<PAGE>

     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 2, 2002

                                                     REGISTRATION NO. 333-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

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

                                    FORM S-1
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933
                             ---------------------

                         INVERESK RESEARCH GROUP, INC.
             (Exact name of registrant as specified in its charter)

<Table>
<S>                                <C>                                <C>
             DELAWARE                             8731                            43-1955097
 (State or other jurisdiction of      (Primary Standard Industrial             (I.R.S. Employer
  incorporation or organization)      Classification Code Number)           Identification Number)
</Table>

                              11000 WESTON PARKWAY
                                   SUITE 100
                                 CARY, NC 27513
                                 (919) 460-9005
  (Address, including zip code, and telephone number, including area code, of
                   registrant's principal executive offices)

                              DR. WALTER S. NIMMO
                              11000 WESTON PARKWAY
                                   SUITE 100
                                 CARY, NC 27513
                                 (919) 460-9005
 (Name, address, including zip code, and telephone number, including area code,
                             of agent for service)

                                   COPIES TO:

<Table>
<S>                                                 <C>
                   JOHN A. HEALY                                     JEFFREY E. COHEN
                 KARL A. ROESSNER                                  COUDERT BROTHERS LLP
        CLIFFORD CHANCE ROGERS & WELLS LLP                      1114 AVENUE OF THE AMERICAS
                  200 PARK AVENUE                                NEW YORK, NEW YORK 10036
             NEW YORK, NEW YORK 10166                                 (212) 626-4400
                  (212) 878-8000
</Table>

                             ---------------------
     APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE TO THE PUBLIC:  As
soon as practicable after this Registration Statement becomes effective.
     If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
     If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
     If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
     If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
     If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
                             ---------------------
                        CALCULATION OF REGISTRATION FEE

<Table>
<Caption>
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
                                                                  PROPOSED             PROPOSED
       TITLE OF EACH CLASS OF              AMOUNT TO BE       MAXIMUM OFFERING    MAXIMUM AGGREGATE        AMOUNT OF
     SECURITIES TO BE REGISTERED          REGISTERED(1)       PRICE PER SHARE     OFFERING PRICE(2)     REGISTRATION FEE
--------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>                  <C>                  <C>                  <C>
Common Stock, par value $.01 per
  share..............................                                                $150,000,000           $13,800
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
</Table>

(1) Includes a maximum of           shares that may be purchased by the
    Underwriters to cover over-allotments, if any.
(2) Estimated solely for the purpose of calculating the registration fee
    pursuant to Rule 457 under the Securities Act of 1933.

     THE REGISTRANT HEREBY AMENDS THE 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 THE 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.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

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 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 APRIL 2, 2002
                                              SHARES

                            [INVERESK RESEARCH LOGO]
                                  COMMON STOCK
                            ------------------------
     This is the initial public offering of common stock of Inveresk Research
Group, Inc. Inveresk Research Group, Inc. is selling all of the   shares of
common stock offered under this prospectus.

     There is currently no public market for our common stock. We expect the
initial public offering price to be between $[     ] and $[     ] per share. We
expect to apply to list our shares of common stock on The Nasdaq National Market
under the symbol "IRGI."

     SEE "RISK FACTORS" BEGINNING ON PAGE 8 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.

<Table>
<Caption>
                                                             PER
                                                            SHARE                     TOTAL
                                                   ------------------------  ------------------------
<S>                                                <C>                       <C>
Public offering price............................  $                         $
Underwriting discounts and commissions...........  $                         $
Proceeds.........................................  $                         $
</Table>

     The underwriters may, under certain circumstances, purchase up to an
additional        shares of common stock at the initial 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           , 2002.

BEAR, STEARNS & CO. INC.                                             UBS WARBURG
WILLIAM BLAIR & COMPANY                                                 SG COWEN
                     Prospectus dated                , 2002
<PAGE>

                      ENFORCEABILITY OF CIVIL LIABILITIES

     Two of the current directors of Inveresk Research Group, Inc. and four of
its current non-director executive officers reside outside the United States and
a substantial portion of the assets of Inveresk Research Group, Inc. and
substantially all of the assets of such persons are located outside the United
States (principally in Scotland and Canada). Therefore, it may not be possible
for investors to effect service of process within the United States against such
persons or with respect to such assets. Furthermore, courts of Scotland and
Canada may not recognize or enforce against Inveresk Research Group, Inc. or
such persons judgments obtained in United States courts predicated upon the
civil liability provisions of the securities laws of the United States and may
not enter judgments in original actions brought in the Scottish and Canadian
courts predicated upon the securities laws of the United States.

                                        i
<PAGE>

                               PROSPECTUS SUMMARY

     This summary highlights information contained elsewhere in this prospectus.
Because this is only a summary, it does not contain all of the information you
should consider before investing in shares of our common stock. You should read
carefully this entire prospectus, especially the section "Risk Factors" and our
financial statements and the notes to those statements.

     Inveresk Research Group, Inc. is a newly-formed holding company and was
incorporated solely for the purpose of changing the ultimate parent for the
Inveresk Research group of companies from a company organized under the laws of
Scotland to a corporation organized in the United States under the laws of the
State of Delaware. The change in ultimate parent for the Inveresk Research group
of companies will be completed immediately prior to the consummation of the
initial public offering described in this prospectus. When this change has been
effected, Inveresk Research Group, Inc. will own all of the share capital of
Inveresk Research Group Limited, which at present is the ultimate parent company
for the Inveresk group of companies. Unless otherwise indicated, all references
to "Inveresk Research," "we," "us" and "our" refer to Inveresk Research Group,
Inc. and its subsidiaries as if the change in ultimate parent described above
had been completed.

                                  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.

     In 2001 our business, including ClinTrials Research Inc., which we acquired
in April 2001, generated net service revenue of $156.3 million, income from
operations of $14.4 million, after $15.9 million of depreciation and
amortization charges, and a net loss of $5.1 million, after $19.6 million of
shareholder loan and bank interest charges, taxes and an extraordinary item.

     PRE-CLINICAL.  Our pre-clinical development business was established over
35 years ago, employs approximately 1,600 people and operates from two principal
facilities, one located in Tranent, Scotland and the other in Montreal, Canada.
This part of our business provides pre-clinical safety and pharmacology
evaluation services and laboratory sciences services (including clinical support
services). In 2001 our pre-clinical business generated net service revenue of
$95.2 million and income from operations of $18.0 million, excluding corporate
overhead and after $10.4 million of depreciation and amortization charges. Based
upon net service revenue, we estimate that we are the second 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 5% of
our net service revenue in 2001. More than 85% of the 2001 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 we committed over $15 million to the expansion of our
pre-clinical facility in Montreal. We intend to devote substantial resources in
the future towards enlarging our pre-clinical operations, with additional
expansion of our facilities in both Montreal and Tranent planned for completion
in 2003 and 2004. We expect to fund this expansion primarily with cash generated
from our operations. We will also consider opportunistically expanding our
pre-clinical business through acquisitions.

     CLINICAL.  Our clinical development business was established in 1988 and
operates from 14 facilities located across the United States and Europe,
employing approximately 700 people. This business conducts Phase I clinical
trials and provides Phase II-IV clinical trials management services (including
medical data
                                        1
<PAGE>

sciences services and regulatory support). In 2001 our clinical development
business generated net service revenue of $61.1 million and income from
operations of $0.9 million, excluding corporate overhead and after depreciation
and amortization charges of $5.6 million. Our 62-bed clinic in Edinburgh
conducts a wide range of Phase I clinical trials and has completed an average of
12 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

     Prior to 1999 we operated as a division of SGS Societe Generale de
Surveillance SA. In 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. In
that transaction, 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.

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 major pharmaceutical 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 companies are seeking in many cases
to manage these risks by pursuing the parallel development of multiple compounds
with similar potential applications (to mitigate the risk of product failure),
while at the same time pursuing strategies to contain costs. Further, since the
profitability of a drug is greatest while it enjoys market exclusivity,
pharmaceutical companies continually seek ways to shorten the time from drug
discovery to marketing.

     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;
                                        2
<PAGE>

     - 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 expand our pre-clinical facilities in Tranent and Montreal
       to provide us with increased 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 to expand these services
       geographically;

     - continuing to position our Phase II-IV clinical development business as a
       provider of higher value-added services;

     - further leveraging the cross-selling opportunities between our two
       business units; and

     - to the extent appropriate opportunities become available, augmenting our
       pre-clinical and clinical development capabilities and market share by
       making strategic acquisitions.

CHANGE IN ULTIMATE PARENT

     In order to implement our growth strategy, we intend, among other things,
to expand further our operations in North America through internally-generated
growth and, to the extent appropriate opportunities become available, through
strategic acquisitions. In light of this desire to expand further in North
America, and particularly the United States, we have decided to change the
ultimate parent for the Inveresk Research group of companies from a company
organized under the laws of Scotland to a corporation organized in the United
States under the laws of the State of Delaware. Inveresk Research Group, Inc.
was incorporated in Delaware in March 2002 solely for the purpose of effecting
this change in ultimate parent for the Inveresk Research group of companies,
which will be completed immediately before consummation of the offering
described in this prospectus. When this change has been effected, Inveresk
Research Group, Inc. will own all of the issued share capital of Inveresk
Research Group Limited. The change will be effected by:

     - the exchange of shares of capital stock in Inveresk Research Group
       Limited by its existing stockholders for shares of common stock of
       Inveresk Research Group, Inc.; and

     - the cancellation of Inveresk Research Group Limited options in exchange
       for options to purchase shares of common stock of Inveresk Research
       Group, Inc.

OUR OFFICES

     Pursuant to the change in ultimate parent described above our headquarters
have been relocated to Cary, North Carolina. Our address there is 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.
                                        3
<PAGE>

                                  THE OFFERING

Common Stock offered..........             shares (          shares if the
                                 underwriters' over-allotment option is
                                 exercised in full).

Common Stock to be outstanding
after the offering............             shares (          shares if the
                                 underwriters exercise their over-allotment
                                 option in full).

Use of proceeds...............   Repayment of $          of debt owed to certain
                                 financial institutions and $          of debt
                                 substantially all of which is owed to Candover
                                 Investments PLC and certain investment funds
                                 indirectly controlled by Candover Investments
                                 PLC, our principal stockholders. See "Principal
                                 Stockholders."

Proposed NASDAQ symbol........   IRGI

                                        4
<PAGE>

                      SUMMARY CONDENSED CONSOLIDATED DATA

     You should read the summary 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. The
financial information for each of the two years ended December 30, 2001 and
December 31, 2000 and for the period from September 20, 1999 to December 26,
1999 reflects the financial position and results of operations of Inveresk
Research Group Limited, which will become our direct subsidiary immediately
prior to the consummation of this offering, pursuant to the transactions
described under "Change in Ultimate Parent." The financial information for the
period from December 28, 1998 to September 19, 1999 and for the years ended
December 27, 1998 and December 28, 1997 reflect the financial position and
results of operations of our business while it was operated as a division of SGS
Societe Generale de Surveillance SA. Information for the year ended December 30,
2001 includes the results of operations of ClinTrials from April 5, 2001.

     The summary consolidated financial data presented below for each of the two
years ended December 30, 2001 and December 31, 2000 and for the periods from
September 20, 1999 to December 26, 1999 and from December 28, 1998 to September
19, 1999 have been derived from the audited consolidated financial statements of
Inveresk Research Group Limited included elsewhere in this prospectus, which
financial statements have been prepared in accordance with U.S. GAAP.

     The unaudited pro forma statement of operations and earnings per share data
presented below for the year ended December 30, 2001 give effect to our
acquisition of ClinTrials and this offering, including the use of proceeds to
repay an aggregate of approximately $     million of debt, as if each of them
had occurred on January 1, 2001. The pro forma balance sheet data is presented
as if this offering had occurred on December 30, 2001. The acquisition of
ClinTrials occurred prior to December 30, 2001 so it is already reflected in the
balance sheet at that date and accordingly no adjustment to the historical
balance sheet as of December 30, 2001 is presented in respect of the acquisition
of ClinTrials.

     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.

                                        5
<PAGE>

<Table>
<Caption>
                                                      INVERESK RESEARCH GROUP(1)                     PREDECESSOR
                                      ----------------------------------------------------------    -------------
                                      PRO FORMA 52     52 WEEKS       53 WEEKS     SEPTEMBER 20,    DECEMBER 28,
                                      WEEKS ENDED       ENDED          ENDED            TO             1998 TO
                                      DECEMBER 30,   DECEMBER 30,   DECEMBER 31,   DECEMBER 26,     SEPTEMBER 19,
                                          2001           2001           2000           1999             1999
                                      ------------   ------------   ------------   -------------    -------------
                                                     (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                   <C>            <C>            <C>            <C>              <C>
Net service revenue.................    $            $   156,296    $     65,540    $    16,832       $ 47,088
Direct costs........................                     (83,975)        (36,133)        (9,645)       (27,177)
                                        --------     -----------    ------------    -----------       --------
Gross profit........................                      72,321          29,407          7,187         19,911
Selling, general and administrative
  expenses..........................                     (41,934)        (13,825)        (3,198)        (9,013)
Depreciation........................                      (8,028)         (4,513)          (809)        (3,731)
Amortization........................                      (7,910)         (3,281)          (973)          (242)
                                        --------     -----------    ------------    -----------       --------
Income from operations..............                      14,449           7,788          2,207          6,925
Interest income (expense), net......                     (17,101)         (7,522)        (2,004)          (560)
                                        --------     -----------    ------------    -----------       --------
Income (loss) before income taxes...                      (2,652)            266            203          6,365
Provision for income taxes..........                      (2,049)           (682)          (325)        (2,308)
                                        --------     -----------    ------------    -----------       --------
Net income (loss) before
  extraordinary items...............                      (4,701)           (416)          (122)         4,057
                                        ========     -----------    ------------    -----------       --------
Extraordinary items.................                        (419)             --             --             --
                                                     -----------    ------------    -----------       --------
Net income (loss)...................                 $    (5,120)   $       (416)   $      (122)      $  4,057
                                                     ===========    ============    ===========       ========
Earnings per share pre extraordinary
  item(2):
  Basic.............................    $            $     (0.20)   $      (0.02)   $     (0.01)
  Diluted...........................    $            $     (0.20)   $      (0.02)   $     (0.01)
Earnings per share post
  extraordinary item:
  Basic.............................                 $     (0.22)   $      (0.02)   $     (0.01)
  Diluted...........................                 $     (0.22)   $      (0.02)   $     (0.01)
Number of shares and common stock
  equivalents used in computing loss
  per shares:
  Basic.............................                  23,349,278      17,171,327     17,171,327
  Diluted...........................                  23,349,278      17,171,327     17,171,327
Dividends per share.................    $     --     $        --    $         --    $        --
                                        ========     ===========    ============    ===========
</Table>

     The information for the periods prior to September 20, 1999 relates to
periods when the businesses were owned by SGS Societe Generale de Surveillance
Holdings SA. It is not meaningful to present earnings per share or dividends per
share data for these periods.

                                        6
<PAGE>

Other Data:

<Table>
<Caption>
                                                                                                         PRE-
                                                        INVERESK RESEARCH GROUP                        DECESSOR
                                       ----------------------------------------------------------    -------------
                                       PRO FORMA 52     52 WEEKS       53 WEEKS     SEPTEMBER 20,    DECEMBER 28,
                                       WEEKS ENDED       ENDED          ENDED            TO             1998 TO
                                       DECEMBER 30,   DECEMBER 30,   DECEMBER 31,   DECEMBER 26,     SEPTEMBER 19,
                                           2001           2001           2000           1999             1999
                                       ------------   ------------   ------------   -------------    -------------
                                                                 (DOLLARS IN THOUSANDS)
<S>                                    <C>            <C>            <C>            <C>              <C>
EBITDA, as defined(3)................    $             $  30,387       $15,582        $  3,989          $10,898
Depreciation and amortization........                     15,938         7,794           1,782            3,973
Cash flow from operating
  activities(4)......................          --         19,493        12,693           2,041            9,306
Net cash (used in) investing
  activities(4)......................          --       (126,292)       (6,752)        (80,099)          (5,305)
Net cash provided by (used in)
  financing activities(4)............          --        115,479        (3,140)         85,066              (83)
                                         ========      =========       =======        ========          =======
</Table>

Balance Sheet Data:

<Table>
<Caption>
                                                                INVERESK RESEARCH GROUP
                                                              ---------------------------
                                                               PRO FORMA
                                                              DECEMBER 30,   DECEMBER 30,
                                                                  2001           2001
                                                              ------------   ------------
                                                                (DOLLARS IN THOUSANDS)
<S>                                                           <C>            <C>
Cash and cash equivalents...................................                   $ 16,118
Total assets................................................                    301,826
Total short term debt.......................................                    127,648
Total long term debt........................................                     85,109
Total shareholders' equity..................................                     (7,385)
                                                                ========       ========
</Table>

---------------
1. Our fiscal year ends on the last Sunday on or prior to December 31. Beginning
   in 2002 our fiscal year will end consistently on December 31.

2. As more fully described in note 4 to the financial statements, historical
   earnings per share have been calculated assuming that the historical
   outstanding shares in Inveresk Research Group Limited were converted to
   common stock in Inveresk Research Group, Inc. using a weighted average rate
   derived from the conversion ratios that will apply when the change of
   ultimate parent company becomes effective.

3. EBITDA, as defined, represents income from operations plus depreciation and
   amortization. EBITDA is presented because it is a widely accepted financial
   indicator used by investors to analyze and compare the operating performance
   of different companies.

   EBITDA, as defined, is not intended to represent cash flows for the period,
   nor is it presented as an alternative to income from operations or as an
   indicator of operating performance. It should not be considered in isolation
   or as a substitute for measures of performance prepared in accordance with
   GAAP in the United States and is not indicative of operating income or cash
   flow from operations as determined under GAAP. Our method of computation may
   or may not be similar to other similarly titled measures of other companies.

4. Cash flow information is not presented with respect to the unaudited pro
   forma data because a statement of cash flows is not required by Article 11 of
   Regulation S-X.

                                        7
<PAGE>

                                  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 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
relaxation in regulatory requirements or introduction of simplified drug
approval procedures could have a material adverse effect on the demand for our
services, which could adversely affect our business, financial condition and
operating results. Alternatively, changes in regulatory requirements could
require us to change the manner in which we conduct our operations and we may
have to incur significant capital expenditures in order to effect such changes.
For example, in Europe there are currently proposals to revise and augment the
regulations governing volunteer clinical trials. This change or 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.

WE ARE EXPOSED TO EXCHANGE RATE FLUCTUATIONS.

     We derived approximately 85% of our consolidated net service revenue in
2001 from our operations outside of the United States, primarily from our
operations in Canada and the United Kingdom. Our financial statements are
presented in U.S. dollars. Accordingly, changes in exchange rates between the
pound sterling, the Canadian dollar and the U.S. dollar will affect the
translation of a subsidiary's financial results into U.S. dollars for purposes
of reporting our financial results.

     In addition, our contracts with our clients are frequently denominated in
currencies other than the currency in which we incur expenses related to such
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 those in which contracts are
priced, fluctuations in the relative value of those currencies could have a
material adverse effect on our results of operations.

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

                                        8
<PAGE>

WE COULD BE ADVERSELY AFFECTED BY CHANGES IN TAX LEGISLATION IN CANADA AND THE
UNITED KINGDOM.

     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 have
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/or our cash flow from our
Canadian and United Kingdom operations.

OUR QUARTERLY OPERATING RESULTS MAY VARY.

     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 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 may be unable to
compensate for periods of underutilization during one part of a fiscal period by
augmenting revenues during another part of that period. We believe that
operating results for any particular quarter are not necessarily a meaningful
indication of future results. Nonetheless, fluctuations in our quarterly
operating results could negatively affect the market price of our common stock.

THERE MAY BE RISKS RELATED TO OUR USE OF ARTHUR ANDERSEN AS OUR INDEPENDENT
AUDITORS.

     On March 14, 2002, Arthur Andersen LLP, an affiliate of our independent
auditors, was indicted on federal obstruction of justice charges arising from
the government's investigation of Enron Corporation. Arthur Andersen LLP has
publicly stated that it intends to contest vigorously the indictment. As a
public company, we are required to file with the Securities and Exchange
Commission annual financial statements audited by independent auditors. The
Securities and Exchange Commission has said that it will continue accepting
financial statements audited by Arthur Andersen, and interim financial
statements reviewed by it, so long as Arthur Andersen is able to make certain
representations to its clients. Certain investors, including significant funds
and institutional investors, may choose not to hold or invest in securities of a
company that does not have current financial reports available. Our access to
the capital markets and our ability to make timely Securities and Exchange
Commission filings could be impaired if the Securities and Exchange Commission
ceases accepting financial statements audited by Arthur Andersen, if Arthur
Andersen becomes unable to make required representations to us or if for any
reason (including the loss of key members of our audit team from Arthur
Andersen) Arthur Andersen is unable to perform required audit-related services
for us is a timely manner. In such case, we would promptly seek to engage new
independent auditors, but such actions could be disruptive to our operations and
affect the price and liquidity of our securities.

WE DEPEND ON OUR SENIOR MANAGEMENT TEAM, AND THE LOSS OF ANY MEMBER 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.

                                        9
<PAGE>

WE MUST RECRUIT AND RETAIN QUALIFIED PERSONNEL.

     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.

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 clients may terminate the agreements that they enter into
with us or reduce the scope of services under these contracts upon little or no
notice. Contracts may be terminated 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.

     In most instances, 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 MAY BE SUBJECT TO UNDERPRICING AND COST OVERRUNS.

     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 these
contracts to adjust the price to be charged under these contracts 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.

WE ARE EXPOSED TO POTENTIAL LIABILITY 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
                                        10
<PAGE>

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 damages or incur defense costs in connection
with a claim that is not indemnified, that is outside the scope of an indemnity
or where the indemnity, although applicable, is not honored in accordance with
its terms.

     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. We cannot assure you that our insurance coverage will
be adequate, or that insurance coverage will continue to be available on terms
acceptable to us.

OUR CLIENTS RETAIN US ON AN ENGAGEMENT-BY-ENGAGEMENT BASIS, WHICH REDUCES THE
PREDICTABILITY OF OUR REVENUES AND OUR PROFITABILITY.

     Our clients retain us on an engagement-by-engagement basis. Costs of
switching drug development services companies are relatively low when compared
with other industries and after we complete a project for a client we have no
assurance that 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.

     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, signed letter of intent or other written evidence
of commitment. Our backlog as of December 31, 2001 was approximately $174
million. Our backlog is subject to fluctuations and is not necessarily
indicative of future backlog or sales. Delayed or cancelled contracts are
removed from backlog. Our failure to replace items of backlog that have been
completed, delayed or canceled could result in lower revenues.

OUR BUSINESS IS SUBJECT TO THE RISKS OF INTERNATIONAL OPERATIONS.

     Approximately 85% of our net service revenue in 2001 was from outside of
the United States. Operations in other countries may involve risks inherent in
our operations, including risks relating to political and economic conditions,
changes in regulatory requirements, exposure to currency exchange rate
fluctuations, differences in legal standards, difficulties in staffing and
managing operations, currency exchange controls and other factors which could
have a material adverse effect on our business, financial conditions and
operating results.

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 of these operations through continued
capital investment and, to a lesser extent, through strategic

                                        11
<PAGE>

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. We cannot assure you that we will be successful in
implementing this strategy. 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.

WE COULD BE ADVERSELY AFFECTED IF WE FAIL TO COMPLY WITH REGULATORY STANDARDS.

     The pre-clinical and clinical development services industries are highly
regulated and monitored closely by North American, European, Japanese and other
national and international regulatory authorities. 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.

     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 second largest provider of pre-clinical safety
evaluation services in the world, based on net service revenue. Our primary
pre-clinical competitor globally 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.

     We believe 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.
Based on this, 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
                                        12
<PAGE>

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.

