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                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON D.C. 20549


                                    FORM 10-Q

(MARK ONE)
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES AND
     EXCHANGE ACT OF 1934.

    For the quarterly period ended March 31, 2000.

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
     EXCHANGE ACT OF 1934.
     For the transition period from ______________ to ______________.

                         Commission File Number 0-27570


                             PHARMACEUTICAL PRODUCT
                                DEVELOPMENT, INC.
             (Exact name of registrant as specified in its charter)


         NORTH CAROLINA                               56-1640186
(STATE OR OTHER JURISDICTION OF                    (I.R.S. EMPLOYER
 INCORPORATION OR ORGANIZATION)                 IDENTIFICATION NUMBER)


                          3151 SOUTH SEVENTEENTH STREET
                           WILMINGTON, NORTH CAROLINA
                    (Address of principal executive offices)



                                      28412
                                   (ZIP CODE)


        Registrant's telephone number, including area code (910) 251-0081


    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 of 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No

    Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 24,844,944 shares of common
stock, par value $0.10 per share, as of April 28, 2000.

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------


<PAGE>


                                      INDEX

<TABLE>
<CAPTION>
                                                                                                       PAGE
                                                                                                       ----
<S>                                                                                                    <C>
PART I.  FINANCIAL INFORMATION
Item 1. Financial Statements
     Consolidated Condensed Statements of Operations for the Three Months Ended
       March 31, 2000 and 1999......................................................................     3
     Consolidated Condensed Balance Sheets as of March 31, 2000
       and December 31, 1999........................................................................     4
     Consolidated Condensed Statements of Cash Flows for the Three Months Ended
       March 31, 2000 and 1999......................................................................     5
     Notes to Consolidated Condensed Financial Statements...........................................     6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.......     8
Item 3. Quantitative and Qualitative Disclosures about Market Risk..................................    13

PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K............................................................    14
Signatures..........................................................................................    15
</TABLE>

FORWARD-LOOKING STATEMENTS

         Statements in this Quarterly Report on Form 10-Q that are not
descriptions of historical facts are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements reflect management's current view with respect to certain future
events and financial performance, but are subject to risks and uncertainties.
Actual results could differ materially from those currently anticipated due to a
number of factors, including those set forth herein and in the Company's other
Securities and Exchange Commission ("SEC") filings, and including, in
particular: risks relating to government regulation; dependence on certain
industries; the fixed price nature of contracts; the commencement, completion or
cancellation of large contracts; progress of ongoing contracts; potential
liability associated with the Company's lines of business; risks associated with
acquisitions; continued success in sales growth; dependence on personnel;
management of growth; and competition. Because a large percentage of the
Company's operating costs are relatively fixed variations in the timing and
progress of large contracts can materially affect results. See "Part I.
Financial Information. Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations - Potential Volatility of Quarterly
Operating Results and Stock Price".


                                       2
<PAGE>


            PHARMACEUTICAL PRODUCT DEVELOPMENT, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)



<TABLE>
<CAPTION>
                                                                              Three Months Ended
                                                                                   March 31,
                                                                             -----------------------------
                                                                                2000              1999
                                                                             ---------           ---------
<S>                                                                          <C>                 <C>
Life sciences revenues, net of subcontractor costs of
    $26,145 and $23,152, respectively                                        $  78,365           $  68,773
Discovery sciences revenues, net of subcontractor costs of
    $6 and $16, respectively                                                     3,396                 837
                                                                             ---------           ---------
Net revenue                                                                     81,761              69,610
                                                                             ---------           ---------
Direct costs - Life sciences                                                    40,373              33,378
Direct costs - Discovery sciences                                                1,698               1,483
Selling, general and administrative expenses                                    26,400              22,037
Depreciation and amortization                                                    3,998               3,465
Merger costs                                                                         -                 218
                                                                             ---------           ---------
                                                                                72,469              60,581
                                                                             ---------           ---------
Operating income                                                                 9,292               9,029
Interest income, net                                                             1,241                 804
Other income, net                                                                  154                 389
                                                                             ---------           ---------
Income from continuing operations before provision
    for income taxes                                                            10,687              10,222
Provision for income taxes                                                       4,047               3,966
                                                                             ---------           ---------
Income from continuing operations                                                6,640               6,256
Loss from operations of discontinued environmental
    sciences segment, net of income taxes of $0 and $(79),
    respectively                                                                     -                (125)
                                                                             ---------           ---------
Net income                                                                   $   6,640           $   6,131
                                                                             =========           =========

