**UNITED
      STATES**


**SECURITIES
      AND EXCHANGE COMMISSION**


WASHINGTON,
      D.C. 20549





**FORM
      10-K**





**FOR
      ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR
      15(d)**


**OF
      THE SECURITIES EXCHANGE ACT OF 1934**





**[X]
      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE**


**ACT
      OF 1934**





For
      the
      fiscal year ended December 31, 2005





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: 0-30318*





**VENTIV
      HEALTH, INC.**


(Exact
      Name of Registrant as Specified in its Charter)





Delaware
              (State
                or Other Jurisdiction No. of Incorporation or
                Organization)
            52-2181734
              (I.R.S.
                Employer Identification No.)




200
      Cottontail Lane Vantage Court North; Somerset, New Jersey 08873


(Address
      of Principal Executive Offices) (Zip Code)





Registrant’s
      telephone number, including area code: (800) 416-0555





**Securities
      registered pursuant to Section 12(b) of the Act:**





**Securities
      registered pursuant to Section 12(g) of the Act: Common
      Stock**


**(Title
      of Class)**





Indicate
      by check mark if the registrant is a well-known seasoned issuer, as defined
      in
      Rule 405 of the Securities Act. Yes [X] No [_]





Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or 15(d) of the Act. Yes [ ] No [X]





Indicate
      by check mark whether the registrant: (1) has filed all reports required to
      be
      filed by Section 13 or 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
      by check mark if disclosure of delinquent filers pursuant to Item 405 of
      Regulation S-K is not contained herein, and will not be contained, to the best
      of registrant's knowledge, in definitive proxy or information statement
      incorporated by reference in Part III of this Form 10-K or any amendment to
      this
      Form 10-K. [X]





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, or a non-accelerated filer. See definition of "accelerated
      filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. (Check
      one):





Large
      accelerated filer [_]    Accelerated
      filer [X]    Non-accelerated
      filer [  ]





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Act). Yes [_] No [X]


Based
      on
      the closing sale price on the Nasdaq National Market as of the last business
      day
      of the registrant’s most recently completed second fiscal quarter, the aggregate
      market value of the voting stock held by nonaffiliates of the registrant was
      approximately $479,018,656. For the purposes of this calculation, shares owned
      by officers, directors and 10% shareholders known to the registrant have been
      deemed to be owned by affiliates. This determination of affiliate status is
      not
      a determination for other purposes.





As
      of
      March 3, 2006, there were 28,553,939 outstanding shares of the registrant's
      common stock.





**DOCUMENTS
      INCORPORATED BY REFERENCE**


Certain
      portions of the Registrant's Definitive Proxy Statement to be filed with the
      Commission for use in connection with the 2006 Annual Meeting of Stockholders
      are incorporated by reference into Part III of this Form 10-K.








**TABLE
      OF CONTENTS**





Item
            DescriptionPART
                I1
            Business1A
            Risk
                Factors1B
            Unresolved
                Staff Comments2
            Properties3
            Legal
                Proceedings4
            Submission
                of Matters to a Vote of Securities
                HoldersPART
                II5
            Market
                for the Registrant’s Common Stock, Related
                Stockholder Matters and Issuer Purchase of Equity
                Securities6
            Selected
                Financial Data7
            Management’s
                Discussion and Analysis of Financial Condition
                and Results of Operations7A
            Quantitative
                and Qualitative Disclosures About Market
                Risk8
            Financial
                Statements and Supplementary
                Data9
            Changes
                in and Disagreements with Accountants on
                Accounting and Financial Disclosures9A
            Controls
                and Procedures9B
            Other
                InformationPART
                III10
            Directors
                and Executive Officers of the
                Registrant11
            Executive
                Compensation12
            Security
                Ownership of Certain Beneficial Owners and
                Management and Related Stockholder Matters13
            Certain
                Relationships and Related
                Transactions14
            Principal
                Accounting Fees and ServicesPART
                IV15
            Exhibits
                and Financial Statement
                Schedules










**CAUTIONARY
        STATEMENT REGARDING FORWARD-LOOKING DISCLOSURE**
 **STATEMENT
          REGARDING FORWARD-LOOKING DISCLOSURE**
  This
        report
        contains “forward-looking statements” within the meaning of Section 27A of the
        Securities Act of 1933 and Section 21E of the Securities Exchange Act of
        1934.
        These statements concern expectations, beliefs, projections, future plans
        and
        strategies, anticipated events or trends and similar expressions concerning
        matters that are not historical facts. Specifically, this report contains
        forward-looking statements regarding:




·
              our
                  estimates regarding our liquidity, capital expenditures and sources
                  of
                  both, and our ability to fund our operations and planned capital
                  expenditures for the foreseeable future;
  ·
                our
                    strategy to address the need to offer additional services through
                    acquisitions of other companies, including the personnel of such
                    companies;
  ·
                  our
                      expectations regarding our pursuit of additional debt or equity
                      sources to
                      finance our internal growth initiatives or
                      acquisitions;
  ·
                    our
                        belief that our growth and success will depend on our ability
                        to continue
                        to enhance the quality of our existing services, introduce
                        new services on
                        a timely and cost-effective basis, integrate new services
                        with existing
                        services, increase penetration with existing customers, recruit,
                        motivate
                        and retain qualified personnel and economically train existing
                        sales
                        representatives and recruit new sales
                        representatives;


·
            our belief that there are ample opportunities for
              cross-selling to our existing clients;





·
            our
                anticipation that it will be necessary to continue to select, invest
                in
                and develop new and enhanced technology and end-user databases on
                a timely
                basis in the future in order to maintain our
                competitiveness;





·
            our
                expectations regarding the impact of our acquisitions, joint ventures
                and
                partnerships; and





·
            our expectations regarding the impact of the adoption
              of
              certain accounting standards.




These
      forward-looking statements reflect our current views about future events and
      are
      subject to risks, uncertainties and assumptions. We wish to caution readers
      that
      certain important factors may have affected and could in the future affect
      our
      actual results and could cause actual results to differ significantly from
      those
      expressed in any forward-looking statement. The most important factors that
      could prevent us from achieving our goals, and cause the assumptions underlying
      forward-looking statements and the actual results to differ materially from
      those expressed in or implied by those forward-looking statements include,
      but
      are not limited to, the following:




·
              our
                    ability to sufficiently increase our revenues and maintain or
                    decrease
                    expenses and cash capital expenditures to permit us to fund our
                    operations;
 ·
                our
                    ability to continue to comply with the covenants and terms of
                    our credit
                    facility and to access sufficient capital to fund our
                    operations;
 ·
                  our ability to grow our existing client relationships,
                    obtain new clients and cross-sell our
                    services;
 ·
                    our
                        ability to successfully operate new lines of
                        business;


·
            our
                ability to manage our infrastructure and resources to support our
                growth;





·
            our
                ability to successfully identify new businesses to acquired, conclude
                acquisition negotiations and integrate the acquired businesses into
                our
                operations;




·
            any
                disruptions, impairments, or malfunctions affecting software as well
                as
                excessive costs or delays that may adversely impact our continued
                investment in and development of software;





·
            our
                  ability to comply with all applicable laws as well as our ability
                  to
                  successfully implement from a timing and cost perspective any changes
                  in
                  applicable laws;





·
            our
                ability to recruit, motivate and retain qualified personnel, including
                sales representatives;




·
            the
                actual impact of the adoption of certain
                accounting standards; and





·
            changes
                  in trends in the pharmaceutical industry or in pharmaceutical
                  outsourcing.




Investors
      should carefully
      consider these risk factors and the additional risk factors outlined in more
      detail in Item 1A, Risk Factors, in this report.









**PART
      I**





**Item
      1*****.
      Business.***





**Overview**





We
      are a
      leading provider of value-added services to the pharmaceutical and life sciences
      industries. We support a broad range of clinical development, communications
      and
      commercialization activities that are critical to our customers' ability to
      complete the development of new pharmaceutical products, diagnostics and medical
      devices, and successfully commercialize them over their entire lifecycle. Our
      goal is to assist our customers in meeting their objectives in each of these
      areas by providing our services on a flexible and cost-effective basis. We
      provide services to over 150 client organizations, including 18 of the top
      20
      global pharmaceutical companies and numerous emerging and specialty
      biotechnology companies.





Our
      service offerings reflect the changing needs of our clients as their products
      move through the late-stage development and regulatory approval processes and
      into product launch and full commercial life. We have established expertise
      and
      leadership in providing the services our clients require at each of these stages
      of product development and commercialization and seek to address their
      outsourced service needs on a comprehensive basis throughout the product life
      cycle.





We
      provide our services through a portfolio of subsidiary companies that have
      historically conducted their operations as "Ventiv Health, Inc." As of the
      date
      of this report, we have changed our corporate brand name to inVentiv Health,
      Inc. as part of a re-branding initiative that began when we acquired inChord
      Communications, Inc. ("inChord"), a healthcare marketing and communications
      company, in October 2005. The legal name change will be effected following
      our
      annual shareholders meeting in June 2006, subject to receipt of stockholder
      approval.





**Business
      Segments**





We
      have
      organized our businesses into three complementary operating divisions, which
      correspond to our operating segments: inVentiv Clinical, inVentiv Communications
      and inVentiv Commercial. Our operating segment reporting was modified in 2005
      to
      account for organizational changes in our business and the cumulative effect
      of
      our acquisition activity. In 2004, we managed three operating segments: inVentiv
      Commercial, inVentiv Clinical and inVentiv Analytic Services. Because of the
      functional relationship of our planning and analytics services business to
      our
      contract sales and regulatory compliance businesses, we have included planning
      and analytics within inVentiv Commercial for 2005. The inVentiv Communications
      segment was formed principally through the acquisition of inChord, in
      October 2005, and of Adheris, Inc. ("Adheris"), an industry leader in the
      area of patient compliance and persistency programs, in February 2006.





The
      following is a detailed description of our three operating
      segments:





**inVentiv
      Clinical**




inVentiv
      Clinical provides services in the areas of clinical development and clinical
      trial support. inVentiv Clinical includes the Smith Hanley group of companies
      (Smith Hanley Associates ("SHA"), Smith Hanley Consulting Group ("SHCG"),
      MedFocus and Anova Clinical Resources) and HHI Clinical and Statistical Research
      Services ("HHI"). inVentiv Clinical has also established international execution
      capabilities through an exclusive joint venture agreement with SIRO Clinpharm
      Pvt. Ltd., India's largest domestic contract research organization. inVentiv
      Clinical's service offerings include:




·
            Clinical
                  Staffing & Recruiting.
                  Through SHCG and MedFocus, we meet staffing and recruiting needs
                  of more
                  than 65 pharmaceutical and biotechnology clients, including 14
                  of the top
                  20 global pharmaceutical companies, for SASTM programmers, data managers,
                  statisticians, monitors and clinical research associates, study
&
                  project managers, clinical trials coordinators, safety/regulatory
                  staff,
                  medical writers, scientific and laboratory staff and other clinical
                  personnel. We provide clinical staffing clients with flexibility
                  in
                  managing and executing clinical trials internally and allow them
                  to avoid
                  the expense of hiring and training a full staff. We draw from a
                  database
                  of over 30,000 candidates that is continually expanded through
                  new
                  recruiting techniques that include search engines, job fairs, conferences
                  and referral bonuses.




·
            Data
                  Management and Statistical Analyses.
                  We provide data management and statistical analysis services through
                  HHI.
                  HHI has performed these services for over 150 clinical trials.
                  HHI
                  complements SHCG and MedFocus’s contract service pool with a
                  statistically-knowledgeable physician and medically-knowledgeable
                  statisticians to deliver well-organized research used in clinical
                  trial
                  and clinical program design, data management, data analysis, double
                  key
                  data entry and validation, reporting and standard operating procedures
                  writing. This bi-disciplinary expertise enables HHI to set up,
                  manage and
                  present data to help pharmaceutical clients move from the preclinical
                  stage through the drug approval process and post-commercialization
                  oversight.




·
            Executive
                  Placement.
                  We provide executive placement services through SHA, which is one
                  of the
                  oldest and most respected executive placement organizations focused
                  primarily on statisticians and data-related
                  functions.




**inVentiv
      Communications**





inVentiv
      Communications provides a full suite of advertising, communications and other
      functionally related services through i nChord's
      specialty companies described below, and offers innovative patient
      pharmaceutical compliance programs through Adheris.




·
            Advertising
                  and Communications Support.
                  Advertising and communications support services are delivered to
                  pharmaceutical industry clients through four separate inChord
                  agencies:




·
            GSW
                    WorldwideandPalioare full-service agencies that create marketing solutions through
                    advertising, public relations, market access strategies, media
                    and    market research. GSW has established international
                    reach through a network of ten international affiliate relationships.




·
            Navicorspecializes in oncology and immunology
                      expertise.


·
              Stoneflyconducts advertising, marketing, and public relations services
                        focused
                        primarily on biotechnology and emerging pharmaceutical
                        companies.


·
            Medical
                  Education.
                  Cadent Medical Communications andCenter
                  for Biomedical Continuing Education("CBCE") provide education and communications services to build
                  advocacy
                  for pharmaceutical and biotech brands. CBCE is an accredited provider
                  of
                  continuing medical education for
                  physicians.




·
            Branding
                  Consultation.
                  Y
                  Brand is a specialized consulting group providing branding solutions
                  for
                  products, product science and technologies, therapeutic franchises
                  and
                  corporations.




·
            Interactive
                  Communication Development.
                  Blue Diesel is a multi-faceted interactive communications company
                  that
                  strategically blends direct marketing, interactive technology and
                  creative
                  design to provide evidence-based marketing
                  solutions.




·
            Consulting
                  and Contract Marketing.
                  Creative Healthcare Solutions, LLC (“CHS”) is a leading provider of
                  contract marketing services for pharmaceutical and biotech companies.
                  CHS
                  supports product teams by adding expertise in brand management,
                  new
                  product planning, market research and business
                  development.




Through
      Adheris, we provide a variety of patient support services with a proven history
      of improving medication adherence across nearly every chronic therapeutic
      category. By partnering with pharmacies around the country, Adheris’ programs
      build on the pharmacist-patient relationship and trust with personalized letters
      from pharmacists themselves. Adheris programs comply with the patient privacy
      provisions of the Health Insurance Portability & Accountability Act of 1996,
      ("HIPAA"), and its OnSyte(TM) technology allows retail pharmacies to help
      patients stay on therapy while protecting their confidentiality and private
      medical information.





3


**inVentiv
      Commercial**





inVentiv
      Commercial provides a wide range of services in the commercialization area.
      These service offerings are organized principally along the lines of the
      business units that make up inVentiv Commercial.




·
              Ventiv
                      Pharma Teams:
                      The Ventiv Pharma Teams group provides outsourced product
                      commercialization programs for prescription pharmaceutical
                      and other life
                      sciences products. inVentiv Commercial maintains and operates
                      systems,
                      facilities, and support services necessary to recruit, train
                      and deploy a
                      customized, full-service, targeted sales force. Ventiv Pharma
                      Teams
                      operates one of the largest pharmaceutical outsourced sales
                      organizations
                      in the United States
                      (“U.S.”).


Life
                    sciences companies, particularly pharmaceutical manufacturers,
                    have
                    traditionally relied upon product detailing as the primary means
                    of
                    influencing prescription writing patterns and promoting their
                    products.
                    Product detailing consists of a one-on-one meeting in a physician's
                    office
                    where a sales representative reviews the medical profile of a
                    product's
                    Food and Drug Administration approved indications. In order to
                    engage in
                    an effective dialogue, the salesperson must be well educated
                    and highly
                    trained. Recruiting qualified personnel and providing client
                    and product
                    specific training are both core competencies of inVentiv
                    Commercial.
  To
                        accomplish a coordinated recruiting effort, we maintain a
                        national
                        recruitment office that locates and hires potential sales
                        representatives.
                        Our in-house human resources team adheres to selective hiring
                        criteria and
                        conducts detailed evaluations to ensure high quality of representation
                        for
                        our clients. inVentiv Commercial’s recruiters maintain a fully automated
                        database of qualified candidates for immediate hiring opportunities,
                        and
                        our website home page offers an online application for employment.
                        We
                        offer these recruitment services to clients as part of an
                        integrated sales
                        force recruitment, training and management program, or on
                        a stand alone
                        basis. Ventiv Pharma Teams hires a mix of full-time and flex-time
                        representatives in order to accommodate the detailing level
                        required by
                        clients and enhance cost efficiency.
                      
                      We
                        have one of the largest dedicated training facilities of
                        its type in the
                        U.S. Topics such as sample accountability, negotiation tactics,
                        personal
                        writing skills, integrity selling, time and territory management,
                        team
                        productivity and pharma-manager leadership are covered extensively
                        in
                        order to prepare the representatives for their contact with
                        medical
                        professionals. Our trainers have access to proprietary information
                        about
                        the prescription writing behavior of physicians. We provide
                        this training
                        both for our own and our clients' sales forces, and training
                        and
                        development services are essential to maintaining and building
                        our
                        relationships with the pharmaceutical companies. These strengths
                        are
                        widely recognized as distinguishing inVentiv Commercial from
                        its
                        competitors.
 ·
                    inVentiv
                              Pharma Analytics:inVentiv Pharma Analytics consists of our Health Products
                              Research (“HPR”)
                              and Total Data Solutions (“TDS”) business
                              units.
  HPR
                              is a leader in the development and implementation of
                              advanced data
                              analysis and research technologies to support client
                              decision making
                              within pharmaceutical and biotechnology companies.
                              HPR combines leading
                              edge technology with advanced statistical techniques
                              and empirical
                              research to deliver strategic and tactical solutions
                              that help
                              pharmaceutical executives maximize their return on
                              investment for
                              promotional resources. HPR’s range of services includes a variety of
                              quantitative and other tools that supports HPR’s clients in optimizing and
                              continually improving the effectiveness of deployed
                              promotional and sales
                              force resources.
                            
                            TDS
                              collects and analyzes sales force level data necessary
                              to make marketing
                              resource allocation decisions. Sales representatives
                              are equipped with an
                              industry-leading palm-top and laptop sales force automation
                              system
                              developed for inVentiv Commercial. This system enables
                              our sales
                              representatives to rapidly collect sales call and physician
                              profiling
                              information while in the field, which is compiled daily
                              in a central data
                              storage server. Our information processing system allows
                              sales management
                              teams to analyze data regularly, compare the results
                              with targeted
                              initiatives and historical data and make necessary
                              adjustments to the
                              sales strategy. TDS supports Ventiv Pharma Teams’ needs and also offers
                              this sales force automation system on a stand alone
                              basis to
                              clients. ·
                          inVentiv
                                      Pharma Services:inVentiv Pharma Services includes three broad
                                      categories of
                                      offerings:


o
            *Patient
                Support Programs:*We
                offer patient assistance programs and reimbursement counseling through
                our
                Franklin Group business unit. Franklin Group has established a leadership
                position in providing reliable and innovative patient assistance
                programs,
                reimbursement counseling, web-based programs, missions programs and
                proactive fulfillment. Franklin also provides a variety of additional
                patient support services to clients, including support in Medicare
                Part D
                education.





o
            *Regulatory
                Compliance Services:*Through our Franklin Group, Lincoln Ltd. and Pharmaceutical Resource
                Solutions business units, we provide independent oversight of Prescription
                Drug Marketing Act (“PDMA”) and Office of Inspector General compliance to
                clients and to internal Ventiv Pharma Teams. Our expertise in PDMA
                compliance issues is nationally recognized. Franklin Group serves
                as a
                liaison for the pharmaceutical industry and consultant to the Food
&
                Drug Administration (“FDA”) and has an ongoing working relationship with
                the Department of Justice. We provide a number of processes, systems
                and
                services to help clients comply with federal and state regulations
                specific to sample accountability, including auditing of sample
                accountability compliance by field force professionals and "whole
                systems"
                sample accountability assessments. Franklin also licenses software
                solutions for the implementation of sophisticated PDMA compliance
                strategies.





o
            *Non-Personal
                Promotion:*We
                provide assembly, mailing, fulfillment, pharmacy, teleservices and
                eServices through our Promotech Research Associates business unit.
                Promotech maintains a newly expanded facility with over 62,000 square
                feet
                that includes an environmentally controlled, FDA and Drug Enforcement
                Agency (“DEA”) certified and PDMA compliant warehouse, office space and a
                64-station call center.





**Acquisitions**





The
      pursuit of strategic acquisitions is a core part of our business strategy.
      We
      believe that our expertise in identifying potential acquisition targets,
      assessing their importance to our operational and growth objectives, diligencing
      and completing the acquisition of appropriate businesses and effectively
      integrating them with our existing operations is a significant competitive
      advantage. The businesses making up inVentiv Clinical and inVentiv
      Communications, and the regulatory compliance and patient components of inVentiv
      Commercial, were added through acquisitions during the past several years.




The
      following is a summary of our acquisitions to date:





**Target**
            **Type
                of Business**
            **Location**
            **Month
                Acquired**Adheris
            Patient
                pharmaceutical compliance
            Massachusetts
            February
                2006inChord
            Advertising
                and communications support
            Ohio
            October
                2005PRS
            Regulatory
                compliance
            Pennsylvania
            August
                2005HHI
            Data
                management and statistical analyses
            Maryland
            November
                2004Smith
                Hanley
            Contract
                research and clinical trial support
            Connecticut
            October
                2004Franklin
            Patient
                support programs
            New
                Jersey
            June
                2004





In
      addition to adding core functionality in virtually every area of our business,
      our acquisition activity has expanded our geographic reach and visibility both
      domestically and internationally.





4


**International
      Operations**





As
      part
      of the acquisition of inChord in October 2005, we added inChord’s U.K.-based
      operations. These operations, based in London, provide advertising, marketing
      and public relations services to clients throughout Europe. As previously
      mentioned, in December 2005, we entered into an exclusive joint venture
      agreement with SIRO Clinpharm Pvt. Ltd., India's largest domestic contract
      research organization, to offer pharmaceutical companies India-based clinical
      data management services. This project is in the development stage and has
      not
      commenced providing client services.





As
      a
      result of the acquisition of inChord, the Company has a 15% ownership interest
      in Heart Reklambyra AB (“Heart”), an advertising agency located in Sweden and a
      44% interest in Angela Liedler GmbH (“Liedler”), a service provider of
      communication and marketing tools for technical, medical and pharmaceutical
      products, located in Germany. Both of these investments are accounted for by
      using the equity method of accounting.





**Clients**





We
      provide our services to leading pharmaceutical and life sciences companies
      as
      well as emerging and specialty biotechnology companies. During 2005,
      approximately 56% of our revenues were derived from our ten largest clients.
      Our
      ten largest clients during 2005, listed alphabetically, were as follows: ALTANA
      Pharma (“ALTANA”), Astellas Pharma, Inc., Bristol-Myers Squibb Company (“BMS”),
      Daiichi Pharmaceutical Corporation, Eli Lilly and Company, Fournier
      Pharmaceuticals, Ltd., Glaxo Smith Kline, Inc., Johnson and Johnson, Noven
      Pharmaceuticals, Inc. and sanofi-aventis Group. Two clients accounted for
      approximately 14% and 11%, respectively, of our total revenue for the year
      ended
      December 31, 2005. Two clients accounted for 16%, and 14%, respectively, of
      our
      revenues during 2004. No other clients accounted for more than 10% of revenue
      in
      2005 or 2004.





We
      consider our close relationships with leading pharmaceutical manufacturers
      to be
      an important competitive advantage, providing us with a source for recurring
      revenues as well as sales growth opportunities as our clients launch new
      products and as we develop new offerings. Our services are typically sold to
      similar target groups within the client organization, typically their clinical
      or their marketing and sales departments and brand teams. This provides the
      basis for continuous interaction and feedback, allowing us to continuously
      improve our services and identify new business opportunities, a process
      augmented by the longevity of many of our client relationships. We have
      developed sustained relationships with large, mid-tier and emerging
      pharmaceutical clients that provide us with recurring revenue streams and
      cross-selling opportunities. Our ability to perform services and add value
      at
      every part of the product life cycle enhances our ability to develop new
      business opportunities and form long-lasting relationships with
      clients.





Our
      relationships with a client's clinical or marketing and sales organizations
      also
      benefit from high switching costs, as retaining another sales force or
      advertising agency and redesigning a marketing program creates substantial
      additional expense and causes losses in time and productivity for our clients.
      In addition, successful marketing and sales outsourcers have established their
      reputations due to sophisticated performance evaluation capabilities, and
      clients are unlikely to use vendors without widely recognized
      expertise.




**Competition**





We
      operate in highly competitive industries. Our competitors include a variety
      of
      vendors providing services to the pharmaceutical and life sciences industry,
      including outsourced sales organizations, medical communications agencies and
      contract research organizations. Each of our business segments faces distinct
      competitors in the individual markets in which each operates:





·
            inVentiv
                Clinical:
                The specialty staffing services industry is very competitive and
                fragmented with relatively few barriers to entry. We compete with
                several
                large nationwide temporary staffing companies. Our primary clinical
                staffing competitors include ClinForce (a division of Cross Country),
                Managed Clinical Solutions (a division of ICON), ASG, Advanced Clinical
                Services and Kforce. Competitors in the permanent placement
                area include Korn Ferry, Reynolds and Reynolds, Heidrick and
                Struggles as wells as numerous smaller specialty permanent placement
                groups. compete with us, however we are one of the only national
                firms
                that specializes exclusively in professional clinical trials research
                personnel.





·
            inVentiv
                Communications:
                Marketing and communications services is a relatively fragmented
                and
                competitive market. Our Communications group competes with the healthcare
                offerings of the five large global advertising holding companies,
                which
                include WPP, Omnicom, Publicis, IPG and Havas. In addition, we compete
                with a large number of smaller specialized agencies that have focused
                either by therapeutic area or a particular service
                offering.





·
            inVentiv
                Commercial:
                The majority of sales teams are managed internally by our clients,
                and we
                compete with our clients' alternative choices of managing their needs
                internally or partnering with another pharmaceutical company. In
                addition,
                a small number of providers comprise the market for outsourced sales
                teams, and we believe that inVentiv, Innovex (Quintiles) and Professional
                Detailing, Inc. combined account for the majority of the U.S. outsourced
                sales team market share. The rest of the industry is fragmented,
                with a
                number of small providers attempting to develop niche services. One
                or
                more of our large competitors in the outsourced sales team market
                could
                become significant competitors with regard to the other services
                we offer
                by either developing additional capabilities or acquiring smaller
                companies.





We
      believe that our business units individually and our organization as a whole
      have a variety of competitive advantages that have allowed us to compete
      successfully in the marketplaces for our services. These advantages include
      the
      following:





·
            Leading
                Position Within Service Categories:
                We believe that our divisions, and the business units within each
                division, have achieved positions of leadership within their service
                areas. inChord is a major force in advertising and communications
                and,
                prior to its acquisition by Ventiv was
                the largest privately held healthcare marketing organization in the
                world.inVentiv
                Clinical is recognized as a leader in clinical trials staffing and
                a
                leading provider of clinical trials-related SAS programmers,
                statisticians, data management and monitoring personnel to the major
                pharmaceutical and biotechnology companies. Ventiv Pharma Teams provides
                product detailing services to a large number of physicians, nurses,
                pharmacists and formularies. Our businesses have extensive experience
                and
                proven track records that support our sales
                efforts.





·
            Comprehensive
                Service Offering:
                We are one of the largest providers of pharmaceutical services in
                the U.S.
                and offer a broad range of services. These are important factors
                to our
                clients and potential clients, many of whom prefer to work with
                organizations that can provide a comprehensive services suite and
                have a
                proven track record.**





·
            Broad
                and Diversified Client Base:
                In addition to serving many of the largest pharmaceutical companies,
                we
                also serve a large number of mid-size and smaller biotech and life
                sciences companies. As each of these companies uses our services,
                our
                relationship is expanded and the opportunity to cross-sell products
                increases. Our client base of over 150 pharmaceutical and biotechnology
                clients is broad and diversified, and with many of these clients
                we have
                maintained long-term relationships that help us in continuing to
                win new
                business.





·
            Proprietary
                Technologies and Data:
                We maintain and operate a number of proprietary software programs
                and
                systems for marketing development and data gathering. We invest in
                technology and have developed and deployed cutting-edge marketing
                and
                sales force automation tools. Our technical advantages in the sales
                force
                automation area are important for the management of sales and marketing
                campaigns for pharmaceutical products throughout their life cycle,
                particularly during the product launch
                phase.





·
            Experienced
                Management Team:
                Our management team includes executives with substantial expertise
                in
                pharmaceutical and healthcare services, as well as substantial background
                within pharmaceutical companies themselves, including managing
                pharmaceutical sales forces, establishing sales and marketing strategies,
                and product management industry experience. The team also has extensive
                experience in the areas of outsourced staffing, permanent placement
                and
                executive search services. We believe our mix of senior management
                with
                pharmaceutical services experience, entrepreneurial talent and strategic
                perspective is unique in the
                industry.





**Seasonality**





Although
      our business is subject to variability as a result of the ongoing startup and
      completion of contracts, periodic receipt of incentive fees and the ramp up
      of
      product revenues in certain contracts, our business is not generally subject
      to
      seasonal variation.





5


**Employees**





At
      December 31, 2005, we employed approximately 4,200 people in our operations.
      Many aspects of our business are very labor intensive and the turnover rate
      of
      employees in our industry, and in corresponding segments of the pharmaceutical
      industry, is generally high, particularly with respect to sales force employees.
      We believe our turnover rate is comparable to that of other outsourced service
      organizations and internal pharmaceutical sales and marketing departments.
      We
      believe that our relations with our employees are satisfactory.





**Government
      Regulation**





Our
      pharmaceutical and life sciences clients are subject to extensive government
      regulation. Generally, compliance with these regulations is the responsibility
      of those clients. However, several of our businesses are themselves subject
      to
      the direct effect of government regulation. We could be subject to a variety
      of
      enforcement or private actions for our failure or the failure of our clients
      to
      comply with such regulations.





Our
      inVentiv Communications segment is subject to all of the risks, including
      regulatory risks, that advertising companies generally experience as well as
      risks that relate specifically to the provision of advertising services to
      the
      pharmaceutical industry. There has been an increasing tendency in the U.S.
      on
      the part of advertisers to resort to the courts and industry and self-regulatory
      bodies to challenge comparative advertising on the grounds that the advertising
      is false and deceptive. Through the years, there has been a continuing expansion
      of specific rules, prohibitions, media restrictions, labeling disclosures and
      warning requirements with respect to the advertising for certain products.





In
        February 2006, we acquired
        Adheris, Inc., which, through our inVentiv Communications segment, provides
        persistence and compliance programs, principally in the form of refill reminder
        communications to pharmacy chains. These activities are subject to regulation
        under HIPAA, the
        Federal Health Care Programs Antikickback Law and corresponding state laws.
        We
        believe that Adheris's activities comply with all applicable federal and
        state
        laws. Certain of these laws are subject to change and interpretation that
        is
        evolving, particularly at the state level. We could incur significant expenses
        if Adheris's activities are determined to be non-compliant and, depending
        the
        extent and scope of any such regulatory developments, our business could
        be
        materially and adversely affected.


Our inVentiv
      Commercial segment
      provides contract sales services to the pharmaceutical industry and employs
      sales representatives who handle and distribute samples of pharmaceutical
      products. The handling and distribution of prescription drug products are
      subject to regulation under the Prescription Drug Marketing Act of 1987 and
      other applicable federal, state and local laws and regulations. These laws
      and
      regulations regulate the distribution of drug samples by mandating storage,
      handling, solicitation and record-keeping requirements for drug samples and
      by
      banning the purchase or sale of drug samples.





Some
      of
      our physician education services in our inVentiv
      Commercial segment
      are subject to a variety of federal and state regulations relating to both
      the
      education of medical professionals and the marketing and sale of
      pharmaceuticals. In addition, certain ethical guidelines promulgated by the
      American Medical Association ("AMA") govern the receipt by physicians of gifts
      in connection with the marketing of healthcare products. These guidelines govern
      the honoraria and other items of value that AMA physicians may receive, directly
      or indirectly, from pharmaceutical companies. Any changes in such regulations
      or
      their application could have a material adverse effect on inVentiv. Failure
      to
      comply with these requirements could result in the imposition of fines, loss
      of
      licenses and other penalties and could have a material adverse effect on
      inVentiv.





From
      time
      to time, state and federal legislation is proposed with regard to the use of
      proprietary databases of consumer and health groups. The uncertainty of the
      regulatory environment is increased by the fact that we generate and receive
      data from many sources. As a result, there are many ways government might
      attempt to regulate our use of this data. Any such restriction could have a
      material adverse effect on inVentiv.





**Available
      Information**





We
      make
      available on our website, located at www.inventivhealth.com, the following
      filings as soon as reasonably practicable after they are electronically filed
      with or furnished to the United States Securities and Exchange Commission
      (“SEC”): our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current
      Reports on Form 8-K and any amendments to those reports filed or furnished
      pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934.
      All
      such filings are available free of charge. Information found on our website
      should not be considered part of this annual report on Form 10-K.


