Registration No. 333-            

SECURITIES AND EXCHANGE COMMISSION

Form S-1

Inveresk Research Group, Inc.

11000 Weston Parkway

Dr. Walter S. Nimmo

Copies to:

     Approximate date of commencement of the proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

CALCULATION OF REGISTRATION FEE

(1)	Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) under the Securities Act of 1933, based on the average of the high and low prices of shares of the Company’s common stock as reported on The Nasdaq Stock Market’s National Market on February 14, 2003.

     The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED FEBRUARY 18, 2003

      We are selling 3,000,000 shares of common stock and the selling stockholders listed under “Principal and Selling Stockholders” are selling 7,350,000 shares of common stock. We will not receive any of the proceeds from the shares sold by the selling stockholders.

      Our common stock is quoted on The Nasdaq Stock Market’s National Market under the symbol “IRGI.” The last reported sale price for our common stock on The Nasdaq Stock Market’s National Market on February 14, 2003 was $17.95 per share.

      See “Risk Factors” beginning on page 9 to read about certain risks you should consider before buying our shares.

      Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

      Certain of the selling stockholders have granted a 30-day over-allotment option to the underwriters to purchase up to an aggregate of 1,552,500 additional shares of common stock at the public offering price less the underwriting discount.

      The underwriters are severally underwriting the shares being offered. The underwriters expect to deliver the shares against payment in New York, New York on                     , 2003.

Prospectus dated                     , 2003

PROSPECTUS SUMMARY

      While this summary highlights what we believe is the most important information contained in this prospectus, you should read carefully this entire prospectus, especially the section “Risk Factors” and our financial statements and the notes to those statements, for a more complete understanding of the offering and our business. Unless otherwise indicated, all references to “Inveresk Research,” “Inveresk Research Group,” “we,” “us” and “our” refer to Inveresk Research Group, Inc. and its consolidated subsidiaries.

The Company

Our Business

      We are a leading provider of drug development services to companies in the pharmaceutical and biotechnology industries. Through our pre-clinical and clinical business segments, we offer a broad range of drug development services, including pre-clinical safety and pharmacology evaluation services, laboratory sciences services and clinical development services. We are one of a small number of drug development services companies currently providing a comprehensive range of pre-clinical and clinical development services on a worldwide basis. Our client base includes major pharmaceutical companies in North America, Europe and Japan, as well as many biotechnology and specialty pharmaceutical companies. We completed our initial public offering of common stock in July 2002.

      Below is a summary of our financial results in 2002, adjusted to reflect the impact of certain charges recorded in the first and second quarters of 2002 which we do not expect to recur. We believe this non-GAAP adjusted financial data more clearly reflects our underlying financial and operational performance and provides a more appropriate basis for comparison (i) to historical and future financial performance, and (ii) to the reported results of comparable businesses.

      The adjustment to our reported 2002 financial results set forth above comprises: (i) a non-cash charge of $4.5 million arising from the amendment and exercise of an employee’s stock options; (ii) a non-cash compensation charge of $48.5 million incurred at the time of our initial public offering in respect of stock options and other equity-based compensation arrangements; and (iii) a $1.5 million charge for stamp duty taxes in respect of the change of our ultimate parent company that we completed shortly before and in connection with our initial public offering.

      Our 2002 net income (loss) is also net of $11.7 million of interest expense and a $1.6 million extraordinary item.

      Pre-clinical. Our pre-clinical development business was established over 35 years ago, employs approximately 1,830 people and operates from two principal facilities, one located in Tranent, Scotland and the other in Montreal, Canada. This business segment provides pre-clinical safety and pharmacology evaluation and laboratory sciences services (including clinical support services). In 2002 our pre-clinical business segment generated net service revenue of $142.2 million and income from operations of $43.5 million. Based upon net service revenue, we estimate that we are the third largest provider of pre-clinical safety evaluation services in the world. Our pre-clinical business has a diverse client base, with no single client representing more than 7.5% of our net service revenue in 2002. More than 85% of the 2002 net service revenue from our pre-clinical business was generated from repeat clients.

      We anticipate continued growth in demand for our pre-clinical development services. During 2001 and 2002 we invested over $35 million in our pre-clinical facilities in Montreal, Canada and Tranent, Scotland.

