UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934
                  For the quarterly period ended March 31, 2000

                                       or

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

                         Commission File Number: 1-12213

                                  COVANCE INC.
             (Exact name of Registrant as specified in its Charter)

              Delaware                               22-3265977
      (State of Incorporation)          (I.R.S. Employer Identification No.)

 210 Carnegie Center, Princeton, New Jersey            08540
  (Address of Principal Executive Offices)           (Zip Code)

    Registrant's telephone number, including area code: (609) 452-4440


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 [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

As of April 25, 2000, the Registrant had 57,175,952 shares of Common Stock
outstanding.


<PAGE>

                                  COVANCE INC.
             FORM 10-Q FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000

                                      INDEX

                                                                          PAGE
                                                                          ----
PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements (Unaudited)

  Consolidated Balance Sheets--March 31, 2000 and December 31, 1999.......  2

  Consolidated Statements of Income--Three Months ended March 31, 2000
  and 1999 ...............................................................  3

  Consolidated Statements of Cash Flows--Three Months ended March 31,
  2000 and 1999 ..........................................................  4

  Notes to Consolidated Financial Statements..............................  5


Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations ...........................................  7

Item 3.  Quantitative and Qualitative Disclosure About Market Risk........ 11


PART II. OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K................................. 12


SIGNATURE PAGE............................................................ 13


                                                                               1
<PAGE>
<TABLE>
<CAPTION>

                                   COVANCE INC. AND SUBSIDIARIES
                                    CONSOLIDATED BALANCE SHEETS
                               MARCH 31, 2000 AND DECEMBER 31, 1999

(DOLLARS IN THOUSANDS)                                                  MARCH 31,       DECEMBER 31,
                                                                          2000              1999
                                                                       ----------        ---------
ASSETS                                                                 (UNAUDITED)
<S>                                                                     <C>              <C>
Current Assets:
    Cash and cash equivalents.................................         $  13,461        $  25,444
    Accounts receivable, net...................................          154,858          139,680
    Unbilled services..........................................           55,496           52,647
    Inventory..................................................           28,676           26,474
    Deferred income taxes......................................           17,610           17,292
    Prepaid expenses and other assets..........................           43,763           40,587
                                                                        --------         --------
       Total Current Assets....................................          313,864          302,124
Property and equipment, net....................................          304,500          296,943
Goodwill, net..................................................           83,455           84,575
Other assets...................................................           19,847           16,672
                                                                        --------         --------
       Total Assets............................................         $721,666         $700,314
                                                                        ========         ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
    Accounts payable...........................................        $  33,321        $  25,715
    Accrued payroll and benefits...............................           26,944           34,138
    Accrued expenses and other liabilities.....................           36,313           40,318
    Unearned revenue...........................................           72,452           75,531
    Short-term debt............................................           19,471           19,787
    Income taxes payable.......................................            5,939            4,388
                                                                        --------         --------
       Total Current Liabilities...............................          194,440          199,877
Long-term debt.................................................          223,499          208,724
Deferred income taxes..........................................           14,425           14,982
Other liabilities..............................................           14,324           14,079
                                                                        --------         --------
       Total Liabilities.......................................          446,688          437,662
                                                                        --------         --------
Commitments and Contingent Liabilities

Stockholders' Equity:
    Common Stock - Par value $0.01 per share; 140,000,000 shares
          authorized; 59,153,250 and 59,024,976 shares issued and
          outstanding, including those held in treasury,
          at March 31, 2000 and December 31, 1999, respectively              592              590
    Paid-in capital............................................          100,525           95,954
    Retained earnings..........................................          202,829          192,190
    Accumulated other comprehensive income--
          Cumulative translation adjustment....................           (9,061)          (6,504)
    Treasury stock at cost (2,025,589 and 1,995,000 shares at
          March 31, 2000 and December 31, 1999, respectively)..          (19,907)         (19,578)
                                                                        --------         --------
       Total Stockholders' Equity..............................          274,978          262,652
                                                                        --------         --------
       Total Liabilities and Stockholders' Equity..............         $721,666         $700,314
                                                                        ========         ========

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

                                                                                                2
</TABLE>
<PAGE>
                          COVANCE INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
               FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
                                   (UNAUDITED)

                                                   THREE MONTHS ENDED MARCH 31
                                                  -----------------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)         2000             1999
                                                  ------------     ------------