Income from continuing operations per share:
    Basic                                                                    $     0.27          $    0.26
                                                                             ==========          =========
    Diluted                                                                  $     0.27          $    0.25
                                                                             ==========          =========
Loss from discontinued operations per share:
    Basic                                                                    $        -          $   (0.01)
                                                                             ==========          =========
    Diluted                                                                  $        -          $   (0.01)
                                                                             ==========          =========
Net income per share:
    Basic                                                                    $     0.27          $    0.25
                                                                             ==========          =========
    Diluted                                                                  $     0.27          $    0.25
                                                                             ==========          =========
Weighted average number of common shares outstanding:
    Basic                                                                        24,748             24,434
    Dilutive effect of stock options                                                197                481
                                                                             ----------          ---------
    Diluted                                                                      24,945             24,915
                                                                             ==========          =========
</TABLE>


        The accompanying notes are an integral part of these consolidated
                        condensed financial statements.

                                       3

<PAGE>


            PHARMACEUTICAL PRODUCT DEVELOPMENT, INC. AND SUBSIDIARIES
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                                 (IN THOUSANDS)


                                     ASSETS


<TABLE>
<CAPTION>
                                                                            March 31,              December 31,
                                                                              2000                     1999
                                                                          -----------             -------------
                                                                           (unaudited)
<S>                                                                        <C>                    <C>
Current assets
   Cash and cash equivalents                                              $     73,687              $    61,251
   Accounts receivable and unbilled services, net                              103,510                  114,753
   Investigator advances                                                         2,720                    2,069
   Prepaid expenses and other current assets                                    15,239                   16,802
   Deferred tax asset                                                            3,278                    4,012
                                                                           -----------              -----------
     Total current assets                                                      198,434                  198,887

Property, plant and equipment, net                                              53,947                   52,282
Goodwill, net                                                                    9,972                    9,437
Note receivable                                                                 19,000                   19,500
Other assets, net                                                                9,902                    8,597
                                                                           -----------              -----------
     Total assets                                                          $   291,255              $   288,703
                                                                           ===========              ===========

                      LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
   Accounts payable                                                        $     6,570              $    10,103
   Payables to investigators                                                     5,150                    5,916
   Other accrued expenses                                                       25,963                   27,471
   Unearned income                                                              48,402                   50,213
   Current maturities of long-term debt                                            396                      211
                                                                           -----------              -----------
     Total current liabilities                                                  86,481                   93,914

Long-term debt, less current maturities                                            745                      359
Deferred rent and other                                                          2,103                    1,966
                                                                           -----------              -----------
     Total liabilities                                                          89,329                   96,239
                                                                           -----------              -----------

Shareholders' equity
   Common stock                                                                  2,480                    2,463
   Paid-in capital                                                             136,405                  134,029
   Retained earnings                                                            65,337                   58,697
   Accumulated other comprehensive loss                                         (2,296)                  (2,725)
                                                                           -----------              -----------
     Total shareholders' equity                                                201,926                  192,464
                                                                           -----------              -----------

     Total liabilities and shareholders' equity                            $   291,255              $   288,703
                                                                           ===========              ===========
</TABLE>

  The accompanying notes are an integral part of these consolidated condensed
                             financial statements.

                                       4

<PAGE>


            PHARMACEUTICAL PRODUCT DEVELOPMENT, INC. AND SUBSIDIARIES
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                                  Three Months Ended
                                                                                       March 31,
                                                                         ------------------------------------
                                                                               2000                  1999
                                                                         ---------------         ------------
<S>                                                                      <C>                     <C>
Cash flows from operating activities:
   Net income                                                             $      6,640            $     6,131
   Adjustments to reconcile net income to net cash
    provided by operating activities:
      Depreciation and amortization                                              3,998                  3,662
      Change in operating assets and liabilities                                 5,629                 (3,950)
                                                                           -----------              ---------
         Net cash provided by operating activities                              16,267                  5,843
                                                                           -----------              ---------

Cash flows from investing activities:
      Cash received from repayment of note receivable                              500                    500
      Cost method investments                                                        -                 (3,500)
      Purchases of property and equipment                                       (4,367)                (6,457)
      Proceeds from sale of property and equipment                                  74                      -
      Net cash (paid for) received from acquisitions                            (1,500)                   738
      Net cash received in sale of business                                          -                  3,421
                                                                           -----------              ---------
         Net cash used in investing activities                                  (5,293)                (5,298)
                                                                           -----------              ---------

Cash flows from financing activities:
      Proceeds from long-term debt                                                   -                    982
      Repayment of long-term debt                                                  (94)                  (102)
      Repayment of capital leases obligation                                      (147)                     -
      Proceeds from exercise of stock options
        and employee stock purchase plan                                         2,201                  4,230
                                                                           -----------              ---------
         Net cash provided by financing activities                               1,960                  5,110
                                                                           -----------              ---------
Effect of exchange rate changes on cash                                           (498)                (1,570)
                                                                           -----------              ---------
Net increase in cash and cash equivalents                                       12,436                  4,085
Cash and cash equivalents, beginning of the period                              61,251                 34,083
                                                                           -----------              ---------
Cash and cash equivalents, end of the period                               $    73,687              $  38,168
                                                                           ===========              =========

</TABLE>

        The accompanying notes are an integral part of these consolidated
                        condensed financial statements.