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      Clinical. Our clinical development business was established in 1988 and operates from 15 facilities located across the United States and Europe, employing approximately 720 people. This business segment conducts Phase I clinical trials and provides Phase II-IV clinical trials management services (including medical data sciences services and regulatory support). In 2002 our clinical development business segment generated net service revenue of $80.3 million and income from operations of $9.0 million. Our 62-bed clinic in Edinburgh conducts a wide range of Phase I clinical trials and has completed an average of 11 first-in-man studies annually over the past five years. The global infrastructure of our clinical development business permits us to offer our clients multi-country Phase II-IV clinical trials, as well as smaller single-country projects.

Corporate History and Initial Public Offering

      Prior to 1999 we operated as a division of SGS Société Générale de Surveillance SA. In September 1999 we were acquired in a management buyout supported by Candover Investments PLC. As a result of that transaction, Candover Investments PLC and certain of its affiliated entities became our principal stockholders and Inveresk Research Group Limited, a newly created Scottish company, became the ultimate holding company for the Inveresk Research group of companies. In April 2001 we acquired a Nasdaq-traded company, ClinTrials Research Inc., for $115.1 million, net of cash acquired of $5.7 million. ClinTrials provided drug development services, with significant pre-clinical operations in Canada and clinical operations primarily in the United States and Europe. We subsequently implemented a major restructuring of ClinTrials’ clinical business and, since the time we acquired it, its profitability has improved significantly.

      On June 25, 2002 we changed our ultimate parent company from a company organized in Scotland to a corporation organized in Delaware. This was accomplished through a share exchange transaction in which all the shareholders of Inveresk Research Group Limited (our former ultimate parent company) exchanged their shares for shares of common stock of Inveresk Research Group, Inc. (the current ultimate parent company) and all of the holders of options to purchase shares of Inveresk Research Group Limited exchanged those options for options to purchase shares of Inveresk Research Group, Inc. With the exception of the incurrence of U.K. stamp duty charges of $1.545 million, this transaction had no impact on our consolidated assets or liabilities.

      On July 3, 2002, we completed our initial public offering of 12 million shares of common stock, at a price of $13.00 per share. At the same time, we put in place a new bank credit facility. The net proceeds from the offering, together with drawings under our new bank credit facility and existing cash resources, were used to repay all of the outstanding principal and interest under our former bank facility and our 10% unsecured subordinated loan stock due 2008. As a result, our aggregate outstanding indebtedness was reduced from approximately $223 million to approximately $74 million.

Industry Background and Industry Trends

      Every drug must undergo extensive evaluation and regulatory review to determine that it has the required quality and is both safe and effective for its intended purpose. Discovery and development of new drugs is a lengthy and complex process and is becoming increasingly expensive. The Tufts Center for the Study of Drug Development estimates the current average cost to develop an approved drug to be $802 million, more than three times the estimated cost in 1987.

      Most pharmaceutical and biotechnology companies depend on the development of a steady succession of new drugs for their future profitability. Accordingly, these companies invest extensively in the research and development of new drugs. There are major risks associated with the research and development process, given the high cost of developing new drugs and the significant possibility that a drug candidate will not succeed. Pharmaceutical and biotechnology companies are seeking in many cases to manage these risks by pursuing the parallel development of multiple compounds with similar potential applications (to

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      In response to these trends, pharmaceutical companies are increasingly relying on independent drug development services companies, such as Inveresk Research, to supplement their internal drug development activities. The greater role of biotechnology and specialty pharmaceutical companies in the drug discovery and development area has also increased demand for the services of independent drug development services companies, like Inveresk Research, particularly because they often do not have the expertise or capital to build the internal capability required to undertake pre-clinical and clinical development of their drug candidates.

      According to Frost & Sullivan, the pharmaceutical and biotechnology industries spent approximately $50.6 billion on global research and development in 2001, of which approximately $9.8 billion is estimated to be outsourced to providers of drug development services. We believe that the needs of pharmaceutical and biotechnology companies for outsourced drug development services will continue to increase, based on the following trends:

	•	demand for new drugs based on changing population demographics;
	•	escalating research and development expenditures by pharmaceutical companies;
	•	the growth of the biotechnology industry;
	•	the emergence of new research and development technologies such as genomics and proteomics;
	•	the need for improved productivity making outsourcing attractive as a cost-effective alternative to in-house development activities;
	•	the increasingly complex and demanding regulatory environment requiring extensive expertise in drug development services and regulatory affairs; and
	•	globalization of clinical research requiring drug development expertise across global markets.

