.
The Company's customers include Glaxo Wellcome plc, SmithKline Beecham plc,
Pfizer Inc., Pharmacia & Upjohn Inc., Rohm and Haas Company, ACS Dobfar, Cell
Therapeutics Inc., and Sanofi S.A.

The Company was created simultaneously with its initial public offering in
March 1996 (the "IPO") through the combination of a U.S.-based chiral
chemistry business, SepraChem, Inc. and a U.K-based pharmaceutical fine
chemical manufacturing business, Sterling Organics Limited. Since the IPO, the
Company has integrated these operations, added new core products to the
Company's portfolio while phasing out non-core products to release capacity
and improve profitability, purchased a new manufacturing facility in Annan,
Scotland and further developed its commercial development process and
technology base. The Company is engaged in one business segment, the
development, manufacture and marketing of pharmaceutical fine chemicals.

RECENT DEVELOPMENTS

In October 1997, the Company purchased a Glaxo Wellcome plc pharmaceutical
production facility located in Annan, Scotland for approximately $69 million,
including payment for certain working capital. As part of the transaction,
Glaxo Wellcome awarded the Company a five-year contract to supply certain
pharmaceutical intermediates and active ingredients with an aggregate sales
value of approximately $450 million in revenues. The Company plans to invest
approximately $25 million over two years to accommodate newly contracted
products and modify the facility for general purpose manufacturing.

In April 1997, as part of its strategy to phase out of non-core products,
the Company disposed of its acetaminophen (paracetamol) business to Rhone
Poulenc Chimie SpA. Although acetaminophen, an OTC analgesic, was the largest
volume product manufactured by the Company, representing approximately 31% of
the Company's 1996 pro forma revenues, it was not highly profitable at the
gross margin level and certain long-term supply arrangements were scheduled to
terminate by 1998 year end. In connection with the disposition of the
business, the Company implemented measures to partially offset the effect on
operating performance, including a 15% headcount reduction and a rebudget of
all cost centers.

During the spring of 1997 the Company finalized its 1996 agreement with
Dabur India Ltd. ("Dabur") to dissolve their joint venture, InNova
Pharmaceuticals SRL ("InNova") due to certain changes in the market for semi-
synthetic paclitaxel, a compound used in the treatment of breast and ovarian
cancer.

In January 1997, the Company entered into an exclusive license with Harvard
University for the application of kinetic resolution technology ("KR
Technology") applicable to the manufacture of single isomer forms of certain
chiral intermediates. The Company believes that such technology may be
developed to reduce the manufacturing costs and improve purity, potency and
efficacy for some single-isomer drugs and intermediates.

INDUSTRY

CMOs have evolved from providing limited third-party manufacturing services
to offering a full range of drug development and manufacturing capabilities.
CMOs currently offer research and development and hazard

evaluation capabilities, scale-up facilities, state-of-the-art analytical
departments, documentation expertise, large, multi-purpose, FDA-inspected
current Good Manufacturing Practices ("cGMP") facilities and efficient waste
treatment facilities. The development and scale-up of customers' products
requires CMOs to interact with their customers on many levels. In many cases,
the customers' technical personnel work closely with the CMOs staff to scale-
up new products, monitor manufacturing and assist with regulatory compliance.
This process necessitates a high degree of confidence in the CMO's technical
expertise as well as its ability to safeguard confidential information.

Due to the interactive nature of their services, a CMO's success depends on
the strength of its relationships with customers. Critical success factors for
CMOs in developing outsourcing relationships with major life science companies
include:

.An established reputation and proven track record

.Flexible cGMP manufacturing capacity at clinical, pilot and commercial
scale

.Technical competence and a broad technology base

.Regulatory support at all development stages

.Financial stability

.Secure management of trade secrets and intellectual property rights

According to A.D. Little, in 1996 the global market for the manufacture of
pharmaceutical fine chemical intermediates and bulk actives and custom
synthesis was approximately $12.0 billion. In recent years, outsourcing of
drug development and manufacturing activities by pharmaceutical and
biotechnology companies has increased for the following reasons:

Cost Containment Pressures. Recently, drug companies have been focusing
on more efficient ways of conducting business because of margin pressures
stemming from patent expirations, market acceptance of generic drugs and
pressure from regulators and payors to reduce drug prices. In addition,
managed care organizations are beginning to limit the selection of drugs
that affiliated physicians may prescribe, thereby further increasing
competition among pharmaceutical and biotechnology companies. The Company
believes that the pharmaceutical industry is responding by focusing its
resources on new drug discovery, regulatory compliance and sales and
marketing while outsourcing information management, clinical trial
management, process development and supply of pharmaceutical intermediates
and active ingredients.

Reducing Drug Development Time. Pharmaceutical and biotechnology
companies face increased pressure to deliver new drugs to market in the
shortest possible time in order to accelerate realization of revenue,
capture market share and obtain the longest possible term of patent
protection. By working in collaboration with CMOs like the Company,
pharmaceutical and biotechnology companies can focus on their core
competencies of drug discovery and marketing activities. The Company
believes that CMOs are often able to perform essential services with a
higher level of expertise and specialization, and in less time than its
customers could perform such services in-house, resulting in reduced new
drug development times.

Increasingly Complex Drug Manufacturing Processes. An increasing
proportion of drugs under development are single-isomer pharmaceuticals,
which for certain drugs may have advantages over racemic mixtures,
including reduced side effects, increased safety and higher potency. The
ability to determine the biological activity of each isomer has led to
increasing regulatory pressure to develop drugs in single-isomer form.
Current FDA guidelines require a demonstration of biological activity for
each isomer, including therapeutic benefits and side effects. As a result,
the cost and time of development are significantly greater for compounds
developed as racemic mixtures as compared to single-isomers, creating a
demand for new processes and process technologies that can produce single-
isomer drugs and intermediates cost effectively. Rather than develop
complex manufacturing processes in-house, pharmaceutical companies are
moving towards outsourcing these functions to CMOs with demonstrated
process technology expertise.

Growth of Biotechnology Industry. The biotechnology industry and the
number of drugs produced by it have grown substantially over the past
decade. Many biotechnology companies have chosen not to spend the
substantial capital resources, time, competency, personnel and risk
necessary to operate a cGMP manufacturing facility, but utilize CMOs to
perform these functions both during product development and
commercialization.

Although these trends will result in increased competition, the Company
believes there are significant entry barriers to the high value-added CMO
industry, including the need for cGMP commercial scale manufacturing capacity
and world-class pilot plant facilities, access to and expertise in leading
manufacturing and process technologies and the ability to manage the complex
regulatory regime governing new product development.