Net revenues ...................................  $    209,627     $    210,632

Cost and expenses:
    Cost of revenue ............................       145,924          141,430
    Selling, general and administrative ........        30,423           33,811
    Depreciation and amortization ..............        13,356           11,225
                                                  ------------     ------------
         Total .................................       189,703          186,466
                                                  ------------     ------------
Income from operations .........................        19,924           24,166
                                                  ------------     ------------
Other expense, net:
    Interest expense, net ......................         2,892            1,986
    Other income ...............................          (381)             (80)
                                                  ------------     ------------
         Other expense, net ....................         2,511            1,906
                                                  ------------     ------------
Income before taxes ............................        17,413           22,260
Taxes on income ................................         6,774            9,112
                                                  ------------     ------------
Net income .....................................  $     10,639     $     13,148
                                                  ============     ============




Basic earnings per share .......................       $  0.19          $  0.22

Weighted average shares outstanding - basic ....    57,037,201       58,562,963


Diluted earnings per share .....................       $  0.19          $  0.22

Weighted average shares outstanding - diluted ..    57,199,742       59,827,159


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

                                                                               3
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<TABLE>
<CAPTION>
                          COVANCE INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
                                   (UNAUDITED)

                                                           THREE MONTHS ENDED MARCH 31
                                                           ----------------------------
(DOLLARS IN THOUSANDS)                                         2000            1999
                                                           ------------    ------------
<S>                                                        <C>             <C>
Cash flows from operating activities:
Net income .............................................   $     10,639    $     13,148
Adjustments to reconcile net income to net cash provided
    by operating activities:
    Depreciation and amortization ......................         13,356          11,225
    Stock issued under employee benefit and stock
      compensation plans ...............................            130           2,178
    Deferred income tax provision ......................           (875)           (938)
    Other ..............................................             48              26
    Changes in operating assets and liabilities:
      Accounts receivable ..............................        (15,178)          2,502
      Unbilled services ................................         (2,849)        (16,709)
      Inventory ........................................         (2,202)          1,462
      Accounts payable .................................          7,606          (1,196)
      Accrued liabilities ..............................        (11,199)         (1,960)
      Unearned revenue .................................         (3,079)         (4,283)
      Income taxes payable .............................          1,551           6,418
      Other assets and liabilities, net ................         (3,267)          1,306
                                                           ------------    ------------
Net cash (used in) provided by operating activities ....         (5,319)         13,179
                                                           ------------    ------------
Cash flows from investing activities:
    Capital expenditures ...............................        (22,141)        (20,196)
    Contingent purchase price paid in connection with
      prior acquisitions ...............................             --         (15,133)
    Other, net .........................................              9             301
                                                           ------------    ------------
Net cash used in investing activities ..................        (22,132)        (35,028)
                                                           ------------    ------------
Cash flows from financing activities:
    Net borrowings under revolving credit facility .....         15,000          20,000
    Repayments of long-term debt .......................           (225)             --
    Stock issued under employee stock purchase and
      option plans .....................................          1,022           2,659
    Purchase of treasury stock .........................           (329)             --
                                                           ------------    ------------
Net cash provided by financing activities ..............         15,468          22,659
                                                           ------------    ------------
Net change in cash and cash equivalents ................        (11,983)            810
Cash and cash equivalents, beginning of period .........         25,444          19,263
                                                           ------------    ------------
Cash and cash equivalents, end of period ...............   $     13,461    $     20,073
                                                           ============    ============
</TABLE>

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

                                                                               4
<PAGE>

                          COVANCE INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                             MARCH 31, 2000 AND 1999

1.   BASIS OF PRESENTATION

     The accompanying unaudited consolidated financial statements reflect all
normal recurring adjustments which are, in the opinion of management, necessary
for a fair statement of the results of operations for the interim periods
presented. The consolidated financial statements have not been audited and are
subject to such year-end adjustments as may be considered appropriate. You
should read these consolidated financial statements together with the historical
consolidated financial statements of Covance Inc. and subsidiaries ("Covance")
for the years ended December 31, 1999, 1998 and 1997 included in our Annual
Report on Form 10-K for the fiscal year ended December 31, 1999. Operating
results for the three months ended March 31, 2000 are not necessarily indicative
of the results that may be expected for the year ending December 31, 2000.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     USE OF ESTIMATES

     These unaudited consolidated financial statements have been prepared in
conformity with generally accepted accounting principles. Generally accepted
accounting principles require management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from these estimates.