Our Strategy

      We believe the increasing demand for outsourced drug development services will provide us with opportunities to continue to grow our pre-clinical and clinical businesses profitably. Our strategy is to build upon our core pre-clinical and clinical development expertise and to further our reputation as a provider of a comprehensive range of high quality, value-added drug development services. Our aim is to become the leading research and development partner to the pharmaceutical and biotechnology industries. We anticipate achieving this strategy primarily through:

	•	continuing to invest in our pre-clinical facilities in Tranent and Montreal to provide us with greater capacity to meet anticipated increases in demand for our pre-clinical development services;
	•	maintaining and enhancing the ability of our Phase I clinical operations in Edinburgh to provide high quality, value-added services while leveraging its experience and expertise in seeking to expand these services geographically;
	•	continuing to position our Phase II-IV clinical development business as a provider of higher value-added services; and
	•	further leveraging the cross-selling opportunities between our two business segments.

      We also intend to seek to augment our pre-clinical and clinical development capabilities and market share by making strategic acquisitions to the extent appropriate opportunities become available. By completing this offering, we will further increase our financial flexibility, which will better position us to exploit appropriate acquisition opportunities as they arise.

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      We believe our approach to acquisitions is a disciplined one that seeks to focus on businesses that are a sound strategic fit and that offer the prospect of enhancing stockholder value. While we continuously consider various acquisition prospects, we do not at present have any definitive plans or agreements for specific acquisitions.

Our Headquarters and Websites

      Our headquarters are located at 11000 Weston Parkway, Suite 100, Cary, North Carolina 27513. Our telephone number is (919) 460-9005. We maintain sites on the World Wide Web at www.inveresk.com and www.ctbr.com; however, the information found on our websites is not a part of this prospectus.

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The Offering

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Summary Condensed Consolidated Financial Information and Other Data

      The summary condensed consolidated financial data presented below for each of the three years ended December 31, 2002, December 30, 2001 and December 31, 2000 derive from the audited consolidated financial statements of Inveresk Research Group, Inc. included elsewhere in this prospectus. You should read the summary condensed consolidated financial information presented below in conjunction with the audited consolidated financial statements and the notes to those statements and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” appearing elsewhere in this prospectus. Information for the year ended December 30, 2001 includes the results of operations of ClinTrials from April 5, 2001.

      The unaudited pro forma statement of operations and earnings per share data presented below for the year ended December 31, 2002 give effect to the completion both of our initial public offering and of this offering, including the use of proceeds from the two offerings to repay debt, as if both offerings had occurred on January 1, 2002. The pro forma balance sheet data is presented as if this offering had been completed on December 31, 2002.

      The unaudited pro forma financial data is provided for illustrative purposes only. It does not purport to represent what our actual results of operations or financial position would have been had the transactions occurred on the respective dates assumed. It is also not necessarily indicative of our future operating results or consolidated financial position.

      Effective as of the beginning of 2002, our fiscal years end consistently on December 31 and our fiscal quarters end consistently on the last calendar day in the quarter. Before 2002, our fiscal years ended on the last Sunday on or prior to December 31 and our fiscal quarters ended on the last Sunday on or prior to the relevant quarter end.

      In the presentation below, as more fully described in Note 4 to our consolidated financial statements, which are presented in this prospectus beginning on page F-1, historical earnings per share have been calculated as if the historical outstanding shares in Inveresk Research Group Limited had been converted to common stock in Inveresk Research Group, Inc., using a weighted average of the conversion ratios applicable to the change in ultimate parent company completed immediately preceding the completion of our initial public offering.

      As a consequence of the adoption of FAS 142 with effect from January 1, 2002, the amortization expense shown for 2002 is not on a consistent basis of accounting with earlier periods. The impact of this is shown in Note 4 to our audited consolidated financial statements, which are presented in this prospectus beginning on page F-1.

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Statement of Operations Data:

Other Data:

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Balance Sheet Data:

(1)	Net cash provided by operating activities in 2002 of $29,785 is after deducting the payment of $21,454 of accumulated interest on 10% unsecured subordinated loan stock due 2008 following our initial public offering.

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RISK FACTORS

      An investment in the common stock offered by this prospectus involves a substantial risk of loss. You should carefully consider the risks described below and the other information in this prospectus, including our financial statements and the related notes, before you purchase any of our shares of common stock. Additional risks and uncertainties, including those generally affecting the market in which we operate or that we currently deem immaterial, may also impair our business. If any such risks actually occur, our business, financial condition and operating results could be adversely affected. In such case, the trading price of our common stock could decline and you may lose all or part of your investment.