                                       5
<PAGE>


            PHARMACEUTICAL PRODUCT DEVELOPMENT, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.       ACCOUNTING POLICIES

         The significant accounting policies followed by Pharmaceutical Product
Development, Inc. and its subsidiaries (collectively the "Company") for interim
financial reporting are consistent with the accounting policies followed for
annual financial reporting. These unaudited consolidated condensed financial
statements have been prepared in accordance with Rule 10-01 of Regulation S-X,
and in management's opinion, all adjustments of a normal recurring nature
necessary for a fair presentation have been included. The accompanying
consolidated condensed financial statements do not purport to contain all the
necessary financial disclosures that might otherwise be necessary in the
circumstances and should be read in conjunction with the consolidated financial
statements and notes thereto in the Company's Annual Report on Form 10-K for the
year ended December 31, 1999. The results of operations for the three-month
period ended March 31, 2000 are not necessarily indicative of the results to be
expected for the full year or any other period. The amounts on the December 31,
1999 consolidated condensed balance sheet have been derived from the audited
financial statements included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1999.

         USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

         The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

         RECLASSIFICATIONS

         Some 1999 financial statement amounts have been reclassified to conform
to the 2000 presentation.

         RECENT ACCOUNTING PRONOUNCEMENTS

         In December 1999, the SEC issued Staff Accounting Bulletin No. 101,
"Revenue Recognition in Financial Statements," ("SAB 101"), which provides
guidance on the recognition, presentation, and disclosures of revenue in
financial statements filed with the SEC. SAB 101, as amended by SAB 101A,
outlines the basic criteria that must be met to recognize revenue and provides
guidance for disclosures related to revenue recognition policies. SAB 101 is not
expected to have a significant impact on the Company's revenue recognition
policies.

2.       PRINCIPLES OF CONSOLIDATION

         The accompanying unaudited consolidated condensed financial statements
include the accounts and operations of the Company and its wholly-owned
subsidiaries. All significant intercompany balances and transactions have been
eliminated in consolidation.


3.       ACQUISITIONS
POOLING

         In March 1999, the Company acquired ATP, Inc. a health information
services company. ATP provides customized inbound and outbound
telecommunications programs targeting consumers and health care providers. The
Company acquired all of the outstanding stock of ATP in exchange for issuance of
approximately 876,000 shares of the Company's common stock. Outstanding ATP
options were exchanged for options to acquire approximately 216,000 shares of
the Company's common stock. This acquisition was accounted for using the pooling
of interests method. Results of operations for ATP are included in the
consolidated results of operations of the Company beginning January 1, 1999.


                                       6
<PAGE>


            PHARMACEUTICAL PRODUCT DEVELOPMENT, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)
3.       ACQUISITIONS (CONTINUED)

         PURCHASE

         In February 2000, the Company acquired the assets of the Pharmazyme
division of Immune Complex Corporation for $1,500,000 in cash. In connection
with this acquisition, the Company recorded approximately $929,000 in goodwill.
Pharmazyme develops, produces and markets drug metabolism reagent products and
services.

4.       EARNINGS PER SHARE

         The computation of basic net income per share information is computed
using the weighted average number of shares of common stock outstanding during
the period. Diluted net income per common share is computed using the weighted
average number of shares of common and dilutive potential common shares
outstanding during the period.

5.       DISCONTINUED OPERATIONS

         Effective January 31, 1999, the Company sold its environmental sciences
segment to Environ Holdings, Inc., a new company formed by the management of the
environmental sciences segment, for total consideration of approximately
$26,244,000. The Company received cash of $1,244,000, a four-year note for
$7,000,000 and a 12-year note for $18,000,000. The sale resulted in no gain or
loss because the sales price was equal to the book value of the net assets sold
at the date of the sale. In the first quarter of 1999, the Company received full
pre-payment of the four-year note of $7,000,000.