     We have traditionally competed effectively in the above areas, but there
can be no assurance that we will be able to continue to do so. If we fail to
compete successfully, our business could be seriously harmed.

HEALTH CARE INDUSTRY REFORM COULD REDUCE OR ELIMINATE OUR BUSINESS
OPPORTUNITIES.

     The health care industry is subject to changing political, economic and
regulatory influences that may affect the pharmaceutical and biotechnology
industries. In recent years, several comprehensive health care reform proposals
were introduced in the United States Congress. The intent of the proposals was,
generally, to expand health care coverage for the uninsured and reduce the
growth of total health care expenditures. While none of the proposals were
adopted, the United States Congress may again address health care reform. In
addition, foreign governments may also undertake health care reforms in their
respective countries. Business opportunities available to us could decrease if
the implementation of government health care reform adversely affects research
and development expenditures by pharmaceutical and biotechnology companies.

OUR BUSINESS MAY BE IMPAIRED BY NEGATIVE ATTENTION FROM SPECIAL INTEREST GROUPS.

     Research activities with animals have been the subject of adverse
attention, particularly in the United Kingdom. This has involved on-site
protests and other demonstrations at facilities operated by certain of our
competitors, clients and suppliers. Any negative attention or threats directed
against our animal research activities in the future could impair our ability to
operate our business efficiently and effectively. In addition, if regulatory
authorities were to mandate a significant reduction in safety testing procedures
which utilize laboratory animals (as has been advocated by certain groups), the
impact upon our business would be negative. However, we believe that this is
unlikely as there are currently no acceptable alternatives to animal testing
which would provide the scientific information necessary to obtain regulatory
approval for pharmaceuticals.

                                        13
<PAGE>

                         RISKS RELATED TO THIS OFFERING

OUR EXISTING STOCKHOLDERS WILL CONTINUE TO CONTROL US AFTER THIS OFFERING, AND
THEY MAY MAKE DECISIONS WITH WHICH YOU DISAGREE.

     Upon consummation of this offering, our management, Candover Investments
PLC, together with a wholly-owned subsidiary of Candover Investments PLC and
certain investment funds indirectly controlled by Candover Investments PLC, will
continue to own an aggregate of approximately      % of our outstanding shares
of common stock (     % if the underwriters' over-allotment option is exercised
in full). See "Principal Stockholders." The interests of those Candover
stockholders and our management could differ from those of other stockholders.
As a result of its share ownership, Candover Investments PLC, together with our
management, will be able to:

     - elect our entire board of directors;

     - amend, without the consent of our other stockholders, our certificate of
       incorporation;

     - control our management and policies; and

     - determine, without the consent of our other stockholders, the outcome of
       any corporate transaction or other matter submitted to our stockholders
       for approval, including mergers, consolidations and the sale of all or
       substantially all our assets.

     The Candover stockholders, together with our management, will have
sufficient voting power to prevent a change in control of our company (which may
have the effect of discouraging third parties offers to acquire our company).

THE MARKET PRICE OF OUR SHARES OF COMMON STOCK COULD FLUCTUATE SIGNIFICANTLY,
AND YOU MAY NOT BE ABLE TO SELL YOUR COMMON STOCK AT A FAVORABLE PRICE OR AT
ALL.

     Currently there is no public market for our shares of common stock. We do
not know the extent to which investor interest will lead to the development of a
trading market or how liquid it may be. The initial public offering price will
be determined by negotiations among us and representatives of the underwriters
and may not be indicative of prices that will prevail in the trading market for
our common stock, should one develop.

     In recent years, the stock market has experienced significant price and
volume fluctuations that are often unrelated to the operating performance of
specific companies. Wide fluctuations in the trading price or volume of our
shares of common stock could be caused by many factors, including factors
relating to our company or to investor perception of our company (including
changes in financial estimates and recommendations by financial analysts who
follow us) but also factors relating to (or relating to investor perception of)
the drug development services industry, the pharmaceutical and biotechnology
industries or the economy in general.

THE SALE OF A SUBSTANTIAL NUMBER OF OUR SHARES OF COMMON STOCK IN THE PUBLIC
MARKET COULD ADVERSELY AFFECT THE MARKET PRICE OF OUR SHARES, WHICH IN TURN
COULD NEGATIVELY IMPACT YOUR INVESTMENT IN US.

     Future sales of substantial amounts of our shares of common stock in the
public market (or the perception that such sales may occur) could adversely
affect market prices of our common stock prevailing from time to time and could
impair our ability to raise capital through future sales of our equity
securities. Upon completion of this offering, we will have           shares of
common stock issued and outstanding. All of the shares we are selling in this
offering, plus any shares issued upon the exercise of the underwriters'
over-allotment option, will be freely tradable without restriction under the
Securities Act of 1933, unless purchased by our affiliates. Upon completion of
this offering, all of our shares of common stock issued and outstanding prior to
the completion of this offering (25,827,720) will be restricted securities
within the meaning of Rule 144 under the Securities Act of 1933. The rules
affecting the sale of these securities are summarized under "Shares Eligible for
Future Sale." We have granted registration

                                        14
<PAGE>

rights to all holders of restricted securities. See "Principal
Stockholders -- Registration Rights Agreements." Upon any sale of such shares
pursuant to an effective registration statement, such shares would be freely
tradeable without restriction.

     Subject to certain exceptions described under the caption "Underwriting,"
we, all of our directors and officers and certain of our stockholders have
agreed not to offer, sell or agree to sell, directly or indirectly, any shares
of common stock without the permission of Bear, Stearns for a period of 180 days
from the date of this prospectus. When this period expires we and our locked-up
stockholders will be able to sell our shares in the public market. Our
stockholders who are subject to the lock-up agreements own 25,827,720 of our
shares constituting all of our issued and outstanding shares immediately prior
to the completion of this offering. Sales of a substantial number of such shares
upon expiration, or early release, of the lock-up (or the perception that such
sales may occur) could cause our share price to fall.

     In addition, simultaneously with this offering, we intend to file one or
more registration statements under the Securities Act of 1933 covering all of
our shares of common stock reserved for issuance under our stock option plans.
Shares registered under these registration statements would be available for
sale in the open market, unless these shares are subject to vesting restrictions
contained in the applicable award agreement, if any.

     We also may issue our shares of common stock from time to time as
consideration for future acquisitions and investments. If any such acquisition
or investment is significant, the number of shares that we may issue may in turn
be significant. In addition, we may also grant registration rights covering
those shares in connection with any such acquisitions and investments.

YOU WILL BE IMMEDIATELY AND SUBSTANTIALLY DILUTED IF YOU PURCHASE SHARES IN THIS
OFFERING BECAUSE THE $     PER SHARE PRICE IN THIS OFFERING IS SUBSTANTIALLY
HIGHER THAN THE NET TANGIBLE BOOK VALUE OF EXISTING SHARES OF COMMON STOCK.

     If you purchase shares in this offering, you will pay more for your shares
than the net tangible book value of existing shares of common stock. As a
result, you will experience an immediate and substantial dilution in the net
tangible book value of your shares of $     per share. See "Dilution." In
addition, if outstanding options to purchase shares of common stock are
exercised, there could be substantial additional dilution. See
"Management -- Executive Compensation" for information regarding outstanding
stock options and additional stock options which we may grant.

WE HAVE IMPLEMENTED ANTI-TAKEOVER PROVISIONS THAT COULD MAKE ANY CHANGE IN
CONTROL OF OUR COMPANY MORE DIFFICULT. THIS COULD ADVERSELY AFFECT OUR SHARE
PRICE.

     Our certificate of incorporation, our bylaws and Delaware law contain
provisions that could delay or prevent a change in control, may discourage bids
at a premium over the market price of our shares of common stock and may
adversely affect the market price of our shares and the voting and other rights
of the holders of our shares. For example, our certificate of incorporation
contains provisions:

     - classifying our board of directors into three groups so that the
       directors in each group will serve staggered three-year terms, which
       could make it difficult for a potential acquiror to gain control of our
       board of directors; and

     - authorizing, without a vote of stockholders, the issuance of one or more
       series of preferred stock, which could have voting and/or conversion
       rights that could impede the ability of a potential acquiror to acquire a
       majority of our voting shares.

     In addition, we are subject to Section 203 of the Delaware General
Corporation Law, which contains provisions restricting the ability of
"interested stockholders" to take action to acquire control of us or to
otherwise engage in a transaction with us.

                                        15
<PAGE>

                           FORWARD-LOOKING STATEMENTS

     This prospectus contains forward-looking statements under the captions
"Prospectus Summary," "Risk Factors," "Management's Discussion and Analysis of
Financial Condition and Results of Operations," "Business" and elsewhere.

     When used in this prospectus, the terms "believe," "anticipate,"
"estimate," "expect," "seek," "intend," "could," "will," "predict," "plan,"
"potential," "continue," and "may" or other similar terminology, or the negative
of these terms, are generally intended to identify "forward-looking statements."
Our forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause our actual results, performance or
achievements, to be materially different from any future results, performance or
achievements express or implied by these forward-looking statements. We discuss
these factors in more detail elsewhere in this prospectus, including under the
captions "Prospectus Summary," "Risk Factors," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business." You
should not place undue reliance on our forward-looking statements. We do not
intend to update any of these factors or to publicly announce the result of any
revisions to any of these forward-looking statements.

                                        16
<PAGE>

                                USE OF PROCEEDS

     We estimate that the net proceeds from the sale of the shares of common
stock that we are offering will be approximately $     million, or approximately
$     million if the underwriters' overallotment option is exercised in full, in
each case based on an initial public offering price of $     per share and after
deducting underwriting discounts and commissions and estimated offering
expenses.

     We anticipate using the net proceeds of this offering to repay $
million of outstanding indebtedness, plus accrued interest, under our existing
bank facilities and $     million of 10% unsecured subordinated loan stock due
2008, substantially all of which are held by Candover Investments PLC and
certain investment funds indirectly controlled by Candover Investments PLC.

     The $     million of outstanding indebtedness under our existing bank
facilities which is being repaid with a portion of the proceeds of this offering
includes $     million principal amount of indebtedness plus $     million of
accrued interest (as of           ). $     million of this indebtedness bears
interest at LIBOR plus 2.25% and the remaining $     million bears interest at
LIBOR plus 2.75%. The facilities are repayable in accordance with repayment
schedules between June 30, 2002 and December 31, 2008. The proceeds of these
facilities were used (i) to refinance previously existing indebtedness, (ii) to
finance the acquisition of ClinTrials in April 2001 and (iii) for general
working capital purposes.

     The first tranche of 10% unsecured subordinated loan stock due 2008, in the
aggregate amount of $43.8 million, was issued to Candover Investments PLC and
certain investment funds indirectly controlled by Candover Investments PLC in
September 1999 in connection with the management buyout from SGS Societe
Generale de Surveillance SA. We issued an additional $64.8 million of 10%
unsecured subordinated loan stock due 2008 in April 2001, the proceeds of which
were used to finance the acquisition of ClinTrials. The indebtedness under the
10% unsecured subordinated loan stock due 2008 accumulates interest on the
principal amount at 10% per year and is due and payable with accumulated
interest no later than June 30, 2008. Immediately prior to this offering,
Candover Investments PLC, together with a wholly-owned subsidiary of Candover
Investments PLC and certain investment funds indirectly controlled by Candover
Investments PLC own an aggregate of 79.0% of our issued and outstanding shares
of common stock. See "Principal Stockholders" and "Certain Transactions."

                                DIVIDEND POLICY

     We have not paid any dividends in the past and currently do not expect to
pay cash dividends or make any other distributions in the foreseeable future. We
expect to retain our future earnings, if any, for use in the operation and
expansion of our business. Any future determination to pay dividends will be at
the discretion of our board of directors and will depend upon our financial
condition, operating results, capital requirements and such other factors as our
board deems relevant. In addition, our ability to declare and pay dividends on
our shares of common stock will be restricted by (i) covenants in the revolving
credit facility which we anticipate entering into upon consummation of this
offering and (ii) our current corporate organizational structure which imposes a
significant tax burden on intercompany dividends and distributions of earnings
to us by our operating subsidiaries.

                                        17
<PAGE>

                                 CAPITALIZATION

     The following table presents:

     - the capitalization of Inveresk Research Group, Inc. as of December 31,
       2001, which assumes the transactions described under "Change in Ultimate
       Parent" had occurred on that date; and

     - our pro forma capitalization as of December 31, 2001, which has been
       adjusted to give effect to the sale of      of our shares of common stock
       in this offering.

     You should read this table in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the consolidated
financial statements and the accompanying notes included in this prospectus
beginning on page F-1.

<Table>
<Caption>
                                                                     AS OF DECEMBER 31, 2001
                                                              -------------------------------------
                                                              INVERESK RESEARCH   INVERESK RESEARCH
                                                                 GROUP, INC.          PRO FORMA
                                                              -----------------   -----------------
                                                                     (DOLLARS IN THOUSANDS)
<S>                                                           <C>                 <C>
Total long-term debt........................................       $85,109             $
Stockholders' equity:
Common stock................................................           255
Addition to paid-in capital.................................         1,021
Accumulated deficit.........................................        (5,707)
Other comprehensive income (loss)...........................        (2,954)
                                                                   -------
Total stockholders' equity..................................        (7,385)
                                                                   -------
     Total capitalization...................................        77,724
                                                                   =======
</Table>

     The above information does not reflect (i) the           shares which we
will issue if the underwriters exercise in full their option to purchase
additional shares from us, (ii) the           shares issuable upon the exercise
of stock options outstanding after this offering as of           , 2002 or (iii)
the           shares (which includes the           shares issuable upon the
exercise of outstanding stock options) authorized and reserved for issuance
under our stock plan as of           , 2002.

                                        18
<PAGE>

                                    DILUTION

     Our net tangible book value as of December 31, 2001, before giving effect
to this offering, were approximately $(141.9) million, or $(5.56) per share of
common stock.

     Purchasers of shares in this offering will experience dilution in net
tangible book value per share equal to the difference between the amount per
share paid by those purchasers in this offering and the net tangible book value
per share immediately following this offering.

     After giving effect to the issuance of the           shares of common stock
that we are selling in this offering at an assumed offering price of $   , and
after deducting underwriting discounts and commissions and estimated offering
expenses that we will incur in connection with this offering, our pro forma net
tangible book value as of December 31, 2001 would have been $     million, or
$     per share. This represents an immediate increase in net tangible book
value of $     per share equivalent to existing stockholders. This also
represents an immediate dilution of $     per share to new investors purchasing
shares in this offering. The following table illustrates this dilution per
share:

<Table>
<Caption>
                                                              PER SHARE
                                                              ---------
<S>                                                           <C>
Assumed initial public offering price.......................  $
  Net tangible book value per share prior to this
     offering...............................................  $
                                                              --------
  Increase in pro forma net tangible book value per share
     attributable to new investors..........................
Pro forma net tangible book value per share after giving
  effect to the offering....................................
                                                              --------
Dilution in pro forma net tangible book value to new
  investors.................................................  $
</Table>

     The analysis presented above does not give effect to the issuance and sale
of [          ] of our shares of common stock that will occur if the
underwriters exercise their option to purchase additional shares from us. If the
underwriters exercise such option in full, the pro forma net tangible book value
after giving effect to this offering would be $  per share, the increase in pro
forma net tangible book value to existing stockholders would be $  per share and
the dilution in pro forma net tangible book value to new investors would be $
per share.

     The following table summarizes as of December 31, 2001, on a pro forma
basis, the number of shares purchased from us, the total consideration paid and
the average price per share paid by our existing stockholders and by the
investors in this offering with respect to the number of shares purchased from
us at an assumed offering price of $          per share and before deduction of
underwriting discounts and commissions and estimated expenses:

<Table>
<Caption>
                                          SHARES PURCHASED    TOTAL CONSIDERATION
                                         ------------------   -------------------   AVERAGE PRICE
                                         NUMBER    PERCENT     AMOUNT    PERCENT      PER SHARE
                                         -------   --------   --------   --------   -------------
<S>                                      <C>       <C>        <C>        <C>        <C>
Existing stockholders..................  $                 %  $                  %    $
New investors..........................
                                         -------   --------   --------   --------     --------
     Total.............................  $                 %  $                  %    $
</Table>

     The analysis presented in this table does not take into account the
1,245,662 shares underlying stock options granted as of December 31, 2001.

                                        19
<PAGE>

                 SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

     You should read the selected consolidated financial information presented
below in conjunction with the audited consolidated financial statements
appearing elsewhere in this prospectus and the notes to those statements and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." The financial information for each of the two years ended December
30, 2001 and December 31, 2000 and for the period from September 20, 1999 to
December 26, 1999 reflects the financial position and results of operations of
Inveresk Research Group Limited, which will become our direct subsidiary
immediately before the completion of this offering, pursuant to the transactions
described under "Change in Ultimate Parent." The financial information for the
period from December 28,1998 to September 19, 1999 and for each of the two years
ended December 27, 1998 and December 28, 1997 reflects the financial position
and results of operations of our business while it was operated as a division of
SGS Societe Generale de Surveillance SA. Information for the year ended December
30, 2001 includes the results of operations of ClinTrials Research Inc. from
April 5, 2001.

     The selected consolidated financial data presented below for each of the
two years ended December 30, 2001 and December 31, 2000 and the periods from
September 20, 1999 to December 26, 1999 and from December 28, 1998 to September
19, 1999 have been derived from the audited consolidated financial statements of
Inveresk Research Group Limited included elsewhere in this prospectus, which
financial statements have been prepared in accordance with generally accepted
accounting principles in the United States, or U.S. GAAP. The summary
consolidated financial data presented below for each of the two years ended
December 27, 1998 and December 28, 1997 have been derived from unaudited
financial statements prepared on the basis of data furnished by SGS Societe
Generale de Surveillance SA. Those unaudited financial statements, which were
prepared in accordance with U.S. GAAP, are not included in this prospectus.

<Table>
<Caption>
                                           INVERESK RESEARCH GROUP(1)                            PREDECESSOR
                                   -------------------------------------------   -------------------------------------------
                                     52 WEEKS       53 WEEKS     SEPTEMBER 20,   DECEMBER 28,      52 WEEKS       52 WEEKS
                                      ENDED          ENDED            TO            1998 TO         ENDED          ENDED
                                   DECEMBER 30,   DECEMBER 31,   DECEMBER 26,    SEPTEMBER 19,   DECEMBER 27,   DECEMBER 28
                                   ------------   ------------   -------------   -------------   ------------   ------------
                                       2001           2000           1999            1999          1998(2)        1997(2)
                                   ------------   ------------   -------------   -------------   ------------   ------------
                                                         (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                <C>            <C>            <C>             <C>             <C>            <C>
Net service revenue..............    $156,296       $ 65,540       $ 16,832        $ 47,088        $ 58,219       $ 51,573
Direct costs.....................     (83,975)       (36,133)        (9,645)        (27,177)        (31,816)       (26,531)
                                     --------       --------       --------        --------        --------       --------
Gross profit.....................      72,321         29,407          7,187          19,911          26,403         25,042
Selling, general and
  administrative expenses........     (41,934)       (13,825)        (3,198)         (9,013)        (12,746)       (12,800)
Depreciation.....................      (8,028)        (4,513)          (809)         (3,731)         (4,268)        (4,105)
Amortization.....................      (7,910)        (3,281)          (973)           (242)           (345)          (341)
                                     --------       --------       --------        --------        --------       --------
Income from operations...........      14,449          7,788          2,207           6,925           9,044          7,796
Interest income (expense), net...     (17,101)        (7,522)        (2,004)           (560)            195            222
                                     --------       --------       --------        --------        --------       --------
Income (loss) before income
  taxes..........................      (2,652)           266            203           6,365           9,239          8,018
Provision for income taxes.......      (2,049)          (682)          (325)         (2,308)         (2,465)        (2,070)
                                     --------       --------       --------        --------        --------       --------
Net income (loss) before
  extraordinary items............      (4,701)          (416)          (122)          4,057           6,774          5,948
                                     --------       --------       --------        --------        --------       --------
Extraordinary items..............        (419)            --             --              --              --             --
                                     --------       --------       --------        --------        --------       --------
Net income (loss)................    $ (5,120)      $   (416)      $   (122)       $  4,057        $  6,774       $  5,948
                                     ========       ========       ========        ========        ========       ========
</Table>

                                        20
<PAGE>

<Table>
<Caption>
                                           INVERESK RESEARCH GROUP(1)                            PREDECESSOR
                                   -------------------------------------------   -------------------------------------------
                                     52 WEEKS       53 WEEKS     SEPTEMBER 20,   DECEMBER 28,      52 WEEKS       52 WEEKS
                                      ENDED          ENDED            TO            1998 TO         ENDED          ENDED
                                   DECEMBER 30,   DECEMBER 31,   DECEMBER 26,    SEPTEMBER 19,   DECEMBER 27,   DECEMBER 28
                                   ------------   ------------   -------------   -------------   ------------   ------------
                                       2001           2000           1999            1999          1998(2)        1997(2)
                                   ------------   ------------   -------------   -------------   ------------   ------------
                                                         (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                <C>            <C>            <C>             <C>             <C>            <C>
Earnings per share pre
  extraordinary item(3):
  Basic..........................    $  (0.20)      $  (0.02)      $  (0.01)
  Diluted........................    $  (0.20)      $  (0.02)      $  (0.01)
Earnings per share post
  extraordinary item:
  Basic..........................    $  (0.22)      $  (0.02)      $  (0.01)
  Diluted........................    $  (0.22)      $  (0.02)      $  (0.01)
Number of shares and common stock
  equivalents used in computing
  loss per shares:
  Basic..........................  23,349,278     17,171,327     17,171,327
  Diluted........................  23,349,278     17,171,327     17,171,327
Dividends per share..............    $     --       $     --       $     --
                                     ========       ========       ========
OTHER DATA:
Depreciation and amortization....    $ 15,938       $  7,794       $  1,782        $  3,973        $  4,613       $  4,446
Capital expenditures.............    $ 11,145       $  6,792       $  1,307        $  5,305        $  6,725       $  6,970
</Table>

BALANCE SHEET DATA:

<Table>
<Caption>
                                             INVERESK RESEARCH GROUP                                     PREDECESSOR
                                   -------------------------------------------                   ---------------------------
                                   DECEMBER 30,   DECEMBER 31,   DECEMBER 26,                    DECEMBER 27,   DECEMBER 28
                                       2001           2000          1999(2)                        1998(2)        1997(2)
                                   ------------   ------------   -------------                   ------------   ------------
                                                                    (DOLLARS IN THOUSANDS)
<S>                                <C>            <C>            <C>             <C>             <C>            <C>
Cash and cash equivalents........    $ 16,118       $  9,686       $  7,009                        $  4,039       $  2,433
Total assets.....................     301,826        124,568        129,180                          79,039         73,384
Total short term debt............     127,648          3,080          3,261                           1,041            362
Total long term debt.............      85,109         80,898         84,653                              70            174
Total shareholders' equity.......      (7,385)           247            712                          37,109         29,978
                                     ========       ========       ========                        ========       ========
</Table>

---------------
1. Our fiscal year ends on the last Sunday on or prior to December 31. Beginning
   in 2002 our fiscal year will end consistently on December 31.

2. Unaudited.

3. The information for the periods prior to September 20, 1999 relates to
   periods when the businesses were owned by SGS Societe Generale de
   Surveillance Holdings SA. It is not meaningful to present earnings per share
   or dividends per share data for these periods.

                                        21
<PAGE>

PRO FORMA FINANCIAL DATA

     The unaudited pro forma statement of operations and earnings per share data
for the fiscal year ended December 30, 2001 give effect to our acquisition of
ClinTrials and this offering, including the use of proceeds to repay an
aggregate of approximately $       million of debt as if each of them had
occurred on January 1, 2001. The pro forma balance sheet data is presented as if
this offering had occurred on December 30, 2001.

     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.

     The pro forma adjustments reflected in the accompanying unaudited pro forma
condensed consolidated financial information reflect estimates and assumptions
made by our management that it believes to be reasonable.

     Furthermore, we have not taken account of any synergies, including cost
savings, or any severance and restructuring costs which may or are expected to
occur as a result of the acquisition of ClinTrials in the future.

     There are no pro forma adjustments in the accompanying pro forma statement
of operations to eliminate transactions between Inveresk and ClinTrials because
there are no such transactions.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE 52 WEEKS ENDED
DECEMBER 30, 2001.

<Table>
<Caption>
                                                               PRE       CLINTRIALS
                                              HISTORICAL   ACQUISITION   ACQUISITION   PRO FORMA      SHARE
                                               INVERESK    RESULTS OF     PRO FORMA    INVERESK     OFFERING
                                                GROUP      CLINTRIALS    ADJUSTMENTS     GROUP     ADJUSTMENTS   PRO FORMA
                                              ----------   -----------   -----------   ---------   -----------   ---------
                                                                         (DOLLARS IN THOUSANDS)
<S>                                           <C>          <C>           <C>           <C>         <C>           <C>
Net service revenues........................   $156,296     $ 24,257       $    --     $ 180,553
Direct costs................................    (83,975)     (16,199)           --      (100,174)
                                               --------     --------       -------     ---------     -------      -------
Gross profit................................     72,321        8,058            --        80,379
Selling, general and administrative
  expenses..................................    (41,934)      (7,989)           --       (49,923)
Depreciation................................     (8,028)      (1,535)           --        (9,563)
Amortization................................     (7,910)        (304)       (1,306)       (9,520)
                                               --------     --------       -------     ---------     -------      -------
Income (loss) from operations...............     14,449       (1,770)       (1,306)       11,373
Interest expense, net.......................    (17,101)          (5)       (2,898)      (20,004)
                                               --------     --------       -------     ---------     -------      -------
Income (loss) before income taxes...........     (2,652)      (1,775)       (4,204)       (8,631)
Provision (benefit) for income taxes........     (2,049)      (1,082)        1,043        (2,088)
                                               --------     --------       -------     ---------     -------      -------
Net income (loss) from continuing
  operations................................   $ (4,701)    $ (2,857)      $(3,161)    $ (10,719)
                                               ========     ========       =======     =========     =======      =======
</Table>

     The above pro forma consolidated statements of operations do not include
the estimated non-recurring compensation expense of $          which will arise
on the exchange of shares and the share options at the point of completion of
the offering and which will be recorded by the Company in 2002.

     The unaudited pro forma financial data has been prepared from our published
financial information and from the management accounts of ClinTrials for the
period from December 31, 2000 to the acquisition date.

     The ClinTrials acquisition pro forma adjustments reflect the estimated
additional amortization of goodwill of $921,000 and other intangible assets of
$689,000 less an adjustment to remove the amortization of $304,000 recorded in
the pre-acquisition accounts of ClinTrials. The goodwill amortization is
calculated based on the goodwill of $73.6 million arising on the acquisition for
the 3 month pre-acquisition period using a 20 year life. The other intangible
assets amortization is calculated based on the assembled workforce intangible
assets of $22.0 million for the 3 month pre-acquisition period using an 8 year
life.

                                        22
<PAGE>

You should read note 3 to our financial statements, which begin at page F-1 of
this prospectus, for details of the purchase price allocation made in respect of
the ClinTrials acquisition. The estimated additional interest cost on the debt
finance for the acquisition comprises additional interest of $1,702,000 on 10%
unsecured subordinated interest loan stock due 2008, additional bank debt
interest of $1,154,000 together with additional debt amortization costs of
$42,000. These costs are based on the issuance of additional loan stock of $64.8
million and bank debt of $56.0 million (a total of $120.8 million) at the
interest rate applicable to these facilities. The adjustment for the related tax
effects that would have arisen had the acquisition been completed on the date
assumed comprises tax on the interest adjustment of $869,000 calculated at the
UK tax rate of 30% together with a deferred tax credit on the amortization of
the assembled workforce intangible of $174,000. No tax effect has been recorded
in respect of the assembled workforce attributable to operations with surplus
net operating losses.

<Table>
<Caption>
                                                              PRO FORMA
                                                              ---------
<S>                                                           <C>
Earnings per share..........................................
                                                              ========
</Table>

     Pro forma unaudited earnings per share are based on the above pro forma
unaudited net income (loss) from continued operations divided by        ordinary
shares of common stock. The number of shares of common stock is calculated as
the weighted average number of shares in issue during 2001 on the basis that the
offering took place on January 1, 2001.

UNAUDITED PRO FORMA BALANCE SHEET AT DECEMBER 30, 2001.

<Table>
<Caption>
                                                              HISTORICAL      SHARE
                                                               INVERESK     OFFERING
                                                                GROUP      ADJUSTMENTS   PRO FORMA
                                                              ----------   -----------   ---------
                                                                     (DOLLARS IN THOUSANDS)
<S>                                                           <C>          <C>           <C>
CURRENT ASSETS
  Cash and cash equivalents.................................   $ 16,118
  Other current assets......................................     61,317
                                                               --------      ------      --------
  Total current assets......................................     77,435
Property, plant and equipment...............................     87,922
Intangible assets...........................................    134,517
Other assets................................................      1,952
                                                               --------      ------      --------
                                                               $301,826
                                                               ========      ------      --------
CURRENT LIABILITIES
  Current portion of long term debt.........................    127,648
  Other current liabilities.................................     64,680
                                                               --------      ------      --------
  Total current liabilities.................................    192,328
Deferred income taxes.......................................     27,053
Long term debt..............................................     85,109
Pension obligation..........................................      4,721
SHAREHOLDERS' EQUITY
  Issued share capital......................................        255
  Other shareholders' equity................................     (7,640)
                                                               --------      ------      --------
  Total shareholders' equity................................     (7,385)
                                                               --------      ------      --------
                                                               $301,826
                                                               ========      ------      --------
</Table>

The Historical Inveresk Group is taken from our published financial information
at December 30, 2001. No adjustments are required to be made to this balance
sheet in respect of the acquisition of ClinTrials as the balance sheet already
reflects this acquisition.

                                        23
<PAGE>

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The following discussion should be read in conjunction with our
consolidated financial statements and our unaudited pro forma condensed
consolidated financial data, including the related notes, contained elsewhere in
this prospectus.

OVERVIEW

     On September 20, 1999 we completed a management buyout supported by
Candover Investments PLC. In that transaction, Inveresk Research Group Limited,
a newly created Scottish company, acquired the businesses that comprise our
European pre-clinical operations, our Phase I clinical trials operations located
in Edinburgh and the original Inveresk Research Phase II-IV clinical development
services operations. As part of the transaction, we also acquired Inveresk
Research North America, Inc., a small Phase II-IV clinical development services
business located in the United States. The total acquisition cost was $78.8
million, net of cash acquired of $9.1 million. In connection with financing this
acquisition we received a $0.8 million equity investment from the Candover
Investments PLC, together with a wholly-owned subsidiary of Candover Investments
PLC and certain investment funds indirectly controlled by Candover Investments
PLC (the "Candover Investors") and management, issued $43.8 million of 10%
unsecured subordinated loan stock due 2008 to certain of the Candover Investors
and borrowed $41.4 million under our bank facilities.

     The financial information in this prospectus divides the 1999 financial
year into two periods -- the period prior to September 20, 1999, when the
original Inveresk Research businesses were under the ownership and control of
its previous parent company, and the post acquisition period from September 20,
1999 to December 26, 1999.

     On April 5, 2001 we completed the acquisition of ClinTrials. The total
acquisition cost was $115.1 million, net of cash acquired of $5.7 million. To
finance this acquisition we received a $0.4 million equity investment from the
Candover Investors, issued $64.8 million of 10% unsecured subordinated loan
stock due 2008 to certain of the Candover Investors and borrowed $93.7 million
under our bank facilities, $38.3 million of which was used to repay loans under
our then existing bank facilities.

     Because of the way in which we financed the original management buyout and
subsequent acquisition of ClinTrials, we have a very high level of shareholder
loans and bank finance and related debt servicing costs. Our interest expense
has therefore been high relative to our income before taxes. We therefore
believe that income from operations (i.e. before interest) is a better measure
of the performance of the business historically than income or loss before
income taxes. We intend to use the net proceeds from this offering, together
with borrowings under a new bank facility which we intend to put in place as of
the effective date of this offering, to repay the 10% unsecured subordinated
loan stock due 2008 and the current borrowing under our bank facilities referred
to above.

                                        24
<PAGE>

     We operate in two segments for financial reporting purposes: pre-clinical
and clinical. The following table shows, for the past three years, a summary of
our financial performance.

<Table>
<Caption>
                                                    SUCCESSOR                                   PREDECESSOR
                           ------------------------------------------------------------    ---------------------
                               52 WEEKS             53 WEEKS         SEPTEMBER 20, 1999      DECEMBER 28, 1998
                                 ENDED                ENDED           TO DECEMBER 26,        TO SEPTEMBER 19,
                           DECEMBER 30, 2001    DECEMBER 31, 2000           1999                   1999
                           -----------------    -----------------    ------------------    ---------------------
                                                          (DOLLARS IN THOUSANDS)
<S>                        <C>                  <C>                  <C>                   <C>
NET SERVICE REVENUE:
Pre-clinical.............      $ 95,172             $ 45,136              $12,184                $ 32,524
Clinical.................        61,124               20,404                4,648                  14,564
                               --------             --------              -------                --------
                                156,296               65,540               16,832                  47,088
                               --------             --------              -------                --------
DIRECT COSTS:
Pre-clinical.............       (44,952)             (22,666)              (6,681)                (17,496)
Clinical.................       (39,023)             (13,467)              (2,964)                 (9,681)
                               --------             --------              -------                --------
                                (83,975)             (36,133)              (9,645)                (27,177)
                               --------             --------              -------                --------
  GROSS PROFIT:
  Pre-clinical...........        50,220               22,470                5,503                  15,028
  Clinical...............        22,101                6,937                1,684                   4,883
                               --------             --------              -------                --------
                                 72,321               29,407                7,187                  19,911
                               --------             --------              -------                --------
SELLING, GENERAL AND
  ADMINISTRATIVE:
Pre-clinical.............       (21,907)              (9,850)              (2,320)                 (6,575)
Clinical.................       (15,619)              (2,278)                (248)                   (797)
Central overheads........        (4,408)              (1,697)                (630)                 (1,641)
                               --------             --------              -------                --------
                                (41,934)             (13,825)              (3,198)                 (9,013)
                               --------             --------              -------                --------
DEPRECIATION:
Pre-clinical.............        (6,062)              (4,158)                (759)                 (3,401)
Clinical.................        (1,966)                (355)                 (50)                   (330)
                               --------             --------              -------                --------
                                 (8,028)              (4,513)                (809)                 (3,731)
                               --------             --------              -------                --------
AMORTIZATION:
Pre-clinical.............        (4,293)              (2,364)                (703)                      0
Clinical.................        (3,617)                (917)                (270)                   (242)
                               --------             --------              -------                --------
                                 (7,910)              (3,281)                (973)                   (242)
                               --------             --------              -------                --------
  INCOME FROM OPERATIONS:
  Pre-clinical...........        17,958                6,098                1,721                   5,052
  Clinical...............           899                3,387                1,116                   3,514
  Central overheads......        (4,408)              (1,697)                (630)                 (1,641)
                               --------             --------              -------                --------
                                 14,449                7,788                2,207                   6,925
Interest expense (net)...       (17,101)              (7,522)              (2,004)                   (560)
                               --------             --------              -------                --------
  INCOME (LOSS) BEFORE
    TAX..................        (2,652)                 266                  203                   6,365
Provision for income
  taxes..................        (2,049)                (682)                (325)                 (2,308)
                               --------             --------              -------                --------
  NET INCOME (LOSS)
    BEFORE EXTRAORDINARY
    ITEM.................        (4,701)                (416)                (122)                  4,057
Extraordinary item.......          (419)                  --                   --                      --
                               --------             --------              -------                --------
  NET INCOME (LOSS)......      $ (5,120)            $   (416)             $  (122)               $  4,057
                               ========             ========              =======                ========
</Table>

                                        25
<PAGE>

     The following table summarizes historical results of operations as a
percentage of net service revenue for the periods shown:

<Table>
<Caption>
                                                    SUCCESSOR                                 PREDECESSOR
                           ------------------------------------------------------------    -----------------
                                                                     SEPTEMBER 20, 1999    DECEMBER 28, 1998
                            52 WEEKS ENDED       53 WEEKS ENDED       TO DECEMBER 26,      TO SEPTEMBER 19,
                           DECEMBER 30, 2001    DECEMBER 31, 2000           1999                 1999
                           -----------------    -----------------    ------------------    -----------------
<S>                        <C>                  <C>                  <C>                   <C>
NET SERVICE REVENUE:
Pre-clinical.............        100.0%               100.0%               100.0%                100.0%
Clinical.................        100.0%               100.0%               100.0%                100.0%
TOTAL....................        100.0%               100.0%               100.0%                100.0%

DIRECT COSTS:
Pre-clinical.............         47.2%                50.2%                54.8%                 53.8%
Clinical.................         63.8%                66.0%                63.8%                 66.5%
TOTAL....................         53.7%                55.1%                57.3%                 57.7%

  GROSS PROFIT:
  Pre-clinical...........         52.8%                49.8%                45.2%                 46.2%
  Clinical...............         36.2%                34.0%                36.2%                 33.5%
  TOTAL..................         46.3%                44.9%                42.7%                 42.3%

SELLING, GENERAL AND
  ADMINISTRATIVE:
Pre-clinical.............         23.0%                21.8%                19.0%                 20.2%
Clinical.................         25.6%                11.2%                 5.3%                  5.5%
TOTAL....................         26.8%                21.1%                19.0%                 19.1%

DEPRECIATION:
Pre-clinical.............          6.4%                 9.2%                 6.2%                 10.5%
Clinical.................          3.2%                 1.7%                 1.1%                  2.3%
TOTAL....................          5.1%                 6.9%                 4.8%                  7.9%

AMORTIZATION:
Pre-clinical.............          4.5%                 5.2%                 5.8%                  0.0%
Clinical.................          5.9%                 4.5%                 5.8%                  1.7%
TOTAL....................          5.1%                 5.0%                 5.8%                  0.5%

  INCOME FROM OPERATIONS:
  Pre-clinical...........         18.9%                13.5%                14.1%                 15.5%
  Clinical...............          1.5%                16.6%                24.0%                 24.1%
  TOTAL..................          9.2%                11.9%                13.1%                 14.7%

Interest expense (net)...         10.9%                11.5%                11.9%                  1.2%

INCOME (LOSS) BEFORE
  TAX....................         (1.7%)                0.4%                 1.2%                 13.5%
</Table>

                                        26
<PAGE>

     Net service revenue.  We recognize revenue as costs are incurred and
include estimated earned fees or profits calculated on the basis of the
relationship between costs incurred and total estimated costs (cost-to-cost type
of percentage-of-completion method of accounting). We recognize revenue related
to contract modifications when realization is assured and the amounts can be
reasonably determined. When estimated contract costs indicate that a loss will
be incurred on a contract, the entire loss is provided for in such period.

     Costs associated with contracting with third party investigators are
excluded from net service revenue where they are the direct responsibility of
the clients and are passed through to our clients without any markup.

     Once a contract for a pre-clinical or clinical trial has been signed, the
commencement date may vary depending upon the preparedness of the client's drug
candidate and our capacity availability. This requires efficient capacity
planning and flexible management of our facilities.

     Direct costs.  These comprise the costs of the direct work force,
laboratory consumables and other direct costs associated with the studies we
perform for clients.

     Selling, general and administrative expenses.  These comprise
administration costs, marketing expenditure and overhead costs such as the costs
of running our facilities that are not allocated to direct costs.

     These expenses also include central overhead costs that are not directly
attributable to our operating businesses and include certain costs related to
group management, insurance, marketing, professional fees and property.

     Depreciation and amortization.  Depreciation represents the depreciation
charged on our tangible fixed assets in accordance with the accounting policies
set out in note 2 of our Financial Statements included herein, Summary of
Significant Accounting Policies -- Property, Plant and Equipment. Amortization
represents the amortization of goodwill and other intangible assets over their
estimated useful lives. As described in note 2 of our Financial Statements
included herein, Summary of Significant Accounting Policies -- Recent Accounting
Pronouncements, the accounting policy relating to amortization of goodwill will
change from January 1, 2002 such that unless it is necessary to record an
impairment of the goodwill, there will be no amortization of the goodwill
recorded in 2002.

     Interest expense (net).  This includes interest on our bank debt and our
10% unsecured subordinated loan stock due 2008. The bank debt bears interest at
rates that range between LIBOR plus 2.25% and LIBOR plus 2.75%. The unsecured
subordinated loan stock due 2008 accumulates interest at a fixed rate of 10%. We
entered into an interest rate cap and collar transaction in 1999 on borrowings
in connection with our management buyout. In 2001 we entered into two interest
rate swap arrangements in connection with the incremental borrowings used to
fund the ClinTrials acquisition. These swaps have the effect of fixing the LIBOR
rate at 6.03% on the pounds sterling borrowings and 5.41% on the Canadian dollar
borrowings. In years prior to 2001, interest expense included the amortization
of costs associated with the cap and collar transaction, in line with the
accounting standards then in force. In 2001, interest expense includes the cost
of recording the cap and collar transaction and the interest rate swaps at their
fair values. We intend to use the net proceeds from this offering, together with
borrowings under a new bank facility, to repay the 10% unsecured subordinated
loan stock due 2008 and current borrowings under our existing bank facilities.

EXCHANGE RATE FLUCTUATIONS

     Our consolidated financial statements are prepared in U.S. dollars. Our
principal businesses are based in the United States, United Kingdom and Canada.
Our United Kingdom and Canadian operations record their transactions in local
currencies. Accordingly, fluctuations in pounds sterling and Canadian dollar
exchange rates will impact the results of operations reported in U.S. dollars.

                                        27
<PAGE>

     The results of our non-U.S. operations have been translated from pounds
sterling and Canadian dollars using the following average exchange rates:

<Table>
<Caption>
                                                           U.S. DOLLARS
                                                               PER          U.S. DOLLARS PER
FISCAL YEAR                                               POUND STERLING    CANADIAN DOLLAR
-----------                                               --------------    ----------------
<S>                                                       <C>               <C>
  1999..................................................      1.6178                N/A
  2000..................................................      1.5156                N/A
  2001..................................................      1.4405             0.6428(1)
</Table>

---------------
(1) Average for the period from April 5, 2001, the date we acquired ClinTrials,
    until December 30, 2001.

     As a result of the acquisition of ClinTrials in 2001, the percentage of our
net service revenue arising from our United Kingdom operations decreased,
although a significant component of our net service revenue now arises in
Canada. The following table sets forth, for the fiscal years indicated, the
percentage of our revenues arising in the United Kingdom and Canada:

<Table>
<Caption>
FISCAL YEAR                                                   UNITED KINGDOM    CANADA
-----------                                                   --------------    ------
<S>                                                           <C>               <C>
  1999......................................................        97%            0%
  2000......................................................        98%            0%
  2001......................................................        54%           31%
</Table>

     In addition, our Canadian business invoices a significant proportion of its
revenues in U.S. dollars, although its costs are largely incurred in Canadian
dollars and it records its transactions in Canadian dollars. This can result in
transaction exchange gains or losses which are reflected in its statements of
operations.

     The foreign currency exchange gain or loss recognized in the statements of
operations and included in "Selling, general and administrative expenses" was a
gain of $1,207,000 for the fiscal year ended December 30, 2001, a loss of
$41,000 for the fiscal year ended December 31, 2000, a loss of $13,000 in the
period from September 20, 1999 to December 26, 1999 and loss of $36,000 for the
period from December 28, 1998 to September 19, 1999. A significant portion of
the foreign exchange gain in 2001 arose from our Canadian pre-clinical
operations.

RESULTS OF OPERATIONS

FISCAL 2001 COMPARED TO FISCAL 2000

     NET SERVICE REVENUE.  Net service revenue in 2001 was $156.3 million, an
increase of $90.8 million, or 138%, over 2000 net service revenue of $65.5
million.

     Pre-clinical.  Net service revenue in 2001 was $95.2 million, an increase
of $50.1 million, or 111%, over revenues of $45.1 million in 2000. The
acquisition of the Canadian pre-clinical operations of ClinTrials in April 2001
increased net service revenue in 2001 by $48.2 million, or 107%. Net service
revenue for the original Inveresk pre-clinical operations increased by $1.9
million, or 4%. Net service revenue for the original Inveresk pre-clinical
operations when expressed in local currency, pounds sterling, grew by 10% in
2001. Net service revenue from our acquired Canadian pre-clinical operations
increased by $5.0 million, or 12%, for the period from April 6, 2001 (the date
we acquired ClinTrials) to December 30, 2001 over revenues of $43.2 million in
the comparable period from April 2000 to December 31, 2000 when such operations
were under prior ownership. Net service revenue for our Canadian pre-clinical
operations when expressed in local currency, Canadian dollars, grew by 16% in
2001. Both of our pre-clinical facilities experienced strong demand for their
services in 2001. The utilization rates in both of our operations also increased
in 2001, permitting the pre-clinical segment to further improve its business mix
by increasing the proportion of its revenues represented by higher value-added
safety and pharmacology evaluation services. Our laboratory sciences and
clinical support operations also continued to experience increased revenue
levels in 2001.

                                        28
<PAGE>

     Clinical.  Net service revenue in 2001 was $61.1 million, an increase of
$40.7 million, or 200%, over revenues of $20.4 million in 2000. The acquisition
of ClinTrials in April 2001 increased net service revenue in 2001 by $40.3
million, or 198%. Net service revenue at the original Inveresk Research clinical
development operations increased by $0.4 million, or 2%. Net service revenue for
the original Inveresk Research clinical operations when expressed in local
currency, pounds sterling, grew by 7% in 2001. Net service revenue in the
acquired ClinTrials clinical trials operations increased by $2.1 million, or 5%,
over revenues of $38.3 million in the comparable period from April 2000 to
December 31, 2000. Our clinical trials management business experienced stronger
demand for its services in 2001. Our Phase I clinical trials operation benefited
from expanded capacity for the whole of 2001 and improved business mix. Our
Phase II-IV revenues increased as the result of a full year's revenues from the
opening of our offices in Prague and Warsaw in 2000 and from increased stability
in the client base at the acquired ClinTrials clinical operations.

     DIRECT COSTS.  In 2001 direct costs totaled $84.0 million, an increase of
$47.9 million, or 132%, from $36.1 million in 2000. Direct costs were 53.7% of
net service revenue in 2001 compared to 55.1% in 2000.

     Pre-clinical.  Direct costs in 2001 were $45.0 million, an increase of
$22.3 million, or 98%, over costs of $22.7 million in 2000. In 2001 direct costs
were 47.2% of net service revenue, compared to 50.2% in 2000. Both of our
pre-clinical facilities contributed to improved margins in 2001. This was
attributable to more efficient use of our facilities, an improvement in the
business mix and continuing attention to cost control.

     Clinical.  Direct costs in 2001 were $39.0 million, an increase of $25.6
million, or 190%, over costs of $13.5 million in 2000. In 2001 direct costs were
63.8% of net service revenue, compared to 66.0% in 2000. The margin improvement
in 2001 was due primarily to stronger demand for our services, improved pricing
and continuing attention to cost control, as well as restructuring measures
undertaken within the acquired ClinTrials clinical operations.

     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.  In 2001 selling, general and
administrative expenses totaled $41.9 million, an increase of $28.1 million, or
203%, from $13.8 million in 2000. Selling, general and administrative expenses
in 2001 were 26.8% of net service revenue in 2001 compared to 21.1% in 2000.

