SCHEDULE 14A INFORMATION

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. ____)

Filed by the Registrant /X/

Filed by a Party other than the Registrant / /

Check the appropriate box:

/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

NEOPHARM, INC.
--------------
(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

/X/ No fee required.

/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1) Title of each class of securities to which transaction applies:

(2) Aggregate number of securities to which transaction applies:

(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how it was determined):

(4) Proposed maximum aggregate value of transaction:

(5) Total fee paid:

/ / Fee paid previously with preliminary materials.

/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.

(1) Amount Previously Paid:

(2) Form, Schedule or Registration Statement No.:

(3) Filing Party:

(4) Date Filed:

NEOPHARM, INC.
100 Corporate North
Suite 215
Bannockburn, Illinois 60015
------------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 15, 1998

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of NeoPharm,
Inc., a Delaware corporation, will be held at the Conference Center, located at
100 Corporate North, Bannockburn, Illinois on June 15, 1998, at 9:00 a.m., local
time, for the following purposes:

1. To elect five directors to serve until the 1999 Annual Meeting of
Stockholders.

2. To transact such other business as may properly come before the
meeting.

Only stockholders of record on April 30, 1998 will be entitled to notice of
and to vote at this meeting.

TO ASSURE THAT YOUR INTERESTS WILL BE REPRESENTED, WHETHER OR NOT YOU PLAN
TO ATTEND THE MEETING, YOU ARE URGED TO SIGN AND DATE THE ENCLOSED PROXY CARD
AND PROMPTLY RETURN IT IN THE PRE-ADDRESSED ENVELOPE PROVIDED, WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES. THE ENCLOSED PROXY IS REVOCABLE AND
WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IF YOU ATTEND THE MEETING.

By Order of the Board of Directors,

/s/ David E. Riggs
------------------
DAVID E. RIGGS
Secretary

Bannockburn, Illinois
May 11, 1998

NEOPHARM, INC.
100 Corporate North
Suite 215
Bannockburn, Illinois 60015
-------------------

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 15, 1998

GENERAL INFORMATION

This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of NeoPharm, Inc., a Delaware corporation (the
"Company"), to be used at the Annual Meeting of Stockholders of the Company (the
"Annual Meeting") to be held at the Conference Center, located at 100 Corporate
North, Bannockburn, Illinois on June 15, 1998 at 9:00 a.m. for the purposes set
forth in the accompanying Notice of Annual Meeting of Stockholders and in this
Proxy Statement. This Proxy Statement and the enclosed form of proxy were first
sent or given to stockholders on or about May 11, 1998.

Only stockholders of record at the close of business on April 30, 1998 (the
"Record Date") will be entitled to vote at the meeting or any adjournment
thereof. As of the close of business on the Record Date, there were 8,195,810
shares of the Company's common stock, par value $.0002145 per share ("Common
Stock"), outstanding.

The presence, either in person or by properly executed proxy, of the
holders of a majority of the outstanding shares of Common Stock is necessary to
constitute a quorum at the Annual Meeting. In the election of directors, each
share is entitled to cast one vote for each director to be elected; cumulative
voting is not permitted. For all matters except the election of directors, each
share is entitled to one vote. Directors are elected by a plurality of the
votes cast by the holders of shares of Common Stock at a meeting at which a
quorum is present. Abstentions and broker non-votes are counted for purposes of
determining the presence or absence of a quorum for the transaction of business.
Abstentions and broker non-votes are not counted for purposes of determining
whether a proposal presented to stockholders has been approved.

A proxy may be revoked at any time before it is exercised by giving a
written notice to the Secretary of the Company bearing a later date than the
proxy, by submitting a later-dated proxy or by voting the shares represented by
the proxy in person at the Annual Meeting. Unless revoked, the shares
represented by each duly executed, timely delivered proxy will be voted in
accordance with the specifications made. If no specifications are made, such
shares will be voted FOR the election of directors as proposed in this Proxy
Statement. The Board of Directors does not intend to present any other matters
at the Annual Meeting. However, should any other matters properly come before
the Annual Meeting, it is the intention of the proxy holders to vote the proxy
in accordance with their best judgement.