     PREPAID EXPENSES AND OTHER ASSETS

     Covance routinely subcontracts with independent physician investigators in
connection with multi-site clinical trials. Investigator fees are not reflected
in net revenues or expenses since such fees are granted by customers on a
"pass-through" basis without risk or reward to Covance. Amounts receivable from
customers in connection with billed and unbilled investigator fees and
out-of-pocket pass-through costs are included in prepaid expenses and other
current assets in the accompanying Consolidated Balance Sheets and totaled $30.2
million and $27.3 million at March 31, 2000 and December 31, 1999, respectively.

     EARNINGS PER SHARE

     Earnings per share has been calculated in accordance with Financial
Accounting Standards Board ("FASB") Statement No. 128, Earnings Per Share. In
computing diluted earnings per share for the three months ended March 31, 2000
and 1999, the denominator was increased by 162,541 shares and 1,264,196 shares,
respectively, representing the dilution of stock options outstanding at March
31, 2000 and 1999 with exercise prices less than the average market price of
Covance's Common Stock during each respective period.

     COMPREHENSIVE INCOME

     Comprehensive income has been calculated in accordance with FASB Statement
No. 130, Reporting Comprehensive Income. Covance has determined total
comprehensive income to be $8.1 million and $8.0 million for the three months
ended March 31, 2000 and 1999, respectively. Covance's total comprehensive
income represents net income plus the change in the cumulative translation
adjustment equity account for the periods presented.

     SEGMENT REPORTING

     Covance reports information about its operating segments and related
disclosures about products, services, geographic areas and major customers in
accordance with FASB Statement No. 131, Disclosures About Segments of an
Enterprise and Related Information. See Note 5 for segment disclosure.

                                                                               5
<PAGE>

                          COVANCE INC. AND SUBSIDIARIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT'D)
                                   (UNAUDITED)
                             MARCH 31, 2000 AND 1999

3.   SUPPLEMENTAL CASH FLOW INFORMATION

     Cash paid for interest for the three months ended March 31, 2000 and 1999
totaled $3.3 million and $2.3 million, respectively. Cash paid for income taxes
for the three months ended March 31, 2000 and 1999 totaled $4.6 million and $2.5
million, respectively.

4.   RESTRUCTURING

     In order to improve its global competitiveness, better optimize capacity
utilization and enhance quality and service worldwide, during 1999 Covance
consolidated its regionally based Phase II and III clinical services under one
global management structure and formed a unified sales force for its clinical
development, central laboratory, packaging and other related clinical support
services. Primarily in connection with these actions, Covance recorded a pre-tax
restructuring charge of $7.7 million ($4.6 million net of tax) consisting
primarily of $6.5 million in severance and related benefits arising from the
elimination of approximately 165 managerial and staff positions. Severance
payments began in September 1999 and will continue through 2000. As of March 31,
2000, substantially all of these employees have been terminated and a total of
$5.5 million in costs have been paid. The remaining $2.2 million is included in
accrued expenses and other liabilities in the Consolidated Balance Sheet.

5.   SEGMENT INFORMATION

     Covance has two reportable segments: early development and late-stage
development. Early development services, which includes Covance's preclinical
and Phase I clinical service capabilities, involve evaluating a new compound for
safety and early effectiveness as well as evaluating the absorption,
distribution, metabolism and excretion of the compound in the human body. It is
at this stage that a pharmaceutical company, based on available data, will
generally decide whether to continue further development of a drug. Late-stage
development services, which include Covance's clinical development, clinical
support, biomanufacturing and commercialization capabilities, are geared toward
demonstrating the clinical effectiveness of a compound in treating certain
diseases or conditions, obtaining regulatory approval and maximizing the drug's
commercial potential.

