Catalytica Pharmaceuticals Expands Relationship With Monarch Pharmaceuticals.

MOUNTAIN VIEW, Calif.--(BW HealthWire)--July 8, 1999--

Catalytica Pharmaceuticals, Inc., a subsidiary of Catalytica, Inc. (Nasdaq:CTAL), announced today that it has extended its original multi-year manufacturing agreement with Monarch Pharmaceuticals, a wholly-owned subsidiary of King Pharmaceuticals, Inc., until December 31, 2003. Under the terms of the five-year agreement, Catalytica will continue to manufacture several products for Monarch and King, including eye and ear preparations for adult and pediatric use.

James E. Gregory, executive vice president and general manager of King, stated, "King is proud to have been among Catalytica's first customers since Catalytica's acquisition of the Glaxo Wellcome facility. Catalytica has consistently delivered quality products to King on a timely basis." Mr. Gregory added, "We look forward to our continued relationship with Catalytica especially in light of King's new agreement with Falcon Pharmaceuticals, Ltd. for a supply of generic formulation of our Cortisporin(R) Otic solution and suspension line, which is manufactured by Catalytica."

According to Dr. Gabriel R. Cipau, president and chief executive officer of Catalytica Pharmaceuticals, "Repeat and new business from our existing customers is one of the best indications that we are servicing our customers well. Many of our new supply agreements are five-year agreements which we believe represents confidence by our customers in our supply capabilities. It also enables us to better manage production at our facility. We have worked hard to establish strong relationships as a key outsourcing partner to our customers and we are pleased that Monarch has chosen Catalytica as one of its long term suppliers of products."

Catalytica Pharmaceuticals, Inc., a subsidiary of Catalytica, Inc., provides the pharmaceutical and biotech industries with comprehensive skills and demonstrated commercial experience in a broad spectrum of areas extending from process development through drug development, formulation, manufacturing and packaging. Since the acquisition of the Greenville Facility from Glaxo Wellcome in 1997, Catalytica has entered into over 25 new agreements for the development and manufacture of products for various pharmaceutical and biotech companies. In anticipation of additional business, it has expanded its chemical manufacturing facility and is currently expanding its sterile facility. It is the largest independent, fully integrated drug development and manufacturing supplier in the world.

Catalytica, Inc. builds businesses in high growth industries where the Company's technologies optimize manufacturing and solve environmental problems. Catalytica Pharmaceuticals, Inc. provides drug development and product manufacturing to the pharmaceutical industry; Catalytica Combustion Systems, Inc. produces XONON, a catalytic system that permits essentially pollution free combustion for the energy market; and Catalytica Advanced Technologies, Inc. serves as the incubator for new catalytic technologies for industrial applications. Find Catalytica on the World Wide Web at www.catalytica-inc.com.

This news release contains forward-looking statements regarding Catalytica's future manufacturing and/or packaging of products at the Greenville, North Carolina facility, the ability to obtain new business, the success of recently announced agreements and contracts, including under the expanded agreement and letter of intent with Monarch, and of ongoing development contracts, the ability to market the Company's development, manufacturing and other services to current and prospective clients, and Catalytica's competitive position in its markets. Actual results may differ and such differences may be material. These statements involve risks and uncertainties, including without limitation, the ability to operate the development, manufacturing, and packaging facilities efficiently, the ability to perform cost effectively and in a timely manner, the potential for product development delays, changes in the company's competitive position, and the impact of FDA and other regulations on pharmaceutical and biotech manufacturing. Catalytica undertakes no obligation to update publicly any forward-looking statements to reflect new information, events, or circumstances after the date of this release. Investors are encouraged to review Catalytica's Form 10K for the year ending December 31, 1998 for a discussion of additional risk factors that could affect Catalytica's future performance.