BUSINESS STRATEGY

The Company's goal is to be a preferred partner to major pharmaceutical and
life sciences companies in the development of manufacturing processes and to
supply on a commercial scale pharmaceutical intermediates and active
ingredients for leading proprietary and generic drugs. The Company's strategy
for achieving this objective is to:

. leverage its research and development expertise to develop and maintain its
process technologies for the manufacture of a broad spectrum of complex
chemicals and extend its relationship with leading academic institutions to
capture next generation process technologies;

. expand cGMP manufacturing capacity at its Dudley and Annan facilities and
explore opportunities to acquire additional facilities or complementary
businesses;

. provide clinical scale manufacturing capacity with safe, efficient scale up
for its customers' products in its state-of-the art pilot plant facility;
and

. apply its proprietary technologies to the development and manufacture of a
range of chiral intermediates which the Company intends to market at higher
margins than those achievable using non-proprietary technologies.

CORE COMPETENCIES

The Company offers a full range of manufacturing and process development
services to its clients. These services include process research and
development, clinical quantity production capability and commercial-scale
manufacturing, as well as hazard evaluation capabilities, sophisticated
chemical analysis services and regulatory and documentation expertise. The
Company provides all or any portion of its service capabilities to its
customers and works with its customers to tailor the range of services
provided based on the customer's needs. The Company has developed the
following core competencies.

Advanced Manufacturing

Over the last 30 years, the Company has developed expertise in the
synthesis, scale-up and manufacture of complex pharmaceutical intermediates
and active ingredients at its Dudley site. This 42-acre site was originally
constructed by Sterling Winthrop Inc. in the late 1960's and became its
primary pharmaceutical chemical manufacturing facility. With a production
capacity of 600 cubic meters (over 160,000 gallons), the Dudley facility is
one of the largest independent pharmaceutical chemical manufacturing
facilities in the world. Since 1992, the Company has invested over $50
million at the site, including major expenditures on waste water treatment
facilities and a new cGMP pilot plant and development center.

There are three main production buildings at the Dudley site which have a
variety of advanced equipment to provide a flexible FDA-inspected, cGMP and
ISO 9002 certified manufacturing base. Two of the buildings provide multi-
process facilities (including a segregated bulk pharmaceutical purification
suite fitted with reactors, isolation and finishing equipment) capable of
performing an extensive range of chemical

transformations. The third building is a plant that was dedicated to the
manufacture of acetaminophen. The equipment associated with the
acetaminophen business was dismantled in 1997 and this plant is now
available for future capacity expansion. The combination of the three main
production buildings and the state-of-the-art pilot plant and development
center enable the Company to manufacture efficiently products in quantities
from laboratory samples to commercial scale.

The Company has made a significant addition to its manufacturing capacity
with the acquisition of a former Glaxo Wellcome facility in Annan,
Scotland. This 154 acre site encompasses three main production buildings.
Two of the production buildings have operated as a unit since 1980 to
produce large volumes of an anti-hypertensive drug. Special features of
this unit include computer control and totally enclosed plant with bulk
handling systems (for both powders and liquids) to ensure safe processing
of chemicals and solvents. The second production unit was opened in 1987
and has manufactured one of the intermediates for an anti-ulcer drug. Under
a Supply Agreement with Glaxo Wellcome, the Company will continue to
manufacture certain products currently made at the site and plans to invest
approximately $25 million over two years to accommodate newly contracted
products and modify the facility for general purpose pharmaceutical fine
chemical manufacturing. The second production unit comprises nearly half
the site capacity and is available for future contract manufacturing
demand.

The Company's quality assurance department has extensive experience in
the analysis, quality assurance, validation and registration of bulk
pharmaceutical and fine chemicals. The Company's analytical laboratories
contain fully-automated equipment with extensive data handling
capabilities, spectroscopic systems and variable wavelength and diode-array
UV capabilities designed to ensure that the Company's products comply with
all pharmacopeia and regulatory requirements.

Process Development

The Company possesses significant expertise in manufacturing process
research and development. These skills are critical to advancing a product
from the laboratory to pilot plant and finally commercial scale
manufacturing in a timely and cost effective manner. Following an initial
inquiry, the Company provides feasibility studies and cost estimates to the
customer. The Company engages in initial process research and development,
hazard evaluation and produces laboratory samples. In connection with
process development, the Company utilizes computer controlled reaction
calorimeters and analytical equipment, and is assisted by its Scientific
Advisory Board, which includes leading academics in various fields of
chemistry. Ultimately, a pilot plant product which receives regulatory
approval and is deemed commercially viable is scaled-up to commercial
manufacture. Historically, approximately 80% of products that reach the
pilot plant result in full commercial manufacturing arrangements.

Process development serves an important marketing function. As a result
of the regulatory requirements associated with certifying a new
manufacturing source, it is often advantageous for a pharmaceutical company
to maintain its relationship with a CMO because the CMO is certified to
produce the product by regulatory authorities. Consequently, the Company
promotes its process research and development capabilities aggressively in
an effort to establish relationships with a customer early in the product
development timeline and consequently secures long-term commercial-scale
supply arrangements.

Technology

The Company's expertise in applying a wide range of sophisticated process
technologies to large scale classical chemical transformations enables it
to provide its customers with safe and cost efficient commercial scale
manufacturing capacity. In addition, the Company has a wide spectrum of
proprietary synthesis and separation technologies for application in the
manufacture of single-isomer products (the "ChiRex Technologies"). In
January 1997, the Company added to this technology platform by licensing KR
Technology from Harvard University. During 1997, the Company manufactured
four products in its pilot plant using its ChiRex Technologies.

PRODUCT PORTFOLIO

The Company sold over 50 products in 1997. Approximately 90% of the
Company's product portfolio are pharmaceutical products with the remaining 10%
consisting of fragrance and flavor, agrichemical and polymer products. Nearly
all of the products produced or under development by the Company are governed
by secrecy agreements which contain, among other things, restrictions on the
disclosure of the customer, the product and the therapeutic indication.

Core Products

During 1996, management identified certain core products which it
believes offer superior long-term growth potential, higher margins or
strategic customer relationship benefits. In 1997, core products accounted
for 72.4% of the Company's revenues. The Company's customers'
pharmaceutical products are used in the treatment of, among others, cancer,
cardiovascular disease, AIDS, urinary tract infections and high
cholesterol.