6




*Item
      1A.  Risk Factors*




**Risks
      Related to Our Business**





We
      are a
      multi-faceted organization encompassing numerous segments, each with its own
      particular risks and uncertainties. A wide range of factors could materially
      affect our financial results and the performance of our stock price. The most
      significant factors affecting our operations include the following:





***Our
      revenues are dependent on expenditures by companies in the pharmaceutical and
      life sciences industries, and a variety of factors could cause the overall
      levels of those expenditures to decline.***





Our
      revenues are highly dependent on expenditures by companies in the pharmaceutical
      and other life sciences industries for advertising, promotional, marketing
      and
      sales, recruiting, clinical staffing and support and compliance services. Any
      decline in aggregate demand for these services could negatively affect our
      business.





·
            Advertising,
                promotional, marketing and sales expenditures by pharmaceutical
                manufacturers have in the past been, and could in the future be,
                negatively impacted by, among other things, governmental reform or
                private
                market initiatives intended to reduce the cost of pharmaceutical
                products
                or by governmental, medical association or pharmaceutical industry
                initiatives designed to regulate the manner in which pharmaceutical
                manufacturers promote their products.


·
            Consolidation
                in the pharmaceutical industry could negatively affect certain of
                our
                business units by reducing overall outsourced expenditures, particularly
                in the sales, marketing and staffing
                areas.


·
            Companies
                may elect to perform advertising, promotional, marketing, sales,
                compliance and other services internally based on industry and
                company-specific factors such as the rate of new product development
                and
                FDA approval of those products, number of sales representatives employed
                internally in relation to demand for or the need to promote new and
                existing products and competition from other
                suppliers.


·
            Companies
                may elect to perform clinical tasks internally based on industry
                and
                company-specific factors such as the rate of new product development
                and
                FDA approval of those products, the number of clinical professionals
                employed internally in relation to the demand for or the need to
                develop
                new drug candidates, and competition from other suppliers.****





***Many
      of the contracts under which we provide services are subject to termination
      on
      short notice, which may make our revenues less
      predictable.***





We
      provide services to many of our most significant clients under contracts that
      our clients may cancel on short notice (generally 10 to 120 days, depending
      on
      the specific business unit). In addition, many of our pharmaceutical sales
      contracts provide our clients with the opportunity to internalize the sales
      forces under contract. Although we have been successful in a number of cases
      in
      negotiating longer-term commitments and a non-cancelable initial period for
      pharmaceutical sales contracts, we cannot be assured that clients will renew
      relationships beyond the expiration date of existing contracts in any of our
      business units. We cannot assure you that our most significant clients will
      continue to do business with us over the long term. If any of our significant
      clients elect to cancel, convert or not renew their contracts, it could have
      a
      material adverse effect on our consolidated results of operations.




***We
      are in the process of integrating several significant acquisitions and expect
      to
      make future acquisitions which will involve additional
      risks*** **




For
      the past
      several years, a significant component of our growth strategy has been the
      addition through acquisitions of businesses that complement us strategically
      and
      are accretive to earnings. We have and will continue to seek to address the
      need
      to offer additional services through acquisitions of other companies, including
      the personnel such acquisitions may bring to us. The current market for
      acquisition targets in our industry is extremely competitive, and we may not
      be
      successful in continuing to identify, successfully bid for and complete
      acquisitions necessary to achieve our operational and financial
      goals.




Some
      of our
      acquisitions, including the acquisition of PRS, inChord and Adheris, were
      completed only recently. Operational and financial integration of the acquired
      businesses is not yet complete and we may experience difficulties in completing
      the integration processes. Among other things, we are generally required to
      document internal controls under Section 404 of the Sarbanes-Oxley Act for
      each
      of our acquired business units by the end of the first fiscal year following
      the
      year in which the acquisition occurs. We may not be successful in recognizing
      material weaknesses in internal controls over financial reporting for our
      acquired businesses and may have difficulty remedying any such material
      weaknesses on a timely basis. More generally, we may experience difficulties
      in
      the integration of personnel and technologies across diverse business platforms.




Acquisitions
      involve numerous risks in addition to integration risk, including the
      following:




·
            diversion
                of management’s attention from normal daily operations of the
                business;






·
            insufficient
                revenues to offset increased expenses associated with acquisitions;
                and






·
            the
                potential loss of key customers or employees of the acquired
                companies.




Acquisitions,
      and related acquisition earnouts, may also cause us to deplete our cash reserves
      and/or increase our leverage, and therefore increase the financial risk of
      our
      capital structure; assume liabilities of the acquired businesses; record
      goodwill and non-amortizable intangible assets that will be subject to
      impairment testing and potential periodic impairment charges; incur amortization
      expenses related to certain intangible assets; or become subject to
      litigation.




Mergers
      and acquisitions of new businesses are inherently risky, and no assurance can
      be
      given that our previous or future acquisitions will be successful and will
      not
      materially and adversely affect our business, operating results, or financial
      condition. Failure to manage and successfully integrate acquisitions we make
      could harm our operational and consolidated financial results in a material
      way.





***We
      may not be successful in managing our infrastructure and resources to support
      continued growth.***





Our
      ability to grow also depends to a significant degree on our ability to
      successfully leverage our existing infrastructure to perform services for our
      clients, develop and successfully implement new sales channels for the services
      we offer and to enhance and expand the range of services that we can deliver
      to
      our customers. Our growth will also depend on a number of other factors,
      including our ability to





·
            maintain
                the high quality of the services we provide to our
                customers;





·
            increase
                our penetration with existing
                customers;





·
            recruit,
                motivate and retain qualified personnel;




·
            implement
                operational and financial systems and additional management resources
                to
                operate efficiently and effectively regardless of market conditions.





We
      cannot
      assure you that we will be able to manage or expand our operations effectively
      to address current or future demand and market conditions. If we are unable
      to
      manage our infrastructure and resources effectively, our business, consolidated
      financial condition and consolidated results of operations could be materially
      and adversely affected.





7


***We
      are subject to a high degree of government regulation.***





We
      are
      subject to a high degree of government regulation. Significant
      changes in these regulations, or our failure to comply with them, could impose
      additional costs on us or otherwise negatively affect our
      operations. See the
      discussion under "Business - Government Regulation" above.





***Our
      services are subject to evolving industry standards and rapid technological
      changes*** **.**





The
      markets for our services are characterized by rapidly changing technology,
      evolving industry standards and frequent introduction of new and enhanced
      services. To succeed, we must continue to enhance our existing services;
      introduce new services on a timely and cost-effective basis to meet evolving
      customer requirements; integrate new services with existing services; achieve
      market acceptance for new services; and respond to emerging industry standards
      and other technological changes.




***We
      may be adversely affected by customer concentration.***





We
      have
      two customers, individually, that accounted for in excess of 10% of our net
      revenues for the year ended December 31, 2005, and our largest customer during
      such year accounted for 14% of net revenues. If any large customer decreases
      or
      terminates its relationship with us, our business, results of consolidated
      operations or consolidated financial position could be materially adversely
      affected.





***We
      may lose or fail to attract and retain key employees and management
      personnel.***





Our
      key
      managerial and other employees are among our most important assets. An important
      aspect of our competitiveness is our ability to attract and retain key employees
      and management personnel. Compensation for these key employees and management
      personnel is an essential factor in attracting and retaining them, and there
      can
      be no assurance that we will offer a level of compensation sufficient to do
      so.
      Equity-based compensation, including compensation in the form of options and
      restricted stock, plays an important role in our compensation of new and
      existing employees. Because of limitations on the number of shares available
      for
      future grant under our equity incentive plan, we may be unable to meet the
      compensation requirements of our key employees and management
      personnel.





***We
      may incur liability in connection with litigation.***





We
      are
      subject from time to time to claims made by third parties relating to our
      business. We do not believe that any claims that are currently pending will
      have
      a material adverse effect on us. Litigation is inherently uncertain, however,
      and we cannot assure you that we will not suffer such an effect as a consequence
      of any pending or future claims.





See
      Item
      3 - Legal Proceedings for a description of certain pending litigation.





***We
      may not be able to comply with the requirements of our credit
      facility.***





In
      connection with our acquisition of inChord, we entered into a syndicated credit
      facility with UBS
      AG,
      Stamford Branch and
      others. The current outstanding balance under this facility was approximately
      $174.6 million as of March 1, 2006, which is attributable to a $175 million
      term
      loan component. The term loan will mature on the sixth anniversary of the credit
      facility, with scheduled quarterly amortization of 1% per year during years
      one
      through five and 95% during year six. The revolving loans will mature on the
      sixth anniversary of the credit facility. Amounts advanced under the credit
      facility must be prepaid with a portion of our "Excess Cash Flow", as defined
      in
      the credit agreement. The credit facility contains numerous operating covenants
      that have the effect of reducing management's discretion in operating our
      businesses, including covenants limiting:





·
            the
                incurrence of indebtedness;





·
            the
                creation of liens on our assets;





·
            sale-leaseback
                transactions;





·
            acquisitions;





·
            guarantees;





·
            payment
                of dividends; and





·
            fundamental
                changes and transactions with
                affiliates.





The
      credit facility also requires that we meet certain ongoing performance tests
      relating to leverage, interest rate coverage and fixed charge coverage ratios
      that vary based on the amount of time elapsed since the initial extension of
      credit. If we are unable to comply with the requirements of the credit facility,
      our lenders could refuse to advance additional funds to us and/or seek to
      enforce remedies against us. Any such developments would have a material adverse
      effect on inVentiv. As of the date of this report, we comply with the
      requirements of our credit facility.




***Our
      future financial results may not be consistent with our
      guidance.***





From
      time
      to time, we communicate to the market guidance relating to our revenue, earnings
      per share and other financial measures. These statements are intended to provide
      metrics against which to evaluate our performance, but they should not be
      understood as predictions or assurances of our future performance. Our ability
      to meet any projected financial result milestone is subject to inherent risks
      and uncertainties, and we caution investors against placing undue reliance
      on
      our published guidance. See "Cautionary Statement Regarding Forward-Looking
      Disclosure" above.





**Risks
      Related to our Common Stock**




***The
      trading price of our common stock may be volatile, and you may not be able
      to
      sell your shares at or above the price at which you acquire
      them.***





The
      trading price of our common stock may fluctuate significantly. Factors affecting
      the trading price of our common stock include:





·
            variations
                in operating results;





·
            the
                gain or loss of significant customers or
                suppliers;





·
            announcements
                relating to our acquisition of other
                businesses;





·
            changes
                in the estimates of our operating results or changes in recommendations
                by
                any securities analysts that elect to follow our common stock;
                and





·
            market
                conditions in our industry, the industries of our customers and our
                suppliers and the economy as a
                whole.





8


In
      addition, if the market for health care stocks or the stock market in general
      experiences a loss of investor confidence, the trading price of our common
      stock
      could decline for reasons unrelated to our business, consolidated operating
      results or consolidated financial condition.





***Anti-takeover
      provisions in our organizational documents make any change in control more
      difficult.***




Our
      certificate of incorporation and by-laws contain provisions that may delay
      or
      prevent a change in control, may discourage bids at a premium over the market
      price of our common stock and may affect adversely the market price of our
      common stock and the voting and other rights of the holders of our common stock.
      These provisions include:





·
            limitations
                on the ability of our shareholders to call a special meeting of
                shareholders;





·
            our
                ability to issue additional shares of our common stock without shareholder
                approval;





·
            our
                ability to issue preferred stock with voting or conversion rights
                that
                adversely affect the voting or other rights of holders of common
                stock
                without their approval;





·
            provisions
                that provide that vacancies on the board of directors, including
                any
                vacancy resulting from an expansion of the board, may be filled by
                a vote
                of the directors in office at the time of the
                vacancy; and





·
            advance
                notice requirements for raising matters of business or making nominations
                at shareholders’ meetings.





***Our
      acquisition activity may dilute your equity interest and negatively affect
      the
      trading price of our common stock.***





We
      have
      historically chosen to satisfy a significant portion of the consideration paid
      for acquired businesses in the form of shares of our common stock, including
      by
      reserving the right to satisfy a portion of any contingent, or "earnout",
      consideration, by issuing additional shares of our common stock. The potential
      earnout obligations under the terms of our completed acquisitions may be
      material individually or in the aggregate. Acquisitions we make in the future,
      and any earnout consideration from completed acquisitions that we satisfy
      through the issuance of our common stock, may significantly dilute your equity
      interest and may negatively affect the trading price of our common
      stock.




***A
      substantial number of our securities are eligible for future sale and this
      could
      affect the market price for our stock.***





The
      market price of our common stock could drop due to sales of a large number
      of
      shares of our common stock or the perception that these sales could occur.
      As of
      March 3, 2006, we had 28,553,939 shares of common stock outstanding. Of these
      shares, a total of 1,212,319 shares were subject to resale restrictions and
      will
      become eligible for sale pursuant to Rule 144 over the next several years or
      earlier if Ventiv elects to register those shares for resale on a voluntary
      basis. Shares issued in future acquisitions, and shares issued in satisfaction
      of earnout obligations under completed acquisitions, may add substantially
      to
      the number of shares available for future sale.





In
      addition, as of March 3, 2006, approximately 2,956,705 shares of our common
      stock were subject to outstanding stock options. Holders of our stock options
      are likely to exercise them, if ever, at a time when we otherwise could obtain
      a
      price for the sale of our securities that is higher than the exercise price
      per
      security of the options or warrants. This exercise, or the possibility of this
      exercise, may reduce the price of our common stock.





**Item
      1B.*****Unresolved
      Staff Comments***




We
      have
      received no written comments regarding its periodic or current reports from
      the
      staff of the Securities and Exchange Commission that were issued 180 days
      or more preceding the end of its 2005 fiscal year and that remain unresolved.




**Item
      2.*****Properties.***





As
      of
      December 31, 2005, we leased 29 facilities totaling 543,241 square feet,
      including our principal executive offices located in Somerset, New Jersey.
      Seven
      facilities totaling 54,878 square feet are leased by the inVentiv Clinical
      segment, 12 facilities totaling 209,968 square feet are leased by the inVentiv
      Communications segment, eight facilities totaling 220,232 square feet are leased
      by the inVentiv Commercial segment, and two facilities with approximately 58,163
      square feet is leased by the Other (corporate) segment. These leases expire
      at
      varying dates through 2015. Leased facilities increased during 2005 due to
      the
      acquisition of inChord. We believe that our facilities are adequate for our
      present and reasonably anticipated business requirements.





**Item
      3.*****Legal
      Proceedings.***





We
      are
      subject to lawsuits, investigations and claims arising out of the conduct of
      our
      business, including those related to commercial transactions, contracts,
      government regulation and employment matters. Certain claims, suits and
      complaints have been filed or are pending against us. With the exception of
      the
      litigation described below, all such matters are of a kind routinely experienced
      in our business and are consistent with our historical experience.





Adheris
      is subject to the following litigation, which was pending at the time of our
      acquisition of Adheris:





John
      Weld, Jr., on behalf of himself and all other similarly situated v. CVS
      Pharmacy, Inc., Elensys Care Services, Inc. and Glaxo Wellcome, Inc. (Civil
      Action No. 98-0897F) .
      Adheris, which was formerly known as Elensys Care Services, Inc., is a named
      defendant in the above-referenced class action lawsuit filed in Suffolk Superior
      Court in Massachusetts on February 20, 1998. On July 15, 1998, Mr. Weld’s
      complaint was amended to include another plaintiff and to add Warner-Lambert,
      Merck, Hoffman La-Roche, BioGen and BioTech as additional defendants. The
      plaintiff claims that the defendants violated the plaintiff’s right to privacy
      and confidentiality by sending the plaintiff letters based on the plaintiff’s
      prescription history and by CVS sharing the plaintiff’s prescription data with
      Adheris and the other parties. The plaintiff is seeking damages and injunctive
      relief in this lawsuit. On February 23, 2006, the class in this action was
      decertified by the court due to the class plaintiffs' failure to prosecute
      the
      action and the case was dismissed as to one of the two named plaintiffs. The
      dismissal was stayed for 60 days in order to allow a new party and a new law
      firm to continue the litigation if a suitable class representative and class
      counsel step forward. The second named plaintiff was permitted to proceed on
      an
      individual basis. We intend to defend this suit vigorously. We do not believe
      that this action will have a material adverse effect on inVentiv.





Utility
      Consumer Action Network v. Albertson’s Inc.(Case No. GIC
      830069). This
      action was filed on May 17, 2004 in California Superior Court against
      Albertson’s Inc. three other drug store chains and 17 pharmaceutical companies
      alleging violations of the California Unfair Competition Law and the California
      Confidentiality of Medical Information Act arising from the operation of
      manufacturer-sponsored, pharmacy-based compliance programs similar to Adheris's
      programs. The plaintiff is seeking "equitable monetary relief", disgorgement,
      statutory damages and penalties, injunctive relief and reimbursement of
      attorneys' fees in this lawsuit. The defendants in this case have moved for
      dismissal of the lawsuit. A decision on that motion is pending. An amended
      complaint was filed on November 4, 2004 naming Adheris as an additional
      defendant but the amended complaint has not been served on Adheris. We do not
      believe that this action will have a material adverse effect on
      inVentiv.




**Item
      4.*****Submission
      of Matters to a Vote of Securities Holders.***





No
      matters were submitted to a vote of security holders during the fourth quarter
      of the year ended December 31, 2005.




9




**PART
      II**





**Item
      5*****.
      Market for the Registrant's Common Stock, Related Stockholder Matters and Issuer
      Purchase of Equity Securities.***





The
      following table contains the high and low sales prices of our common stock
      traded on the Nasdaq National Market (ticker symbol “VTIV”) during the periods
      indicated:





**High**
            
            **Low**Year
                ended December 31, 2005First
                Quarter
            
            $
            26.17
            
            $
            19.47Second
                Quarter
            
            $
            24.60
            
            $
            17.22Third
                Quarter
            
            $
            27.23
            
            $
            19.00Fourth
                Quarter
            
            $
            27.65
            
            $
            23.20**High**
            
            
            **Low**Year
                ended December 31, 2004First
                Quarter
            
            $
            13.92
            
            $
            9.36Second
                Quarter
            
            $
            18.40
            
            $
            13.87Third
                Quarter
            
            $
            16.95
            
            $
            12.94Fourth
                Quarter
            
            $
            20.67
            
            $
            16.65





On
      March
      3, 2006, there were approximately 182 record holders of our common
      stock.





To
      date,
      we have not declared cash dividends on our common stock and are currently
      restricted from doing so under our credit agreement. We do not anticipate paying
      any cash dividends in the foreseeable future.





The
      following table summarizes securities authorized for issuance under our equity
      compensation plans as of December 31, 2005:





Number
                of securities to be issued upon exercise of outstanding options,
                warrants
                and rights
            Weighted-average
                exercise price of outstanding options, warrants and rights
            Number
                of securities remaining available for future issuance under equity
                compensation plansEquity
                compensation plans approved by security holders1999
                Stock Incentive Plan
            2,971,420
            $10.47
            1,020,584
            *Equity
                compensation plans not approved by security holders
            -
            -
            -Total
            2,971,420
            
            1,020,584*
                The 1999 Stock Incentive Plan authorizes the issuance of stock options,
                restricted stock, restricted stock units and stock appreciation rights.
                To
                date we have not issued any restricted stock units or stock appreciation
                rights.





During
      the fourth quarter of 2005, we did not repurchase any of our outstanding equity
      securities and, to our knowledge, no “affiliated purchaser” of inVentiv
      repurchased any of our outstanding securities.





The
      transfer agent for our common stock is American Stock Transfer and Trust
      Company, 6201 Fifteenth Avenue, Brooklyn, New York, 11219.




10


**Item
      6.*****Selected
      Financial Data.***





**SELECTED
      FINANCIAL DATA**





The
      following table summarizes certain of our historical financial data and is
      qualified in its entirety by reference to, and should be read in conjunction
      with, our historical consolidated financial statements and related notes
      included elsewhere in this Annual Report on Form 10-K. Historical financial
      information may not be indicative of our future performance. See also "Item
      7--Management's Discussion and Analysis of Financial Condition and Results
      of
      Operations".




**For
                  the Years Ended December 31,****2005**
              
              **2004**
              
              **2003**
              
              **2002**
              
              **2001****(in
                  thousands, except per share data)**Revenues
              
              $
              556,312
              
              $
              352,184
              
              $
              224,453
              
              $
              215,387
              
              $
              294,763Income
                  (losses) from continuing operations
              
              $
              43,082
              
              $
              30,130
              
              $
              9,895
              
              $
              4,941
              
              $
              (16,060
              )Income
                  (losses) from discontinued operations
              
              $
              781
              
              $
              1,002
              
              $
              (4,119
              )
              $
              2,951
              
              $
              (42,442
              )Net
                  income (losses)
              
              $
              43,863
              
              $
              31,132
              
              $
              5,776
              
              $
              7,892
              
              $
              (58,502
              )Basic
                  earnings (losses) per share:Continuing
                  operations
              
              $
              1.60
              
              $
              1.26
              
              $
              0.43
              
              $
              0.22
              
              $
              (0.71
              )Discontinued
                  operations
              
              $
              0.03
              
              $
              0.04
              
              $
              (0.18
              )
              $
              0.13
              
              $
              (1.87
              )Net
                  income (losses)
              
              $
              1.63
              
              $
              1.30
              
              $
              0.25
              
              $
              0.35
              
              $
              (2.58
              )Diluted
                  earnings (losses) per share:Continuing
                  operations
              
              $
              1.53
              
              $
              1.18
              
              $
              0.42
              
              $
              0.22
              
              $
              (0.71
              )Discontinued
                  operations
              
              $
              0.03
              
              $
              0.04
              
              $
              (0.18
              )
              $
              0.13
              
              $
              (1.87
              )Net
                  income (losses)
              
              $
              1.56
              
              $
              1.22
              
              $
              0.24
              
              $
              0.35
              
              $
              (2.58
              )Shares
                  used in computing basic earnings (losses) per share
              
              
              26,875
              
              
              23,951
              
              
              22,919
              
              
              22,842
              
              
              22,648Shares
                  used in computing diluted earnings (losses) per share
              
              
              28,165
              
              
              25,437
              
              
              23,801
              
              
              22,857
              
              
              22,648Balance
                  sheet data:Total
                  assets
              
              $
              583,894
              
              $
              287,452
              
              $
              180,708
              
              $
              153,418
              
              $
              232,343Long-term
                  debt (a)
              
              $
              190,508
              
              $
              24,898
              
              $
              18,488
              
              $
              8,904
              
              $
              16,947Total
                  equity
              
              $
              253,219
              
              $
              172,444
              
              $
              107,725
              
              $
              96,446
              
              $
              87,206


(a)
      Long-term debt includes the non-current portion of our credit arrangement (for
      2005) and capital lease obligations (for all years) but excludes the current
      portion of our credit agreement and capital lease obligations.






11





**Item
      7*****.
      Management's Discussion and Analysis of Financial Condition and Results of
      Operations.***





This
      Management's Discussion and Analysis of Financial Condition and Results of
      Operations should be read in conjunction with the consolidated financial
      statements, accompanying notes and other financial information included in
      this
      Annual Report on Form 10-K for the years ended December 31, 2005, 2004 and
      2003.





**Introduction**





Our
      business is organized for managerial purposes along the lines of our reporting
      segments. Our three operating segments are inVentiv Clinical, inVentiv
      Communications and inVentiv Commercial. A fourth reporting segment, "Other",
      is
      a non-operating segment that consists of corporate and executive managerial
      functions. Our operating segment reporting was modified in 2005 to account
      for
      organizational changes in our business and the cumulative effect of our
      acquisition activity. In 2004, we managed three operating segments: inVentiv
      Commercial, inVentiv Clinical and inVentiv Analytic Services. The modification
      of our operating segments for 2005 was driven by the following
      factors:





·
            The
                inclusion of our planning and analytics services business in inVentiv
                Commercial for 2005 reflects the functional relationship of that
                business
                to our contract sales and regulatory compliance
                businesses.





·
            The
                inVentiv Communications segment was formed principally through the
                acquisition of inChord Communications, Inc. ("inChord"), a healthcare
                marketing and communications company, in October 2005 and Adheris,
                Inc.
                ("Adheris"), an industry leader in the area of patient compliance
                and
                persistency programs, in February 2006.


**Critical
      Accounting Policies**





*Revenue
      Recognition*





The
      following is a summary of the Company’s revenue recognition policy, based on the
      segment and services we provide:





**inVentiv
      Clinical**





·
            Clinical
                Staffing-
                Revenues from temporary personnel services, outsourcing and outplacement
                are recorded when services are rendered.





·
            Clinical
                Analysis and Data Management-
                Revenues are mainly achieved and recorded based on milestones, depending
                on the terms of the contracts.





·
            Executive
                Placement-
                Permanent placement services revenues are recorded at the time a
                candidate
                begins full-time employment. Any write-offs due to cancellations
                and/or
                billing adjustments historically have been insignificant.





**inVentiv
      Communications**





·
            Advertising
                and Communication support-
                Retainer revenue is recognized under the proportional performance
                method,
                by relating the actual hours of work performed to date to the current
                estimated total hours of the respective projects. Any anticipated
                losses
                on projects are recognized when such losses are anticipated. Time
                and
                production billings are billed as incurred for actual time and
                expenses.





·
            Branding
                Consultation-
                Revenues are mainly based on fee for service, based on the
                contract.





·
            Patient
                and Physician Education-
                For its meeting and event services business, the Company uses either
                the
                completed contract method or bases revenue recognition on defined
                milestones, depending on the terms of the specific
                contracts.





·
            Interactive
                Communication Development-
                Time and production billings are billed as incurred for actual time
                and
                expenses.





**inVentiv
      Commercial**





·
            Sales
                and Marketing Teams-
                Revenues and associated costs under pharmaceutical detailing contracts
                are
                generally based on the number of physician calls made or the number
                of
                sales representatives utilized. Most of our Sales and Marketing Teams’
                contracts involve two phases, a “deployment phase”, typically three
                months, in which we perform initial recruiting, training and preparation
                for deployment of the field force at the start of a new contract,
                and the
                “Promotion phase” in which our deployed field force actively promotes
                specified products for clients through face-to-face interactions
                with
                physicians referred to as “detailing”.
              
              Most
                  of our Ventiv Pharma Teams contracts specify a separate fee for
                  the
                  initial “deployment phase” of a project. We consider the deployment phase
                  to be a separate and distinct earnings process and recognize the
                  related
                  revenues throughout the deployment phase, which typically spans
                  a period
                  of two to three months at the beginning of the first year of a
                  contract.
                  We generally recognize revenue during the “promotion phase” of our Ventiv
                  Pharma Teams contracts on a straight-line basis based on the size
                  of the
                  deployed field force.
                
                Many
                  of the product detailing contracts allow for additional periodic
                  incentive
                  fees to be earned once agreed upon performance benchmarks have
                  been
                  attained. Revenue earned from incentive fees is recognized when
                  we are
                  reasonably assured that payment will be made, and is typically
                  based upon
                  verification through calculation of achievement, third party data
                  or
                  client verification. Many contracts also stipulate penalties if
                  agreed
                  upon performance benchmarks have not been met. These penalties
                  are
                  recognized upon verification of performance shortfalls.
                
                Non-refundable
                  conversion fees are earned and recognized as revenue when one of
                  our sales
                  professionals accepts a firm offer of permanent employment from
                  a customer
                  during the term of a
                  contract.




·
            Planning
                and Analytics-
                Revenues for HPR generally include fixed fees, which are recognized
                when
                monthly services are performed based on the proportional performance
                method and when payment is reasonably assured. HPR’s initial contracts
                typically range from one month to one year. Revenues for additional
                services are recognized when the services are provided and payment
                is
                reasonably assured.





·
            Regulatory
                Compliance and Patient Assistance-
                For regulatory compliance, revenues are recorded based on both fixed
                fees
                as well as fees for specific compliance related services both of
                which are
                recognized when monthly services are performed, while patient assistance
                programs depend on the number of patients served and are recognized
                as
                each service is performed.





·
            Marketing
                Support Services-
                Revenues are recorded based on time incurred and fulfillment requirements
                based on contractual terms.





·
            Professional
                Development and Training-
                Revenues are generally recorded as training courses are
                completed.





12


**General**





Reimbursable
      Costs


Reimbursable
      costs, including those relating to travel and out-of pocket expenses, sales
      force bonuses tied to individual or product revenues, and other similar costs,
      are generally included in revenues, and an equivalent amount of reimbursable
      expenses is included in costs of services in the period in which such amounts
      have been finalized. In certain cases, based on the Company’s analysis of
      Emerging Issues Task Force Issue No. 99-19, *Reporting
      Revenue Gross as a Principal versus Net as an Agent* ,
      and
      related accounting literature, the Company may also record certain reimbursable
      transactions, such as the placement of media advertisements where we act as
      an
      agent, as net revenues.





Loss
      Contracts


We
      periodically analyze our contracts to determine the likelihood and amount of
      any
      potential loss on a contract resulting from lower than anticipated product,
      field force or other performance. In the event that current information
      illustrates a loss is likely to be incurred over the remaining life of the
      contract, we accrue that loss at the time it becomes probable. We did not have
      any material loss contracts in 2005.





Billing


Customers
      are invoiced according to agreed upon billing terms. Contracts that are invoiced
      prior to performance of related services are recorded as client advances and
      unearned revenue and are not recognized as revenues until earned, in accordance
      with our revenue recognition policies. Amounts earned for revenues recognized
      before the agreed upon billing terms have been met are recorded as revenue
      and
      included in unbilled services. Upon billing, these amounts are transferred
      to
      billed accounts receivable.




*Goodwill
      and Other Intangible Assets*





With
      our
      aforementioned acquisitions, we have material intangible assets, including
      goodwill and other identifiable finite and indefinite-lived acquired
      intangibles. The identification and valuation of these intangible assets and
      the
      determination of the estimated useful lives at the time of acquisition, as
      well
      as the completion of annual impairment tests, require significant management
      judgments and estimates. These estimates are made based on, among others,
      consultations with an accredited independent valuation consultant, reviews
      of
      projected future income cash flows and statutory regulations. The use of
      alternative estimates and assumptions could increase or decrease the estimated
      fair value of our goodwill and other intangible assets, and potentially result
      in a different impact to our results of operations. Furthermore, changes in
      business strategy and/or market conditions may significantly impact these
      judgments thereby impacting the fair value of these assets, which could result
      in an impairment of the goodwill. We performed annual impairment tests as of
      June 2005 and concluded that the existing goodwill and tradename balances were
      not impaired. As of December 31, 2005, we had goodwill of approximately
      $173.8 million and other intangibles (net) of $117.6 million in the
      Consolidated Balance Sheet.





*Claims
      and Insurance Accruals*





We
      maintain self-insured retention limits for certain insurance policies. The
      liabilities associated with the risk we retain are estimated in part based
      on
      historical experience, third-party actuarial analysis, demographics, nature
      and
      severity, past experience and other assumptions. The liabilities for self-funded
      retention are included in claims and insurance reserves based on claims
      incurred, with liabilities for unsettled claims and claims incurred but not
      yet
      reported being actuarially determined with respect to workers’ compensation and
      auto liability claims and estimated based on management’s evaluation of the
      nature and severity of individual claims and historical experience with respect
      to all other liabilities. A significant number of these claims typically take
      several years to develop and even longer to ultimately settle. These estimates
      tend to be reasonably accurate over time; however, the actual liabilities could
      vary materially from management's estimates and assumptions regarding severity
      of claims, medical cost inflation, as well as specific case facts can create
      short-term volatility in estimates. Management believes that these reserves
      are
      adequate.





*Income
      Taxes*





Deferred
      tax assets and liabilities are determined based on the difference between the
      financial reporting and the tax bases of assets and liabilities and are measured
      using the tax rates and laws that are expected to apply to taxable income in
      the
      years in which those temporary differences are expected to be recovered or
      settled.  A
      valuation allowance is established, when necessary, to reduce deferred income
      tax assets to the amount that is more likely than not to be realized. Realization
      is dependent on generating sufficient taxable income of a specific nature prior
      to the expiration of any loss carryforwards or capital losses. The asset may
      be
      reduced if estimates of future taxable income during the carryforward period
      are
      reduced. In addition, we maintain reserves for certain tax items, which are
      included in income taxes payable on our consolidated balance sheet. We
      periodically review these reserves to determine if adjustments to these balances
      are necessary.





*Derivative
      Financial Instruments*





We
      enter
      into interest rate swap agreements to modify the interest rate characteristics
      of our outstanding long-term debt. At hedge inception, and at least quarterly
      thereafter, we assess whether derivatives used to hedge transactions are highly
      effective in offsetting changes in the cash flow of the hedged item. To the
      extent the instruments are considered to be effective, changes in fair value
      are
      recorded as a component of other comprehensive income (loss). To the extent
      there is any hedge ineffectiveness, changes in fair value relating to the
      ineffective portion are immediately recognized in earnings (interest expense).
      The fair values of our interest rate swaps are obtained from dealer quotes.
      These values represent the estimated amount we would receive or pay to terminate
      the agreement taking into consideration the difference between the contract
      rate
      of interest and rates currently quoted for agreements of similar terms and
      maturities.





**Recent
      Business Developments**





*Ventiv
      Pharma Teams Contracts*





Ventiv
      Pharma Teams contracts often involve the deployment of large numbers of sales
      representatives and may have appreciable impacts on revenues and earnings.
      The
      following are brief summaries of the most significant Ventiv Pharma Teams’
contracting events during 2004 and 2005, which are discussed further in the
      comparative analysis of our financial results below:





During
      the first quarter of 2004, we won several new contracts, mainly comprising
      of small
      to
      mid-size clients looking to enter new markets or looking to build
      infrastructure. Among the notable contracts were Synthon Pharmaceuticals, Ltd.
      and ISTA Pharmaceuticals, Inc.