The expenses of soliciting proxies will be paid by the Company. In
addition to solicitation by mail, officers, directors and employees of the
Company, who will receive no extra compensation therefor, may solicit proxies
personally or by telephone, telecopy or telegram. The Company will reimburse
brokerage houses, custodians, nominees and fiduciaries for their expenses in
mailing proxy materials to principals.

ELECTION OF DIRECTORS

Five directors, constituting the entire Board of Directors, are to be
elected at the Annual Meeting. Each director will hold office until the 1999
Annual Meeting of stockholders and until his successor has been elected and
qualified. The nominees named below have been selected by the Board of
Directors of the Company. The Board believes that all of its present nominees
will be available for election at the meeting and will serve if elected. If,
due to circumstances not now foreseen, any of the nominees named below will not
be available for election, the proxies will be voted for such other person or
persons as the Board of Directors may select. Each of these nominees is
currently a director of the Company.

Effective March 16, 1998, and in accordance with procedures set forth in
the Company's by-laws, the Board of Directors appointed James M. Hussey to fill
the vacancy created in the Board of Directors by the resignation of William C.
Govier as President, Chief Executive Officer and a Director of the Company.

There follows information as to each nominee for election as a director at
the Annual Meeting, including his age, present principal occupation, other
business experience during the last five years, directorships of other
publicly-held companies and period of service as a director of the Company.

THE PERSONS NAMED IN THE ACCOMPANYING FORM OF PROXY WILL VOTE FOR THE
ELECTION OF THE NOMINEES UNLESS STOCKHOLDERS SPECIFY OTHERWISE IN THEIR PROXIES.

Nominees for Director. The following information has been provided by the
respective nominees for election to the Board of Directors.

NAME AGE PRINCIPAL OCCUPATION
---- --- --------------------

James M. Hussey, R.Ph., MBA... 39 Mr. Hussey joined the Company as
President, Chief Executive Officer and
Director on March 16, 1998. Prior to
joining the Company, Mr. Hussey served as
Chief Executive Officer of Physicians
Quality Care, Inc., a managed care
organization from 1994 to 1998. Previous
to that, Mr. Hussey held several
positions with Bristol-Myers Squibb, a
diversified pharmaceutical manufacturer,
from 1986 to 1994, most recently as the
General Manager Midwest Integrated
Regional Business Unit.

John N. Kapoor, Ph.D.......... 54 Dr. Kapoor has been a Director and
Chairman of the Board since its formation
in July 1990. Prior to forming the
Company, Dr. Kapoor formed EJ Financial
Enterprises, Inc., a health care
consulting and investment company, in
March 1990, of which Dr. Kapoor is the
principal shareholder and President. Dr.
Kapoor is presently Chairman of Option
Care, Inc., a provider of home
healthcare; Chairman of Unimed
Pharmaceuticals, Inc., a developer and
marketer of pharmaceuticals for cancer,
endocrine disorders and infectious
diseases; and Chairman and Chief
Executive Officer of Akorn, Inc., a
manufacturer, distributor and marketer of
generic ophthalmic products.

2
5

NAME AGE PRINCIPAL OCCUPATION
---- --- --------------------

Aquilur Rahman, Ph.D.......... 55 Dr. Rahman has been a Director and the
Company's Chief Scientific Officer since
joining the Company in July 1990. Prior
to joining the Company on a full time
basis in 1996, Dr. Rahman was an
associate professor of pathology and
pharmacology at Georgetown University and
has more than 15 years of research
experience in developing methods of
chemotherapy treatment for cancer.

Anatoly Dritschilo, M.D....... 53 Dr. Dritschilo joined the Company as a
Member of the Board of Directors in July
1990. Since August 1979, Dr. Dritschilo
has been Chairman of the Department of
Radiation Medicine and Medical Director
of the Georgetown University Medical
Center in Washington, D.C.