Non-Core Products

In 1997, the Company effectively completed the planned phase out of
products which do not meet management's criteria regarding profitability,
growth profile or customer development potential. There are currently
approximately less than five remaining non-core products which the Company
plans to eliminate from its product portfolio. In 1997, non-core products
(excluding acetaminophen) accounted for 6.4% of the Company's revenues.

DEVELOPMENT PRODUCTS

The Company has over 30 years of experience collaborating with
pharmaceutical companies on the process development of new pharmaceutical
products. The Company's work in the development stage of its customers'
products provides a strong foundation for securing supply arrangements for
full-scale manufacturing upon commercialization. Products are no longer
considered development products when they are produced by the Company on a
commercial scale.

The Company provides development and pilot-scale manufacturing services for
its pharmaceutical customers. The following table sets forth 37 products in
the Company's development pipeline which the Company believes have significant
revenue potential. Sixteen of these products have been identified as core
products, of which ten are produced at pilot-scale and had revenues associated
with them in 1997 and fifteen incorporate ChiRex Technologies. The remaining
products are at an earlier stage in the development cycle and have not been
identified as core products.

NUMBER OF
DEVELOPMENT PHASE OF COMPANY
DRUG(1) PRODUCTS REPRESENTATIVE INDICATIONS
-------------------- --------- -------------------------------------------------------------

Commercial.............. 18 AIDS, Hypertension, Central Nervous System Disorder, Diabetes
Phase III............... 6 Cancer, Pancreatitis, Asthma, Migrane
Phase II................ 7 AIDS
Preclinical/Phase
I/Unknown.............. 6 Various

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(1) Based on customer provided or publicly available information.

Fourteen of the commercial products listed above have been produced on a
commercial scale by manufacturers other than the Company. However, the Company
is working with its customers to gain the necessary regulatory approval to
participate in the manufacture of these products.

TECHNOLOGY

The Company has developed expertise in the large-scale operation of many
classical chemical transformation technologies and has the exclusive rights to
use the ChiRex Technologies in a defined field on a perpetual basis under
approximately 45 U.S. patents and several patent applications. In addition, it
has accumulated experience in the effective management of the risks inherent
in handling toxic or hazardous raw materials and products and in carrying out
hazardous chemical reactions. The Company's expertise allows pharmaceutical
companies to have complex multi-step procedures carried out at a single site,
which increases the ability of such companies to maintain confidentiality,
product supervision and management.

The Company's ChiRex Technologies consist of a broad platform of proprietary
asymmetric synthesis and resolution technologies, which it believes provide
multiple manufacturing routes to produce single-isomer chiral pharmaceutical
intermediates and active ingredients. The Company selects the most appropriate
ChiRex Technology for a particular application based on several factors,
including the cost of any required catalyst, the availability and cost of the
starting materials and the cost of recovering and recycling by-products. The
following table summarizes certain aspects of the ChiRex Technologies:

DEVELOPMENT
--------------------------------
METHOD OF
TECHNOLOGY USE PHASE MANUFACTURE
---------- ------------------------ ----------- --------------------

Kinetic Resolution...... Catalytic ring opening Pilot Plant Asymmetric Synthesis
of epoxides to make
chiral epoxides and
Diols
Asymmetric Catalytic asymmetric Commercial Asymmetric Synthesis
dihydroxylation........ reaction to make chiral
diols using Sharpless
catalyst
Asymmetric epoxidation.. Catalytic oxidation to Commercial Asymmetric Synthesis
make chiral epoxides
using Jacobsen Catalyst
Enzymatic resolution.... Enzymatic Commercial Resolution
Biotransformation
Diastereomeric Resolution by Commercial Resolution
crystallization........ Crystallization
Asymmetric reduction.... Catalytic reduction to Laboratory Asymmetric Synthesis
make chiral alcohols

Single-isomer chiral chemicals are generally manufactured by asymmetric
synthesis or resolution. In asymmetric synthesis, the single-isomer form of
the drug or intermediate is synthesized directly from a precursor compound
that is achiral. With resolution, the single-isomer is separated from a
racemic mixture. Asymmetric synthesis is often the preferred method of
producing single-isomer drugs or intermediates due to the potential higher
attainable yields. Due to the technical challenges of developing a cost-
effective process, however, there are few asymmetric synthesis processes
demonstrated at commercial scale.

The Company continues to improve its technology position through significant
research and development expenditures, licensing third party technology and by
maintaining close relationships with its Scientific Advisory Board and
institutional research partners.

In support of its technologies, the Company maintains a state-of-the-art
hazards evaluation laboratory where operating hazards are identified and safe
operating parameters established for all processes before they are carried out
in the pilot plant. The pilot plant is then used to confirm the safe operation
of the process and evaluate scale-up parameters before moving to full-scale
operation. In addition, the Company has accumulated extensive in-house
experience in the development and application of microprocessor control
systems to control process hazards and improve the reproducibility of process
performance and product quality.

The Company uses a wide range of computer software in its operations. The
Company has dedicated internal resources to identify and resolve "year 2000"
compliance issues within computer applications utilized by the Company. The
Company has also engaged external resources and will purchase necessary
computer software and upgrades to become "year 2000" compliant.

SALES AND MARKETING, CUSTOMERS

The Company markets the majority of its products directly to pharmaceutical
and other life science companies. An important component of the Company's
strategy is to pursue long-term supply relationships with selected major
customers. The Company employs sales and marketing personnel who possess the
requisite technical backgrounds to communicate effectively with both
prospective customers and the Company's research and development personnel.

The Company is dependent on a small number of customers. In 1997, the
Company's four largest customers accounted for approximately 76% of total
revenues. Sanofi S.A., Glaxo Wellcome plc, Rohm and Haas Company and
SmithKline Beecham accounted for approximately 36%, 17%, 13% and 10% of the
Company's 1997 revenues respectively. The loss of one or more of these
customers could have a material adverse effect on the Company. In addition, in
light of the worldwide consolidation of the pharmaceutical market, there is a
risk that the Company could lose customers in market consolidations or become
more dependent on individual customers as such customers increase their size
and market share.

The Company, as part of its ongoing commercial development efforts,
maintains a presence at important international trade shows and hosts a bi-
annual international technical symposium to which selected senior
representatives and executives of the research and development organizations
of major pharmaceutical companies are invited. In addition, the Company's
technical and marketing personnel present papers at symposia on a regular
basis.

CONTRACTS

The Company conducts business on both a purchase order basis and a formal
contract basis. Where the company conducts business on a formal contract
basis, it has entered into a variety of contractual arrangements with its
customers, on both a fixed price and a cost plus basis. In cases where the
contracts are fixed price, the Company bears the cost of overruns, with
certain exceptions, but benefits if the costs are lower than anticipated. In
cases where the contracts are on a cost plus basis, the Company is guaranteed
reimbursement for its actual costs of performance and an agreed upon profit,
with certain exceptions.

Contracts may have terms ranging from a few months to several years
depending upon the nature of the work being performed and the approval status
of the product in question. Some of the Company's contracts are terminable by
the customer upon notice. Contracts may also be terminated for a variety of
reasons including unexpected or undesired results of the product, the failure
of a product to satisfy safety requirements, the failure of a product to gain
regulatory approval or a party's failure to properly discharge its obligations
under such agreement.

In 1997 the Company bore the cost of overruns on certain contracts with
customers which were on a fixed price basis. In response to such losses,
management of the Company has initiated discussions with such customers and is
attempting to renegotiate these contracts. However, there can be no assurance
that any renegotiation will be successful or that any new contractual
provisions so negotiated will result in arrangements which will be more
favorable to the Company.

PATENTS AND PROPRIETARY TECHNOLOGY

Proprietary rights relating to the Company's products and processes will
generally be protected from unauthorized use by third parties only to the
extent that they are covered by valid and enforceable patents or are
maintained in confidence as trade secrets. The Company currently has the
exclusive, royalty-free perpetual right and license to use and practice the
ChiRex Technologies on a worldwide basis in a defined field under

approximately 45 U.S. patents and several patent applications. The material
patents licensed to the Company expire at various times beginning in 2005. The
Company has ongoing research efforts and expects to seek additional patents in
the future covering patentable results of such research. Certain of the
Company's technology is not covered by any patent or patent application. There
can be no assurance that any pending patent applications filed by the Company
will result in patents being issued or that any patents now or hereafter owned
or licensed by the Company will afford protection against competitors with
similar technology, will not be infringed upon or designed around by others or
will not be challenged by others and held to be invalid or unenforceable. In
the absence of patent protection, the business of the Company may be adversely
affected by competitors who independently develop substantially equivalent
technology.

There may now or in the future be issued third-party patents relating to
technology utilized by the Company. The Company may need to acquire licenses
to, or to contest the validity of, any such patents. It is likely that
significant funds would be required to defend any claim that the Company
infringes a third-party patent, and any such claim could adversely affect
sales of the challenged product until the claim is resolved. Furthermore, any
such dispute could result in a rejection of the Company's patent applications
or the invalidation of its patents. There can be no assurance that any license
required under any such patent would be made available or, if available, would
be available on acceptable terms or that the Company would prevail in any
litigation involving such patent. Any of the foregoing adverse results could
have a material adverse effect on the Company and its results of operations.

The Company also seeks to protect its proprietary technology, including
technology which may not be patented nor patentable, in part by
confidentiality agreements and, if applicable, inventors' rights agreements
with its collaborators, advisors, employees and consultants. There can be no
assurance that these agreements will be enforceable and will not be breached,
that the Company will have adequate remedies for any breach or that the
Company's trade secrets will not otherwise be disclosed to, or discovered by,
competitors.

COMPETITION

Competition in the Company's market is based upon reputation, service,
manufacturing capability and expertise, reliability of supply and price. In
addition, the Company's success depends to a significant extent on its ability
to sell products to potential customers at an early stage of product
development. The Company's current competitors include Alusuisse-Lonza
Holdings AG, DSM Andeno B.V. and Laporte PLC. In addition, the Company
competes with major pharmaceutical manufacturers (including a number of the
Company's customers) who develop their own process technologies and
manufacture fine chemicals and pharmaceutical intermediates in-house.

The Company encounters, and expects to continue to encounter, intense
competition in obtaining contracts for the sale of its products. The market in
which the Company competes is characterized by extensive research efforts and
rapid technological progress. Competition may increase further as a result of
advances that may be made in the commercial applicability of the Company's and
competitors' technologies and greater availability of capital for investment
in these fields. In addition, the Company faces intense competition for
scientific, managerial and marketing personnel from other companies, research
and academic institutions and governmental entities.

The Company also has encountered, and expects to continue to encounter,
intense competition for the acquisition of additional manufacturing capacity.
The Company's competitors for manufacturing capacity include CMOs and certain
pharmaceutical and chemical companies, some of which have substantially
greater financial resources than the Company.

ENVIRONMENTAL REGULATION

The manufacturing and research and development processes of the Company
involve the controlled use of hazardous materials. The Company is subject to
laws and regulations governing the use, manufacture, storage,

handling and disposal of such materials and waste products in the United
Kingdom. In the event of contamination or injury from hazardous materials, the
Company could be held liable for any resulting damages and any such liability
could exceed its resources.

Dudley, England Facility

The Company's manufacturing plant in Dudley, England is subject to the U.K.
Environmental Protection Act 1990 ("EPA 1990"), which requires
authorizations for any industrial air and certain water discharges and
solid waste disposal. The individual authorizations are contained within
several Integrated Pollution Control ("IPC") authorizations under the 1991
Environmental Protection Regulations adopted pursuant to the EPA 1990. The
Company's IPC authorizations for its Dudley facility are administered by
the U.K.'s Environment Agency ("EA"). In addition, the Dudley plant is also
subject to the U.K. Water Resource Act 1991 ("WRA") governing the discharge
of liquid waste, and the U.K. Water Industry Act 1991 ("WIA") governing
discharges to sewers.

The Company believes it is in compliance in all material respects with
its IPC authorization conditions, limitations and compliance schedules for
Dudley. The Company possesses "envelope" authorizations for its air
pollutant emissions, which enable the Company to alter its production lines
and processes to a degree without seeking additional authorizations. The
Company has committed itself in a plan submitted to the EA to implement
certain air pollution emission reduction programs.

The Company has a consent to discharge its process waste water in Dudley,
following treatment in the Company's biological waste water pretreatment
plant, into local sewers for further treatment by the company that owns and
operates the local area wastewater treatment facility, which discharges its
effluent to the River Tyne. Northumbrian Water ("NW") is the local sewer
operator and the EA is the governmental regulatory body responsible for the
regulation of NW and the country's rivers. In the past, the Company has had
periodic difficulty in meeting its consent limits for suspended solids in
waste water. During 1996, the Company reached agreement with NW which
resulted in a relaxation of the consent limit for suspended solids. The
Company also made certain capital improvements to its biological waste
water treatment plant, and it is now generally in compliance with the
consent limit. If the consent limit is exceeded, the plant must adhere to
certain notice and corrective action procedures. This compliance program
was developed in consultation with and has received the approval of the EA.