During
      the second quarter of 2004, we won two additional contracts, one with an
      existing client and another for a new client, Yamanouchi Pharmaceutical Company,
      Ltd., in which deployment occurred during the fourth quarter of 2004.





In
      June
      2004, Watson Pharmaceuticals, Inc. (“Watson”) elected to exercise its option to
      not continue its sales force contract for a second year, effective on or about
      August 1, 2004. This action was related to Watson’s strategic decision to
      refocus its broader business priorities, and was not a reflection on the
      performance of our sales team.





In
      July
      2004, we entered into an agreement with sanofi-aventis to provide a national
      sales force including recruiting, training and operational support. The
      size of this agreement was subsequently reduced in the fourth quarter of
      2005.




During
      the third quarter of 2004, we won two significant new contracts with large,
      global pharmaceutical firms, including one contract with Bristol-Myers Squibb.
      To accommodate these and other new contracts, we agreed to an early wind-down
      of
      our contracts with Bayer Pharmaceuticals Corporation (“Bayer”) in order to
      redeploy its sales representatives from these older contracts to recently
      announced new multi-year contracts.




In
      July
      2005, one of our two ALTANA Pharma sales teams was converted from full-time
      inVentiv employees to full-time ALTANA employees. Our second ALTANA sales
      team continues to service our continuing ALTANA contract.





During
      the year ended December 31, 2005, we won several new contracts mainly comprised
      of small to mid-size clients looking to enter new markets or looking to build
      infrastructure, including NPS and Connetics. These wins were offset by certain
      contract conversions, mainly as described above relating to ALTANA.





13


*Acquisitions*





In
      March
      2006, we entered into an agreement for the acquisition of Synergos, LLP
      ("Synergos"). Synergos is a focused clinical services provider with expertise
      in
      clinical trial management services, particularly project management and
      monitoring as well as investigator and patient recruitment. The Synergos
      acquisition agreement provides for up front purchase consideration of $5.75
      million in cash and stock, plus earn-out payments for exceeding specified
      financial targets. The Synergos acquisition is expected to close during the
      second quarter of 2006.




Also
      in
      March 2006, we entered into an agreement for the acquisition of Jeffrey Simbrow
      Associates Inc. (and certain of its affiliated companies) ("JSAI"), Canada's
      leading healthcare marketing and communications agency. Under the terms of
      the
      agreement, inVentiv will acquire JSAI for CAD$10.0 million in cash and stock,
      plus earn-out payments for exceeding specified financial targets. The JSAI
      acquisition is expected to close during the second quarter of 2006.





In
      February 2006, we acquired Adheris for approximately $67 million in cash and
      stock, including certain working capital adjustments but exclusive of direct
      acquisition costs and post-closing adjustments, which have not yet been
      finalized. Adheris is a Massachusetts-based industry leader in the area of
      patient compliance and persistency programs. We will be obligated to make
      certain earn-out payments, which may be material, contingent on Adheris's
      performance measurements in 2006, 2007 and 2008. Adheris's financial results
      will be reported under inVentiv Communications from the date of its acquisition
      and accordingly are not reflected in our 2005 consolidated financial results.




In
      October 2005, we acquired all of the outstanding capital stock of inChord for
      approximately $196.8 million of cash and stock (taking into account certain
      post-closing adjustments and direct acquisition costs) for approximately $18.6
      million in net assets. To help finance the transaction, we entered into a credit
      agreement that is discussed in further detail below. We acquired inChord to
      expand our service portfolio in the marketing and communications arena, expand
      our market position in the pharmaceutical services market and achieve
      cross-selling opportunities by leveraging our existing businesses. We will
      be
      obligated to make certain earn-out payments, which may be material, contingent
      on inChord’s performance measurements from 2005 through 2007. The amount due
      with respect to inChord for 2005 is expected to be approximately $3.6 million
      of
      cash and stock, which we accrued at December 31, 2005, but is subject to review
      mechanisms set forth in the acquisition agreement and may change materially
      based on such review.




The
      results of inChord have been reflected in the inVentiv Communications segment
      since the date of acquisition. The purchase price and direct transaction costs
      were allocated to the assets purchased and liabilities assumed, based on their
      respective fair values at the date of acquisition. However, changes to the
      estimates of the fair values of inChord’s assets acquired and liabilities
      assumed may be necessary as additional information becomes available including
      the finalization of a third-party valuation of certain intangible
      assets.




In
      August
      2005, we acquired the net assets of PRS, a provider of compliance management
      and
      marketing support services based in Horsham, Pennsylvania. PRS specializes
      in
      pharmaceutical sample management and compliance services; its operations are
      similar in nature to the business of Franklin Group, Inc. and Lincoln Ltd,
      Inc.
      (together, “Franklin”), which we acquired in June 2004. The closing
      consideration for the transaction was approximately $13.6 million in cash and
      stock (taking into account post-closing adjustments and direct acquisition
      costs) for approximately $1.0 million of net assets. We will be obligated to
      make certain earn-out payments, which may be material, contingent on PRS’s
      performance measurements in 2005 and 2006. The amount due with respect to PRS
      for 2005 is expected to be approximately $0.3 million in cash and stock, which
      the Company accrued at December 31, 2005, but is subject to review mechanisms
      set forth in the acquisition agreement and may change materially based on such
      review. The results of PRS have been reflected in the inVentiv Commercial
      segment since the date of acquisition. The purchase price and direct transaction
      costs were allocated to the assets purchased and liabilities assumed, based
      on
      their respective fair values at the date of acquisition. However, changes to
      the
      estimates of the fair values of PRS’s assets acquired and liabilities assumed
      may be necessary as additional information becomes available including the
      finalization of a third-party valuation of certain intangible assets.





In
      November 2004, we acquired the net assets of HHI. HHI, based in Baltimore,
      Maryland, is a specialized statistical analysis and data management provider
      to
      the U.S. pharmaceutical industry. HHI complements our Smith Hanley business
      by
      offering clients the option of outsourced clinical support services as an
      alternative to internal staffing. The closing consideration for the transaction
      was approximately $6.2 million in cash and stock (taking into account
      post-closing adjustments and direct acquisition costs) for approximately $0.8
      million of net assets. We will be obligated to make certain earn-out payments,
      which may be material, contingent on HHI’s performance measurements in 2005 and
      2006. The amount due with respect to HHI for 2005 is expected to be
      approximately $5.0 million in cash and stock, which the Company accrued at
      December 31, 2005, but is subject to review mechanisms set forth in the
      acquisition agreement and may change materially based on such review. The
      results of HHI have been reflected in the inVentiv Clinical segment since the
      date of acquisition.





In
      October 2004, we acquired the net assets of Smith Hanley. Smith Hanley
      specializes primarily in providing late-stage clinical staffing and recruiting
      services to the U.S. pharmaceutical industry. We acquired Smith Hanley to expand
      our service portfolio in the clinical services and recruitment areas, expand
      our
      market position in the pharmaceutical services market and achieve cross-selling
      opportunities by leveraging our existing sales force and relationships. We
      acquired approximately $9.5 million of net assets for consideration of
      approximately $52.9 million in cash and stock (taking into account post-closing
      adjustments and direct acquisition costs) and will be obligated to make certain
      earn-out payments, which may be material, contingent on Smith Hanley’s
      performance measurements in 2004 and 2005. Smith Hanley’s 2004 earn-out paid in
      2005 was approximately $6.6 million, for which $6.8 million was previously
      accrued for at December 31, 2004; the portion adjusted in 2005 mainly relates
      to
      the finalization of the 2004 earn-out. The amount due with respect to Smith
      Hanley for 2005 is expected to be approximately $4.0 million in cash and stock,
      which we accrued at December 31, 2005, but is subject to review mechanisms
      set
      forth in the acquisition agreement and may change materially based on such
      review. The results of Smith Hanley have been reflected in the inVentiv Clinical
      segment since the date of acquisition.




In
      June
      2004, we acquired the net assets of Franklin, based in Somerville, New Jersey.
      Franklin specializes primarily in conducting patient assistance programs and
      pharmaceutical compliance services. We paid approximately $11.3 million in
      cash
      and stock (taking into account post-closing adjustments and direct acquisition
      costs) to acquire approximately $2.7 million of net assets. We are obligated
      to
      make certain earn-out payments, which may be material, contingent on Franklin’s
      performance measurements during 2004 through 2006. Franklin’s 2004 earn-out paid
      in 2005 was approximately $1.8 million, $1.7 million of which was accrued for
      at
      December 31, 2004; the portion adjusted in 2005 mainly relates to the
      finalization of the 2004 earn-out. The amount due with respect to Franklin
      for
      2005 is expected to be approximately $3.2 million in cash and stock, which
      the
      Company accrued at December 31, 2005, but is subject to review mechanisms set
      forth in the acquisition agreement and may change materially based on such
      review. Franklin’s financial results have been reflected in the inVentiv
      Commercial segment since the date of acquisition.




A
      summary
      of the purchase price consideration for the acquisitions is as follows:





Purchase
                price consideration
            
            Franklin
            
            Smith
                Hanley
            
            HHI
            
            PRS
            
            inChordCash
                *
            
            $
            6,667
            
            $
            30,000
            
            $
            5,000
            
            $
            9,100
            
            $
            172,500Stock
            
            
            3,580
            
            
            21,215
            
            
            747
            
            
            4,105
            
            
            12,145Direct
                acquisition and other
              Post-closing
                adjustments
            
            
            1,064
            
            
            1,685
            
            
            478
            
            
            440
            
            
            12,149Contingent
                consideration for completed measurement periods
            
            
            5,065
            
            
            10,603
            
            
            4,995
            
            
            272
            
            
            3,619Total
            
            $
            16,376
            
            $
            63,503
            
            $
            11,220
            
            $
            13,917
            
            $
            200,413


*
      Cash
      provided for the acquisition of inChord is pursuant to the credit agreement
      entered into on October 5, 2005.





The
      following represents the allocation of the purchase price to the acquired assets
      of Franklin, Smith Hanley, HHI, PRS and inChord. The allocations are based
      upon
      the estimated fair value of the assets acquired and liabilities assumed as
      of
      the respective acquisition date.




Allocation
                  of purchase price
              
              Franklin
              
              Smith
                  Hanley
              
              HHI
              
              PRS
              
              inChordCurrent
                  assets
              
              $
              3,165
              
              $
              13,859
              
              $
              1,005
              
              $
              1,368
              
              $
              66,223Property
                  and equipment, and other noncurrent assets
              
              
              432
              
              
              670
              
              
              48
              
              
              183
              
              
              8,533Goodwill
              
              
              11,133
              
              
              36,631
              
              
              8,795
              
              
              9,081
              
              
              87,537Identifiable
                  intangible assets
              
              
              2,557
              
              
              17,400
              
              
              1,610
              
              
              3,870
              
              
              94,300Liabilities
                  assumed
              
              
              (911
              )
              
              (5,057
              )
              
              (238
              )
              
              (585
              )
              
              (56,165
              )Minority
                  interest
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              (15
              )Total
              
              $
              16,376
              
              $
              63,503
              
              $
              11,220
              
              $
              13,917
              
              $
              200,413





Goodwill
      represents the excess of the
      purchase price over the fair value of tangible and identifiable intangible
      assets.





*Divesting
      Transactions*





During
      2002 and 2003, we divested our Communications and European Contract Sales
      businesses. We have been receiving payments subsequent to some of these
      divestitures based on the subsequent earnings of the divested unit. For the
      years ended December 31, 2005 and 2004, we received approximately $1.7 million
      and $2.1 million, respectively, relating to these divestitures.


14


**Results
      of Operations**





The
      following sets forth, for the periods indicated, certain components of our
      operating earnings, including such data stated as a percentage of revenues




**For
                  the Years Ended December 31,****2005**
              
              **2004**
              
              **2003****(in
                  thousands, except for per share data)**Revenues:
              
              
              
              Percentage*
              
              
              
              Percentage*
              
              
              
              Percentage
                  *inVentiv
                  Clinical
              
              $
              113,700
              
              
              20.4
              %
              $
              21,688
              
              
              6.2
              %
              $
              --
              
              
              --inVentiv
                  Communications
              
              
              48,726
              
              
              8.8
              %
              
              --
              
              
              --
              
              
              --
              
              
              --inVentiv
                  Commercial
              
              
              393,886
              
              
              70.8
              %
              
              330,496
              
              
              93.8
              %
              
              224,453
              
              
              100.0
              %Total
                  revenues
              
              
              556,312
              
              
              100.0
              %
              
              352,184
              
              
              100.0
              %
              
              224,453
              
              
              100.0
              %Cost
                  of services:inVentiv
                  Clinical
              
              
              75,177
              
              
              66.1
              %
              
              14,487
              
              
              66.8
              %
              
              --
              
              
              --inVentiv
                  Communications
              
              
              32,440
              
              
              66.6
              %
              
              --
              
              
              --
              
              
              --
              
              
              --inVentiv
                  Commercial
              
              
              309,408
              
              
              78.6
              %
              
              265,246
              
              
              80.3
              %
              
              182,658
              
              
              81.4
              %Total
                  cost of services
              
              
              417,025
              
              
              75.0
              %
              
              279,733
              
              
              79.4
              %
              
              182,658
              
              
              81.4
              %Selling,
                  general and administrative expenses
              
              
              79,313
              
              
              14.3
              %
              
              38,539
              
              
              10.9
              %
              
              26,223
              
              
              11.7
              %Other
                  operating income
              
              
              --
              
              
              --
              
              
              264
              
              
              --
              
              
              392
              
              
              0.2
              %Total
                  operating income
              
              $
              59,974
              
              
              10.8
              %
              $
              34,176
              
              
              9.7
              %
              $
              15,964
              
              
              7.1
              %Interest
                  expense
              
              
              (3,955
              )
              
              (0.7
              )%
              
              (922
              )
              
              (0.3
              )%
              
              (549
              )
              
              (0.3
              )%Interest
                  income
              
              
              1,409
              
              
              0.3
              %
              
              678
              
              
              0.2
              %
              
              413
              
              
              0.2
              %Income
                  from continuing operations before income tax
                provision,
                  minority interest in income of subsidiary
                and
                  income from equity investments
              
              
              57,428
              
              
              10.4
              %
              
              33,932
              
              
              9.6
              %
              
              15,828
              
              
              7.0
              %Income
                  tax provision
              
              
              (14,229
              )
              
              (2.6
              )%
              
              (3,802
              )
              
              (1.1
              )%
              
              (5,933
              )
              
              (2.6
              )%Income
                  from continuing operations before minority
                interest
                  in income of subsidiary and income from
                equity
                  investments
              
              
              43,199
              
              
              7.8
              %
              
              30,130
              
              
              8.5
              %
              
              9,895
              
              
              4.4
              %Minority
                  interest in income of subsidiary
              
              
              (224
              )
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              --Equity
                  earnings in investments
              
              
              107
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              --Income
                  from continuing operations
              
              
              43,082
              
              
              7.8
              %
              
              30,130
              
              
              8.5
              %
              
              9,895
              
              
              4.4
              %Income
                  (losses) from discontinued operations:Losses
                  from discontinued operations, net of taxes
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              (4,092
              )
              
              (1.8
              )%Gains
                  (losses) on disposals of discontinued operations, net of
                  taxes
              
              
              781
              
              
              0.1
              %
              
              1,002
              
              
              0.3
              %
              
              (4,406
              )
              
              (2.0
              )%Tax
                  benefit related to the disposal of a discontinued
                  operation
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              4,379
              
              
              2.0
              %Income
                  (losses) from discontinued operations
              
              
              781
              
              
              0.1
              %
              
              1,002
              
              
              0.3
              %
              
              (4,119
              )
              
              (1.8
              )%Net
                  income
              
              $
              43,863
              
              
              7.9
              %
              $
              31,132
              
              
              8.8
              %
              $
              5,776
              
              
              2.6
              %Earnings
                  (losses) per share:Continuing
                  operations:Basic
              
              $
              1.60
              
              
              
              
              $
              1.26
              
              
              
              
              $
              0.43Diluted
              
              $
              1.53
              
              
              
              
              $
              1.18
              
              
              
              
              $
              0.42Discontinued
                  operations:Basic
              
              $
              0.03
              
              
              
              
              $
              0.04
              
              
              
              
              $
              (0.18
              )Diluted
              
              $
              0.03
              
              
              
              
              $
              0.04
              
              
              
              
              $
              (0.18
              )Net
                  income:Basic
              
              $
              1.63
              
              
              
              
              $
              1.30
              
              
              
              
              $
              0.25Diluted
              
              $
              1.56
              
              
              
              
              $
              1.22
              
              
              
              
              $
              0.24


*
      Cost of
      services is expressed as a percentage of segment revenue. All other line items
      are displayed as a percentage of total revenues.




15




**Year
        Ended December 31, 2005 Compared to Year Ended December 31,
        2004**




***Revenues*** :
      Revenues increased by approximately $204.1 million, or 58.0%, to $556.3 million
      in the year ended December 31, 2005, from $352.2 million in the year ended
      December 31, 2004, mainly due to increased business in our inVentiv Commercial
      business and company acquisitions during 2004 and 2005, as more fully described
      below.




As
      a
      result of the fourth quarter 2004 acquisitions in inVentiv Clinical, the segment
      has contributed approximately $21.7 million of revenues in 2004 and $113.7
      million of revenues for the year ended December 31, 2005. inVentiv Clinical’s
      clientele consists of a wide range of pharmaceutical, biotechnology and medical
      device companies, as well as to their outsourced service providers to those
      sectors. The key driver of increased business was due to increased hiring in
      permanent placement and clinical staffing.




In
      our
      inVentiv Communications segment, which was initially established in October
      2005
      via acquisition, there was approximately $48.7 million of revenue recorded
      from
      the acquisition date through December 31, 2005. This segment specializes in
      pharmaceutical advertising, branding, marketing and medical
      education.




Revenues in our inVentiv Commercial business were $393.9 million in the year
      ended December 31, 2005, an increase of $63.4 million or 19.2% from $330.5
      million in the year ended December 31, 2004, and accounted for 70.8% of total
      revenues for the year ended December 31, 2005. The majority of this growth
      is
      due to increased business in our Sales & Marketing Teams; a
      new
      contract with sanofi-aventis during the third quarter of 2004; and two
      additional contracts with
      large, global pharmaceutical firms  during
      the fourth quarter of 2004, one of which was BMS. The increases from these
      significant contract wins (described above) were offset by decreases
      attributable to contract conversions of certain clients, including ALTANA,
      as
      discussed in Recent Business Developments; Watson’s election to terminate its
      sales force contract effective August 1, 2004; and the redeployment of Bayer
      representatives from older contracts to new multi-year contracts with other
      clients, as discussed previously. There were also two acquisitions (Franklin
      in
      June 2004 and PRS in August 2005), which contributed to the increase in
      revenues.




***Cost
      of
      Services*** :
      Cost of
      services increased by approximately $137.3 million or 49.1%, to $417.0 million
      during the year ended December 31, 2005 from $279.7 million in the year ended
      December 31, 2004, mainly due to increased business in our inVentiv Commercial
      business and company acquisitions during 2004 and 2005, as mentioned previously.
      Cost of services decreased as a percentage of revenues to 75.0% from 79.4%
      in
      the year ended December 31, 2005 and 2004, respectively. The 2004 and 2005
      acquisitions in the inVentiv Clinical and inVentiv Communications segments
      generally tend to have higher margins than the inVentiv Commercial group due
      to
      the nature of the services provided.




inVentiv
      Clinical’s cost of services in 2005 was approximately $75.2 million, compared to
      approximately $14.5 million during the fourth quarter of 2004, when the segment
      was established via the Smith Hanley and HHI acquisitions. Cost of services
      as a
      percentage of revenues was in line from the previous year. The increase in
      cost
      was due to the full year effect of the acquisitions and increased hiring in
      permanent placement and clinical staffing.




Our
      inVentiv Communications segment incurred approximately $32.4 million in cost
      of
      services from the October 5, 2005 acquisition date through December 31, 2005.
      The segment’s cost of services was approximately 66.6 % of the segment’s
      revenues.




Cost
      of
      services at the inVentiv Commercial business increased by approximately $44.2
      million, or 16.6%, to $309.4 million in the year ended December 31, 2005 from
      $265.2 million in the year ended December 31, 2004. This variance percentage
      is
      lower than the percentage increase in revenue between the related periods.
      Cost
      of services was 78.6% of inVentiv Commercial revenue in the year ended December
      31, 2005, compared to 80.3% in the year ended December 31, 2004. The decrease
      of
      cost of services as a percentage of revenue in 2005 as compared to 2004 was
      attributable to ongoing cost savings measures implemented by management to
      align
      our support and infrastructure with the current level of operations. In
      addition, we acquired Franklin in June 2004, as described previously, which
      is a
      higher margin division than the core commercial services business.




***Selling,
      General and Administrative Expenses (“SG&A”)*** :
      SG&A expenses increased by approximately $40.8 million, or 105.8%, to $79.3
      million from $38.5 million in the years ended December 31, 2005 and 2004,
      respectively. This increase was primarily due to increased compensation levels
      in 2005 versus 2004, SG&A expenses incurred at the divisions acquired in
      2004 and 2005, increases in professional fees related to increased acquisitions
      and compliance with the internal control standards of Section 404 of the
      Sarbanes-Oxley Act of 2002, and the hiring of an internal audit department
      in
      2005.




SG&A
      expenses at our inVentiv Clinical business units, which were acquired during
      the
      fourth quarter of 2004, were approximately $29.0 million during the year ended
      December 31, 2005, compared to $5.5 million during the fourth quarter of
      2004.




SG&A
      expenses at our newly acquired inVentiv Communications businesses were
      approximately $10.6 million in 2005, which reflects expenses incurred during
      the
      fourth quarter, when the inChord acquisition was consummated. At the acquisition
      date, the Company assumed a $7.5 million existing liability on inChord’s balance
      sheet relating to certain performance thresholds of the segment over a
      three-year period. The Company will continue to periodically monitor these
      performance thresholds, which may result in up to an additional $7.5 million
      of
      future expenses if and when it is probable that additional thresholds will
      be
      met.




SG&A
      expenses at inVentiv Commercial increased by approximately $5.0 million, or
      20.8%, to $29.0 million in the year ended December 31, 2005 from $24.0 million
      incurred in the year ended December 31, 2004. This increase was due to increased
      compensation and benefits in 2005 versus 2004, mainly due to increased results
      during 2005; $2.1 million of additional SG&A at Franklin, which was acquired
      in June 2004; and additional SG&A at PRS, which was acquired in August
      2005.




Other
      SG&A was approximately $10.6 million for the year ended December 31, 2005,
      an increase of approximately $1.6 million or 18.2% from $9.0 million for the
      year ended December 31, 2004. The increase was mainly related to increases
      in
      compensation as a result of improved company performance, professional fees
      primarily related to increased acquisitions and our compliance with the internal
      control standards of Section 404 of the Sarbanes-Oxley Act of 2002, and the
      hiring of an internal audit department in 2005. Due to increased acquisitions
      over the last two years, our internal and external audit expenses have increased
      substantially from 2004.




***Provision
      for Income Taxes*** :
      In
      March 2005, we recorded a tax benefit of approximately $1.6 million primarily
      related to prior period tax contingencies, which are no longer required. During
      the third quarter of 2005, we recorded a tax benefit of approximately $6.7
      million primarily related to the reversal of a previously recorded valuation
      allowance as the Company determined an additional portion of its deferred tax
      asset was more likely than not expected to be realized. Excluding these tax
      benefits, our annual effective tax rate was 39.2% in 2005.





During
      the fourth quarter of 2004, we recorded a tax benefit of approximately $7.1
      million primarily related to the divestiture and shutdown of certain former
      subsidiaries. Our tax rate during the fourth quarter benefited additionally
      from
      $2.0 million of net federal & state tax adjustments and other one-time
      reversals, primarily related to prior period tax contingencies, which are no
      longer required. Excluding these tax benefits, our annual effective tax rate
      was
      38.0% in 2004.





Our
      current effective tax rate is based on current projections for earnings in
      the
      tax jurisdictions in which we do business and is subject to taxation. Our
      effective tax rate could fluctuate due to changes in earnings between operating
      entities and related tax jurisdictions, or due to the potential tax impact
      arising from previous divestitures.




***Discontinued
      Operations*** :
      For the
      year ended December 31, 2005 and 2004, income from discontinued operations,
      net
      of taxes, was $0.8 million and $1.0 million, respectively, which mainly
      consisted of contingency payments due from our previously divested Germany
      and
      Hungary (2004 only) based operations, as more fully described in Recent Business
      Developments.




***Net
      Income and Earnings Per Share (“EPS”)*** :
      Our net
      income increased by approximately $12.8 million from $31.1 million in 2004
      to
      $43.9 million in 2005. Diluted earnings per share increased to $1.56 per share
      for the year ended December 31, 2005 from $1.22 for the year ended December
      31,
      2004.  Operating results were higher due to increased revenues from certain
      contracts; the middle to late 2004 and 2005 acquisitions; and various cost
      saving strategies in 2005. This was slightly offset by the higher tax benefits
      recorded in 2004 than 2005.




16


**Year
      Ended December 31, 2004 Compared to Year Ended December 31,
      2003**




***Revenues*** :
      Revenues increased by approximately $127.7 million, or 56.9%, to $352.2 million
      in the year ended December 31, 2004, from $224.5 million in the year ended
      December 31, 2003, mainly due to increased business in our inVentiv Commercial
      business and company acquisitions during 2004, as more fully described below.




As
      a
      result of the fourth quarter 2004 acquisitions in inVentiv Clinical, we
      increased our revenues by approximately $21.7 million. inVentiv Clinical’s
      clientele consists of a wide range of pharmaceutical, biotechnology and medical
      device companies, as well as to their outsourced service providers to those
      sectors. Since inVentiv Clinical was created as a result of 2004 acquisitions,
      there were no revenues generated for this segment in 2003.




Revenues
      in our inVentiv Commercial business were $330.5 million in the year ended
      December 31, 2004, an increase of $106.0 million or 47.2% from $224.5 million
      in
      the year ended December 31, 2003, and accounted for 93.8% of total revenues
      for
      the year ended December 31, 2004. This increase resulted primarily from new
      contracts won in 2004, ranging from small to mid-size clients looking to enter
      new markets or build infrastructure, to large, global pharmaceutical companies
      with existing infrastructure, and including several new contracts during
      the first half of 2004; a new contract with sanofi-aventis during the third
      quarter of 2004; two additional contracts with large, global pharmaceutical
      firms, one of which was BMS. The increases from these significant contract
      wins
      (described above) were offset by decreases attributable to conversions of sales
      teams for Endo Pharmaceutical, Inc. and Boehringer Ingleheim Pharmaceuticals,
      Inc. during the fourth quarter of 2003, Watson’s election to terminate its sales
      contract effective August 1, 2004, and the redeployment of Bayer representatives
      from older contracts to recently announced new multi-year contracts with other
      clients, as discussed previously. Revenues from the sanofi-aventis and other
      2004 contract wins are expected to offset the preceding losses and diversify
      our
      client base. Finally, we acquired Franklin on June 9, 2004, resulting
      in additional revenue in 2004 since the acquisition date.




***Cost
      of Services*** :
      Cost of
      services increased by approximately $97.0 million or 53.1%, to $279.7 million
      during the year ended December 31, 2004 from $182.7 million in the year ended
      December 31, 2003. Cost of services decreased as a percentage of revenues to
      79.4% from 81.4% in the years ended December 31, 2004 and 2003, respectively.




Cost
      of
      services at the inVentiv Clinical business was approximately $14.5 million
      for
      the period from the respective acquisition dates to December 31, 2004. Cost
      of
      services represented approximately 66.8% of inVentiv Clinical revenues during
      this period. Gross margins related to this business tend to be higher than
      the
      core commercial services business. Since inVentiv Clinical was created as a
      result of 2004 acquisitions, there was no cost of services for this segment
      in
      2003.




Cost
      of
      services at the inVentiv Commercial business increased by approximately $82.5
      million, or 45.2%, to $265.2 million in the year ended December 31, 2004 from
      $182.7 million in the year ended December 31, 2003. This variance percentage
      is
      lower than the percentage increase in revenue between the related periods.
      Cost
      of services was 80.3% of inVentiv Commercial revenue in the year ended December
      31, 2004, compared to 81.4% in the year ended December 31, 2003. The decrease
      of
      cost of services as a percentage of revenue in 2004 as compared to 2003 was
      attributable to ongoing cost savings measures implemented by management to
      align
      our support and infrastructure with the current level of operations. In
      addition, we acquired Franklin, as described previously, which is a higher
      margin division than the core commercial services business.




***Selling,
      General and Administrative Expenses*** :
      SG&A expenses increased by approximately $12.3 million, or 47.0%, to $38.5
      million from $26.2 million in the year ended December 31, 2004 and 2003,
      respectively. This increase was primarily due to increased compensation levels
      in 2004 versus 2003, SG&A expenses incurred from the 2004 acquisitions, and
      increases in professional fees related to compliance with the internal control
      standards of Section 404 of the Sarbanes-Oxley Act of 2002.




SG&A
      expenses at inVentiv Clinical businesses were approximately $5.5 million in
      2004, which reflects expenses incurred during the fourth quarter, when the
      acquisitions were consummated. Since inVentiv Clinical was created as a result
      of 2004 acquisitions, there were no SG&A expenses for this segment in
      2003.




SG&A
      expenses at inVentiv Commercial increased by approximately $3.3 million, or
      16.1%, to $24.0 million in the year ended December 31, 2004 from $20.7 million
      incurred in the year ended December 31, 2003. This increase was due to increased
      compensation levels in 2004 versus 2003 due to increased results during the
      current year, increased rent expense due to inVentiv Commercial occupying
      additional space, which it previously subleased to a third party, and expenses
      related to Franklin in 2004.




Other
      SG&A was approximately $9.0 million for the year ended December 31, 2004, an
      increase of approximately $3.5 million or 63.1% from $5.5 million for the year
      ended December 31, 2003. The increase was mainly related to increases in
      compensation as a result of improved company performance, and professional
      fees
      primarily related to our compliance with the internal control standards of
      Section 404 of the Sarbanes-Oxley Act of 2002.




***Provision
      for Income Taxes*** :
      During
      the fourth quarter of 2004, we recorded a tax benefit of approximately $7.1
      million primarily related to the divestiture and shutdown of certain former
      subsidiaries. Our tax rate during the fourth quarter benefited additionally
      from
      $2.0 million of net federal & state tax adjustments and other one-time
      reversals, primarily related to prior period tax contingencies, which are no
      longer required. Excluding these tax benefits, our annual effective tax rate
      was
      38.0% in 2004. We recorded a provision for income taxes on continuing operations
      using an estimated effective tax rate of 37.5% for the year ended December
      31,
      2003. Our current effective tax rate is based on current projections for
      earnings in the tax jurisdictions in which we do business and is subject to
      taxation. Our effective tax rate could fluctuate due to changes in earnings
      between operating entities and related tax jurisdictions, or to the potential
      tax impact arising from previous divestitures.




***Discontinued
      Operations*** :
      For the
      year ended December 31, 2004 and 2003, income (losses) from discontinued
      operations, net of taxes, were income of $1.0 million and losses of $4.1
      million, respectively. The 2004 gains on disposals of discontinued operations
      of
      mainly consisted of contingency payments due from our previously divested
      Germany, Hungary and Alpharetta, Georgia-based operations, as more fully
      described in Recent Business Developments, offset by increased expenses in
      our
      facility remaining from a previously-divested business segment.





For
      the
      year ended December 31, 2003, operating losses of $4.1 million mainly consisted
      of the results of our France-based operations. In addition, we incurred
      approximately $4.4 million of losses related to the disposals of the units
      described in Recent Business Developments, consisting of the following: we
      wrote
      off net liabilities and currency translation adjustments of approximately $5.1
      million, mainly related to the sale of its France-based business unit; we
      incurred approximately $1.2 million of expenses, comprised primarily of legal
      and severance fees associated with the sale of its France and UK-based business
      units, and adjustments of residual balances in entities divested; we recorded
      a
      loss of $0.6 million on the sale of the assets and business of its Hungary-based
      contract sales business unit; these adjustments were offset in 2003 by
      contingent consideration of approximately $0.5 million recognized pursuant
      to
      divestiture agreements on the sale of our Germany and Hungary-based contract
      sales business units; as a result of these adjustments, there were approximately
      $2.0 million of tax benefits recorded in 2003.





Finally,
      in connection with the completion of the divestiture of our France-based
      contract sales business unit in 2003, we recorded an estimated $4.4 million
      tax
      benefit relating to the disposal of this business unit.




***Net
      Income and Earnings Per Share*** :
      Our net
      income increased by approximately $25.3 million from $5.8 million in 2003 to
      $31.1 million in 2004. Diluted earnings per share increased to $1.22 per share
      for the year ended December 31, 2004 from $0.24 for the year ended December
      31,
      2003.  Operating results were higher due to increased revenues from certain
      contracts; the acquisitions of Franklin and the companies comprising inVentiv
      Clinical; various cost saving strategies in 2004; and the tax benefit and
      one-time tax adjustments recorded in 2004. During 2004, we started to realize
      earnings from discontinued operations related to the receipt of post acquisition
      contingent consideration from the divested entities, while incurring losses
      from
      discontinued operations in 2003 from our previously divested business units.




