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): February 8, 2010

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 February 8, 2010, the Company issued a press release announcing its financial and operating results for the three months and twelve months ended December 31, 2009. 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 February 8, 2010 of Pharmaceutical Product Development, Inc. announcing its financial and operating results for the three months and twelve months ended December 31, 2009. (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: February 8, 2010	By:	/s/ Daniel Darazsdi
	Name:	Daniel Darazsdi
	Title:	Chief Financial Officer

EX-99.1

Exhibit 99.1

Contacts:

Dan Darazsdi

+1 910 558 7915

daniel.darazsdi@ppdi.com

Luke Heagle

+1 910 558 7585

luke.heagle@ppdi.com

FOR IMMEDIATE RELEASE

PPD Reports Fourth Quarter and Full Year 2009 Financial Results

Highlights:

• Completed two strategic acquisitions in China

• Full year 2009 cash flow from operations of $253 million

• Establishing strategic outsourcing partnerships

• Planning to spin off compound partnering business by mid-2010

WILMINGTON, N.C. (February 8, 2010) - PPD, Inc. (Nasdaq: PPDI) today reported its financial and operating results for the fourth quarter and full year ended December 31, 2009.

PPD recorded net revenue of $357.4 million for the fourth quarter of 2009, compared to $363.1 million for the fourth quarter of 2008. Fourth quarter 2009 income from operations was $23.9 million, compared to $71.7 million for the same period in 2008. Fourth quarter 2009 diluted earnings per share were $0.16, compared to $0.40 for the same period last year. Fourth quarter 2009 diluted earnings per share included impairments of an intangible asset and equity investments totaling $10.0 million, net of tax, related to the company’s dermatology program within the compound partnering business and the company’s investment portfolio, respectively.

Net revenue for the full year ended December 31, 2009, was $1.42 billion, compared to net revenue of $1.55 billion for the full year 2008. Full year 2009 income from operations was $192.9 million, compared to income from operations of $282.4 million for the same period in 2008. Diluted earnings per share for the full year 2009 were $1.34, compared to diluted earnings per share of $1.56 for the same period last year.

Development

Development segment net revenue for the fourth quarter of 2009 was $328.1 million, compared to $338.7 million for the fourth quarter of 2008. Development segment income from operations for the fourth quarter of 2009 was $49.4 million, compared to $72.6 million for the fourth quarter of 2008.

Full year 2009 development segment net revenue was $1.31 billion, compared to net revenue of $1.42 billion for the full year 2008. Development segment income from

operations for the full year 2009 was $223.2 million, compared to income from operations of $272.5 million for the same period in 2008. Full year 2009 income from operations for this segment included restructuring costs of $3.9 million.

Discovery Sciences

Discovery sciences segment net revenue for the fourth quarter of 2009 was $0.5 million, compared to $0.1 million for the fourth quarter of 2008. Discovery sciences segment loss from operations for the fourth quarter of 2009 was $25.5 million, compared to a loss from operations of $0.9 million for the same period in 2008. The loss for the fourth quarter of 2009 was higher than the prior year loss due to the impairment of an intangible asset, an increase in research and development expenditures related to the company’s dermatology business and the upfront costs and research and development expenses related to the two compounds PPD in-licensed from Janssen Pharmaceutica N.V. in the fourth quarter of 2009.

Full year 2009 discovery sciences segment net revenue was $6.3 million, compared to net revenue of $18.4 million for the full year 2008. Full year 2008 discovery sciences segment net revenue included two milestone payments from Takeda Pharmaceutical Company Limited totaling $18.0 million triggered by the U.S. Food and Drug Administration’s acceptance of Takeda’s new drug application, or NDA, for alogliptin in the United States and the submission of its NDA for alogliptin to the Ministry of Health, Labour and Welfare in Japan. Discovery sciences segment loss from operations for the full year 2009 was $30.3 million, compared to income from operations of $9.9 million for the same period in 2008.

As previously disclosed, in April 2009, PPD sold the assets of its wholly owned subsidiary, Piedmont Research Center, LLC. In December 2009, PPD also completed the sale of its wholly owned subsidiary, PPD Biomarker Discovery Sciences, LLC, which owned and operated a biomarker discovery laboratory in Menlo Park, CA. These businesses were part of the company’s discovery sciences segment. Therefore, the company is reporting current and historical financial results for these businesses in discontinued operations.

Other Financial Information

New business authorizations for the fourth quarter of 2009 totaled $465.6 million. Backlog at December 31, 2009, was $3.0 billion. Contract cancellations and adjustments for the quarter were $284.9 million, including three large project cancellations that together represented approximately four percent of year-end backlog.

Days sales outstanding for the full year 2009 were 31.3 days, compared to 42.2 days at December 31, 2008. Cash flow from operations for the fourth quarter of 2009 was $115.9 million. At December 31, 2009, PPD had $642.1 million in cash and investments. The effective tax rate for continuing operations in the fourth quarter of 2009 was approximately 20 percent.