Erick E. Hanson............... 51 Mr. Hanson joined the Company as a
Member of the Board of Directors in April
1997. Since April 1995, Mr. Hanson has
been associated with Option Care, Inc., a
provider of home healthcare, were he
currently holds the positions of
Director, President and Chief Executive
Officer. Prior to joining Option Care,
Mr. Hanson held a variety of executive
positions with Caremark, Inc., including
Vice President Sales and Marketing. Mr.
Hanson served as President and Chief
Operating Officer of Clinical Partners
Inc. in Boston, MA from 1989 to 1991 and
prior to 1989 was associated with Blue
Cross and Blue Shield of Indiana for over
twenty years. Mr. Hanson presently
serves on the boards of directors of
Option Care and Condell Medical Centers.

MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors held two meetings in 1997. During 1997, each of
the directors participated in at least 75% of the total number of such meetings
of the Board and meetings of committees of the Board on which he served.

The Board of Directors has established a Compensation Committee and an
Audit Committee. The Company's bylaws provide that each such committee shall
have one or more members, who serve at the pleasure of the Board of Directors.
The Company does not have a standing nominating committee, however, the Board
of Directors will consider director nominations which are submitted by
stockholders in writing addressed to: Corporate Secretary, NeoPharm, Inc., 100
Corporate North, Suite 215, Bannockburn, Illinois 60015.

Compensation Committee. The Compensation Committee is responsible for
administering incentive compensation and benefit plans under the Company's 1995
Stock Option Plan (the "Stock Option Plan") and the Company's 1995 Director
Option Plan (the "Director Plan") and reviewing and making recommendations to
the Board of Directors with respect to the administration of the salaries,
incentives and other compensation of directors, officers, and other employees
of the Company, including the terms and conditions of their employment and
other compensation matters. The Board of Directors has appointed Messrs.
Kapoor and Dritschilo to the Compensation Committee. During fiscal 1997, there
was one meeting of the Compensation Committee.

Audit Committee. The Audit Committee is responsible for making an annual
recommendation, based on a review of qualifications, to the Board of Directors
for the appointment of independent public accountants to audit the financial
statements of the Company and to perform such other duties as the Board of
Directors may from time to time prescribe. The Audit Committee is also
responsible for reviewing and making recommendations to the Board of Directors
with respect to (i) the scope of audits conducted by the Company's independent
public accountants and internal auditors and (ii) the accounting methods and the
system of internal control used by the Company. In addition, the Audit
Committee reviews reports from the Company's independent public accountants and
internal auditors concerning compliance by management with governmental laws and
regulations and with the Company's policies relating to ethics, conflicts of
interest and disbursements of funds. The Board of Directors has appointed
Messrs. Dritschilo and Hanson to the Audit Committee. During fiscal 1997, there
was one meeting of the Audit Committee.

Compensation Committee Interlocks and Insider Participation. As noted
above, the Compensation Committee of the Board consists of Messrs. Kapoor and
Dritschilo, each of whom is a non-employee director of the Company. In 1997,
the Company paid EJ Financial Enterprises, Inc. ("EJ") $125,000 pursuant to a
Consulting Agreement for certain business and financial services, plus
reimbursement of expenses. Dr. Kapoor, the Company's Chairman, is the president
and a director of EJ. Dr. Mahendra Shah, Vice President of the Company, is also
a Vice President of EJ. In addition, Dr. Kapoor is Chairman of Option Care,
Inc., a company in which Director Hanson serves as director, President and Chief
Executive Officer. The Company's principal offices are located in space
subleased from Option Care, Inc. See "Certain Relationships and Related
Transactions" for additional information.

COMPENSATION OF DIRECTORS

Directors are not paid any compensation for attendance at directors'
meetings or for serving on any committee of the Board. Directors are reimbursed
for reasonable out-of-pocket expenses incurred in connection with attendance at
such meetings.

