Catalytica Pharmaceuticals Announces Manufacturing Agreement with Allergan.

MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--Jan. 20, 1998-- Catalytica Pharmaceuticals, Inc., a subsidiary of Catalytica, Inc. (NASDAQ:CTAL), today announced a new contract with Allergan, Inc. (NYSE:AGN) to continue to produce pharmaceutical products at its Greenville, North Carolina development and manufacturing facilities.

The contract represents revenue potential to Catalytica Pharmaceuticals of approximately $17 million over five years. The contract announced today also ensures that a key Allergan product produced at the Greenville facility prior to its acquisition will continue to be manufactured at this site.

Under the agreement with Allergan, Catalytica Pharmaceuticals will produce Elimite, a topical cream for the treatment of scabies. The contract announced today is a continuation of a manufacturing agreement Allergan has had since 1989 (first with Burroughs Wellcome and later with Glaxo Wellcome) to manufacture Elimite at the Greenville facility.

According to Gabriel R. Cipau, President and Chief Operating Officer of Catalytica Pharmaceuticals, the contract demonstrates the pharmaceutical industry's confidence in the quality, service and reliability of supply offered by Catalytica's Greenville operation. "We are extremely pleased that Allergan has chosen to extend its business with us and will continue to be a valued customer of the Greenville facility. We are committed to ensuring that they continue to receive the high-quality products, superior level of service and long-term reliability of supply that they have come to expect from the world-class Greenville facility."

James A. Cusumano, Chairman of Catalytica Inc. and Chief Executive Officer of Catalytica Pharmaceuticals, called the agreement with Allergan a significant milestone for the company. "Our proven ability to sustain important relationships with long-time customers of the Greenville facility is a key piece of our strategy to become the pre-eminent technology and manufacturing partner to the healthcare industry. Our customers are helping us make the case that Catalytica Pharmaceuticals is unique in the healthcare marketplace as a one-source solution for technology and manufacturing expertise."

Allergan becomes the latest global healthcare product company to sign a manufacturing agreement with Catalytica since its acquisition of the Greenville facility from Glaxo Wellcome Inc. As part of the agreement to acquire the Greenville facility, Catalytica negotiated a five-year outsourcing agreement to manufacture certain Glaxo Wellcome products formerly produced at the facility. In addition, Amgen Inc. and Pfizer Inc. have recently committed to producing sterile products and chemical intermediates respectively at the North Carolina facility.

Allergan, Inc., headquartered in Irvine, California, is a technology-driven, global healthcare company focused on specialty pharmaceutical products for specific disease areas that deliver value to customers, satisfy unmet medical needs and improve patients' lives.

Catalytica, Inc., through its subsidiaries, provides technologies and advanced products that allow its customers and business partners to streamline and reduce the cost of bringing their products and services to market. Catalytica Pharmaceuticals, Inc., a majority-owned subsidiary, provides process and formulation development and manufacturing for business partners in the pharmaceutical and biotech industry. Find Catalytica on the World Wide Web at www.catalytica-inc.com

This news release contains forward-looking statements regarding Catalytica's future operation of the Greenville facility and Catalytica's competitive position in its markets. These statements involve risks and uncertainty, including without limitation, the ability to operate the facility efficiently, the ability to perform cost-effectively and in a timely manner, the ability to obtain contracts with new customers, product development delays, changes in the company's competitive position, and the impact of FDA and other regulations on fine chemical manufacturing. Investors are encouraged to review Catalytica's Form 10-K/A for the year ended December 31, 1996 (Part II, Item 7) and Form 10-Q for the period ended June 30, 1997, and the Proxy Statement dated July 16, 1997 for a more complete discussion of factors that could affect Catalytica's future performance.

CONTACT: Catalytica, Inc.

Lloyd Baylis, 650/960-3000