**Off-Balance-Sheet
      Arrangements**





As
      of
      December 31, 2005, we did not have any off-balance-sheet arrangements, as
      defined in Item 303(a)(4)(ii) of SEC Regulation S-K.


17





***Liquidity
      and Capital Resources***





At
      December 31, 2005, inVentiv had $73.1 million of unrestricted cash and
      equivalents, an increase of $22.3 million from December 31, 2004. For the year
      ended December 31, 2004, compared to December 31, 2005, cash provided by
      operations increased by $6.3 million from $49.0 million to $55.3 million. Cash
      used in investing activities increased from $45.5 million in the year ended
      December 31, 2004 to $196.1 million in the year ended December 31, 2005. Cash
      provided in financing activities increased by $171.0 million from a use of
      $7.8
      million to a source of $163.2 million over the same comparative periods.





Cash
      provided by operations was $55.3 million during the year ended December 31,
      2005, while cash provided by operations was $49.0 million in the year ended
      December 31, 2004. This is mainly due to increased volume of business, as
      described in the Results of Operations section above, and collections of certain
      receivables at inVentiv Communications.





Cash
      used
      in investing activities was $196.1 million for the year ended December 31,
      2005
      compared to $45.5 million used during the same period in 2004. The Company
      paid
      approximately $172.5 million and $9.1 million in 2005 for the acquisitions
      of
      inChord and PRS, respectively, versus $6.7 million, $30.0 million, and $4.6
      million of purchase price for the acquisition of Franklin, Smith Hanley and
      HHI
      in 2004, both excluding acquisition costs. In 2005, the Company also paid
      approximately $5.2 million of cash relating to 2004 earn-outs, the majority
      of
      which was accrued at the end of 2004. The Company has existing letters of credit
      for insurance on its automobile fleet in its inVentiv Commercial business
      segment. Any changes in these letters of credit and changes in the principal
      of
      client escrow accounts constitute the increases in restricted cash.  These
      letters of credit have been fully cash collateralized by the Company in 2004
      and
      2005. In 2005, the Company entered into a Deferred Compensation Plan for certain
      key employees and funded the liability with a corporate-owned life insurance
      (“COLI”) program in a rabbi trust whereby it purchases life insurance policies
      covering the lives of certain employees, with the Company named as beneficiary.
      In 2005, the Company invested approximately $1.4 million in the COLI program.





Cash
      provided by financing activities was $163.2 million compared to cash used of
      $7.8 million for the years ended December 31, 2005 and 2004, respectively.
      The
      increase was primarily due to the activation of our credit agreement in
      connection with the acquisition of inChord. The Company received $6.8 million
      of
      proceeds from the exercise of stock options, versus $3.2 million for the year
      ended December 31, 2004. Also, the Company made capital lease payments of $14.6
      million and $11.0 million for the same periods in 2005 and 2004, respectively,
      mainly under the fleet lease agreement in its inVentiv Commercial business
      segment.




Our
      principal external source of liquidity is our syndicated, secured credit
      agreement, which we entered into with UBS AG, Stamford Branch, and others in
      connection with the inChord acquisition. The key features of this credit
      facility are as follows:






·
            A
                $175 million term loan facility was made available to inVentiv in
                a single
                drawing at the time of the inChord transaction. The credit agreement
                also
                includes a $50 million revolving credit facility, of which $5 million
                is
                available for the issuance of letters of credit, and a $5 million
                swingline facility.






·
            The
                term loan will mature on the sixth anniversary of the Credit Agreement,
                with scheduled quarterly amortization of 1% per year during years
                one
                through five and 95% during year six. The revolving loans will mature
                on
                the sixth anniversary of the Credit
                Agreement.






·
            Amounts
                advanced under the credit agreement must be prepaid with a percentage,
                determined based on a leverage test set forth in the credit agreement,
                of
                Excess Cash Flow (as defined in the credit agreement) and the proceeds
                of
                certain non-ordinary course asset sales and certain issuances of
                debt
                obligations or equity securities of inVentiv and its subsidiaries,
                subject
                to certain exceptions. We may elect to prepay the loans, in whole
                or in
                part at any time, in certain minimum principal amounts, without penalty
                or
                premium (other than normal LIBOR break funding costs). Amounts borrowed
                under the credit agreement that are repaid or prepaid may not be
                reborrowed.






·
            Interest
                on the loans accrue, at our election, at either (1) the Alternate
                Base
                Rate (which is the greater of UBS’s prime rate and federal funds effective
                rate plus 1/2 of 1%) or (2) the Adjusted LIBOR Rate, with interest
                periods
                determined at our option of 1, 2, 3 or 6 months (or, if the affected
                lenders agree, 9 months), in each case plus a spread based on the
                type of
                loan and method of interest rate determination
                elected.




·
            The
                credit agreement contains, among other things, conditions precedent,
                representations and warranties, covenants and events of default customary
                for facilities of this type. Such covenants include certain limitations
                on
                indebtedness, liens, sale-leaseback transactions, guarantees, fundamental
                changes, dividends, acquisitions and transactions with affiliates.
                The
                credit agreement also includes covenants under which we are required
                to
                maintain a maximum leverage ratio and minimum interest rate coverage
                and
                fixed charge coverage ratios that vary based on the amount of time
                elapsed
                since the initial extension of
                credit.




Effective
      October 2005, we entered into a three-year swap arrangement for $175 million
      to
      hedge against the six-year $175 million loan arrangement entered into to
      facilitate the acquisition of inChord. This arrangement is discussed more fully
      under Item 7A - Quantitative and Qualitative Disclosures About Market Risk.





We
      believe that our cash and equivalents, cash to be provided by operations and
      available credit under our credit facility will be sufficient to fund our
      current operating requirements over the next 12 months. However, we cannot
      assure you that these sources of liquidity will be sufficient to fund all
      internal growth initiatives, investments and acquisition activities that we
      may
      wish to pursue. If we pursue significant internal growth initiatives or if
      we
      wish to acquire additional businesses in transactions that include cash payments
      as part of the purchase price, we may pursue additional debt or equity sources
      to finance such transactions and activities, depending on market conditions.





**Commitments
      and Contractual Obligations**





A
      summary
      of our current contractual obligations and commercial commitments is as follows:





**(Amounts
                in thousands)**
            
            
            
            
            **Amounts
                Due In****Contractual
                Obligations**
            
            
            Total
                Obligation
            
            
            Less
                than 1 Year
            
            
            1
                - 3 years
            
            
            3
                -5 years
            
            More
                than 5 yearsLong
                term debt obligations (a)
            
            $
            231,773
            
            $
            12,506
            
            $
            24,688
            
            $
            65,933
            
            $
            128,646Capital
                lease obligations (b)
            
            
            31,417
            
            
            12,243
            
            
            17,254
            
            
            1,920
            
            
            --Operating
                leases (c)
            
            
            55,274
            
            
            12,185
            
            
            18,507
            
            
            11,592
            
            
            12,990Total
                obligations
            
            $
            318,464
            
            $
            36,934
            
            $
            60,449
            
            $
            79,445
            
            $
            141,636




18


(a)
            These
                future commitments represent the principal and interest payments
                under the
                $175 million term loan under our credit
                facility.


(b)
            These
                future commitments include interest and management fees, which are
                not
                recorded on the Consolidated Balance Sheet as of December 31, 2005
                but
                will be recorded as incurred.


(c)
            Operating
                leases include facility lease obligations in which the lease agreement
                may
                expire during the five-year period, but are expected to continue
                on a
                monthly basis beyond the lease term, as provided for in the leasing
                arrangements.





The
      acquisition agreements entered into in connection with our acquisitions include earn-out
      provisions pursuant to which the sellers will become entitled to additional
      consideration, which may be material, if the acquired businesses achieve
      specified performance measurements. See footnote 3 to our consolidated financial
      statements included in Part II, Item 8 of this Annual Report on Form
      10-K.





**Effect
      of Inflation**





Because
      of the relatively low level of inflation experienced in the United States,
      inflation did not have a material impact on our consolidated results of
      operations for 2005 or 2004.





**New
      Accounting Pronouncements**





On
      November 10, 2005, the Financial Accounting Standards Board (“FASB”) issued
      Interpretation No. 45-3,*Application
      of FASB Interpretation No. 45 to Minimum Revenue Guarantees Granted to a
      Business or Its Owners*(“FIN
      45-3”). FIN 45-3 amends FIN 45, Guarantor’s Accounting and Disclosure
      Requirements for Guarantees, Including Indirect Guarantees of Indebtedness
      of
      Others, to expand the scope to include guarantees granted to a business, such
      as
      a physician’s practice, or its owner(s), that the revenue of the business for a
      period will be at least a specified amount. Under FIN 45-3, the accounting
      requirements of FIN 45 are effective for any new revenue guarantees issued
      or
      modified on or after January 1, 2006 and the disclosure of all revenue
      guarantees, regardless of whether they were recognized under FIN 45, is required
      for all interim and annual periods beginning after January 1, 2006. We do
      not expect the adoption of FIN 45-3 to have a material impact on ourconsolidated
      balance sheets, consolidated income statements or consolidated statements of
      cash flows.





In
      June
      2005, the FASB issued
      Statement of Financial Account Standard (“SFAS”) No. 154, *Accounting
      Changes and Error Corrections* ,
      (“SFAS
      No.154”) a replacement of Accounting
      Principles Board ("APB") Opinion
      No. 20, *Accounting
      Changes* ,
      and
      Statement No. 3, *Reporting
      Accounting Changes in Interim Financial Statements* .
      SFAS
      No. 154 changes the requirements for the accounting for and the reporting of
      a
      change in accounting principle. Previously, most voluntary changes in accounting
      principles required recognition by recording a cumulative effect adjustment
      within net income in the period of change. SFAS No. 154 requires retrospective
      application to prior periods’ financial statements, unless it is impracticable
      to determine either the specific period effects or the cumulative effect of
      the
      change. SFAS No. 154 is effective for accounting changes made in fiscal years
      beginning after December 15, 2005. We do not expect the implementation of SFAS
      No. 154 to have an impact on our consolidated balance sheets, consolidated
      income statements or consolidated statements of cash flows.




In
      March
      2005, the SEC issued Staff Accounting Bulletin No. 107 (“SAB 107”) that provides
      additional guidance in applying the provisions of SFAS No. 123 (revised 2004), *Share-Based
      Payment* (“SFAS
      No. 123R”). SFAS No. 123R requires that compensation cost relating to
      share-based payment transactions be recognized in the financial statements
      based
      on the fair value of the equity or liability instruments issued. SFAS No. 123R
      covers a wide range of share-based compensation arrangements, including share
      options, restricted share plans, performance-based awards, share appreciation
      rights and employee share purchase plans. SAB 107 describes the SEC staff's
      expectations in determining the assumptions that underlie fair value estimates
      and discusses the interaction of SFAS No. 123R with certain existing SEC
      guidance. The provisions of SAB 107 will be applied upon adoption of SFAS No.
      123R. In April 2005, the SEC adopted a new rule that allows companies to
      implement SFAS No. 123R at the beginning of their next fiscal year, instead
      of
      the next reporting period that begins after June 15, 2005. As such, we are
      required to adopt SFAS No. 123R in our first quarter of 2006, beginning
      January 1, 2006. Under SFAS No. 123R, we must determine the appropriate
      fair value model to be used for valuing share-based payments, the amortization
      method for compensation cost and the transition method to be used at the date
      of
      adoption. The transition alternatives include prospective and retroactive
      adoption methods. Under the retroactive methods, prior periods may be restated
      either as of the beginning of the year of adoption or for all periods presented.
      The prospective method requires that compensation expense be recorded for all
      unvested stock options and share awards at the beginning of the first quarter
      of
      adoption of SFAS No. 123R, while the retroactive methods would record
      compensation expense for all unvested stock options and share awards beginning
      with the first period restated. We are evaluating the requirements of SFAS
      No. 123R and we expect that the adoption of SFAS No. 123R will have a
      material impact on our consolidated results of operations and earnings per
      share. We plan to continue to use the Black-Scholes model for stock compensation
      valuation. Based on grants of stock compensation issued through 2005, we
      estimate approximately $2.4 million (net of $1.6 million of taxes) of
      compensation relating to the expensing of stock options in 2006 and $1.0 million
      (net of $0.6 million of taxes) relating to the vesting of restricted shares.





In
      December 2004, the FASB issued SFAS No. 123R, which replaces SFAS
      No. 123, *Accounting
      for Stock-Based Compensation* (“SFAS
      No. 123”) and supercedes APB Opinion No. 25, *Accounting
      for Stock Issued to Employees* (“APB
      25”). SFAS No. 123R requires all share-based payments to employees,
      including grants of employee stock options, to be recognized in the financial
      statements based on their fair values, beginning with the first interim or
      annual period after December 31, 2005, with early adoption encouraged. In
      addition, SFAS No. 123R will cause unrecognized expense (based on the
      amounts in our pro forma footnote disclosure) related to options vesting after
      the date of initial adoption to be recognized as a charge to consolidated
      results of operations over the remaining vesting period.


19


**Item
      7A.*****Quantitative
      and Qualitative Disclosures About Market Risk.***





**Long-Term
      Debt Exposure**





At
      December 31, 2005, Ventiv had $174.6 million debt outstanding under its
      unsecured term loan. See Liquidity and Capital Resources section for further
      detail on inVentiv’s credit agreement. inVentiv will incur variable interest
      expense with respect to its outstanding loan. This interest rate risk may be
      partially offset by our derivative financial instrument, as described below.
      Based on our debt obligation outstanding at December 31, 2005, a hypothetical
      increase or decrease of 10% in the variable interest rate would have an
      immaterial effect on interest expense due to the fixed rate associated with
      the
      derivative financial instrument.





**Derivative
      Financial Instrument**





Effective
      October 2005, we entered into a three-year swap arrangement for $175 million
      to
      hedge against the six-year $175 million loan arrangement entered into to
      facilitate the acquisition of inChord. We entered into this interest rate swap
      agreement to modify the interest rate characteristics of our outstanding
      long-term debt and have designated this qualifying instrument as a cash flow
      hedge. At hedge inception, and at least quarterly thereafter, we assess whether
      derivatives used to hedge transactions are highly effective in offsetting
      changes in the cash flow of the hedged item. To the extent the instruments
      are
      considered to be effective, changes in fair value are recorded as a component
      of
      other comprehensive income (loss). To the extent there is any hedge
      ineffectiveness, changes in fair value relating to the ineffective portion
      are
      immediately recognized in earnings (interest expense).





For
      the
      year ended December 31, 2005, we recorded a $0.3 million reduction to interest
      expense relating to the mark-to-market adjustment required to record hedge
      ineffectiveness to earnings, and a corresponding derivative asset of
      approximately $0.3 million, which was recorded as Deposits and Other Assets
      on
      the December 31, 2005 consolidated balance sheet. The fair values of our
      interest rate swaps are obtained from dealer quotes. These values represent
      the
      estimated amount we would receive or pay to terminate the agreement taking
      into
      consideration the difference between the contract rate of interest and rates
      currently quoted for agreements of similar terms and maturities.





**Foreign
      Currency Exchange Rate Exposure**





inVentiv
      is not currently affected by foreign currency exchange rate exposure, except
      for
      any fluctuations in the foreign bank accounts remaining from the divestitures
      of
      inVentiv’s European business units and our equity investments and minority
      interests in inVentiv Communications’ foreign business units, which are not
      material to our financial statements. At December 31, 2005, the accumulated
      other comprehensive earnings was approximately $0.2 million.





20


**Item
      8.*****Financial
      Statements and Supplementary Data.***





**INDEX
      TO FINANCIAL STATEMENTS**





Report
                of ManagementReport
                of Independent Registered Public Accounting FirmConsolidated
                Balance Sheets as of December 31, 2005 and 2004Consolidated
                Statements of Operations for the years ended December 31, 2005, 2004
                and
                2003Consolidated
                Statements of Stockholders' Equity for the years ended December 31,
                2005,
                2004, and 2003Consolidated
                Statements of Cash Flows for the years ended December 31, 2005, 2004
                and
                2003Notes
                to Consolidated Financial Statements





21


**REPORT
      OF MANAGEMENT**






**Management's
      Report on Financial Statements**




Our
      management is responsible for the preparation, integrity and fair presentation
      of information in our consolidated financial statements, including estimates
      and
      judgments. The consolidated financial statements presented in this report have
      been prepared in accordance with accounting principles generally accepted in
      the
      United States of America. Our management believes the consolidated financial
      statements and other financial information included in this report fairly
      present, in all material respects, our consolidated financial condition,
      consolidated results of operations and consolidated cash flows as of and for
      the
      periods presented in this report. The consolidated financial statements have
      been audited by Deloitte & Touche LLP, an independent registered public
      accounting firm, as stated in their report, which is included herein.




**Management's
      Report on Internal Control Over Financial Reporting**




Our
      management is responsible for establishing and maintaining an adequate system
      of
      internal control over financial reporting. Our system of internal control over
      financial reporting is designed to provide reasonable assurance regarding the
      reliability of financial reporting and the preparation of financial statements
      for external purposes in accordance with accounting principles generally
      accepted in the United States of America.




Our
      internal control over financial reporting includes those policies and procedures
      that:




•
pertain
      to the maintenance of records that, in reasonable detail, accurately and fairly
      reflect our transactions and dispositions of our assets;


•
provide
      reasonable assurance that our transactions are recorded as necessary to permit
      preparation of our consolidated financial statements in accordance with
      accounting principles generally accepted in the United States of America, and
      that our receipts and expenditures are being made only in accordance with
      authorizations of our management and our directors; and


•
provide
      reasonable assurance regarding prevention or timely detection of unauthorized
      acquisition, use, or disposition of our assets that could have a material effect
      on the consolidated financial statements.





Our
      management, including the Chief Executive Officer and Chief Financial Officer,
      does not expect that our internal control over financial reporting will prevent
      or detect all error and all fraud. A control system, no matter how well designed
      and operated, can provide only reasonable, not absolute, assurance that the
      control system’s objectives will be met. The design of a control system must
      reflect the fact that there are resource constraints, and the benefits of
      controls must be considered relative to their costs. Further, because of the
      inherent limitations in all control systems, no evaluation of controls can
      provide absolute assurance that misstatements due to error or fraud will not
      occur or that all control issues and instances of fraud, if any, within the
      company have been detected. The design of any system of controls is based in
      part on certain assumptions about the likelihood of future events, and there
      can
      be no assurance that any design will succeed in achieving its stated goals
      under
      all potential future conditions. Projections of any evaluation of controls
      effectiveness to future periods are subject to risks. Over time, controls may
      become inadequate because of changes in conditions or deterioration in the
      degree of compliance with policies or procedures. Our system contains self
      monitoring mechanisms, and actions are taken to correct deficiencies as they
      are
      identified.





Our
      management conducted an evaluation of the effectiveness of the system of
      internal control over financial reporting based on the framework in *Internal
      Control—Integrated Framework* issued
      by
      the Committee of Sponsoring Organizations of the Treadway Commission. Our
      assessment excludes the PRS and inChord businesses we acquired in 2005 as
      allowed under the rules and clarifications provided by the Securities and
      Exchange Commission and the Public Company Accounting Oversight Board (United
      States). The financial statements of these acquired businesses constitute 9%
      and
      45% of revenues and total assets, respectively, of the consolidated financial
      statement amounts as of and for the year ended December 31, 2005. Based on
      this
      evaluation, our management concluded that our system of internal control over
      financial reporting was effective as of December 31, 2005. Our management's
      assessment of the effectiveness of our internal control over financial reporting
      has been audited by Deloitte & Touche LLP, an independent registered
      public accounting firm, as stated in their report which is included herein.






22




**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**





Board
      of
      Directors and Stockholders of Ventiv Health, Inc.


Somerset,
      New Jersey





We
      have
      audited the accompanying consolidated balance sheets of Ventiv Health, Inc.
      and
      subsidiaries (the "Company") as of December 31, 2005 and 2004, and the
      related consolidated statements of operations, stockholders' equity and cash
      flows for each of the three years in the period ended December 31, 2005.
      Our audits also included the financial statement schedule listed in the Index
      at
      Item 15. We also have audited management's assessment, included in the
      accompanying *Management's
      Report on Internal Control Over Financial Reporting* ,
      that
      the Company maintained effective internal control over financial reporting
      as of
      December 31, 2005, based on criteria established in *Internal
      Control—Integrated Framework* issued
      by
      the Committee of Sponsoring Organizations of the Treadway Commission. As
      described in *Management's
      Report on Internal Control Over Financial Reporting* ,
      management excluded from their assessment the internal control over financial
      reporting at Pharmaceutical Resource Solutions LLC (“PRS”) and inChord
      Communications, Inc. (“inChord”), which were acquired in August and October
      2005, respectively, and whose financial statements reflect total assets and
      revenues constituting 45% and 9% of the related consolidated financial statement
      amounts as of and for the year ended December 31, 2005. Accordingly, our audit
      did not include the internal control over financial reporting at PRS and
      inChord. The Company's management is responsible for these consolidated
      financial statements and financial statement schedule, for maintaining effective
      internal control over financial reporting, and for its assessment of the
      effectiveness of internal control over financial reporting. Our responsibility
      is to express an opinion on these consolidated financial statements and
      financial statement schedule, an opinion on management's assessment, and an
      opinion on the effectiveness of the Company's internal control over financial
      reporting based on our audits.





We
      conducted our audits in accordance with the standards of the Public Company
      Accounting Oversight Board (United States). Those standards require that we
      plan
      and perform the audit to obtain reasonable assurance about whether the
      consolidated financial statements are free of material misstatement and whether
      effective internal control over financial reporting was maintained in all
      material respects. Our audit of the consolidated financial statements included
      examining, on a test basis, evidence supporting the amounts and disclosures
      in
      the consolidated financial statements, assessing the accounting principles
      used
      and significant estimates made by management, and evaluating the overall
      consolidated financial statement presentation. Our audit of internal control
      over financial reporting included obtaining an understanding of internal control
      over financial reporting, evaluating management's assessment, testing and
      evaluating the design and operating effectiveness of internal control, and
      performing such other procedures as we considered necessary in the
      circumstances. We believe that our audits provide a reasonable basis for our
      opinions.





A
      company's internal control over financial reporting is a process designed by,
      or
      under the supervision of, the company's principal executive and principal
      financial officers, or persons performing similar functions, and effected by
      the
      company's board of directors, management, and other personnel to provide
      reasonable assurance regarding the reliability of financial reporting and the
      preparation of financial statements for external purposes in accordance with
      generally accepted accounting principles. A company's internal control over
      financial reporting includes those policies and procedures that (1) pertain
      to the maintenance of records that, in reasonable detail, accurately and fairly
      reflect the transactions and dispositions of the assets of the company;
      (2) provide reasonable assurance that transactions are recorded as
      necessary to permit preparation of financial statements in accordance with
      generally accepted accounting principles and that receipts and expenditures
      of
      the company are being made only in accordance with authorizations of management
      and directors of the company; and (3) provide reasonable assurance
      regarding prevention or timely detection of unauthorized acquisition, use,
      or
      disposition of the company's assets that could have a material effect on the
      financial statements.





Because
      of the inherent limitations of internal control over financial reporting,
      including the possibility of collusion or improper management override of
      controls, material misstatements due to error or fraud may not be prevented
      or
      detected on a timely basis. Also, projections of any evaluation of the
      effectiveness of the internal control over financial reporting to future periods
      are subject to the risk that the controls may become inadequate because of
      changes in conditions, or that the degree of compliance with the policies or
      procedures may deteriorate.





In
      our
      opinion, the consolidated financial statements referred to above present fairly,
      in all material respects, the consolidated financial position of the Company
      as
      of December 31, 2005 and 2004, and the results of its operations and its
      cash flows for each of the three years in the period ended December 31,
      2005, in conformity with accounting principles generally accepted in the United
      States of America. Also, in our opinion, such financial statement schedule,
      when
      considered in relation to basic consolidated financial statements taken as
      a
      whole, presents fairly, in all material respects, the information set forth
      therein. Also, in our opinion, management's assessment that the Company
      maintained effective internal control over financial reporting as of
      December 31, 2005, is fairly stated, in all material respects, based on the
      criteria established in *Internal
      Control—Integrated Framework* issued
      by
      the Committee of Sponsoring Organizations of the Treadway Commission.
      Furthermore, in our opinion, the Company maintained, in all material respects,
      effective internal control over financial reporting as of December 31,
      2005, based on the criteria established in *Internal
      Control—Integrated Framework* issued
      by
      the Committee of Sponsoring Organizations of the Treadway Commission.





As
      discussed in Note 2, during 2005, the Company changed the presentation of its
      consolidated statements of cash flows to separately present the cash flows
      from
      operating, investing and financing activities of discontinued operations within
      the respective categories of operating, investing and financing activities
      of
      the Company and retroactively revised the consolidated statements of cash flows
      for the years ended December 31, 2004 and 2003 for the change.








/s/
      Deloitte & Touche LLP


Parsippany,
      New Jersey


March
      14,
      2006




23


**VENTIV
      HEALTH, INC.**





**CONSOLIDATED
      BALANCE SHEETS**


**(in
      thousands, except share amounts)**








December
                31,2005
            
            
            2004**ASSETS**Current
                assets:Cash
                and equivalents
            
            $
            73,102
            
            $
            50,809Restricted
                cash
            
            
            3,878
            
            
            2,488Accounts
                receivable, net of allowances for doubtful accounts of $3,979 and
                $1,980
                atDecember
                31, 2005 and 2004, respectively
            
            
            112,782
            
            
            56,534Unbilled
                services
            
            
            41,206
            
            
            36,130Prepaid
                expenses and other current assets
            
            
            5,737
            
            
            2,755Current
                deferred tax assets
            
            
            4,029
            
            
            8,226Total
                current assets
            
            
            240,734
            
            
            156,942Property
                and equipment, net
            
            
            36,637
            
            
            40,226Equity
                investments
            
            
            5,183
            
            
            --Goodwill
            
            
            173,777
            
            
            64,823Other
                intangibles, net
            
            
            117,606
            
            
            21,370Deferred
                tax assets
            
            
            3,428
            
            
            3,583Deposits
                and other assets
            
            
            6,529
            
            
            508Total
                assets
            
            $
            583,894
            
            $
            287,452**LIABILITIES
                AND STOCKHOLDERS’ EQUITY**Current
                liabilities:Current
                portion of capital lease obligations
            
            $
            10,859
            
            $
            12,004Current
                portion of long-term debt
            
            
            1,750
            
            
            --Accrued
                payroll, accounts payable and accrued expenses
            
            
            77,816
            
            
            56,076Current
                income tax liabilities
            
            
            7,359
            
            
            12,113Client
                advances and unearned revenue
            
            
            29,393
            
            
            9,184Total
                current liabilities
            
            
            127,177
            
            
            89,377Capital
                lease obligations
            
            
            17,695
            
            
            24,898Long-term
                debt
            
            
            172,813
            
            
            --Other
                non-current liabilities
            
            
            12,994
            
            
            733Total
                liabilities
            
            
            330,679
            
            
            115,008Commitments
                and contingenciesMinority
                interests
            
            
            (4
            )
            
            --Stockholders’
                Equity:Preferred
                stock, $.001 par value, 10,000,000 shares authorized, none issued
                and
                outstanding atDecember
                31, 2005 and 2004, respectively
            
            
            --
            
            
            --Common
                stock, $.001 par value, 50,000,000 shares authorized; 27,862,436
                and
                25,705,012Shares
                issued and outstanding at December 31, 2005 and 2004,
                respectively
            
            
            28
            
            
            26Additional
                paid-in-capital
            
            
            233,441
            
            
            193,061Deferred
                compensation
            
            
            (3,563
            )
            
            (420
            )Accumulated
                other comprehensive income
            
            
            221
            
            
            320Accumulated
                earnings (deficit)
            
            
            23,092
            
            
            (20,543
            )Total
                stockholders’ equity
            
            
            253,219
            
            
            172,444Total
                liabilities and stockholders’ equity
            
            $
            583,894
            
            $
            287,452





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


24


**VENTIV
      HEALTH, INC.**





**CONSOLIDATED
      STATEMENTS OF OPERATIONS**


**(in
      thousands, except per share amounts)**





For
                    the Years Ended December 31,2005
                
                2004
                
                2003Revenues
                
                $
                556,312
                
                $
                352,184
                
                $
                224,453Operating
                    expenses:Cost
                    of services
                
                
                417,025
                
                
                279,733
                
                
                182,658Selling,
                    general and administrative expenses
                
                
                79,313
                
                
                38,539
                
                
                26,223Other
                    operating income
                
                
                --
                
                
                (264
                )
                
                (392
                )Total
                    operating expenses
                
                
                496,338
                
                
                318,008
                
                
                208,489Operating
                    income
                
                
                59,974
                
                
                34,176
                
                
                15,964Interest
                    expense
                
                
                (3,955
                )
                
                (922
                )
                
                (549
                )Interest
                    income
                
                
                1,409
                
                
                678
                
                
                413Income
                    from continuing operations before income tax provision, minority
                    interest
                    in
                  income
                    of subsidiary and income from equity investments
                
                
                57,428
                
                
                33,932
                
                
                15,828Income
                    tax provision
                
                
                (14,229
                )
                
                (3,802
                )
                
                (5,933
                )Income
                    from continuing operations before minority interest in income
                    of
                    subsidiary and
                  income
                    from equity investments
                
                
                43,199
                
                
                30,130
                
                
                9,895Minority
                    interest in income of subsidiaries
                
                
                (224
                )
                
                --
                
                
                --Equity
                    earnings in investments
                
                
                107
                
                
                --
                
                
                --Income
                    from continuing operations
                
                
                43,082
                
                
                30,130
                
                
                9,895Income
                    (losses) from discontinued operations:Losses
                    from discontinued operations, net of tax expense of $63 for
                    the
                  year
                    ended December 31, 2003
                
                
                --
                
                
                --
                
                
                (4,092
                )Gains
                    (losses) on disposals of discontinued operations, net of tax
                    (expense)benefit of
                  ($442),
                    ($547), and $2,056 for the years ended December 31, 2005, 2004
                    and
                  2003,
                    respectively
                
                
                781
                
                
                1,002
                
                
                (4,406
                )Tax
                    benefit related to the disposal of a discontinued
                    operation
                
                
                --
                
                
                --
                
                
                4,379Income
                    (losses) from discontinued operations
                
                
                781
                
                
                1,002
                
                
                (4,119
                )Net
                    income
                
                $
                43,863
                
                $
                31,132
                
                $
                5,776Earnings
                    (losses) per share:Continuing
                    operations:Basic
                
                $
                1.60
                
                $
                1.26
                
                $
                0.43Diluted
                
                $
                1.53
                
                $
                1.18
                
                $
                0.42Discontinued
                    operations:Basic
                
                $
                0.03
                
                $
                0.04
                
                $
                (0.18
                )Diluted
                
                $
                0.03
                
                $
                0.04
                
                $
                (0.18
                )Net
                    income:Basic
                
                $
                1.63
                
                $
                1.30
                
                $
                0.25Diluted
                
                $
                1.56
                
                $
                1.22
                
                $
                0.24Weighted
                    average common shares outstanding:Basic
                
                
                26,875
                
                
                23,951
                
                
                22,919Diluted
                
                
                28,165
                
                
                25,437
                
                
                23,801





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




25


**VENTIV
      HEALTH, INC.**





**CONSOLIDATED
      STATEMENTS OF STOCKHOLDERS' EQUITY**


**For
      the years ended December 31, 2005, 2004 and 2003**


**(in
      thousands)**





Common
                Stock
            
            Additional
                Paid-In
              Capital
            
            Accumulated
                earnings/
              (deficit)
            
            Deferred
                Compen-
              Sation
            
            Compre-hensive
              Income
              (Losses)
            
            Accumulated
                Other Comprehen-sive Income (Losses)
            
            TotalBalance
                at January 1, 2003
            
            $
            23
            
            $
            158,619
            
            $
            (57,451
            )
            $
            (457
            )
            
            
            
            $
            (4,288
            )
            $
            96,446Net
                income
            
            
            --
            
            
            --
            
            
            5,776
            
            
            --
            
            $
            5,776
            
            
            --
            
            
            5,776Foreign
                currency translation
              Adjustment
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            (1,913
            )
            
            (1,913
            )
            
            (1,913
            )Write-off
                of currency translation
              adjustments
                from divestitures
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            6,304
            
            
            6,304
            
            
            6,304$
            10,167Vesting
                of restricted shares
            
            
            --
            
            
            --
            
            
            --
            
            
            397
            
            
            
            
            
            --
            
            
            397Exercise
                of stock options
            
            
            --
            
            
            555
            
            
            --
            
            
            --
            
            
            
            
            
            --
            
            
            555Issuance
                of restricted shares
            
            
            --
            
            
            85
            
            
            --
            
            
            (85
            )
            
            
            
            
            --
            
            
            --Tax
                benefit from exercise of employee stock options and vesting of restricted
                stock
            
            
            --
            
            
            345
            
            
            --
            
            
            --
            
            
            
            
            
            --
            
            
            345Executive
                share surrender
            
            
            --
            
            
            (185
            )
            
            --
            
            
            --
            
            
            
            
            
            --
            
            
            (185
            )Other
            
            
            --
            
            
            (60
            )
            
            --
            
            
            60
            
            
            
            
            
            --
            
            
            --Balance
                at December 31, 2003
            
            
            23
            
            
            159,359
            
            
            (51,675
            )
            
            (85
            )
            
            
            
            
            103
            
            
            107,725Net
                income
            
            
            --
            
            
            --
            
            
            31,132
            
            
            --
            
            $
            31,132
            
            
            --
            
            
            31,132Foreign
                currency translation
              Adjustment
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            217
            
            
            217
            
            
            217$
            31,349Vesting
                of restricted shares
            
            
            --
            
            
            --
            
            
            --
            
            
            64
            
            
            
            
            
            --
            
            
            64Compensation
                expense
            
            
            --
            
            
            74
            
            
            --
            
            
            --
            
            
            
            
            
            --
            
            
            74Exercise
                of stock options
            
            
            2
            
            
            3,196
            
            
            --
            
            
            --
            
            
            
            
            
            --
            
            
            3,198Issuance
                of restricted shares
            
            
            --
            
            
            399
            
            
            --
            
            
            (399
            )
            
            
            
            
            --
            
            
            --Tax
                benefit from exercise of employee stock options and vesting of restricted
                stock
            
            
            --
            
            
            4,493
            
            
            --
            
            
            --
            
            
            
            
            
            --
            
            
            4,493Issuance
                of shares in connection with acquisitions
            
            
            1
            
            
            25,540
            
            
            --
            
            
            --
            
            
            
            
            
            --
            
            
            25,541Balance
                at December 31, 2004
            
            
            26
            
            
            193,061
            
            
            (20,543
            )
            
            (420
            )
            
            
            
            
            320
            
            
            172,444Net
                income
            
            
            --
            
            
            --
            
            
            43,863
            
            
            --
            
            $
            43,863
            
            
            --
            
            
            43,863Foreign
                currency translation
              Adjustment
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            (99
            )
            
            (99
            )
            
            (99
            )$
            43,764Vesting
                of restricted shares
            
            
            --
            
            
            --
            
            
            --
            
            
            694
            
            
            
            
            
            --
            
            
            694Compensation
                expense
            
            
            --
            
            
            435
            
            
            --
            
            
            --
            
            
            
            
            
            --
            
            
            435Exercise
                of stock options
            
            
            1
            
            
            6,831
            
            
            --
            
            
            --
            
            
            
            
            
            --
            
            
            6,832Issuance
                of restricted shares
            
            
            --
            
            
            3,858
            
            
            --
            
            
            (3,858
            )
            
            
            
            
            --
            
            
            --Cancellation
                of restricted shares
            
            
            --
            
            
            (21
            )
            
            --
            
            
            21
            
            
            
            
            
            --
            
            
            --Tax
                benefit from exercise of employee stock options and vesting of restricted
                stock
            
            
            --
            
            
            9,772
            
            
            --
            
            
            --
            
            
            
            
            
            --
            
            
            9,772Issuance
                of shares in connection with acquisitions
            
            
            1
            
            
            19,505
            
            
            --
            
            
            --
            
            
            
            
            
            --
            
            
            19,506Cash
                distribution TSP
            
            
            --
            
            
            --
            
            
            (228
            )
            
            --
            
            
            
            
            
            --
            
            
            (228
            )Balance
                at December 31, 2005
            
            $
            28
            
            $
            233,441
            
            $
            23,092
            
            $
            (3,563
            )
            
            
            
            $
            221
            
            $
            253,219








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


26


**VENTIV
      HEALTH, INC.**


**CONSOLIDATED
      STATEMENTS OF CASH FLOWS**


**(in
      thousands)**





**For
                the Years Ended****December
                31,****2005**
            
            **2004**
            
            **2003**Cash
                flows from operating activities:
            
            
            
            (Revised)(1)
            
            (Revised)(1)Net
                income from continuing operations
            
            $
            43,082
            
            $
            30,130
            
            $
            9,895Adjustments
                to reconcile net income to net cash provided by operating
                activities:Depreciation
            
            
            15,491
            
            
            15,602
            
            
            9,485Amortization
            
            
            1,934
            
            
            306
            
            
            19Earnings
                of equity investments
            
            
            (107
            )
            
            --
            
            
            --Minority
                interest in income of TSP
            
            
            224
            
            
            --
            
            
            --Fair
                market value adjustment on derivative financial instrument
            
            
            (269
            )
            
            --
            
            
            --Deferred
                taxes
            
            
            4,352
            
            
            (4,711
            )
            
            2,316Gain
                on sale of real estate
            
            
            --
            
            
            --
            
            
            (392
            )Stock
                compensation expense
            
            
            694
            
            
            138
            
            
            397Tax
                benefit from stock option exercises and vesting of restricted
                shares
            
            
            9,772
            
            
            4,493
            
            
            345Executive
                share surrender
            
            
            --
            
            
            --
            
            
            (185
            )Changes
                in assets and liabilities, net of effects from discontinued
                operations:Accounts
                receivable, net
            
            
            (20,204
            )
            
            (1,186
            )
            
            (13,140
            )Unbilled
                services
            
            
            10,348
            
            
            (9,522
            )
            
            (6,800
            )Prepaid
                expenses and other current assets
            
            
            6,521
            
            
            (1,208
            )
            
            280Accrued
                payroll, accounts payable and accrued expenses
            
            
            (6,401
            )
            
            8,413
            
            
            3,926Current
                income tax liabilities
            
            
            (4,754
            )
            
            2,948
            
            
            5,886Client
                advances and unearned revenue
            
            
            (8,186
            )
            
            4,286
            
            
            1,134Other
            
            
            3,757
            
            
            397
            
            
            341Net
                cash provided by continuing operations
            
            
            56,254
            
            
            50,086
            
            
            13,507Net
                cash (used in) provided by discontinued operations
            
            
            (951
            )
            
            (1,125
            )
            
            2,879Net
                cash provided by operating activities
            
            
            55,303
            
            
            48,961
            
            
            16,386Cash
                flows from investing activities:Restricted
                cash balances
            
            
            (1,332
            )
            
            (816
            )
            
            22Investment
                in cash value of life insurance policies
            
            
            (1,382
            )
            
            --
            
            
            --Cash
                paid for acquisitions, net of cash acquired
            
            
            (187,002
            )
            
            (44,943
            )
            
            --Acquisition
                earn-out payments
            
            
            (5,181
            )
            
            --
            
            
            --Equity
                investments
            
            
            (115
            )
            
            --
            
            
            --Purchases
                of property and equipment
            
            
            (5,936
            )
            
            (5,697
            )
            
            (3,642
            )Proceeds
                from manufacturers rebates on leased vehicles
            
            
            3,093
            
            
            3,799
            
            
            1,478Proceeds
                from sale of real estate
            
            
            --
            
            
            --
            
            
            1,099Net
                cash used in continuing operations
            
            
            (197,855
            )
            
            (47,657
            )
            
            (1,043
            )Net
                cash provided by discontinued operations
            
            
            1,732
            
            
            2,141
            
            
            1,280Net
                cash (used in) provided by investing activities
            
            
            (196,123
            )
            
            (45,516
            )
            
            237Cash
                flows from financing activities:Borrowings
                on credit agreement
            
            
            175,000
            
            
            --
            
            
            --Repayments
                on credit agreement
            
            
            (437
            )
            
            --
            
            
            --Repayments
                of capital lease obligations
            
            
            (14,624
            )
            
            (11,021
            )
            
            (6,354
            )Fees
                to establish credit agreement
            
            
            (3,330
            )
            
            --
            
            
            --Proceeds
                from exercise of stock options
            
            
            6,831
            
            
            3,198
            
            
            555Distributions
                to minority interests in affiliated partnership
            
            
            (228
            )
            
            --
            
            
            --Net
                cash provided by continuing operations
            
            
            163,212
            
            
            (7,823
            )
            
            (5,799
            )Net
                cash provided by discontinued operations
            
            
            --
            
            
            --
            
            
            --Net
                cash provided by (used in) financing activities
            
            
            163,212
            
            
            (7,823
            )
            
            (5,799
            )Effect
                of exchange rate changes
            
            
            (99
            )
            
            217
            
            
            (1,913
            )Net
                increase (decrease) in cash and equivalents
            
            
            22,293
            
            
            (4,161
            )
            
            8,911Cash
                and equivalents, beginning of year
            
            
            50,809
            
            
            54,970
            
            
            46,059Cash
                and equivalents, end of year
            
            $
            73,102
            
            $
            50,809
            
            $
            54,970Supplemental
                disclosures of cash flow information:Cash
                paid for interest
            
            $
            4,090
            
            $
            857
            
            $
            352Cash
                paid for income taxes
            
            $
            5,296
            
            $
            1,641
            
            $
            462Supplemental
                disclosure of non-cash activities:Vehicles
                acquired through capital lease agreements
            
            $
            10,845
            
            $
            16,581
            
            $
            19,463Vehicles
                disposed through capital lease agreements
            
            $
            1,232
            
            
            --
            
            
            --Stock
                issuance related to acquisitions
            
            $
            19,506
            
            $
            25,541
            
            
            --


(1)
            See
                footnote 2 for further details.





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





27


**VENTIV
      HEALTH, INC.**


**Notes
      to Consolidated Financials Statements**





**1.
      Organization and Business:**





Ventiv
      Health Inc. (together with its subsidiaries, “Ventiv”, or the “Company”) is a
      leading provider of value-added services to the pharmaceutical and life sciences
      industries. We support a broad range of clinical development, communications
      and
      commercialization activities that are critical to our customers' ability to
      complete the development of new drug products and medical devices and
      successfully bring them to market. Our goal is to assist our customers in
      meeting their objectives in each of these areas by providing our services on
      a
      flexible and cost-effective basis. We provide services to over 150 client
      organizations, including 18 of the top 20 global pharmaceutical companies and
      numerous emerging and specialty biotechnology companies.





Our
      service offerings reflect the changing needs of our clients as their products
      move through the late-stage development and regulatory approval processes and
      into product launch. We have established expertise and leadership in providing
      the services our clients require at each of these stages of product development
      and commercialization and seek to address their outsourced service needs on
      a
      comprehensive basis throughout the product life cycle.





We
      provide our services through a portfolio of subsidiary companies that have
      historically conducted their operations as "Ventiv Health, Inc." As of the
      date
      of this report, we have changed our corporate brand name to inVentiv Health,
      Inc. as part of a re-branding initiative that began when we acquired inChord
      Communications, Inc. ("inChord"), a healthcare marketing and communications
      company, in October 2005. The legal name change will be effected following
      our
      annual shareholders meeting in June 2006, subject to receipt of stockholder
      approval.





*Business
      Segments*





We
      currently serve our clients primarily through three business segments, which
      correspond to our reporting segments for 2005:





·
            inVentiv
                Clinical,
                which provides services related to permanent placement, clinical
                staffing,
                data collection and management and functional service provision.
                This
                segment was initially built through several businesses that were
                acquired
                in the fourth quarter of 2004: the Smith Hanley group of companies
                (which
                includes Smith Hanley Associates, Smith Hanley Consulting Group and
                MedFocus) and HHI Clinical & Statistical Research Services (“HHI”).





·
            inVentiv
                Communications,
                which provides services related to pharmaceutical advertising, branding,
                interactive communication development and patient and physician education.
                This segment includes inChord and Adheris, Inc. ("Adheris"), a patient
                compliance and persistence communications company, which we acquired
                in
                the first quarter of 2006, as more fully discussed below.





·
            inVentiv
                Commercial,
                which consists of our outsourced sales and marketing teams, planning
                and
                analytics services, sample accountability and patient assistance
                businesses, marketing support services, professional development
                and
                training, and recruitment of sales representatives in the commercial
                services area.





Our
      services are designed to develop, execute and monitor strategic and tactical
      sales and marketing plans and programs for the promotion of pharmaceutical,
      biotechnology and other life sciences products.





**2.
      Summary of Significant Accounting Policies:**





*Basis
      of Presentation*





The
      consolidated financial statements include the accounts of Ventiv Health, Inc.,
      its wholly owned subsidiaries and its 53% owned subsidiary, Taylor Search
      Partners (“TSP”), which was acquired in conjunction with the acquisition of
      inChord. Our continuing operations consist primarily of three business segments:
      in Ventiv
      Clinical, inVentiv Communications and inVentiv Commercial. All
      significant intercompany transactions have been eliminated in
      consolidation.




As
      a
      result of the acquisition of inChord, we have a 15% ownership interest in Heart
      Reklambyra AB (“Heart”), an advertising agency located in Sweden and a 44%
      interest in Angela Liedler GmbH (“Liedler”), a service provider of communication
      and marketing tools for technical, medical and pharmaceutical products, located
      in Germany. Both of these investments are accounted for by using the equity
      method of accounting.





In
      December 2005, we entered into an exclusive joint venture agreement with SIRO
      Clinpharm Pvt. Ltd., India's largest domestic contract research organization,
      to
      offer pharmaceutical companies India-based clinical data management services.
      This project is in the development stage and has not commenced providing client
      services.





*Consolidated
      Statements of Cash Flows*





During
      2005, the Company changed the presentation of its consolidated statements of
      cash flows to separately present the cash flows from discontinued operations
      within the categories of operating, investing and financing activities. In
      addition, the Company has corrected the classification of changes in restricted
      cash balances previously included within operating activities and financing
      activities to properly reflect such changes within investing activities. A
      summary of the effects of the change in presentation on the consolidated
      statements of cash flows for the years ended December 31, 2004 and 2003 is
      as
      follows:





Year
                Ended December 31,*(in
                thousands)*
            
            2004
            
            2003Net
                cash flows provided by operating activities as previously
                reported
            
            $
            50,270
            
            $
            14,317Change
                in net cash flows from discontinued operations
            
            
            (1,125
            )
            
            2,879Changes
                in net cash flows from restricted cash balances
            
            
            (184
            )
            
            (810
            )Net
                cash flows provided by operating activities as currently
                reported
            
            $
            48,961
            
            $
            16,386Net
                cash flows (used in) provided by investing activities as previously
                reported
            
            $
            (44,700
            )
            $
            215Changes
                in net cash flows from restricted cash balances
            
            
            (816
            )
            
            22Net
                cash flows (used in) provided by investing activities as currently
                reported
            
            $
            (45,516
            )
            $
            237Net
                cash flows used in financing activities as previously
                reported
            
            $
            (8,823
            )
            $
            (6,587
            )Changes
                in net cash flows from restricted cash balances
            
            
            1,000
            
            
            788Net
                cash flows used in financing activities as currently
                reported
            
            $
            (7,823
            )
            $
            (5,799
            )





28


*Cash
      and Equivalents*





Cash
      and
      equivalents are comprised principally of amounts in operating accounts, money
      market investments and other short-term instruments. These accounts are stated
      at cost, which approximates market value, and have original maturities of three
      months or less. Approximately $0.1 million and $0.7 million were held in escrow
      on behalf of clients and included in restricted cash at December 31, 2005 and
      2004, respectively.





*Revenue
      Recognition*





Here
      is a
      summary of our revenue recognition policy, based on the segment and services
      we
      provide:





**inVentiv
      Clinical**





·
            Clinical
                Staffing-
                Revenues from temporary personnel services, outsourcing and outplacement
                are recorded when services are rendered.





·
            Clinical
                Analysis and Data Management-
                Revenues are mainly achieved and recorded based on milestones, depending
                on the terms of the contracts.





·
            Executive
                Placement-
                Permanent placement services revenues are recorded at the time a
                candidate
                begins full-time employment. Any write-offs due to cancellations
                and/or
                billing adjustments historically have been insignificant.





**inVentiv
      Communications**





·
            Advertising
                and Communication support-
                Retainer revenue is recognized under the proportional performance
                method,
                by relating the actual hours of work performed to date to the current
                estimated total hours of the respective projects. Any anticipated
                losses
                on projects are recognized when such losses are anticipated. Time
                and
                production billings are billed as incurred for actual time and
                expenses.





·
            Branding
                Consultation-
                Revenues are mainly based on fee for service, based on the
                contract.





·
            Patient
                and Physician Education-
                For its meeting and event services business, we use either the completed
                contract method or bases revenue recognition on defined milestones,
                depending on the terms of the specific
                contracts.





·
            Interactive
                Communication Development-
                Time and production billings are billed as incurred for actual time
                and
                expenses.




**inVentiv
      Commercial**





·
            Sales
                and Marketing Teams-
                Revenues and associated costs under pharmaceutical detailing contracts
                are
                generally based on the number of physician calls made or the number
                of
                sales representatives utilized. Most of our Sales and Marketing Teams’
                contracts involve two phases, a “deployment phase”, typically three
                months, in which we perform initial recruiting, training and preparation
                for deployment of the field force at the start of a new contract,
                and the
                “Promotion phase” in which our deployed field force actively promotes
                specified products for clients through face-to-face interactions
                with
                physicians referred to as “detailing”.





Most
      of
      our Ventiv Pharma Teams contracts specify a separate fee for the initial
“deployment phase” of a project. We consider the deployment phase to be a
      separate and distinct earnings process and recognize the related revenues
      throughout the deployment phase, which typically spans a period of two to three
      months at the beginning of the first year of a contract. We generally recognize
      revenue during the “promotion phase” of our Ventiv Pharma Teams contracts on a
      straight-line basis based on the size of the deployed field force. The
      accounting for the two phases is based on our analysis of Emerging Issues Task
      Force Issue No. 00-21, *Revenue
      Arrangements with Multiple Deliverables* .





Many
      of
      the product detailing contracts allow for additional periodic incentive fees
      to
      be earned once agreed upon performance benchmarks have been attained. Revenue
      earned from incentive fees is recognized when we are reasonably assured that
      payment will be made, and is typically based upon verification through
      calculation of achievement, third party data or client verification. Many
      contracts also stipulate penalties if agreed upon performance benchmarks have
      not been met. These penalties are recognized upon verification of performance
      shortfalls.





We
      provide services to many of our most significant clients under contracts that
      our clients may cancel, typically on 10 to 120 days notice. In addition, many
      of
      the Ventiv Pharma Teams contracts provide our clients with the opportunity
      to
      internalize the sales forces ("sales force conversion") under contract, with
      sufficient notice. Although Ventiv Pharma Teams has been successful in a number
      of cases in negotiating longer-term commitments and an initial non-cancelable
      contract period, we cannot be assured that clients will renew relationships
      beyond the expiration date of existing contracts. Normally, if a client
      terminates a project, the client remains obligated to pay for services performed
      and reimbursable expenses incurred through the date of termination.





Non-refundable
      conversion fees are earned and recognized as revenue when one of our sales
      professionals accepts a firm offer of permanent employment from a customer
      during the term of a contract.





·
            Planning
                and Analytics-
                Revenues for HPR generally include fixed fees, which are recognized
                when
                monthly services are performed based on the proportional performance
                method and when payment is reasonably assured. HPR’s initial contracts
                typically range from one month to one year. Revenues for additional
                services are recognized when the services are provided and payment
                is
                reasonably assured.





·
            Regulatory
                Compliance and Patient Assistance-
                For regulatory compliance, revenues are recorded based on both fixed
                fees
                as well as fees for specific compliance related services both of
                which are
                recognized when monthly services are performed, while patient assistance
                programs depend on the number of patients served and are recognized
                as
                each service is performed.





·
            Marketing
                Support Services-
                Revenues are recorded based on time incurred and fulfillment requirements
                based on contractual terms.





·
            Professional
                Development and Training-
                Revenues are generally recorded as training courses are
                completed.





**General**





Reimbursable
      Costs


Reimbursable
      costs, including those relating to travel and out-of pocket expenses, sales
      force bonuses tied to individual or product revenues, and other similar costs,
      are generally included in revenues, and an equivalent amount of reimbursable
      expenses is included in costs of services in the period in which such amounts
      have been finalized. In certain cases, based on our analysis of Emerging Issues
      Task Force Issue No. 99-19, *Reporting
      Revenue Gross as a Principal versus Net as an Agent* ,
      and
      related accounting literature, we may also record certain reimbursable
      transactions, such as the placement of media advertisements where we act as
      an
      agent, as net revenues.





Loss
      Contracts


The
      Company periodically analyzes its contracts to determine the likelihood and
      amount of any potential loss on a contract resulting from lower than anticipated
      product, field force or other performance. In the event that current information
      illustrates a loss is likely to be incurred over the remaining life of the
      contract, the Company accrues that loss at the time it becomes probable. The
      Company did not have any material loss contracts in 2005.




29


Billing




Customers
      are invoiced according to agreed upon billing terms. Contracts that are invoiced
      prior to performance of related services are recorded as client advances and
      unearned revenue and are not recognized as revenues until earned, in accordance
      with our revenue recognition policies. Amounts earned for revenues recognized
      before the agreed upon billing terms have been met are recorded as revenue
      and
      included in unbilled services. Upon billing, these amounts are transferred
      to
      billed accounts receivable.




*Receivables*




Receivables
      consist of amounts billed and currently due from customers and unbilled amounts
      which have been earned but not yet billed. With the exception of amounts
      relating to certain contracts with pre-determined billing intervals, all amounts
      that are unbilled at the end of each monthly period are billed during the
      immediately succeeding monthly period.





*Property
      and Equipment*





Property
      and equipment is stated at cost. We depreciate furniture, fixtures and office
      equipment on a straight-line basis over three to seven years; computer equipment
      over two to five years and buildings up to thirty nine years. Leasehold
      improvements are amortized on a straight-line basis over the shorter of the
      term
      of the lease or the estimated useful lives of the improvements. We amortize
      the
      cost of vehicles under capital leases on a straight-line basis over the term
      of
      the lease.





*Goodwill
      and Other Intangible Assets*





With
      the
      acquisition of Smith Hanley and other businesses we have acquired, material
      intangible assets, including goodwill and other identifiable finite and
      indefinite-lived acquired intangibles. The identification and valuation of
      these
      intangible assets and the determination of the estimated useful lives at the
      time of acquisition, as well as the completion of annual impairment tests,
      require significant management judgments and estimates. These estimates are
      made
      based on, among others, consultations with an accredited independent valuation
      consultant, reviews of projected future income cash flows and statutory
      regulations. The use of alternative estimates and assumptions could increase
      or
      decrease the estimated fair value of our goodwill and other intangible assets,
      and potentially result in a different impact to our results of operations.
      Furthermore, changes in business strategy and/or market conditions may
      significantly impact these judgments thereby impacting the fair value of these
      assets, which could result in an impairment of the goodwill. Goodwill is tested
      at least annually for impairment. In 2005, we performed an annual impairment
      as
      of the valuation date of June 30, 2005 and concluded that the existing goodwill
      and tradename balances were not impaired. As of December 31, 2005, goodwill
      of approximately $173.8 million and other intangibles (net) of
      $117.6 million were recorded in the Consolidated Balance Sheet.





*Impairment
      of Long-Lived Assets*





Statement
      of Financial Accounting Standards (“SFAS”) No. 144,  *Accounting
      for the Impairment or Disposal of Long-Lived Assets* ,  establishes
      accounting standards for the impairment of long-lived assets. The Company
      reviews its long-lived assets, including property and equipment, for impairment
      whenever events or circumstances indicate that the carrying amount of an asset
      may not be recoverable. Events or circumstances that would result in an
      impairment review primarily include operations reporting sustained losses or
      a
      significant change in the use of an asset. An impairment loss would be
      recognized based on the amount by which the carrying value of the asset exceeds
      its fair value. There were no material impairment losses in 2005.





*Claims
      and Insurance Accruals*





We
      maintain self-insured retention limits for certain insurance policies. The
      liabilities associated with the risk retained by us are estimated in part based
      on historical experience, third-party actuarial analysis, demographics, nature
      and severity, past experience and other assumptions. The liabilities for
      self-funded retention are included in claims and insurance reserves based on
      claims incurred, with liabilities for unsettled claims and claims incurred
      but
      not yet reported being actuarially determined with respect to workers’
compensation and auto liability claims and with respect to all other
      liabilities, estimated based on management’s evaluation of the nature and
      severity of individual claims and historical experience. However, these
      estimated accruals could be significantly affected if our actual costs differ
      from these assumptions. A significant number of these claims typically take
      several years to develop and even longer to ultimately settle. These estimates
      tend to be reasonably accurate over time; however, assumptions regarding
      severity of claims, medical cost inflation, as well as specific case facts
      can
      create short-term volatility in estimates.





*Earnings
      Per Share (“EPS”)*





Basic
      net
      earnings per share excludes the effect of potentially dilutive securities and
      is
      computed by dividing earnings attributable to common shareholders by the
      weighted average number of common shares outstanding during the period. 
Diluted earnings per share reflect the potential dilution that could occur
      if
      securities or other instruments to issue common stock were exercised or
      converted into common stock. Potentially dilutive securities are excluded from
      the computation of diluted earnings per share when their inclusion would be
      antidilutive. A summary of the computation of basic and diluted earnings per
      share from continuing operations is as follows:





**Year
                Ended December 31,****2005**
            
            **2004**
            
            **2003****(in
                thousands, except per share data)**Basic
                EPS from Continuing Operations ComputationIncome
                from continuing operations
            
            $
            43,082
            
            $
            30,130
            
            $
            9,895Weighted
                average number of common shares outstanding
            
            
            26,875
            
            
            23,951
            
            
            22,919Basic
                EPS from continuing operations
            
            $
            1.60
            
            $
            1.26
            
            $
            0.43Diluted
                EPS from Continuing Operations ComputationIncome
                from continuing operations
            
            $
            43,082
            
            $
            30,130
            
            $
            9,895Adjustments
            
            
            --
            
            
            --
            
            
            --Adjusted
                income from continuing operations
            
            $
            43,082
            
            $
            30,130
            
            $
            9,895Weighted
                average number of common shares outstanding
            
            
            26,875
            
            
            23,951
            
            
            22,919Stock
                options(1)
            
            
            1,265
            
            
            1,482
            
            
            882Restricted
                awards(2)
            
            
            25
            
            
            4
            
            
            --Total
                diluted common shares outstanding
            
            
            28,165
            
            
            25,437
            
            
            23,801Diluted
                EPS from continuing operations
            
            $
            1.53
            
            $
            1.18
            
            $
            0.42





(1)
            For
                the years ended December 31, 2005, December 31, 2004 and December
                31,
                2003, 55,911 shares, 377,121 shares, and 1,600,648 shares, respectively,
                were excluded from the calculation of diluted EPS because the grant
                prices
                exceeded the market prices during those periods.


(2)
            For
                the years ended December 31, 2005 and December 31, 2004, 9,770 shares
                and
                3,826 shares, respectively, were excluded from the calculation of
                diluted
                EPS because the grant prices exceeded the market prices during those
                periods.





30


*Income
      Taxes*





Deferred
      tax assets and liabilities are determined based on the difference between the
      financial reporting and the tax bases of assets and liabilities and are measured
      using the tax rates and laws that are expected to apply to taxable income in
      the
      years in which those temporary differences are expected to be recovered or
      settled.  A
      valuation allowance is established, when necessary, to reduce deferred income
      tax assets to the amount that is more likely than not to be realized. Realization
      is dependent on generating sufficient taxable income of a specific nature prior
      to the expiration of any loss carryforwards or capital losses. The asset may
      be
      reduced if estimates of future taxable income during the carryforward period
      are
      reduced. In addition, we maintain reserves for certain tax items, which are
      included in income taxes payable on our consolidated balance sheet. We
      periodically review these reserves to determine if adjustments to these balances
      are necessary.





*Foreign
      Currency Translations*





We
      are
      not currently affected by foreign currency exchange rate exposure, except for
      any fluctuations in the foreign bank accounts remaining from the divestitures
      of
      inVentiv’s European business units and our equity investments and minority
      interests in inVentiv Communications’ foreign business units, which are not
      material to our consolidated financial statements. At December 31, 2005, the
      accumulated other comprehensive earnings was approximately $0.2
      million.




*Use
      of Estimates*





The
      consolidated financial statements are prepared in conformity with accounting
      principles generally accepted in the United States of America. The consolidated
      financial statements include certain amounts that are based on management's
      best
      estimates and judgments.  Estimates are used in determining items such as
      reserves for accounts receivable, certain assumptions related to goodwill and
      intangible assets, deferred tax valuation, and amounts recorded for
      contingencies and other reserves.  Because of the uncertainty inherent in
      such estimates, actual results may differ from these estimates.  We are not
      aware of reasonably likely events or circumstances that would result in
      different amounts being reported that would have a material impact on
      consolidated results of operations or consolidated financial
      condition.





*Fair
      Value of Liquid Financial Instruments*





The
      carrying amount of our cash and cash equivalents, accounts receivable, unbilled
      services and accounts payable approximate fair value because of the relatively
      short maturity of these instruments.





*Derivative
      Financial Instruments*





We
      enter
      into interest rate swap agreements to modify the interest rate characteristics
      of our outstanding long-term debt. At hedge inception, and at least quarterly
      thereafter, we assess whether derivatives used to hedge transactions are highly
      effective in offsetting changes in the cash flow of the hedged item. To the
      extent the instruments are considered to be effective, changes in fair value
      are
      recorded as a component of other comprehensive income (loss). To the extent
      there is any hedge ineffectiveness, changes in fair value relating to the
      ineffective portion are immediately recognized in earnings (interest expense).
      The fair values of our interest rate swaps are obtained from dealer quotes.
      These values represent the estimated amount we would receive or pay to terminate
      the agreement taking into consideration the difference between the contract
      rate
      of interest and rates currently quoted for agreements of similar terms and
      maturities.





*Concentration
      of Credit Risk*





Financial
      instruments that potentially subject us to concentration of credit risk consist
      of accounts receivable and unbilled services. We place our investments in highly
      rated financial institutions, U.S. Treasury bills, money market accounts,
      investment grade short-term debt instruments. We are subject to credit exposure
      to the extent we maintain cash balances at one institution in excess of the
      Federal Depository Insurance Company limit of $100,000. Our receivables are
      concentrated with its major pharmaceutical clients. We do not require collateral
      or other security to support clients' receivables.





*Accounting
      for Stock Options*





In
      December 2002, the FASB issued SFAS No. 148, *Accounting
      for Stock-Based Compensation - Transition and Disclosure - an Amendment of
      FASB
      Statement No. 123* (“SFAS
      No. 148”), to provide alternative methods of transition for a voluntary change
      to the fair value based method of accounting for stock-based employee
      compensation. In addition, this Statement amends the disclosure requirements
      of
      SFAS No. 123 to require prominent disclosures in both annual and interim
      financial statements about the method of accounting for stock-based employee
      compensation and the effect of the method used on reported results. We adopted
      the disclosure requirements of SFAS No. 148 as of December 31, 2002. We account
      for stock-based employee compensation arrangements in accordance with provisions
      of APB 25 *,* and
      complies with the disclosure provisions of SFAS No. 123, as amended. Under
      APB
      25, compensation expense is based on the difference, if any, on the date of
      grant, between the quoted market price of our stock and the exercise
      price.


The
      following table illustrates the effect on net income and net earnings per share
      attributable to common shareholders if we had applied the fair value recognition
      provisions of SFAS No. 123 to stock-based employee compensation
      arrangements:







**Year
                Ended December 31,****2005**
            
            **2004**
            
            **2003****(in
                thousands, except per share data)**Net
                income attributable to common shareholders, as reported
            
            $
            43,863
            
            $
            31,132
            
            $
            5,776Less:
                stock-based employee compensation expense determined
              
              under
                the fair value method, net of related income tax
            
            
            (3,663
            )
            
            (2,637
            )
            
            (1,395
            )Pro
                forma net income
            
            $
            40,200
            
            $
            28,495
            
            $
            4,381Net
                earnings per share attributable to common shareholders:As
                reported: Basic
            
            $
            1.63
            
            $
            1.30
            
            $
            0.25As
                reported: Diluted
            
            $
            1.56
            
            $
            1.22
            
            $
            0.24Pro
                forma: Basic
            
            $
            1.50
            
            $
            1.19
            
            $
            0.19Pro
                forma: Diluted
            
            $
            1.43
            
            $
            1.12
            
            $
            0.18





31





*New
      Accounting Pronouncements*





On
      November 10, 2005, the FASB issued Interpretation No. 45-3, *Application
      of FASB Interpretation No. 45 to Minimum Revenue Guarantees Granted to a
      Business or Its Owners* (“FIN
      45-3”). FIN 45-3 amends FIN 45, Guarantor’s Accounting and Disclosure
      Requirements for Guarantees, Including Indirect Guarantees of Indebtedness
      of
      Others, to expand the scope to include guarantees granted to a business, such
      as
      a physician’s practice, or its owner(s), that the revenue of the business for a
      period will be at least a specified amount. Under FIN 45-3, the accounting
      requirements of FIN 45 are effective for any new revenue guarantees issued
      or
      modified on or after January 1, 2006 and the disclosure of all revenue
      guarantees, regardless of whether they were recognized under FIN 45, is required
      for all interim and annual periods beginning after January 1, 2006. We do
      not expect the adoption of FIN 45-3 to have a material impact on our
      consolidated results of operations or consolidated financial position.





In
      June
      2005, the Financial
      Accounting Standards Board (“FASB”) issued
      Statement of Financial Account Standard (“SFAS”) No. 154, *Accounting
      Changes and Error Corrections* ,
      (“SFAS
      No.154”) a replacement of Accounting
      Principles Board ("APB") Opinion
      No. 20, *Accounting
      Changes* ,
      and
      Statement No. 3, *Reporting
      Accounting Changes in Interim Financial Statements* .
      SFAS
      No. 154 changes the requirements for the accounting for and the reporting of
      a
      change in accounting principle. Previously, most voluntary changes in accounting
      principles required recognition by recording a cumulative effect adjustment
      within net income in the period of change. SFAS No. 154 requires retrospective
      application to prior periods’ financial statements, unless it is impracticable
      to determine either the specific period effects or the cumulative effect of
      the
      change. SFAS No. 154 is effective for accounting changes made in fiscal years
      beginning after December 15, 2005. We do not expect the implementation of SFAS
      No. 154 to have an impact on our consolidated balance sheets, consolidated
      income statements or consolidated statements of cash flows.





In
      March
      2005, the SEC issued Staff Accounting Bulletin No. 107 (“SAB 107”) that provides
      additional guidance in applying the provisions of SFAS No. 123 (revised 2004), *Share-Based
      Payment* (“SFAS
      No. 123R”). SFAS No. 123R requires that compensation cost relating to
      share-based payment transactions be recognized in the financial statements
      based
      on the fair value of the equity or liability instruments issued. SFAS No. 123R
      covers a wide range of share-based compensation arrangements, including share
      options, restricted share plans, performance-based awards, share appreciation
      rights and employee share purchase plans. SAB 107 describes the SEC staff's
      expectations in determining the assumptions that underlie fair value estimates
      and discusses the interaction of SFAS No. 123R with certain existing SEC
      guidance. The provisions of SAB 107 will be applied upon adoption of SFAS No.
      123R. In April 2005, the SEC adopted a new rule that allows companies to
      implement SFAS No. 123R at the beginning of their next fiscal year, instead
      of
      the next reporting period that begins after June 15, 2005. As such, we are
      required to adopt SFAS No. 123R in our first quarter of 2006, beginning
      January 1, 2006. Under SFAS No. 123R, we must determine the appropriate
      fair value model to be used for valuing share-based payments, the amortization
      method for compensation cost and the transition method to be used at the date
      of
      adoption. The transition alternatives include prospective and retroactive
      adoption methods. Under the retroactive methods, prior periods may be restated
      either as of the beginning of the year of adoption or for all periods presented.
      The prospective method requires that compensation expense be recorded for all
      unvested stock options and share awards at the beginning of the first quarter
      of
      adoption of SFAS No. 123R, while the retroactive methods would record
      compensation expense for all unvested stock options and share awards beginning
      with the first period restated. We plan to continue to use the Black-Scholes
      model for stock compensation valuation. Based on grants of stock compensation
      issued through 2005, we estimate approximately $2.4 million (net of $1.6 million
      of taxes) of compensation relating to the expensing of stock options in 2006
      and
      $1.0 million (net of $0.6 million of taxes) relating to the vesting of
      restricted shares.




In
      December 2004, the FASB issued SFAS No. 123R, which replaces SFAS
      No. 123, *Accounting
      for Stock-Based Compensation* (“SFAS
      No. 123”) and supercedes APB Opinion No. 25, *Accounting
      for Stock Issued to Employees* (“APB
      25”). SFAS No. 123R requires all share-based payments to employees,
      including grants of employee stock options, to be recognized in the financial
      statements based on their fair values, beginning with the first interim or
      annual period after December 31, 2005, with early adoption encouraged. In
      addition, SFAS No. 123R will cause unrecognized expense (based on the
      amounts in our pro forma footnote disclosure) related to options vesting after
      the date of initial adoption to be recognized as a charge to results of
      operations over the remaining vesting period.





**3.
      Acquisitions:**





In
      March
      2006, we entered into an agreement for the acquisition of Synergos, LLP
      ("Synergos"). Synergos is a focused clinical services provider with expertise
      in
      clinical trial management services, particularly project management and
      monitoring as well as investigator and patient recruitment. The Synergos
      acquisition agreement provides for up front purchase consideration of $5.75
      million in cash and stock, plus earn-out payments for exceeding specified
      financial targets. The Synergos acquisition is expected to close during the
      second quarter of 2006.





Also
      in
      March 2006, we entered into an agreement for the acquisition of Jeffrey Simbrow
      Associates Inc. (and certain of its affiliated companies) ("JSAI"), Canada's
      leading healthcare marketing and communications agency. Under the terms of
      the
      agreement, Ventiv will acquire JSAI for CAD$10.0 million in cash and stock,
      plus
      earn-out payments for exceeding specified financial targets. The JSAI
      acquisition is expected to close during the second quarter of 2006.





In
      February 2006, we acquired Adheris for approximately $67 million in cash and
      stock, exclusive of direct acquisition costs and post-closing adjustments,
      which
      have not yet been finalized. Adheris is a Massachusetts-based industry leader
      in
      the area of patient compliance and persistency programs. We will be obligated
      to
      make certain earn-out payments, which may be material, contingent on Adheris's
      performance measurements in 2006, 2007 and 2008. Adheris's financial results
      will be reported under inVentiv Communications from the date of its acquisition
      and accordingly are not reflected in our 2005 consolidated financial results.




In
      October 2005, we acquired all of the outstanding capital stock of inChord for
      approximately $196.8 million of cash and stock, including certain post-closing
      adjustments and direct acquisition costs, for approximately $18.6 million in
      net
      assets. To help finance the transaction, we entered into a credit agreement
      dated October 5, 2005, as more fully described in footnote 8. We acquired
      inChord to expand our service portfolio in the marketing and communications
      arena, expand our market position in the pharmaceutical services market and
      achieve cross-selling opportunities by leveraging our existing businesses.
      We
      will be obligated to make certain earn-out payments, which may be material,
      contingent on inChord’s performance measurements from 2005 through 2007. The
      amount due with respect to inChord for 2005 is expected to be approximately
      $3.6
      million in cash and stock, which we accrued at December 31, 2005, but is subject
      to review mechanisms set forth in the acquisition agreement and may change
      materially based on such review.




The
      results of inChord have been reflected in the inVentiv Communications segment
      since the date of acquisition. The purchase price and direct transaction costs
      were allocated to the assets purchased and liabilities assumed, based on their
      respective fair values at the date of acquisition. However, changes to the
      estimates of the fair values of inChord’s assets acquired and liabilities
      assumed may be necessary as additional information becomes available including
      the finalization of a third-party valuation of certain intangible
      assets.




In
      August
      2005, we acquired the net assets of PRS, a provider of compliance management
      and
      marketing support services based in Horsham, Pennsylvania. PRS specializes
      in
      pharmaceutical sample management and compliance services; its operations are
      similar in nature to the business of Franklin Group, Inc. and Lincoln Ltd,
      Inc.
      (together, “Franklin”), which we acquired in June 2004. The closing
      consideration for the transaction was approximately $13.6 million in cash and
      stock (taking into account post-closing adjustments and direct acquisition
      costs) for approximately $1.0 million of net assets. We will be obligated to
      make certain earn-out payments, which may be material, contingent on PRS’s
      performance measurements in 2005 and 2006. The amount due with respect to PRS
      for 2005 is expected to be approximately $0.3 million in cash and stock, which
      the Company accrued at December 31, 2005, but is subject to review mechanisms
      set forth in the acquisition agreement and may change materially based on such
      review. The results of PRS have been reflected in the inVentiv Commercial
      segment since the date of acquisition. The purchase price and direct transaction
      costs were allocated to the assets purchased and liabilities assumed, based
      on
      their respective fair values at the date of acquisition. However, changes to
      the
      estimates of the fair values of PRS’s assets acquired and liabilities assumed
      may be necessary as additional information becomes available including the
      finalization of a third-party valuation of certain intangible assets.





In
      November 2004, we acquired the net assets of HHI. HHI, based in Baltimore,
      Maryland, is a specialized statistical analysis and data management provider
      to
      the U.S. pharmaceutical industry. HHI complements our Smith Hanley business
      by
      offering clients the option of outsourced clinical support services as an
      alternative to internal staffing. The closing consideration for the transaction
      was approximately $6.2 million in cash and stock (taking into account
      post-closing adjustments and direct acquisition costs) for approximately $0.8
      million of net assets. We will be obligated to make certain earn-out payments,
      which may be material, contingent on HHI’s performance measurements in 2005 and
      2006. The amount due with respect to HHI for 2005 is expected to be
      approximately $5.0 million in cash and stock, which the Company accrued at
      December 31, 2005, but is subject to review mechanisms set forth in the
      acquisition agreement and may change materially based on such review. The
      results of HHI have been reflected in the inVentiv Clinical segment since the
      date of acquisition.





In
      October 2004, we acquired the net assets of Smith Hanley. Smith Hanley
      specializes primarily in providing late-stage clinical staffing and recruiting
      services to the U.S. pharmaceutical industry. We acquired Smith Hanley to expand
      our service portfolio in the clinical services and recruitment areas, expand
      our
      market position in the pharmaceutical services market and achieve cross-selling
      opportunities by leveraging our existing sales force and relationships. We
      acquired approximately $9.5 million of net assets for consideration of
      approximately $52.9 million in cash and stock (taking into account post-closing
      adjustments and direct acquisition costs) and will be obligated to make certain
      earn-out payments, which may be material, contingent on Smith Hanley’s
      performance measurements in 2004 and 2005. Smith Hanley’s 2004 earn-out paid in
      2005 was approximately $6.6 million, for which $6.8 million was previously
      accrued for at December 31, 2004; the portion adjusted in 2005 mainly relates
      to
      the finalization of the 2004 earn-out. The amount due with respect to Smith
      Hanley for 2005 is expected to be approximately $4.0 million in cash and stock,
      which the Company accrued at December 31, 2005, but is subject to review
      mechanisms set forth in the acquisition agreement and may change materially
      based on such review. The results of Smith Hanley have been reflected in the
      inVentiv Clinical segment since the date of acquisition.





32


In
      June
      2004, inVentiv acquired the net assets of Franklin, based in Somerville, New
      Jersey. Franklin specializes primarily in conducting patient assistance programs
      and pharmaceutical compliance services. We paid approximately $11.3 million
      in
      cash and stock (taking into account post-closing adjustments and direct
      acquisition costs) to acquire approximately $2.7 million of net assets. We
      are
      obligated to make certain earn-out payments, which may be material, contingent
      on Franklin’s performance measurements during 2004 through 2006. Franklin’s 2004
      earn-out paid in 2005 was approximately $1.8 million, $1.7 million of which
      was
      accrued for at December 31, 2004; the portion adjusted in 2005 mainly relates
      to
      the finalization of the 2004 earn-out. The amount due with respect to Franklin
      for 2005 is expected to be approximately $3.2 million in cash and stock, which
      the Company accrued at December 31, 2005, but is subject to review mechanisms
      set forth in the acquisition agreement and may change materially based on such
      review. Franklin’s financial results have been reflected in the inVentiv
      Commercial segment since the date of acquisition.




A
      summary
      of the purchase price consideration for the acquisitions is as follows:


Purchase
                price consideration
            
            Franklin
            
            Smith
                Hanley
            
            HHI
            
            PRS
            
            inChordCash
                *
            
            $
            6,667
            
            $
            30,000
            
            $
            5,000
            
            $
            9,100
            
            $
            172,500Stock
            
            
            3,580
            
            
            21,215
            
            
            747
            
            
            4,105
            
            
            12,145Direct
                acquisitions and other
              post-closing
                adjustments
            
            
            1,064
            
            
            1,685
            
            
            478
            
            
            440
            
            
            12,149Contingent
                consideration
            
            
            5,065
            
            
            10,603
            
            
            4,995
            
            
            272
            
            
            3,619Total
            
            $
            16,376
            
            $
            63,503
            
            $
            11,220
            
            $
            13,917
            
            $
            200,413


*
      Cash
      provided for the acquisition of inChord is pursuant to the credit agreement
      entered into on October 5, 2005.





The
      following represents the allocation of the purchase price to the acquired assets
      of Franklin, Smith Hanley and HHI. The allocations are based upon the estimated
      fair value of the assets acquired and liabilities assumed as of the respective
      acquisition date.





Allocation
                of purchase price
            
            Franklin
            
            Smith
                Hanley
            
            HHI
            
            PRS
            
            inChordCurrent
                assets
            
            $
            3,165
            
            $
            13,859
            
            $
            1,005
            
            $
            1,368
            
            $
            66,223Property
                and equipment, and other noncurrent assets
            
            
            432
            
            
            670
            
            
            48
            
            
            183
            
            
            8,533Goodwill
            
            
            11,133
            
            
            36,631
            
            
            8,795
            
            
            9,081
            
            
            87,537Identifiable
                intangible assets
            
            
            2,557
            
            
            17,400
            
            
            1,610
            
            
            3,870
            
            
            94,300Liabilities
                assumed
            
            
            (911
            )
            
            (5,057
            )
            
            (238
            )
            
            (585
            )
            
            (56,165
            )Minority
                interest
            
            
            --
            
            
            --
            
            
            --
            
            
            --
            
            
            (15
            )Total
            
            $
            16,376
            
            $
            63,503
            
            $
            11,220
            
            $
            13,917
            
            $
            200,413





Goodwill
      represents the excess of the purchase price over the fair value of tangible
      and
      identifiable intangible assets. Goodwill and other intangible assets are more
      fully described in Footnote 7.




The
      following table provides unaudited pro forma results of operations for the
      periods noted below, as if the 2005 acquisitions had been made at the beginning
      of each period. The pro forma amounts are not necessarily indicative of the
      results that would have occurred if the acquisitions had been completed at
      that
      time.





2005
            
            2004Revenues
            
            $
            693,304
            
            $
            589,767Income
                from continuing operations
            
            
            46,314
            
            
            38,423Net
                income
            
            
            47,095
            
            
            39,425Earnings
                per share:Basic
            
            $
            1.72
            
            $
            1.53Diluted
            
            $
            1.65
            
            $
            1.44





**4.
        Significant Clients:**





During
      the year ended December 31, 2005, two clients accounted for approximately 14%
      and 11%, individually, of our total revenues spread across the inVentiv
      Commercial, inVentiv Communications and inVentiv Clinical segments. For the
      year
      ended December 31, 2004, two clients serving the inVentiv Commercial segment
      accounted for approximately 16% and 14%, individually, of our total revenues.
      During 2003, two clients serving the inVentiv Commercial segment accounted
      for
      approximately 23% and 18%, individually, of our total revenues.





**5.
      Restricted Cash:**





In
      October 2005, we pledged approximately $0.7 million of cash as collateral on
      an
      outstanding standby letter of credit to support the security deposit relating
      to
      the New York office rental for the inVentiv Commercial segment. The beneficiary
      has not drawn on this letter of credit. As this cash has been pledged as
      collateral, it is restricted from use for general purposes and has been
      classified accordingly in the Consolidated Balance Sheet as of December 31,
      2005.





In
      June
      2005, we pledged approximately $0.3 million of cash as collateral on an
      outstanding standby letter of credit to support the security deposit relating
      to
      the New York office rental for the inVentiv Clinical segment. The beneficiary
      has not drawn on this letter of credit. As this cash has been pledged as
      collateral, it is restricted from use for general purposes and has been
      classified accordingly in the Consolidated Balance Sheet as of December 31,
      2005.





In
      January 2005, we pledged additional cash as collateral of approximately $1.0
      million, for a total of approximately $2.0 million, on an existing outstanding
      standby letter of credit to support the insurance policy relating to a fleet
      leasing arrangement for the inVentiv Commercial segment, opened in January
      2004.
      The beneficiary has not drawn on this letter of credit. As this cash has been
      pledged as collateral, approximately $2.0 million and $1.0 million has been
      restricted from use for general purposes and classified accordingly in the
      Consolidated Balance Sheets as of December 31, 2005 and December 31, 2004,
      respectively.





In
      March
      2003, we pledged approximately $0.8 million of cash as collateral on an
      outstanding standby letter of credit, issued in support of the insurance policy
      relating to a fleet leasing arrangement for the inVentiv Commercial segment.
      The
      beneficiary has not drawn on this letter of credit. As this cash has been
      pledged as collateral, it is restricted from use for general purposes and has
      been classified accordingly in the Consolidated Balance Sheet as of December
      31,
      2005 and December 31, 2004.





We
      often
      receive cash advances from our clients as funding for specific projects and
      engagements. These funds are deposited into segregated bank accounts and used
      solely for purposes relating to the designated projects. Although these funds
      are not held subject to formal escrow agreements, we consider these funds to
      be
      restricted and have classified these balances accordingly. Cash held in such
      segregated bank accounts totaled approximately $0.1 million and $0.7 million
      held in escrow on behalf of clients and was included in restricted cash in
      the
      Consolidated Balance Sheet at December 31, 2005 and 2004,
      respectively.





33


**6.
      Property and Equipment, net:**





Property
      and equipment consist of the following:





**As
                of December 31,****2005**
            
            **2004****(in
                thousands)**Land
            
            $
            ---
            
            $
            ---Buildings
                and leasehold improvements
            
            
            6,797
            
            
            2,973Computer
                equipment and software
            
            
            18,036
            
            
            16,896Vehicles
            
            
            34,525
            
            
            44,397Furniture
                and fixtures
            
            
            4,031
            
            
            3,60063,389
            
            
            67,866Accumulated
                depreciation
            
            
            (26,752
            )
            
            (27,640
            )$
            36,637
            
            $
            40,226





The
      vehicles have been recorded under the provisions of a capital lease. Our
      inVentiv Commercial segment has entered into a lease agreement to provide fleets
      of automobiles for sales representatives for certain client
      engagements.





Depreciation
      expense of property and equipment totaled $15.5 million, $15.6 million and
      $9.5
      million in 2005, 2004 and 2003, respectively. In 2005, 2004, and 2003 inVentiv
      recorded $10.5 million, $11.0 million and $5.7 million of depreciation,
      respectively, on vehicles under capital lease.




**7** . **Goodwill
      and Other Intangible Assets:**





Goodwill
      consists of the following:





(in
                thousands)
            
            **January
                1,**
              **2005**
            
            **2005
                Acquisitions**
            
            **Contingent**(1)
              **Consideration**
            
            **December
                31, 2005**inVentiv
                Clinical
            
            $
            36,509
            
            $
            152
            
            $
            8,766
            
            $
            45,427inVentiv
                Communications
            
            
            --
            
            
            83,919
            
            
            3,619
            
            
            87,538inVentiv
                Commercial
            
            
            28,314
            
            
            8,834
            
            
            3,664
            
            
            40,812Total
            
            $
            64,823
            
            $
            92,905
            
            $
            16,049
            
            $
            173,777




(1)
      The
      contingent consideration represents amounts accrued for 2005 earnouts and
      adjustments relating to the finalization of the 2004 earnouts (see Note 3 for
      further details).




Other
      intangible assets consist of the following:





**December
                31, 2005**
            
            **December
                31, 2004**(in
                thousands)
            
            
            
            **Accumulated**
            
            
            
            
            
            **Accumulated****Gross**
            
            **Amortization**
            
            **Net**
            
            **Gross**
            
            **Amortization**
            
            **Net**Customer
                relationships(1)
            
            $
            37,787
            
            $
            (2,098
            )
            $
            35,689
            
            $
            7,567
            
            $
            (282
            )
            $
            7,285Noncompete
                agreement(1)
            
            
            690
            
            
            (103
            )
            
            587
            
            
            240
            
            
            (5
            )
            
            235Other
            
            
            260
            
            
            (190
            )
            
            70
            
            
            260
            
            
            (170
            )
            
            90Total
                definite-life intangibles
            
            
            38,737
            
            
            (2,391
            )
            
            36,346
            
            
            8,067
            
            
            (457
            )
            
            7,610Tradename(1)
            
            
            81,260
            
            
            --
            
            
            81,260
            
            
            13,760
            
            
            --
            
            
            13,760Total
                other intangibles
            
            $
            119,997
            
            $
            (2,391
            )
            $
            117,606
            
            $
            21,827
            
            $
            (457
            )
            $
            21,370





(1)
            The
                changes in other intangible assets arose from 2005 and 2004 acquisitions
                (see Note 3 for further details).





The
      business combinations discussed in footnote 3 above resulted in approximately
      $153.1 million of goodwill (all of which is expected to be deductible for tax
      purposes) and the following other intangible assets:





Intangible
                asset
            
            Amount
              (in
                thousands)
            
            Weighted
                average amortization periodTradename
            
            $
            81,260
            
            
            IndefiniteCustomer
                relationships
            
            
            37,787
            
            
            11.5
                yearsNoncompete
                agreement
            
            
            690
            
            
            4.7
                yearsTotal
            
            $
            119,737





Amortization
      expense, based on intangibles subject to amortization held at December 31,
      2005,
      is expected to be $3.8 million annually from 2006 through 2007, $3.7 million
      in
      2008, $3.3 million in 2009, $3.0 million in 2010 and $18.7 million
      thereafter.





**8.
      Debt:**




Our
      principal external source of liquidity is our syndicated, secured credit
      agreement, which we entered into with UBS AG, Stamford Branch, and others in
      connection with the inChord acquisition. The key features of this credit
      facility are as follows:




·
            A
                $175 million term loan facility was made available to us in a single
                drawing at the time of the inChord transaction. The credit agreement
                also
                includes a $50 million revolving credit facility, of which $5 million
                is
                available for the issuance of letters of credit, and a $5 million
                swingline facility.




·
            The
                term loan will mature on the sixth anniversary of the Credit Agreement,
                with scheduled quarterly amortization of 1% per year during years
                one
                through five and 95% during year six. The revolving loans will mature
                on
                the sixth anniversary of the Credit
                Agreement.




34


·
            Amounts
                advanced under the credit agreement must be prepaid with a percentage,
                determined based on a leverage test set forth in the credit agreement,
                of
                Excess Cash Flow (as defined in the credit agreement) and the proceeds
                of
                certain non-ordinary course asset sales and certain issuances of
                our debt
                obligations or equity securities, subject to certain exceptions.
                We may
                elect to prepay the loans, in whole or in part at any time, in certain
                minimum principal amounts, without penalty or premium (other than
                normal
                LIBOR break funding costs). Amounts borrowed under the credit agreement
                that are repaid or prepaid may not be
                reborrowed.




·
            Interest
                on the loans accrue, at our election, at either (1) the Alternate
                Base
                Rate (which is the greater of UBS’s prime rate and federal funds effective
                rate plus 1/2 of 1%) or (2) the Adjusted LIBOR Rate, with interest
                periods
                determined at our option of 1, 2, 3 or 6 months (or, if the affected
                lenders agree, 9 months), in each case plus a spread based on the
                type of
                loan and method of interest rate determination
                elected.




·
            The
                credit agreement contains, among other things, conditions precedent,
                representations and warranties, covenants and events of default customary
                for facilities of this type. Such covenants include certain limitations
                on
                indebtedness, liens, sale-leaseback transactions, guarantees, fundamental
                changes, dividends, acquisitions and transactions with affiliates.
                The
                credit agreement also includes covenants under which we are required
                to
                maintain a maximum leverage ratio and minimum interest rate coverage
                and
                fixed charge coverage ratios that vary based on the amount of time
                elapsed
                since the initial extension of credit. As of the date of this report,
                we
                comply with the requirements of our credit
                facility.




The
      three-month LIBOR base rate as of December 31, 2005 was 4.53%. As mentioned
      in
      footnote 11, the Company entered into a derivative financial instrument to
      hedge
      against this $175 million term loan facility.




During
      2005, we incurred costs of approximately $3.3 million related to the credit
      agreement. These amounts are classified as deferred financing costs and are
      included as Deposits and Other Assets on the December 31, 2005 consolidated
      balance sheet. These deferred financing costs are amortized as interest expense
      over the life of the loan. At December 31, 2005, the Company had approximately
      $174.6 million outstanding on the unsecured term loan and no amounts outstanding
      under the credit facility. The following table displays the required future
      commitment of the principal payment on the loan.





Years
                Ending December 31,2006
            
            $
            1,7502007
            
            
            1,7502008
            
            
            1,7502009
            
            
            1,7502010
            
            
            42,900Thereafter
            
            
            124,700Total
                minimum lease payments
            
            $
            174,600





**9.
      Accrued Payroll, Accounts Payable and Accrued Expenses:**





Accrued
      payroll, accounts payable and accrued expenses consist of the
      following:





December
                31,2005
            
            2004(in
                thousands)Accrued
                payroll and related employee benefits
            
            $
            24,236
            
            $
            21,869Accounts
                payable
            
            
            7,295
            
            
            2,901Accrued
                insurance
            
            
            5,872
            
            
            4,899Accrued
                commissions
            
            
            3,979
            
            
            3,377Accrued
                professional fees
            
            
            2,441
            
            
            2,058Accrued
                meeting fees
            
            
            1,511
            
            
            1,721Contingent
                consideration from acquisitions
            
            
            16,120
            
            
            8,504Accrued
                expenses
            
            
            16,362
            
            
            10,747$
            77,816
            
            $
            56,076








**10.
      Leases:**





We
      lease
      certain facilities, office equipment and other assets under non-cancelable
      operating leases. Our operating leases are generally expensed on a straight-line
      basis and may include certain renewal options and escalation
      clauses.




The
      following is a schedule of future minimum lease payments for these operating
      leases at December 31, 2005 (in thousands):





Years
                Ending December 31,2006
            
            $
            12,1852007
            
            
            10,8432008
            
            
            7,6642009
            
            
            5,9102010
            
            
            5,682Thereafter
            
            
            12,990Total
                minimum lease payments
            
            $
            55,274





Rental
      expense charged to operations was approximately $5.6 million, $2.5 million
      and
      $2.6 million for the years ended December 31, 2005, 2004 and 2003, respectively.
      In February 2003, we started to receive sublease payments for one of our
      facilities, which was formerly occupied by one of its divested units. In 2005
      and 2004, approximately $0.9 million and $0.9 million, respectively, of sublease
      income was received and offset against the obligation . We
      expect
      to collect for years ending December 31, 2006 and 2007, approximately $1.5
      million in each year, under the sublease agreement, and an additional $0.4
      million through the contract expiration in March 2008.




35


We
      also
      have commitments under capital leases. The following is a schedule of future
      minimum lease payments for these capital leases at December 31, 2005 (in
      thousands):





(a)Years
                Ending December 31,2006
            
            $
            12,2432007
            
            
            11,0672008
            
            
            6,1872009
            
            
            1,9202010
            
            
            --Total
                minimum lease payments
            
            
            31,417Amount
                representing interest and
              management
                fees
            
            
            (2,863
            )28,554Current
                portion
            
            
            (10,859
            )Non-current
                lease obligations
            
            $
            17,695





(a) These
      future commitments include interest and management fees, which are not recorded
      on the Consolidated Balance Sheet as of December 31, 2005 but will be recorded
      as incurred.





**11.
      Derivative Financial Instruments:**





Effective
      October 2005, we entered into a three- year swap arrangement for $175 million
      to
      hedge against the six-year $175 million loan arrangement entered into to
      facilitate the acquisition of inChord. We entered into this interest rate swap
      agreement to modify the interest rate characteristics of our outstanding
      long-term debt and have designated this qualifying instrument as a cash flow
      hedge. At hedge inception, and at least quarterly thereafter, we assess whether
      derivatives used to hedge transactions are highly effective in offsetting
      changes in the cash flow of the hedged item. To the extent the instruments
      are
      considered to be effective, changes in fair value are recorded as a component
      of
      other comprehensive income (loss). To the extent there is any hedge
      ineffectiveness, changes in fair value relating to the ineffective portion
      are
      immediately recognized in earnings (interest expense).





For
      the
      year ended December 31, 2005, we recorded a $0.3 million reduction to interest
      expense relating to the mark-to-market adjustment required to record hedge
      ineffectiveness to earnings, and a corresponding derivative asset of
      approximately $0.3 million, which was recorded as Other Assets on the December
      31, 2005 Consolidated Balance Sheet. The fair values of our interest rate swaps
      are obtained from dealer quotes. These values represent the estimated amount
      we
      would receive or pay to terminate the agreement taking into consideration the
      difference between the contract rate of interest and rates currently quoted
      for
      agreements of similar terms and maturities.





**12.
      Commitments and Contingencies:**





We
      are
      subject to lawsuits, investigations and claims arising out of the conduct of
      our
      business, including those related to commercial transactions, contracts,
      government regulation and employment matters. Certain claims, suits and
      complaints have been filed or are pending against us. In the opinion of
      management and based on the advice of legal counsel, no matters outstanding
      as
      of December 31, 2005 are likely to have a material adverse effect on
      inVentiv.




Pursuant
      to the acquisition of inChord, the Company assumed a $7.5 million existing
      liability on inChord’s balance sheet relating to certain performance thresholds
      of the segment over a three-year period. The Company will continue to
      periodically monitor these performance thresholds, which may result in up to
      an
      additional $7.5 million of future expenses if and when it is probable that
      the
      additional thresholds will be met.




**13.
      Common Stock and Stock Incentive Plans:**





As
      amended June 16, 2004, our 1999 Stock Incentive Plan (“Stock Plan”) authorizes
      us to grant incentive stock options, nonqualified stock options, restricted
      stock awards, restricted stock units and stock appreciation rights ("SARs”). The
      aggregate number of shares of our common stock that may be issued under the
      Stock Plan upon exercise of options, SARs or in the form of restricted stock
      is
      7.2 million shares, which was increased from 4.8 million shares in June 2004
      as
      approved by a majority shareholder vote.





The
      exercise price of options granted under the Stock Plan may not be less than
      100%
      of the fair market value per share of our common stock on the date of the option
      grant. The vesting and other provisions of the options are determined by the
      Compensation Committee of our Board of Directors.





A
      summary
      of the option activity within the Stock Plan, is as follows:





**Number
                of Shares**
            
            **Weighted
                Average Exercise Price Per Share****(in
                thousands)**Outstanding
                options at January 1, 2003
            
            
            3,892
            
            $
            3.43Granted
            
            
            371
            
            
            6.75Exercised
            
            
            (181
            )
            
            3.08Forfeited
                or expired
            
            
            (218
            )
            
            3.61Outstanding
                options at December 31, 2003
            
            
            3,864
            
            
            3.76Granted
            
            
            1,467
            
            
            16.51Exercised
            
            
            (1,059
            )
            
            3.02Forfeited
                or expired
            
            
            (64
            )
            
            3.63Outstanding
                options at December 31, 2004
            
            
            4,208
            
            
            8.39Granted
            
            
            175
            
            
            24.41Exercised
            
            
            (1,282
            )
            
            5.33Forfeited
                or expired
            
            
            (130
            )
            
            12.54Outstanding
                options at December 31, 2005
            
            
            2,971
            
            $
            10.47Exercisable
                at:December
                31, 2003
            
            
            1,987
            
            $
            4.24December
                31, 2004
            
            
            1,681
            
            $
            4.64December
                31, 2005
            
            
            1,470
            
            $
            7.82





Options
      outstanding and exercisable have exercise price ranges and weighted average
      remaining contractual lives of:





36


(options
      below are presented in thousands)





Outstanding
                  Options
              
              Exercisable
                  Options**Exercise
                  Price Range**
              **Numbers
                  of Options**
              **Weighted
                  Average Exercise Price**
              **Weighted
                  Average**
                **Remaining
                  Life**
                **(years)**
              **Number
                  of Options**
              **Weighted
                  Average**
                **Exercise
                  Price**$1.19
              To
              $1.60
              13
              $1.45
              6.62
              --
              $--$1.66
              To
              $1.66
              647
              1.66
              6.95
              383
              1.66$1.68
              To
              $4.00
              365
              3.50
              6.77
              259
              3.68$4.11
              To
              $8.06
              313
              7.86
              3.92
              305
              7.95$8.14
              To
              $14.88
              305
              9.38
              7.43
              141
              9.00$15.05
              To
              $15.48
              30
              15.28
              8.52
              3
              15.38$15.96
              To
              $15.96
              433
              15.96
              8.73
              283
              15.96$16.86
              To
              $17.25
              512
              17.06
              8.78
              82
              17.06$17.57
              To
              $25.63
              277
              19.01
              8.77
              14
              18.35$26.76
              To
              $26.76
              76
              26.76
              9.76
              --
              --2,971
              
              
              1,470





The
      fair
      value of each option grant is estimated on the date of grant using a
      Black-Scholes option pricing model with the following weighted average
      assumptions.





**2005**
            **2004**
            **2003**Expected
                life of option
            4.78
                yrs
            4.42
                yrs
            4.00
                yrsRisk-free
                interest rate
            4.27%
            3.52%
            3.06%Expected
                volatility
            63.62%
            87.30%
            94.51%Expected
                dividend yield
            0.00%
            0.00%
            0.00%





During
      the fourth quarter of 2005, we engaged an independent consultant to analyze
      our
      expected volatility and expected life of stock options. Based on these
      independent results, management concluded that the current expected volatility
      for options granted during the fourth quarter of 2005 should be 45% and the
      expected life of the options granted should range between 5.5 and 6.0 years,
      depending on the grantee’s employee status. These conclusions were based on
      several factors, including past company history, current and future trends,
      comparable benchmarked data and other key metrics. We will continue to assess
      these variables on a periodic basis as we start to expense stock-based
      compensation in 2006 and beyond.





The
      weighted average option fair value at date of grant was $13.24, $10.95 and
      $4.54
      at December 31, 2005, 2004 and 2003, respectively.