Non-employee directors are eligible to participate in the Director Plan
which provides for the grant of nonstatutory stock options to non-employee
directors of the Company who are not stockholders holding more than 5% of the
Company's outstanding Common Stock ("Outside Directors") pursuant to an
automatic, non-discretionary grant mechanism providing for a total of 100,000
shares of Common Stock. Currently two directors are eligible to participate in
the Director Plan. Each Outside Director is automatically granted an option to
purchase 5,000 shares of Common Stock of the Company upon his or her initial
election as a director. Subsequently, each Outside Director is granted an
additional option to purchase 5,000 shares of Common Stock on the first business
day of each year thereafter (if, on such date, he or she has served as a
director for at least six (6) months), so long as he or she remains an Outside
Director.

EXECUTIVE COMPENSATION

Summary of Cash and Certain Other Compensation of Executive Officers. The
following table sets forth certain summary compensation information for the
fiscal year ended December 31, 1997, for services rendered by the chief
executive officer and for each executive officer of the Company who received
more than $100,000 in salary and bonus in 1997 (the "Named Executive Officers").

ANNUAL COMPENSATION LONG-TERM COMPENSATION AWARDS
------------------------------------------------------ ---------------------------------
ANNUAL OTHER
NAME AND COMPENSATION ANNUAL RESTRICTED STOCK
PRINCIPAL POSITION FISCAL YEAR SALARY($) BONUS($) COMPENSATION AWARDS($) OPTIONS(#)
- - ------------------------- ----------- --------- ---------------- ------------ ---------------- ---------------

William C. Govier, 1997 $138,600 $ 0 $0 $0 0
Chief Executive Officer 1996 121,000 39,600 0 0 50,000(2)
and President(1) 1995 0 0 0 0 0

Aquilur Rahman, 1997 $167,000 $51,000 $0 $0 0
Chief Scientific Officer 1996 144,100 45,000 0 0 50,000(2)
1995 0 0 0 0 0

_________________________________
(1) Dr. Govier resigned as President, Chief Executive Officer and a Director
of the Company effective January 18, 1998. Effective March 16, 1998, Mr.
James M. Hussey succeeded Dr. Govier as President and Chief Executive
Officer and was appointed to fill the vacancy in the Board of Directors
created by Dr. Govier's departure.

(2) The stock option became exercisable for 25% of the covered shares on
August 13, 1997 and will become exercisable with respect to an additional
25% on each anniversary of such date thereafter until exercisable in full
unless terminated in accordance with the terms of the 1995 Stock Option
Plan. Exercisability may be accelerated in the event of a "change of
control."

OPTION GRANTS IN LAST FISCAL YEAR

No options to purchase shares of Common Stock were granted to the Named
Executive Officers during the fiscal year ended December 31, 1997.

AGGREGATED OPTION EXERCISES IN LAST FISCAL
YEAR, AND FISCAL YEAR-END OPTION VALUES

The following table sets forth information with respect to stock options
exercised during the fiscal year ended December 31, 1997, and the value at
December 31, 1997, of unexercised stock options held by the Named Executive
Officers:

INDIVIDUAL GRANTS

VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED OPTIONS IN-THE-MONEY AT
SHARES ACQUIRED OPTIONS AT FISCAL YEAR- FISCAL YEAR-END*
ON EXERCISE VALUE END EXERCISABLE/ EXERCISABLE/
--------------- REALIZED UNEXERCISABLE UNEXERCISABLE
NAME # $ # $
- - ---- ------ ----- ----- -----

William C. Govier 0 0 12,500/37,500 N/A*
Aquilur Rahman 0 0 12,500/37,500 N/A*

_______________
* Represents the fair market value at December 31, 1997, of the Common
Stock underlying the options minus the exercise price. As of December 31,
1997, the fair market value of the underlying common stock was less than
the option exercise price for all options held by the Named Executive
Officers.

