<PAGE>   1

--------------------------------------------------------------------------------
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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                   FORM 10-Q

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

            QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

               FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999

                        COMMISSION FILE NUMBER 340-23520

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

                         QUINTILES TRANSNATIONAL CORP.
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                            <C>
               NORTH CAROLINA                                   56-1714315
       (State or other jurisdiction of                       (I.R.S. Employer
       incorporation or organization)                       Identification No.)
</TABLE>

                         4709 CREEKSTONE DR., SUITE 200
                             DURHAM, NC 27703-8411
          (Address of principal executive offices, including zip code)

                                 (919) 998-2000
              (Registrant's telephone number, including area code)

                                      N/A
   (Former name, former address and former fiscal year, if changed since last
                                    report)

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.  [X] Yes     [ ] No

The number of shares of Common Stock, $.01 par value, outstanding as of October
31, 1999 was 114,951,844.

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<PAGE>   2

                 QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES
                                     INDEX

<TABLE>
<CAPTION>
                                                                                                 PAGE
                                                                                                 ----
<S>                  <C>           <C>                                                           <C>
Part I.              Financial Information
                     Item 1.       Financial Statements (unaudited)
                                   Condensed consolidated balance sheets -- September 30, 1999
                                   and December 31, 1998                                           3
                                   Condensed consolidated statements of operations -- Three
                                   months ended September 30, 1999 and 1998; nine months ended
                                   September 30, 1999 and 1998                                     4
                                   Condensed consolidated statements of cash flows -- Nine
                                   months ended September 30, 1999 and 1998                        5
                                   Notes to condensed consolidated financial statements --
                                   September 30, 1999                                              6
                     Item 2.       Management's Discussion and Analysis of Financial Condition
                                   and Results of Operations                                      12
                     Item 3.       Quantitative and Qualitative Disclosure about Market Risk      24

Part II              Other Information
                     Item 1.       Legal Proceedings                                              24
                     Item 2.       Changes in Securities                                          25
                     Item 3.       Defaults upon Senior Securities - Not Applicable               25
                     Item 4.       Submission of Matters to a Vote of Security Holders -- Not
                                   Applicable                                                     25
                     Item 5.       Other Information -- Not Applicable                            25
                     Item 6.       Exhibits and Reports on Form 8-K                               25

                                                                                                  26
Signatures

                                                                                                  27
Exhibit Index
</TABLE>

                                        2
<PAGE>   3

ITEM 1.  FINANCIAL STATEMENTS (UNAUDITED)

                 QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                              SEPTEMBER 30   DECEMBER 31
                                                                  1999          1998
                                                              ------------   -----------
                                                              (UNAUDITED)     (NOTE 1)
                                                                    (IN THOUSANDS)
<S>                                                           <C>            <C>
ASSETS
Current assets:
  Cash and cash equivalents.................................   $  185,687    $  156,977
  Accounts receivable and unbilled services.................      442,569       363,163
  Investments in debt securities............................       34,958        32,241
  Prepaid expenses..........................................       41,482        26,326
  Other current assets......................................       23,299        24,112
                                                               ----------    ----------
          Total current assets..............................      727,995       602,819

Property and equipment......................................      552,199       430,408
Less accumulated depreciation...............................     (204,892)     (156,763)
                                                               ----------    ----------
                                                                  347,307       273,645
Intangibles and other assets:
  Goodwill, net.............................................      243,566       124,963
  Other intangibles, net....................................       26,922        30,655
  Investments in debt securities............................       76,079        65,456
  Investments in marketable equity securities...............       23,279            --
  Deferred income taxes.....................................       71,291        71,401
  Deposits and other assets.................................       46,773        41,984
                                                               ----------    ----------
                                                                  487,910       334,459
                                                               ----------    ----------
          Total assets......................................   $1,563,212    $1,210,923
                                                               ==========    ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Lines of credit...........................................   $    3,496    $      921
  Accounts payable and accrued expenses.....................      201,034       161,548
  Credit arrangements, current..............................      178,190        33,818
  Unearned income...........................................      154,100       153,535
  Income taxes and other current liabilities................       28,192        13,558
                                                               ----------    ----------
          Total current liabilities.........................      565,012       363,380
Long-term liabilities:
  Credit arrangements, less current portion.................        9,682       155,180
  Long-term obligations.....................................        2,874         2,926
  Deferred income taxes and other liabilities...............       45,155        43,305
                                                               ----------    ----------
                                                                   57,711       201,411
                                                               ----------    ----------
          Total liabilities.................................      622,723       564,791

Shareholders' equity:
  Preferred stock, 0 and 3,264,800 shares issued and
     outstanding at September 30, 1999 and December 31,
     1998, respectively.....................................           --            33
  Common stock and additional paid-in capital, 114,951,099
     and 105,775,628 shares issued and outstanding at
     September 30, 1999 and December 31, 1998,
     respectively...........................................      782,143       559,496
  Retained earnings.........................................      169,706        95,618
  Accumulated other comprehensive income....................       (7,684)       (5,198)
  Other equity..............................................       (3,676)       (3,817)
                                                               ----------    ----------
          Total shareholders' equity........................      940,489       646,132
                                                               ----------    ----------
          Total liabilities and shareholders' equity........   $1,563,212    $1,210,923
                                                               ==========    ==========
</TABLE>

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

                                        3
<PAGE>   4

                 QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                              THREE MONTHS                  NINE MONTHS
                                           ENDED SEPTEMBER 30            ENDED SEPTEMBER 30
                                         ----------------------      --------------------------
                                           1999          1998           1999            1998
                                         --------      --------      ----------      ----------
                                                            (IN THOUSANDS)
<S>                                      <C>           <C>           <C>             <C>
Net revenue............................  $457,827      $362,035      $1,327,554      $1,017,540
Costs and expenses:
  Direct...............................   239,448       186,432         684,372         524,923
  General and administrative...........   147,867       112,822         414,359         316,514
  Depreciation and amortization........    25,726        23,426          75,077          68,397
                                         --------      --------      ----------      ----------
                                          413,041       322,680       1,173,808         909,834
                                         --------      --------      ----------      ----------
Income from operations.................    44,786        39,355         153,746         107,706
Transaction costs......................      (281)       (1,145)        (26,108)         (2,146)
Other income (expense).................       806          (168)          2,451            (723)
                                         --------      --------      ----------      ----------
          Total other income (expense),
            net........................       525        (1,313)        (23,657)         (2,869)
                                         --------      --------      ----------      ----------
Income before income taxes.............    45,311        38,042         130,089         104,837
Income taxes...........................    14,132        16,057          55,116          41,220
                                         --------      --------      ----------      ----------
Net income.............................  $ 31,179      $ 21,985      $   74,973      $   63,617
                                         ========      ========      ==========      ==========
Basic net income per share.............  $   0.27      $   0.21      $     0.66      $     0.61
                                         ========      ========      ==========      ==========
Diluted net income per share...........  $   0.27      $   0.20      $     0.65      $     0.57
                                         ========      ========      ==========      ==========
</TABLE>

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

                                        4
<PAGE>   5

                 QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                              NINE MONTHS ENDED SEPTEMBER 30
                                                              -------------------------------
                                                                  1999               1998
                                                              ------------        -----------
                                                                      (IN THOUSANDS)
<S>                                                           <C>                 <C>
OPERATING ACTIVITIES
Net income..................................................   $  74,973           $ 63,617
Adjustments to reconcile net income to net cash provided by
  operating activities:
  Depreciation and amortization.............................      75,077             68,397
  Non-recurring transaction costs...........................      26,108                 --
  Provision for (benefit from) deferred income tax
     expense................................................       2,899             (2,587)
  Change in operating assets and liabilities................     (66,580)           (26,864)
  Other.....................................................         361                247
                                                               ---------           --------
Net cash provided by operating activities...................     112,838            102,810
INVESTING ACTIVITIES
Proceeds from disposition of property and equipment.........       4,367              4,499
Acquisition of property and equipment.......................    (129,550)           (77,084)
Cash acquired in stock transactions.........................      81,980             (6,903)
Payment of non-recurring transaction costs..................     (24,733)                --
Payment of dividends by pooled entities.....................        (761)            (2,583)
(Purchases) maturities of debt securities, net..............     (10,419)             9,722
Purchases of equity securities, net.........................     (12,424)                --
Other.......................................................          (2)                --
                                                               ---------           --------
Net cash used in investing activities.......................     (91,542)           (72,349)
FINANCING ACTIVITIES
Increase (decrease) in lines of credit, net.................       3,334             (9,015)
Principal payments on credit arrangements...................     (10,092)           (14,735)
Issuance of common stock, net...............................      16,331             14,331
Other.......................................................         (29)                --
                                                               ---------           --------
Net cash provided by (used in) financing activities.........       9,544             (9,419)
Effect of foreign currency exchange rate changes on cash....      (2,130)               742
                                                               ---------           --------
Increase in cash and cash equivalents.......................      28,710             21,784
Cash and cash equivalents at beginning of period............     156,977             93,195
                                                               ---------           --------
Cash and cash equivalents at end of period..................   $ 185,687           $114,979
                                                               =========           ========
</TABLE>

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

                                        5
<PAGE>   6

                 QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (UNAUDITED)

                               SEPTEMBER 30, 1999

1.  BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring adjustments) considered necessary for a fair presentation
have been included. Operating results for the three and nine month periods ended
September 30, 1999 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1999. For further information, refer to
the Consolidated Financial Statements and Notes thereto included in the Current
Report on Form 8-K, dated July 15, 1999 of Quintiles Transnational Corp. (the
"Company").

The balance sheet at December 31, 1998 has been derived from the audited
consolidated financial statements of the Company. The financial statements do
not include all of the information and notes required by generally accepted
accounting principles for complete financial statements.

2.  MERGERS AND ACQUISITIONS

On January 1, 1999, the Company acquired substantial assets of Hoechst Marion
Roussel's ("HMR") Kansas City-based Drug Innovation and Approval facility for
approximately $93 million in cash, most of which (approximately $58 million) is
expected to be paid in the fourth quarter of 1999 when the acquisition of the
physical facility is completed. As a part of this transaction, the Company was
awarded a $436 million contract for continued support and completion of ongoing
HMR development projects over a five-year period. In addition, HMR will offer
the Company the opportunity to provide all U.S. outsourcing services up to an
additional $144 million over the same period.

On February 17, 1999, the Company acquired Oak Grove Technologies, Inc. ("Oak
Grove"), a leader in providing current Good Manufacturing Practice compliance
services to the pharmaceutical, biotechnology and medical device industries. The
Company acquired Oak Grove in exchange for 87,948 shares of the Company's Common
Stock. The acquisition of Oak Grove has been accounted for as a purchase. The
Company has evaluated the pro forma disclosure requirements for the Oak Grove
transaction and has determined that this transaction is immaterial and
therefore, no pro forma disclosures are required.

On March 29, 1999, the Company acquired Pharmaceutical Marketing Services Inc.
("PMSI") and its core company, Scott-Levin, a leader in pharmaceutical market
information and research services in the U.S. The Company acquired PMSI in
exchange for approximately 4,993,732 shares of the Company's Common Stock.
Outstanding PMSI options became options to acquire approximately 440,426 shares
of the Company's Common Stock. In addition, the Company agreed to pay contingent
value payments to former PMSI stockholders who deferred receipt of one-half of
the shares of the Company's Common Stock they were entitled to receive in the
transaction until June 14, 1999. The right to receive contingent value payments
terminated in accordance with the merger agreement. Accordingly, no contingent
value payments were payable to any former PMSI shareholder. The total purchase
price of the PMSI acquisition approximates $201.8 million. The Company recorded
approximately $111.5 million related to the excess cost over the fair value of
net assets acquired, which amount is being amortized over 30 years. The
acquisition of PMSI has been accounted for as a purchase. For the periods
presented, the Company has evaluated the pro forma disclosure requirements for
the PMSI transaction and has determined that this transaction is immaterial and
therefore, no pro forma disclosures are required.

                                        6
<PAGE>   7
                 QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES

On March 30, 1999, the Company acquired ENVOY Corporation ("ENVOY"), a
Tennessee-based provider of healthcare electronic data interchange and data
mining services. The Company acquired ENVOY in exchange for approximately
28,465,083 shares of the Company's Common Stock. Outstanding ENVOY options
became options to acquire approximately 3,914,583 shares of the Company's Common
Stock. The acquisition of ENVOY has been accounted for as a pooling of
interests, and as such, all historical financial data have been restated to
include the historical financial data of ENVOY.

On March 31, 1999, the Company acquired Medlab Pty Ltd and the assets of the
Niehaus & Botha ("N & B") partnership, a South African based clinical
laboratory, in exchange for 271,146 shares of the Company's Common Stock. The
acquisition of N & B has been accounted for as a pooling of interests, and as
such, all historical financial data have been restated to include the historical
financial data of N & B.

On May 19, 1999, the Company acquired Minerva Medical plc ("Minerva"), a
Scotland-based clinical research organization, in exchange for 1,143,625 shares
of the Company's Common Stock. The acquisition of Minerva has been accounted for
as a pooling of interests, and as such, all historical data have been restated
to include the historical data of Minerva.

On June 3, 1999, the Company acquired SMG Marketing Group Inc. ("SMG"), a
Chicago-based leading healthcare market information company, in exchange for
1,170,291 shares of the Company's Common Stock. The acquisition of SMG has been
accounted for as a pooling of interests, and as such, all historical data have
been restated to include the historical data of SMG.

On July 2, 1999, the Company acquired Medcom, Inc., a New Jersey-based provider
of physician meetings and educational events to help pharmaceutical companies
raise awareness of their products among healthcare professionals, for
approximately $2.5 million in cash. In addition, the Company agreed to pay the
former Medcom, Inc. owners earnout payments based on a multiple of 1999 profits
for Medcom as defined in the Medcom purchase agreement. The acquisition of
Medcom, Inc. has been accounted for as a purchase. The Company has evaluated the
pro forma disclosure requirements for the Medcom, Inc. transaction and has
determined that this transaction is immaterial and therefore, no pro forma
disclosures are required.

On July 15, 1999, the Company acquired MediTrain, a Netherlands-based multimedia
pharmaceutical sales representative training company, in exchange for 19,772
shares of the Company's Common Stock. The acquisition of MediTrain has been
accounted for as a purchase. The Company has evaluated the pro forma disclosure
requirements for the MediTrain transaction and has determined that this
transaction is immaterial and therefore, no pro forma disclosures are required.

On August 27, 1999, the Company acquired Medicines Control Consultants Pty Ltd.
("MCC"), a South African-based pharmaceutical regulatory consulting group, for
approximately $1 million in cash. The acquisition of MCC has been accounted for
as a purchase. The Company has evaluated the pro forma disclosure requirements
for the MCC transaction and has determined that this transaction is immaterial
and therefore, no pro forma disclosures are required.

                                        7
<PAGE>   8
                 QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES

Reconciliation of results of operations previously reported by the separate
entities prior to the mergers and as restated for the combined company follows
(in thousands, except per share data):

<TABLE>
<CAPTION>
                                      COMPANY      ENVOY     N & B    MINERVA     SMG     CONSOLIDATED
                                     ----------   --------   ------   -------   -------   ------------
<S>                                  <C>          <C>        <C>      <C>       <C>       <C>
For the three months ended
September 30, 1998:
Net revenue........................  $  308,064   $ 47,290   $2,631   $ 1,157   $ 2,893    $  362,035
Net income (loss)..................      21,449      2,271       24    (1,787)       28        21,985
Basic net income per share.........        0.28                                                  0.21
Diluted net income per share.......  $     0.27                                            $     0.20
For the nine months ended September
  30, 1999:
Net revenue........................  $1,261,985   $ 54,468   $2,724   $ 1,938   $ 6,439    $1,327,554
Net income (loss) (1)..............      75,817     (3,316)     535       290     1,647        74,973
Basic net income per share(1)......        0.74                                                  0.66
Diluted net income per share(1)....  $     0.73                                            $     0.65
For the nine months ended September
  30, 1998:
Net revenue........................  $  861,929   $132,763   $8,282   $ 4,429   $10,137    $1,017,540
Net income (loss)..................      60,722      2,958       83    (1,988)    1,842        63,617
Basic net income per share.........        0.78                                                  0.61
Diluted net income per share.......  $     0.77                                            $     0.57
</TABLE>

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

(1) Includes transaction costs and amortization of certain acquired intangible
    assets.

3.  SIGNIFICANT CUSTOMERS

One customer accounted for 10.2% of consolidated net revenue for the nine months
ended September 30, 1999. These revenues were earned by the Company's product
development and commercialization segments. No customer accounted for greater
than 10% of consolidated net revenue for the three months ended September 30,
1999 and 1998 and the nine months ended September 30, 1998.

4.  NET INCOME PER SHARE

The following table sets forth the computation of basic and diluted net income
per share (in thousands, except per share data):

<TABLE>
<CAPTION>
                                                      THREE MONTHS ENDED    NINE MONTHS ENDED
                                                         SEPTEMBER 30          SEPTEMBER 30
                                                      ------------------    ------------------
                                                       1999       1998       1999       1998
                                                      -------    -------    -------    -------
<S>                                                   <C>        <C>        <C>        <C>
Net income..........................................  $31,179    $21,985    $74,973    $63,617
                                                      =======    =======    =======    =======
Weighted average shares:
  Basic weighted average shares.....................  114,907    105,071    112,994    104,510
  Effect of dilutive securities
     Stock options..................................    1,857      2,782      2,312      2,889
     Preferred stock................................       --      3,264         --      3,264
                                                      -------    -------    -------    -------
  Diluted weighted average shares...................  116,764    111,117    115,306    110,663
                                                      =======    =======    =======    =======
Basic net income per share..........................  $  0.27    $  0.21    $  0.66    $  0.61
Diluted net income per share........................  $  0.27    $  0.20    $  0.65    $  0.57
</TABLE>

Options to purchase approximately 7.0 million and 3.0 million shares of common
stock with exercise prices ranging between $33.94 and $56.25 per share were
outstanding during the three and nine months ended

                                        8
<PAGE>   9
                 QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES

September 30, 1999, respectively, but were not included in the computation of
diluted net income per share because the options' exercise price was greater
than the average market price of the common shares and, therefore, the effect
would be antidilutive.