“Although fourth quarter cancellations and adjustments were higher than anticipated, we delivered strong operating cash flow during the quarter and we are continuing to establish new strategic outsourcing partnerships,” said David Grange, chief executive officer of PPD. “We remain committed to combining our financial and operational strength with our

unrelenting focus on creating efficient solutions for our clients to maximize value for our shareholders.”

Fred Eshelman, executive chairman of PPD, added, “PPD made significant progress on several strategic fronts in 2009, as evidenced by acquisitions and investments in emerging markets, expansion in new service areas, and the anticipated spin-off of our compound partnering business. We continue to believe in the fundamentals of the market for CRO services, and we intend to continue to focus on sales execution, operational performance, and building strategic partnerships with clients in the year ahead.”

PPD will conduct a live conference call and webcast tomorrow, February 9, 2010, at 9:30 a.m. ET to discuss its fourth quarter and full year 2009 results. A Q&A session will follow. All interested parties can access the webcast through the Presentations & Events link in the Investors section of the PPD Web site at http://www.ppdi.com. The webcast will be archived shortly after the call for on-demand replay. The conference call will be broadcast live over the Internet, and the live call may be accessed via the following direct dial numbers:

Participant dial-in:	+1 877 644 0692 (U.S./Canada)
	+1 973 200 3387 (International)
Conference ID:	43391595

PPD is a leading global contract research organization, celebrating 25 years of advancing drug development. We provide 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 40 countries and more than 10,500 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: success in sales growth; loss of and delay in large contracts; higher-than-expected cancellation rates; competition within the outsourcing industry; reliance on economic conditions and outsourcing trends in the pharmaceutical, biotechnology and medical device industries and academic and government-sponsored research sectors; overall global economic conditions; costs and risks associated with the development and commercialization of drugs, including uncertainties regarding regulatory submissions and approvals, and successful sales and marketing thereafter, for alogliptin and Priligy^®; rapid technological advances that make our products and services less competitive; risks associated with acquisitions and investments, such as integration and impairments; risks associated with and dependence on collaborative relationships; the ability to attract, integrate and retain key personnel; the planned spin-off of the compound partnering business; 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.

PPD, Inc.

Statement of Operations Data

(in thousands, except per share amounts)

(unaudited)

	Three Months Ended December 31,						Twelve Months Ended December 31,
	2008			2009			2008			2009
Net revenue:
Development	$	338,710		$	328,080		$	1,415,829		$	1,309,454
Discovery Sciences		108			547			18,423			6,313
Reimbursed out-of-pockets		24,321			28,775			117,132			101,003
Total net revenue		363,139			357,402			1,551,384			1,416,770
Direct costs:
Development		154,940			157,120			689,424			630,122
Discovery Sciences		249			57			614			630
Reimbursable out-of-pocket expenses		24,321			28,775			117,132			101,003
Total direct costs		179,510			185,952			807,170			731,755
Research and development		1,045			13,348			7,621			23,630
Selling, general and administrative		95,957			107,039			393,439			390,229
Depreciation and amortization		14,918			16,795			59,150			64,013
Restructuring costs		—			—			—			3,892
Impairment of intangible asset		—			10,361			1,607			10,361
Operating income		71,709			23,907			282,397			192,890
Impairment of investments		(2,306	)		(2,076	)		(17,741	)		(2,076	)
Loss from equity method investment		—			(1,278	)		—			(1,278	)
Other income (expense), net		(146	)		1,444			14,761			3,547
Income from continuing operations before income taxes		69,257			21,997			279,417			193,083
Provision for income taxes		22,135			4,363			91,469			52,952
Income from continuing operations		47,122			17,634			187,948			140,131
Discontinued operations, net of taxes		78			1,357			(429	)		19,164
Net income	$	47,200		$	18,991		$	187,519		$	159,295
Income per share from continuing operations:
Basic	$	0.40		$	0.15		$	1.58		$	1.19
Diluted	$	0.40		$	0.15		$	1.56		$	1.18
Income per share from discontinued operations:
Basic	$	—		$	0.01		$	—		$	0.16
Diluted	$	—		$	0.01		$	—		$	0.16
Net income per share:
Basic	$	0.40		$	0.16		$	1.58		$	1.35
Diluted	$	0.40		$	0.16		$	1.56		$	1.34
Dividends declared per common share	$	0.13		$	0.15		$	0.43		$	0.575
Weighted average number of shares outstanding:
Basic		117,895			118,173			118,792			118,007
Diluted		118,837			118,918			120,097			118,769

PPD, Inc.

Balance Sheet Data

(in thousands)

(unaudited)

	December 31,
	2008		2009
Cash, cash equivalents, short-term and long-term investments	$	608,437	$	642,106
Accounts receivable and unbilled services, net		401,303		429,670
Total assets		1,754,428		2,027,880
Unearned income		246,649		297,844
Shareholders’ equity		1,180,996		1,346,127
Additional information
(in thousands)
(unaudited)
Cash, cash equivalents, short-term and long-term investments categories
	December 31,
	2008		2009
Cash and cash equivalents	$	491,755	$	408,903
Short-term investments		27,064		144,645
Long-term auction rate securities		89,618		88,558
	$	608,437	$	642,106