Since the IPO, the Company reached agreement with NW and the EA on a set
of contingency measures that would be taken in the event the Company's
biological pretreatment plant in Dudley experienced a treatment upset or,
due to malfunction or other failure had to be bypassed for a period of
time. The procedures are designed to minimize the impact of such
occurrences while allowing the Company to continue its production
operations, which in the absence of such agreed procedures, would have been
subject to potential shutdown.

The Environment Act 1995 ("1995 Act") imposes strict, retroactive clean-
up liability on persons responsible for creating or contributing to
contaminated sites. Landowners are presumptively liable under this statute
for conditions existing on their property where a different responsible
party can not be found. The Company believes that the limited areas of
subsurface contamination presently known to exist at the Dudley site are
confined and will not give rise to liability under the 1995 Act.

Annan, Scotland Facility

The Company's manufacturing plant in Annan, Scotland is also subject to
the EPA 1990 and the 1995 Act. The Company's IPC authorizations for Annan
are administered by the Scottish Environmental Protection Agency ("SEPA").
In addition, the facility is also subject to the Sewerage (Scotland) Act
1968 and the Control of Pollution Act 1974 providing for the regulation of
trade or sewage effluent to streams and other inland waters, as well as
certain provisions of The Rivers (Prevention of Pollution) (Scotland) Acts
1951 and 1965.

The Company possesses certain IPC authorizations covering existing
products at the Annan site. In addition, the Company has also applied for
additional IPC authorizations governing other products to be manufactured
and is engaged in discussions with SEPA to obtain envelope authorizations.
SEPA has approved a two phase, twenty-four month environmental improvement
program for the Annan incinerator. Phase one relating to burner
modifications is underway and is scheduled to be completed by the end of
second quarter 1998. Phase two which involves installation of a baghouse
filter to manage particulate emissions, will begin by September 1998 with
completion expected by year end. The Company has also agreed with SEPA upon
a program to reduce volatile organic compound emissions by fitting the site
with new vacuum pumps and scrubber systems.

An oil spill following the off-loading of a road tanker occurred on the
Annan site in 1992 when Glaxo Wellcome plc owned the facility. Actions to
control the oil spill were taken at such time. However, sporadic problems
have been encountered since such spill, involving the appearance of fuel in
the site's drainage system. To address this issue, the Company has applied
for permission to install a land drainage interceptor to capture minor
residual oil before it can enter any waterways or the land drainage system.
Under the Asset Purchase Agreement between the Company and Glaxo Wellcome,.
Glaxo is responsible for remediation costs relating to such oil spill and
has agreed to provide the Company with certain indemnities in the event of
governmental and other claims.

There can be no assurance that the Company will not be required to incur
future expenditures for environmental compliance and control at both the
Dudley and Annan sites. Such costs, and other unanticipated costs of
compliance with environmental laws and regulations in the future, could have a
material adverse effect on the Company's results of operations.

OTHER GOVERNMENTAL REGULATION

The Company's operations, as well as those of its customers, are subject to
extensive regulation by numerous governmental authorities in the United
States, the United Kingdom and other countries. In particular, the Company's
manufacturing operations are required to comply with applicable FDA
regulations with respect to cGMP. Similar requirements are imposed by
regulatory authorities in other countries. The concept of cGMP encompasses all
aspects of the production process, including validation and record keeping,
and involves changing and evolving standards. Consequently, continuing
compliance with cGMP is a particularly difficult and expensive part of
regulatory compliance, especially since the FDA and certain other analogous
international governmental agencies have increased the number of regular
inspections to determine compliance. Failure to comply with the applicable
regulatory requirements can among other things result in fines, suspensions of
regulatory approvals, product recalls, operating restrictions and criminal
prosecution.

Continuing studies of the proper utilization, safety and efficacy of
pharmaceutical products are being conducted by government agencies, industry
and others. Such studies, which increasingly employ sophisticated methods and
techniques, can call into question the utilization, safety and efficacy of
previously marketed products and in some cases have resulted, and may in the
future result, in the discontinuance of their marketing and, in certain
countries, give rise to claims for damages for persons who allege they have
been injured as a result of their use.

The Company is subject to environmental, labor, health and workplace safety
regulation pursuant to a variety of national and local legislation in the
United Kingdom. The Company is also subject to FDA regulation under the
Federal Food, Drug, and Cosmetic Act, the Public Health Service Act and the
Toxic Substances Control Act. In addition, numerous other domestic and foreign
government regulations govern the Company.

The evolving and complex nature of regulatory requirements, the broad
authority and discretion of governmental agencies, continuing studies
involving the safety of currently marketed pharmaceutical products and the
generally high level of regulatory oversight results in a continuing
possibility that from time to time the Company will be adversely affected by
regulatory actions despite its ongoing efforts and commitment to achieve and
maintain compliance with regulatory requirements.

In addition, compliance with governmental laws and regulations, including
environmental laws and regulations, requires the Company to obtain permits
issued by appropriate regulatory agencies. Permits generally require periodic
renewal or review of their conditions, and public comment may be solicited in
the permitting process. There can be no assurance that the Company will be
able to obtain all necessary permits or renew all existing permits, or that
material changes in permit conditions will not be imposed or that material
public opposition will not surface. Failure to obtain or renew certain permits
could result in the shutdown of the Company's facility, the imposition of
significant fines or require the Company to incur significant expenditures to
comply with the law.

FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES

The Company derives the majority of its revenues and operating income from
its foreign operations. The Company's foreign operations are subject to
various risks including, in certain countries, currency exchange fluctuations
and restrictions, restrictions on imports, government price controls,
restrictions on the level of remittance of dividends, interest, royalties and
other payments, the need for governmental approval of new operations, the
continuation of existing operations and other corporate actions, political
instability, the possibility of expropriation and uncertainty as to the
enforcement of commercial rights, trademarks and other proprietary rights. In
addition, the introduction of the Euro as currency in Europe in 1999 may
subject the Company to additional risks including contract termination,
computer system application changes, and currency swaps.

EMPLOYEES

As of December 31, 1997, the Company had 578 full-time employees. Three
hundred and seventy-four of the Company's full time employees are unionized.
The Company believes its labor relations are satisfactory.

ITEM 2. PROPERTIES

The Company's production facilities are located in the United Kingdom. The
Company's corporate office is located in Stamford, Connecticut.