The conversion of the Company's 4.25% Convertible Subordinated Notes into
approximately 3.5 million shares of common stock was not included in the
computation of diluted net income per share because the effect would be
antidilutive.

5.  COMPREHENSIVE INCOME

The following table represents the Company's comprehensive income for the three
and nine months ended September 30, 1999 and 1998 (in thousands):

<TABLE>
<CAPTION>
                                                      THREE MONTHS ENDED    NINE MONTHS ENDED
                                                         SEPTEMBER 30          SEPTEMBER 30
                                                      ------------------    ------------------
                                                       1999       1998       1999       1998
                                                      -------    -------    -------    -------
<S>                                                   <C>        <C>        <C>        <C>
Net income..........................................  $31,179    $21,985    $74,973    $63,617
Other comprehensive income:
  Unrealized gain on marketable securities, net of
     tax............................................      641        165      4,218        197
  Foreign currency adjustment.......................    7,572      5,867     (6,702)     4,224
                                                      -------    -------    -------    -------
Comprehensive income................................  $39,392    $28,017    $72,489    $68,038
                                                      =======    =======    =======    =======
</TABLE>

6.  CREDIT ARRANGEMENTS

As a result of the acquisition of PMSI, the Company had a forward sale
arrangement with CIBC Oppenheimer ("CIBC") pursuant to which the Company
transferred all of the IMS Health common stock in exchange for cash and a note
payable of $73.0 million. All of the Company's 1.2 million shares of IMS Health
common stock were held by CIBC as collateral against the Company's obligation to
deliver these shares in August 1999. In accordance with the terms of the
agreement, the forward sale and related note payable were settled in August
1999.

7.  COMMITMENTS AND CONTINGENCIES

On September 30, 1999 a class action lawsuit was filed in the United States
District Court for the Middle District of North Carolina against the Company and
two of its executive officers and directors on behalf of all persons who
purchased or otherwise acquired shares of the Company's common stock between
July 16, 1999 and September 15, 1999. The complaint alleges violations of
federal securities laws, including violations of Section 10(b) of the Securities
Exchange Act of 1934 and Rule 10b-5 thereunder. In particular, among other
claims, the complaint alleges that defendants made certain statements about the
Company's anticipated growth that were misleading because they failed to
disclose that the pharmaceutical industry allegedly had reversed its trend of
outsourcing clinical trials and that the Company had been notified that clinical
trials for a class of cardiovascular drugs would be discontinued. The complaint
seeks unspecified damages, plus costs and expenses, including attorneys' fees
and experts' fees.

Since then, three additional class action complaints have been filed against the
Company in the same court. These three new actions assert essentially the same
claims and seek the same relief as the original complaint. One of the new
complaints, filed October 26, 1999, seeks to expand the class to include a
purported sub-class of persons who purchased Company call options, or sold
Company put options, during the class period. The Company anticipates that all
of the existing lawsuits, and any additional suits that may be filed, ultimately
will be consolidated into a single action. The Company continues to believe that
all of the claims are without merit and intends vigorously to defend the
lawsuits.

In February 1999, Kenneth Hodges ("Plaintiff") filed a civil lawsuit naming as
defendants Richard L. Borison, Bruce I. Diamond, 14 pharmaceutical companies and
Quintiles Laboratories Limited, a subsidiary of

                                        9
<PAGE>   10
                 QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES

the Company. The complaint alleges that certain drug trials conducted by Drs.
Borison and Diamond in which Plaintiff alleges he participated between 1988 and
1996 were not properly conducted or supervised, that Plaintiff had violent
adverse reactions to many of the drugs and that his schizophrenia was aggravated
by the drug trials. Consequently, Plaintiff alleges that he was subject to
severe mortification, injured feelings, shame, public humiliations,
victimization, emotional turmoil and distress. The complaint alleges claims for
battery, fraudulent inducement to participate in the drug experiments, medical
malpractice, negligence in conducting the experiments, and intentional
infliction of emotional distress. Plaintiff seeks to recover his actual damages
in unspecified amounts, medical expenses, litigation costs, and punitive
damages. Nowhere in the complaint are found any specific allegations against
Quintiles Laboratories Limited nor any specific factual connection between the
Company and the Plaintiff's claims. The Company believes the claims alleged
against it are vague and meritless, and the recovery sought is baseless. The
Company intends to vigorously defend itself against these claims.

Three class action complaints were filed in 1998, and later consolidated into a
single action against ENVOY and certain of its executive officers. The complaint
asserted claims under Sections 10(b) and 20(a) of the Securities Exchange Act of
1934, as amended, and Rule 10b-5 promulgated thereunder, and also asserted
additional claims under Tennessee common law for fraud and negligent
misrepresentation. On September 15, 1999, the Federal Court for the Middle
District of Tennessee granted ENVOY's motion to dismiss each of the complaints.
The Court dismissed the claims without prejudice.

                                       10
<PAGE>   11
                 QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES

8.  SEGMENTS

The following table presents the Company's operations by reportable segment. The
Company is managed through three reportable segments, namely, the product
development service group, the commercialization service group and the
QUINTERNET(TM) informatics service group. Management has distinguished these
segments based on the normal operations of the Company. The product development
group is primarily responsible for all phases of clinical research and outcomes
research consulting. The commercialization group is primarily responsible for
sales force deployment and strategic marketing services. The QUINTERNET(TM)
informatics group is primarily responsible for electronic data interchange and
related informatics and includes primarily ENVOY, which was acquired in the
first quarter of 1999. The Company does not include non-recurring costs ($5.1
million for the three months ended September 30, 1998, and $3.7 million and
$15.2 million for the nine months ended September 30, 1999 and 1998,
respectively), interest income (expense) and income tax (benefit) in segment
profitability. Overhead costs are allocated based upon management's best
estimate of efforts expended in managing the segments. There are not any
significant intersegment revenues.

<TABLE>
<CAPTION>
                                                THREE MONTHS ENDED        NINE MONTHS ENDED
                                                   SEPTEMBER 30              SEPTEMBER 30
                                               --------------------    ------------------------
                                                 1999        1998         1999          1998
                                               --------    --------    ----------    ----------
                                                                (IN THOUSANDS)
<S>                                            <C>         <C>         <C>           <C>
Net revenue:
  Product development........................  $228,523    $185,417    $  697,000    $  513,382
  Commercialization..........................   161,828     126,435       437,930       361,258
  QUINTERNET(TM) informatics.................    67,476      50,183       192,624       142,900
                                               --------    --------    ----------    ----------
                                               $457,827    $362,035    $1,327,554    $1,017,540
                                               ========    ========    ==========    ==========
Income from operations:
  Product development........................  $ 14,323    $ 20,724    $   72,380    $   56,499
  Commercialization..........................    15,403      10,854        41,227        33,912
  QUINTERNET(TM) informatics.................    15,060      12,842        43,860        32,490
                                               --------    --------    ----------    ----------
                                               $ 44,786    $ 44,420    $  157,467    $  122,901
                                               ========    ========    ==========    ==========
</TABLE>

<TABLE>
<CAPTION>
                                                 AS OF SEPTEMBER 30, 1999        AS OF DECEMBER 31, 1998
                                                 ------------------------        -----------------------
<S>                                              <C>                             <C>
Total assets:
  Product development........................           $  847,080                     $  754,129
  Commercialization..........................              271,730                        267,091
  QUINTERNET(TM) informatics.................              444,402                        189,703
                                                        ----------                     ----------
                                                        $1,563,212                     $1,210,923
                                                        ==========                     ==========
</TABLE>

                                       11
<PAGE>   12
                 QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES

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

CAUTIONARY STATEMENT FOR FORWARD-LOOKING INFORMATION

Information set forth in this Form 10-Q, including Management's Discussion and
Analysis of Financial Condition and Results of Operations and "Risk Factors",
contains various "forward looking statements" within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Act of 1934,
which statements represent the Company's judgement concerning the future and are
subject to risks and uncertainties that could cause the Company's actual
operating results and financial position to differ materially. Such forward
looking statements can be identified by the use of forward looking terminology
such as "may," "will," "expect," "anticipate," "estimate," "believe," or
"continue," or the negative thereof or other variations thereof or comparable
terminology.

The Company cautions that any such forward looking statements are further
qualified by important factors that could cause the Company's actual operating
results to differ materially from those in the forward looking statements,
including without limitation, our ability to efficiently distribute backlog
among therapeutic business units and match demand to resources, actual operating
performance, the ability to maintain large contracts or enter into new
contracts, the ability of the Company to integrate acquired businesses with the
Company's historical operations, the costs and impact of the year 2000 issue,
the actual costs of the combining of the acquired businesses, the ability to
operate successfully in the lines of business resulting from the ENVOY and PMSI
transactions, the Company's ability to introduce new service offerings and
achieve commercial success for those offerings and the level of demand for
services. See "Risk Factors" for additional factors that could cause the
Company's actual results to differ.

RESULTS OF OPERATIONS

The Company's consolidated financial data have been restated to include ENVOY,
N & B, Minerva and SMG.

