Pharmaceutical Product Development, Inc (NASDAQ: PPDI) is a global contract research organization (CRO). A CRO serves as a middle-man who finds doctors, recruits patients, and compiles data. CROs are organizations that offer many different pharmaceutical research services to clients.
PPD has offices in 33 countries and has partnerships with pharmaceutical, biotechnology, medical device, academic and government organizations. The goal of PPD is to maximize the returns of its clients' and partners' research and development investments.
PPD's development services include preclinical programs and Phase I through Phase IV clinical development services, as well as bioanalytical, cGMP, global central laboratory and vaccines and biologics laboratory services.
The use of CROs, such as PPD, is increasing as these kind of companies become more and more crucial to drug development. CROs help accelerate the time of development and project failure decisions and help increase approval success rates among outsourcing partnerships. The company offers a range of services, from toxicology testing and biomarker discovery in the earliest phases of drug research, to the management of large, multi-site clinical trials, in which drug compounds are tested in humans. PPD is also developing some of its own compounds in partnership with other firms. Its customers include most of the world's 50 most prominent pharmaceutical companies. 
Second Quarter 2010 Results
During the second quarter, PPD recorded net revenue of $369.9 million, compared to $354.6 million for the second quarter of 2009. Second quarter 2010 operating income was $40.1 million, compared to $58.3 million for the same period in 2009. Operating income for the second quarter of 2010 was lower than the same period last year due primarily to operating and integration expenses related to PPD's recent acquisitions and an increase in business development expenses. Second quarter 2010 operating income was also impacted by increased compound partnering research and development expenses prior to the spin-off and general and administrative costs related to the spin-off. These costs will not continue since the spin-off was completed in mid-June.
Diluted earnings per share for the second quarter of 2010 were $0.18, compared to $0.49 for the second quarter of 2009. Second quarter 2009 diluted earnings per share included the after-tax gain on the sale of Piedmont Research Center of $0.16 per share. Second quarter 2010 diluted earnings per share included a charge for income taxes of $3.8 million, or $0.03 per share, related to the spin-off of PPD's compound partnering business and a loss from discontinued operations, net of taxes, of $2.6 million, or $0.02 per share, resulting from the closing of the company's dermatology business unit. The dermatology business unit was part of PPD's discovery sciences segment, and the financial results for this business unit have been reported in discontinued operations.
PPD specializes in developing integrated product development that provide companies with interdisciplinary preclinical, chemistry, manufacturing and controls (CMC), medical, and regulatory road maps for the development of their products through global marketing approvals and the post-marketing life-cycle. Its 330+ bed Phase I clinic in Austin, Texas, is engaged in conducting first-in-man studies, cardiac safety monitoring and large, complex, procedure-intensive Phase I trials. Its Phase I unit also includes a dental surgical and research clinic to evaluate the safety and effectiveness of analgesic compounds in third molar extraction models.
With laboratory facilities in Highland Heights, Kentucky, Brussels, Belgium, Singapore and Beijing, China, PPD’s global laboratories provide standardized efficacy and safety testing services with customized results databases for pharmaceutical and biotechnology companies engaged in clinical drug development, as well as government-funded studies. The Company’s vaccines and biologics testing facility is involved in vaccine testing for influenza, Human Immunodeficiency Virus (HIV), adenovirus, haemophilus influenza type B, human papillomavirus, pneumococcus, staphylococcus, hepatitis A and B, measles, mumps and rubella, varicella zoster virus, rotavirus, as well as other viruses and bacteria.
The Company provides bioanalytical services through good laboratory practices (GLP)/FDA Guidance-compliant laboratories in Richmond, Virginia and Middleton, Wisconsin. Its bioanalytical laboratories analyze biological fluid samples from animal and human clinical studies. Its service offerings also include dedicated laboratory space to conduct immunologic Opsonophagocytic Assay (OPA) bioassays for the vaccine industry. The Company provides non-GLP early preclinical development services and product analysis laboratory services through its cGMP compliant laboratory located in Middleton, Wisconsin. Its product analysis services include inhalation, biopharmaceutics, dissolution, stability and microbiology studies.
Discovery Sciences segment focuses on the discovery research segment of the biopharmaceutical research and development outsourcing market. The Company’s two Phase II-ready therapeutic compounds are licensed from Janssen Pharmaceutica N.V. Through the acquisition of Magen, the Company acquired in-process research and development. At acquisition, the acquired in-process research and development was related to the MAG-131 compound, which was in the pre-IND phase of research.
In May 2009, the Company completed its disposition of its wholly owned subsidiary Piedmont Research Center, LLC. In December 2009, the Company completed its disposition of its wholly owned subsidiary PPD Biomarker Discovery Sciences, LLC. On April 2, 2009, the Company acquired Magen BioSciences, Inc. On April 21, 2009, the Company acquired AbC.R.O., Inc. On November 6, 2009, the Company acquired Excel PharmaStudies, Inc.
New drug development costs have risen from $0.8 billion (1997) to an expected $1.9 billion (2013). The average total research and development costs for new drugs in the late 1990s was more than double the cost in the 1980s and more than 5 times the cost in the 1970s. This increase in cost is driven by steep increases in costs for clinical testing - the number of experimental subjects and the complexity of the clinical trials have both increased. These increases in costs are driving companies to switch to outsourcing for drug development (CROs). Companies are finding that outsourcing ends up saving them large amounts of time and money.  The CRO market is expected to grow at an annual rate of 14-16% per year, giving PPD much potential to grow.
A record number of clinical trials are being done with Investigational New Drugs (INDs) than before. The United States Food and Drug Administration (FDA) investigational new drug program is the means by which pharmaceutical companies obtain permission to ship experimental drugs across state lines. The desire for more global clinical trials is helping large CROs seize market share from smaller companies.
Over the past 5 years, the number of drug compounds in different stages of development has increased steadily. Since many biotechnology and pharmaceutical companies do not have sufficient resources to pursue development for all of these upcoming drugs, they are looking to drug discovery and development outsourcing companies (CROs) to reduce cost. 
PPD is one of the largest CROs and so competes with major and national CROs. Among these, the most important include: