8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 19, 2005

PHARMACEUTICAL PRODUCT DEVELOPMENT, INC.

(Exact name of Registrant as specified in its charter)

North Carolina

(State or other jurisdiction of incorporation)

0-27570	56-1640186
(Commission file Number)	(IRS Employer ID Number)

3151 South 17^th Street, Wilmington, North Carolina 28412

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code 910-251-0081

NA

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications material pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications material pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition.

On April 19, 2005, the Company issued a press release announcing its operating and financial results for the quarter ended March 31, 2005. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein in its entirety by reference.

The information furnished in this Item, including the exhibit, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01 Financial Statements, Pro Forma Financial Information and Exhibits.

(c) Exhibits

Exhibit No.	Description
99.1	Press release dated April 19, 2005 of Pharmaceutical Product Development, Inc. (the “Company”), announcing its operating and financial results for the quarter ended March 31, 2005. (Furnished pursuant to Item 2.02, not filed; see Item 2.02 above.)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Pharmaceutical Product Development, Inc.
Date: April 19, 2005	By:	/s/ Linda Baddour
	Name:	Linda Baddour
	Title:	Chief Financial Officer

EX-99.1

Exhibit 99.1

Contacts:

Linda Baddour

+910 772 6999

linda.baddour@wilm.ppdi.com

Steve Smith

+910 772 7585

stephen.smith@wilm.ppdi.com

FOR IMMEDIATE RELEASE

PPD REPORTS FIRST QUARTER 2005 FINANCIAL RESULTS

First Quarter Highlights:

• New business authorizations of $331.3 million

• EPS of $0.62

• Development segment revenue growth of 21.9 percent year-over-year

• Cash flow from operations of $47.4 million

WILMINGTON, N.C., April 19, 2005—PPD, Inc. (Nasdaq: PPDI) today reported its financial and operating results for the first quarter ended March 31, 2005.

For the first quarter of 2005, PPD recorded net revenue of $244.1 million, an increase of 25.0 percent over net revenue of $195.3 million for the first quarter of 2004. Net revenue for the first quarter 2005 included reimbursed out-of-pocket expenses of $18.3 million, compared to $13.0 million for the same period in 2004. First quarter 2005 net revenue included a $10.0 million milestone payment to us related to the filing of the new drug application (NDA) for dapoxetine. First quarter 2004 net revenue included a $5.0 million payment to us for an amendment to the dapoxetine out-license.

First quarter 2005 income from operations was $47.9 million, compared to income from operations of $38.5 million for the same period in 2004. Research and development expense for the first quarter 2005, which was primarily related to compound partnering, was $8.8 million, compared to R&D expense of $1.3 million for the same period last year. First quarter 2005 income from operations included a $5.1 million pre-tax gain on the exchange of assets associated with our acquisition of SurroMed, Inc.’s biomarker business. First quarter 2004 income from operations included $0.5 million in restructuring charges.

First quarter 2005 earnings per diluted share were $0.62, compared to earnings per diluted share of $0.44 for the first quarter 2004. First quarter 2005 earnings per diluted share included the gain on the exchange of assets related to our acquisition of SurroMed’s biomarker business. This gain on the exchange of assets resulted in a $0.07, net of tax, impact on first quarter 2005 earnings per diluted share.

Page 1 of 3

PPD Announces First Quarter 2005 Earnings

The effective tax rate for the first quarter 2005 was 27.5 percent. The effective tax rate was positively impacted by a $3.7 million reduction in our capital loss valuation allowance due to the recognition of capital gains for both the SurroMed transaction and the dapoxetine NDA milestone. This reduction in capital loss valuation allowances decreased the effective tax rate by 7.5 percent.

Segment Performance

Development segment net revenue, which does not include reimbursed out-of-pocket expenses, for the first quarter of 2005 was $212.9 million, an increase of 21.9 percent over the same period in 2004. Development segment income from operations for the first quarter 2005 was $41.8 million, compared to $35.0 million for the same period in 2004.

Discovery sciences segment net revenue, which does not include reimbursed out-of-pocket expenses, was $12.9 million for the first quarter of 2005, compared to net revenue of $7.5 million in the same period last year. First quarter 2005 discovery sciences net revenue included the $10.0 million milestone payment related to the filing of the dapoxetine NDA, and first quarter 2004 net revenue included a $5.0 million payment to us for the dapoxetine out-license amendment. Discovery sciences segment first quarter 2005 income from operations was $6.1 million, compared to $3.5 million for the first quarter 2004. First quarter 2005 income from operations included the $5.1 million pre-tax gain on the exchange of assets.