  Three Months Ended September 30, 1999 and 1998

Net revenue for the third quarter of 1999 was $457.8 million, an increase of
$95.8 million or 26.5% over the third quarter of 1998 net revenue of $362.0
million. Growth occurred across each of the Company's three segments. Factors
contributing to the growth included an increase of contract service offerings,
the provision of increased services rendered under existing contracts, the
initiation of services under contracts awarded subsequent to the third quarter
of 1998 and the Company's 1999 acquisitions accounted for under purchase
accounting which contributed approximately $11.0 million of net revenue for the
third quarter of 1999. Net revenue for the product development group increased
23.2% to $228.5 million for the third quarter of 1999 as compared to $185.4
million for the third quarter of 1998. This growth was slower than anticipated
as a result of several factors, including early termination and delays of
clinical trials and utilization rates that were lower than historical levels.
Net revenue for the commercialization group increased 28.0% to $161.8 million
for the third quarter of 1999 as compared to $126.4 million for the third
quarter of 1998. The net revenue for the third quarter of 1999 for the
commercialization group included approximately $2.2 million of net revenue
contributed by a 1999 acquisition accounted for as a purchase. Net revenue for
the QUINTERNET(TM) informatics group increased 34.5% to $67.5 million for the
third quarter of 1999 as compared to $50.2 million for the third quarter of
1998. The net revenue for the third quarter of 1999 for the QUINTERNET(TM)
informatics group included approximately $7.7 million of net revenue contributed
by a 1999 acquisition accounted for as a purchase. In addition, the
QUINTERNET(TM) informatics group continued to experience an increase in the
volume of transactions processed.

Direct costs, which include compensation and related fringe benefits for
billable employees, cost of communications and related electronic data
interchange ("EDI") and transaction processing expenses and other expenses
directly related to contracts, were $239.4 million or 52.3% of net revenue for
the third quarter of 1999 versus $186.4 million or 51.5% of net revenue for the
third quarter of 1998. The increase in direct costs as a percentage of net
revenue was primarily attributable to a decrease in the utilization rates
achieved during the third quarter, as discussed above.
                                       12
<PAGE>   13
                 QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES

General and administrative expenses, which include compensation and fringe
benefits for administrative employees, non-billable travel, professional
services, advertising, computer and facility expenses, were $147.9 million or
32.3% of net revenue for the third quarter of 1999 versus $112.8 million or
31.2% of net revenue for the third quarter of 1998. Also included in general and
administrative expenses were incremental costs related to the Company's Year
2000 Program of $2.9 million for the third quarter of 1999 versus $1.2 million
for the third quarter of 1998. The remaining $33.3 million increase in general
and administrative expenses was primarily due to an increase in personnel,
facilities and locations and outside services resulting from the Company's
growth.

Depreciation and amortization were $25.7 million or 5.6% of net revenue for the
third quarter of 1999 versus $23.4 million or 6.5% of net revenue for the third
quarter of 1998. Included is amortization of certain acquired intangible assets
of $5.1 million for the three months ended September 30, 1998. These intangible
assets were fully amortized as of March 31, 1999. Excluding these expenses,
depreciation and amortization were $18.4 million or 5.1% of net revenue for the
third quarter of 1998. Excluding the amortization of certain acquired intangible
assets, amortization expense increased $1.8 million due to the goodwill
amortization resulting from the Company's 1999 acquisitions accounted for under
purchase accounting. The remaining $5.5 million increase is primarily due to the
increase in the capitalized asset base of the Company.

Income from operations was $44.8 million or 9.8% of net revenue for the third
quarter of 1999 versus $39.4 million or 10.9% of net revenue for the third
quarter of 1998. Excluding amortization of certain acquired intangible assets as
discussed above, income from operations was $44.4 million or 12.3% of net
revenue for the third quarter of 1998. Income from operations for the product
development group decreased to $14.3 million or 6.3% of net revenue for the
third quarter of 1999 from $20.7 million or 11.2% of net revenue for the third
quarter of 1998. This decrease results from the early termination and delays of
clinical programs and lower utilization rates as discussed above and an increase
of approximately $1.6 million in incremental costs incurred related to the
Company's Year 2000 Program. Income from operations for the commercialization
group increased to $15.4 million or 9.5% of net revenue for the third quarter of
1999 from $10.9 million or 8.6% of net revenue for the third quarter of 1998.
Excluding the amortization of certain acquired intangible assets as discussed
above, income from operations for the QUINTERNET(TM) informatics group increased
to $15.1 million or 22.3% of net revenue for the third quarter of 1999 from
$12.8 million or 25.6% of net revenue for the third quarter of 1998.

Other income was $525,000 for the third quarter of 1999 versus other expense of
$1.3 million for the third quarter of 1998. Excluding transaction costs, other
income was $806,000 for the third quarter of 1999 versus other expense of
$168,000 for the third quarter of 1998. The $974,000 fluctuation was due to an
increase in net interest income of $1.4 million which was partially offset by a
$400,000 increase in other expense.

The effective tax rate for the third quarter of 1999 was 31.2% versus a 42.2%
effective tax rate for the third quarter of 1998. Excluding the amortization of
certain acquired intangible assets as discussed above and transaction costs
which are not generally deductible for tax purposes, the effective tax rate for
the third quarter of 1999 was 31.0% versus a 36.3% effective tax rate for the
third quarter of 1998. The effective tax rate decrease resulted primarily from
profits generated in locations with lower tax rates. Since the Company conducts
operations on a global basis, its effective tax rate may vary.

  Nine Months Ended September 30, 1999 and 1998

Net revenue for the nine months ended September 30, 1999 was $1.3 billion, an
increase of $310.0 million or 30.5% over the nine months ended September 30,
1998 net revenue of $1.0 billion. Growth occurred across each of the Company's
three segments. Factors contributing to the growth included an increase of
contract service offerings, the provision of increased services rendered under
existing contracts, the initiation of services under contracts awarded
subsequent to September 30, 1998 and the Company's 1999 acquisitions accounted
for under purchase accounting which contributed approximately $21.3 million of
net revenue for the nine months ended September 30, 1999. Net revenue for the
product development group increased 35.8% to $697.0 million for the nine months
ended September 30, 1999 as compared to $513.4 million for the nine months ended
September 30, 1998. Net revenue for the commercialization group increased 21.2%
to $437.9 million
                                       13
<PAGE>   14
                 QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES

for the nine months ended September 30, 1999 as compared to $361.3 million for
the nine months ended September 30, 1998. The net revenue for the nine months
ended September 30, 1999 for the commercialization group included approximately
$2.2 million of net revenue contributed by a 1999 acquisition accounted for as a
purchase. Net revenue for the QUINTERNET(TM) informatics group increased 34.8%
to $192.6 million for the nine months ended September 30, 1999 as compared to
$142.9 million for the nine months ended September 30, 1998. The net revenue for
the nine months ended September 30, 1999 for the QUINTERNET(TM) informatics
group includes approximately $16.1 million of net revenue contributed by a 1999
acquisition accounted for as a purchase. In addition, the QUINTERNET(TM)
informatics group experienced an increase in the volume of transactions
processed.

Direct costs, which include compensation and related fringe benefits for
billable employees, cost of communications and related EDI and transaction
processing expenses and other expenses directly related to contracts, were
$684.4 million or 51.6% of net revenue for the nine months ended September 30,
1999 versus $524.9 million or 51.6% of net revenue for the nine months ended
September 30, 1998.

General and administrative expenses, which include compensation and fringe
benefits for administrative employees, non-billable travel, professional
services, advertising, computer and facility expenses, were $414.4 million or
31.2% of net revenue for the nine months ended September 30, 1999 versus $316.5
million or 31.1% of net revenue for the nine months ended September 30, 1998.
Also included in general and administrative expenses were incremental costs
related to the Company's Year 2000 Program of $6.8 million for the nine months
ended September 30, 1999 versus $1.2 million for the nine months ended September
30, 1998. The remaining $92.2 million increase in general and administrative
expenses was primarily due to an increase in personnel, facilities and locations
and outside services resulting from the Company's growth.

Depreciation and amortization were $75.1 million or 5.7% of net revenue for the
nine months ended September 30, 1999 versus $68.4 million or 6.7% of net revenue
for the nine months ended September 30, 1998. Included is amortization of
certain acquired intangible assets of $3.7 million and $15.2 million for the
nine months ended September 30, 1999 and 1998, respectively. These intangible
assets were fully amortized as of March 31, 1999. Excluding these expenses,
depreciation and amortization were $71.4 million or 5.4% of net revenue for the
nine months ended September 30, 1999 versus $53.2 million or 5.2% of net revenue
for the nine months ended September 30, 1998. Excluding the amortization of
certain acquired intangible assets, amortization expense increased approximately
$3.1 million due to the goodwill amortization resulting from the Company's 1999
acquisitions accounted for under purchase accounting. The remaining $15.0
million increase is primarily due to the increase in the capitalized asset base
of the Company.