During
      1999, we granted 831,502 shares of restricted stock to certain key employees,
      of
      which 269,608 of the shares vested upon grant with the remaining shares of
      restricted stock vesting ratably over the four years following the grant date
      and currently fully vested. During 2005 and 2004, we issued 186,356 shares
      and
      23,122 shares of restricted stock, respectively, which vest over a period of
      two
      to three years.





A
      summary
      of the restricted shares activity within the Stock Plan is as
      follows:





**Restricted
                Stock****Number
                of Shares****(in
                thousands)**January
                1, 2003
            626Granted
            10Cancelled
            --December
                31, 2003 (626 shares vested)
            636Granted
            23Cancelled
            --December
                31, 2004 (631 shares vested)
            659Granted
            186Cancelled
            (1)December
                31, 2005 (636 shares vested)
            844





During
      2005, 2004 and 2003, we recognized compensation expense related to the vesting
      of restricted shares of $0.7 million, $0.1 million and $0.4 million,
      respectively.





**14.
      Benefit Plans:**





Ventiv
      Health, Inc. and certain of its subsidiaries maintain a defined contribution
      benefit plans. Costs incurred by us related to this plan amounted to
      approximately $1.1 million, 0.7 million, and $0.5 million for 2005, 2004 and
      2003, respectively.





On
      November 22, 2004, we adopted the Ventiv Health, Inc. Deferred Compensation
      Plan
      (the "Plan"), which was approved by our Board of Directors. The Plan provides
      eligible management and other highly compensated employees with the opportunity
      to defer, on a pre-tax basis, their salary, bonus, and other specified cash
      compensation and to receive the deferred amounts, together with a deemed
      investment return (positive or negative), either at a pre-determined time in
      the
      future or upon termination of employment with Ventiv Health, Inc. or an
      affiliated employer participating in the Plan. The compensation deferrals were
      initiated in 2005. The deferred compensation liability of approximately $1.9
      million was included in other liabilities in our Consolidated Balance Sheets
      as
      of December 31, 2005. The Plan does not provide for the payment of above-market
      interest to participants.




To
      assist
      in the funding of the Plan obligation, we participate in a corporate-owned
      life
      insurance program in a rabbi trust whereby it purchases life insurance policies
      covering the lives of certain employees, with Ventiv Health, Inc. named as
      beneficiary. Rabbi trusts are grantor trusts generally set up to fund
      compensation for a select group of management or highly paid executives. The
      cash value of the life insurance policy as of December 31, 2005 was
      approximately $1.9 million and is currently classified in Deposits and other
      assets on our Consolidated Balance Sheets.




37


**15.
      Income Taxes:**





Our
      income tax provision (benefit) included the following components:





**For
                the Years Ended****December
                31,****2005**
            
            **2004**
            
            **2003****(in
                thousands)**Current:U.S.—Federal
            
            $
            10,854
            
            $
            7,808
            
            $
            4,998U.S.—State
                and local
            
            
            1,721
            
            
            1,707
            
            
            629$
            12,575
            
            $
            9,515
            
            $
            5,627Deferred:U.S.—Federal
            
            $
            1,739
            
            $
            (5,050
            )
            $
            284U.S.—State
                and local
            
            
            (85
            )
            
            (663
            )
            
            22$
            1,654
            
            $
            (5,713
            )
            $
            306Income
                tax provision
            
            $
            14,229
            
            $
            3,802
            
            $
            5,933





The
      provision for taxes on net income (losses) differs from the amount computed
      by
      applying the U.S. federal income tax rate as a result of the
      following:





**For
                the Years Ended****December
                31,****2005**
            **2004**
            **2003**Taxes
                at statutory U.S. federal income tax rate
            35.0%
            35.0%
            35.0%State
                and local income taxes, net of federal tax benefit
            4.6
            4.7
            4.1Utilization
                of net operating losses / other tax benefits
            (15.3)
            (29.2)
            (1.7)Other
                permanent differences
            0.5
            0.7
            0.1Effective
                tax rate
            24.8%
            11.2%
            37.5%





In
      March
      2005, the Company recorded a tax benefit of approximately $1.6 million primarily
      related to prior period tax contingencies, which are no longer required. During
      the third quarter of 2005, the Company recorded a tax benefit of approximately
      $6.7 million primarily related to the reversal of previously recorded valuation
      allowance as the Company determined that it was more likely than not that an
      additional portion of its deferred tax asset was expected to be realized.
      Additional tax benefits related to the vesting of restricted stock and the
      exercise of stock options in the amount of $9.7 million were credited directly
      to “Additional paid-in-capital” in the Consolidated Balance Sheet and statement
      of stockholders’ equity.





Deferred
      income taxes are recorded based upon differences between the financial statement
      and tax bases of assets and liabilities. As of December 31, 2005 and 2004,
      the
      deferred tax assets and liabilities consisted of the following:


**As
                  of December 31,****2005**
              **2004****Current
                  Deferred Assets****:**
              **(in
                  thousands)**Accrued
                  expenses
              $2,800
              $6,530Net
                  operating loss carryforwards
              3,546
              3,545Deferred
                  revenue
              331
              --Other
              297
              424Subtotal
              6,974
              10,499
 **** **Non-Current
        Deferred Assets:**
 Deferred
                  Compensation
              232
              7Intangible
                  Assets
              1,774
              4,001Net
                  operating loss carryforwards
              12,235
              20,048Fixed
                  Assets
              16,481
              11,777Other
              1,257
              388Subtotal
              31,979
              36,221**Gross
                  Deferred Assets**
              38,953
              46,720**Current
                  Deferred Liabilities**:Accrued
                  Expenses
              (2,075)
              (1,301)Other
              (870)
              (972)Subtotal
              (2,945)
              (2,273)**Non-Current
                  Deferred Liabilities:**Property
                  and Equipment
              (18,490)
              (12,606)Other
              (14)
              (14)Subtotal
              (18,504)
              (12,620)**Gross
                  Deferred Liabilities**
              (21,449)
              (14,893)**Valuation
                  Allowance**
              (10,047)
              (20,018)**Net
                  deferred tax assets**
              $7,457
              $11,809


During
      2004, a deferred tax asset in the amount of $23.6 million was established for
      net operating loss carryforwards primarily related to the divestiture of certain
      subsidiaries. A valuation allowance of $20 million was established at that
      time
      related to net operating loss carryforwards for which the Company had concluded
      it was more likely than not that these loss carryforwards would not be realized
      in future periods. Management revised its assessment in the third quarter of
      2005 and recorded a tax benefit of approximately $6.7 million primarily related
      to the reversal of a previously recorded valuation allowance as the Company
      determined an additional portion of its deferred tax asset was more likely
      than
      not expected to be realized. This and other items resulted in a reduction in
      the
      overall valuation allowance for deferred tax assets. The deferred tax asset
      related to loss carryforwards was also reduced for such assets utilized during
      the year ended December 31, 2005. For financial statement purposes, federal
      net
      operating loss carryforwards of approximately $45 million exist at December
      31,
      2005 and will begin to expire in 2022. A capital tax loss carryover in the
      amount of approximately $2.8 million exists at December 31, 2005 and will begin
      to expire in 2007. A valuation allowance has been recorded against the capital
      loss carryovers as management believes it is more likely than not that the
      associated deferred tax asset will not be realized in the future. Management
      continually assesses whether inVentiv's deferred tax asset position is
      realizable and has concluded that it is more likely than not that the reported
      deferred tax asset is realizable at December 31, 2005.





38


**16.
      Discontinued Operations:**




For
      the
      year ended December 31, 2005 and 2004, income from discontinued operations,
      net
      of taxes, were $0.8 million and $1.0 million, respectively. For the years ended
      December 31, 2005 and 2004, income from discontinued operations, net of taxes,
      mainly consisted of contingency payments due from our previously divested
      Germany and Hungary-based operations.




**17.
      Related Parties:**





We
      are
      currently in a lease with Olde Worthington Road LLC for inVentiv Communications’
Services’ current headquarters facility in Westerville, Ohio. This facility is
      partially owned by the current inVentiv Communications’ Chief Executive Officer
      (who is also a member of the Board of Directors), his brothers and other current
      employees of inVentiv Communications through their ownership in GSW Capital
      LLC.
      GSW Capital LLC is a 50% owner of Olde Worthington Road LLC. The term of the
      lease is fifteen years, and expires on September 30, 2015 (subject to an
      early termination option effective as of September 30, 2010 in favor of
      inChord).





**18.
      Segment Information:**





In
      2004,
      we managed three operating segments: inVentiv Commercial, Planning and Analytics
      and inVentiv Clinical, and our non-operating reportable segment, “Other”. As a
      result of the fourth quarter acquisitions in the clinical services arena and
      the
      commonality of the nature of the commercial services we provide, our planning
      and analytics services business unit which was operated as a separate reporting
      segment (Ventiv Analytic Services) during 2004, is now included as part of
      inVentiv Commercial for operating and segment reporting purposes.





In
      August
      2005, we acquired PRS, which is
      reported in the inVentiv Commercial segment from the date of its acquisition.
      In
      October 2005, we acquired inChord, which is reported in a separate operating
      segment, inVentiv Communications, from the date of its acquisition. We
      identified the inVentiv Commercial, inVentiv Communications and inVentiv
      Clinical segments as the three primary operating segments based on the way
      management makes operating decisions and assesses performance.




Subsequent
      to the inChord acquisition, which formed the inVentiv Communications segment
      in
      October 2005, our 2005 reportable segments are:




·
              inVentiv
                    Clinical,
                    which provides services related to permanent placement, clinical
                    staffing,
                    data collection and management and functional service
                    provision




·
            inVentiv
                Communications,
                which provides services related to pharmaceutical advertising, branding,
                interactive communication development and patient and physician education





·
            inVentiv
                Commercial,
                which consists of our outsourced sales and marketing teams, planning
                and
                analytics services, sample accountability and patient assistance
                businesses, marketing support services, professional development
                and
                training, and recruitment of sales representatives in the commercial
                services area.





·
            Other,
                which encompasses the activities of the corporate management group.




For
      the
      year ended December 31, 2005 (in thousands):





**inVentiv**
              **Clinical**
            
            **inVentiv**
              **Communications**
            
            **inVentiv
                Commercial**
            
            **Other**
            
            **Total**Revenues
            
            $
            113,717
            
            $
            48,901
            
            $
            394,552
            
            $
            --
            
            $
            557,170Less:
                Intersegment revenues
            
            
            17
            
            
            175
            
            
            666
            
            
            --
            
            
            858Reported
                Revenues
            
            
            113,700
            
            
            48,726
            
            
            393,886
            
            
            --
            
            
            556,312Depreciation
                and amortization
            
            
            1,241
            
            
            679
            
            
            15,420
            
            
            85
            
            
            17,425Interest
                expense
            
            
            --
            
            
            19
            
            
            1,275
            
            
            2,661
            
            
            3,955Interest
                income
            
            
            35
            
            
            47
            
            
            114
            
            
            1,213
            
            
            1,409Segment
                income (loss)(1)
            
            $
            9,563
            
            $
            5,677
            
            $
            54,271
            
            $
            (12,083
            )
            $
            57,428





For
      the
      year ended December 31, 2004 (in thousands):





**inVentiv**
              **Clinical**
            
            **inVentiv**
              **Communications**
            
            **inVentiv
                Commercial**
            
            **Other**
            
            **Total**Revenues
            
            $
            21,694
            
            
            --
            
            $
            330,953
            
            $
            --
            
            $
            352,647Less:
                Intersegment revenues
            
            
            6
            
            
            --
            
            
            457
            
            
            
            
            
            463Reported
                revenues
            
            
            21,688
            
            
            --
            
            
            330,496
            
            
            
            
            
            352,184Depreciation
                and amortization
            
            
            219
            
            
            --
            
            
            15,613
            
            
            76
            
            
            15,908Restructuring
            
            
            --
            
            
            --
            
            
            249
            
            
            15
            
            
            264Interest
                expense
            
            
            --
            
            
            --
            
            
            627
            
            
            295
            
            
            922Interest
                income
            
            
            5
            
            
            --
            
            
            51
            
            
            622
            
            
            678Segment
                income (loss)(1)
            
            $
            1,709
            
            
            --
            
            $
            40,873
            
            $
            (8,650
            )
            $
            33,932





For
      the
      year ended December 31, 2003 (in thousands):





**inVentiv**
              **Clinical**
            
            **inVentiv**
              **Communications**
            
            **inVentiv
                Commercial**
            
            **Other**
            
            **Total**Revenues
            
            $
            --
            
            $
            --
            
            $
            225,242
            
            $
            --
            
            $
            225,242Less:
                Intersegment revenues
            
            
            --
            
            
            --
            
            
            789
            
            
            --
            
            
            789Reported
                revenues
            
            
            --
            
            
            --
            
            
            224,453
            
            
            --
            
            
            224,453Depreciation
                and amortization
            
            
            --
            
            
            --
            
            
            9,333
            
            
            171
            
            
            9,504Gain
                on sale of real estate
            
            
            --
            
            
            --
            
            
            392
            
            
            --
            
            
            392Interest
                expense
            
            
            --
            
            
            --
            
            
            279
            
            
            270
            
            
            549Interest
                income
            
            
            --
            
            
            --
            
            
            13
            
            
            400
            
            
            413Segment
                income (loss)(1)
            
            $
            --
            
            $
            --
            
            $
            21,213
            
            $
            (5,385
            )
            $
            15,828





39


(1) Income
      from continuing operations before income tax provision, minority interest in
      income of subsidiary and income from equity investments




(in
                thousands)
            
            **December
                31,****2005**
            
            **2004**Total
                Assets:inVentiv
                Clinical
            
            $
            84,731
            
            $
            74,258inVentiv
                Communications
            
            
            248,986
            
            
            --inVentiv
                Commercial
            
            
            171,468
            
            
            158,367Other
            
            
            78,709
            
            
            54,827Total
                assets
            
            $
            583,894
            
            $
            287,452




**19.
      Selected Quarterly Financial Data (unaudited, in
      thousands):**





The
      following table summarizes financial data by quarter for inVentiv for 2005
      and
      2004.





**2005
                Quarter Ended (b)****March
                31**
            
            **June
                30**
            
            **Sept.
                30**
            
            **Dec.
                31**
            
            **Total
                (a)****(in
                thousands, except per share amounts)**Revenues
            
            $
            120,859
            
            $
            131,788
            
            $
            128,359
            
            $
            175,306
            
            $
            556,312Gross
                profit
            
            
            27,147
            
            
            32,027
            
            
            30,595
            
            
            49,518
            
            
            139,287Income
                from continuing operations
            
            
            9,192
            
            
            9,032
            
            
            15,033
            
            
            9,825
            
            
            43,082Income
                (losses) from discontinued operations
            
            
            99
            
            
            1,463
            
            
            78
            
            
            (859
            )
            
            781Net
                income
            
            
            9,291
            
            
            10,495
            
            
            15,111
            
            
            8,966
            
            
            43,863Earnings
                (losses) per share (a)Continuing
                operations:Basic
            
            $
            0.35
            
            $
            0.34
            
            $
            0.56
            
            $
            0.35
            
            $
            1.60Diluted
            
            $
            0.33
            
            $
            0.32
            
            $
            0.53
            
            $
            0.35
            
            $
            1.53Discontinued
                operations:Basic
            
            $
            0.01
            
            $
            0.05
            
            $
            0.00
            
            $
            (0.03
            )
            $
            0.03Diluted
            
            $
            0.01
            
            $
            0.06
            
            $
            0.01
            
            $
            (0.05
            )
            $
            0.03Net
                income:Basic
            
            $
            0.36
            
            $
            0.39
            
            $
            0.56
            
            $
            0.32
            
            $
            1.63Diluted
            
            $
            0.34
            
            $
            0.38
            
            $
            0.54
            
            $
            0.30
            
            $
            1.56





**2004
                Quarter Ended (b)****March
                31**
            
            **June
                30**
            
            **Sept.
                30**
            
            **Dec.
                31**
            
            **Total
                (a)****(in
                thousands, except per share amounts)**Revenues
            
            $
            70,661
            
            $
            75,221
            
            $
            88,853
            
            $
            117,449
            
            $
            352,184Gross
                profit
            
            
            14,350
            
            
            14,924
            
            
            16,831
            
            
            26,346
            
            
            72,451Income
                from continuing operations
            
            
            4,948
            
            
            4,855
            
            
            5,087
            
            
            15,240
            
            
            30,130Income
                (losses) from discontinued operations
            
            
            155
            
            
            1,754
            
            
            223
            
            
            (1,130
            )
            
            1,002Net
                income (losses)
            
            
            5,103
            
            
            6,609
            
            
            5,310
            
            
            14,110
            
            
            31,132Earnings
                (losses) per share (a)Continuing
                operations:Basic
            
            $
            0.22
            
            $
            0.21
            
            $
            0.21
            
            $
            0.60
            
            $
            1.26Diluted
            
            $
            0.20
            
            $
            0.19
            
            $
            0.20
            
            $
            0.57
            
            $
            1.18Discontinued
                operations:Basic
            
            $
            --
            
            $
            0.07
            
            $
            0.01
            
            $
            (0.04
            )
            $
            0.04Diluted
            
            $
            0.01
            
            $
            0.07
            
            $
            0.01
            
            $
            (0.05
            )
            $
            0.04Net
                income (losses):Basic
            
            $
            0.22
            
            $
            0.28
            
            $
            0.22
            
            
            0.56
            
            $
            1.30Diluted
            
            $
            0.21
            
            $
            0.26
            
            $
            0.21
            
            
            0.52
            
            $
            1.22





(a)  The
      sum
      of the net earnings per share do not add up to the full year amount due to
      rounding and because the quarterly calculations are based on varying numbers
      of
      shares outstanding.





(b)  The
      above
      tables have been reclassified as per SFAS No. 144 for the effects of
      discontinued operations. See Note 17 for a further description.





40




**SCHEDULE
      II VALUATION AND QUALIFYING ACCOUNTS**


**YEARS
      ENDED DECEMBER 31, 2005, 2004 and 2003**


(in
      thousands)





**Additions**
            
            **Deductions****Balance
                at**
              **Beginning**
              **Of
                Year**
            
            **Charged
                to Cost and Expense**
            
            **Charged
                to other Accounts****(1)**
            
            **from
                Reserve for Purpose for which Reserve was Created**
            
            **Balance
                at End**
              **Of
                Year**Allowances
                for Doubtful Accounts:Year
                ended December 31, 2005
            
            $
            1,980
            
            $
            1,404
            
            $
            2,039
            
            $
            1,444
            
            $
            3,979Year
                ended December 31, 2004
            
            $
            2,019
            
            $
            643
            
            $
            141
            
            $
            823
            
            $
            1,980Year
                ended December 31, 2003
            
            $
            1,178
            
            $
            1,790
            
            $
            --
            
            $
            949
            
            $
            2,019


(1) Reserves
      acquired with the acquisition of Franklin, Smith Hanley, HHI, PRS and
      inChord.





**Item
      9.** ***Changes
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure.***




None.




**Item
      9A.** ***Controls
      and Procedures.***




**Evaluation
      of Disclosure Controls and Procedures**




An
      evaluation was performed under the supervision and with the participation of
      our
      management, including our Chief Executive Officer and Chief Financial Officer,
      of the effectiveness of our disclosure controls and procedures (as defined
      in
      Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)),
      as of the end of the period covered by this annual report on Form 10-K. Our
      assessment excludes the PRS and inChord businesses we acquired in 2005 as
      allowed under the rules and clarifications provided by the Securities and
      Exchange Commission and the Public Company Accounting Oversight Board (United
      States). The financial statements of these acquired businesses constitute 9%
      and
      45% of revenues and total assets, respectively, of the consolidated financial
      statement amounts as of and for the year ending December 31, 2005. Based on
      this
      evaluation, our Chief Executive Officer and Chief Financial Officer have
      concluded that, as of December 31, 2005 our disclosure controls and procedures
      are effective to provide reasonable assurance that information required to
      be
      disclosed in our Exchange Act reports is recorded, processed, summarized and
      reported within the time periods specified by the Securities and Exchange
      Commission and that material information relating to us and our consolidated
      subsidiaries is made known to management, including the Chief Executive Officer
      and Chief Financial Officer during the period when our periodic reports are
      being prepared. There were no changes in our internal controls over financial
      reporting during the quarter ended December 31, 2005 that have materially
      affected, or are reasonably likely to materially affect, our internal controls
      over financial reporting.




Please
      refer to the Report of Independent Registered Public Accounting Firm included
      in
      Item 8A of this report.






**Management’s
      Report on Internal Control over Financial Reporting**




Management’s
        Report on Internal Control Over Financial Reporting and the corresponding
        Report
        of Independent Registered Public Accounting Firm are included in Item 8,
        Financial Statements and Supplementary Data, of this report. See page
        32.


**Item
      9B.** ***Other
      Information.***




At
        its
        meeting on December 15, 2005, our Compensation Committee approved an increase
        in
        John Emery's base salary from $308,827 to $318,270 and an increase in Terrell
        Herring's base salary from $345,000 to $360,500, in each case effective January
        1, 2006.
  41


**PART
      III**





**Item
      10.** ***Directors
      and Executive Officers of the Registrant.***





The
      following table sets forth certain information concerning our current executive
      officers and directors:




Name
              Age
              Positions
                  with CompanyDaniel
                  M. Snyder
              41
              Chairman
                  of the BoardEran
                  Broshy
              47
              Chief
                  Executive Officer and DirectorJohn
                  R. Emery
              49
              Chief
                  Financial Officer and SecretaryTerrell
                  G. Herring
              42
              President
                  and Chief Executive Officer, inVentiv Commercial, and DirectorBlane
                  Walter
              35
              President
                  and Chief Executive Officer, inVentiv Communications, and DirectorA.
                  Clayton Perfall
              47
              DirectorDonald
                  Conklin
              69
              DirectorJohn
                  R. Harris
              57
              DirectorPer
                  G.H. Lofberg
              58
              DirectorMark
                  Jennings
              43
              Director




**Daniel
        M. Snyder** - Mr.
        Snyder has served as the Chairman of the Board of Directors of the Company
        since
        October 2001 and previously served as Co-Chairperson since inVentiv's separation
        from Snyder Communications, Inc. in September 1999. Mr. Snyder is the Owner
        and
        Chairman of the Washington Redskins football team. Mr. Snyder was Chairman
        and a
        founder of Snyder Communications, Inc. and served as Chief Executive Officer
        of
        Snyder Communications and its predecessors from 1987 to September 2000. Mr.
        Snyder is Chairman of the Board of Directors of Six Flags
        Incorporated.




**Eran
      Broshy** - Mr.
      Broshy has served as a director and the Chief Executive Officer of the Company
      since inVentiv's separation from Snyder Communications, Inc. in September 1999.
      Prior to joining inVentiv, Mr. Broshy spent 14 years with the Boston Consulting
      Group, and most recently served as the partner responsible for the firm’s North
      American healthcare practice. From 1998 to 1999, Mr. Broshy served as President
      and Chief Executive Officer of Coelacanth Corporation, a privately-held
      biotechnology company. Mr. Broshy is a member of the Board of Directors of
      Neurogen Corporation.





**John
      R. Emery** - Mr.
      Emery has served as the Chief Financial Officer of the Company since August
      2001. Prior to that time, Mr. Emery was Chief Financial Officer of MedQuist
      Inc.
      During his tenure at MedQuist, revenues increased nearly five-fold and market
      capitalization increased from approximately $200 million to $1.5 billion. During
      this period MedQuist also completed a $230 million acquisition of its largest
      competitor, acquired 20 smaller competitors and sold a 65% equity stake in
      the
      company to Philips Electronics for $1.2 billion. Prior to joining MedQuist,
      Mr.
      Emery held the positions of CFO and Senior Vice President of Operations at
      Integra LifeSciences Corporation.





**Terrell
      G. Herring** - Mr.
      Herring has been a director of the Company since October 2005.  Mr.
      Herring has served as the President and Chief Executive Officer of inVentiv
      Commercial since October 2005. Since joining the Company in November 1999,
      Mr.
      Herring has held the positions of National Business Director, Vice President
      and
      General Manager, U. S. Sales, President and COO, inVentiv Pharma Services and
      President and COO, inVentiv Commerical. He has more than 18 years experience
      in
      the pharmaceutical sales industry. Before joining inVentiv, Mr. Herring was
      the
      Senior National Sales Director at Noven Pharmaceuticals where he focused on
      transdermal delivery and women's health marketing. He began his career at
      Ciba-Geigy Pharmaceuticals and Solvay Pharmaceuticals where he held various
      sales management, training, development, marketing, and operations
      positions.





**Blane
      Walter** - Mr.
      Walter has been a director of the Company since October 2005. Mr. Walter has
      served as the President and Chief Executive Officer of inVentiv Communications
      since the acquisition of inChord Communications, Inc. (“inChord”) in October
      2005. Mr. Walter joined inChord (then known as Gerbig, Snell/Weisheimer &
Associates) as an Account Manager in 1994. In 1996, he became a Partner and
      later purchased the company in 2000. Under his direction as Chairman and CEO,
      inChord became the largest privately-held healthcare communication company
      in
      the world, with affiliates throughout the world.  Prior
      to
      inChord, Mr. Walter worked as a financial analyst in New York City for Smith
      Barney in mergers and acquisitions.




**A.
      Clayton Perfall** - Mr.
      Perfall has been a director of the Company since inVentiv's separation from
      Snyder Communications, Inc. in September 1999. He currently serves as Chief
      Executive Officer of AHL Services, Inc. a non-pharmaceutical, outsourced sales
      and marketing company. Prior to taking this position in October 2001, Mr.
      Perfall served as Chief Executive Officer of Convergence Holdings, Corp. Prior
      to taking this position in January 2001, Mr. Perfall served as the Chief
      Financial Officer and a director of Snyder Communications, Inc. from 1996 to
      September 2000. Prior to joining Snyder Communications, Inc., Mr. Perfall spent
      fifteen years with Arthur Andersen LLP.





**Donald
        R. Conklin** **-** Mr.
        Conklin has been a director of the Company since September 1999. Prior to
        joining the Company's Board, Mr. Conklin worked for 39 years with
        Schering-Plough Corporation. He was President of the Worldwide Pharmaceutical
        Operations for nine years and concluded his career as Chairman of the Health
        Care Products division for three years. Mr. Conklin is a member of the Board
        of
        Directors of Alfacell, Inc.





**John
      R. Harris** - Mr.
      Harris has been a director of the Company since May 2000. Mr. Harris is
      currently Chief Executive Officer of eTelecare Global Solutions, a leading
      teleservices company. Until January 2005 Mr. Harris served as Chief Executive
      Officer of Seven Worldwide Inc., a digital content management company. From
      July
      2002 to December 2003, he served as Chief Executive Officer and President of
      Delinea Corporation, an application and business process management company
      serving the energy industry. From August 2001 to July 2002, Mr. Harris served
      as
      Chief Executive Officer and President of Exolink. He was Chairman and Chief
      Executive Officer of Ztango, Inc. from 1999 to 2001. Mr. Harris previously
      spent
      25 years with Electronic Data Systems, during which he held a variety of
      executive leadership positions including Executive and President of EDS's four
      strategic business units. Mr. Harris is a member of the Board of Directors
      of
      PTEK Holdings, Inc and Answerthink, Inc..





**Per
      G.H. Lofberg** -Mr.
      Lofberg has been a director of the Company since February 2005. Mr. Lofberg
      brings over 30 years pharmaceutical and health care industry experience to
      inVentiv Health. He is currently President and CEO of Merck Capital Ventures,
      LLC, a position that he has held since 2000. From 1993-2000, Mr. Lofberg was
      Chairman of Merck-Medco Managed Care, LLC, a wholly-owned subsidiary of Merck
      & Co., Inc. and the country’s largest provider of prescription drug benefit
      management services. Under his leadership, Merck-Medco grew from $3 billion
      to
      $23 billion in revenues. Mr. Lofberg joined Merck-Medco in 1988 as Senior
      Executive Vice President, a member of the Office of the President and a
      Director. Before Merck-Medco, Mr. Lofberg was a Partner at The Boston Consulting
      Group and oversaw the firm’s worldwide health care practice.





**Mark
      E. Jennings** - Mr.
      Jennings has been a director of the Company since February 2005. Mr. Jennings
      is
      the Managing Partner and co-founder of Generation Partners, a $325 million
      private investment firm focused on providing growth capital to companies
      primarily in the business and information services, communications and
      healthcare sectors. Prior to founding Generation in 1995, Mr. Jennings was
      a
      Partner of Centre Partners, a private investment firm affiliated with Lazard
      Frères & Co. Mr. Jennings began his career at Goldman Sachs & Co. where
      he advised companies in the areas of financial strategy, public offerings,
      mergers & acquisitions and leveraged buyouts. Through Generation and
      predecessor firms, he has invested in more than 50 companies and has served
      as a
      director on 20 boards. Mr. Jennings is also the Chairman of the Board of
      Trustees of Post University, Inc., a 115 year-old regionally-accredited
      University and is on the Board of Directors of the Spiritual Cinema Circle,
      a
      mult-faith organization dedicated to fitness that inspire, heal and
      transform.




**Audit
      Committee and Audit Committee Financial Expert**




The
      Audit
      Committee is comprised of Messrs. Perfall (Chairman), Conklin and Harris.
      The Audit Committee oversees the accounting and financial reporting processes
      of
      the Company, as well as the audits of the financial statements of the
      Company.  The Board has determined that all members of the Audit Committee
      are independent directors, and otherwise satisfy the requirements for service
      on
      the Audit Committee, under the rules of the Securities and Exchange Commission
      (the “SEC”) and the NASD. The Board has determined that Mr. Perfall
      qualifies as an “audit committee financial expert” as defined by the rules of
      the SEC.




42


**Material
      Changes to Procedures for Shareholder Recommendations**





There
      have been no material changes to the procedures by which stockholders may
      recommend nominees to our Board of Directors since the filing of our proxy
      statement with respect to our 2005 Annual Meeting of Stockholders. The
      Nominating and Corporate Governance Committee will consider written proposals
      from stockholders for nominees for director. All bona fide
      shareholder-recommended candidates will be considered on the same basis as
      other
      candidates. Any such nominations should be submitted to the Chairman of the
      Nominating and Corporate Governance Committee, c/o Ventiv Health, Inc., 200
      Cottontail Lane, Vantage Court North, Somerset, New Jersey 08873, and should
      include the following: (a) all information relating to such nominee that is
      required to be disclosed pursuant to Regulation 14A under the Securities
      Exchange Act of 1934 (including such person's written consent to being named
      in
      the proxy statement as a nominee and to serving as director if elected);
      (b) whether the candidate qualifies as “independent” under NASD rules and
      for service on the Audit Committee under SEC rules; (c) the name and address
      of
      the recommending shareholder, as they appear on the Corporation’s books, and of
      any beneficial owner on whose behalf the recommendation is made; (d) the class
      and number of shares of the Company that are beneficially owned and held of
      record by such shareholder and any such beneficial owner; (e) information
      regarding whether the recommending shareholder, beneficial owner or candidate
      or
      their affiliates have any plans or proposals for the Company; and (f) whether
      the recommending shareholder, beneficial owner or candidate seeks to use the
      nomination to redress personal claims or grievances against the Company or
      to
      further personal interests or special interests not shared by shareholders
      at
      large.




**Code
      of Business Ethics and Conduct**





We
      have
      adopted a Code of Business Conduct and Ethics that applies to all of our
      directors, officers (including our chief executive officer, chief financial
      officer, chief accounting officer and any person performing similar functions)
      and employees. We have made the Code of Business Conduct available on our
      website at www.inventivhealth.com





**Item
      11.*****Executive
      Compensation****.*





**Summary
      Compensation Table**





The
      following Summary Compensation Table sets forth the compensation earned for
      each
      of the last three completed fiscal years by (i) the person who served
      as our chief executive officer during the last completed fiscal year and
      (ii) each of our officers other than our chief executive officer who was
      serving as an executive officer at the end of the last completed fiscal
      year.





**SUMMARY
      COMPENSATION TABLE**


Annual
                  Compensation
              
              Long-Term
                Compensation
                  AwardsName
                  and Principal Position(s)
              
              Year
              
              Salary
              
              Bonus
                  (1)
              
              Restricted
                  Stock Award(s)($)
                (2)
              
              Securities
                  Underlying Options
              
              All
                  Other Compensation
                (3)Eran
                  Broshy
              
              
              2005
              
              $
              535,137
              
              $
              600,000(4)(5
              )
              
              --
              
              
              --
              
              $
              3,500Chief
                  Executive Officer
              
              
              2004
              
              $
              519,841
              
              $
              919,841
              
              
              --
              
              
              200,000
              
              $
              3,250Ventiv
                  Health, Inc.
              
              
              2003
              
              $
              504,587
              
              $
              600,000
              
              
              --
              
              
              55,000
              
              $
              3,000John
                  R. Emery
              
              
              2005
              
              $
              308,827
              
              $
              277,945(5
              )
              $
              50,006
              
              
              --
              
              
              --Chief
                  Financial Officer
              
              
              2004
              
              $
              300,000
              
              $
              370,000
              
              
              --
              
              
              100,000
              
              
              --Ventiv
                  Health, Inc.
              