     Pre-clinical.  Selling, general and administrative costs in 2001 were $21.9
million, an increase of $12.1 million, or 122%, over costs of $9.8 million in
2000. Selling general and administrative costs increased from 21.8% of net
service revenue in 2000 to 23.0% in 2001. The increased level of costs was
associated with additional investment in infrastructure, including quality
assurance and IT, to support the growth of our pre-clinical business. This was
offset partially by transaction exchange gains in our Canadian operations.

     Clinical.  Selling, general and administrative costs in 2001 were $15.6
million, an increase of $13.3 million, or 586%, over costs of $2.3 million in
2000. Selling, general and administrative expenses increased from 11.2% of net
service revenue in 2000 to 25.6% in 2001. This increase is wholly attributable
to the cost structure levels in the acquired ClinTrials clinical development
operations. The selling, general and administrative costs in our original
Inveresk clinical operations, as a percentage of net service revenues,
marginally declined from 2000 levels. The clinical development operations
acquired with ClinTrials were unprofitable at the time they were acquired, which
resulted primarily from an excessive overhead cost structure. We have
successfully implemented a restructuring plan in the acquired ClinTrials
European clinical business. This resulted in a reduction in head count and the
relocation of certain operations from Maidenhead in England to more
cost-effective locations in Scotland. Additional cost reduction measures were
undertaken in the ClinTrials U.S. clinical development operations.

     Corporate overhead.  The 160% increase in these costs during 2001 is
attributable to the increased corporate overhead following the ClinTrials
acquisition.

     AMORTIZATION OF INTANGIBLE ASSETS.  In 2001 amortization of intangible
assets totaled $7.9 million ($4.3 million relating to our pre-clinical and $3.6
million relating to our clinical business), an increase of
                                        29
<PAGE>

$4.6 million, or 141%, from $3.3 million in 2000. The increase was due to the
additional amortization resulting from the ClinTrials acquisition in April 2001.
As described in note 2 to our Financial Statements included herein, Summary of
Significant Accounting Policies -- Recent Accounting Pronouncements, the
accounting policy relating to amortization of goodwill will change from January
1, 2002 such that unless it is necessary to record an impairment of the goodwill
values, there will be no amortization of the goodwill in 2002.

     INCOME FROM OPERATIONS.  Income from operations in 2001 was $14.4 million,
an increase of $6.7 million, or 86%, from $7.8 million in 2000. Income from
operations in 2001 was 9.2% of net service revenue, compared to 11.9% in 2000.

     Pre-clinical.  Income from operations increased by $11.9 million, or 194%,
from $6.1 million in 2000 to $18.0 million in 2001 for the reasons set forth
above.

     Clinical.  Income from operations decreased by $2.5 million, or 73%, from
$3.4 million in 2000 to $0.9 million in 2001, for the reasons set forth above.

FISCAL 2000 COMPARED TO FISCAL 1999

     The figures for Fiscal 1999 described below represent the aggregate of the
predecessor period from December 28, 1998 to September 19, 1999 and the
successor period from September 20, 1999 to December 26, 1999.

     NET SERVICE REVENUE.  Net service revenue in 2000 was $65.5 million, an
increase of $1.6 million, or 3%, over 1999 net service revenue of $63.9 million.

     Pre-clinical.  Net service revenue in 2000 was $45.1 million, an increase
of $0.4 million, or 1%, over revenues of $44.7 million in 1999. Net service
revenue for the pre-clinical business when expressed in local currency, pounds
sterling, grew by 8% in 2000. This growth was primarily attributable to strong
performance in pre-clinical safety evaluation services, due to a higher level of
new studies being awarded to Inveresk Research. Our laboratory sciences and
clinical support operations also continued to experience increased revenue
levels in 2000.

     Clinical.  Net service revenue in 2000 was $20.4 million, an increase of
$1.2 million, or 6%, over revenues of $19.2 million in 1999. Net service revenue
for the clinical business when expressed in local currency, pounds sterling,
grew by 13% in 2000. Net service revenue at our Phase I operations increased due
to improved occupancy levels in our Phase I clinic. Phase II-IV net service
revenue increased by 43% as a consequence of being awarded several large Phase
III projects, as well as opening our offices in Prague and Warsaw.

     DIRECT COSTS.  In 2000 direct costs totaled $36.1 million, a decrease of
$0.7 million, or 2%, from $36.8 million in 1999.

     Pre-clinical.  Direct costs in 2000 were $22.7 million, a decrease of $1.5
million, or 6%, over costs of $24.2 million in 1999. In 2000 direct costs were
50.2% of net service revenue, compared to 54.1% in 1999. This was attributable
to improved labor utilization and continued emphasis on maintaining tight cost
controls.

     Clinical.  Direct costs in 2000 were $13.5 million, an increase of $0.9
million, or 7%, over costs of $12.6 million in 1999. In 2000 direct costs were
66.0% of net service revenue, a slight increase over 65.8% in 1999.

     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.  In 2000 selling, general and
administrative expenses were $13.8 million, an increase of $1.6 million, or 13%,
over costs of $12.2 million in 1999. Selling, general and administrative
expenses were 21.1% of net service revenue in 2000, compared to 19.1% in 1999.

     Pre-clinical.  Selling, general and administrative expenses in 2000 were
$9.9 million, an increase of $1.0 million, or 11%, over costs of $8.9 million in
1999. Selling, general and administrative expenses in

                                        30
<PAGE>

2000 were 21.8% of net service revenue, compared to 19.9% in 1999. This increase
resulted primarily from increased marketing expenditure and a small increase in
indirect staff levels in 2000.

     Clinical.  Selling, general and administrative expenses in 2000 were $2.3
million, an increase of $1.3 million, or 118%, over costs of $1.0 million in
1999. Selling, general and administrative expenses in 2000 were 11.2% of net
service revenue, compared to 5.4% in 1999. In 1999, selling, general and
administrative expenses were reduced by recovery of debts of $0.15 million
against which we had previously reserved. The remaining increase in 2000
resulted from increased marketing expenditure and costs associated with opening
our offices in Prague and Warsaw.

     Corporate overhead.  In 2000 unallocated corporate overhead amounted to
$1.7 million, a decrease of $0.6 million, or 25%, over the charge of $2.3
million in 1999.

     AMORTIZATION OF INTANGIBLE ASSETS.  In 2000 amortization of intangible
assets totaled $3.3 million ($2.4 million relating to our pre-clinical and $0.9
million relating to our clinical business), an increase of $2.1 million, or
170%, from $1.2 million in 1999. This increase arose due to additional
amortization resulting from the management buyout in September 1999.

     INCOME FROM OPERATIONS.  In 2000 income from operations amounted to $7.8
million, a decrease of $1.3 million, or 15%, from $9.1 million in 1999. Income
from operations in 2000 was 11.9% of net service revenue, compared to 14.3% in
1999.

     Pre-clinical.  Income from operations decreased from $6.8 million in 1999
to $6.1 million in 2000, for the reasons set forth above.

     Clinical.  Income from operations decreased from $4.6 million in 1999 to
$3.4 million in 2000, for the reasons set forth above.

QUARTERLY RESULTS FROM OPERATIONS

     Certain of our operations have experienced and may continue to experience,
period-to-period fluctuations in net service revenue and results from
operations. Our results of operations in any one 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
proportion of our revenue from service provided on 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. See "Risk
Factors -- Risks Relating to our Business -- Our quarterly operating results may
vary."

                                        31
<PAGE>

     The following table sets out the unaudited quarterly consolidated financial
data for the four quarters in the period January 1, 2001 to December 30, 2001.
The unaudited quarterly consolidated financial data has been prepared on a basis
consistent with the audited consolidated financial data, which are included in
this prospectus. In the opinion of management they reflect all adjustments of a
normal and recurring nature which are necessary to present fairly the results of
operations for the quarterly periods.

<Table>
<Caption>
                                                                    QUARTER ENDED
                                                ------------------------------------------------------
                                                MARCH 31,    JUNE 30,    SEPTEMBER 30,    DECEMBER 30,
                                                  2001         2001          2001             2001
                                                ---------    --------    -------------    ------------
                                                                (DOLLARS IN MILLIONS)
<S>                                             <C>          <C>         <C>              <C>
NET SERVICE REVENUE:
Pre-clinical..................................    $11.4       $27.2          $28.0           $28.5
Clinical......................................      4.6        19.0           18.9            18.7
                                                  -----       -----          -----           -----
                                                  $16.0       $46.2          $46.9           $47.2
                                                  -----       -----          -----           -----
INCOME FROM OPERATIONS:
Pre-clinical..................................    $ 1.1       $ 4.8          $ 5.9           $ 6.1
Clinical......................................      0.8        (1.4)           0.4             1.1
Corporate overhead............................     (0.4)       (1.4)          (1.2)           (1.4)
                                                  -----       -----          -----           -----
                                                  $ 1.5       $ 2.0          $ 5.1           $ 5.8
                                                  -----       -----          -----           -----
NET INCOME (LOSS).............................    $(0.2)      $(2.5)         $(1.5)          $(0.9)
                                                  =====       =====          =====           =====
</Table>

     The quarterly financial data set out above reflects the acquisition of
ClinTrials on April 5, 2001.

LIQUIDITY AND CAPITAL RESOURCES

     Prior to our management buyout from SGS Societe Generale de Surveillance
SA, our principal source of liquidity was cash flow from operations. Following
the consummation of our management buyout, our principal sources of liquidity
have been cash flow from operations and borrowings under our bank facilities and
our 10% unsecured subordinated loan stock due 2008.

     In September 1999, we received a $0.8 million equity investment from the
Candover Investors and management, issued $43.8 million of 10% unsecured
subordinated loan stock due 2008 to the Candover Investors and borrowed $41.4
million under our bank facilities. In connection with the acquisition of
ClinTrials, we received a $0.4 million equity investment from the Candover
Investors, issued $64.8 million of 10% unsecured subordinated loan notes due
2008 to the Candover Investors and borrowed $93.7 million under our bank
facilities, $38.3 million of which was used to repay loans under our then
existing bank facilities.

     The total amount available to us under our bank facilities is $109.3
million which is secured by a charge on our assets. Borrowings under these
facilities bear interest at a rate per year equal to a margin over LIBOR. Of the
amounts currently available under our facilities, $46.8 million are denominated
in U.S. dollars, $52.9 million are denominated in pounds sterling and $9.6
million are denominated in Canadian dollars. $79.9 million of the bank loan
facilities bear interest at LIBOR plus 2.25%, and the remaining $29.4 million
bears interest at LIBOR plus 2.75%. The facilities are repayable according to
repayment schedules applicable to each part of the facility between June 30,
2002 and December 31, 2008.

     We are currently negotiating the terms of a new senior secured credit
facility with a number of lenders, including an affiliate of one of the
underwriters in this offering, to replace our existing bank loan facilities.

     We intend to use the net proceeds from this offering, together with
available borrowings under such new bank facility, to repay the 10% unsecured
subordinated loan stock due 2008 and the current borrowings under our existing
bank facilities.

                                        32
<PAGE>

     We anticipate that our operating cash flow, together with available
borrowings under our new credit facility, will be sufficient to meet our
anticipated future operating expenses, capital expenditures and debt service
obligations as they become due over the next twelve months.

  Fiscal 2001 compared to Fiscal 2000

     Cash flow from operations in 2001 was $19.5 million compared to $12.7
million in 2000. Net cash used in investing activities in 2001 was $126.3
million compared to $6.8 million in 2000. The increase was due primarily to the
acquisition of ClinTrials for $115.1 million net of cash acquired of $5.7
million. Capital expenditures in 2001 were $11.1 million compared to $6.8
million in 2000, the increase being accounted for primarily by capital
expenditures at our pre-clinical operations in Montreal.

     Net cash flows from financing activities in 2001 were $115.5 million versus
net cash flows used in financing activities of $3.1 million in 2000. The
activities in 2001 consisted of the repayment of long-term debt amounting to
$38.3 million, repayment of short-term debt of $3.0 million, the issue of new
equity for $0.4 million and the receipt of proceeds from long-term borrowings,
net of issue costs, of $156.4 million in connection with the financing
arrangements for the acquisition of ClinTrials.

  Fiscal 2000 compared to Fiscal 1999

     The figures for Fiscal 1999 described below represent the aggregate of its
predecessor period from December 28, 1998 to September 19, 1999 and the
successor period from September 20, 1999 to December 26, 1999.

     Cash flow from operations in 2000 was $12.7 million compared to $11.3
million in 1999. Net cash used in investing activities in 2000 was $6.8 million
compared to $85.4 million in 1999. The use of net cash in 1999 related to our
management buyout from SGS Societe Generale de Surveillance SA for $78.8 million
net of cash acquired of $9.1 million. Capital expenditures in 2000 were $6.8
million compared to $6.6 million in 1999.

     Net cash flows used in financing activities in 2000 were $3.1 million
versus net cash flows provided by financing activities of $85.0 million in 1999.
The activities in 2000 consisted primarily of the repayment of long-term debt
amounting to $3.0 million. The activities in 1999 consisted primarily of the
receipt of financing proceeds in connection with our management buyout, together
with short-term borrowings of $3.2 million.

QUANTITATIVE AND QUALITATIVE DISCLOSURES AND MARKET RISKS

     We are subject to market risks arising from changes in interest rates and
foreign currency exchange rates.

     Our primary interest rate exposure results from changes in LIBOR or the
base rates which are used to determine the applicable interest rates under our
bank facilities. Our bank debt currently bears interest at rates that range
between LIBOR plus 2.25% and LIBOR plus 2.75%. We have entered into interest
rate protection agreements designed to protect us against fluctuations in
interest rates with respect to at least 61% of the aggregate principal amount of
our bank facilities at December 31, 2001. In 1999 we entered into an interest
rate cap and collar transaction on borrowings in connection with our management
buyout. This interest rate cap and collar transaction remains effective. In 2001
we entered into two interest rate swap agreements in connection with the
incremental borrowings to fund the ClinTrials acquisition. These swaps have the
effect of fixing the LIBOR rate at 6.03% on the pounds sterling borrowings and
5.41% on the Canadian dollar borrowings.

     Our potential loss over one year that would result from a hypothetical,
instantaneous and unfavorable change of 100 basis points in the interest rate on
all of our variable rate obligations would be less than $0.5 million.
Fluctuations in interest rates will not affect the interest payable on the 10%
unsecured subordinated loan stock due 2008, which is fixed.

                                        33
<PAGE>

     Our consolidated financial statements are prepared in U.S. dollars. The
functional currency of each of our subsidiaries is the local currency of the
country in which the subsidiary is located. Our principal operating subsidiaries
are located in the United Kingdom and Canada and, together, they accounted for
85% of our net service revenue in 2001. Accordingly, fluctuations in the
exchange rates between the pounds sterling, Canadian dollars and the U.S.
dollars will affect any translation of our results for financial reporting
purposes.

     We also have exposure to some foreign currency exchange rate fluctuations
for the cash flows received from our foreign affiliates. This risk is mitigated
by the fact that their operations are conducted in their respective local
currencies, and it is not our intention to repatriate earnings prospectively.
Currently, we do not engage in any foreign currency hedging activities as we do
not believe that our foreign currency exchange rate risk is material.

     We do not use financial instruments for trading or other speculative
purposes.

     Management does not believe that inflation in past years has had a
significant impact on our results from operations. Management believes that, in
the event inflation affects our costs in the future, we will offset the effect
of inflation and maintain operating margins through increases in fees.

RECENT ACCOUNTING PRONOUNCEMENTS

     In July 2001, the Financial Accounting Standards Board ("FASB") issued FAS
141, "Business Combinations," and FAS 142, "Goodwill and Other Intangible
Assets." FAS 141 requires that the purchase method of accounting be used for all
business combinations initiated after June 30, 2001. FAS 141 also specifies the
criteria that intangible assets acquired in a purchase method business
combination must meet to be recognized and reported apart from goodwill, noting
that any purchase price allocable to an assembled workforce may not be accounted
for separately. FAS 142 will require that goodwill and intangible assets with
indefinite useful lives no longer be amortized, but instead will be tested for
impairment at least annually in accordance with the provisions of FAS 142. FAS
142 will also require that intangible assets with definite useful lives be
amortized over their respective estimated useful lives to their estimated
residual values, and reviewed for impairment in accordance with FAS 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of."

     FAS 142 is effective from January 1, 2002. Furthermore, any goodwill and
any intangible asset determined to have an indefinite useful life that is
acquired in a purchase business combination completed after June 30, 2001 will
not be amortized, but instead tested for impairment at least annually in
accordance with the provisions of FAS 142. Goodwill and intangible assets
acquired in business combinations completed before July 1, 2001 have continued
to be amortized prior to the effective date of FAS 142.

     On adoption of FAS 142 the net book value of the intangible assets relating
to the assembled workforce net of deferred tax will transfer to goodwill. Had
FAS 142 been applied from January 1, 2001 the amortization expense in 2001 would
have been reduced by approximately $7.91 million from the level it was under the
old standards.

     In June 2001, the FASB issued FAS 143, "Accounting for Asset Retirement
Obligations." FAS 143 requires the fair value of a liability for asset
retirement obligations to be recognized in the period in which it is incurred if
a reasonable estimate of the fair value can be made. The associated asset
retirement costs are capitalized as part of the carrying amount of the related
long-lived asset.

     FAS 143 is effective for financial statements issued for fiscal years
beginning after June 15, 2002. The Company has not yet assessed the potential
impact of the adoption of FAS 143.

     In August 2001, the FASB issued FAS 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." FAS 144 establishes a single accounting model
for long-lived assets to be disposed of by sale consistent with the fundamental
provisions of FAS 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of." While it supersedes APB Opinion 30,

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"Reporting the Results of Operations -- Reporting the Effects of the Disposal of
a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions." FAS 144 retains the presentation of discontinued
operations but broadens that presentation to include a component of an entity
(rather than a segment of a business). However, discontinued operations are no
longer recorded at the net realizable value and future operating losses are no
longer recognized before they occur. Under FAS 144, there is no longer a
requirement to allocate goodwill to long-lived assets to be tested for
impairment. It also establishes a probability weighted cash flow estimation
approach to deal with situations in which there is a range of cash flows that
may be generated by the asset being tested for impairment. FAS 144 also
establishes criteria for determining when an asset should be treated as held for
sale.

     FAS 144 is effective for fiscal years beginning after December 15, 2001 and
interim periods within those fiscal years, with early application encouraged.
The provisions of FAS 144 are generally to be applied prospectively. The Company
currently has no plans to dispose of any operations and, accordingly, does not
anticipate that adoption of FAS 144 will have any material impact on its results
of operations or its financial position.

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                                    BUSINESS

     In this prospectus, "Inveresk Research," "we," "us," or "our" refers to
Inveresk Research and its consolidated subsidiaries after giving effect to the
transactions described under "Change in Ultimate Parent."

OVERVIEW

     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.

     In 2001 our business, including ClinTrials Research Inc., which we acquired
in April 2001, generated net service revenue of $156.3 million, income from
operations of $14.4 million, after $15.9 million of depreciation and
amortization charges, and a net loss of $5.1 million, after $19.6 million of
shareholder loan and bank interest charges, taxes and an extraordinary item.

     PRE-CLINICAL.  Our pre-clinical development business was established over
35 years ago, employs approximately 1,600 people and operates from two principal
facilities, one located in Tranent, Scotland and the other in Montreal, Canada.
This part of our business provides pre-clinical safety and pharmacology
evaluation services and laboratory sciences services (including clinical support
services). In 2001 our pre-clinical business generated net service revenue of
$95.2 million and income from operations of $18.0 million, excluding corporate
overhead and after $10.4 million of depreciation and amortization charges. Based
upon net service revenue, we estimate that we are the second 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 5% of
our net service revenue in 2001. More than 85% of the 2001 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 we committed over $15 million to the expansion of our
pre-clinical facility in Montreal. We intend to devote substantial resources in
the future towards enlarging our pre-clinical operations, with additional
expansion of our facilities in both Montreal and Tranent planned for completion
in 2003 and 2004. We expect to fund this expansion primarily with cash generated
from our operations. We will also consider opportunistically expanding our
pre-clinical business through acquisitions.

     CLINICAL.  Our clinical development business was established in 1988 and
operates from 14 facilities located across the United States and Europe,
employing approximately 700 people. This business conducts Phase I clinical
trials and provides Phase II-IV clinical trials management services (including
medical data sciences services and regulatory support). In 2001 our clinical
development business generated net service revenue of $61.1 million and income
from operations of $0.9 million, excluding corporate overhead and after
depreciation and amortization charges of $5.6 million. Our 62-bed clinic in
Edinburgh conducts a wide range of Phase I clinical trials and has completed an
average of 12 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

     Prior to 1999 we operated as a division of SGS Societe Generale de
Surveillance SA. In 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. In
that transaction, 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

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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.

THE NEW DRUG DEVELOPMENT PROCESS

     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. The drug development process, together with typical
corresponding time periods for each stage of the process, in the United States
is described below. A similar process must be undertaken elsewhere, including in
other major pharmaceutical markets in Europe and Japan, before a drug can be
approved for use in those markets. The approval procedure and the time required
for approval vary from country to country and may involve additional evaluation.

  Pre-clinical Evaluation

     Once a drug candidate is identified for development, it will enter the
pre-clinical development stage. Pre-clinical evaluation generally lasts from one
week to three years (long term repeat dose studies). It is comprised of both in
vitro ("test tube" based) and in vivo (animal based) studies conducted to
establish the toxic effects of a drug and how it is absorbed, distributed and
cleared from the body. Initially, acute, or short term, toxicology studies are
conducted to ascertain the noxious characteristics of the drug on target organs,
following which an investigational new drug application will typically be made.
Longer-term chronic safety studies to determine the drug's longer-term safety
and toxicological profile, such as carcinogenicity studies, will typically run
in parallel with Phase II clinical trials.

  Investigational New Drug Application

     In the United States, when the results of pre-clinical evaluation have
addressed the regulatory requirements of the United States Food and Drug
Administration ("FDA"), an investigational new drug application is filed with
the FDA to seek authorization to begin human testing (Phase I clinical trials)
of the drug candidate. An Institutional Review Board, comprised of appropriate
experts and lay persons at the hospital or clinic where the initial Phase I
studies will be conducted, must review and approve the study. The Institutional
Review Board also continues to monitor the study throughout its duration. A
similar process must be undertaken elsewhere, including in other major
pharmaceutical markets in Europe and Japan.

  Clinical Trials

     Clinical development generally lasts from three to seven years and is
usually comprised of four sequential phases, with multiple studies conducted
within each phase.

  Phase I

     Phase I trials are usually conducted on healthy volunteers, typically 20 to
80 persons, to identify basic tolerability and safety data as well as
absorption, metabolism, excretion and pharmacological actions. Phase I
development generally takes six months to one year to complete and offers an
early indication of the side effects of the drug, how the drug works, how it
might be affected by other drugs, where it goes in the body, how long it remains
active and how it is broken down and eliminated from the body.

  Phase II

     Phase II trials are conducted on a small number of patients who suffer from
a targeted disease or condition, typically 100 to 400 people. Phase II
development generally lasts for up to two years and offers the first evidence of
efficacy and determines the optimum dose for the drug. It also helps to provide
additional safety data.

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  Phase III

     Phase III trials are conducted on several hundred to several thousand
patients who suffer from the targeted disease or condition. Phase III
development generally lasts for up to two to three years and is intended to
provide information on drug safety and efficacy, an evaluation of the
risk-benefit relationship for the drug, and information for the adequate
labeling of the product. It involves numerous multinational investigational
sites, where patients participating in the trial will be enrolled, the drug
administered and the patient monitored.

  Regulatory Review and Approval

     After the completion of all three clinical trial phases, if the sponsor
concludes that there is evidence that the drug is safe and effective, a New Drug
Application ("NDA") is filed with the FDA. The NDA must contain all of the
information on the drug gathered to that date, including the results of all pre-
clinical and clinical studies, information about the drug's composition and the
sponsor's plans for producing, packaging and labeling the drug. The FDA
undertakes an in-depth review of the NDA which can last from several months to
several years. Drugs that successfully complete this review may be marketed in
the United States, subject to the conditions imposed by the FDA in its approval.