Income from operations was $153.7 million or 11.6% of net revenue for the nine
months ended September 30, 1999 versus $107.7 million or 10.6% of net revenue
for the nine months ended September 30, 1998. Excluding amortization of certain
acquired intangible assets as discussed above, income from operations was $157.5
million or 11.9% of net revenue for the nine months ended September 30, 1999
versus $122.9 million or 12.1% of net revenue for the nine months ended
September 30, 1998. Income from operations for the product development group
increased to $72.4 million or 10.4% of net revenue for the nine months ended
September 30, 1999 from $56.5 million or 11.0% of net revenue for the nine
months ended September 30, 1998. Income from operations for the
commercialization group increased to $41.2 million or 9.4% of net revenue for
the nine months ended September 30, 1999 from $33.9 million or 9.4% of net
revenue for the nine months ended September 30, 1998. Excluding the amortization
of certain acquired intangible assets as discussed above, income from operations
for the QUINTERNET(TM) informatics group increased to $43.9 million or 22.8% of
net revenue for the nine months ended September 30, 1999 from $32.5 million or
22.7% of net revenue for the nine months ended September 30, 1998. This increase
primarily results from the efficiencies realized due to the increase in the
volume of transactions processed.

Other expense increased to $23.7 million for the nine months ended September 30,
1999 from $2.9 million for the nine months ended September 30, 1998. Excluding
transaction costs, other income was $2.5 million for the nine months ended
September 30, 1999 versus other expense of $723,000 for the nine months ended
September 30, 1998. The $3.2 million change primarily results from an increase
in net interest income.

                                       14
<PAGE>   15
                 QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES

The effective tax rate for the nine months ended September 30, 1999 was 42.4%
versus a 39.3% effective tax rate for the nine months ended September 30, 1998.
Excluding the amortization of certain acquired intangible assets as discussed
above and transaction costs which are not generally deductible for tax purposes,
the effective tax rate for the nine months ended September 30, 1999 was 34.5% as
compared to a 33.7% effective tax rate for the nine months ended September 30,
1998. The effective tax rate increase resulted primarily from profits generated
in locations with higher tax rates. Since the Company conducts operations on a
global basis, its effective tax rate may vary.

Results of operations for the nine months ended September 30, 1999 were impacted
in the third quarter of 1999 by the same factors discussed under three months
results of operations for the product development group.

LIQUIDITY AND CAPITAL RESOURCES

Cash inflows from operations were $112.8 million for the nine months ended
September 30, 1999 versus $102.8 million for the comparable period of 1998.
Investing activities, for the nine months ended September 30, 1999, consisted
primarily of capital asset purchases, investment security purchases and
maturities and payment of non-recurring transaction costs. Capital asset
purchases required an outlay of cash of $129.6 million for the nine months ended
September 30, 1999 compared to an outlay of $77.1 million for the same period in
1998. Capital asset expenditures for the nine months ended September 30, 1999
included approximately $35 million in connection with the acquisition of the HMR
Drug Innovation and Approval Facility. The remainder of the purchase price,
approximately $58 million, is expected to be paid in the fourth quarter of 1999
when the acquisition of the physical facility is completed.

As of September 30, 1999, total working capital was $163.0 million versus $239.4
million as of December 31, 1998. Net receivables from clients (accounts
receivable and unbilled services, net of unearned income) were $288.5 million at
September 30, 1999 as compared to $209.6 million at the end of 1998. As of
September 30, 1999, accounts receivable were $280.3 million versus $212.7
million at December 31, 1998. Unbilled services were $162.3 million at September
30, 1999 versus $150.4 million at December 31, 1998, offset by unearned income
balances of $154.1 million and $153.5 million, respectively. The number of days
revenue outstanding in accounts receivable and unbilled services, net of
unearned income, was 50 days at September 30, 1999, as compared to 43 days at
December 31, 1998.

During the first five months of 1999, the Company had a L15.0 million
(approximately $24.3 million) unsecured line of credit with a U.K. bank and a
L5.0 million (approximately $8.1 million) unsecured line of credit with a second
U.K. bank. In accordance with their terms, both of these facilities expired in
May 1999.

In May 1999, the Company entered into a L10.0 million (approximately $16.4
million) unsecured line of credit with a U.K. bank. The Company also entered
into a L1.5 million (approximately $2.5 million) general banking facility with
the same U.K. bank. At September 30, 1999, the Company had L9.4 million
(approximately $15.4 million) available under these arrangements.

The Company has a $150 million senior unsecured credit facility ("$150.0 million
facility") with a U.S. bank. At September 30, 1999, the Company had the full
$150 million available under this credit facility. Based upon its current
financing plan, the Company believes the $150.0 million facility would be
available to retire long-term credit arrangements and obligations, if necessary.

Based on its current operating plan, the Company believes that its available
cash and cash equivalents and investments in marketable securities, together
with future cash flows from operations and borrowings under its line of credit
agreements will be sufficient to meet its foreseeable cash needs in connection
with its operations. As part of its business strategy, the Company reviews many
acquisition candidates in the ordinary course of business, and in addition to
acquisitions already made, the Company is continually evaluating new acquisition
and expansion possibilities. The Company may from time to time seek to obtain
debt or equity financing in its ordinary course of business or to facilitate
possible acquisitions or expansion.

                                       15
<PAGE>   16
                 QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES

RISK FACTORS

In addition to the other information provided or incorporated by reference in
our reports, you should consider the following factors carefully in evaluating
us and our business. Additional risks and uncertainties not presently known to
us, that we currently deem immaterial or that are similar to those faced by
other companies in our industry or business in general, such as competitive
conditions, may also impair our business operations. If any of the following
risks occur, our business, financial condition, or results of operations could
be materially adversely affected.

Changes in Outsourcing Trends in the Pharmaceutical and Biotechnology Industries
Could Adversely Affect Our Operating Results and Growth Rate

Economic factors and industry trends that affect our primary customers,
pharmaceutical and biotechnology companies, also affect our business. For
example, the practice of many companies in these industries has been to hire
outside organizations such as ours to conduct large clinical research and sales
and marketing projects. This practice has grown substantially in the 1990s, and
we have benefited from this trend. Some industry commentators believe that the
rate of growth of outsourcing has slowed. If these industries reduced their
tendency to outsource those projects, our operations, financial condition and
growth rate could be materially and adversely affected. In addition, numerous
governments have undertaken efforts to control growing healthcare costs through
legislation, regulation and voluntary agreements with medical care providers and
pharmaceutical companies. If future regulatory cost containment efforts limit
the profits which can be derived on new drugs, our customers may reduce their
research and development spending which could reduce the business they outsource
to us. We cannot predict the likelihood of any of these events or the effects
they would have on our business, results of operations or financial condition.

We May Not Be Able to Successfully Integrate PMSI and ENVOY Into Our Business

In March 1999 we completed the acquisitions of Pharmaceutical Marketing
Services, Inc. and ENVOY Corporation. ENVOY is the largest acquisition we have
completed to date, and PMSI is one of the largest we have ever completed. We may
not achieve the intended benefits of the mergers with PMSI and ENVOY if we are
unable to integrate these businesses with our own successfully. The PMSI and
ENVOY acquisitions have expanded our lines of business and thus involve new
risks. ENVOY is a provider of electronic data interchange (or "EDI") and data
analysis services; PMSI provides market research audits and other studies for
the pharmaceutical industry. If either of these acquisitions fails to meet our
performance expectations, our results of operation and financial condition could
be materially adversely affected. We could encounter a number of difficulties in
the integration of these businesses, such as:

     - retaining PMSI's customers among pharmaceutical companies;

     - retaining ENVOY's EDI customers among pharmacies, health insurance
       companies, hospitals and other healthcare providers;

     - maintaining and increasing PMSI's and ENVOY's competitive presence in the
       healthcare industry;

     - the ability to operate and expand the data analysis portion of ENVOY's
       business;

     - continuing to operate each of PMSI's and ENVOY's businesses efficiently;
       or

     - retaining key PMSI and ENVOY employees.

For example, if either acquired company's current customers are uncertain about
our commitment to support their existing products and services, they could
cancel or refuse to renew current contracts. In addition, the combined company
may be unsuccessful in expanding or retaining its competitive position in the
current and

                                       16
<PAGE>   17
                 QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES

new sectors of the healthcare industry in which it now operates as a result of
factors such as its inability to properly market either acquired company's
services and products. Furthermore, the successful integration of PMSI and ENVOY
depends on the contribution of certain key PMSI and ENVOY employees. The loss of
any key personnel could result in less efficient business operations for the
combined company and could seriously harm its business.

If Companies We Acquire Do Not Perform as Expected or if We Are Unable to Make
Strategic Acquisitions, Our Business Could Be Adversely Affected

A key element of our growth strategy depends on our ability to complete
acquisitions that complement or expand our business and successfully integrate
the acquired companies into our operations. If we are unable to successfully
execute our acquisition strategy, there could be a material adverse effect on
our business, results of operations and financial condition. In the past, some
of our acquisitions performed below our expectations in the short term, but we
experienced no impact to our expectations for our overall results, due in part
to the size of such acquisitions and the performance of other areas of our
business. In the future, if we are unable to operate the business of an acquired
company so that its results meet our expectations, those results could have a
negative impact on our results as a whole. The risk that our results may be
affected if we are unable to successfully operate the businesses we acquire may
increase in proportion with (1) the size of the businesses we acquire, (2) the
lines of business we acquire and (3) the number of acquisitions we complete in
any given time period.

