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): July 22, 2008

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)
929 North Front Street, Wilmington, North Carolina	28401
(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

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act

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

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

Item 2.02 Results of Operations and Financial Condition.

On July 22, 2008, the Company issued a press release announcing its financial and operating results for the three months and six months ended June 30, 2008. 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 and Exhibits.

(d) Exhibits

Exhibit No.	Description
99.1	Press release dated July 22, 2008 of Pharmaceutical Product Development, Inc. announcing its financial and operating results for the three months and six months ended June 30, 2008. (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: July 22, 2008	By:	/s/ Daniel Darazsdi
	Name:	Daniel Darazsdi
	Title:	Chief Financial Officer

EX-99.1

Exhibit 99.1

Contacts:

Dan Darazsdi

+910 558 7915

dan.darazsdi@wilm.ppdi.com

Craig Eastwood

+910 558 7585

craig.eastwood@wilm.ppdi.com

FOR IMMEDIATE RELEASE

PPD REPORTS SECOND QUARTER 2008 FINANCIAL RESULTS

Highlights:

• EPS of $0.41, a 13.9 percent increase over Q2 2007

• Development segment net revenue growth of 17.1 percent over Q2 2007

• Significant sequential expansion of development segment operating margin

WILMINGTON, NC, July 22, 2008 - PPD, Inc. (Nasdaq: PPDI) today reported its financial and operating results for the second quarter ended June 30, 2008.

PPD recorded net revenue of $407.0 million for the second quarter of 2008, an increase of 16.3 percent over net revenue of $350.0 million for the second quarter of 2007. Income from operations for the second quarter 2008 was $70.7 million, compared to income from operations of $61.1 million for the same period in 2007.

Second quarter 2008 earnings per diluted share were $0.41, compared to earnings per diluted share of $0.36 for the same period last year. Second quarter 2008 earnings per diluted share included a reimbursement of $1.9 million, net of tax, related to the investment impairment recognized in the first quarter of 2008.

Segment Performance

Development segment net revenue for the second quarter of 2008 was $370.6 million, an increase of 17.1 percent over the same period in 2007. Development segment income from operations for the second quarter of 2008 was $72.7 million, compared to $64.8 million for the same period in 2007. Development segment operating margin for the second quarter of 2008 was 18.1 percent compared to 15.5 percent for the first quarter of this year, an increase of more than 250 basis points.

Discovery sciences segment net revenue for the second quarter of 2008 was $4.3 million, compared to $4.5 million in the same period last year. Discovery sciences segment loss from operations for the second quarter of 2008 was $2.0 million, compared to a loss from operations of $3.7 million for the second quarter of 2007. The loss for the second quarter of 2008 was lower than the prior year loss due primarily to a decrease in research and development expenditures.

Other Financial Information

New business authorizations for the second quarter of 2008 totaled $552.1 million, a 16.7 percent year-over-year increase. The cancellation rate for the second quarter of 2008 was 26.2 percent, resulting in a book-to-bill ratio of 1.09 for the quarter. The year-to-date (YTD) book-to-bill ratio was 1.30. Backlog at June 30, 2008 was $2.87 billion, a year-over-year increase of 20.4 percent.

YTD days sales outstanding (DSO) at June 30, 2008, were 45.7 days, compared to YTD DSO at December 31, 2007, of 50.8 days. Second quarter 2008 cash flow from operations was $60.1 million. At June 30, 2008, PPD had $597 million in cash, cash equivalents, and short- and long-term investments, after giving effect to the payment of the company’s dividend and the repurchase of PPD shares during the quarter under its previously announced share repurchase program. The effective tax rate for the second quarter 2008 was 35.8 percent.

“I am very pleased with our financial and operating performance for the quarter,” said Fred Eshelman, chief executive officer of PPD. “The management team made substantial progress on various internal initiatives, as evidenced by the expansion in our development segment operating margin, robust cash flow, improved DSO and solid earnings.” Eshelman added, “We believe the market for CRO services is strong, even though our new authorizations came in lower than expected for the quarter. Request-for-proposal volume remains high, and we will continue to focus our efforts on operational excellence and sales execution.”

Commenting on compound partnering, Eshelman said, “We continue to evaluate the future of PPD’s statin program and await news from the regulators on alogliptin and dapoxetine.”