6.       COMPREHENSIVE INCOME

         The Company's total comprehensive income for the three-month periods
ended March 31, 2000 and 1999 was $4,344,000 and $4,561,000, respectively. The
Company's other comprehensive loss consisted of a decrease in the cumulative
translation adjustment for the three-month periods ended March 31, 2000 and 1999
of $3,222,000 and $1,570,000, respectively, and an unrealized gain on investment
of $926,000 for the 2000 period.

7.       ACCOUNTS RECEIVABLE AND UNBILLED SERVICES:

         Accounts receivable and unbilled services consisted of the following:


<TABLE>
<CAPTION>
                                                          March 31,               December 31,
                                                            2000                      1999
                                                       --------------             ------------
                                                        (unaudited)
<S>                                                    <C>                        <C>

           Billed                                           $60,852                     $70,005
           Unbilled                                          43,656                      45,814
           Reserve for doubtful accounts                       (998)                     (1,066)
                                                       ------------               -------------
                                                           $103,510                   $114,753
                                                           ========                   ========
</TABLE>

                                       7

<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS


COMPANY OVERVIEW

         Pharmaceutical Product Development, Inc. and its subsidiaries
(collectively the "Company") provide a broad range of research and development
and consulting services in the life sciences and discovery sciences segments. In
the life sciences segment, the Company provides worldwide clinical research and
development of pharmaceutical products and medical devices, biostatistical
analysis and analytical laboratory services. The discovery sciences services
include target identification and validation, compound creation, screening and
compound selection. The Company provides services under contract to clients in
the pharmaceutical, general chemical, agrochemical, biotechnology and other
industries. In addition, the Company performs discovery research on compounds
for which the Company holds a license. The Company markets its life sciences
services primarily in the United States and Europe. The Company's discovery
revenues have all been generated in the United States to date.

         LIFE SCIENCES GROUP

         The Company's Life Sciences Group provides services through PPD
Development, Inc. and its wholly owned subsidiaries (collectively "PPD
Development") in the Americas (United States, Canada and South America), Africa,
Asia, Europe and the Pacific Rim. PPD Informatics, a division of PPD
Development, provides software development and system integration services to
the pharmaceutical and biotechnology industries. PPD ATP, a division of PPD
Development, provides customized inbound and outbound telecommunications
programs targeting consumers and healthcare providers.

         PPD Development provides its clients services designed to reduce drug
development time. Reduced development time allows the client to get its products
into the market faster and to maximize the period of marketing exclusivity and
the economic return for those products. In addition, PPD Development's
integrated services offer its clients a variable cost alternative to the fixed
costs associated with internal drug development. PPD Development's professional
CRO services include Phase I clinical testing, laboratory services, patient and
investigator recruitment, Phase II-IV clinical trial monitoring and management,
clinical data management and biostatistical analysis, regulatory consulting and
submissions, medical writing, pharmacovigilance, and healthcare economics and
outcomes research. The Company believes that it is one of a few CROs in the
world capable of providing such a broad range of global clinical development
services.

         PPD Informatics became a division of the Company through the Company's
acquisition of Belmont Research, Inc. in March 1997. PPD Informatics' clients
include international and domestic pharmaceutical and biotechnology companies,
and government agencies, including the FDA. PPD Informatics develops specialized
software products to support different aspects of the pharmaceutical research
and development process, including drug discovery, clinical trials and
regulatory review. Current PPD Informatics software products include:
TABLETRANS(R), which automates data transformation; CROSSGRAPHS(R), which
provides graphical displays of complex research data; ResolveTM, which manages
data queries to investigator sites; and CLASSIFY TM, which manages global coding
capabilities.

         PPD ATP became a division of the Company through the acquisition of
ATP, Inc. in March 1999. PPD ATP manages telephone inquiries from consumers and
healthcare providers by utilizing on-line, licensed pharmacists, other
healthcare professionals and other customer assistance specialists who are
available 24 hours a day, 365 days a year. In addition to telephone inquiries
and responses, PPD ATP also receives and responds to medical information
inquiries from consumers and healthcare providers in writing and via e-mail. PPD
ATP creates and implements customized inbound and outbound telecommunication
programs for pharmaceutical manufacturers, chain drug stores, managed care
organizations and other corporations with healthcare enhancing objectives.

