Given their desire to maximize speed and global market penetration to achieve higher potential returns on their research and development expenditures, pharmaceutical and biotechnology companies are increasingly pursuing simultaneous regulatory new drug submissions and approvals in multiple countries, rather than sequentially, as in the past. However, many drug companies do not possess the capability or capacity to simultaneously conduct large-scale clinical trials in more than one country. In addition, building and maintaining internal global infrastructures to pursue multiple drug approvals in different therapeutic categories and locations may not be cost-effective for many pharmaceutical and biotechnology companies. In response to the growing demand for global clinical trials, a few CROs have built a global presence and are able to quickly and efficiently initiate and conduct global clinical studies, and then integrate the information generated.

It is believed that pharmaceutical and biotechnology companies will have a burgeoning number of clinical product candidates and combination therapies entering clinical trials, resulting in an increased need to quickly determine the most promising ones. According to the FDA, the number of active commercial INDs has increased from 3,611 in 1999 to 4,544 in 2003, representing an increase of over 25%. It is believed that this trend will continue in the future.

The biotechnology industry has experienced significant growth over the last few years, primarily driven by technological innovations, product development successes, and recent capital raises. According to industry sources, U.S. biotechnology research and development expenditures grew from $3.5 billion in 2000 to $7.6 billion in 2003. It is believed that this growth trend in biotechnology research and development expenditures will continue.

The greater complexity in clinical research, regulatory oversight, and the level of specialization required to conduct tests have contributed to an increase in the average number of clinical trials required per new drug, increasing the uncertainty and cost of bringing a new drug to market.

Clinical trials management services encompass the design, management, and implementation of study protocols, which are the critical building blocks of product development programs. The Company has extensive resources and expertise to design and conduct studies on a global basis, develop integrated global product databases, collect and analyze the data, and prepare and submit regulatory submissions in the United States, Europe, and the rest of the world.

Clinical trials management services, used by the Company’s pharmaceutical and biotechnology customers, may be performed exclusively by the Company or in collaboration with the client’s internal staff or other CROs. With its broad clinical trial management capabilities, the Company conducts single site studies (Phase I), multi-site domestic studies, and global studies on multiple continents. Through its electronic trial master file, the Company can create, collect, store, edit, and retrieve any electronic document in any of its office locations worldwide, allowing seamless transfer of work to a more efficient locale.

Direct costs increased by $1.5 million, or 4.7%, from $31.3 million for the three months ended March 31, 2003 to $32.8 million for the three months ended March 31, 2004.

Selling, general, and administrative expenses increased by $4.3 million, or 24.6%, from $17.7 million for the three months ended March 31, 2003 to $22.0 million for the three months ended March 31, 2004.

Interest expense, net decreased by $0.2 million, or 17.6%, from $0.9 million for the three months ended March 31, 2003 to $0.8 million for the three months ended March 31, 2004.