Risks Related to Our Business

We could be adversely affected if the companies in the pharmaceutical and biotechnology industries to whom we offer our services reduce their research and development activities or reduce the extent to which they outsource pre-clinical and clinical development.

      We are a global provider of drug development services to pharmaceutical and biotechnology clients. As such, our ability to grow and win new business is dependent upon the ability and willingness of companies in the pharmaceutical and biotechnology industries to continue to spend on research and development at rates close to or at historical levels and to outsource the services we provide. We are therefore subject to risks, uncertainties and trends that affect companies in these industries. For example, we have benefited to date from the increasing tendency of pharmaceutical and biotechnology companies to outsource both small and large pre-clinical and clinical development projects. Any general downturn in the pharmaceutical or biotechnology industries, any reduction in research and development spending by companies in these industries or any expansion of their in-house development capabilities could have a material adverse effect on our business, financial condition and operating results.

We could be adversely affected by changes in government regulations.

      The process for approval of a drug candidate is subject to strict government regulation, especially in North America, Europe and Japan. Any material changes in government regulations, whether involving a relaxation or a strengthening of regulation, could adversely affect us. A relaxation in regulatory requirements or the introduction of simplified drug approval procedures, for instance, could have a material adverse effect on the demand for our services, which could adversely affect our business, financial condition and operating results. At the same time, an increase in regulatory requirements could require us to change the manner in which we conduct our operations or could require us to incur significant capital expenditures in order to effect those changes. For example, in Europe new regulations have recently been adopted that will require clinical trials in healthy volunteers to be pre-approved by a national regulatory authority. Other changes in governmental regulations could result in a change in the type and amount of capital expenditures required to conduct our business and as a result could have a material adverse effect on our business, financial condition and operating results.

Our exposure to exchange rate fluctuations could adversely affect our results of operations.

      We derived approximately 84% of our consolidated net service revenue in 2002 from our operations outside of the United States, primarily from our operations in Canada and the United Kingdom, where significant amounts of our revenues and expenses are recorded in local (non-U.S.) currency. Our financial statements are presented in U.S. dollars. Accordingly, changes in currency exchange rates, particularly between the pound sterling, the Canadian dollar and the U.S. dollar, will cause fluctuations in our reported financial results, which fluctuations could be material.

      In addition, our contracts with our clients are frequently denominated in currencies other than the currency in which we incur expenses related to those contracts. This is particularly the case with respect to our Canadian operations, where our contracts generally provide for invoicing clients in U.S. dollars but our expenses are generally incurred in Canadian dollars. Where expenses are incurred in currencies other than

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      To date, we have not attempted to hedge our exposure to currency fluctuations.

We could be adversely affected by tax law changes in the United Kingdom or Canada.

      Our operations in the United Kingdom and Canada currently benefit from favorable corporate tax arrangements. We receive substantial tax credits in Canada from both the Canadian federal and Quebec governments and we benefit from tax credits and accelerated tax depreciation allowances in the United Kingdom. Any reduction in the availability or amount of these tax credits or allowances would be likely to have a material adverse effect on our profits and cash flow from either or both of our Canadian and United Kingdom operations.

Our quarterly operating results may vary, which could negatively affect the market price of our common stock.

      Our results of operations in any quarter can fluctuate depending upon, among other things, the number of weeks in the quarter, the number and scope of ongoing client engagements, the commencement, postponement and termination of engagements in the quarter, the mix of revenue, the extent of cost overruns, employee hiring, holiday patterns, severe weather conditions, exchange rate fluctuations and other factors. Because we generate a large portion of our revenue from services provided on the basis of an hourly recovery charge, our net service revenue in any period is directly related to the number of employees and the number of billable hours worked during that period. We have only limited ability to compensate for periods of underutilization during one part of a fiscal period by augmenting revenues during another part of that period. We may also, in any given quarter, be required to make U.K. National Insurance contributions in connection with the exercise of options by certain of our U.K. resident employees. We believe that operating results for any particular quarter are not necessarily a meaningful indication of the health of our business or of future results. Nonetheless, fluctuations in our quarterly operating results could negatively affect the market price of our common stock.

We depend on our senior management team, and the loss of any member of the team may adversely affect our business.