         In February 1999, Intek, a subsidiary of the Company became a
subsidiary of PPGx, Inc., a joint venture with Axys Pharmaceuticals, Inc. PPGx
provides broad pharmacogenomics products and services to pharmaceutical and
biotechnology companies. Pharmacogenomics is the use of genetic information to
predict the safety, toxicity and/or efficacy of drugs in individual patients or
groups of patients. The Company believes that pharmacogenomics is becoming
widely adopted as a drug discovery and development tool and increasingly
important as part of an individual's diagnosis and treatment regimen. The
Company owns a minority position in PPGx, with the option to increase its
ownership share at any time. The Company also has exclusive marketing rights to
PPGx

                                       8

<PAGE>

pharmacogenomics products and services, sold under the brand name,
Pharmacogenomic Solutions TM. For more detailed information on the Company's
Life Sciences Group, see the Company's Annual Report on Form 10-K for the year
ended December 31, 1999.

         DISCOVERY SCIENCES GROUP

         PPD Discovery, Inc. was established in June 1997 when the Company
acquired SARCO, Inc., a combinational chemistry company, and the GSX System, a
functional genomics platform technology. PPD Discovery focuses on the discovery
research segment of the pharmaceutical research and development outsourcing
market. In May 1998, the Company created PPD GenuPro, Inc., a wholly owned
subsidiary, which holds licenses to a number of compounds in the genitourinary
field. PPD GenuPro manages and performs the discovery research and development
of these compounds and intends to license these compounds to pharmaceutical or
biotechnology companies. In May 1999, the Company formed its PPD Virtual
subsidiary. PPD Virtual provides consultant and management services for product
portfolio management, strategic development and commercial product assessment.
In May 1999, PPD GenuPro was realigned as a division of PPD Virtual. For more
detailed information on the Company's Discovery Sciences Group, see the
Company's Annual Report on Form 10-K for the year ended December 31, 1999.


RESULTS OF OPERATIONS

GENERAL

         During the first quarter of 2000, the Company reported net income of
$6.6 million, or $0.27 per diluted share, compared to net income of $6.1
million, or $0.25 per diluted share, during the first quarter of 1999. The
Company's net income of $6.6 million was 3.9% higher than net income from
continuing operations (excluding merger costs and discontinued operations) of
$6.4 million for the same period a year ago.

         In February 2000, the Company acquired the assets of the Pharmazyme
division of Immune Complex Corporation for $1.5 million in cash. In connection
with this acquisition, the Company recorded approximately $0.9 million in
goodwill. Pharmazyme develops, produces and markets of drug metabolism reagent
products and services.

         Effective January 31, 1999, the Company sold its environmental sciences
segment to Environ Holdings, Inc., a new company formed by the management of the
environmental sciences segment. The Company received cash of $1.2 million, a
note receivable in the amount of $7.0 million (which was paid in the first
quarter of 1999) and a note receivable in the amount of $18.0 million, which is
payable over a 12-year period. The Company has received all principal and
interest payments due on the ENVIRON note receivable through January 2000. The
Company did not recognize a gain or loss as a result of the sale because the
sales price was equal to the book value of the net assets sold. The Company also
entered into a three-year consulting agreement to provide consulting services to
Environ Holdings for a fee of $0.5 million per year.

THREE MONTHS ENDED MARCH 31, 2000 VERSUS THREE MONTHS ENDED MARCH 31, 1999

         Net revenue increased $12.2 million, or 17.5%, to $81.8 million in 2000
from $69.6 million in 1999. The Life Sciences Group's operations accounted for
95.8% of the Company's net revenue for the first quarter of 2000. The Life
Sciences Group generated net revenue of $78.4 million, an increase of $9.6
million, or 13.9%, from the 1999 first quarter. The growth in the Life Sciences
Group operations was primarily attributable to an increase in the size and
number of contracts in the global CRO Phase II-IV division along with an
increase in the Company's laboratory services revenue. The Discovery Sciences
Group generated net revenue of $3.4 million, an increase of $2.6 million, or
305.7%, from the 1999 first quarter. The growth in the Discovery Sciences
operations was primarily attributable to revenue generated by the functional
genomics division as a result of entering into a new contract in January 2000.

         Total direct costs increased 20.7% to $42.1 million from $34.9 million
in the same period last year, and gross margin percentage decreased 1.4% from
the same period a year ago. The Life Sciences direct costs increased to $40.4
million in 2000 as compared to $33.4 million in 1999. The increased direct cost
dollars resulted primarily from increased personnel costs due to the increase in
the size and number of contracts in the Global CRO Phase II-IV division. The
Life Sciences Group direct costs increased as a percentage of related net
revenue to 51.5% from 48.5%. This increase is principally due to the mix of
levels of personnel involved in the contracts performed,

                                       9

<PAGE>

decreases in personnel utilization due to quality initiatives and an increase
in direct overhead as the Company expanded its facilities. The Discovery
Sciences Group direct costs increased to $1.7 million in 2000 as compared to
$1.5 million in 1999.

         Selling, general and administrative ("SG&A") expenses increased 19.8%
to $26.4 million in 2000 from $22.0 million in the same period last year. The
increase is primarily attributable to an investment in additional administrative
personnel and an increase in facility and information technology costs to
support the Company's expanding operations. As a percentage of net revenue, SG&A
expenses increased to 32.3% in 2000 from 31.7% in the same period last year.

         Total depreciation and amortization expense increased $0.5 million, or
15.4%, to $4.0 million from $3.5 million in the same period last year. The
increase was related to the depreciation of the increased investment in property
and equipment due primarily to the Company's growth. The Company's capital
expenditures were $4.4 million in the first quarter of 2000. Expanded
capabilities in the Company's laboratories accounted for approximately 48.6% of
this capital investment, while the enhancement and expansion of the Discovery
Sciences Group's facilities accounted for approximately 17.4% of this capital
investment. The remaining capital expenditures were predominately incurred in
connection with the expansion of existing operations.

         During the first quarter of 1999, the Company recorded merger costs of
$0.2 million in connection with the acquisition of PPD ATP. These costs were
primarily cash expenses, such as legal and accounting fees, related to this
transaction.

         Operating income increased $0.3 million to $9.3 million in 2000, as
compared to $9.0 million in 1999. As a percentage of net revenue, operating
income of 11.4% in 2000 represents a decrease from 13.0% of net revenue in 1999.
This decrease was primarily due to the decrease in the Company's gross margin
mentioned above.

         Net interest and other income increased $0.2 million, or 16.9% to $1.4
million for 2000 from $1.2 million for 1999. The increase was primarily the
result of the increase in interest income of $0.4 million offset by $0.2 million
decrease in currency fluctuation gain and loss.

         The Company recorded a loss from discontinued operations, net of income
tax benefit, related to its environmental sciences segment, of $0.1 million in
the first quarter of 1999. The Company sold its environmental sciences segment
on January 31, 1999.

         Net income of $6.6 million in 2000 represents an increase of $0.5
million over the same period a year ago. Net income per diluted share of $0.27
compares to net income per diluted share of $0.25 for the same period last year.

LIQUIDITY AND CAPITAL RESOURCES

         As of March 31, 2000, the Company had $73.7 million of cash and cash
equivalents on hand. The Company has historically funded its operations and
growth, including acquisitions, with cash flow from operations, borrowings and
through the use of the Company's stock.

         For the three months ended March 31, 2000, the Company had a net
increase in cash flow from operating activities of $16.3 million as compared to
$5.8 million for the same period last year. For the 2000 period, net income of
$6.6 million, depreciation and amortization of $4.0 million and the net decrease
of $5.6 million in other assets and liabilities resulted in this increase in
cash flow from operating activities. The change in other assets and liabilities
includes a $11.2 million decrease in accounts receivable and unbilled services.
The number of days revenue outstanding in accounts receivable and unbilled
services ("DSO"), net of unearned income, were 48.7 and 72.0 days as of March
31, 2000 and March 31, 1999, respectively. The decrease in accounts receivable
along with DSO were the result of the focused effort by management on improving
the accounts receivable collection process.

         For the three months ended March 31, 2000, the Company's investing
activities used $5.3 million in cash. Capital expenditures of $4.4 million and
the cash paid for Pharmazyme of $1.5 million were partially offset by $0.5
million received from the repayment of a note receivable.

         For the three months ended March 31, 2000, the Company's financing
activities provided $2.0 million in cash, as net proceeds from stock option
exercises of $2.2 million were partially offset by $0.2 million in repayments of
long-term debt and capital lease obligations.


                                       10

<PAGE>

         Working capital as of March 31, 2000 was $112.0 million compared to
$88.3 million at March 31, 1999. The increase in working capital was due
primarily to the increase in cash and cash equivalents of $35.5 million offset
partially by the decrease in accounts receivable and unbilled services of $15.7
million.

         In June 1998, the Company obtained a $50.0 million revolving credit
facility with First Union National Bank. Interest accrues on amounts borrowed at
a floating rate currently equal to LIBOR plus 0.625% per year. Indebtedness
under the line is unsecured and subject to covenants relating to financial
ratios and tangible net worth. The unused portion of the loan is available to
provide working capital and for general corporate purposes. As of March 31,
2000, the Company had $5.7 million reserved under this facility in the form of a
letter of credit. This credit facility expires in June 2000, at which time any
outstanding balance is due.