In 1998, we completed 11 acquisitions and announced agreements to acquire PMSI
and ENVOY. As of September 30, 1999, we have completed another nine
acquisitions, including PMSI and ENVOY. In addition, we are currently reviewing
many acquisition candidates and continually evaluating and competing for new
acquisition opportunities. Other risk factors we face as a result of our
aggressive acquisition strategy include the following:

     - the ability to achieve anticipated synergies from combined operations;

     - integrating the operations and personnel of acquired companies,
       especially those in lines of business that differ from our current lines
       of business;

     - the ability of acquired companies to meet anticipated revenue and net
       income targets;

     - potential loss of the acquired companies' key employees;

     - the possibility that we may be adversely affected by risk factors present
       at the acquired companies, including Year 2000 risks;

     - potential losses resulting from undiscovered liabilities of acquired
       companies that are not covered by the indemnification we may obtain from
       the sellers;

     - risks of assimilating differences in foreign business practices and
       overcoming language barriers (for acquisitions of foreign companies); and

     - risks experienced by companies in general that are involved in
       acquisitions.

Due to these risks, we may not be able to successfully execute our acquisition
strategy.

If We Are Unable to Successfully Develop and Market Potential New Services, Our
Growth Could Be Adversely Affected

Another key element of our growth strategy is the successful development and
marketing of new services which complement or expand our existing business. If
we are unable to succeed in (1) developing new services and (2) attracting a
customer base for those newly developed services, we will not be able to
implement this element of our growth strategy, and our future business, results
of operations and financial condition could be adversely affected.
                                       17
<PAGE>   18
                 QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES

For example, as a result of our acquisition of ENVOY, we are expanding our
pharmaceutical and healthcare information and market research services.
Providers of these services analyze healthcare information to study aspects of
current healthcare products and procedures for use in producing new products and
services or in analyzing sales and marketing of existing products. We believe
that the healthcare information ENVOY processes in its current business could be
utilized to create new data analysis services. In addition to the other
difficulties associated with the development of any new service, our ability to
develop this line of service may be limited further by contractual provisions
limiting our use of the healthcare information or the legal rights of others
that may prevent or impair our use of the healthcare information. Due to these
and other limitations, we cannot assure you that we will be able to develop this
type of service successfully. Our inability to develop new products or services
or any delay in development may adversely affect our ability to realize some of
the synergies we anticipate from the acquisition of ENVOY and to maintain our
rate of growth in the future.

Our Results Could Be Adversely Affected by the Potential Loss or Delay of Our
Large Contracts

Many of our contract research customers can terminate our contracts upon 15-90
days' notice. In the event of termination, our contracts often provide for fees
for winding down the project, but these fees may not be sufficient for us to
maintain our margins and termination may result in lower resource utilization
rates. Still, the loss or delay of a large contract or the loss or delay of
multiple contracts could adversely affect our net revenue and profitability. We
believe that this risk has potentially greater effect as we pursue larger
outsourcing arrangements with global pharmaceutical companies, which may
encompass global clinical trials at a number of sites and cross many service
lines. Also, our EDI customers under certain circumstances may enter into
contracts with other providers which lessen the number of transactions processed
by or under our contracts.

Our Backlog May Not Be Indicative of Future Results

We report backlog based on anticipated net revenue from uncompleted projects
that a customer has authorized. Backlog does not include anticipated net revenue
from our transaction processing services since the contracts do not quantify the
volume of transactions processed. We cannot assure you that the backlog we have
reported will be indicative of our future results. A number of factors may
affect our backlog, including:

     - the variable size and duration of projects (some are performed over
       several years);

     - the loss or delay of projects; and

     - a change in the scope of work during the course of a project.

We Face Risks Concerning the Year 2000 Issue

  If We or Our Vendors Do Not Adequately Prepare for the Year 2000 Issue,
  Our Operations Could be Disrupted

We continue to implement our Year 2000 Program described in our previous filings
with the Securities and Exchange Commission, and we refer you to our Form 10-K
for the fiscal year ended December 31, 1998 for information relating to the
staffing, framework and scope of our Year 2000 Program. We have addressed and
substantially completed our assessment, remediation, testing and deployment of
our systems for all service groups. A very small number of remaining systems are
currently undergoing remediation, testing and deployment and are anticipated to
be complete by the end of 1999. Furthermore, ENVOY, one of our recent
acquisitions, will continue testing with customers through the end of 1999. We
expect to complete the core components of our Year 2000 Program before there is
a significant risk that internal Year 2000 problems will have a material impact
on our operations.

Although we cannot control whether and how third parties will address the Year
2000 issue, we are conducting a limited evaluation of services on which we are
substantially dependent. For example, we believe that among our most significant
third party service providers are physician investigators who participate as
independent

                                       18
<PAGE>   19
                 QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES

contractors in clinical studies conducted through our contract research services
and external organizations (such as pharmacies, insurance providers and medical
offices) linked to our QUINTERNET(TM) informatics services. We do not plan to
assess how our customers, such as pharmaceutical and large biotechnology
companies, are dealing with the Year 2000 issue.

  If Our Costs of Addressing the Year 2000 Issue Exceed Our Estimates,
  Our Net Income Could Be Adversely Affected

We estimate that the aggregate costs of our Year 2000 Program, including recent
acquisitions, will be approximately $20.7 million, including costs already
incurred. A significant portion of these costs, approximately $8.1 million, are
not likely to be incremental costs, but rather will represent the redeployment
of existing resources. This reallocation of resources is not expected to have a
significant impact on our day-to-day operations. We incurred total Year 2000
Program costs of $16.8 million through September 30, 1999, of which
approximately $10.4 million represented incremental expense. Our estimates
regarding the cost, timing and impact of addressing the Year 2000 issue are
based on numerous assumptions of future events, including the continued
availability of certain resources, our ability to meet deadlines and the
cooperation of third parties. We cannot assure you our assumptions will be
correct and that these estimates will be achieved. Actual results could differ
materially from our expectations as a result of numerous factors, including the
availability and cost of personnel trained in this area, unforeseen
circumstances that would cause us to allocate our resources elsewhere, costs
relating to the Year 2000 compliance status of acquired companies and similar
uncertainties.

We are developing and finalizing business continuity plans for each service
area. These plans are specifically created based on the unique characteristics
of the affected service group or business unit and each plan will vary based on
the internal and third party risks identified and prioritized for the applicable
service group or business unit. Each plan may also identify incident response
teams to allocate appropriate resources where required and to initiate and
implement decisions in the event of a Year 2000 related failure. We will
continue to develop and refine these plans through the fourth quarter of 1999.

  Our Business Could Be Adversely Affected if Year 2000 Issues Are Not
  Adequately Addressed in Other Parts of the World or by Companies With Which We
  Do Business

We face both internal and external risks from the Year 2000 issue. If realized,
these risks could have a material adverse effect on our business, results of
operations or financial condition. The decentralized nature of our business may
compound these risks if we are unable to coordinate efforts across our global
operations. We believe that our Year 2000 Program will successfully address
these risks, however, we cannot assure you that this program will effectively
address all Year 2000 issues. Notwithstanding our Year 2000 Program, we also
face external risks that may be beyond our control. Our international operations
and our relationships with foreign third parties create additional risks for us,
as many countries outside the United States have been less attuned to the Year
2000 issue. These risks include the possibility that infrastructural systems,
such as electricity, water, natural gas or telephony, will fail in some or all
of the regions in which we operate, as well as the danger that the internal
systems of our foreign suppliers, service providers and customers will fail. Our
business also requires considerable travel, and our ability to perform services
under our customer contracts could be negatively affected if air travel is
disrupted by the Year 2000 issue.

In addition, our business depends heavily on the healthcare industry, including
third party physician investigators, pharmacies, insurance providers and medical
offices. The healthcare industry, and physicians' groups in particular, to date
may not have focused on the Year 2000 issue to the same degree as some other
industries, especially outside of major metropolitan centers. As a result, we
face increased risk that our physician investigators will be unable to provide
us with the data that we need to perform under our contracts on time, if at all.
Thus, the clinical study involved could be slowed or brought to a halt. The
failure due to a Year 2000 issue of an external organization on whose services
we rely significantly could also impact our ability to process transactions in
our informatics services. Also, the failure of our customers to address the Year
2000 issue could negatively impact their ability to utilize our services. While
we intend to develop
                                       19
<PAGE>   20
                 QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES

contingency plans to address certain of these risks, we cannot assure you that
any developed plans will sufficiently insulate us from the effects of these
risks. Any disruptions resulting from the realization of these risks would
affect our ability to perform our services. If we are unable to receive or
process information, or if third parties are unable to provide information or
services to us, we may not be able to meet milestones or obligations under our
customer contracts, which could have a material adverse effect on our business,
results of operations and financial condition.

If We Lose the Services of Dennis Gillings or Other Key Personnel,
Our Business Could Be Adversely Affected

Our success substantially depends on the performance, contributions and
expertise of our senior management team, led by Dennis B. Gillings, Ph.D., our
Chairman of the Board of Directors and Chief Executive Officer. We maintain key
man life insurance on Dr. Gillings in the amount of $3 million. Our performance
also depends on our ability to attract and retain qualified management and
professional, scientific and technical operating staff, as well as our ability
to recruit qualified representatives for our contract sales services. The
departure of Dr. Gillings, or any key executive, or our inability to continue to
attract and retain qualified personnel could have a material adverse effect on
our business, results of operations or financial condition.

Our Product Development Services Create a Risk of Liability From Clinical Trial
Participants and the Parties With Whom We Contract

We contract with drug companies to perform a wide range of services to assist
them in bringing new drugs to market. Our services include supervising clinical
trials, data and laboratory analysis, patient recruitment and other services.
The process of bringing a new drug to market is time-consuming and expensive. If
we do not perform our services to contractual or regulatory standards, the
clinical trial process could be adversely affected. Additionally, if clinical
trial services such as laboratory analysis do not conform to contractual or
regulatory standards trial participants could be affected. These events would
create a risk of liability to us from the drug companies with whom we contract
or the study participants.

We also contract with physicians to serve as investigators in conducting
clinical trials. Such testing creates risk of liability for personal injury to
or death of volunteers, particularly to volunteers with life-threatening
illnesses, resulting from adverse reactions to the drugs administered during
testing. It is possible third parties could claim that we should be held liable
for losses arising from any professional malpractice of the investigators with
whom we contract or in the event of personal injury to or death of persons
participating in clinical trials. We do not believe we are legally accountable
for the medical care rendered by third party investigators, and we would
vigorously defend any such claims. Nonetheless, it is possible we could be found
liable for those types of losses.

In addition to supervising tests or performing laboratory analysis, we also own
a number of labs where Phase I clinical trials are conducted. Phase I clinical
trials involve testing a new drug on a limited number of healthy individuals,
typically 20 to 80 persons, to determine the drug's basic safety. We also could
be liable for the general risks associated with ownership of such a facility.
These risks include, but are not limited to, adverse events resulting from the
administration of drugs to clinical trial participants or the professional
malpractice of Phase I medical care providers.

We maintain insurance to cover these risks but the insurance might not be
adequate and it would not cover the risk of a drug company deciding not to do
business with us as a result of poor performance.

Relaxation of Government Regulation Could Decrease the Need For the Services We
Provide

Governmental agencies throughout the world, but particularly in the United
States, highly regulate the drug development/approval process. A large part of
our business involves helping pharmaceutical and biotechnology companies through
the regulatory drug approval process. Any relaxation in regulatory approval
standards could eliminate or substantially reduce the need for our services,
and, as a result, our business, results of
                                       20
<PAGE>   21
                 QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES

operations and financial condition could be materially adversely affected.
Potential regulatory changes under consideration in the United States and
elsewhere include mandatory substitution of generic drugs for patented drugs,
relaxation in the scope of regulatory requirements or the introduction of
simplified drug approval procedures. These and other changes in regulation could
have an impact on the business opportunities available to us.

Failure to Comply With Existing Regulations Could Result in a Loss of Revenue

Any failure on our part to comply with applicable regulations could result in
the termination of ongoing clinical research or sales and marketing projects or
the disqualification of data for submission to regulatory authorities, either of
which could have a material adverse effect on us. For example, if we were to
fail to verify that informed consent is obtained from patient participants in
connection with a particular clinical trial, the data collected from that trial
could be disqualified, and we could be required to redo the trial under the
terms of our contract at no further cost to our customer, but at substantial
cost to us.

Proposed Regulations May Increase the Cost of Our Business or Limit Our Service
Offerings

Certain of our current services relate to the diagnosis and treatment of
disease. The confidentiality of patient-specific information and the
circumstances under which such patient-specific records may be released for
inclusion in our databases or used in other aspects of our business, are subject
to substantial government regulation. Additional legislation governing the
possession, use and dissemination of medical record information and other
personal health information has been proposed at both the state and federal
levels. This legislation may (1) require us to implement security measures that
may require substantial expenditures or (2) limit our ability to offer some of
our products and services. These and other changes in regulation could limit our
ability to offer some of our products or have an impact on the business
opportunities available to us.

Industry Regulation May Restrict Our Ability to Analyze and Disseminate
Pharmaceutical and Healthcare Data

As described above, the pharmaceutical industry is subject to extensive
regulations at the federal, state and international levels, including
limitations on the prices drug companies may charge. Such regulations may cause
our pharmaceutical company clients to revise or reduce their marketing programs.
In addition, we are directly subject to certain restrictions on the collection
and use of data. Laws relating to the collection and use of data are evolving,
as are contractual rights. We cannot assure you that contractual restrictions
imposed by our customers, legislation or regulations will not, now or in the
future, directly or indirectly restrict the analysis or dissemination of the
type of information we gather and therefore materially adversely affect our
operations.

Consolidation in the Healthcare Industry May Adversely Affect Our Business

Many healthcare providers and payors are consolidating to create larger
healthcare organizations. This consolidation reduces the number of potential
customers for our EDI and data analysis services, and the increased bargaining
power of these organizations could lead to reductions in the amounts paid for
such services. For example, payors and other healthcare information companies,
such as billing services and practice management vendors, which currently
utilize our EDI services, have developed or acquired transaction processing and
networking capabilities and may cease utilizing our EDI services in the future.
Industry developments are increasing the amount of capitation-based care and
reducing the need for providers to make claims or reimbursements for products or
services. The impact of these developments in the healthcare EDI and transaction
processing industry, as well as the import for the development of new data
analysis products, is difficult to predict and could materially adversely affect
our business.

                                       21
<PAGE>   22
                 QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES

Our Services Are Subject to Evolving Industry Standards and Rapid Technological
Changes

The markets for our services, particularly our QUINTERNET(TM) informatics
services, which include our EDI and data analysis 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;

     - achieve market acceptance for new services; and

     - respond to emerging industry standards and other technological changes.

Particularly, the current industry standard EDI platform for processing
transactions could be replaced or supplemented by an internet platform to handle
these transactions. Some of our competitors in the EDI business are beginning to
implement such a platform. If others succeed in implementing an internet
platform and are able to gain market acceptance of that platform, whether or not
we develop and execute an internet platform, our EDI business could be
materially adversely affected.

Exchange Rate Fluctuations May Affect Our Results of Operations and Financial
Condition

We derive a large portion of our net revenue from international operations; for
example, we derived approximately 44.3% of our 1998 net revenue from outside the
United States. Our financial statements are denominated in U.S. dollars; thus,
factors associated with international operations, including changes in foreign
currency exchange rates, could significantly affect our results of operations
and financial condition. Exchange rate fluctuations between local currencies and
the U.S. dollar create risk in several ways, including:

     - Foreign Currency Translation Risk.  The revenue and expenses of our
       foreign operations are generally denominated in local currencies.

     - Foreign Currency Transaction Risk.  Our service contracts may be
       denominated in a currency other than the currency in which we incur
       expenses related to such contracts.

We try to limit these risks through exchange rate fluctuation provisions stated
in our service contracts, or we may hedge our transaction risk with foreign
currency exchange contracts or options. Despite these efforts, we may still
experience fluctuations in financial results from our operations outside the
United States, and we cannot assure you that we will be able to favorably reduce
our currency transaction risk associated with our service contracts.

On January 1, 1999, a new currency, the euro, became the legal currency for 11
of the 15 member countries of the European Economic Community. Between January
1, 1999 and January 1, 2002, governments, companies and individuals may conduct
business in these countries in both the euro and existing national currencies.
On January 1, 2002, the euro will become the sole currency in these countries.
We are evaluating the impact that conversion to the euro will have on our
business. In particular we are reviewing (1) whether we may have to change the
prices of our services in the different countries because they will now be
dominated in the same currency in each country and (2) whether we will have to
change the terms of any financial instruments in connection with our hedging
activities described above. Based on current information and our initial
evaluation, we do not expect the cost of any necessary corrective action to
seriously harm our business. However, we will continue to evaluate the impact of
these and other possible effects of the conversion to the euro on our business.
We cannot assure you that the costs associated with the conversion to the euro
will not in the future seriously harm our business, results of operations or
financial condition.

We May Be Adversely Affected By Customer Concentration

We have one customer that accounted for 10.2% of our revenues for the nine
months ended September 30, 1999. These revenues resulted from services provided
by our product development and commercialization
                                       22
<PAGE>   23
                 QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES

service groups. If this or any future customer of similar size decreases or
terminates its relationship with us, our business, results of operations or
financial condition could be materially adversely affected.

We Rely on Specific Data Centers for Our EDI Business

Our EDI business relies on a host computer system to perform real-time EDI
transaction processing. This host computer system is contained in a single data
facility. The host computer system does not have a remote backup data center.
Although the host computer system is insured, if there is a fire or other
disaster at the data facility, our EDI business could be materially adversely
affected.

Our EDI business also relies on a data center operated by a third party to
perform many of our other healthcare EDI transaction processing services. The
facility is located in Tampa, Florida and is operated by GTE Data Services
Incorporated, with whom we have contracted for such processing services. Our EDI
business relies primarily on this facility to process batch claims and other
medical EDI transaction sets. Our contract with GTE requires GTE to maintain
continuous processing capability and a "hot site" disaster recovery system. This
contract expires in December 2003. If the GTE facility's services are disrupted
or delayed, our EDI business could be materially adversely affected.

We Cannot Predict the Need for Independent Healthcare EDI Processing

Our EDI business strategy anticipates that providers of healthcare services and
payors will increase their use of electronic processing of healthcare
transactions in the future. The development of the business of electronically
transmitting healthcare transactions is affected, and somewhat hindered, by the
complex nature and types of transactions that must be processed. Furthermore,
while the wide variety of processing forms used by different payors has fostered
the need for healthcare EDI and transaction processing clearinghouses such as
ENVOY to date, if such forms become standardized, through consolidation of
payors or otherwise, then the need for independent third party healthcare EDI
processing could become less prevalent. We cannot assure you that the electronic
processing of healthcare transactions will increase or that our EDI business
will grow.

Direct Links May Bypass Need for Our EDI Services

Some third party payors provide electronic data transmission systems to
healthcare providers, thereby directly linking the payor to the provider. These
direct links bypass third party processors like us. An increase in the use of
direct links between payors and providers would materially adversely affect our
EDI business.

Increased Competition in the Healthcare EDI Business Could Adversely Impact Our
Results

Increased competition in the healthcare EDI and transaction processing business
could force us to reduce, or even eliminate, per transaction fees, which could
adversely affect our results of operations. Our EDI services face different
types of competition, any or all of which could affect our EDI business. Some of
our competitors are similarly specialized, such as former regional partners of
ENVOY that have direct provider relationships, and others are involved in more
highly developed areas of the business. In addition, some vendors of provider
information management systems include or may include, in their offered
products, their own electronic transaction processing systems. If electronic
transaction processing becomes the standard method of processing healthcare
claims and information, other companies with significant capital resources could
enter the industry.

New Healthcare Legislation or Regulation Could Restrict Our EDI Business

The Health Insurance Portability and Accountability Act of 1996 requires the use
of standard transactions, standard identifiers, security and other
administrative simplification provisions and instructs the Secretary of Health
and Human Services to promulgate regulations regarding these standards. HIPAA
also specifically names clearinghouses as the compliance facilitators for
providers and payors, and permits clearinghouses to convert non-standard
transactions to standard transactions on behalf of their clients. We are
preparing to
                                       23
<PAGE>   24
                 QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES

comply with the mandated standards within the time frames set forth in final
rules, which have not yet been issued. Whether we are successful in complying
with these standards may depend on whether providers, payors and others are also
successful in complying with the standards.

HIPAA also requires the Secretary of Health and Human Services to develop
recommendations regarding the privacy of individually identifiable health
information. On September 11, 1997, the Secretary presented her recommendations,
which, among other things, advise that patient information should not be
disclosed to third parties except when authorized by the patient or as
specifically permitted by law or regulation. HIPAA further established an August
1999 deadline for Congress to enact privacy legislation after which, if Congress
failed to act, the Department of Health and Human Services was directed to issue
regulations setting privacy standards to protect health information that is
transmitted electronically. HHS published a proposed rule in the Federal
Register on November 3, 1999. HHS will accept public comments regarding the rule
for 60 days from the date of publication. While the proposed rule, if
promulgated without modification, likely would not restrict ENVOY from
de-identifying individual health information and providing such de-identified,
aggregated data to our Synergy subsidiary for purposes of analysis, the proposed
rule is subject to comment and further modification and could be preempted by
legislation. Such legislative or regulatory changes could occur as early as the
year 2000, and their impact cannot be predicted. If legislation or a more
restrictive regulation is adopted, it could inhibit third party processors in
using, transmitting or disclosing health data (even if they have been
de-identified) for purposes other than facilitating payment or performing other
clearinghouse functions, or it could make such activities more expensive to
undertake, and hence less profitable to the EDI business. Third party
processors, under the proposed rules, or modified rules, also may require us to
provide indemnity from claims against them arising from our use of data, even in
de-identified form. While the impact of developments in legislation, regulations
or the demands of third party processors is difficult to predict, each could
materially adversely affect our EDI business.

Unauthorized Access To Data Centers Could Adversely Affect Our EDI Business

Unauthorized access to our EDI data centers and misappropriation of our
proprietary information could have a material adverse effect on our EDI business
and financial results. While we believe our current security measures and the
security measures used by third parties for whom we process or transmit
healthcare information are adequate, such unauthorized access or
misappropriation could occur.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

As a result of the acquisition of PMSI, the Company had a forward sale agreement
with CIBC pursuant to which the Company transferred all of the IMS Health common
stock, approximately 1.2 million shares, in exchange for cash and a note payable
of $73.0 million. As a result of this forward sale agreement, the Company
mitigated its risk of a decrease in the market value of the IMS Health common
stock by agreeing to a pre-determined value with CIBC. In accordance with the
terms of the agreement, the forward sale and related note payable were settled
in August 1999.

The Company did not have any other material changes in market risk from December
31, 1998.

PART II.  OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

In its Form 8-K filed with the Securities and Exchange Commission dated October
4, 1999, the Company disclosed that a class action lawsuit had been filed
against it in the United States District Court for the Middle District of North
Carolina, alleging violations of federal securities laws, including violations
of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5
thereunder. Since the date of its last filing, three additional class action
complaints have been filed against the Company in the same court. These three
new actions assert essentially the same claims and seek the same relief as the
original complaint. One of the new

                                       24
<PAGE>   25
                 QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES

complaints, filed October 26, 1999, seeks to expand the class to include a
purported sub-class of persons who purchased Company call options, or sold
Company put options, during the class period. The Company anticipates that all
of the existing lawsuits, and any additional suits that may be filed, ultimately
will be consolidated into a single action. The Company continues to believe that
all of the claims are without merit and intends to vigorously defend the
lawsuits.

The Company previously reported certain legal proceedings in its Form 10-K for
the fiscal year ended December 31, 1998. There were no material developments in
such matters since that report and subsequent periodic reports except as
discussed below.

On September 15, 1999, the Federal Court for the Middle District of Tennessee
granted ENVOY's motion to dismiss three class action complaints against ENVOY
and certain of its officers alleging violation of the Securities Exchange Act of
1934 and related State laws. The Court dismissed the claims without prejudice.

ITEM 2.  CHANGES IN SECURITIES

On July 15, 1999, the Company completed the acquisition of MediTrain, a
Netherlands-based multimedia pharmaceutical sales representative training
company. The Company issued 19,772 shares of its Common Stock, par value $0.01
per share, in connection with the acquisition, which shares were received by the
holders of all of the outstanding share capital of MediTrain in exchange for
such interests. The shares were issued in reliance on a claim of exemption
pursuant to section 4(2) of the Securities Act of 1933, as amended, based on
representations made by the recipients in the share acquisition agreement.

During the three months ended September 30, 1999, options to purchase 6,000
shares of Common Stock were exercised at an average exercise price of $4.3175
per share in reliance on Rule 701 under the Securities Act of 1933. Such options
were issued by the Company prior to becoming subject to the requirements of
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, pursuant
to its Non-qualified Employee Incentive Stock Option Plan.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES -- NOT APPLICABLE

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS -- NOT APPLICABLE

ITEM 5.  OTHER INFORMATION -- NOT APPLICABLE

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT                                DESCRIPTION
-------                                -----------
<S>            <C>
 3.01          Amended and Restated Articles of Incorporation, as amended
27.01          Financial Data Schedule for the Nine Months Ended September
               30, 1999
</TABLE>

(b) During the three months ended September 30, 1999, the Company filed four
reports on Form 8-K.

The Company filed a Form 8-K, dated July 15, 1999, to report restated
consolidated financial statements and other materials in connection with certain
acquisitions accounted for as poolings of interests which were consummated
between January 1, 1998 and June 30, 1999.

The Company filed a Form 8-K, dated July 19, 1999, to report restated
consolidated financial statements and other materials in connection with certain
acquisitions accounted for as poolings of interests which were consummated
between January 1, 1998 and March 31, 1999.

The Company filed a Form 8-K, dated July 21, 1999, including its press release
announcing the Company's fiscal second quarter 1999 earnings information.

The Company filed a Form 8-K, dated September 16, 1999, including its press
release announcing that the Company has lowered its earnings targets.

No other reports on Form 8-K were filed during the three months ended September
30, 1999.

                                       25
<PAGE>   26
                 QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES

                                   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.

                         Quintiles Transnational Corp.
                                   Registrant

Date          November 15, 1999                 /s/ DENNIS B. GILLINGS
                                          --------------------------------------
                                           Dennis B. Gillings, Chief Executive
                                                         Officer

Date          November 15, 1999                 /s/ RACHEL R. SELISKER
                                          --------------------------------------
                                           Rachel R. Selisker, Chief Financial
                                                         Officer

                                       26
<PAGE>   27
                 QUINTILES TRANSNATIONAL CORP. AND SUBSIDIARIES

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT                                DESCRIPTION
-------                                -----------
<S>            <C>
 3.01          Amended and Restated Articles of Incorporation, as amended
27.01          Financial Data Schedule for the Nine Months Ended September
               30, 1999
</TABLE>

                                       27