  Phase IV or Post Marketing Clinical Studies

     As a condition of granting marketing approval, the FDA may require that a
sponsor continue to conduct additional clinical trials, known as Phase IV or
post marketing clinical studies, to monitor long-term risks and benefits, study
different dosages, or evaluate different safety and efficacy in target patient
populations.

  Pharmacovigilance

     Any serious adverse events that are identified after a drug has been
launched in the market must be submitted to the regulatory authorities in all
markets where the product is licensed. Therefore, even after a drug has been
approved and launched in the market, there is a need for ongoing
pharmacovigilance and safety monitoring for any adverse drug reactions, drug
interactions and safety issues with the drug that may become apparent only when
the drug is in general use.

INDUSTRY BACKGROUND

GENERAL

     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 major pharmaceutical 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 companies are seeking in many cases
to manage these risks by pursuing the parallel development of multiple compounds
with similar potential applications (to mitigate the risk of product failure),
while at the same time pursuing strategies to contain costs. Further, since the
profitability of a drug is greatest while it enjoys market exclusivity,
pharmaceutical companies continually seek ways to shorten the time from drug
discovery to marketing.

     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
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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.

     While there are numerous drug development services companies, including
Inveresk Research, offering clinical development services, there are only a
small number of companies able to offer a full range of sophisticated
pre-clinical and clinical development services on a worldwide basis. Barriers to
entry include:

     - availability of capital to invest in infrastructure (including capital
       equipment and labor), particularly in connection with the pre-clinical
       and Phase I business;

     - broad experience in sophisticated drug development;

     - comprehensive databases;

     - long-standing reputation for excellence; and

     - ability to manage complex clinical trials involving large patient
       populations in numerous countries simultaneously.

INDUSTRY TRENDS

  General

     The drug development services industry has evolved from providing limited
clinical trial services in the 1970s to a full-service industry today that
encompasses broader relationships with clients, covering the entire drug
development process, including pre-clinical safety evaluation, pharmacology,
study design, clinical trial management, data collection, statistical analysis,
product support and regulatory services. Pharmaceutical companies are now using
drug development services companies not only to cover gaps in capacity, but also
to increase their skills base, help to control costs and reduce drug development
timelines.

  Demand for New Drugs Based on Changing Population Demographics

     There is a strong demand in the marketplace to treat diseases such as
cancer and HIV as well as illnesses associated with aging such as osteoporosis,
arthritis and Alzheimer's disease. The development and testing of some of the
compounds that treat such illnesses require complex clinical trials. In
addition, the cost of developing therapies for chronic disorders, such as
arthritis, Alzheimer's disease and osteoporosis, is higher because the
treatments must be studied for a longer period to demonstrate their
effectiveness and to determine any possible long-term side effects. The
complexity and expense of these trials prompts pharmaceutical and biotechnology
companies to outsource all or a portion of these trials to drug development
services organizations to take advantage of the experience and expertise of such
organizations in conducting complicated trials.

  Escalating Research and Development Expenditures by Pharmaceutical Companies

     Increases in global research and development expenditures by the major
pharmaceutical companies have broadly tracked the increase in pharmaceutical
revenues over the past ten years. The outsourcing of pre-clinical and clinical
trials for pharmaceutical, biotechnology and medical device products is
estimated to be growing at least as much as the rate of growth in global
research and development expenditures by major pharmaceutical companies.

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  The Growth of the Biotechnology Industry

     The United States, European and Japanese biotechnology industries and the
number of drugs produced by them have grown substantially over the past decade.
According to the Biotechnology Industry Organization, 24 new biotechnology drugs
and vaccines received approval in 2001 compared with seven in 1993. The
biotechnology industry is expected to increase its expenditure on drug
development in the coming years. Biotechnology companies typically do not have
the staff, operating procedures, experience or expertise in-house to conduct
their own pre-clinical testing or clinical trials. In addition, while
biotechnology companies have historically sought to defray the costs of
pre-clinical and clinical development by licensing their products to
pharmaceutical companies, they are now increasingly seeking to license out their
technology at a later stage of clinical development.

  The Emergence of New Research and Development Technologies

     Over the past 20 years, technological advances have dramatically changed
the drug discovery process. New and improved technologies have evolved such as
combinatorial chemistry, ultra high-throughput screening, new in vitro and in
vivo pre-clinical profiling techniques, and the evolution in genetic-based drug
research commonly referred to as genomics and proteomics. The objective of these
innovations is to find more drug targets and to screen against targets much more
quickly with literally millions of chemical compounds. This process should
produce many more molecules having the ability to affect biological activity.
The increased numbers of drug candidates will make it imperative that the
development and regulatory processes be rapid and cost-effective. Pharmaceutical
and biotechnology companies may also find that they do not have sufficient
internal development resources or know-how to cope with the increased number of
new drug candidates emerging as a consequence of the emergence of new
technologies. These resource shortages are expected to increase demand for the
services of drug development services companies.

  The Need for Improved Productivity and Cost Effectiveness

     Pharmaceutical companies face increased pressure and competition to bring
new drugs to market in the shortest possible time. The development time of a
potential new drug is crucial to the competitive advantage and profitability of
that drug because it determines the market exclusivity available to a
pharmaceutical company to recoup its research and development expenditure. We
believe that drug development services organizations are able to perform the
needed services with a higher level of expertise or specialization, and more
quickly, than a pharmaceutical company could perform such services internally.

  The Increasingly Complex and Demanding Regulatory Environment

     Increasingly complex and stringent regulatory requirements throughout the
world have increased the volume of high quality data required for regulatory
filings and escalated the demand for data collection and analysis during the
drug development process. As regulatory requirements become more complex, we
believe the pharmaceutical and biotechnology industries will increasingly
outsource to drug development services organizations to take advantage of their
data management and regulatory expertise, technological capabilities and global
presence.

  Globalization of Clinical Research Development

     With the increasing cost of new drug development, pharmaceutical companies
are increasingly attempting to maximize returns from a given drug by pursuing
regulatory approvals in multiple countries simultaneously rather than
sequentially. A pharmaceutical company seeking approval in a country in which it
lacks experience or internal resources will frequently turn to a drug
development services organization for assistance in interacting with regulators
or in organizing and conducting clinical trials.

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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 Expand Our Pre-clinical Facilities in Tranent and Montreal

     We intend to expand further our pre-clinical business organically to meet
the anticipated continued growth in demand for pre-clinical development
services. During 2001, we committed over $15 million to the expansion of our
pre-clinical facility in Montreal. We intend to devote substantial resources in
the future towards enlarging our pre-clinical operations, with additional
expansion of our facilities in both Montreal and Tranent planned for completion
in 2003 and 2004. The planned facilities expansion will provide us with
additional laboratory sciences and clinical support capacity and the ability to
conduct additional pre-clinical safety pharmacological evaluation studies.

     Leveraging our Phase I Capabilities

     We intend to continue to maintain and enhance our position in the provision
of Phase I clinical development services by building on our core competence and
global reputation for first administration of drugs to man. We will also
consider selected geographic expansion of our Phase I capability.

     Continuing to Position our Phase II-IV Clinical Development Business as a
     Provider of Higher Value-added Services

     Inveresk Research established a highly successful and profitable Phase II
and III clinical trials business over many years. Our acquisition of ClinTrials
in 2001 provided a geographic network, an additional client base and enhanced
personnel allowing expanded access to important European and North American
markets. We can now combine our successful business approach and high quality
service offering with the capacity to deliver large or small projects on an
international or national scale. We intend to continue to provide high quality
services that accurately and efficiently address customers needs.

     Further Leveraging the Cross-selling Opportunities Between our Pre-clinical
     and Clinical Business Units

     Our two business units are complementary. Our ability to offer a
comprehensive range of pre-clinical and clinical development services in an
integrated manner will permit us to differentiate our clinical trials services
business in the marketplace. In addition, our laboratory sciences business
within the pre-clinical business unit will have the opportunity to source
additional clinical support assignments through our clinical development
business unit.

     Augmenting our Pre-clinical and Clinical Development Capabilities and
     Market Share by Making Strategic Acquisitions

     We intend to consider selective acquisitions designed to expand or
complement our existing services and our ability to service our clients. This
strategy may include geographic expansion of an existing core service or an
extension or strengthening of one of our core services.

OUR SERVICES

  General

     We provide a full range of product development services on a worldwide
basis. We derive approximately 94% of our net service revenue from services that
we provide to the pharmaceutical and

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biotechnology industries. We also service the product development needs of the
veterinary products, agrochemical and chemical industries. One of our primary
objectives is to assist our clients to optimize the time for new product
development and provide regulatory advice and direction.

     Our pre-clinical development services business offers pre-clinical safety
evaluation and pharmacology services as well as selected laboratory sciences
services. Our clinical development services business offers a wide range of drug
development services including Phase I clinical safety evaluation, Phase II - IV
clinical trials and regulatory services. Our approach is to work in partnership
with our clients, providing regulatory advice and direction and tailoring our
services to their requirements at every stage of a project.

  Pre-clinical Development Services

     Our pre-clinical development services business offers a broad range of
services including pre-clinical safety evaluation, pharmacology and laboratory
sciences. In 2001, this business generated net service revenue of $95.2 million
and operating income, excluding corporate overhead, of $18.0 million and after
$10.4 million of depreciation and amortization charges.

     Pre-clinical Safety

     We conduct pre-clinical safety and evaluation studies and efficacy and
pharmacological services in our laboratories located in Tranent and Montreal. We
conduct product development and safety evaluation programs, involving both
mammalian and in vitro toxicology and we have the necessary resources in
specialist ancillary groups to support fully toxicology studies and provide a
complete safety evaluation service. We perform standard or tailored safety
evaluation studies designed to satisfy the needs of our clients and the
different requirements of regulatory agencies across the world. Both of our
facilities are compliant with the regulations imposed by the regulatory
authorities in North America, Europe and Japan including Good Laboratory
Practice ("GLP"). We are one of the few Western drug development services
organizations with an established market presence for pre-clinical development
services in Japan.

     The design of each study is agreed with the client at the beginning of the
study and set out in a protocol. We also establish a development strategy for
each pre-clinical study with input from our scientific, medical and regulatory
teams. This integrated process is aimed at reducing the time taken to bring a
product through pre-clinical testing to the first human studies.

     Pre-clinical safety evaluation and pharmacological services that we
undertake on behalf of our clients are wide-ranging and include:

     - PRE-CLINICAL TOXICOLOGY STUDIES designed to detect physiological,
       biochemical and hematological, neurological and pathological effects of a
       pharmaceutical candidate;

     - GENETIC TOXICOLOGY STUDIES conducted on materials to assess the potential
       for induction of genetic mutations or chromosomal damage. Materials that
       we test include pharmaceuticals, industrial chemicals, food additives and
       agrochemicals;

     - IMMUNOTOXICOLOGY STUDIES designed to detect, in vitro, the effects of a
       pharmaceutical candidate on the human immune system;

     - BIOANALYTICAL CHEMISTRY STUDIES undertaken to provide a quantitative
       analysis of parent compounds (pharmaceutical candidates) and metabolites
       in a variety of biological matrices. These studies play a pivotal role in
       providing support for toxicology studies; and

     - TOXICOKINETIC EVALUATIONS designed to assess how a pharmaceutical
       candidate is absorbed by and eventually eliminated from the body. These
       studies are important for interpreting toxicology findings and providing
       information to support clinical studies.

     In addition, we have an established reputation for the provision of
specialist toxicology safety evaluation services relating to specific routes of
administration, including infusion and inhalation studies, highly specialized
areas in which we have experienced increasing demands for our services.

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     We utilize modern, industry-standard validated software systems wherever
possible to assist in the collection, analysis and reporting of toxicology data.

     Laboratory Sciences

     We provide a wide range of laboratory-based analytical services, primarily
to the pharmaceutical and biotechnology industries. These services are provided
from our laboratories located in Tranent and Montreal. All of the activities of
our laboratory sciences business unit are conducted in compliance with GLP.

     Our laboratory sciences service offering has been expanded over many years
and encompasses:

     - BIOANALYTICAL SERVICES -- our bioanalytical group specializes in the
       quantitative analysis of drug candidates and metabolites in biological
       fluids and tissues to support toxicokinetic and clinical investigations.
       Over the past five years we have made considerable investment, including
       in LC-MS/MS technology, and in facilities and instrumentation;

     - DRUG METABOLISM SERVICES -- our drug metabolism group has more than 25
       years experience in a range of in vivo and in vitro ADME (absorption,
       distribution, metabolism and elimination) disciplines. Our in vitro group
       supports discovery and development programs and performs studies to
       investigate metabolic stability, P450 induction and inhibition, reaction
       phenotyping, extrahepatic and non-P450 metabolism and drug absorption.
       Our in vivo metabolism group conducts studies to investigate the
       disposition of radio labeled and non-radio labeled test items, both in
       pre-clinical and in clinical studies;

     - CENTRAL LABORATORY SERVICES -- our clinical pathology laboratory offers a
       full range of services from clinical chemistry and hematology to more
       specialized molecular and microbiology techniques (e.g. clinical
       immunology, genotyping and PCR and flow cytometry) and biochemical
       pharmacology (particularly for drugs targeting cardiovascular disease).
       We expanded this pre-clinical research group first to support our own
       Phase I clinical safety evaluation unit and then further to become a
       central laboratory for international multi-center clinical trials;

     - PRODUCT CHARACTERIZATION AND STABILITY TESTING -- we offer a range of
       chemistry quality-testing services and can test a wide range of drug
       candidates and products including demonstration that the source material
       is free from detectable contaminants, demonstration that the
       manufacturing process is capable of removing and/or inactivating
       contaminants, characterization of the product and demonstration of the
       storage stability of the product.

     We also offer a wide range of studies to register new compounds and support
existing materials worldwide for the agrochemical, animal health, biocide and
chemical industries. In addition to the services described above, we carry out
environmental toxicity and related investigations, environmental fate studies,
veterinary clinical trials, livestock studies, plant metabolism studies and
field trials for agricultural products on behalf of these clients.

  Clinical Development Services

     Our clinical development services business offers a broad range of services
including Phase I clinical safety evaluation, Phase II-IV clinical trials
services (including medical data sciences) and regulatory support. In 2001, this
business generated net service revenue of $61.1 million and operating income,
excluding corporate overhead, of $0.9 million, after depreciation and
amortization charges of $5.6 million.

     Phase I Clinical Safety Evaluation

     Our Phase I clinical safety evaluation service is designed to move lead
pharmaceutical candidates rapidly from pre-clinical development through Phase I
tolerability assessments to explore the human pharmacology. Blending the
experience of our physicians, scientists, project managers and specialist
nursing staff, we can design for our clients an optimal program for the early
and later stage development of

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their drug candidates. We are one of the few drug development services
organizations worldwide able to offer this breadth of service.

     We conduct Phase I safety evaluations at our facility in Edinburgh which is
capable of housing up to 62 volunteers at any one time. This facility is in
close proximity to our laboratory sciences unit in Tranent, which is responsible
for performing the analysis of biological samples generated by our Phase I
clinic, guaranteeing fast response times. All of our volunteers go through an
intensive screening process to ensure suitability for our studies.

     We believe one of our core competencies is our ability to provide in-depth
analysis of the results of Phase I clinical safety evaluation and meaningful
information for our clients with respect to the product being tested.

     Our clinic in Edinburgh conducts a wide range of Phase I clinical trials
and has completed an average of 12 first-in-man studies annually over the past
five years.

     Phase I in Patients and Special Populations

     We conduct Phase I trials in patients for specific indications at
investigational sites throughout the United States. We also have the ability to
undertake special population studies, including in groups such as the elderly,
post-menopausal women or patients with specific diagnoses, such as renal failure
or asymptomatic HIV disease.

     Phase II-IV Clinical Development

     From our 14 offices worldwide, we can manage every aspect of clinical
trials from clinical development plans and protocol design to New Drug
Applications. In addition to providing small or single site studies, we have the
ability to conduct large international multi-center trials. We also have
extensive experience in managing small, medium and large trials in many parts of
the world. We have a proven track record of managing integrated projects in
Europe and North America, as well as single-continent and country specific
projects, culminating in regulatory filings. We have supported studies in over
20 countries, working in 17 different languages.

     We offer customized program management to co-ordinate and manage a clinical
trial development program. The design of each study is agreed with the client at
the beginning of the study and set out in a protocol.

     As part of conducting clinical trials, we provide the following core
services, either on an individual or integrated basis, depending on our clients'
needs:

     - STUDY DESIGN -- in the critical area of study design, we assist clients
       in protocol design and prepare study protocols and case report forms
       taking into account current products and competing clinical trials with a
       view to building an effective database for regulatory authorities and
       post-marketing studies;

     - INVESTIGATOR RECRUITMENT -- during a clinical trial, physicians, also
       referred to as investigators, supervise the administration of the drugs
       to patients. We solicit the participation of investigators, who contract
       directly either with our clients or us. We maintain, and continually
       expand and refine, our investigator databases containing information
       regarding our experience with these investigators, including factors
       relevant to rapid study initiation, patient enrollment and quality of
       participation;

     - PROJECT MANAGEMENT -- our skilled project management professionals
       oversee all aspects of our work on Phase II, III and IV clinical studies.
       They are responsible for overall service delivery to a client, working to
       ensure that studies proceed to agreed milestones on agreed terms, and for
       communicating with the client promptly and accurately on all relevant
       matters. Good project management plays a vital role in successful
       completion of a study;

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     - QUALITY ASSURANCE -- all of our activities are audited by staff
       independent of the study to ensure the quality and compliance. We also
       offer this service to our clients;

     - PATIENT RECRUITMENT SERVICES -- we assist our clients in recruiting
       patients to participate in clinical trials through investigator
       relationships, media advertising and other methods;

     - STUDY MONITORING -- we provide study-monitoring services by visiting
       investigator sites. These visits ensure that data is gathered according
       to Good Clinical Practice, the requirements of the sponsor, and other
       applicable regulations. Monitoring staff and project managers provide
       training to investigators and hospital staff, both on study and protocol
       specific matters, and, as necessary, on the regulatory requirements
       associated with the particular study. As patients are examined and tests
       are conducted in accordance with the study protocol, data are recorded on
       case report forms and laboratory reports. Specially trained Clinical
       Research Associates ("CRAs") collect the data from study sites. CRAs
       visit sites regularly to ensure that the case report forms are completed
       correctly and that all data specified in the protocol are collected. We
       review case report forms for consistency and accuracy before we enter
       their data into an electronic database for purposes of medical and
       statistical analysis;

     - CLINICAL DATA MANAGEMENT -- our data management professionals assist in
       the design of protocols and case report forms, as well as training
       manuals and training sessions for investigational staff, to ensure that
       data are collected and coded in an organized and consistent format.
       Databases are designed according to the analytical specifications of the
       project and the particular needs of the sponsor. We provide clients with
       data abstraction, data review and coding, data entry, database
       verification and editing and problem data resolution. We have expertise
       in electronically capturing and using diverse study data from different
       locations and we have invested in our data management capability to
       ensure the provision of current technology, experienced resources and
       innovative ideas;

     - BIOSTATISTICAL ANALYSIS -- our biostatistics professionals provide
       biostatistical consulting, database design, data analysis and statistical
       reporting. They often participate in assessing the number of patients
       required in particular programs and trials. Our biostatisticians provide
       sponsors with assistance in all phases of drug development.
       Biostatisticians develop and review protocols, design appropriate
       analysis plans and design report formats to address the objectives of the
       study protocol as well as the sponsor's individual objectives and report
       results according to the analysis plan. Additionally, biostatisticians
       assist our clients before panel hearings at the FDA;

     - MEDICAL WRITING SERVICES -- we write integrated clinical/statistical
       reports, manuscripts, risk/benefit assessment reports and regulatory
       submissions. These services are fully integrated with our other clinical
       services and are designed to reduce overall drug development time;

     - MEDICAL OVERVIEW -- throughout the course of a development program, our
       physicians provide a wide range of medical research and consulting
       services to improve the speed and quality of clinical development,
       including medical supervision of clinical trials and compliance with
       medical standards and safety regulation;

     - PRODUCT SAFETY -- we provide pharmacovigilance support for both full
       service and self-standing projects. We are experienced in writing safety
       narratives and reconciliation of Serious Adverse Events with the clinical
       database. In addition, in conjunction with our regulatory affairs group,
       we can provide regulatory reporting of all Serious Adverse Events to
       worldwide regulatory authorities;

     - PHASE IV STUDIES -- post-marketing studies are conducted after a drug has
       successfully undergone clinical efficacy and safety testing and the NDA
       has been submitted to the FDA. We offer a range of post-marketing
       studies, including: post-marketing surveillance (Phase IV trials);
       periodic safety update reports; support in regulatory agency liaison;
       advice on product claims and labeling; consumer acceptability studies;
       and pharmacovigilance; and

                                        45
<PAGE>

     - RX TO OTC SWITCHES -- we provide consultancy for and conduct specifically
       designed studies to support clients in switching product classifications
       from prescription only to over the counter (OTC) approvals, including
       labeling requirements and new indications.

     Regulatory Support

     Before a product can be launched in any country, it must be approved by the
regulatory agency in that particular country. We offer comprehensive global
regulatory product registration services at all stages of development for
pharmaceutical and biotechnology products and have particular expertise with the
regulations in Europe, North America and Japan. Our regulatory affairs experts
review existing published literature, assess the scientific background of a
product, assess the competitive and regulatory environment, identify
deficiencies and define the steps necessary to obtain registration in the most
expeditious manner. Through this service, we help our clients determine the
feasibility of developing a particular product or product line.

CLIENTS AND MARKETING

     We provide product development services on a global basis to, among others,
the pharmaceutical and biotechnology industries. In 2001, no single client
accounted for more than 5% of our net service revenue, and in 2001 our top 20
clients accounted for less than 45% of our net service revenue.

     Our pre-clinical business has historically been successful in maintaining
clients, as is evidenced by the fact that more than 85% of our pre-clinical
revenues in 2001 came from repeat clients. Our clinical operations are marketed
primarily to our existing pre-clinical clients. In addition, we have appointed a
business development manager who, together with a team of business development
personnel, markets our clinical operations on a global basis. We also engage in
promotional activities including organizing scientific symposia, publishing
scientific papers, making presentations and exhibiting at scientific conferences
and trade shows in North America, Europe and Japan.

CONTRACTUAL ARRANGEMENTS

     Most of our contracts with our clients are fixed priced contracts.
Contracts may range from a few weeks to several years depending upon the nature
of the work performed. In many cases of multi-year contracts, a portion of the
contract fee is paid at the time the study or trial is started with the balance
of the contract fee payable in installments over the study or trial duration.
Sometimes the installments are tied to meeting performance milestones; for
example, in clinical trials, installment payments may be related to investigator
recruitment, patient enrollment or delivery of a report.

     We generally bill our clients upon the completion of negotiated performance
requirements and, to a lesser extent, on a date certain basis. In cases where
our contracts are fixed price, we generally bear the cost of overruns, but we
benefit if the costs are lower than we anticipated. Where there are material
changes in the scope of review or any study-specific assumptions, we typically
negotiate appropriate amendments of the contract price.

     Most of our contracts may be terminated by the client with or without cause
upon little or no notice. These contracts typically require payment to us of
expenses to wind down and close out a study, payment to us of fees earned to
date and payment to us for committed resources that cannot be reallocated to
existing studies. Contracts may be terminated for various reasons, including our
failure to discharge our obligations properly, the failure of a product to
satisfy safety requirements, unexpected or undesired results of the product,
inadequate patient enrollment or investigator recruitment, production problems
resulting in shortages of the drug being tested or adverse patient reactions to
the drug being tested or clients' decisions to forego or terminate a particular
study.