     The accounting policies of the reportable segments are the same as those
described in Note 2. Segment net revenues and operating income for the three
months ended March 31, 2000 and 1999 are as follows:

                                             EARLY       LATE-STAGE
                                          DEVELOPMENT    DEVELOPMENT     TOTAL
                                          -----------    -----------     -----
THREE MONTHS ENDED MARCH 31, 2000
   Net revenues from external customers    $  72,169     $ 137,458     $ 209,627
   Operating income                        $  11,008     $   8,916     $  19,924

THREE MONTHS ENDED MARCH 31, 1999
   Net revenues from external customers    $  65,583     $ 145,049     $ 210,632
   Operating income                        $   7,990     $  16,176     $  24,166


6.   NEW ACCOUNTING PRONOUNCEMENTS

     In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin 101, Revenue Recognition ("SAB 101"). SAB 101 summarizes
certain of the SEC staff's views in applying generally accepted accounting
principles to selected revenue recognition issues in financial statements.
Implementation of SAB 101 is required in the second quarter of 2000. Covance is
currently in the process of evaluating the impact, if any, SAB 101 will have on
its consolidated financial position or results of operations.

                                                                               6
<PAGE>

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

     You should read the following discussion together with the unaudited
Covance consolidated financial statements and the accompanying notes included in
this Quarterly Report on Form 10-Q for the quarter ended March 31, 2000.

OVERVIEW

     Covance is a leading contract research organization providing a wide range
of product development services on a worldwide basis to the pharmaceutical,
biotechnology and medical device industries. Covance also provides services such
as health economics and outcomes for managed care organizations, hospitals and
other health care providers and laboratory testing to the chemical, agrochemical
and food industries. The foregoing services comprise two segments for financial
reporting purposes: early development services (includes preclinical and Phase I
clinical); and late-stage development services (includes clinical development,
clinical support, biomanufacturing and commercialization). Covance believes it
is one of the largest biopharmaceutical contract research organizations, based
on 1999 annual net revenues, and one of a few that is capable of providing
comprehensive global product development services. Covance offers its clients
high quality services designed to reduce product development time. This enables
Covance's customers to introduce their products into the marketplace faster and
as a result, maximize the period of market exclusivity and monetary return on
their research and development investments. Additionally, Covance's
comprehensive services and broad experience provide its customers with a
variable cost alternative to fixed cost internal development capabilities.

     Historically, a majority of Covance's net revenues have been earned under
contracts. These contracts generally range in duration from a few months to two
years. Revenue from these contracts is generally recognized under either the
percentage of completion method of accounting or as services are rendered or
products are delivered. The contracts may contain provisions for renegotiation
for cost overruns arising from changes in the scope of work. Renegotiated
amounts are included in net revenues when earned and realization is assured. In
some cases, for multi-year contracts a portion of the contract fee is paid at
the time the trial is initiated. Additional payments are made based upon the
achievement of performance-based milestones over the contract duration. Covance
routinely subcontracts with independent physician investigators in connection
with either single or multi-site clinical trials. Investigator fees are not
reflected in net revenues or expenses since these investigator fees are paid by
the customers to Covance on a "pass-through basis" (i.e. without risk or reward
to Covance). Most contracts are terminable either immediately or upon notice by
the client. These contracts typically require payment to Covance of expenses to
wind down a study, payment to Covance of fees earned to date, and, in some
cases, a termination fee or a payment to Covance of some portion of the fees or
profit that could have been earned by Covance under the contract if it had not
been terminated early.

     Covance segregates its recurring operating expenses among three categories:
cost of revenue; selling, general and administrative expenses; and depreciation
and amortization. Cost of revenue consists of appropriate amounts necessary to
complete the revenue and earnings process, and includes direct labor and related
benefit charges, other direct costs and an allocation of facility charges and
information technology costs. Cost of revenue, as a percentage of net revenues,
tends and is expected to fluctuate from one period to another, as a result of
changes in labor utilization and the mix of service offerings involving hundreds
of studies conducted during any period of time. Selling, general and
administrative expenses consist primarily of administrative payroll and related
benefit charges, advertising and promotional expenses, administrative travel and
an allocation of facility charges and information technology costs.

QUARTERLY RESULTS

     Covance's quarterly operating results are subject to variation, and are
expected to continue to be subject to variation, as a result of factors such as
(1) delays in initiating or completing significant drug development trials, (2)
termination of drug development trials, (3) acquisitions and (4) exchange rate
fluctuations. Delays and terminations of trials are often the result of actions
taken by Covance's customers or regulatory authorities and are not typically
controllable by Covance. Since a large amount of Covance's operating costs are
relatively fixed while revenue is subject to fluctuation, minor variations in
the commencement, progress or completion of drug development trials may cause
significant variations in quarterly operating results.