5
8

COMPENSATION COMMITTEE REPORT

The Compensation Committee of the Board of Directors, consisting of
directors Dr. John N. Kapoor and Dr. Anatoly Dritschilo, neither of whom is an
employee of the Company, annually reviews and makes recommendations to the Board
of Directors regarding executive compensation. It is the philosophy of the
Committee that the total executive compensation package should align the
financial interests of the Company's executives with the short-term and
long-term goals of the Company and consequently enhance stockholder value. The
key elements of the Company's current compensation program include a base
salary, an annual bonus and equity participation through a long term incentive
plan.

Base Salary. As a development stage company, with only four full time
employees, it is difficult to compare salaries to any particular peer group.
Rather, the Committee takes into consideration the responsibilities, experience
level, individual performance levels and amount of time devoted to the Company's
needs. Salaries are reviewed annually by the Committee based on the foregoing
criteria and are adjusted, if warranted, by the Committee.

Annual Bonus. The Committee recommends to the Board the amount of bonus
awards, including who should receive them based upon its evaluations. The
awards are intended to reward excellent individual and team performance in the
achievement of the Company's financial and operational goals. The Board of
Directors reviews the Committee's bonus recommendations and makes its bonus
determinations based on the Committee's report. Bonuses paid to employees for
the fiscal year 1997 amounted to 30% of base salary.

Long-term Incentives. The Company adopted the 1995 Stock Option Plan in
January 1995. The purpose of the plan is to create an opportunity for
employees, including executive officers and consultants to the Company, to share
in the enhancement of stockholder value. As with annual bonus payments, the
Compensation Committee annually recommends to the Board the grant of incentive
awards based upon its evaluation of individual contributions towards the
Company's past and future success. After reviewing the recommendation of the
Committee, including the executive's individual performance and level of
responsibility together with the Company's achievement with respect to
profitability and growth, the Board grants incentive awards. Fiscal year 1996
marked the first time the Committee has made such recommendations to the Board.
In 1997 no recommendations for the issuance of stock options were made by the
Committee.

Compensation Committee

Dr. John N. Kapoor
Dr. Anatoly Dritschilo

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9

SECURITY OWNERSHIP

The following table sets forth certain information regarding beneficial
ownership of shares of the Common Stock as of March 31, 1998 by (i) all those
known by the Company to be beneficial owners of more than 5% of its outstanding
Common Stock, (ii) each director of the Company and each nominee for director,
(iii) each of the executive officers named in the Summary Compensation Table and
(iv) all Executives, directors and nominees for director as a group.

Amount and Nature of Percent
Name of Beneficial Ownership Class (1)
- - ---- ----------------------- ---------

John N. Kapoor 2,112,909(2) 24.24%
EJ Financial Enterprises, Inc.
225 East Deerpath
Suite 250
Lake Forest, IL 60045

John N. Kapoor 1994-A 1,550,453(3) 17.79%
Annuity Trust
225 East Deerpath
Suite 250
Lake Forest, IL 60045

Aquilur Rahman 878,040 10.07%
100 Corporate North
Suite 215
Bannockburn, IL 60015

Anatoly Dritschilo 245,949 2.82%
100 Corporate North
Suite 215
Bannockburn, IL 60015

James M. Hussey 0(4) *
100 Corporate North
Suite 215
Bannockburn, IL 60015

Erick E. Hanson 0 *
100 Corporate North, Suite 212
Bannockburn, IL 60015

William C. Govier 245,634(5) 2.82%
225 E. Deerpath
Suite 250
Lake Forest, IL 60045

All officers and directors as a group
(8 persons) 5,337,591(6) 61.24%

________________________________

* Indicates ownership of less than 1%.

7
10

(1) Based on 8,195,810 shares of Common Stock outstanding as of March 31,
1998, plus 519,817 shares subject to warrant and options that are
considered to be beneficially owned by the persons listed. Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission (the "Commission") and generally includes voting or
investment power with respect to securities. Shares of Common Stock
subject to options or warrants exercisable or convertible within 60 days
are deemed outstanding for computing the percentage of the person or group
holding such options or warrants.

