Coastal Healthcare Group and SmithKline Beecham form strategic alliance; SmithKline's Clinical Laboratories and Diversified's Pharmaceutical Benefit Management to collaborate with Coastal Physicians' Network.

DURHAM, N.C. and PHILADELPHIA--(BUSINESS WIRE)--March 28, 1995-- Coastal Healthcare Group, Inc. (NYSE:DR) and SmithKline Beecham (NYSE:SBE) announced today that they have formed a strategic alliance to enhance the ability for Coastal to meet the needs of a changing medical marketplace.

The agreement establishing the alliance anticipates that SmithKline services will be integrated into the Coastal network of physicians to create new and more efficient ways of delivering high-quality health care. The collaboration will combine the capabilities of:

- Coastal, the largest physician management company in the U.S. Coastal provides services to over 6,000 physicians at nearly 1,000 practice locations. The Coastal network covers more than 600,000 patients, including 200,000 enrolled in prepaid health plans.

- Diversified Pharmaceutical Services, Inc., a subsidiary of SmithKline and one of the largest pharmaceutical benefit managers in the U.S. Diversified uses its management of pharmacy benefits and its network of retail pharmacy providers to curb pharmaceutical expenses. Diversified currently manages pharmaceutical benefits for 13.8 million people, and its pharmacy network includes more than one-third of all pharmacies nationwide. Diversified will become the pharmaceutical benefit management company for Coastal health plans.

- SmithKline Beecham Clinical Laboratories (SBCL), a business sector within SmithKline and one of the largest laboratory networks in the U.S. SBCL operates 750 patient-service and laboratory sites across the country, offering more than 1,500 different types of clinical tests. SBCL will become a preferred provider to Coastal.

"SmithKline Beecham is combining the strengths of its business sectors, each a leader in its field," said SmithKline Chief Executive Jan Leschly. "We are uniquely able to offer both clinical laboratory and pharmaceutical-benefit-management services and we intend to use these two capabilities to create an array of new products that will benefit Coastal and its customers. The key to this alliance is innovation."

Steven M. Scott, M.D., Coastal Chief Executive Officer stated, "We are excited about bringing our physician partners and SmithKline Beecham together to provide more cost effective delivery systems. An important next step will be to draw on Coastal's and SmithKline's databases to help physicians better manage patient care and thus avoid unnecessary expenses. Enhanced care, together with cost containment, is our objective."

Coastal Healthcare Group Inc. - The Physician Company, is the largest physician management company in the United States, and provides a broad range of health care and administrative services to physicians, hospitals, employers, managed care programs and other health care providers.

SmithKline Beecham - one of the world's leading health care companies - discovers, develops, manufactures and markets human pharmaceuticals and vaccines, over-the-counter medicines, health-related consumer products, and clinical laboratory services.

CONTACT: Coastal Healthcare Group Inc., Durham

David Singley, 919/383-0355

SmithKline Beecham, Philadelphia

Richard Koenig, 215/751-3415