LAND SIZE
LOCATION TITLE (ACRES) (SQ. FT) USE
-------- ------ ------ ------- -----------------------------------

Stamford, CT Leased -- 4,500 Corporate Office
Dudley, England Owned 42 443,108 Manufacturing, Warehousing, Offices
Annan, Scotland Owned 154 158,446 Manufacturing, Warehousing, Offices

ITEM 3. LEGAL PROCEEDINGS

The Company is involved in various legal proceedings incidental to the
conduct of its business. While it is not possible to determine the ultimate
disposition of these proceedings, the Company believes that the outcome of
such proceedings will not have a material adverse effect on the financial
position or results of operations of the Company.

In late 1996, Phenomenex Inc., of Torrance, California formally opposed the
Company's attempt to register the ChiRex name as a trademark for "single
isomer chiral intermediate chemical compounds and active ingredients for use
in the manufacture of pharmaceuticals" in a proceeding filed in the U.S.
Patent and Trademark Office's Trademark Trial and Appeal Board. In December
1997, the Company reached a final agreement with Phenomenex whereby Phenomenex
discharged their opposition proceeding on terms favorable to the Company.
Under such agreement, the Company also purchased certain Phenomenex
trademarks.

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

None.

PART II

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

PRICE RANGE OF COMMON STOCK

The Common Stock was initially offered to the public on March 5, 1996 at a
price of $13.00 per share. The Common Stock is listed and traded on The Nasdaq
Stock Market's National Market SM ("Nasdaq") under the symbol "CHRX." The
following table sets forth for the periods indicated the high and low sales
prices of the Common Stock as reported by Nasdaq.

1997: HIGH LOW
----- ------ ------

First Quarter.............................................. $13.25 $ 9.50
Second Quarter............................................. 12.75 9.88
Third Quarter.............................................. 25.50 11.63
Fourth Quarter............................................. 26.25 16.63

1996: HIGH LOW
----- ------ ------

First Quarter (from March 5)............................... $13.25 $ 9.50
Second Quarter............................................. 13.25 10.00
Third Quarter.............................................. 13.38 7.88
Fourth Quarter............................................. 13.50 9.50

On March 4, 1998, the last reported sale price of the Common Stock as
reported by Nasdaq was $16.75. As of March 4, 1998, there were approximately
6,500 holders of record of the Common Stock.

DIVIDEND POLICY

The Company has never declared or paid cash dividends on its capital stock.
The Company currently intends to retain any future earnings for use in the
Company's business and, therefore, does not anticipate paying cash dividends
in the foreseeable future.

ITEM 6. SELECTED HISTORICAL FINANCIAL DATA

The following selected historical financial data of ChiRex Inc. as of
December 31, 1994 and 1995 and for the years then ended have been derived from
the financial statements of ChiRex Inc. which have been audited by Coopers &
Lybrand L.L.P., independent public accountants. The selected historical
financial data for ChiRex Inc. as of December 31, 1996 and 1997 and for the
years then ended, have been derived from the financial statements of ChiRex
Inc. which are incorporated by reference elsewhere in this document and which
have been audited by Arthur Andersen LLP , independent public accountants. The
period from inception (January 1, 1993) to December 31, 1993 is unaudited.
This information should be read in conjunction with "Item 8. Financial
Statements and Supplementary Data" and "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations."

CHIREX INC.

YEARS ENDED DECEMBER 31
---------------------------------------------
1993 1994 1995 1996 1997
------- ------- ------- -------- --------
(IN THOUSANDS EXCEPT PER-SHARE AMOUNTS)

STATEMENT OF OPERATIONS DATA:
Revenues........................ $ 4,633 $ 1,810 $ 2,754 $ 74,615 $ 94,100
Cost and expenses:
Cost of goods sold............ 1,565 814 1,715 56,508 71,440
Research and development...... 3,458 2,343 595 3,517 3,937
Selling, general and
administrative............... 1,999 1,964 2,099 8,876 10,587
Restructruring charge, net of
proceeds from disposition of
acetaminophen business....... -- -- -- -- 8,069
Write-off of in-process
research and development..... -- -- -- 5,790 --
Stock compensation charge..... -- -- -- 5,611 --
------- ------- ------- -------- --------
Total operating expenses.... 7,022 5,121 4,409 80,302 94,033
------- ------- ------- -------- --------
Operating income (loss)......... (2,389) (3,311) (1,655) (5,687) 67
Interest expense, net........... -- -- -- 755 1,052
Other expenses.................. -- -- 797 -- --
------- ------- ------- -------- --------
Loss before income taxes........ (2,389) (3,311) (2,452) (6,442) (985)
Benefit (provision) for income
taxes.......................... -- -- -- (1,867) 335
------- ------- ------- -------- --------
Net loss........................ $(2,389) $(3,311) $(2,452) $ (8,309) $ (650)
======= ======= ======= ======== ========
Basic and diluted loss per
common share................... $ (0.68) $ (0.94) $ (0.70) $ (0.88) $ (0.06)
======= ======= ======= ======== ========
BALANCE SHEET DATA (AS OF
DECEMBER 31):
Cash............................ $ -- $ -- $ 1 $ 291 $ 5,347
Total assets.................... 2,531 1,873 2,693 130,806 203,067
Long-term debt.................. -- -- -- 3,933 69,675
Stockholders' equity............ 2,351 1,873 2,693 90,068 93,095

The following selected historical financial data of ChiRex (Dudley) Limited
(formerly ChiRex Limited or Sterling Organics Limited) as of December 31,
1992, 1993 and 1994 and for the years then ended and for the period from
January 1, 1995 to August 10, 1995, have been derived from the financial
statements of Sterling Organics Limited which have been audited by Coopers &
Lybrand L.L.P., independent public accountants. The following selected
historical financial data of ChiRex (Holdings) Limited (formerly Crossco (157)
Limited) as of December 31, 1995 and for the period from August 10, 1995 to
December 31, 1995, have been derived from the consolidated financial
statements of Crossco (157) Limited which have been audited by Coopers &
Lybrand L.L.P., independent public accountants. This information should be
read in conjunction with "Item 8. Financial Statements and Supplementary Data"
and "Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations."