PPD will conduct a live conference call and audio webcast tomorrow, July 23, 2008, at 9:00 a.m. ET to discuss its second quarter 2008 results. A Q&A session will follow. To access the webcast, please visit http://www.ppdi.com and follow the directions under the Investor Presentations & Events link in the Corporate section of the PPD Web site. A replay of the webcast will be available shortly after the call. The conference call will be broadcast live over the Internet, and the live call may be accessed via the following direct dial number:

Participant toll free dial in:	+877 644 0692 (U.S./Canada)
	+706 634 2439 (International)
Conference ID:	54570429

PPD is a leading global contract research organization providing discovery, development and post-approval services as well as compound partnering programs. Our clients and partners include pharmaceutical, biotechnology, medical device, academic and government organizations. With offices in 31 countries and more than 10,400 professionals worldwide, PPD applies innovative technologies, therapeutic expertise and a commitment to quality to help its clients and partners maximize returns on their R&D investments and accelerate the delivery of safe and effective therapeutics to patients. For more information, visit our Web site at http://www.ppdi.com.

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 actual results to differ materially include the following: general economic conditions; outsourcing trends in the pharmaceutical, biotechnology and medical device industries and academic and government-sponsored research sectors; competition within the outsourcing industry; success in sales growth; loss of large contracts; increased cancellation rates; risks associated with acquisitions and investments, such as impairments; risks associated with the development and commercialization of drugs, including R&D expense, earnings dilution and obtaining regulatory approvals; failure or refusal of the FDA to approve the NDA for alogliptin; risks associated with and dependence on collaborative relationships; currency fluctuations; the ability to attract and retain key personnel; rapid technological advances that make our products and services less competitive; 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.

Confidential 22-Jul-2008

2

PPD, Inc.

Statement of Operations Data

(in thousands, except per share amounts)

(unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2008		2007		2008			2007
Net revenue:
Development	$	370,648	$	316,527	$	718,446		$	616,683
Discovery Sciences		4,258		4,500		24,025			8,883
Reimbursed out-of-pockets		32,110		28,943		60,791			56,656
Total net revenue		407,016		349,970		803,262			682,222
Direct costs:
Development		183,546		157,515		360,736			309,430
Discovery Sciences		2,617		2,462		5,325			4,820
Reimbursable out-of-pocket expenses		32,110		28,943		60,791			56,656
Total direct costs		218,273		188,920		426,852			370,906
Research and development		1,924		3,963		6,254			5,868
Selling, general and administrative		101,097		82,149		200,027			157,887
Depreciation and amortization		14,979		13,843		29,850			26,429
Impairment of intangible asset		—		—		1,607			—
Income from operations		70,743		61,095		138,672			121,132
Reimbursement on (impairment of) investments		2,976		—		(13,343	)		—
Other income, net		2,555		4,015		8,272			8,574
Income before income taxes		76,274		65,110		133,601			129,706
Income tax expense		27,268		22,463		44,466			45,072
Net income	$	49,006	$	42,647	$	89,135		$	84,634
Net income per share:
Basic	$	0.41	$	0.36	$	0.75		$	0.72
Diluted	$	0.41	$	0.36	$	0.74		$	0.71
Dividends declared per common share	$	0.10	$	0.03	$	0.20		$	0.06
Weighted average number of shares outstanding:
Basic		119,195		118,265		119,285			118,071
Diluted		120,707		119,770		120,840			119,585

PPD, Inc.

Balance Sheet Data

(in thousands)

(unaudited)

	June 30, 2008		December 31, 2007
Cash, cash equivalents, short-term and long-term investments	$	596,956	$	502,384
Accounts receivable and unbilled services, net		482,665		481,477
Total assets		1,827,099		1,684,375
Unearned income		246,876		205,779
Shareholders' equity		1,221,169		1,150,096

Additional information

(in thousands)

(unaudited)

Cash, cash equivalents, short-term investments and long-term investments categories

	June 30, 2008		December 31, 2007
Cash and cash equivalents	$	441,185	$	171,427
Auction Rate Securities		128,181		209,475
Other municipal debt securities		22,690		111,230
Other securities		4,900		10,252
	$	596,956	$	502,384