                                        46
<PAGE>

BACKLOG

     Our studies and projects are performed over varying times, from a short
period of time to extended periods of time, which may be as long as several
years. We maintain an order backlog to track anticipated revenue from projects
that either have not started, but are anticipated to begin in the near future,
or are in process and have not been completed. We only recognize a contract in
backlog when it is evidenced by a signed contract, signed letter of intent or
other written evidence of commitment. Delayed or cancelled contracts are removed
from backlog. Based upon the foregoing, our aggregate backlog at December 31,
2001 was approximately $174 million.

     We believe our aggregate backlog as of any date is not necessarily a
meaningful indicator of our future results for a variety of reasons, including
the following. First, studies vary in duration. For instance, some studies that
are included in 2001 backlog may be completed in 2002, while others may be
completed in later years. Second, the scope of studies may change, which may
either increase or decrease their value. Third, studies included in backlog may
be subject to bonus or penalty payments. Fourth, studies may be terminated or
delayed at any time by the client or regulatory authorities. Terminations or
delays can result from a number of reasons. Delayed contracts remain in our
backlog until a determination of whether to continue, modify or cancel the study
has been made.

COMPETITION

     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 second largest provider of pre-clinical safety
evaluation services in the world, based on net service revenue. Our primary
pre-clinical competitor globally 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.

     We believe 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.
Based on this, 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.

                                        47
<PAGE>

     Although there can be no assurance that we will continue to do so, we
believe we compete favorably in the above areas.

UNITED STATES AND FOREIGN GOVERNMENT REGULATION

     Our laboratory services are subject to various regulatory requirements
designed to ensure the quality and integrity of the development processes. The
industry standards for conducting pre-clinical laboratory testing are embodied
in the GLP and Good Manufacturing Practice ("GMP") regulations. The standards of
GLP and GMP are required by the FDA, the U.S. Environmental Protection Agency,
the Department of Health in the United Kingdom, the Health Protection Branch of
Health Canada, the Japanese Ministry of Health and Welfare, the European Agency
for the Evaluation of Medicinal Products and similar regulatory authorities in
other parts of the world. Such standards are also the subject of guidance
endorsed by the Organisation for Economic Co-operation and Development. GLP and
GMP stipulate requirements for facilities, equipment and professional staff. The
regulations require standardized procedures for conducting studies, including
procedures for recording and reporting data and for managing study materials and
records. To help satisfy our compliance obligations, we have established quality
assurance and quality control systems at our laboratories that monitor ongoing
compliance with GLP and GMP regulations and the Clinical Laboratory Improvement
Amendments, as applicable, by auditing development data and conducting
inspections of development procedures. In addition, we have obtained FDA
approval to conduct Stability and Lot Release Testing in compliance with GMP.

     The industry standards for the conduct of clinical research and development
studies are embodied in the regulations for Good Clinical Practice ("GCP"). The
FDA and other regulatory authorities require that results of clinical trials
that are submitted to such authorities be based on studies conducted in
accordance with GCP. These regulations require that we, among other things:

     - comply with specific requirements governing the selection of qualified
       investigators;

     - obtain specific written commitments from the investigators;

     - verify that appropriate patient informed consent is obtained;

     - ensure adverse drug reactions are medically evaluated and reported;

     - monitor the validity and accuracy of data;

     - verify drug or device accountability;

     - instruct investigators and studies staff to maintain records and reports;
       and

     - permit appropriate governmental authorities access to data for their
       review.

     We must also maintain reports for each study for specified periods for
auditing by the study sponsor and by the FDA or similar regulatory authorities
in other parts of the world. As with GLP, noncompliance with GCP can result in
the disqualification of data collected and reports issued during the clinical
trial. In addition, under certain clinical contracts, we have directly assumed
certain obligations of the study sponsor under FDA regulations.

     Our standard operating procedures are written in accordance with
regulations and guidelines appropriate to the region and the nation where they
will be used. All clinical research is carried out in accordance with the
International Conference on Harmonization -- Good Clinical Practice Guidelines,
and the requirements of the applicable country. Although the United States is a
signatory to these guidelines, the FDA has not adopted all of the guidelines as
statutory regulations, but has currently adopted them only as guidelines. From
an international perspective, when applicable, we have implemented common
standard operating procedures across regions to assure consistency whenever it
is feasible and appropriate to do so.

                                        48
<PAGE>

     Our animal import facilities are subject to a variety of national,
regional, and local laws and regulations, including the U.K. Home Office Code of
Practice for the Housing and Care of Animals, the U.K. Animals (Scientific
Procedures) Act of 1986, the Canadian Health of Animals Act and regulations
promulgated under such act by the Canada Food Inspection Agency, the Japanese
Basic Law on Food, Agriculture and Rural Areas and regulations promulgated under
such law by the Japanese Ministry of Agriculture, Forestry and Fisheries. We
also incorporate the U.S. Department of Agriculture Animal Welfare Regulation
into our standard operating procedures. These regulations establish the
standards for the humane treatment, care and handling of animals by dealers and
research facilities. Our animal import facilities maintain the certificates,
licenses, detailed standard operating procedures and other documentation
necessary to comply with applicable regulations for the humane treatment of the
animals in our custody. In addition, our animal research facilities in Canada
are accredited by the American Association for Accreditation of Laboratory
Animal Care and maintain a Certification of Good Animal Practice with the
Canadian Council on Animal Care.

     Our pre-clinical laboratories are subject to licensing and regulation under
national, regional and local laws relating to the surface and air transportation
of laboratory specimens, the handling, storage and disposal of laboratory
specimens, hazardous waste and radioactive materials, and the safety and health
of laboratory employees, including, but not limited to, the regulations of the
U.K. Home Office, the Scottish Environmental Protection Agency, the
International Air Transport Association, Environment Canada, the Canadian
Nuclear Safety Commission, the Quebec Ministry of the Environment and Health and
Social Services Quebec. Although we believe we are currently in compliance in
all material respects with such national, regional and local laws, failure to
comply could subject us to denial of the right to conduct business, fines,
criminal penalties and other enforcement actions.

     To ensure that we comply with all scientific regulatory matters we are
subject to, each division of our business has established an independent quality
assurance group that is responsible for monitoring compliance and that reports
directly to the relevant division president. In compliance with GCP, we conduct
our Phase I clinical trials under the supervision of an Ethics Committee and
have undertaken measures to ensure the protection of personal data.

POTENTIAL PRODUCT LIABILITY AND INSURANCE

     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 damages or incur defense costs in connection
with a claim that is not indemnified, that is outside the scope of an indemnity
or where the indemnity, although applicable, is not honored in accordance with
its terms.

     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

                                        49
<PAGE>

or omission by us. We cannot assure you that our insurance coverage will be
adequate, or that insurance coverage will continue to be available on terms
acceptable to us.

INTELLECTUAL PROPERTY RIGHTS

     We have developed, and continually develop and update, certain computer
software related methodologies intended to maximize the quality and
effectiveness of our services. We believe such factors as the technical
expertise, knowledge, ability and experience of our professionals are
significantly more important to our performance than are any intellectual
property rights developed by us.

EMPLOYEES

     At December 31, 2001, we had 2,288 employees, of which 101 held a Ph.D. or
M.D. degree, 15 held D.V.M. degrees and 166 held master's degrees. 11% of our
employees are located in the United States, 44% are located in Canada, 44% are
located in Europe and less than 1% are located in other international locations.
We believe our relations with our employees are good.

     Our performance depends on our ability to attract and retain a qualified
management, professional, scientific and technical staff. Competition from both
our clients and competitors for skilled personnel is high. While we have not
experienced any significant problems in attracting or retaining qualified staff
to date, there can be no assurance we will be able to continue to attract and
retain personnel in future.

FACILITIES

     We both own and lease our facilities. Our corporate headquarters are
located in Cary, North Carolina. Our pre-clinical operations are conducted from
our 300,000 square foot facility located in Tranent, Scotland and our 260,000
square foot facility located in Montreal, Canada, both of which we own. Our
clinical operations are conducted from our 180,000 square foot leased facility
in Cary, North Carolina, our 20,700 square foot owned Phase I facility in
Edinburgh, our smaller owned facility in Edinburgh, our pre-clinical facility in
Tranent and our leased facilities in Maidenhead (England), Glasgow, Brussels,
Milan, Paris, Tel Aviv, Warsaw, Madrid, Prague, and Munich.

     We believe the space we own and lease is adequate for our operations.

SUPPLIERS

     We purchase the animals used in our in vivo studies from a number of
different suppliers. We do not have long-term contracts with any of these
suppliers. However, we believe that we will continue to be able to meet our
current supply needs and any increase in these needs resulting from the planned
expansion of our pre-clinical operations.

LEGAL PROCEEDINGS

     We are from time to time subject to claims and suits arising in the
ordinary course of business. In the opinion of our management, except as set
forth below, there are currently no proceedings to which we are a party that
could have a material adverse effect upon our operations or financial condition.

     In March 1996, Apotex Inc., a Canadian pharmaceutical manufacturer, filed a
civil lawsuit against us in the Court of Ontario. The claim arises out of
research work undertaken by us in conjunction with Sheffield University in the
early 1990s relating to a product of Apotex. The claim alleges that we failed to
conduct the study in a competent and timely manner, causing Apotex to lose the
advantage of being the first into the market with the product under a brand
name. The claim seeks damages in excess of Canadian $32 million for
misrepresentation, breach of contract, special and punitive damages,
reimbursement of the contract price and costs in respect of the claim. The
proceedings relating to this claim are being managed by a third party which has
agreed to indemnify us for any damages we may incur as a result of this claim.
We have been advised that the third party intends to defend this claim
vigorously.

                                        50
<PAGE>

                                   MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

     Set forth below is certain information concerning our executive officers
and directors as of March 31, 2002.

<Table>
<Caption>
NAME                                           AGE                   GROUP POSITION
----                                           ---                   --------------
<S>                                            <C>   <C>
Dr. Ian P. Sword.............................  60    Chairman of the Board of Directors
Dr. Walter S. Nimmo..........................  54    Chief Executive Officer, President and Director
D. J. Paul E. Cowan..........................  41    Chief Financial Officer
Michael F. Ankcorn...........................  59    Vice President
Dr. Brian Bathgate...........................  42    Vice President
Alastair S. McEwan...........................  46    Vice President
Nicholas J. Thornton.........................  40    Vice President
Dr. John Urquhart............................  67    Vice Chairman of the Board of Directors
Dr. John T. Henderson........................  57    Director
Ms. S. Louise McCrary........................  43    Director (Candover nominee)
</Table>

     Dr. Ian P. Sword is Chairman of our Board of Directors and has served as
Chairman of the Board of Directors of Inveresk Research Group Limited since
September 1999. Dr. Sword has served as director and Senior Executive Vice
President of SGS Societe Generale de Surveillance SA since September 1993. Dr.
Sword was the Chairman of Scottish Enterprise Edinburgh and Lothian Ltd, an
entity that engages in the development of enterprises in the Edinburgh area,
from April 2000 until March 2002. Dr. Sword earned a Ph.D. from Glasgow
University.

     Dr. Walter S. Nimmo is our Chief Executive Officer, President and serves on
our Board of Directors and has served as Chief Executive and as a Director of
Inveresk Research Group Limited since September 1999. From 1993 until September
1999, Dr. Nimmo was Chief Executive Officer at Inveresk Clinical Research; Dr.
Nimmo had established Inveresk Clinical Research, which was purchased by SGS
Societe Generale de Surveillance SA in 1993, in 1988. Dr. Nimmo holds a BSc in
medical sciences and qualified as a medical doctor in 1971. He became of Member
of the Royal College of Physicians in 1975 and a Fellow in 1980. He also became
a Fellow of the Royal College of Anaesethetists in 1977. He has lectured at
Harvard, Duke and other prominent universities.

     Mr. D. J. Paul E. Cowan is our Chief Financial Officer and has served as
Chief Financial Officer of Inveresk Research Group Limited since January 2002.
Prior to joining Inveresk Research, Mr. Cowan worked as an investment banker at
Bear, Stearns International Limited from May 2000 until January 2002,
specializing in the European health care and biotechnology industries. From
September 1997 until December 1999, Mr. Cowan was Chief Financial Officer of
Cerebrus plc, a privately owned biotechnology company. Mr. Cowan worked as an
investment banker at Societe Generale from April 1997 until August 1997 and at
Deutsche Bank from November 1988 until April 1997, in each case specializing in
mergers and acquisitions. Mr. Cowan received his Bachelor's degree in business
in 1981 from Queensland University of Technology in Australia.

     Mr. Michael F. Ankcorn is a Vice President of Inveresk Research Group, Inc.
and the President and CEO of CTBR, our Canadian pre-clinical operation. He has
served as Chairman, President and Chief Executive Officer of ClinTrials
BioResearch Ltd., a subsidiary of Inveresk Research Limited, since August 1996.
From December 1978, Mr. Ankcorn served as President and Chief Executive Officer
of Bio-Research Laboratories Ltd. until all of its assets were purchased and the
business of ClinTrials BioResearch Ltd. commenced in August 1996. Prior to this,
he served as Assistant Vice-President of the Canada Development Corporation and
as a director on the board of a number of health care venture capital investee
companies.

                                        51
<PAGE>

     Dr. Brian Bathgate is a Vice President of Inveresk Research Group, Inc. and
the President of our Pre-Clinical Europe operations and has served as President,
Pre-Clinical Europe of Inveresk Research since April 2001. Dr. Bathgate served
as General Manager of Inveresk Research International Limited from September
1996 until April 2001, responsible for all activities relating to the European
pre-clinical division. Dr. Bathgate earned a Bachelor's degree in 1982 from
Glasgow University, a Ph.D. in 1985 from Nottingham University, a Business
Management Diploma (HND) in 1988 and completed the Young Managers Programme at
INSEAD in 1996.

     Mr. Alastair S. McEwan is a Vice President of Inveresk Research Group, Inc.
and the President of our Clinical Americas operations and has served as
President, Clinical Americas since April 2001. Mr. McEwan was Head of Corporate
Development of Inveresk Research Group Limited from January 2000 until March
2001, focusing on mergers and acquisitions, and served as General Manager,
Clinical, of Inveresk Research Group Limited from June 1996 until December 1999,
with operational responsibility for the clinical division. Mr. McEwan has served
as a Director of Inveresk Research Inc. since April 2001. Mr. McEwan qualified
as a Chartered Accountant in 1979 with the Institute of Chartered Accountants of
Scotland after receiving a Bachelor of Commerce degree in 1976 from the
University of Edinburgh.

     Mr. Nicholas J. Thornton is a Vice President of Inveresk Research Group,
Inc. and President of our Clinical Europe operations and has served as
President, Clinical Europe since March 2001. Mr. Thornton has served as
President of Inveresk Research Limited and Inveresk Clinical Research Limited
since April 2001. Prior to joining Inveresk Research, Mr. Thornton worked at SGS
Societe Generale de Surveillance Holding SA as Senior Vice President of
eBusiness from April 2000 until February 2001, where he established the
corporate eBusiness unit, and as Vice President Group Corporate Development from
January 1998 until March 2000, where he was responsible for acquisitions and
development of the business unit. Mr. Thornton was the Managing Director of SGS
Medlab Holdings Australia Limited from February 1997 until December 1997, where
he was responsible for acquisitions. Mr. Thornton received an M.B.A. in 1992 and
a law degree (LLB) in 1984, each from Auckland University in New Zealand.

     Dr. John Urquhart is our Vice Chairman of the Board of Directors and has
served as a director of Inveresk Research Group Limited since January 2000.
Since September 1995, Dr. Urquhart has been the Chief Scientist of AARDEX Ltd.,
acting as the chief technical officer of the pharmaceutical packaging company,
and the Chief Executive Officer of APREX, also a pharmaceutical packaging
company and a subsidiary of AARDEX. Dr. Urquhart has been Extraordinary
Professor of Pharmacoepidemiology at Maastrict University in the Netherlands
since 1991, concentrating on graduate education and research, and an Adjunct
Professor of Biopharmaceutical Sciences at University of California San
Francisco Medical Center since 1986. In addition, Dr. Urquhart occasionally
serves as a paid consultant to the pharmaceutical industry. Dr. Urquhart
received his M.D. from Harvard Medical School in 1959 and his Bachelor's degree
from Rice University in 1955.

     Dr. John T. Henderson is one of our Directors. Since January 1, 2001, Dr.
Henderson has served as a consultant to the pharmaceutical industry through
Futurepharm LLC, a company founded and owned by him. Dr. Henderson held various
positions at Pfizer Inc. from December 1974 until December 2001, where he was
responsible for medical and regulatory affairs in support of marketed products
since 1993. Dr. Henderson earned his primary medical degree in 1968 and a
Bachelor's degree in 1965, each from the University of Edinburgh.

     S. Louise McCrary is one of our Directors and has worked at WellPoint
Health Networks Inc., a Fortune 200 managed care company, since December, 1996.
She has served as Senior Vice President and Chief of Staff and Corporate
Planning, Office of the Chairman since February 2000 and prior to that, she
served as Senior Vice President, Chief Accounting Officer and Controller and
Chief Financial Officer of all WellPoint subsidiaries, including Blue Cross of
California. From July 1985 until November 1996, Ms. McCrary worked at Coopers &
Lybrand and was a Partner at Coopers & Lybrand from 1993 until 1996. Ms. McCrary
earned a B.A. in accounting from Golden Gate University in 1984.

                                        52
<PAGE>

BOARD COMPOSITION

     Our board of directors consists of seven members. There are currently two
vacancies on our board of directors. We intend to appoint two additional
directors prior to the consummation of this offering. All directors hold office
until their successors have been elected and qualified or until their earlier
death, resignation, disqualification or removal. The terms of office of the
directors are divided into three classes:

     - Class I, whose term will expire at the annual meeting of stockholders to
       be held in 2003;

     - Class II, whose term will expire at the annual meeting of stockholders to
       be held in 2004; and

     - Class III, whose term will expire at the annual meeting of stockholders
       to be held in 2005.

     Currently, Class I consists of John Urquhart; Class II consists of Ian
Sword and John Henderson; and Class III consists of S. Louise McCrary and Walter
Nimmo. At each annual meeting of stockholders after the initial classification
or special meeting in lieu thereof, the successors to directors whose terms will
then expire serve from the time of election and qualification until the third
annual meeting following election or special meeting held in lieu thereof and
until their successors are duly elected and qualified. In addition, a resolution
of the board of directors may change the authorized number of directors. Any
additional directorships resulting from an increase in the number of directors
will be distributed among the three classes so that, as nearly as possible, each
class will consist of one third of the directors. This classification of the
board of directors may have the effect of delaying or preventing changes in
control or management of our company.

     There are no family relationships among any of our directors, executive
officers or key employees.

BOARD COMMITTEES

     Our board of directors has an audit committee and a compensation committee
and may from time to time establish other committees.

  Audit Committee

     The audit committee of our board of directors recommends the appointment of
our independent auditors, reviews our internal accounting procedures and
financial statements and consults with and reviews the services provided by our
internal and independent auditors, including the results and scope of their
audit. The audit committee currently consists of John Henderson, Louise McCrary
and           .

  Compensation Committee

     The compensation committee of our board of directors reviews and recommends
to the board the compensation and benefits of all of our executive officers,
administers our stock option plans and establishes and reviews general policies
relating to compensation and benefits of our employees. The compensation
committee currently consists of John Henderson and Louise McCrary.

COMPENSATION OF DIRECTORS

     During the year ended December 31, 2001, Drs. Sword and Urquhart received
approximately $43,000 and $36,000, respectively, as consideration for their
services as directors of Inveresk Research Group Limited. We paid the
consideration for Dr. Sword's services to his employer, SGS Societe Generale de
Surveillance SA. We also reimbursed Drs. Sword and Urquhart $7,200 and $9,300,
respectively, in connection with their attendance at directors meetings.
Following this offering, members of the board of directors who are neither our
officers nor employees will receive $37,500 per year as consideration for their
services as directors plus reasonable expenses incurred in connection with their
attendance at directors' meetings. Directors who are also our officers or
employees will not receive compensation for their services as directors.

                                        53
<PAGE>

EMPLOYMENT AGREEMENTS

     We intend to enter into Employment Agreements with each of Walter Nimmo,
Paul Cowan, Nick Thornton, Michael Ankcorn, Brian Bathgate and Alastair McEwan.

EXECUTIVE COMPENSATION

     The table below summarizes information concerning the compensation paid by
Inveresk Research Group Limited during 2001 to our Chief Executive Officer and
our four other most highly paid executive officers. We refer to those persons as
our named executive officers:

                           SUMMARY COMPENSATION TABLE

<Table>
<Caption>
                                                                          LONG-TERM
                                                                         COMPENSATION
                                                                         ------------
                                       ANNUAL COMPENSATION                NUMBER OF
                             ----------------------------------------     SECURITIES
                                                       OTHER ANNUAL       UNDERLYING        ALL OTHER
NAME AND PRINCIPAL POSITION  SALARY(1)    BONUS(1)    COMPENSATION(1)      OPTIONS       COMPENSATION(1)
---------------------------  ---------    --------    ---------------    ------------    ---------------
<S>                          <C>          <C>         <C>                <C>             <C>
Dr. Walter S. Nimmo.......   $201,676     $366,718        $17,896(2)        96,360           $34,445(3)
  President and Chief
  Executive Officer
D. J. Paul E. Cowan(4)....         --           --             --               --                --
  Chief Financial Officer
Michael F. Ankcorn........   $222,795     $111,397        $10,415(5)       271,912(6)          4,625(7)
  Vice President
Alastair S. McEwan........   $160,209     $ 98,700          3,453(8)       147,600           $99,063(9)
  Vice President
Nicholas J. Thornton(10)...  $158,567     $115,150        $11,852(11)      327,600           $25,658(12)
  Vice President
Stewart G. Leslie(13).....   $118,844     $ 40,835        $13,292(14)           --           $18,112(15)
  Chief Financial Officer
</Table>

---------------
 (1) Remuneration of Dr. Nimmo, Mr. Thornton and Mr. Leslie was paid in pounds
     sterling and converted to U.S. dollars based on the average pounds sterling
     to U.S. dollars exchange rate for 2001 of L1:$1.4405. Remuneration of Mr.
     Ankcorn was paid in Canadian dollars and converted to U.S. dollars based on
     the average Canadian dollars to U.S. dollars exchange rate for 2001 of
     C$1:U.S.$.6428. Remuneration of Mr. McEwan through March 2001 was paid in
     pounds sterling and converted to U.S. dollars based on the average pounds
     sterling to U.S. dollars exchange rate for 2001 of L1:$1.4405. For the
     remainder of 2001, Mr. McEwan was paid in U.S. dollars.

 (2) Includes car allowance of $11,910 and fuel allowance of $5,059.

 (3) Includes payments for pension plan of $30,251, premiums for life assurance
     of $2,251, premiums for private health cover of $415, premiums for
     permanent health insurance of $1,198 and premiums for spouse's death in
     service benefits of $330.

 (4) Mr. Cowan became Chief Financial Officer of Inveresk Research Group Limited
     in January 2002. If he had been an executive officer in 2001 he would have
     been one of our four other most highly paid executive officers.

 (5) Includes car allowance of $10,415.

 (6) Mr. Ankcorn purchased these options for an aggregate purchase price of
     $100,000.

 (7) Includes payments for pension plan of $1,107, premiums for life insurance
     of $1,084, premiums for medical coverage of $1,410, premiums for hospital
     coverage of $122, premiums for dental coverage of $2,000 and premiums for
     dependent life insurance of $8.

 (8) Includes car allowance of $2,612.

                                        54
<PAGE>

 (9) Includes payments for pension plan of $29,868, premiums for life insurance
     of $557, premiums for private health coverage of $1,859, premiums for
     permanent health insurance of $736, premiums for spouse's death in service
     benefits of $330, a relocation package valued at $64,822, disability
     premiums of $630 and premiums for dental coverage of $243.

(10) Mr. Thornton joined Inveresk Research Group Limited in February 2001.