              
              2003
              
              $
              291,779
              
              $
              229,103
              
              
              --
              
              
              15,000
              
              
              --Terrell
                  G. Herring
              
              
              2005
              
              $
              345,000
              
              $
              345,000(5
              )
              $
              102,480
              
              
              --
              
              $
              3,450President
                  & COO
              
              
              2004
              
              $
              304,615
              
              $
              429,615
              
              $
              175,009
              
              
              150,000
              
              $
              2,939inVentiv
                  Commercial Services
              
              
              2003
              
              $
              291,187
              
              $
              410,098
              
              $
              84,500
              
              
              20,000
              
              $
              3.000Blane
                  Walter (6)
              
              
              2005
              
              $
              104,192
              
              $
              14,565
              
              
              --
              
              
              --
              
              
              --President
                  & CEOinVentiv
                  Communications Services




(1)
            Bonuses
                to executive officers are awarded at the discretion of the Compensation
                Committee of the Board of Directors and are disclosed for the year
                in
                which they are awarded.





(2)
            In
                January 2005, the Company granted Mr. Emery 2,431 shares of restricted
                Common Stock, one-third of which vested on January 1, 2006 and two-thirds
                will vest on January 1, 2007. The restricted stock agreements for
                these
                grants prohibit Mr. Emery from transferring any of his restricted
                shares
                during the vesting period.





In
      December 2003, the Company granted Mr. Herring 10,000 shares of restricted
      Common Stock, which are fully vested. In December 2004, the Company granted
      Mr.
      Herring 10,122 shares of restricted Common Stock, one-third of which vested
      on
      January 1, 2006 and two-thirds will vest on January 1, 2007. In March 2005,
      the
      Company granted Mr. Herring 4,000 shares of restricted Common Stock, which
      vest
      equally on the first three anniversaries of the date of grant. The restricted
      stock agreements for these grants prohibit Mr. Herring from transferring any
      of
      his restricted shares during the respective vesting periods.





Dividends
      will be paid on shares of restricted stock granted to the Company’s executive
      officers if dividends are paid on the Company’s capital stock. The Company has
      never paid dividends and has no plan to do so in the foreseeable
      future.




As
        of
        December 31, 2005 Mr. Herring held a total of 14,122 shares of restricted
        (unvested) stock having a value of $277,489 and Mr. Emery held a total of
        2,431
        shares of restricted (unvested) stock having a value of $50,006. No other
        named
        executive officer held unvested shares of restricted stock as of December
        31,
        2005.





(3)
              Represents
                  matching contributions made by us under our 401 (k) savings
                  plan.




(4)
            Of
                the total bonus of $919,841awarded to Mr. Broshy for 2004, Mr. Broshy
                elected to defer approximately $389,881 in accordance with the Ventiv
                Health, Inc. Deferred Compensation Plan.




(5)
              Does
                  not include discretionary bonuses, if any, that may be awarded
                  after the
                  date of this report with respect to
                  2005.


(6)
            Mr.
                Walter joined the Company in October 2005, a consequence of the
                acquisition of inChord. Prior to joining the Company, Mr. Walter
                served as
                the Chief Executive Officer of inChord. Pursuant to Mr. Walter’s
                employment agreement, he is entitled to receive an annual salary
                of
                $387,000.




**Option
      Grants in Fiscal 2005**





There
      were no options granted in 2005 to the executive officers.





43


**Aggregated
      Option Exercises in Fiscal 2005 and Year-End Option Values**





The
      following table sets forth information with respect to options exercised during
      fiscal 2005 to the individuals named in the Summary Compensation Table pursuant
      to the Company’s 1999 Stock Incentive Plan.





Name
            
            Shares
                Acquired on Exercise
            
            Value
                Realized
              ($)
            
            Number
                of Securities
              Underlying
                Unexercised
              Options/SARs
                at Fiscal Year End
              Exercisable/Unexercisable
            
            Value
                of Unexercised in-the-money
              Options/SARs
                Fiscal
              Year
                End
              Exercisable/UnexercisableEran
                Broshy
            
            
            400,000
            
            $
            7,960,317
            
            
            421,438/57,500
            
            $
            5,828,653
                / $1,076,550John
                R. Emery
            
            
            103,750
            
            
            1,734,014
            
            
            70,000/77,500
            
            $
            536,900/
                $1,534,750Terrell
                G. Herring
            
            
            85,750
            
            
            1,387,587
            
            
            --/156,250
            
            $
            --/
                $1,746,513




**Compensation
      of Directors**





All
      non-management directors receive compensation of $35,000 per year plus $1,000
      for attendance at each Board of Directors or Board Committee meeting, other
      than
      telephonic meetings. In addition, Board Committee Chairpersons receive
      additional annual compensation in the following amounts: Daniel M. Snyder
      (Chairman of the Board) - $15,000, A. Clayton Perfall (Chairman of the Audit
      Committee) - $25,000, and Per G.H. Lofberg, who is Chairman of the Compensation
      Committee (and cannot receive equity compensation pursuant to his current
      employment agreement with Merck Capital Ventures, LLC, his principal employer)
      -
      $90,000, effective June 15, 2005. Eran Broshy, Terrell G. Herring and Blane
      Walter are not additionally compensated for attending Board
      meetings.





Option
      and restricted stock award grants for non-management directors are determined
      by
      the Compensation Committee from time to time. Non-management members of the
      Board of Directors have received options to purchase shares of Common Stock
      and
      restricted stock awards in the Company at the following dates and in the
      following amounts:




**Date**
              **Number
                  of Restricted Stock Awards**Daniel
                  M. Snyder
              June
                  2005
              20,000A.
                  Clayton Perfall
              June
                  2005
              20,000Donald
                  Conklin
              June
                  2005
              20,000John
                  R. Harris
              June
                  2005
              20,000Mark
                  E. Jennings
              June
                  2005(1)
              20,000







(1) On
      June
      15, 2005, Mr. Jennings agreed to surrender for cancellation the 25,000 options
      granted to Mr. Jennings on February 9, 2005.





Non-management
        directors’ 2005 restricted stock awards vest at a rate of 25% per year on the
        anniversary of the grant date.




**Executive
      Employment Contracts**


We
        have
        entered into employment agreements with each of the named officers below
        and on
        such terms and conditions as are described.
 
 *Eran
        Broshy* .
        On June
        14, 1999, Snyder Communications, Inc. retained the services of Mr. Broshy
        as
        President of Snyder Communications, Inc.'s healthcare group. Under the terms
        of
        Mr. Broshy's employment agreement, which was assumed by us in connection
        with
        our spin-off from Snyder Communications, Inc., and an amendment to the
        employment agreement made April 8, 2002, he was entitled to an initial annual
        base salary of $490,000; his base salary currently in effect in 2006 is
        $560,000, as compared to $535,137 for 2005 and $519,841 for 2004. He is also
        eligible for an annual bonus award of up to 100% of annual base salary, with
        the
        target bonus being 50% of annual base salary, based on certain performance
        measures. Any bonus determination, either within or outside of Mr. Broshy’s
        contractual range, is discretionary. During 2005, Mr. Broshy was awarded
        a bonus of $600,000.
 
 The
        agreement provides that upon a "change in control" of Ventiv, the vesting
        of
        both the stock options and any restricted stock will accelerate so that Mr.
        Broshy's options and restricted stock would be fully vested, and that Mr.
        Broshy
        would be awarded a lump sum equal to two times his annual base salary plus
        two
        times his target bonus unless he continues to be employed by us for at least
        18
        months. For purposes of his employment agreement, "change in control" means
        any
        sale, transfer or other disposition of all or substantially all of our assets
        or
        the consummation of a merger or consolidation which results in our stockholders
        immediately prior to such transaction owning, in the aggregate, less than
        a
        majority of the surviving entity. In the event of Mr. Broshy’s termination
        without cause, he is entitled to receive a lump sum of one time his annual
        base
        salary plus target bonus, plus up to an additional twelve monthly payments
        of
        his monthly base salary plus target bonus offset by any compensation Mr.
        Broshy
        earns through other employment.
 
 *John
        R. Emery* .
        Ventiv
        Health, Inc. entered into an employment agreement with John R. Emery on August
        13, 2001, which was amended as of January 1, 2004. Mr. Emery was entitled
        to an
        initial annual base salary of $270,000; his base salary currently in effect
        in
        2006 is $318,270, as compared to $308,827 for 2005 and $300,000 for 2004.
        He is
        also eligible for an annual bonus award of up to 100% of annual base salary,
        with the target bonus being 50% of annual base salary, based on certain
        performance measures. Any bonus determination, either within or outside of
        Mr.
        Emery’s contractual range, is discretionary. During 2005, Mr. Emery was awarded
        a bonus of $277,945.  Mr. Emery was also granted 2,341 shares of restricted
        stock, one-third of which vested on January 1, 2006 and two-thirds will vest
        on
        January 1, 2007.
 
 In
        the
        event of Mr. Emery's termination without cause, he is entitled to receive
        his
        base salary until the earlier of twenty-six (26) weeks after his termination
        or
        the date he gains new employment. The agreement provides that upon a "change
        in
        control" of Ventiv, the vesting of stock options will accelerate so that
        Mr.
        Emery’s options would be fully vested in the event that Mr. Emery is terminated
        without cause within six months following the change in control. For purposes
        of
        his employment agreement, "change in control" means any sale, transfer or
        other
        disposition of all or substantially all of our assets or the consummation
        of a
        merger or consolidation which results in our stockholders immediately prior
        to
        such transaction owning, in the aggregate, less than a majority of the surviving
        entity. Mr. Emery’s agreement also provides that in the event of a change in
        control, Mr. Emery will be eligible for payments of up to one year of base
        salary in lieu of severance or any other payments, in the event that Mr.
        Emery
        has appropriately fulfilled his obligations to facilitate such change in
        control
        for a period of up to one year following such change in control.
 
 *Terrell
        G. Herring* .
        Mr.
        Herring’s employment agreement executed in April 2002 entitled him to an initial
        annual base salary of $230,000; his base salary currently in effect in 2006
        is
        $360,500, as compared to $ 345,000 for 2005
        and $304,615 for 2004. He is also eligible for an annual bonus of up to 100%
        of
        base salary, with the target bonus being 50% of annual base salary, based
        on
        certain performance measures. Any bonus determination, either within or outside
        of Mr. Herring’s contractual range, is discretionary, except that Mr. Herring
        has been guaranteed a minimum $100,00 bonus payout with respect to 2006
        contingent upon continued employment. During 2005, Mr. Herring was awarded
        a
        bonus of $345,000.  In March 2005 Mr. Herring was granted 4,000 shares
        of restricted stock, which vest equally on the first three anniversaries
        of the
        date of grant.  We have also agreed to provide Mr. Herring with life
        insurance in a minimum amount of $1 million.
  44
 In
          the event
          of Mr. Herring's termination without cause or his resignation for good
          reason,
          he is entitled to receive a lump sum payment equal to 52 weeks' base salary
          and
          continuation of his base salary until the earlier of 26 weeks after his
          termination or the date he gains new employment. The agreement provides
          that
          upon a "change in control" of Ventiv, Mr. Herring may become entitled to
          an
          additional payment equal to 18 months' base salary, subject to his having
          satisfactorily performed his employment duties and having used his best
          efforts
          to facilitate the "change in control", if Mr. Herring is either terminated
          without cause within two months prior to the "change in control" or is
          employed
          on the date of the "change in control", provided that if he is so employed
          but
          his employment terminates prior to the six month anniversary of the "change
          in
          control" for any reason other than a termination without cause by us, the
          additional payment will be equal to 9 months' base salary. The agreement
          further
          provides that upon a "change in control" of Ventiv, the vesting of stock
          options
          will accelerate so that Mr. Herring’s options would be fully vested in the event
          that Mr. Herring is terminated without cause within six months following
          the
          change in control. For purposes of his employment agreement, "change in
          control"
          means any sale, transfer or other disposition of all or substantially all
          of our
          assets or the consummation of a merger or consolidation which results in
          our
          stockholders immediately prior to such transaction owning, in the aggregate,
          less than a majority of the surviving entity.
  *Blane
          Walter* .
          Mr.
          Walter's employment agreement was executed on September 6, 2005, became
          effective on October 5, 2005 upon the closing of the inChord acquisition
          and
          continues through December 31, 2007. Mr. Walter was entitled to an initial
          annual base salary of $387,000, subject to such increases as may be approved
          by
          our Board or the Compensation Committee. Prior to the termination date,
          Mr.
          Walter’s employment may be terminated by the Employer only (i) for cause, (ii)
          in the event that inChord fails to achieve certain specified performance
          measures or (iii) a contractually stipulated settlement of certain obligations
          under the inChord acquisition agreement occurs simultaneously with the
          termination.
 
 The
        employment agreements described above for Messrs. Broshy, Emery and Herring
        contain non-competition commitments during the term of employment and for
        a
        period of 12 months after termination of employment. The employment agreement
        described above for Mr. Walter contains a non-competition commitment ending
        on
        October 5, 2010. Additionally, each employment agreement contains a
        non-solicitation provision and provides for assignment by the employee to
        his
        employer of any work products developed by him during the term of his
        employment.


**Compensation
      Committee Interlocks and Insider Participation**




The
        members of the Compensation Committee for the 2005 fiscal year, effective
        February 2005, were Per Lofberg and Donald Conklin. No member of the
        Compensation Committee was at any time during the 2005 fiscal year or at
        any
        other time an officer or employee of Ventiv, and no member had any relationship
        with Ventiv requiring disclosure under Item 404 of Regulation S-K. None of
        our
        executive officers has served on the board of directors or compensation
        committee of any other entity that has or has had one or more executive officers
        who served as a member of the Board of Directors or the Compensation Committee
        during the 2005 fiscal year.


**Item
      12.*****Security
      Ownership of Certain Beneficial Owners and
      Management.***




The
        following table sets forth certain information, to our knowledge, as of March
        1,
        2006 (except as otherwise noted), with respect to the beneficial ownership
        of
        the Common Stock by (i) each person known to us to be the beneficial owner
        of
        more than 5% of the outstanding Common Stock, (ii) each director and nominee
        for
        director, (iii) each of our executive officers named in the Summary Compensation
        Table under "Executive Compensation," and (iv) all of our directors and
        executive officers as a group.
 
 Beneficial
        ownership is determined under the rules of the Securities and Exchange
        Commission and generally includes voting or investment power with respect
        to
        securities. Except as indicated in the footnotes to this table and pursuant
        to
        applicable community property laws, the persons named in the table below
        have
        sole voting and investment power with respect to all shares of Common Stock
        beneficially owned. The number of shares beneficially owned by each person
        or
        group as of March 1, 2006 includes shares of Common Stock that such person
        or
        group had the right to acquire on or within 60 days after March 1, 2006,
        including, but not limited to, upon the exercise of options. References to
        options in the footnotes of the table below include only options to purchase
        shares that were exercisable on or within 60 days after March 1, 2006.





Name
                and Address of Beneficial Owner (1)
            Number
                of Shares and Nature of Beneficial Ownership
            Percent
                of Class (2)Daniel
                M. Snyder (3)(4)
            1,300,001
            4.6%A.
                Clayton Perfall (5)
            100,000
            *Donald
                R. Conklin (6)
            80,000
            *John
                R. Harris (5)
            50,000
            *Mark
                E. Jennings (7)
            10,000
            *Per
                G.H. Lofberg
            --
            --Eran
                Broshy (8)
            491,762
            1.7%John
                R. Emery (9)
            120,810
            *Terrell
                G. Herring
            13,374
            *Blane
                Walter
            416,180
            1.5%All
                directors and executive officers as a group (9 persons)
            2,582,127
            8.9%





*
      Denotes
      less than 1%.


(1)
            Except
                as noted, the address for each such beneficial owner is c/o Ventiv
                Health,
                Inc., 200 Cottontail Lane, Vantage Court North, Somerset, New Jersey
                08873


(2)
            Percentage
                ownership is calculated by dividing the number of shares beneficially
                owned by each person or group listed in the table by the sum of the
                27,862,436 shares of Common Stock outstanding on March 1, 2006 plus
                the
                number of shares of Common Stock that such person or group had the
                right
                to acquire on or within 60 days after March 1,
                2006.


(3)
            Includes
                300,000 shares of Common Stock issuable upon exercise of options.
                The
                address for Daniel M. Snyder is 21300 Redskin Park Drive, Ashburn,
                Virginia 20147.


(4)
            Mr.
                Snyder holds interests in three private investment companies ("Private
                Funds") to which shares of our capital stock or our predecessor,
                Snyder
                Communications, Inc., were contributed in exchange for interests
                in the
                Private Funds.  Under certain circumstances (principally at the
                discretion of the Private Funds), Mr. Snyder may receive shares of
                Common
                Stock held by the Private Funds in satisfaction of redemption
                rights.  No such shares have been included in Mr. Snyder's beneficial
                ownership of Common Stock set forth in the above
                table.


(5)
            All
                shares reported comprise of Common Stock issuable upon exercise of
                options.


(6)
            Includes
                70,000 shares of Common Stock issuable upon exercise of options and
                10,000
                shares of Common Stock held after the exercise of
                options.


(7)
            All
                shares were purchased in the open market prior to election to the
                Board of
                Directors.


(8)
            Includes
                421,438 shares of Common Stock issuable upon exercise of options. 
                In
                addition, Mr. Broshy holds an interest in a Private Fund to which
                shares
                of our common stock were contributed in exchange for such interest.
                Under
                certain circumstances, Mr. Broshy may receive shares of common stock
                held
                by the Private Fund in satisfaction of redemption rights. No such
                shares
                have been included in Mr. Broshy's beneficial ownership of common
                stock
                set forth in the above
                table.


(9)
            Includes
                120,000 shares of Common Stock issuable upon exercise of
                options.




Please
        refer to Item 5 of this report for a summary of securities authorized for
        issuance under the Company’s equity compensation plans as of December 31,
        2005.


45


**SECTION
        16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE**
 
 Section
        16(a) of the Securities Exchange Act of 1934 requires our executive officers
        and
        directors, and persons who beneficially own more than ten percent (10%) of
        a
        registered class of our equity securities, to file reports of ownership and
        changes in ownership with the Securities and Exchange Commission and the
        Nasdaq
        National Market System. In addition, under Section 16(a), trusts for which
        a
        reporting person is a trustee and a beneficiary (or for which a member of
        his
        immediate family is a beneficiary) may have a separate reporting obligation
        with
        regard to ownership of our Common Stock and other equity securities. Such
        reporting persons are required by rules of the Securities and Exchange
        Commission to furnish us with copies of all Section 16(a) reports they file.
        Based upon a review of the copies of such forms furnished to us and written
        representations from and communications with our executive officers, directors
        and greater than ten percent (10%) beneficial stockholders, we believe that
        during 2005, all transactions were timely reported except as set forth below.
        To
        our knowledge, all forms relating to transactions during 2005 have been timely
        filed.
 
 **Item
        13.*****Certain
        Relationships and Related Transactions****.*
 
 Our
        inChord subsidiary is party to a lease with Olde Worthington Road LLC for
        inVentiv Communications’ current headquarters facility in Westerville, Ohio.
        This facility is partially owned by the current inVentiv Communications’ Chief
        Executive Officer (who is also a member of the Board of Directors), his brothers
        and other current employees of inVentiv Communications through their ownership
        in GSW Capital LLC. GSW Capital LLC is a 50% owner of Olde Worthington Road
        LLC.
        The term of the lease is fifteen years, and expires on September 30, 2015
        (subject to an early termination option effective as of September 30, 2010
        in favor of inChord). The entry by inChord into this lease preceded our
        acquisition of inChord and, accordingly, no person who has a financial interest
        in this transaction was one of our executive officers or directors at the
        time
        the lease was executed.


**Item
      14.*****Principal
      Accounting Fees and Services.***





**Audit
      Fees**





The
      aggregate fees billed or expected to be billed for the audit of the Company's
      annual financial statements for the fiscal years ended December 31, 2005
      and 2004 and for the reviews of the financial statements included in the
      Company's Quarterly Reports on Form 10-Q were $2.6 million and $1.8
      million, respectively. The $2.6 million of audit fees incurred from Deloitte
      & Touche LLP for 2005 services included approximately $1.4 million related
      to the audit of the Company’s internal controls over financial reporting under
      Section 404 of the Sarbanes-Oxley Act of 2002.





**Audit-Related,
      Tax and Other Fees**





The
      aggregate fees of approximately $0.5 million and $0.4 million for audit-related
      services by Deloitte & Touche LLP during 2005 and 2004, respectively, were
      primarily for due diligence work and other acquisition-related costs. The
      aggregate fees billed for tax services by Deloitte & Touche LLP during 2004
      were approximately $0.1 million. These fees related to tax services provided
      in
      our previously divested UK-based business unit. No other fees besides the audit,
      audit-related and tax fees previously mentioned were billed by Deloitte
& Touche LLP in the Company’s last two fiscal years.





**Pre-Approval
      Policies and Procedures**





It
      is the
      Audit Committee’s policy to approve in advance the types of audit,
      audit-related, tax, and any other services to be provided by the Company’s
      independent registered public accounting firm.





The
      Audit
      Committee has approved all of the aforementioned independent registered public
      accounting firm’s services and fees for 2005 and 2004 and, in doing so, has
      considered whether the provision of such services is compatible with maintaining
      independence.




46





**PART
      IV**




(a)  *1.
      The following Consolidated Financial Statements of Ventiv Health, Inc. are
      filed
      under "Item 8. Financial Statements and Supplementary Data."*





Consolidated
      Balance Sheets as of December 31, 2005 and 2004





Consolidated
      Statements of Operations for the years ended December 31, 2005, 2004 and
      2003.





Consolidated
      Statements of Stockholders' Equity for the years ended December 31, 2005, 2004
      and 2003.





Consolidated
      Statements of Cash Flows for the years ended December 31, 2005, 2004 and
      2003.





Notes
      to
      Consolidated Financial Statements





*2.
      The following financial statement schedule is filed under "Item 8. Financial
      Statements and Supplementary Data* ."





Schedule
      II--Valuation and Qualifying Accounts





All
      other
      schedules are omitted because they are not applicable or are not required under
      Regulation S-X.





*3.
      The following exhibits are filed herewith or are incorporated herein by
      reference, as indicated* .





Exhibit
              Description3.1
              Amended
                  and Restated Certificate of Incorporation of Ventiv Health, Inc.
                  (filed as
                  Exhibit 3.1 to the Registrant's Form 10 filed with the Securities
                  and
                  Exchange Commission under the Securities Act of 1934, as amended).
                  *3.2
              Amended
                  and Restated By-Laws of Ventiv Health, Inc. (filed as Exhibit 3.2
                  to the
                  Registrant's Current Report on Form 8-K filed June 21, 2005.
                  *4.1
              Specimen
                  form of certificate representing Ventiv Health, Inc. common stock
                  (filed
                  as Exhibit 4.1 to the Registrant's Form 10 filed with the Securities
                  and
                  Exchange Commission under the Securities Act of 1934, as amended).
                  *10.1
              Form
                  of Distribution Agreement between Snyder Communications, Inc. and
                  Ventiv
                  Health, Inc. (filed as Exhibit 10.1 to the Registrant's Form 10
                  filed with
                  the Securities and Exchange Commission under the Securities Act
                  of 1934,
                  as amended). *10.2
              Form
                  of Tax Sharing Agreement between Snyder Communications, Inc. and
                  Ventiv
                  Health, Inc. (filed as Exhibit 10.2 to the Registrant's Form 10
                  filed with
                  the Securities and Exchange Commission under the Securities Act
                  of 1934,
                  as amended). *10.4
              Ventiv
                    Health, Inc. 1999 Stock Incentive Plan (filed as Appendix A to
                    the
                    Registrant’s 2004 Proxy Statement filed with the Securities and Exchange
                    Commission under the Securities Act of 1934, as amended).
                    *10.4.1
              Form
                  of Executive Officer Stock Option Agreement (filed as Exhibit 10.4.1
                  to
                  the Registrant's Annual Report on Form 10-K filed for the fiscal
                  year
                  ended December 31, 2004 with the Securities and Exchange Commission
                  under
                  the Securities Act of 1934, as amended). *10.4.2
              Form
                  of Director Stock Option Agreement (filed as Exhibit 10.4.2 to
                  the
                  Registrant's Annual Report on Form 10-K filed for the fiscal year
                  ended
                  December 31, 2004 with the Securities and Exchange Commission under
                  the
                  Securities Act of 1934, as amended). * .10.4.3
              Form
                  of Restricted Stock Agreement (filed as Exhibit 10.4.3 to the Registrant's
                  Annual Report on Form 10-K filed for the fiscal year ended December
                  31,
                  2004 with the Securities and Exchange Commission under the Securities
                  Act
                  of 1934, as amended). *10.4.4
              Form
                of Director Restricted Stock Agreement. (filed as Exhibit 10.4.4
                to the
                Registrant's Form 8-K filed with the Securities and Exchange Commission
                under the Securities Act of 1934, as amended, on June 21, 2005).
                *10.4.5
              Form
                of Executive Officer Restricted Stock Agreement. (filed as Exhibit
                10.4.5
                to the Registrant's Form 8-K filed with the Securities and Exchange
                Commission under the Securities Act of 1934, as amended, on June
                21,
                2005).*10.5
              Employment
                  Agreement, dated June 14, 1999 by and between Eran Broshy and Snyder
                  Communications, Inc. (filed as Exhibit 10.5 to the Registrant's
                  Form 10
                  filed with the Securities and Exchange Commission under the Securities
                  Act
                  of 1934, as amended). *10.5.1
              Amendment
                  dated January 1, 2004 to Employment Agreement, dated June 14, 1999,
                  by and
                  between Eran Broshy and Snyder Communications, Inc. (filed as Exhibit
                  10.5.1 to the Registrant's Annual Report on Form 10-K filed for
                  the fiscal
                  year ended December 31, 2003 with the Securities and Exchange Commission
                  under the Securities Act of 1934, as amended). *10.9
              Employment
                  Agreement, dated August 13, 2001 by and between John R. Emery and
                  Ventiv
                  Health, Inc.
                (filed
                  as Exhibit 10.9 to the Registrant's Annual Report on Form 10-K
                  for the
                  fiscal year ended December 31, 2001 filed with the Securities and
                  Exchange
                  Commission under the Securities Act of 1934, as amended).
                  *10.9.1
              Amendment
                  dated January 1, 2004 to Employment Agreement, dated August 13,
                  2001, by
                  and between John R. Emery and Ventiv Health, Inc. (filed as Exhibit
                  10.9.1
                  to the Registrant's Annual Report on Form 10-K for the fiscal year
                  ended
                  December 31, 2003 filed with the Securities and Exchange Commission
                  under
                  the Securities Act of 1934, as amended). *10.11
              Employment
                  Agreement, dated April 8, 2002 by and between Terrell Herring and
                  Ventiv
                  Health, Inc.
                (filed
                  as Exhibit 10.11 to the Registrant's Annual Report on Form 10-K
                  for the
                  fiscal year ended December 31, 2002 filed with the Securities and
                  Exchange
                  Commission under the Securities Act of 1934, as amended).
                  *10.11.1
              Amendment
                  dated January 1, 2004 to Employment Agreement, dated April 8, 2002,
                  by and
                  between Terrell Herring and Ventiv Health, Inc. (filed as Exhibit
                  10.11.1
                  to the Registrant's Annual Report on Form 10-K for the fiscal year
                  ended
                  December 31, 2003 filed with the Securities and Exchange Commission
                  under
                  the Securities Act of 1934, as amended). *10.12
              Asset
                  Purchase Agreement dated as of September 21, 2004 among Ventiv
                  Health,
                  Inc., Smith Hanley Holding Corporation and the other parties thereto
                  (filed as Exhibit 2.1 to the Registrant's Form 8-K/A filed with
                  the
                  Securities and Exchange Commission under the Securities Act of
                  1934, as
                  amended, on December 29, 2004). * #10.13
              Ventiv
                  Health, Inc. 2005 Deferred Compensation Plan (filed as Exhibit
                  10.1 to the
                  Registrant's Form 8-K filed with the Securities and Exchange Commission
                  under the Securities Act of 1934, as amended, on November 29, 2004).
                  *10.14
              Asset
                  Purchase Agreement dated as of November 19, 2004 among Ventiv Health,
                  Inc., HHI, L.L.C. and the other parties thereto (filed as Exhibit
                  10.14 to
                  the Registrant's Quarterly Report on Form 10-Q for the three months
                  ended
                  March 31, 2005 filed with the Securities and Exchange Commission
                  under the
                  Securities Act of 1934, as amended). *10.15
              Asset
                  Purchase Agreement dated as of August 5, 2005 among Ventiv Health,
                  Inc.,
                  Pharmaceutical Resource Solutions LLC and the other parties thereto
                  (filed
                  as Exhibit 10.15 to the Registrant's Quarterly Report on Form 10-Q
                  for the
                  three months ended September 30, 2005 filed with the Securities
                  and
                  Exchange Commission under the Securities Act of 1934, as amended).
                  *10.16
              Acquisition
                  Agreement dated September 6, 2005 by and among inChord Communications,
                  Inc., the shareholders of inChord Communications, Inc., Ventiv
                  Health,
                  Inc. and Accordion Holding Corporation (filed as Exhibit 2.1 to
                  the
                  Registrant's Current Report on Form 8-K filed October 11, 2006
                  with the
                  Securities and Exchange Commission under the Securities Act of
                  1934, as
                  amended).*10.17
              Form
                  of Indemnification Agreement entered into with each executive officer
                  and
                  director of Ventiv (filed as Exhibit 10.1 to the Registrant's Current
                  Report on Form 8-K filed October 11, 2006 with the Securities and
                  Exchange
                  Commission under the Securities Act of 1934, as amended).*10.18
              Employment
                  Agreement dated as of September 6, 2005 between inChord Communications,
                  Inc. and R. Blane Walter (filed as Exhibit 10.2 to the Registrant's
                  Current Report on Form 8-K filed October 11, 2006 with the Securities
                  and
                  Exchange Commission under the Securities Act of 1934, as
                  amended).*10.19
              Credit
                  Agreement dated as of October 5, 2005 among Ventiv Health, Inc.,
                  the
                  Subsidiary Guarantors,the
                  lenders party thereto, UBS Securities LLC, as bookmanager, as joint
                  lead
                  arranger, and as documentation agent, UBS Loan Finance LLC, as
                  swingline
                  lender, UBS AG, Stamford Branch, as issuing bank, as administrative
                  agent
                  for the Lenders and as collateral agent, Banc of America Securities
                  LLC,
                  as joint lead arranger, and Bank of America, N.A., as syndication
                  agent(filed
                  as Exhibit 10.3 to the Registrant's Current Report on Form 8-K
                  filed
                  October 11, 2006 with the Securities and Exchange Commission under
                  the
                  Securities Act of 1934, as amended).*10.20
              Agreement
                  and Plan Merger dated as of February 2, 2006 among inVentiv Health,
                  Inc.,
                  Acorn Acquisition Corp., Adheris, Inc. and Eugene W. Williams II,
                  solely
                  in his capacity as stockholder representative.21.1
              Subsidiaries
                  of Ventiv Health, Inc.23
              Consent
                  of Deloitte & Touche LLP.31.1
              Chief
                  Executive Officer’s Certification Pursuant to Rule 13a-14(a) of the
                  Exchange Act31.2
              Chief
                  Financial Officer’s Certification Pursuant to Rule 13a-14(a) of the
                  Exchange Act32.1
              Chief
                  Executive Officer's Certification of Financial Statements Pursuant
                  to 18
                  U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 200232.2
              Chief
                  Financial Officer's Certification of Financial Statements Pursuant
                  to 18
                  U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002


*
      Incorporated by reference.


#
      Confidential treatment requested.





47




**SIGNATURES**





Pursuant
      to the requirements of Section 13 or 15(d) 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.





**VENTIV
      HEALTH, INC.**




By:
            /s/ John
              R. EmeryJohn R. EmeryChief
              Financial Officer





Date:
        March 15, 2006





Pursuant
      to the requirements of the Securities Exchange Act of 1934, this report has
      been
      signed below by the following persons on behalf of the Registrant and in the
      capacities and on the dates indicated.





***Signature***
            ***Title***
            ***Date****/s/
                ERAN BROSHY*
            *Chief
                Executive Officer and Director*
            *March
                15 2006**Eran
                Broshy*
            *(Principal
                Executive Officer)**/s/
                JOHN R. EMERY*
            *Chief
                Financial Officer*
            *March
                15, 2006**John
                R. Emery*
            *(Principal
                Financial Officer and Principal Accounting Officer)**/s/
                TERRELL G. HERRING*
            *President
                and CEO, inVentiv Commercial Services*
            *March
                15, 2006**Terrell
                G. Herring*
            *(Director)**/s/
                BLANE WALTER*
            *President
                and CEO, inVentiv Communications Services*
            *March
                15 2006**Blane
                Walter*
            *(Director)**/s/
                DANIEL M. SNYDER*
            *Chairman
                of the Board*
            *March
                15, 2006**Daniel
                M. Snyder**/s/
                DONALD R. CONKLIN*
            *Director*
            *March
                15, 2006**Donald
                R. Conklin**/s/
                JOHN R. HARRIS*
            *Director*
            *March
                15, 2006**John
                R. Harris*/s/*MARK
                E. JENNINGS*
            *Director*
            *March
                15, 2006**Mark
                E.Jennings*/s/*PER
                G.H. LOFBERG*
            *Director*
            *March
                15, 2006**Per
                G.H. Lofberg**/s/
                A. CLAYTON PERFALL*
            *Director*
            *March
                15, 2006**A.
                Clayton Perfall*