      We believe our success will depend on the continued employment of our senior management team. If one or more members of our senior management team were unable or unwilling to continue in their present positions, those persons could be difficult to replace and our business could be harmed. If any of our key employees were to join a competitor or to form a competing company, some of our clients might choose to use the services of that competitor or new company instead of our own. Furthermore, clients or other companies seeking to develop in-house capabilities may hire away some of our senior management or key employees.

If we are unable to recruit and retain qualified personnel we may not be able to expand our business and remain competitive.

      Because of the specialized scientific nature of our business, we are highly dependent, in both our pre-clinical and clinical operations, upon qualified scientific, technical and managerial personnel. There is intense competition for qualified personnel in the pharmaceutical and biotechnology fields. Therefore, although traditionally we have experienced a relatively low turnover in our staff, in the future we may not be able to attract and retain the qualified personnel necessary for the conduct and further development of our businesses. The loss of the services of existing personnel, as well as the failure to recruit additional key scientific, technical and managerial personnel in a timely manner, could have a material adverse effect on our ability to expand our businesses and remain competitive in the industries in which we participate.

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Our contracts are generally terminable on little or no notice. Termination of a large contract for services or multiple contracts for services could adversely affect our revenue and profitability.

      In general, our agreements with clients provide that the client can terminate the agreements or reduce the scope of services under the agreements upon little or no notice. Clients may elect to terminate their agreements with us for various reasons, including:

	•	unexpected or undesired study results;
	•	inadequate patient enrollment or investigator recruitment;
	•	production problems resulting in shortages of the drug being tested;
	•	adverse patient reactions to the drug being tested; or
	•	the client’s decision to forego or terminate a particular study.

      If a client terminates its contract with us we are generally entitled under the terms of the contract to receive revenue earned to date as well as certain other costs. In both our pre-clinical and clinical businesses, cancellations of any large contract or simultaneous cancellation of multiple contracts could materially adversely affect our business, financial condition and operating results.

Because most of our clinical development net service revenue is from long-term fixed-fee contracts, we would lose money in performing these contracts if our costs of performing those contracts were to exceed the fixed fees payable to us.

      Because most of our clinical development net service revenue is from long-term fixed price contracts, we bear the risk of cost overruns under these contracts. If the costs of completing these projects exceed the fixed fees for these projects, for example if we underprice these contracts or if there are significant cost overruns under these contracts, our business, financial condition and operating results could be adversely affected.

      Although the majority of our contracts with our pre-clinical clients are also fixed price contracts, we typically have more flexibility under those contracts to adjust the price to be charged if we are asked to provide additional services. These contracts also tend to have shorter terms than our clinical contracts. Therefore, we have less risk of underpricing or incurring significant cost overruns under our pre-clinical contracts. However, if we did have to bear significant costs of underpricing or cost-overruns under our pre-clinical contracts, our business, financial condition and operating results could be adversely affected.

Our future profitability could be reduced if we incur liability for failure to properly perform our obligations under our contracts with our clients.

      We are liable to our clients for any failure to conduct their studies properly according to the agreed upon protocol and contract. If we fail to conduct a study properly in accordance with the agreed upon procedures, we may have to repeat the study at our expense, reimburse the client for the cost of the study and pay additional damages.

      At our Phase I clinic in Edinburgh, we study the effects of drugs on healthy volunteers. In addition, in our clinical business we, on behalf of our clients, contract with physicians who render professional services, including the administration of the substance being tested, to participants in clinical trials, many of whom are seriously ill and are at great risk of further illness or death as a result of factors other than their participation in a trial. As a result, we could be held liable for bodily injury, death, pain and suffering, loss of consortium, or other personal injury claims and medical expenses arising from a clinical trial.

      To reduce our potential liability, informed consent is sought from each volunteer and we obtain indemnity provisions in our contracts with clients. These indemnities generally do not, however, protect us against certain of our own actions such as those involving negligence or misconduct. Our business, financial condition and operating results could be materially and adversely affected if we were required to pay

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      We maintain errors and omissions professional liability insurance in amounts we believe to be appropriate. This insurance provides coverage for vicarious liability due to negligence of the investigators who contract with us, as well as claims by our clients that a clinical trial was compromised due to an error or omission by us. If our insurance coverage is not adequate, or if our insurance coverage does not continue to be available on terms acceptable to us, our business, financial condition and operating results could be materially and adversely affected.

Our clients retain us on an engagement-by-engagement basis, which reduces the predictability of our revenues and our profitability.