(11) Includes car allowance of $7,273 and fuel allowance of $3,995.

(12) Includes payments for pension plan of $23,786, premiums for life assurance
     of $390, premiums for private health cover of $406, premiums for permanent
     health insurance of $820 and premiums for spouse's death in service
     benefits of $256.

(13) In January 2002, Mr. Leslie became our European Vice President, Finance.

(14) Includes car allowance of $10,445.

(15) Includes payments for pension plan of $16,205, premiums for life assurance
     of $307, premiums for private health cover of $415, premiums for permanent
     health insurance of $396 and premiums for spouse's death in service
     benefits of $789.

                             OPTION GRANTS IN 2001

     The following table sets forth information regarding stock options granted
pursuant to Option Plans during 2001 to each of the named executive officers.
The information in this table assumes consummation of the transactions described
in "Change in Ultimate Parent" as of January 1, 2001. These figures do not
represent our estimate of future share prices.

<Table>
<Caption>
                                                                                                  POTENTIAL
                                                 INDIVIDUAL GRANTS(1)                           REALIZED VALUE
                            ---------------------------------------------------------------       AT ASSUMED
                                            PERCENT OF                                           ANNUAL RATES
                            NUMBER OF      TOTAL OPTIONS                                        OF SHARE PRICE
                            SECURITIES      GRANTED TO                                         APPRECIATION FOR
                            UNDERLYING     EMPLOYEES IN      EXERCISE OR                         OPTION TERM
                             OPTIONS          FISCAL         BASE PRICE                        ----------------
NAME                         GRANTED           2001          (PER SHARE)    EXPIRATION DATE      5%       10%
----                        ----------    ---------------    -----------    ---------------    ------    ------
<S>                         <C>           <C>                <C>            <C>                <C>       <C>
Dr. Walter S. Nimmo.......   121,860            8.4%           $ 1.44       March 2012             []        []
D. J. Paul E. Cowan.......   290,971           20.0%           $11.68       March 2012             []        []
Michael F. Ankcorn........   303,677           20.8%           $11.68       March 2012             []        []
Alastair S. McEwan........   160,306           11.0%           $ 1.44       March 2012             []        []
Nicholas J. Thornton......    12,706            0.9%           $11.68       March 2012             []        []
Stewart G. Leslie.........    12,706            0.9%           $11.68       March 2012            --        --
</Table>

---------------
(1) All of the options listed in this table were issued in connection with the
    transactions described in "Change in Ultimate Parent" upon cancellation of
    existing options to purchase shares of Inveresk Research Group Limited.

                                        55
<PAGE>

                             YEAR-END OPTION VALUES

     None of our named executive officers exercised any stock options during
2001. The following table sets forth information concerning options held by our
named executive officers as of December 31, 2001. The information in this table
assumes consummation of the transactions described in "Change in Ultimate
Parent" as of January 1, 2001. There was no public market for our shares of
common stock as of December 31, 2001. Accordingly, the fair market value on
December 31, 2001 is based on the initial public offering price of $     per
share.

<Table>
<Caption>
                                               NUMBER OF SECURITIES
                                              UNDERLYING UNEXERCISED            VALUE OF UNEXERCISED
                                                    OPTIONS AT                IN-THE-MONEY OPTIONS AT
                                               DECEMBER 31, 2001(1)           DECEMBER 31, 2001(1)($)
                                           ----------------------------     ----------------------------
NAME                                       EXERCISABLE    UNEXERCISABLE     EXERCISABLE    UNEXERCISABLE
----                                       -----------    -------------     -----------    -------------
<S>                                        <C>            <C>               <C>            <C>
Dr. Walter S. Nimmo......................    121,860               --                              --
D. J. Paul E. Cowan......................    290,971               --
Michael F. Ankcorn.......................    303,677               --                              --
Alastair S. McEwan.......................    160,306               --                              --
Nicholas J. Thornton.....................     12,706               --                              --
Stewart G. Leslie........................     12,706               --
</Table>

---------------
(1) All of the options listed in this table were issued in connection with the
    transactions described in "Change in Ultimate Parent" upon cancellation of
    existing options to purchase shares of Inveresk Research Group Limited.

EMPLOYEE BENEFIT PLANS

     Our Stock Option Plan reserves, upon consummation of this offering,
          shares (which amount is adjustable upon the occurrence of certain
events) of our shares of common stock for grant of stock options to our
employees, directors and consultants, and employees, directors and consultants
of our subsidiaries.

     The plan is administrated by a committee designated by our board of
directors. At least two directors serving on the administrative committee are
required to be "Non-Employee Directors" as that term is defined under Rule
16b-3(b)(3)(i) under the Securities Exchange Act of 1934, as amended, and shall,
at such time as we are subject to Section 162(m) of the United States Internal
Revenue Code of 1986, as amended (the "Code") qualify as "Outside Directors"
within the meaning of Section 162(m) of the Code. The administrative committee
has all the discretionary authority that may be necessary or helpful to enable
it to discharge its responsibilities with respect to the plan, including but not
limited to the following:

     - to determine eligibility for participation;

     - to determine the type and amount of any award granted under the plan;

     - to make such changes to the plan as may be necessary or appropriate to
       comply with the rules and regulations of any government authority or to
       obtain tax and certain other benefits applicable to stock options;

     - to make rules and regulations and establish procedures for carrying out
       and administering the plan and to make changes in such rules as it deems
       proper;

     - to determine, in accordance with the terms of the plan, the fair market
       value of shares underlying an award;

     - to accelerate the vesting of any award; and

     - to take any and all other actions it deems necessary or advisable for the
       proper operation or administration of the plan.

                                        56
<PAGE>

     Under the plan, the administrative committee also determines the exercise
price at the time of grant; provided, that the exercise price for options will
not be less than 100% of the fair market value of a share on the date of grant.
Options under the plan are generally granted for a ten-year term, but may
terminate earlier if the employment or service of the option holder with us
terminates before the end of the ten-year period.

     In the event of a change in control, the administrative committee may make
certain adjustments to outstanding options, including the immediate vesting of
such options. For purposes of the plan, a change in control means the occurrence
of any one of the following events:

     - the acquisition of beneficial ownership by any individual, partnership or
       entity of 50% or more of our voting securities (other than by us);
       provided, however, that any acquisition of beneficial ownership shall not
       constitute a change in control by reason of an increase in the percentage
       of beneficial ownership of any person or group that results from a
       reduction in the number of outstanding shares or by reason of an increase
       in the beneficial ownership of a person or group of less than 5% per
       year;

     - any consolidation or merger of us where our stockholders immediately
       prior to the consolidation or merger, would not, immediately after the
       consolidation or merger, beneficially own, directly or indirectly, shares
       representing in the aggregate 50% or more of the combined voting power of
       the securities of the corporation issuing cash or securities in the
       consolidation or merger (or of its ultimate parent corporation, if any);

     - the sale, lease, exchange or other transfer of all or substantially all
       of our assets to a third party other than to an entity, at least a
       majority of the combined voting power of the voting securities of which
       are owned by persons in substantially the same proportion as their
       ownership of Inveresk Research immediately prior to such sale;

     - our stockholders approve a plan for the dissolution of us in accordance
       with applicable state law; or

     - during any period of 24 consecutive months, individuals who at the
       beginning of such period constitute our board of directors cease for any
       reason to constitute a majority thereof unless the election, or the
       nomination for election, by our stockholders of each director who was not
       a director at the beginning of the period was approved by a vote of at
       least a majority of the directors then still in office who were directors
       at the beginning of such period.

     Special rules may apply with respect to certain non-U.S. employees.

                                        57
<PAGE>

                             PRINCIPAL STOCKHOLDERS

BENEFICIAL OWNERSHIP

     The following table sets forth certain information known to us regarding
the beneficial ownership of our shares of common stock as of April 2, 2002 and
as adjusted to reflect the sale of our shares in this offering, by

     - each person (or group within the meaning of Section 13(d)(3) of the
       Securities Exchange Act of 1934) known by us to own beneficially 5% or
       more of our shares of common stock;

     - each of our directors and named executive officers; and

     - all directors and executive officers as a group.

     Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. In computing the number of shares beneficially
owned by a person and the percentage ownership of that person, shares of common
stock that could be issued upon the exercise of outstanding options and warrants
held by that person that are currently exercisable or exercisable within 60 days
of April 2, 2002 are considered outstanding. These shares, however, are not
considered outstanding when computing the percentage ownership of each other
person.

     Except as indicated in the footnotes to this table and pursuant to state
community property laws, each stockholder named in the table has sole voting and
investment power for the shares shown as beneficially owned by them. Percentage
of ownership is based on 25,827,720 shares of common stock outstanding on April
2, 2002 and           shares of common stock outstanding after completion of
this offering. This table assumes no exercise of the underwriters'
over-allotment option.

<Table>
<Caption>
                                                                             PERCENTAGE OF SHARES OF
                                                                         COMMON STOCK BENEFICIALLY OWNED
NAME AND ADDRESS OF                       SHARES OF COMMON STOCK   --------------------------------------------
BENEFICIAL OWNERS                           BENEFICIALLY OWNED     PRIOR TO THIS OFFERING   AFTER THIS OFFERING
-------------------                       ----------------------   ----------------------   -------------------
<S>                                       <C>                      <C>                      <C>
Stockholders Owning Approximately 5% or
  More
Candover Investments PLC(1).............        20,107,088                  79.0%
  20 Old Bailey
  London EC4M 7LN
  United Kingdom

Directors and Executive Officers
Dr. Walter S. Nimmo(2)..................         2,029,680                   7.8%
  11000 Weston Parkway
  Suite 100
  Cary, North Carolina 27513
D. J. Paul E. Cowan(3)..................           290,971                   1.1%
  11000 Weston Parkway
  Suite 100
  Cary, North Carolina 27513
Michael F. Ankcorn(4)...................           303,677                   1.2%
  87 Senneville Road
  Senneville (Montreal)
  Quebec, Canada H9X3R3
</Table>

                                        58
<PAGE>

<Table>
<Caption>
                                                                             PERCENTAGE OF SHARES OF
                                                                         COMMON STOCK BENEFICIALLY OWNED
NAME AND ADDRESS OF                       SHARES OF COMMON STOCK   --------------------------------------------
BENEFICIAL OWNERS                           BENEFICIALLY OWNED     PRIOR TO THIS OFFERING   AFTER THIS OFFERING
-------------------                       ----------------------   ----------------------   -------------------
<S>                                       <C>                      <C>                      <C>
Alastair S. McEwan(5)...................           340,306                   1.3%
  11000 Weston Parkway
  Suite 100
  Cary, North Carolina 27513
Nicholas J. Thornton(6).................           340,306                   1.3%
  Elphinstone Research Centre
  Tranent, EH 332NE
  Scotland, United Kingdom
Stewart G. Leslie(7)....................           533,026                   2.1%
  Elphinstone Research Centre
  Tranent, EH 332NE
  Scotland, United Kingdom
Dr. Ian P. Sword........................           879,240                   3.4%
  Elphinstone Research Centre
  Tranent, EH 332NE
  Scotland, United Kingdom
Dr. John Urquhart.......................           120,015                   0.5%
  11000 Weston Parkway
  Suite 100
  Cary, North Carolina 27513
Dr. John Henderson......................                --                    --                    --
  11000 Weston Parkway
  Suite 100
  Cary, North Carolina 27513
S. Louise McCrary.......................                --                    --                    --
  11000 Weston Parkway
  Suite 100
  Cary, North Carolina 27513
All directors and executive officers as
  a group (9 persons)...................         5,125,907                  19.1%
</Table>

---------------
(1) Candover Investments PLC shares voting and investment power with Candover
    Partners Limited, a wholly-owned subsidiary of Candover Investments PLC,
    over (a) 2,128,995 shares of common stock directly held by Candover
    Investments PLC, pursuant to a Coinvestment Agreement dated December 16,
    1997, and (b) 17,741,567 shares of common stock held collectively by five
    limited partnerships that make up the Candover 1997 Fund of which Candover
    Partners Limited is general partner. Candover Investments PLC shares voting
    and investment power with Candover (Trustees) Limited, a wholly-owned
    subsidiary of Candover Investments PLC, over 236,527 shares of common stock
    held directly by Candover (Trustees) Limited.

(2) Includes 121,860 shares of common stock issuable upon the exercise of stock
    options.

(3) Includes 290,971 shares of common stock issuable upon the exercise of stock
    options.

(4) Includes 303,677 shares of common stock issuable upon the exercise of stock
    options.

(5) Includes 160,306 shares of common stock issuable upon the exercise of stock
    options.

(6) Includes 12,706 shares of common stock issuable upon the exercise of stock
    options. The remainder of these shares are held of record by the Thornton
    Settlement trust but are beneficially owned by Mr. Thornton.

(7) Includes 12,706 shares of common stock issuable upon the exercise of stock
    options.

                                        59
<PAGE>

REGISTRATION RIGHTS AGREEMENT

     In connection with the transactions described under "Change in Ultimate
Parent," we have entered into a registration rights agreement with Candover
Investments PLC, a wholly-owned subsidiary of Candover Investments PLC, certain
investment funds indirectly controlled by Candover Investments PLC and all of
the other holders of our common stock immediately before this offering,
including certain members of our management and our employees. Under the
registration rights agreement, subject to a number of conditions and
limitations, Candover Investments PLC, a wholly-owned subsidiary of Candover
Investments PLC, and certain investment funds indirectly controlled by Candover
Investments PLC may require us to file a registration statement under the
Securities Act to register the sale of our shares of common stock held by them.
We may be required to file up to five registration statements. The registration
rights agreement also provides that all of our stockholders named in this
agreement have "piggy-back" registration rights in connection with registered
offerings of our shares that we, or the Candover stockholders, initiate, not
including this offering. Under the agreement, we will be required to pay all
registration expenses with the exception of fees and expenses of counsel to the
stockholders named in the agreement and underwriters discounts and commissions.
We and the stockholders named in the agreement are required to indemnify one
another against certain liabilities in respect of an offering covered by the
registration rights agreement.

                           CHANGE IN ULTIMATE PARENT

     In order to implement our growth strategy, we intend, among other things,
to expand further our operations in North America through internally-generated
growth and, to the extent appropriate opportunities become available, through
strategic acquisitions. In light of this desire to expand further in North
America, and particularly the United States, we have decided to change the
ultimate parent for the Inveresk Research group of companies from a company
organized under the laws of Scotland to a corporation organized in the United
States under the laws of the State of Delaware. Inveresk Research Group, Inc.
was incorporated in Delaware in March 2002 solely for the purpose of effecting
this change in ultimate parent for the Inveresk Research group of companies,
which will be completed immediately before consummation of the offering
described in this prospectus. When this change has been effected, Inveresk
Research Group, Inc. will own all of the issued share capital of Inveresk
Research Group Limited.

     In connection with the change in ultimate parent described above, all of
the existing shareholders of Inveresk Research Group Limited have agreed to
exchange their shares in Inveresk Research Group Limited for our shares of
common stock. The mechanics for this share-for-share exchange are set forth in
an Exchange Agreement by Declaration of Trust that we entered into on April 2,
2002 with all of the shareholders of Inveresk Research Group Limited. Under that
agreement, each shareholder of Inveresk Research Group Limited agreed that,
commencing shortly before the execution of the underwriting agreement in
connection with this offering, such stockholder will hold all of such
shareholder's shares of Inveresk Research Group Limited in trust absolutely for
us. In furtherance of this obligation, each shareholder has placed all of such
shareholder's shares of Inveresk Research Group Limited in escrow with Paul
Cowan, as escrow agent. In addition, each shareholder has agreed that, at any
time after the trust described above is established, we can instruct the escrow
agent to transfer legal title of such shareholder's shares in Inveresk Research
Group Limited to us. In connection with this obligation, each shareholder has
placed his, her or its share certificates and share transfer forms in escrow
with the escrow agent referred to above. In consideration for these actions by
the shareholders, we have agreed to issue to each shareholder shares of common
stock. Each ordinary share and A ordinary share of Inveresk Research Group
Limited will be exchanged for 60 and 28.028 of our shares of common stock,
respectively. Under the existing Articles of Inveresk Research Group Limited,
the A ordinary shares and B ordinary shares are convertible into ordinary shares
upon the occurrence of certain events based upon a formula set forth in the
Articles. There are no B ordinary shares of Inveresk Research Group Limited
issued and outstanding. All of the current shareholders of Inveresk Research
Group Limited have agreed that the conversion of the A ordinary shares and the B
ordinary shares will not be triggered by the share-for-share exchange. However,
the exchange ratio used in calculating the number of shares of our common stock
issuable in
                                        60
<PAGE>

exchange for A ordinary shares will be determined by taking into account this
formula. Upon consummation of all of the transactions contemplated by the
Exchange Agreement by Declaration of Trust, we will own all of the issued share
capital of Inveresk Research Group Limited.

     Pursuant to the Exchange Agreement by Declaration of Trust all of the
current shareholders of Inveresk Research Group Limited have agreed that if the
share-for-share exchange is completed but the offering of our common stock
pursuant to this prospectus does not occur within certain time periods, if
requested by any Candover shareholder, the shareholders will take all actions
reasonably necessary to place each party to the Exchange Agreement by
Declaration of Trust in the position that such party was in with respect to its
relative shareholdings in Inveresk Research Group Limited prior to the
share-for-share exchange described in the preceding paragraph. If this request
is made by any Candover shareholder, each shareholder also agreed to enter into
an agreement to provide the Candover shareholders with similar rights and
protections as those they previously enjoyed with respect to Inveresk Research
Group Limited.

     All of the existing option awards granted by Inveresk Research Group
Limited provide that, upon a sale of more than 50% of the shares in Inveresk
Research Group Limited, the options will be cancelled and options to purchase
shares of the acquiring entity issued in their place. Therefore, upon
consummation of the share-for-share exchange described above, all of the
outstanding options of Inveresk Research Group Limited shall automatically be
cancelled and, in their place, we will issue options to purchase shares of our
common stock to the holders of the cancelled options. The options granted by us
will have a similar exercise cost and economic value to those which have been
cancelled Inveresk Research Group Limited currently has outstanding options to
purchase ordinary shares and B ordinary shares in Inveresk Research Group
Limited. Holders of options to purchase ordinary shares will be issued options
to purchase our shares of common stock based upon the same exchange ratio used
to calculate the number of shares of our common stock issuable in exchange for
ordinary shares and A ordinary shares under the Exchange Agreement by
Declaration of Trust described above. Holders of options to purchase B ordinary
shares will be issued options to purchase our shares of common stock in
accordance with an exchange ratio that is also based upon the conversion formula
for the A ordinary shares and the B ordinary shares set forth in the Articles of
Inveresk Research Group Limited. As a result, we will issue options to purchase
31.765 of our shares of common stock in return for each option to purchase one B
ordinary share. Immediately following the consummation of this offering, as
required by the option arrangements of Inveresk Research Group Limited, all of
the options we issue to the former option holders of Inveresk Research Group
Limited to purchase shares of our common stock following the change in ultimate
parent will be fully vested and immediately exercisable.

     For a description of our capitalization see "Capitalization" and for a
description of our option plans and employment arrangements see
"Management -- Employee Benefit Plans."

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

INITIAL CANDOVER INVESTMENT

     Candover Investments PLC, together with a wholly-owned subsidiary of
Candover Investments PLC and certain investment funds indirectly controlled by
Candover Investments PLC, own approximately 79.0% of our shares of common stock.
In September 1999, Candover Investments PLC, together with a wholly-owned
subsidiary of Candover Investments PLC and certain investment funds indirectly
controlled by Candover Investments PLC, purchased an aggregate of 462,500 A
ordinary shares of Inveresk Research Group Limited for $0.7 million and Candover
Investments PLC and certain investment funds indirectly controlled by Candover
Investments PLC purchased an aggregate of $43.8 million 10% unsecured
subordinated loan stock due 2008 of Inveresk Research Group Limited. Under the
investment agreement pursuant to which these shares and 10% unsecured
subordinated loan stock due 2008 were issued, Inveresk Research Group Limited
agreed not to, among other things, change the authorized share capital of any of
its subsidiaries, reorganize or consolidate its share capital, create any
mortgage, or commence or terminate the employment of any of its directors or
management, without the prior written consent of Candover

                                        61
<PAGE>

Partners Limited, as agent for Candover Investments PLC and the other Candover
investors. In addition, if Inveresk Research Group Limited offers or sells any
of its equity shares, Candover Investments PLC and the other Candover investors
have the right to participate in the offer or sale in the same proportion that
their holdings of equity shares bear to the aggregate number of equity shares
held by all other shareholders. If Inveresk Research Group Limited lists any of
its equity shares on a recognized investment exchange, such listing must extend
to the A ordinary shares held by Candover Investments PLC and the other Candover
investors. All of the parties to this investment agreement have agreed that this
agreement will automatically terminate upon consummation of this offering and
that it will not apply to this offering of our shares.

ADDITIONAL CANDOVER INVESTMENT

     In connection with the acquisition of ClinTrials in April 2001, Candover
Investments PLC, together with a wholly-owned subsidiary of Candover Investments
PLC and certain investment funds indirectly controlled by Candover Investments
PLC, purchased an aggregate of 264,128 A ordinary shares of Inveresk Research
Group Limited and Candover Investments PLC and certain investment funds
indirectly controlled by Candover Investments PLC purchased an aggregate of
$64.8 million of 10% unsecured subordinated loan stock due 2008 of Inveresk
Research Group Limited. An investment agreement similar to the investment
agreement described above was entered into at the time of this investment. All
of the parties to this investment agreement have agreed that this agreement will
automatically terminate upon consummation of this offering.

DESCRIPTION OF 10% UNSECURED SUBORDINATED LOAN STOCK DUE 2008

     The indebtedness under the 10% unsecured subordinated loan stock due 2008
bears interest at 10% per year and is due and payable in full no later than June
30, 2008. Inveresk Research Group Limited is obligated to repay any 10%
unsecured subordinated loan stock due 2008 not redeemed or repaid upon the sale
of more than fifty percent of its equity or assets or upon the listing of any of
its shares on the London Stock Exchange. Therefore, the change in our ultimate
parent described in "Change in Ultimate Parent" will trigger repayment of the
10% unsecured subordinated loan stock due 2008. The holders of the loan stock,
including Candover Investments PLC, and certain investment funds indirectly
controlled by Candover Investments PLC, have agreed not to require repayment of
the 10% unsecured subordinated loan stock due 2008 until this offering is
consummated. We intend to repay all of the 10% unsecured subordinated loan stock
due 2008 out of the proceeds of this offering and the bank facilities that we
intend to enter into upon consummation of this offering. See "Use of Proceeds."
We have received assurances from the holders of the loan stock, including
Candover Investments PLC, and certain investment funds indirectly controlled by
Candover Investment PLC, that, if the net proceeds of this offering and such
bank facilities are inadequate to enable the loan stock to be repaid, they will
not seek repayment of any portion of the loan stock in excess of the net
proceeds of this offering and such bank facilities until the 366th day after the
date on which this offering is consummated.

INCREASE IN MANAGEMENT OWNERSHIP

     Under the existing Articles of Inveresk Research Group Limited, its A
ordinary shares and B ordinary shares are convertible into ordinary shares upon
the occurrence of certain events, including the listing of the ordinary shares
of Inveresk Research Group Limited, based upon a formula set forth in the
Articles. The purpose of the conversion formula of the A ordinary shares and B
ordinary shares is, depending upon the overall return on investment received by
the holders of A ordinary shares, to give ordinary shareholders (who are
comprised entirely of managers and officers of Inveresk Research Group Limited)
an increased percentage of the outstanding share capital of Inveresk Research
Group Limited prior to certain events, including a listing. Because we have
changed the location of our ultimate parent, the ordinary shares of Inveresk
Research Group Limited will not be listed. Therefore the conversion of the A
ordinary shares and the B ordinary shares will not be triggered in this
offering. In order to put the shareholders and optionholders of Inveresk
Research Group Limited in the position that they would have been in if the

                                        62
<PAGE>

change in our ultimate parent had not occurred prior to this offering, the rate
at which the A ordinary shares and options to purchase B ordinary shares were
exchanged for shares of our common stock or options to purchase shares of our
common stock, as applicable, in connection with the change in our ultimate
parent was based on the number of ordinary shares that the A ordinary shares and
B ordinary shares would have been convertible into if they had been converted
into ordinary shares prior to the change in our ultimate parent. As a
consequence, in connection with the change in our ultimate parent, our
management's percentage ownership in our outstanding share capital increased
from 11.2% prior to the change in ultimate parent to 21.2% following the change
in ultimate parent. The members of this management group include Walter S.
Nimmo, Ian Sword, Nicholas J. Thornton, Brian Bathgate and Stewart G. Leslie.
See "Change in Ultimate Parent."