CHIREX (HOLDINGS) LIMITED AND CHIREX (DUDLEY) LIMITED

CHIREX (HOLDINGS)
LIMITED(1)
------------------------
CHIREX (DUDLEY) LIMITED PERIOD FROM
----------------------------------- INCEPTION
PERIOD (AUGUST 10, (UNAUDITED)
YEARS ENDED DECEMBER 31 ENDED 1995) TO PERIOD
------------------------ AUGUST 10, DECEMBER 31, ENDED MARCH
1992 1993 1994 1995(1) 1995 11, 1996(2)
------- ------- ------- ---------- ------------ -----------
(IN THOUSANDS)

STATEMENT OF OPERATIONS
DATA:
Revenues................ $85,609 $74,497 $78,859 $51,375 $34,828 $15,212
Costs and expenses:
Cost of goods sold.... 74,245 66,529 68,572 44,220 30,836 12,564
Research and develop-
ment expenses........ 1,741 1,564 1,816 1,115 651 558
Selling, general and
administrative....... 6,202 4,908 5,598 2,156 2,728 1,300
------- ------- ------- ------- ------- -------
Total costs and ex-
penses............. 82,188 73,001 75,986 47,491 34,215 14,422
------- ------- ------- ------- ------- -------
Operating income........ 3,421 1,496 2,873 3,884 613 790
Interest income (ex-
pense)................. (181) 264 237 16 (1,927) (690)
Other income............ 484 379 481 402 5 --
------- ------- ------- ------- ------- -------
Income before income tax
expense................ 3,724 2,139 3,591 4,302 (1,309) 100
Income tax expense...... 1,353 935 1,061 1,327 (351) 33
------- ------- ------- ------- ------- -------
Net income (loss)... $ 2,371 $ 1,204 $ 2,530 $ 2,975 (958) 67
======= ======= ======= =======
Dividends on preference
shares................. (243) (217)
------- -------
Net loss for ordinary
shares................. $(1,201) $ (150)
======= =======
BALANCE SHEET DATA (END
OF PERIOD):
Cash.................... $ -- $ 3,329 $ -- $ 396 $ 7,845 $ 7,517
Total assets............ 75,552 73,362 77,016 82,727 79,961 78,793
Long-term debt.......... -- -- -- -- 40,304 40,376
Total shareholders' eq-
uity................... 49,824 50,502 54,849 59,821 365 322

- --------
(1) On August 10, 1995, ChiRex (Dudley) Limited was acquired by ChiRex
(Holdings) Limited.

(2) On March 11, 1996, ChiRex (Holdings) Limited was acquired by ChiRex inc.

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

Management's discussion and analysis of results of operations and financial
condition as set forth on pages 14 through 17 of the Registrant's 1997 Annual
Report to Stockholders is incorporated herein by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Financial statements and supplementary data as set forth on pages 18 through
31 of the Registrant's 1997 Annual Report to Stockholders is incorporated
herein by reference. In addition, the following is included herein as Schedule
II:

SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997

CHARGED BALANCE
BALANCE (CREDITED) TO AT END
BEGINNING STATEMENTS OF OF
OF PERIOD OPERATIONS DEDUCTIONS PERIOD
--------- ------------- ---------- --------

Allowance for doubtful
accounts:
1995....................... $ -- $ 70,000 $ -- $ 70,000
1996....................... 70,000 434,000 (204,000) 300,000
1997....................... 300,000 (236,000) (42,000) 22,000

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

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The required information is hereby incorporated by reference from the
Company's Proxy Statement for the 1998 Annual Meeting of Stockholders to be
filed with the Securities and Exchange Commission by March 17, 1998.

ITEM 11. EXECUTIVE COMPENSATION

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

PART IV

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

(a)(1) Financial Statements. The following financial statements as set forth
on pages 18 through 31 of the Registrant's 1997 Annual Report to Stockholders
are incorporated herein by reference:

. Reports of Independent Public Accountants
. Consolidated Balance Sheets as of December 31, 1996 and 1997
. Consolidated Statements of Operations for the years ended December 31,
1995, 1996 and 1997
. Consolidated Statements of Cash Flows for the years ended December 31,
1995, 1996 and 1997
. Consolidated Statements of Stockholder's equity for the years ended
December 31, 1995, 1996 and 1997
. Notes to Consolidated Financial Statements.

(a)(2) Financial Statement Schedule. Schedules have been omitted as they are
not applicable or the required information is shown in the financial
statements or notes thereto.

(a)(3) Exhibits. The Exhibits listed on the accompanying Index to Exhibits
are filed as part of this Annual Report on Form 10-K.

(b) Reports on Form 8-K. In 1997 the Company filed the following Reports on
Form 8-K:

. On April 11, 1997 the Company filed a Report on Form 8-K reporting the
sale of its acetaminophen business to Rhone-Poulenc Chimie.

. On May 1, 1997 the Company filed Amendment Number 1 to its April 11,
1997 Report on Form 8-K. This Amendment Number 1 included pro forma
financial statements relating to the sale of the Company's
acetaminophen business to Rhone-Poulenc Chimie which were not filed in
the original Report.

. On November 17, 1997 the Company filed a Report on Form 8-K reporting
its completion of the purchase of a pharmaceutical production facility
located in Annan, Scotland from Glaxo Wellcome plc.

. On November 26, 1997 the Company filed Amendment Number 1 to its
November 17, 1997 Report on Form 8-K. This Amendment Number 1 included
audited financial statements for the years ended December 31, 1994,
1995 and 1996 relating to the Annan, Scotland business purchased.

CHIREX INC.
INDEX TO EXHIBITS
ITEM 14 (A) (3)