(2) Includes 1,511,624 shares held by the John N. Kapoor Trust, dtd 9/20/89
(the "JNK Trust"), of which Dr. Kapoor is the sole trustee and sole
beneficiary. The address of the Trust is 225 East Deerpath, Suite 250,
Lake Forest, Illinois 60045. The Trust also owns Warrants to purchase
287,004 shares of Common Stock, which are assumed to have been exercised
for purposes of disclosing the ownership indicated. The amount shown also
includes 300,000 shares which are held by the John N. Kapoor Charitable
Trust (the "Charitable Trust") of which Dr. Kapoor and his spouse are
co-trustees. Dr. Kapoor disclaims beneficial ownership of the shares held
by the Charitable Trust.

(3) The sole trustee of the John N. Kapoor 1994-A Annuity Trust (the "Annuity
Trust") is Editha Kapoor, Dr. Kapoor's spouse, who also serves as trustee
for four trusts which have been established for their children (the
"Childrens' Trusts") and which collectively own 310,848 shares and as
co-trustee with Dr. Kapoor of the Charitable Trust. The shares held by
the Childrens' Trusts and the Charitable Trust are not included in the
reported shares.

(4) Mr. Hussey joined the Company on March 16, 1998.

(5) Dr. Govier resigned as President, Chief Executive Officer and Director
effective January 18, 1998.

(6) Does not include shares held by family members or trusts established for
family members of officers and directors as to which shares such officers
and directors do not have or share voting or investment power and as to
which they have disclaimed beneficial ownership.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

In November, 1997 the Company relocated its principal corporate office to
space subleased from Option Care, Inc. Mr. Hanson, a director of the Company,
is President, CEO and a Director of Option Care. In addition, Dr. Kapoor,
Chairman of the Company's Board of Directors, is a director and principal
shareholder of Option Care. The sublease was negotiated at arms length and the
Company believes the terms are fair.

On July 1, 1994, the Company entered into a Consulting Agreement with EJ
Financial Enterprises, Inc. ("EJ Financial"). The Consulting Agreement provides
that the Company will pay EJ Financial $125,000 per year (paid quarterly) for
certain business and financial services, including having certain officers of EJ
Financial serve as officers of the Company. Dr. John Kapoor, the Company's
Chairman of the Board is the president and a director of EJ Financial. Dr.
Mahendra Shah, Vice President of the Company, is also a Vice President of EJ
Financial. The Company believes that the charges provided for in the Agreement
are reasonable and reflect the cost of the services provided. These charges
reflect the increased need for EJ Financial's services in connection with
operation of NeoPharm as a publicly-held company. Unless terminated by the
parties, the management services agreement with EJ Financial automatically
renews in June of each year for a one year term.

In connection with the Company's initial public offering, the Company
adopted a policy whereby any further transactions between the Company and its
officers, directors, principal stockholders and any affiliates of the foregoing
persons will be on terms no less favorable to the Company than could reasonably
be obtained in arm's length transactions with independent third parties, and
that any such transactions also be approved by a majority of the Company's
disinterested outside directors.

8
11

STOCK PERFORMANCE GRAPH

The following graph compares the percentage change in cumulative total
stockholder return on the Company's Common Stock with the cumulative return on
the AMEX Market Value Index, the NASDAQ Stock Market Index and the NASDAQ
Pharmaceutical Stock Index during the period beginning January 25, 1996 (the
date on which the Company's Common Stock began trading publicly on the Nasdaq
Small Cap System) through December 31, 1997. The price of the Common Stock as
reflected in the graph has been adjusted to reflect the two-for-one stock split
in the Common Stock in August 1996. The comparison assumes that $100 was
invested on January 1, 1996 in the Company's Common Stock and in the foregoing
indices and assumes the reinvestment of dividends.