                                                                               7
<PAGE>

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2000 COMPARED WITH THREE MONTHS ENDED MARCH 31,
1999. Net revenues decreased 0.5% to $209.6 million for the three months ended
March 31, 2000 from $210.6 million for the corresponding 1999 period. Excluding
the impact of foreign exchange rate variances between both periods, net revenues
increased 1.7% as compared to the corresponding 1999 period. Net revenues from
Covance's late-stage development services decreased 2.6% for the three months
ended March 31, 2000 as compared to the corresponding 1999 period, excluding the
impact of foreign exchange rate variances between both periods. The year over
year reduction in late-stage development net revenues is primarily attributable
to softness in our clinical development services, resulting from weak new
business generation. Year over year revenue growth is also affected by the
comparison to a very strong first quarter of 1999. Net revenues from Covance's
more mature early development services grew 11.1% for the three months ended
March 31, 2000 as compared to the corresponding 1999 period, excluding the
impact of foreign exchange rate variance between both periods.

     Cost of revenue increased 3.2% to $145.9 million or 69.6% of net revenues
for the three months ended March 31, 2000 from $141.4 million or 67.1% of net
revenues for the corresponding 1999 period. Gross margins declined to 30.4% for
the three months ended March 31, 2000 from 32.9% for the corresponding 1999
period. The reduction in gross margins is attributable primarily to our clinical
development services, whose weak new business generation (as mentioned above)
and increasing price competition combined to account for most of the year over
year variance. In addition, direct costs in our biomanufacturing services
increased at a faster rate than net revenues from such services. While this
increase in direct costs was planned to meet demand, net revenues, although
increasing considerably over the corresponding 1999 period, fell short of plan
due to issues associated with both a planned and an unplanned (weather-related)
facility shutdown and subsequent production complications.

     Overall, selling, general and administrative expenses decreased 10.0% to
$30.4 million for the three months ended March 31, 2000 from $33.8 million for
the corresponding 1999 period. As a percentage of net revenues, selling, general
and administrative expenses decreased to 14.5% for the three months ended March
31, 2000 from 16.1% for the corresponding 1999 period. This decrease is
primarily attributable to lower payroll and variable compensation expense.

     Depreciation and amortization increased 19.0% to $13.4 million or 6.4% of
net revenues for the three months ended March 31, 2000 from $11.2 million or
5.3% of net revenues for the corresponding 1999 period due primarily to
increased depreciation expense associated with capital spending.

     Income from operations decreased 17.6% to $19.9 million for the three
months ended March 31, 2000 from $24.2 million for the corresponding 1999
period. As a percentage of net revenues, income from operations decreased to
9.5% for the three months ended March 31, 2000 from 11.5% for the corresponding
1999 period, primarily as a result of the reduction in gross margins discussed
above. Income from operations from Covance's late-stage and early development
segments totaled $8.9 million and $11.0 million, respectively, at March 31, 2000
and $16.2 million and $8.0 million, respectively, at March 31, 1999. The
reduction in late-stage development operating income was due primarily to the
softness in clinical development and biomanufacturing services, as discussed
above.

     Other expense increased $0.6 million to $2.5 million for the three months
ended March 31, 2000 from $1.9 million for the corresponding 1999 period, due to
a $0.9 million increase in interest expense resulting from higher average
borrowings and an increase in the weighted average borrowing rate under our
long-term revolving credit facility as compared to the corresponding 1999
period. This increase was partially offset by a $0.3 million increase in foreign
exchange transaction gains.

     Covance's effective tax rate for the three months ended March 31, 2000
decreased to 38.9% from 40.9% for the corresponding 1999 period. Since Covance
operates on a global basis, its effective tax rate is subject to variation from
period to period due to the changes in the geographic distribution of its
pre-tax earnings.

     Net income decreased 19.1% to $10.6 million for the three months ended
March 31, 2000 from $13.1 million for the corresponding 1999 period, due to the
increases in cost of revenue, depreciation and amortization and interest
expense, all as discussed above.

                                                                               8
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

     Covance's primary cash needs on both a short and long-term basis are for
capital expenditures, expansion of services, possible future acquisitions,
geographic expansion, working capital and other general corporate purposes.
Management believes that through a combination of borrowing under its long-term
revolving credit facility, cash generated from operations and capital that
Covance expects to be made available to it from other credit sources if
required, Covance will have sufficient financial flexibility and ready access to
cash on both a short-term and a long-term basis to fund, as required, capital
expenditures, potential future acquisitions and other longer-term growth
opportunities. At March 31, 2000 and December 31, 1999, there was $205.0 million
and $190.0 million, respectively, of outstanding borrowings and $11.3 million
and $11.3 million, respectively, of outstanding letters of credit, with a
remaining availability of $33.7 million and $48.7 million, respectively, under
Covance's long-term revolving credit facility. Interest on all outstanding
borrowings under Covance's long-term revolving credit facility is based upon the
London Interbank Offered Rate plus a margin and approximated 6.33% and 5.30% per
annum for the three month periods ended March 31, 2000 and 1999, respectively.

     Covance Biotechnology Services Inc. ("Covance Biotechnology") has a $10.0
million short-term revolving credit facility with a bank, of which $10.0 million
of borrowings were outstanding as of March 31, 2000. This short-term revolving
credit facility carries interest at a rate substantially equivalent to the rate
in effect on Covance's borrowings under its long-term credit facility and is
guaranteed by Covance.

     In December 1999, Covance financed its newly constructed North American
packaging facility through a five year, $20 million mortgage which bears
interest at a rate of 7.72% per annum.

     In October 1997, a foreign subsidiary of Covance borrowed 13.5 million
Swiss Francs from a bank. This loan bears interest at a fixed rate of 2.9% per
annum and matures in October 2000. In connection with the loan, Covance provided
a letter of credit in favor of the lender which may be drawn upon in event of
default.

     During the three months ended March 31, 2000, Covance's operations used net
cash of $5.3 million, a decrease of $18.5 million from the corresponding 1999
period. Cash flows from net earnings adjusted for non-cash activity provided
$23.3 million for the three months ended March 31, 2000, down $2.3 million or
9.1% from the corresponding 1999 period. The change in net operating assets used
$28.6 million in cash, primarily due to an increase in accounts receivable and a
reduction in accrued liabilities, and $12.5 million in cash, primarily due to an
increase in unbilled receivables, during the three months ended March 31, 2000
and 1999, respectively.

     Working capital was $119.4 million at March 31, 2000, an increase of $17.2
million from December 31, 1999. Accounts receivable and unbilled services, net
of unearned revenue, at March 31, 2000 of $137.9 million were up $21.1 million
or 18.1% from the December 31, 1999 level of $116.8 million. Net days sales
outstanding ("DSOs") increased from 52 days at December 31, 1999 to 60 days at
March 31, 2000. DSOs are customarily at their lowest levels at year end and
generally increase during the first, second and third quarters, before returning
to their seasonally lower levels at year end. For comparison, DSOs at December
31, 1998 were 55 days and increased to 60 days at March 31, 1999. Covance's
ratio of current assets to current liabilities was 1.61 at March 31, 2000 and
1.51 at December 31, 1999.

     Investing activities for the three months ended March 31, 2000 used $22.1
million compared to $35.0 million for the corresponding 1999 period. Capital
spending for the first three months of 2000 totaled $22.1 million, primarily for
outfitting of new facilities, purchase of new equipment, upgrade of existing
equipment and computer equipment and software for newly hired employees,
compared to $20.2 million for the corresponding 1999 period. Investing
activities for the three months ended March 31, 1999 also included a cash
payment of contingent purchase price totaling approximately $15.1 million in
connection with Covance's 1996 acquisition of Health Technology Associates, Inc.

COMPETITION

     Covance's Clinical Development Services participates in a competitive
industry. Covance believes that this industry is experiencing an increase in
price competition which is having a material adverse effect on both Covance's
late-stage development and consolidated net income, and if such trend continues,
could have a material adverse effect on Covance's late-stage development and
consolidated net revenues and could continue to have a material adverse effect
on Covance's late-stage development and consolidated net income.