      Our clients generally retain us on an engagement-by-engagement basis. Costs of switching drug development services companies are not significant and after we complete a project for a client we do not know whether the same client will retain us in the future for additional projects. A client that accounts for a significant portion of our revenues in a given period may not generate a similar amount of revenues, if any, in subsequent periods. This makes it difficult for us to predict revenues and operating results. Since our operating expenses are relatively fixed and cannot be reduced on short notice to compensate for unanticipated variations in the number or size of engagements in progress, we may continue to incur costs and expenses based on our expectations of future revenues. This could have an adverse effect on our business, financial condition and operating results.

Our backlog is subject to reduction and cancellation and our failure to replace completed or cancelled backlog could reduce our future revenues and profitability.

      For our internal purposes, we periodically calculate backlog. Backlog represents the aggregate price of services that our clients have committed to purchase by signed contract or other written evidence of a firm commitment. Our aggregate backlog at December 31, 2002 was approximately $210 million. Our backlog is subject to fluctuations and is not necessarily indicative of future backlog or revenues. Cancelled contracts are removed from backlog. Our failure to replace items of backlog that have been completed, reduced in scope or cancelled could result in lower revenues.

If we are unable to implement our business strategy effectively we may not be able to expand our business and compete effectively.

      A significant aspect of our business strategy for our pre-clinical operations is to increase the capacity and broaden the service capability of these operations through continued capital investment and, to a lesser extent, through strategic acquisitions. If we fail to implement our expansion strategy for our pre-clinical development operations successfully, we may not be able to grow or remain competitive in this area.

      A significant aspect of our business strategy for our clinical operations is to emphasize our scientific and medical input, to maximize the number of value-added services that we provide and, to a lesser extent, to grow through strategic acquisitions. If we are not successful in implementing this strategy we may not be able to expand our clinical trials operations or remain competitive in this area.

      In addition, any acquisitions we undertake in implementing our business strategy may involve a number of special risks, including:

	•	diversion of management’s attention;
	•	potential failure to retain key acquired personnel;
	•	assumptions of unanticipated legal liabilities and other problems; and
	•	difficulties integrating systems, operations and corporate cultures.

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We could be adversely affected if we fail to comply with regulatory standards.

      Many of the regulations that govern the pre-clinical and clinical development services industries empower regulatory authorities to compel an entity conducting pre-clinical or clinical operations to cease all or a portion of its activities if it fails to comply with regulatory standards. If we fail to comply with any existing or future government regulations, our non-complying facilities could be forced to cease operations, which could have a material adverse effect on our business, financial condition and operating results. Our failure to comply with regulatory standards could also result in the termination of ongoing research or the disqualification of data for submission to regulatory authorities, either of which could have a material adverse effect on our business, financial condition and operating results. 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 client, but at substantial cost to us.

Risks Related to Our Industry

We compete in a highly competitive market and if we do not compete successfully our business could be seriously harmed.

      The competitive landscape for our two core businesses varies. Nevertheless, both businesses primarily compete with in-house departments of pharmaceutical companies, other drug development services organizations, universities and teaching hospitals.

      We believe we are the third largest provider of pre-clinical safety evaluation services in the world, based on net service revenue. Our primary pre-clinical competitor on a global basis is Covance, although we also face competition from publicly traded companies such as Charles River Laboratories, Life Sciences Research and MDS Pharma, as well as from a number of privately-held companies. Certain of these competitors are also expanding their pre-clinical operations.

      The clinical development services market is highly fragmented, with participants ranging from hundreds of small, limited-service providers to a few full service drug development services organizations with global operations. We believe that we compete with a number of publicly traded companies, primarily Quintiles, PPD, Covance, MDS Pharma, Parexel, ICON and Kendle, as well as with a number of privately-held companies.

      In contrast to the pre-clinical drug development industry, the clinical drug development industry has few barriers to entry. Newer, smaller companies with specialty focuses, such as those aligned to a specific disease or therapeutic area, may compete aggressively against larger companies for clients.

      Increased competition might lead to price and other forms of competition that may adversely affect our operating results. Providers of outsourced drug development services compete on the basis of many factors, including the following:

	•	reputation for on-time quality performance;
	•	expertise, experience and stability;
	•	scope of service offerings;
	•	how well services are integrated;
	•	strength in various geographic markets;
	•	technological expertise and efficient drug development processes;
	•	ability to acquire, process, analyze and report data in a time-saving, accurate manner; and
	•	ability to manage large-scale clinical trials both domestically and internationally.