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                              EMPLOYMENT AGREEMENT

                  THIS EMPLOYMENT AGREEMENT (hereinafter the "Agreement"), made
this 1st day of October, 1997, by and between PPD Pharmaco, Inc., a Texas
corporation with its principal office at 3151 17th Street Extension, Wilmington,
North Carolina 28412 (hereinafter "PPD Pharmaco"), and Joshua S. Baker
(hereinafter "Employee").

                                    RECITALS:

                  A. Employee desires employment upon the terms and conditions
herein stated.

                  B. PPD Pharmaco desires to employ Employee upon the terms and
conditions herein stated.

                  C. Employee and PPD Pharmaco desire to embody in writing the
terms and conditions of such employment in this Agreement.

                  NOW, THEREFORE, in consideration of the mutual promises,
covenants and considerations contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:

                  1. Employment. PPD Pharmaco hereby employs Employee and
Employee hereby accepts such employment on a full time basis as Senior Vice
President - Clinical Operations upon the terms and conditions hereinafter set
forth.

                  2. Term. The term of this Agreement shall be for one year,
beginning October 1, 1997, and ending September 30, 1998, unless sooner
terminated as provided herein. Thereafter, this Agreement shall be automatically
renewed for successive one-year terms upon the terms and conditions herein set
forth and subject to salary adjustments as provided for in paragraph 10 below,
unless either party gives notice as herein provided to the other of said party's
intent not renew this Agreement not less than 60 days prior to the expiration of
the one-year term then in effect.

                  3. Salary. For all services rendered by Employee under this
Agreement, PPD Pharmaco shall pay to Employee an annual salary of $200,000 for
the initial one-year term hereof.

                  4. Stock Options. Pharmaceutical Product Development, Inc.
("PPD"), the parent company of PPD Pharmaco, has granted to Employee as of the
date of this Agreement (the "Grant Date") options to purchase 10,000 shares of
PPD's common stock at a purchase price equal to NASDAQ market close price on the
Grant Date. Said share options have been granted under the terms of PPD's Equity

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Compensation Plan (the "Plan") and are subject to all of the terms and
conditions of the Plan as more specifically evidenced by that certain Stock
Award Agreement entered into by the parties as of the Grant Date, which Stock
Award Agreement is in a form substantially similar to that generally provided to
Plan participants except that (a) 3,334 of the share options may only be
exercised one year after the Grant Date, (b) 3,333 of the share options may only
be exercised two years after the Grant Date, (c) the remaining 3,333 share
options may only be exercised three years after the Grant Date, and (d) any
unvested share options, i.e., share options which cannot be exercised under the
terms hereof, shall be forfeited upon Employee's termination of employment with
PPD Pharmaco.

                  5. Duties. Employee shall have overall responsibility for and
decision making authority necessary to fulfill the duties of Senior Vice
President - Clinical Operations of PPD Pharmaco. Employee shall undertake such
travel as required to perform the duties prescribed herein. During the term of
this Agreement, Employee shall devote substantially all of his working time,
attention and energies to the business of PPD Pharmaco.

                  6. Working Facilities. PPD Pharmaco shall furnish Employee
with office space, equipment, technical, secretarial and clerical assistance and
such other facilities, services, support and supplies as may be reasonably
needed to perform the duties herein prescribed in an efficient and professional
manner.

                  7. Non-Compete. During the term of this Agreement, Employee
hereby agrees that he shall not (a) become an officer, employee, director,
agent, representative, member, associate or consultant of or to a corporation,
partnership or other business entity or person, (b) directly or indirectly
acquire a proprietary interest in a corporation, partnership or other business
entity or person, or (c) directly or indirectly own any stock in a corporation
(other than a publicly traded corporation of which Employee owns less than five
percent (5%) of the outstanding stock) which is engaged in the business of
managing clinical research programs for pharmaceutical and medical products or
in any other business which is developed by PPD Pharmaco during the term of this
Agreement anywhere in the United States (whether or not such business is
physically located within the United States). The parties agree that the
business and operations of PPD Pharmaco are national in scope. For that reason,
the parties agree that a geographical limitation on the foregoing covenant is
not appropriate.

                  8. Termination. Notwithstanding any other provision of this
Agreement, PPD Pharmaco may terminate Employee's employment hereunder upon the
occurrence of any of the following events:

                  a.       Death of Employee.

                  b. A determination by the Chief Executive Officer and the
President and Chief Operating Officer of PPD, acting in good faith but made in
their sole discretion, that Employee has failed to substantially perform his
duties under this Agreement.

                  c. A determination by the Chief Executive Officer and the
President and Chief Operating Officer of PPD, acting in good faith but made in
their sole discretion, that Employee (i) has become physically or mentally
incapacitated and is unable to perform his duties under this Agreement as a
result of such disability, which inability continues for a period of sixty (60)
consecutive calendar days, (ii) has breached any of the material terms of this
Agreement, (iii) has demonstrated gross negligence or willful misconduct in the
execution of his duties, or (iv) has been convicted of a felony.

                  9. Disclosure of Information. As a condition of employment
hereunder, Employee will execute as of the date of this Agreement that certain
Proprietary and Inventions Agreement attached hereto as Exhibit A and
incorporated herein by reference.

                  10. Benefits. During the term thereof, Employee shall be
entitled to participate in all benefits provided by PPD Pharmaco to its
employees generally, including but not limited to health insurance, disability
insurance and retirement plans, all of which are currently provided to employees
of PPD Pharmaco, subject to the eligibility requirements of any plan(s)
establishing same. Employee shall be subject to PPD Pharmaco's policies
applicable to other executive employees of PPD Pharmaco with respect to periodic
reviews and increases in salary, and shall be considered for and eligible to
participate in benefits, if any, provided generally by PPD Pharmaco to its
executive employees, including but not limited to issuance of stock options,
cash bonuses, etc., to the extent such bonuses, etc., are not otherwise provided
for herein in connection with Employee's duties and performance as an executive
employee.

                  11. Expenses. PPD Pharmaco shall pay all reasonable expenses
of Employee which are directly related to Employee's duties hereunder in
accordance with PPD Pharmaco's policy for reimbursement of employee expenses.

                  12. Remedies. In the event of Employee's actual or threatened
breach of the provisions of paragraph 7 of this Agreement, PPD Pharmaco shall be
entitled to a temporary restraining order and/or permanent injunction
restraining Employee from such breach. Nothing herein shall be construed as
preventing PPD Pharmaco from pursuing any other available remedies for such
breach or threatened breach, including recovery of damages from Employee and
from any corporation, partnership or other business entity or person with which
the Employee has entered or attempted to enter into a relationship.

                  13. Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and may
not be altered or amended except by agreement in writing signed by the parties.



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                  14. Waiver of Breach. Waiver by either party of a breach of
any provision of this Agreement by the other party shall not operate as a waiver
of any subsequent breach by the other party. No waiver shall be valid unless in
writing and signed by the party against whom the waiver is sought.

                  15. Severability. If any portion of this Agreement shall be
declared invalid by a court of competent jurisdiction, the remaining portion
shall continue in full force and effect as if this Agreement has been executed
with the invalid portion eliminated and this Agreement shall be so construed.

                  16. Benefit. This Agreement shall inure to the benefit of and
be binding upon PPD Pharmaco, its successors and assigns, and Employee, his
heirs, successors, assigns and personal representatives.

                  17. Applicable Law. This Agreement shall be governed by the
laws of the State of North Carolina.

                  18. Assignment. Neither party hereto may assign said party's
rights or obligations hereunder without the prior written consent of the other.

                  19. Notice. Any notice required or permitted hereunder shall
be delivered in person or mailed certified mail, return receipt requested, if to
PPD Pharmaco at PPD Pharmaco's principal office in Wilmington, North Carolina at
the address hereinabove set forth, and if to Employee at PPD Pharmaco's
principal office in Morrisville, North Carolina, and shall be deemed received
when actually received. Any notice from Employee to PPD Pharmaco shall be
addressed to the Chief Executive Officer and to the President and Chief
Operating Officer of PPD, with a copy to the General Counsel of PPD. Either
party hereto may change the notice address provided for herein upon ten days
prior written notice to the other in the manner prescribed for herein.

                  20. Arbitration. Any dispute, controversy or claim arising out
of or relating to this Agreement, including but not limited to any breach, or as
to its existence, validity, interpretation, performance or non-performance,
breach or damages, including claims in tort, shall be decided by a single
neutral arbitrator in Wilmington, North Carolina in binding arbitration pursuant
to the commercial Arbitration Rules of the American Arbitration Association then
in effect. The parties to any such arbitration shall be limited to the parties
to this Agreement or any successor thereof. The arbitration shall be conducted
in accordance with the procedural laws of the United States Federal Arbitration
Act, as amended. The written decision of the arbitrator shall be final and
binding, and may be entered and enforced in any court of competent jurisdiction
and each party specifically acknowledges and agrees to waive any right to a jury
trial in any such forum. Each party to the arbitration shall pay its fees and
expenses, unless otherwise determined by the arbitrator.


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                  21. Amendment; Modification. No amendment or modification of
this Agreement and no waiver by any party of the breach of any covenant
contained herein shall be binding unless executed in writing by the party
against whom enforcement of such amendment, modification or waiver is sought. No
waiver shall be deemed a continuing waiver or a waiver in respect of any
subsequent breach or deferral, either of a similar or different nature, unless
expressly so stated in writing.

                  22. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute one and the same Agreement.

                  23. Descriptive Headings: Interpretation. The descriptive
headings in this Agreement are inserted for convenience of reference only and
are not intended to be part of or to affect the meaning or interpretation of
this Agreement.

                  IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed as of the date first hereinabove set forth.

                                            PPD PHARMACO, INC.


                                            By: /s/ Thomas W. D'Alonzo
                                                ------------------------------
                                            Name: Thomas W. D'Alonzo
                                                ------------------------------

                                            Title: President
                                                  ----------------------------




                                             /s/ Joshua S. Baker
                                            ----------------------------(SEAL)
                                            Joshua S. Baker





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