         In August 1999, the Company renegotiated a credit facility for $50.0
million with Wachovia Bank, N.A. Interest accrues on amounts borrowed at a
floating rate currently equal to LIBOR plus 0.625% per year. Indebtedness under
the line is unsecured and subject to covenants relating to financial ratios and
tangible net worth. This credit facility expires in August 2000, at which time
any outstanding balance is due. There was no amount outstanding under this
credit facility at March 31, 2000.

         In the fourth quarter of 1999, the Company entered into a short sale
and repurchase of U.S. Treasury bonds with a face value of $520 million based on
management's expectations that interest rates would rise between the date the
transaction was entered into and its maturity date of May 15, 2000. The Company
is required to record these financial instruments at their net fair value on
each reporting date, with any changes in the fair value recorded as either
interest income or interest expense. The Company made a margin deposit of $2.6
million related to this transaction. The Company recognized a loss of
approximately $0.1 million on this transaction in 1999. The last interest
redetermination date on this transaction was on January 5, 2000. The Company was
not required to recognize any additional loss on this transaction at the
interest redetermination date and no longer has any exposure for changes in
interest rates between January 5, 2000 and the maturity date of May 15, 2000.

         The Company expects to continue expanding its operations through
internal growth and strategic acquisitions. The Company expects these activities
will be funded from existing cash, cash flow from operations, borrowings under
its credit facilities and through the use of the Company's stock. The Company
believes that these sources of liquidity will be sufficient to fund the
Company's current operations for at least the next 12 months. The Company is
currently evaluating a number of acquisitions and other growth opportunities,
which might require additional external financing, and the Company might seek
funds from public or private issuances of equity or debt securities.

YEAR 2000 COMPLIANCE

         The Year 2000 issue was the result of computer programs having been
written using two digits, rather than four, to define the applicable year. As a
result, computer systems and/or software used by many companies in a very wide
variety of applications could experience operating difficulties unless they were
modified or upgraded to adequately process information involving, related to or
dependent upon the four digit field.

         The Company recognized the need to ensure its operations would not be
adversely impacted by Year 2000 failures and had established an internal review
team to address the Year 2000 issue that encompassed operating and
administrative areas of the Company. The process included an inventory and
assessment of affected equipment and software, development of remediation plans,
execution of those plans and testing of all technology affected by this issue.
In addition, the Company assessed the Year 2000 issue with significant suppliers
and clients.

         At December 31, 1999, the assessment process was 100% complete
worldwide for all equipment (including computer hardware and software
technology) used internally by the Company. Remediation and testing was 100%
complete for critical systems and for non-critical systems. All systems,
regardless of whether they required remediation, were tested to ensure Year 2000
compliance. The Company assessed its significant suppliers in North America and
Europe to determine the extent to which the Company could be vulnerable to third
party failure to remediate Year 2000 compliance problems. Business contingency
plans were developed to minimize the impact of outages across our locations
worldwide. External and internal costs specifically associated with applying
vendor upgrades, testing and modifying internal use software for Year 2000
compliance were expensed as incurred. The Company pays for Year 2000 expenses
with cash from operating activities. The percentage of the Company's information
technology budget used for remediation was approximately 11% in 1998 and 5% in
1999.

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<PAGE>

As of March 31, 2000, the Company had spent approximately $1.8 million on
Year 2000 compliance. Of the total amount that the Company spent, $1.3 million
was attributable to internal labor costs for assessment and testing.

         At year-end all systems were backed up and verified to be operational
prior to the resumption of business after the new year. Only minor Year 2000
issues were encountered which resulted in an insignificant amount of cost to the
Company. These issues did not have an impact on the business and all issues were
resolved within the first week. The Company did not experience any Year 2000
issues at any time in the first quarter of 2000, including the leap year. The
Company has also not experienced any third party supplier issues. The Company
remains alert to potential Year 2000 related issues that may occur in the
future, but believes that there will be no material impact on operations,
liquidity or financial condition.

EXCHANGE RATE FLUCTUATIONS AND EXCHANGE CONTROLS

         The vast majority of the Company's contracts are entered into by the
Company's United States or United Kingdom subsidiaries. The contracts entered
into by the United States subsidiaries are almost always denominated in United
States dollars.

         Contracts between the Company's United Kingdom subsidiaries and their
clients are generally denominated in pounds sterling, United States dollar or
Euros. Substantially all of the United Kingdom subsidiaries' expenses, such as
salaries, services, materials and supplies, are paid in pounds sterling.
However, the Company's consolidated financial statements are denominated in
dollars and, accordingly, changes in the exchange rates between the pound
sterling and the dollar will affect the translation of subsidiaries' financial
results into dollars for purposes of reporting the Company's consolidated
financial results, and also affect the amounts in dollars actually received by
the Company from subsidiaries.