[STOCK PERFORMANCE GRAPH]

- - --------------------------------------------------------------------------------
12/31/95* 12/31/96 12/31/97
- - --------------------------------------------------------------------------------

NeoPharm, Inc. ** 100.00 229.00 150.00
- - --------------------------------------------------------------------------------
AMEX Market Value Index 100.00 106.00 129.00
- - --------------------------------------------------------------------------------
NASDAQ Stock Market Index 100.00 123.00 151.00
- - --------------------------------------------------------------------------------
NASDAQ Pharmaceutical Stock Index 100.00 100.00 104.00
- - --------------------------------------------------------------------------------

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING

Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than 10% of a
registered class of the Company's equity security, to file with the Securities
and Exchange Commission and the applicable stock exchanges reports of ownership
and changes in ownership of common stock and other equity securities of the
Company. Officers, directors and greater than 10% shareholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file.

Based solely on a review of the copies of such reports furnished to the
Company or written representations that no other reports were required, the
Company believes that, during the 1997 fiscal year, all filing requirements
applicable to its officers, directors and greater than 10% beneficial owners
were complied with.

9
12

RELATIONSHIP WITH INDEPENDENT AUDITORS

The firm of Arthur Andersen LLP was the Company's independent public
accountant for the 1997 fiscal year. A representative from the Company's
independent public accountants customarily attends the Annual Meeting and has
the opportunity to make a statement if he so desires. This representative also
is available to respond to appropriate questions. The Company has not yet
selected its independent public accountant for the 1998 fiscal year.

OTHER MATTERS

The only matters which management intends to present to the meeting are set
forth in the Notice of Annual Meeting. Management knows of no other matters
which will be brought before the meeting by any other person. However, if any
other matters are properly brought before the meeting, the persons named on the
enclosed form of proxy intend to vote on such matters in accordance with their
best judgement on such matters.

1999 ANNUAL MEETING

Proposals of stockholders intended to be presented at the next Annual
Meeting of Stockholders to be held in 1999 must be received by the Company on or
before January 11, 1999 for inclusion in the Company's Proxy Statement and form
of proxy relating to that Annual Meeting.

1997 ANNUAL REPORT ON FORM 10-K

A copy of the Company's 1997 Annual Report on Form 10-K (the "Form 10-K")
accompanies this Proxy Statement as part of the Company's Annual Report.
Additional copies of the Form 10-K are available to stockholders without charge
on request in writing to the following address: NeoPharm, Inc., 100 Corporate
North, Suite 215, Bannockburn, Illinois 60015.

By Order of the Board of Directors,

/s/ James M. Hussey
-------------------
JAMES M. HUSSEY
President and Chief Executive Officer

May 11, 1998

10
13

NEOPHARM, INC.

PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS -- JUNE 15, 1998

The undersigned appoints James M. Hussey, Kevin Harris and Christopher R.
Manning, and each of them, as proxies, with full power of substitution and
revocation, to vote, as designated on the reverse side hereof, all the Common
Stock of NeoPharm, Inc. which the undersigned has power to vote, with all powers
which the undersigned would possess if personally present, at the Annual Meeting
of Stockholders thereof to be held on June 15, 1998, or at any adjournment
thereof.

Unless otherwise marked, this proxy will be voted FOR the election of the
nominees named.

PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.

(Continued and to be signed on reverse side.)

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

1. Election of Directors --
Nominees: John N. Kapoor, James M. Hussey, For Withhold For All
Aquilur Rahman, Anatoly Dritschilo, All All Except
Erick E. Hanson [ ] [ ] [ ]

The undersigned acknowledges receipt of the Notice of Annual Meeting
of Shareholders and of the Proxy Statement.

Dated: , 1998
--------------------------

Signature(s):
----------------------------------------------------------

------------------------------------------------------------------------
Please sign exactly as your name appears. Joint owners should each sign
personally. Where applicable, indicate your __________ position or
representation _________________.

- - ------------------------------------------------------------------------------------------------------------------------------------
< FOLD AND DETACH HERE >

YOUR VOTE IS IMPORTANT!

PLEASE VOTE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.