                                                                               9
<PAGE>

FOREIGN CURRENCY

     Since Covance operates on a global basis, it is exposed to various foreign
currency risks. Two specific risks arise from the nature of the contracts
Covance executes with its customers since from time to time contracts are
denominated in a currency different than the particular Covance subsidiary's
local currency. This contract currency denomination issue is generally
applicable only to a portion of the contracts executed by Covance's foreign
subsidiaries providing clinical services. The first risk occurs as revenue
recognized for services rendered is denominated in a currency different from the
currency in which the subsidiary's expenses are incurred. As a result, the
subsidiary's net revenues and resultant earnings can be affected by fluctuations
in exchange rates. Some contracts provide that currency fluctuations from the
rates in effect at the time the contract is executed are the responsibility of
the customer. Other contracts provide that currency fluctuations from the rates
in effect at the time the contract is executed up to a specified threshold
(generally plus or minus a few percentage points) are absorbed by Covance while
fluctuations in excess of the threshold are the customer's responsibility. Most
contracts do not specifically address responsibility for currency fluctuations.
Historically, fluctuations in exchange rates from those in effect at the time
contracts were executed have not had a material effect upon Covance's
consolidated financial results.

     The second risk results from the passage of time between the invoicing of
customers under these contracts and the ultimate collection of customer payments
against such invoices. Because the contract is denominated in a currency other
than the subsidiary's local currency, Covance recognizes a receivable at the
time of invoicing for the local currency equivalent of the foreign currency
invoice amount. Changes in exchange rates from the time the invoice is prepared
and payment from the customer is received will result in Covance receiving
either more or less in local currency than the local currency equivalent of the
invoice amount at the time the invoice was prepared and the receivable
established. This difference is recognized by Covance as a foreign currency
transaction gain or loss, as applicable, and is reported in other expense
(income) in Covance's Consolidated Statements of Income.

     Finally, Covance's consolidated financial statements are denominated in
U.S. dollars. Accordingly, changes in exchange rates between the applicable
foreign currency and the U.S. dollar will affect the translation of each foreign
subsidiary's financial results into U.S. dollars for purposes of reporting
Covance's consolidated financial results. The process by which each foreign
subsidiary's financial results are translated into U.S. dollars is as follows:
income statement accounts are translated at average exchange rates for the
period; balance sheet asset and liability accounts are translated at end of
period exchange rates; and equity accounts are translated at historical exchange
rates. Translation of the balance sheet in this manner affects the stockholders'
equity account, referred to as the cumulative translation adjustment account.
This account exists only in the foreign subsidiary's U.S. dollar balance sheet
and is necessary to keep the foreign balance sheet stated in U.S. dollars in
balance. To date such cumulative translation adjustments have not been material
to Covance's consolidated financial position.

TAXES

     Since Covance conducts operations on a global basis, Covance's effective
tax rate has and will continue to depend upon the geographic distribution of its
pre-tax earnings among locations with varying tax rates. Covance's profits are
further impacted by changes in the tax rates of the various taxing
jurisdictions. In particular, as the geographic mix of Covance's pre-tax
earnings among various tax jurisdictions changes, Covance's effective tax rate
may vary from period to period.

INFLATION

     While most of Covance's net revenues are earned under contracts, the
long-term contracts (those in excess of one year) generally include an inflation
or cost of living adjustment for the portion of the services to be performed
beyond one year from the contract date. As a result, Covance believes that the
effects of inflation generally do not have a material adverse effect on its
operations or financial condition.

YEAR 2000 ISSUES

     Commencing in 1997, Covance planned and implemented a Year 2000 assessment
and remediation plan. The plan approached the Year 2000 problem from an
internal, supplier and customer perspective. As a result of this plan, Covance's
information systems have been successfully transitioned into the Year 2000 and
Covance's operations have not been adversely affected by Year 2000 computer
issues.

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<PAGE>

     Beginning in early 1998, Covance began to incur costs and make expenditures
related to the Year 2000 project. Covance expects to continue to incur costs and
make expenditures relating to the Year 2000 project into the year 2000. These
costs and expenditures can be broadly classified into two categories:

     (1) amounts that will be expensed as incurred. These amounts consist of
         internal payroll relating to employees newly hired or redeployed to
         work on the Year 2000 project, external consultants and the net book
         value of non-Year 2000 compliant equipment to be replaced; and

     (2) amounts that will be capitalized and depreciated over the useful lives
         of the associated assets. These amounts consist of the purchase price
         of new hardware, software and other equipment acquired to replace
         existing hardware, software and other equipment that is not Year 2000
         compliant.