Other Financial Information

New business authorizations for the first quarter of 2005 totaled $331.3 million. The first quarter 2005 cancellation rate was 15 percent resulting in backlog growth of 16.2 percent compared to first quarter 2004. Net days sales outstanding at March 31, 2005 were 32 days. First quarter 2005 cash flow from operations was $47.4 million. At March 31, 2005, PPD had $236.4 million in cash and minimal debt.

“PPD continues to build value for the future through our focus on a number of quality and operational initiatives in the core business and the implementation of our compound partnering vision,” said Fred Eshelman, chief executive officer of PPD. “With the filing of the dapoxetine NDA, strong new business wins and the opening of the new Phase I clinic in Austin, Texas, PPD is off to a solid start for 2005.”

PPD will conduct a live conference call and audio Webcast tomorrow, April 20, 2005, at 9:00 a.m. ET to discuss its first quarter 2005 results. To access the Webcast, please visit http://www.ppdi.com and follow the instructions under the Corporate News section of the Web page. A replay of the Webcast will be available shortly after the call. If you have difficulty accessing the Webcast via the Internet, PPD has established a direct dial number, +888 214 0355, for telephone access.

As a leading global provider of discovery and development services and products for pharmaceutical, biotechnology and medical device companies, PPD applies innovative technologies, therapeutic expertise and a commitment to quality to help clients maximize the return on their R&D investments. With proven early discovery through post-market resources, the company also offers compound partnering opportunities. PPD has more than 7,100 professionals in 28 countries around the world. For more information on PPD, visit our Web site at http://www.ppdi.com.

Page 2 of 3

PPD Announces First Quarter 2005 Earnings

Except for historical information, all of the statements, expectations and assumptions contained in this news release are forward-looking statements that involve a number of risks and uncertainties. Although PPD attempts to be accurate in making these forward-looking statements, it is possible that future circumstances might differ from the assumptions on which such statements are based. In addition, other important factors which could cause results to differ materially include the following: continued success in sales growth; loss of large contracts; economic conditions and outsourcing trends in the pharmaceutical, biotechnology and medical device industries; increased cancellation rates; competition within the outsourcing industry; risks associated with and dependence on collaborative relationships; risks associated with the development and commercialization of drugs; risks associated with acquisitions and investments, such as impairments; rapid technological advances that make our products and services less competitive; the ability to attract and retain key personnel; and the other risk factors set forth from time to time in the SEC filings for PPD, copies of which are available free of charge upon request from the PPD investor relations department.

###

Page 3 of 3

PPD, Inc.

Statement of Operations Data

(in thousands, except per share amounts)

(unaudited)

	Three Months Ended Mar. 31,
	2005			2004
Net revenue:
Development	$	212,921		$	174,714
Discovery sciences		12,860			7,548
Reimbursed out-of-pockets		18,273			13,018
Total net revenue		244,054			195,280
Direct costs:
Development		108,330			88,210
Discovery sciences		1,765			1,566
Reimbursable out-of-pocket expenses		18,273			13,018
Total direct costs		128,368			102,794
Research and development		8,821			1,286
Selling, general and administrative		55,432			45,159
Depreciation		8,359			6,717
Amortization		288			325
Gain on exchange of assets		(5,144	)		—
Restructuring charges		—			505
Income from operations		47,930			38,494
Other income, net		1,180			504
Income before income taxes		49,110			38,998
Income tax expense		13,489			14,234
Net income	$	35,621		$	24,764
Net income per share:
Basic	$	0.63		$	0.44
Diluted	$	0.62		$	0.44
Weighted average number of shares outstanding:
Basic		56,758			56,155
Diluted		57,529			56,589

PPD, Inc.

Balance Sheet Data

(in thousands)

(unaudited)

	March 31, 2005		December 31, 2004
Cash, cash equivalents and short-term investments	$	236,358	$	249,368
Accounts receivable and unbilled services, net	$	268,408	$	265,067
Working capital	$	235,707	$	257,103
Total assets	$	1,018,800	$	975,201
Unearned income	$	146,301	$	153,170
Long-term debt, including current portion	$	9,351	$	6,970
Shareholders’ equity	$	673,085	$	635,310