EXHIBIT NO. DESCRIPTION
----------- -----------

2.1* Agreement for the Sale and Purchase of the Entire Issued Share Capital of
Sterling Organics Limited by and among Sanofi Winthrop Limited, Crossco
(157) Limited and Sanofi, dated August 10, 1995.
2.2* Contribution Agreement by and among the Registrant, SepraChem Inc. and the
shareholders of Crossco (157) Limited listed on Schedule I attached thereto,
dated February 7, 1996.
2.3* Agreement and Plan of Merger by and among the Registrant, SepraChem,
Sepracor, SepraChem Merger Corporation, Roger B. Pettman and Certain Trusts
Affiliated with Victor H. Wooley, dated as of February 6, 1996, as amended.
2.4+**** Asset Purchase Agreement between ChiRex Limited, ChiRex Inc. and Rhone-
Poulenc Chimie S.A.
2.5+***** Asset Purchase Agreement between ChiRex Inc. and Glaxo Wellcome plc
3.1* Certificate of Incorporation of the Registrant.
3.2*** Amended and Restated By-Laws of the Registrant.
4.1* Specimen Certificate for Shares of Common Stock, $.01 par value, of the
Registrant.
4.2***** Facilities Agreement between ChiRex (Holdings) Limited and Bankers Trust
Company.
4.3***** Pledge Agreement between ChiRex Inc. and Bankers Trust Company.
10.1* 1995 Employee Stock Purchase Plan.
10.2*** 1997 Stock Incentive Plan.
10.3*** Amended and Restated 1995 Director Stock Option Plan.
10.4* Employment Agreement with Alan R. Clark.
10.5* Employment Agreement with David F. Raynor.
10.6*** Employment Agreement with John Graham Thorpe.
10.7*** Employment Agreement with John Edward Weir.
10.8*** Settlement Agreement with Robert L. Bratzler.
10.9*** Consulting Agreement with Robert L. Bratzler.
10.10*** ChiRex Pension Scheme.
10.11+*** Supply Agreement dated as of January 21, 1997 between ChiRex Inc. and Cell
Therapeutics, Inc.
10.12+*** License Agreement dated as of January 28, 1997 between ChiRex Inc. and
President and Fellows of Harvard College.
10.13* Contract Research Agreement by and between the Registrant and Sepracor,
dated December 21, 1995.
10.14* Contract Manufacturing Agreement by and between the Registrant and Sepracor,
dated December 21, 1995.
10.15* Technology Transfer and License Agreement by and between the Registrant and
Sepracor, dated as of January 1, 1995.
10.16* Corporate Services Agreement by and between the Registrant and Sepracor,
dated December 21, 1995.

EXHIBIT NO. DESCRIPTION
----------- -----------

10.17* Supply Agreement by and between the Registrant and Sepracor, dated December
21, 1995.
10.18* Technology Development Agreement by and between SepraChem and Sandoz Pharma
Ltd., dated October 1, 1995.
10.19* License Agreement by and between Sepracor and Massachusetts Institute of
Technology, dated May 5, 1989.
10.20* License Agreement by and between Sepracor and Massachusetts Institute of
Technology, dated June 21, 1991.
10.21* License Agreement by and between Sepracor and Research Corporation
Technologies, Inc., dated March 13, 1991.
10.22* License Agreement by and between Sepracor and Research Corporation
Technologies, Inc., dated September 10, 1992.
10.23* License Agreement by and between Sepracor and Tanabe Seiyaku Co., Ltd.,
dated October 30, 1990.
10.24* Toll Manufacturing Agreement by and between Sterling Organics and Rohm and
Haas (UK) Limited, dated July 4, 1991.
10.25* Toll Manufacturing Agreement by and between Sterling Organics and Rohm and
Haas (UK) Limited, dated August 27, 1987.
10.26* Supply Agreement by and between Sterling Organics and Sanofi Winthrop
Limited and Sterling Winthrop, Inc. dated June 17, 1994.
10.27* Supply Agreement by and between Sterling Organics and Sanofi S.A., dated
August 10, 1995.
10.28* Supply Agreement by and between Sterling Organics and Sanofi S.A., dated
August 10, 1995.
10.29*** Sterling/Currency LIBOR Revolving Credit Facility between Midland Bank Plc
and ChiRex (Holdings) Limited, executed as of August 10, 1996.
10.30* Procedural Joint Union Agreement by and between Sterling Organics and AEEU,
dated July 7, 1975.
10.31* House Agreement by and between Sterling Organics and AEEU, dated February
1976.
10.32* Procedural Agreement by and between Sterling Organics and EESA, dated
November 3, 1979.
10.33* Agreement by and between Sterling Organics and ACTS, dated July 19, 1978.
10.34* Escrow Agreement by and between the Registrant, Roger B. Pettman and Broomes
Secretarial Services Limited.
10.35* Escrow Agreement by and between Alan R. Clark, David F. Raynor, John E.
Weir, J. Graham Thorpe, Hugh F. Ford, William Riddell, Geoff B. Loxham, C.
Lyn Chapple, David A. Routledge and Broomes Secretarial Services Limited
10.36+***** Supply Agreement between ChiRex Inc. and Glaxo Wellcome plc.
10.37 Employment Agreement with Michael A. Griffith dated December 22, 1997.
10.38 Employment Agreement with Jon E. Tropsa dated January 1, 1998.
10.39 Employment Agreement with Beth P. Hecht dated December 22, 1997.
10.40 Scientific Advisory Board Consulting Agreement with Eric Jacobsen, Ph.D.
dated July 19, 1996.
13 ChiRex Inc. 1997 Annual Report
16** Letter re Change in Certifying Accountant

EXHIBIT
NO. DESCRIPTION
- ------- -----------

21*** Subsidiaries of the Registrant.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Coopers & Lybrand L.L.P.
23.3# Consent of Coopers & Lybrand L.L.P.
27 Financial Data Schedule

- --------
* Incorporated by reference to the corresponding exhibits in the
Registration Statement on Form S-1 previously filed by the Registrant
(File no. 33-80831).

** Incorporated by reference to the Form 8-K previously filed by the
Registrant on September 11, 1996.

*** Incorporated by reference to the corresponding exhibits in the
Registration Statement on Form S-1 previously filed by the Registrant on
February 26, 1997 (File no. 333-22401).

**** Incorporated by reference to the Form 8-K previously filed by the
Registrant on April 11, 1997.

***** Incorporated by reference to the Form 8-K previously filed by the
Registrant on November 17, 1997.

# Previously filed by the Registrant on the Company's 1996 Annual Report on
Form 10-K and is incorporated by reference.

+ Confidential treatment received as to certain portions.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this Annual
Report on Form 10-K to be signed on its behalf by the undersigned, thereunto
duly authorized, in the Town of Stamford, Connecticut on this 13th day of
March, 1998.

CHIREX INC.

/s/ Alan R. Clark
By __________________________________
Alan R. Clark, Chairman and Chief
Executive Officer

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, this Annual Report on Form 10-K has been
signed below by the following persons in the capacities indicated below on
this 13th day of March, 1998.

SIGNATURE TITLE

/s/ Alan R. Clark Chairman of the Board of Directors and
- ------------------------------------- Chief Executive Officer (Principal
Alan R. Clark Executive Officer)

/s/ Michael A. Griffith Chief Financial Officer, Secretary and
- ------------------------------------- Director (Principal Financial and
Michael A. Griffith Accounting Officer)

/s/ Eric Jacobsen Director
- -------------------------------------
Eric A. Jacobsen

/s/ Dirk Detert Director
- -------------------------------------
Dirk Detert

/s/ Elizabeth M. Greetham Director
- -------------------------------------
Elizabeth M. Greetham

/s/ W. Dieter Zander Director
- -------------------------------------
W. Dieter Zander

- -------------------------------------
SM