     Covance currently estimates that the costs of internal payroll, external
consultants and the net book value of equipment to be replaced, amounts that
have and will be expensed as incurred, will total approximately $8.5 million
over the three year period ending December 31, 2000. Of these amounts, a total
of $0.3 million has been incurred and expensed during the three month period
ended March 31, 2000 and a total of $8.2 million has been incurred and expensed
to date (including $5.6 million in 1999 and $2.3 million in 1998).

     Covance currently estimates that the cost of new hardware, software and
other equipment to be acquired in replacement of existing non-Year 2000
compliant hardware, software and other equipment will total approximately $6.5
million. Of these amounts, capitalizable expenditures totaling $0.1 million have
been made during the three month period ended March 31, 2000 and capitalizable
expenditures totaling $6.3 million have been made to date (including $4.5
million in 1999 and $1.7 million in 1998).

     The primary source of funds for all costs yet to be incurred and
expenditures to be made is expected to be provided by Covance's operating cash
flows.

     FORWARD LOOKING STATEMENTS. Statements in this Management's Discussion and
Analysis of Financial Condition and Results of Operations, as well as in certain
other parts of this Quarterly Report on Form 10-Q that look forward in time, are
forward looking statements made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Forward looking statements
include statements concerning plans, objectives, goals, strategies, future
events or performance, expectations, predictions, and assumptions and other
statements which are other than statements of historical facts. All such forward
looking statements are based on the current expectations of management and are
subject to, and are qualified by, risks and uncertainties that could cause
actual results to differ materially from those expressed or implied by those
statements. These risks and uncertainties include, but are not limited to,
Covance's ability to estimate costs of Year 2000 remediation, price competition
in the clinical development services industry, Covance's ability to obtain
credit on terms satisfactory to it, and risks and uncertainties set forth in
Covance's filings with the Securities and Exchange Commission including without
limitation its Annual Report on Form 10-K.

NEW ACCOUNTING PRONOUNCEMENTS

     In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin 101, Revenue Recognition ("SAB 101"). SAB 101 summarizes
certain of the SEC staff's views in applying generally accepted accounting
principles to selected revenue recognition issues in financial statements.
Implementation of SAB 101 is required in the second quarter of 2000. Covance is
currently in the process of evaluating the impact, if any, SAB 101 will have on
its consolidated financial position or results of operations.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

See Management's Discussion and Analysis of Financial Condition and Results of
Operations

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PART II. OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits:

        (1) Exhibit 10.A - Amendment No. 1 to Executive Employment Letter
            between Covance Inc. and Stephen J. Sullivan.
        (2) Exhibit 10.B - Covance Inc. Variable Compensation Plan.
        (3) Exhibit 10.C - Amendment No. 1 to the Covance Inc. Employee Stock
            Purchase Plan.
        (4) Exhibit 27 - Financial Data Schedule  (Edgar filing only)

(b)  Reports on Form 8-K

     During the three month period ended March 31, 2000, no reports on Form
     8-K were filed.


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                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                        COVANCE INC.

Dated: April 28, 2000                   By: /s/ CHRISTOPHER A. KUEBLER
                                            --------------------------
                                                Christopher A. Kuebler
                                                Chairman of the Board, President
                                                and Chief Executive Officer

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/ CHRISTOPHER A. KUEBLER
---------------------------
    Christopher A. Kuebler    Chairman of the Board, President    April 28, 2000
                              and Chief Executive Officer
                              (Principal Executive Officer)

/s/ CHARLES C. HARWOOD, JR.
---------------------------
    Charles C. Harwood, Jr.   Corporate Senior Vice President     April 28, 2000
                              and Chief Financial Officer
                              (Principal Financial Officer)

/s/ MICHAEL GIANNETTO
---------------------------
    Michael Giannetto         Corporate Vice President            April 28, 2000
                              and Controller
                              (Principal Accounting Officer)



                                                                              13
<PAGE>

                                  EXHIBIT INDEX

EXHIBIT NUMBER   DESCRIPTION

10.A             Amendment No. 1 to Executive Employment Letter between Covance
                 Inc. and Stephen J. Sullivan.

10.B             Covance Inc. Variable Compensation Plan.

10.C             Amendment No. 1 to the Covance Inc. Employee Stock Purchase
                 Plan.

27               Financial Data Schedule (Edgar filing only)




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