         The Company currently participates in transactions involving multiple
currencies, but these form only a small percentage of the Company's total
transactions. In most of those situations, contractual provisions either limit
or reduce the translation risk. Financial statement translation has not, to
date, been material to the Company's balance sheet. The reasons for this are
that the majority of international operations are located in the United Kingdom,
which traditionally has had a relatively stable currency, and international
operations have not accounted for a significant portion of total operations
(approximately 13% in the first quarter of 2000). It is anticipated that those
conditions will persist for at least the next 12 months.

         There are no material exchange controls currently in effect in any
country in which the Company's subsidiaries conduct operations on their payment
of dividends or transfer of funds outside the country. Although the Company
performs services for clients located in a number of foreign jurisdictions, to
date, the Company has not experienced any difficulties in receiving funds
remitted from foreign countries. However, if any such jurisdictions were to
impose or modify existing exchange control restrictions on the remittance of
funds to the Company, these restrictions could have an adverse effect on the
Company's business.

POTENTIAL VOLATILITY OF QUARTERLY OPERATING RESULTS AND STOCK PRICE

         The Company's quarterly operating results are subject to volatility due
to such factors as the commencement, completion or cancellation of large
contracts, progress of ongoing contracts, acquisitions, the timing of start-up
expenses for new offices, management of growth, changes in the mix of services
and the timing of milestone payments under Discovery Sciences contracts. Because
a large percentage of the Company's operating costs are relatively fixed,
variations in the timing and progress of large contracts can materially affect
quarterly results. To the extent the Company's international business increases,
exchange rate fluctuations and other international business risks might also
influence these results. The Company believes that comparisons of its quarterly
financial results are not necessarily meaningful and should not be relied upon
as an indication of future performance. However, fluctuations in quarterly
results or other factors beyond the Company's control, such as changes in
earnings estimates by analysts, market conditions in the CRO, environmental,
pharmaceutical and biotechnology industries and general economic conditions,
could affect the market price of the Common Stock in a manner unrelated to the
longer-term operating performance of the Company.


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<PAGE>

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company is exposed to foreign currency risk by virtue of its
international operations. The Company conducts business in several foreign
countries. Approximately 13% and 15% of the Company's net revenues for the three
months ended March 31, 2000 and 1999, respectively, were derived from operations
outside the United States. Funds generated by each subsidiary of the Company are
generally reinvested in the country where they are earned. The operations in the
United Kingdom generated more than 34% of the Company's revenue from foreign
operations during the first quarter of 2000. Accordingly, some exposure exists
to adverse movements in the pound sterling and other foreign currencies. The
United Kingdom has traditionally had a relatively stable currency. It is
anticipated that those conditions will persist for at least the next 12 months.

         Additionally, the Company's consolidated financial statements are
denominated in U.S. dollars. Accordingly, changes in the exchange rates between
Company subsidiaries' local currency and the U.S. dollar will affect the
translation of the subsidiaries' financial results into U.S. dollars for
purposes of reporting the Company's consolidated financial results. Translation
adjustments are reported with accumulated other comprehensive income (loss) as a
separate component of shareholders' equity. Financial statement translation has
not, to date, been material to the Company's balance sheet. However, in the
future this kind of adjustment might be material to the Company's financial
statements.

         The Company is exposed to changes in interest rates on its cash
equivalents, short-term investments, and amounts outstanding under note payable
and lines of credit. The Company's cash and cash equivalents and short-term
investments are invested in financial instruments with interest rates based on
financial market conditions.


                                       13

<PAGE>

PART II.  OTHER INFORMATION


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K


(a)      EXHIBITS


         Exhibit 10.143    Second Amendment to Loan Agreement dated March 1,
                           2000, between  Pharmaceutical  Product
                           Development, Inc. and First Union National Bank.


         Exhibit 10.144    Fourth  Amendment to Loan  Agreement  dated  February
                           23, 2000,  between  Pharmaceutical
                           Product Development, Inc. and Wachovia Bank N.A.


         Exhibit 27        Financial Data Schedule (for SEC use only)


(b)      REPORTS ON FORM 8-K


         The Company filed no reports on Form 8-K during the quarter ended March
31, 2000.


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<PAGE>


         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 thereunto duly authorized.


                        PHARMACEUTICAL PRODUCT DEVELOPMENT, INC.
                  -------------------------------------------------
                                    (Registrant)



                           By       /s/               Linda Baddour
                                       -----------------------------------------
                                       Interim Chief Financial Officer and Chief
                                                  Accounting Officer
                                             (Principal Financial Officer)

Date:  May 3, 2000


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