                                        63
<PAGE>

                          DESCRIPTION OF CAPITAL STOCK

GENERAL

     Upon completion of this offering and the transactions described under
"Change in Ultimate Parent," our authorized capital stock will consist of
150,000,000 shares of common stock, par value $0.01 per share, and 10,000,000
shares of preferred stock, par value $0.01 per share, which our board of
directors has the power and authority to designate into classes or shares.
Immediately after the sale of common stock in this offering our issued and
outstanding share capital will consist of           shares of common stock.

     The following is a summary of various provisions of our shares of common
stock and shares of preferred stock. The following summary is not complete and
you should also refer to our certificate of incorporation and bylaws, both of
which have been filed with the Securities and Exchange Commission as exhibits to
our registration statement, of which this prospectus forms a part.

COMMON STOCK

     The holders of our shares of common stock are entitled to one vote per
share on all matters to be voted on by our stockholders. Holders of our shares
of common stock are not entitled to cumulate their votes in the election of
directors. Generally, all matters on which stockholders will vote must be
approved by a majority of the votes entitled to be cast by all shares of common
stock present in person or represented by proxy, subject to any voting rights
granted to holders of any shares of preferred stock. Holders of our shares of
common stock are entitled to share ratably in any dividends declared by our
board of directors, subject to any priority dividend rights of any shares of
preferred stock we may issue in the future. If we are liquidated, dissolved, or
wound up, we must first pay all amounts we owe our creditors and then pay the
full amounts required to be paid to holders of any shares of preferred stock
then outstanding before we may make any payments to holders of our shares of
common stock. All holders of our shares of common stock are entitled to share
ratably in any assets available for distribution to them, after all of our
creditors have been satisfied and we have paid the liquidation preferences of
any of our shares of preferred stock. None of our shares of common stock are
subject to redemption by us. Holders of our shares of common stock do not have
any preemptive rights to purchase additional shares of common stock. In
addition, holders of our shares of common stock do not have subscription rights,
sinking fund rights or conversion rights. Our outstanding shares of common stock
are, and the shares of common stock to be issued upon completion of this
offering will be, fully paid and non-assessable.

PREFERRED STOCK

     Our board of directors has the authority, without further action by our
stockholders, to issue up to an aggregate of 10,000,000 shares of preferred
stock in one or more series and to fix the rights, preferences, privileges and
restrictions of those shares, subject to limitations prescribed by law. The
issuance of shares of preferred stock may have the effect of delaying, deferring
or preventing a change in control of us without further action by the
stockholders. The issuance of shares of preferred stock with voting and
conversion rights may also adversely affect the voting power of the holders of
shares of common stock. In some circumstances, an issuance of shares of
preferred stock could have the effect of decreasing the market price of the
shares of common stock. As of the closing of the offering, no shares of
preferred stock will be outstanding. We currently have no plans to issue any
shares of preferred stock.

LIMITATION ON DIRECTORS' LIABILITIES

     As permitted by the Delaware General Corporation Law, as amended, the
"DGCL," our certificate of incorporation limits the liability of our directors
to our company or our stockholders for monetary damages for breach of fiduciary
duty as directors to the fullest extent permitted by the DGCL as it now exists
or as

                                        64
<PAGE>

it may be amended. As of the date of this prospectus, the DGCL permits
limitations of liability for director's breach of fiduciary duty other than
liability:

     - for any breach of the director's duty of loyalty to our company or our
       stockholders,

     - for acts or omissions not in good faith or that involve intentional
       misconduct or a knowing violation of law,

     - under Section 174 of the DGCL, or

     - for any transaction from which the director derived an improper personal
       benefit.

     In addition, our bylaws provide that we will indemnify, to the fullest
extent permitted under the DGCL, all of our directors, officers, employees and
agents for acts performed on our behalf in such capacity.

DELAWARE ANTI-TAKEOVER PROVISIONS

     We are subject to the provisions of Section 203 of the DGCL, an
anti-takeover law. In general, this provision prohibits a publicly held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless, with some exceptions,
the business combination is approved in the prescribed manner. Generally, an
"interested stockholder" is a person who, together with affiliates and
associates, owns, or within three years prior, did own, 15% or more of the
corporation's voting stock. The statute broadly defines business combinations to
include:

     - mergers;

     - consolidations;

     - sales or other dispositions of assets having an aggregate value in excess
       of 10% of the consolidated assets of the corporation or aggregate market
       value of all outstanding stock of the corporation; and

     - certain transactions that would increase the interested stockholder's
       proportionate share ownership in the corporation.

These provisions may have the effect of delaying, deferring or preventing a
change in control of us without further action by our stockholders.

CERTIFICATE OF INCORPORATION AND BYLAW PROVISIONS

     Our certificate of incorporation provides for the issuance by our board of
directors of up to           shares of preferred stock, with voting power,
designations, preferences and other special rights. The issuance of shares of
preferred stock could decrease the amount of earnings and assets available for
distribution to the holders of shares of common stock or could adversely affect
the rights and powers, including voting rights, of holders of shares of common
stock. In certain circumstances, such issuance could have the effect of
decreasing the market price of our shares of common stock. Holders of our shares
of preferred stock could also make it more difficult for a third party to
acquire our company. At the closing of this offering, no shares of preferred
stock will be outstanding and we currently have no plans to issue any shares of
preferred stock.

     Our certificate of incorporation provides that our board of directors will
be divided into three classes of directors, with the number of directors in each
class to be as nearly equal as possible. Our classified board staggers terms of
the three classes and will be implemented through one, two and three-year terms
for the initial three classes, followed in each case by full three-year terms.
With a classified board, only one-third of the members of our board of directors
will be elected each year. This classification of directors will have the effect
of making it more difficult for stockholders to change the composition of our
board of directors. Our certificate of incorporation and bylaws provide that the
number of directors will be fixed from time to time exclusively pursuant to a
resolution adopted by our board of directors, but must consist

                                        65
<PAGE>

of not less than three directors. This provision will prevent stockholders from
circumventing the provisions of our classified board.

NASDAQ LISTING

     We expect to list our shares of common stock for quotation on the Nasdaq
National Market under the trading symbol "IRGI."

TRANSFER AGENT AND REGISTRAR

     The transfer agent and registrar for our shares of common stock is
          .

                        SHARES ELIGIBLE FOR FUTURE SALE

     Before this offering, there has been no market for our shares of common
stock, and we cannot assure you that a significant public market for our shares
of common stock will develop or be substantial after this offering. Future sales
of substantial amounts of our shares of common stock, including shares issued
upon the exercise of outstanding options, in the public market (or the
perception that such sales may occur) could adversely affect market prices
prevailing from time to time and could impair our ability to raise capital
through sale of our equity securities. After this offering is completed, the
resale of certain of our outstanding shares into public markets will be subject
to legal and contractual restrictions, some of which are described below. The
lapsing of these restrictions will permit sales of substantial amounts of our
shares of common stock or could create the perception that such sales may occur,
which could adversely affect the market price for our shares of common stock.

     Upon completion of this offering, we will have           shares of common
stock outstanding, plus up to           additional shares if the underwriters
exercise the over-allotment option in full, without taking into account
          shares that may be issued upon exercise of options outstanding as of
December 31, 2001.

     The           shares of common stock being sold in this offering will be
freely tradable (other than by an affiliate of our company as that term is
defined in the Securities Act of 1933, or Securities Act, which generally
includes officers, directors or 10% stockholders) without restriction or
registration under the Securities Act. All remaining shares were issued and sold
by us in private transactions and are eligible for public sale solely if
registered under the Securities Act or sold under an applicable exemption. We
have entered into a registration rights agreement with all of our stockholders
with respect to the shares of common stock they hold. See
"Stockholders -- Registration Rights Agreements." Upon any sale of such shares
pursuant to an effective registration statement, such shares would be fully
transferable without restriction.

     In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person who has beneficially owned restricted
shares for at least one year, including a person who may be deemed an affiliate
of ours, would be entitled to sell within any three-month period a number of
shares that does not exceed the greater of:

     - 1% of the number of the shares then outstanding, which will be
       approximately           shares immediately after this offering, assuming
       no exercise of the underwriters' over-allotment option and no exercise of
       outstanding options; or

     - the average weekly trading volume of our shares of common stock on the
       Nasdaq National Market during the four calendar weeks before the filing
       of a Form 144 with respect to that sale.

     Sales under Rule 144 are also subject to requirements relating to manner of
sale, notice and availability of current public information about us. Under Rule
144(k), a person who is not deemed to have been an affiliate of ours at any time
during the three months preceding a sale and who has beneficially owned the
shares proposed to be sold for at least two years, including the holding period
of any

                                        66
<PAGE>

previous owner except an affiliate of ours, is entitled to sell those shares
without complying with the manner of sale, public information, volume limitation
or notice provisions of Rule 144.

     Our officers, directors and stockholders, who collectively hold an
aggregate of approximately 25,827,720 shares of common stock, constituting all
of our issued and outstanding shares immediately prior to completion of this
offering, have agreed, under lock-up agreements that, subject to certain
exceptions described under the caption "Underwriting," they will not sell any
shares of common stock owned by them without the prior written consent of Bear,
Stearns & Co. Inc. for a period of at least 180 days from the date of this
prospectus.

     In addition, simultaneously with this offering we intend to file one or
more registration statements on Form S-8 under the Securities Act to register
the shares of common stock reserved for issuance under our stock option plan
and, as a result, all shares of common stock acquired upon exercise of stock
options under this plan (subject to vesting requirements contained in the
applicable award agreement, if any) will also be freely tradable in the open
market unless purchased by our affiliates.

     We also may issue our shares of common stock from time to time as
consideration for future acquisitions and investments. In the event any such
acquisition or investment is significant, the number of shares that we may issue
may in turn be significant. In addition, we may also grant registration rights
covering those shares in connection with any such acquisitions and investments.

                TAX CONSIDERATIONS IN CONNECTION WITH THE CHANGE
                             IN OUR ULTIMATE PARENT

U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR THE EXISTING LIMITED SHAREHOLDERS

     The following discussion is a summary of the material United States federal
income tax considerations applicable to a U.S. holder in connection with the
transactions described under the caption "Change in Our Ultimate Parent." The
discussion is based on the U.S. Internal Revenue Code of 1986, as amended (the
"Code"), U.S. Treasury Regulations promulgated under the Code, administrative
rulings and pronouncements and judicial decisions as of the date of this
prospectus, all of which are subject to change, possibly with retroactive
effect.

     The discussion below is for general information only and, except where
specially noted, does not address the effects of any state, local or non-U.S.
tax laws. In addition, the discussion below relates only to persons who hold
shares of Inveresk Research Group Limited as capital assets. The tax treatment
of a U.S. holder may vary depending upon such holder's particular situation, and
some U.S. holders may be subject to special rules not discussed below. These
holders would include, for example, dealers in securities or currencies,
tax-exempt organizations, persons owning 10% or more of Inveresk Research Group
Limited's voting shares or persons who receive our shares pursuant to the
exercise of employee stock options or otherwise as compensation. If a
partnership holds shares of Inveresk Research Group Limited, the tax treatment
of a partner will generally depend upon the status of the partner and the
activities of the partnership. A partner of a partnership holding shares of
Inveresk Research Group Limited should consult its own tax adviser.

     As used in this section, a "U.S. Holder" means: (i) a citizen or resident
of the United States, (ii) a corporation, partnership or other entity, other
than a trust, created or organized in or under the laws of the United States or
any political subdivision thereof, (iii) an estate whose income is subject to
U.S. federal income tax regardless of its source, or (iv) a trust if a U.S.
court is able to exercise primary supervision over its administration and one or
more U.S. persons have the authority to control all of its substantial
decisions.

     Inveresk Research Group Limited has been advised by its U.S. counsel,
Clifford Chance Rogers & Wells, LLP, that based on certain assumptions and
representations provided by us, Inveresk Research Group Limited and certain of
its principal stockholders, and pursuant to Sections 351 and 368(a) of the Code,
U.S. Holders of shares of Inveresk Research Group Limited should not recognize
any gain or loss
                                        67
<PAGE>

for United States Federal income tax purposes upon the receipt of our shares in
exchange for shares of Inversek Research Group Limited provided that Inveresk
Research Group Limited has not been a passive foreign investment company during
any portion of the U.S. Holder's holding period for such shares.

     A foreign corporation will be classified as a "passive foreign investment
company" for U.S. federal income tax purposes if 75% or more of its gross income
for the taxable year is passive income or, on average for the taxable year, 50%
or more of its assets produce or are held for the production of passive income.
For this purpose, passive income generally includes interest, dividends,
royalties and gains from assets that produce passive income. However, passive
income does not generally include rents and royalties derived in the active
conduct of a trade or business and not derived from a related persons. If a
foreign corporation owns at least 25% by value of the stock of another
corporation, the foreign corporation is treated for purposes of the passive
foreign investment company tests as owning its proportionate share of the assets
of the other corporation and as receiving directly its proportionate share of
the other corporation's income. If a foreign corporation is classified as a
passive foreign investment company in any year with respect to which a U.S.
Holder owns its stock, it generally will continue to be treated as a passive
foreign investment company with respect to such shareholder in all succeeding
years. Based upon the current and historical income, assets and activities of
Inveresk Research Group Limited, we do not believe it likely that its shares
would be considered shares of a passive foreign investment company.

     U.S. Holders of shares of Inveresk Research Group Limited should have a tax
basis in the shares of our common stock that they receive in transactions
described under "Change in our Ultimate Parent" equal to the tax basis of the
shares of Inveresk Research Group Limited surrendered in exchange therefor. The
holding period for our shares of common stock received by a U.S. Holder in the
share exchange should include the period during which the shares of Inveresk
Research Group Limited surrendered in exchange therefor were held prior to that
share exchange.

     U.S. Holders who receive our shares in exchange for shares of Inveresk
Research Group Limited are subject to certain U.S. information reporting
requirements. Holders of shares of Inveresk Research Group Limited are urged to
consult their tax advisors as to these reporting obligations.

     We will not seek a ruling from the Internal Revenue Service concerning the
tax consequences of the transaction described under "Change in Ultimate Parent."
An opinion of counsel is not binding on the Internal Revenue Service and we
cannot assure you that the Internal Revenue Service will not take a position
contrary to one or more positions set forth in this section or that the courts
will uphold such positions if challenged by the Internal Revenue Service.

     The United States Federal income tax discussion set forth above is included
for general information only. U.S. HOLDERS OF SHARES OF INVERESK RESEARCH GROUP
LIMITED ARE URGED TO CONSULT THEIR TAX ADVISORS TO DETERMINE THE PARTICULAR TAX
CONSEQUENCES TO THEM OF THE SHARE EXCHANGE, INCLUDING THE APPLICATION AND EFFECT
OF FOREIGN, STATE AND LOCAL INCOME TAX AND OTHER TAX LAWS.

U.K. TAX CONSIDERATIONS FOR THE EXISTING HOLDERS OF SHARES OF INVERESK RESEARCH
GROUP LIMITED

     The following is intended as a general guide only and is based on current
U.K. taxation legislation and Inland Revenue Practice. Please note that the
levels and bases of taxation can change. The following summarizes certain
limited aspects of the U.K. taxation treatment applicable in connection with the
exchange of shares of Inveresk Research Group Limited for our shares and relates
only to the position of shareholders who hold their shares of Inveresk Research
Group Limited beneficially as a capital asset (and otherwise than under a
personal equity plan or an individual savings plan) and who are resident in the
U.K. for taxation purposes ("U.K. holders"). The taxation position of U.K.
holders such as banks, insurance companies and collective investments schemes,
and of non-taxpayers, such as pension funds and other tax exempts is not
specifically addressed. In addition, the tax treatment of a U.K. holder may vary
depending upon such U.K. holder's particular situation.

                                        68
<PAGE>

IF IN ANY DOUBT AS TO THEIR TAXATION POSITION OR IF THEY ARE SUBJECT TO TAXATION
IN ANY JURISDICTION OUTSIDE THE U.K. HOLDERS SHOULD CONSULT THEIR TAX ADVISOR.

  "Roll-over" relief

     A U.K. holder who, either alone or together with persons connected with
him, does not hold more than 5 per cent. of, or any class of, shares in or
debentures of Inveresk Research Group Limited should not be treated as having
made a disposal of shares of Inveresk Research Group Limited for capital gains
tax ("CGT") purposes to the extent that he receives shares of our common stock.
Any gain or loss which would otherwise have arisen on a disposal of such U.K.
holder's shares of Inveresk Research GroupLimited will be "rolled over" into the
shares of our common stock and our shares will be treated as the same asset as
such U.K. holder's shares of Inveresk Research Group Limited acquired at the
same time and for the same consideration as he acquired his shares of Inveresk
Research Group Limited.

     Any U.K. Holder who, either alone or together with persons connected with
him, holds more than 5 per cent. of, or any class of, shares in or debentures of
Inveresk Research Group Limited is advised that an application for clearance has
been made to the Inland Revenue under section 138 of the Taxation of Chargeable
Gains Act 1992 in respect of the share exchange. If, as expected, such clearance
is given, any such U.K. Holder will be treated in the same manner described in
the proceeding paragraph. The share exchange is not conditional on such
clearance being obtained.

  Disposal

     A subsequent disposal by a U.K. Holder of all or any of the Company shares
received in exchange for Limited shares may, depending on individual
circumstances, give rise to a liability to U.K. CGT.

  Section 707 of the Income and Corporation Taxes Act 1988 ("ICTA")

     U.K. Holders should note that clearance is also being sought under section
707 ICTA that the share exchange is being carried out for bona fide commercial
reasons and that no tax advantage is being sought to be obtained thereby.

  Stamp Duty and Stamp Duty Reserve Tax ("SDRT")

     No stamp duty or SDRT will be payable by shareholders of Inveresk Research
Group Limited as a result of accepting shares of our common in exchange for
shares in Inveresk Research Group Limited. Stamp duty or SDRT will be payable by
Inveresk Research Group Limited (at broadly the rate of 0.5% of the value of the
shares issued by us in exchange for the shares in Inveresk Research Group
Limited) in respect of the acquisition of shares of our common stock.

U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR INVERESK RESEARCH

     The following discussion is a summary of the material U.S. federal income
tax considerations to us as a result of the share exchange. The discussion is
based on the Code, U.S. Treasury Regulations promulgated under the Code,
administrative rulings and pronouncements and judicial decisions as of the date
hereof, all of which are subject to change, possibly with retroactive effect.

     As a result of the share exchange, Inveresk Research Group, Inc. will hold
all the shares of Inveresk Research Group Limited and its subsidiaries. Thus,
the earnings distributed by Inveresk Research Group Limited and its subsidiaries
to Inveresk Research Group, Inc, will be subject to a U.S. Federal income tax at
a maximum rate of 35% (plus any state and local taxes). In addition, all of our
subsidiaries that are not organized or created in the U.S. (or under the laws of
the U.S. or any state) will become "controlled foreign corporations" by virtue
of the share exchange. Certain earnings of those controlled foreign corporations
from passive activities, related party transactions and U.S. investments may be
currently taxable to Inveresk Research Group, Inc. even if not remitted to
Inveresk Research Group, Inc. in the

                                        69
<PAGE>

year they are earned. U.S. controlled foreign corporations are also subject to
substantial information reporting to the Internal Revenue Service.

     Credits for non-U.S. taxes paid by Inveresk Research Group, Inc. and by our
controlled foreign corporations are available to reduce the U.S. tax subject to
limitations.

     The interposition of Inveresk Research Group, Inc. between Inveresk
Research Group Limited and its former shareholders may decrease the net amount
available for distribution to our shareholders as a result of the 35% U.S. tax
payable on funds remitted to Inveresk Research Group, Inc. for distribution and
the potential increase in non-U.S. withholding tax on payments from Inveresk
Research Group Limited to Inveresk Research Group, Inc., rather than directly to
our shareholders. In addition, the withholding obligations with respect to
payments from Inveresk Research Group, Inc. to the former shareholders of
Inveresk Research Group Limited may be greater than the previous withholding
obligations with respect to payments from Inveresk Research Group Limited to the
former shareholders of Inveresk Research Group Limited because U.S. withholding
provisions and treaties (as opposed to U.K. provisions) will now govern the new
relationship.

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<PAGE>

                                  UNDERWRITING

     Under the terms and subject to the conditions contained in an underwriting
agreement among the underwriters and us, each of the underwriters named below,
through their representatives, Bear, Stearns & Co. Inc., UBS Warburg LLC,
William Blair & Company, L.L.C. and SG Cowen Securities Corporation, have
severally agreed to purchase from us the aggregate number of shares of common
stock set forth opposite its name below:

<Table>
<Caption>
UNDERWRITERS                                                  NUMBER OF SHARES
------------                                                  ----------------
<S>                                                           <C>
Bear, Stearns & Co. Inc.....................................
UBS Warburg LLC.............................................
William Blair & Company, L.L.C. ............................
SG Cowen Securities Corporation.............................
     Total..................................................
</Table>

     The underwriting agreement provides that the obligations of the several
underwriters are subject to approval of various legal matters by their counsel
and to various other conditions, including delivery of legal opinions by our
counsel, the delivery of a letter by our independent auditors and the accuracy
of the representations and warranties made by us in the underwriting agreement.
Under the underwriting agreement, the underwriters are obliged to purchase and
pay for all of the above shares of our shares of common stock if any are
purchased.

PUBLIC OFFERING PRICE

     The underwriters propose to offer the shares of common stock directly to
the public at the offering price set forth on the cover page of this prospectus
and at that price less a concession not in excess of $     per share to other
dealers who are members of the National Association of Securities Dealers, Inc.
The underwriters may allow, and those dealers may reallow, concessions not in
excess of $     per share to other dealers. After this offering, the offering
price, concessions and other selling terms may be changed by the underwriters.
Our shares of common stock are offered subject to receipt and acceptance by the
underwriters and subject to other conditions, including the right to reject
orders in whole or in part. The underwriters have informed us that the
underwriters do not expect to confirm sales of shares of common stock to any
accounts over which they exercise discretionary authority.

     The following table summarizes the per share and total public offering
price of the shares of common stock in the offering, the underwriting
compensation to be paid to the underwriters by us and the proceeds of the
offering, before expenses, to us. The information presented assumes either no
exercise or full exercise by the underwriters of their over-allotment option.

<Table>
<Caption>
                                                                         TOTAL
                                                            -------------------------------
                                                   PER         WITHOUT            WITH
                                                  SHARE     OVER-ALLOTMENT   OVER-ALLOTMENT
                                                 --------   --------------   --------------
<S>                                              <C>        <C>              <C>
Public offering price..........................  $             $                $
Underwriting discounts and commissions.........
Proceeds before expenses.......................
</Table>

     The underwriting discount and commission per share is equal to the public
offering price per share of common stock less the amount paid by the
underwriters to us per share of common stock.

     We estimate total expenses payable by us in connection with this offering,
other than the underwriting discounts and commissions referred to above, will be
approximately $          .

OVER-ALLOTMENT OPTION TO PURCHASE ADDITIONAL SHARES

     We have granted a 30-day over-allotment option to the underwriters to
purchase up to an aggregate of           additional shares of common stock
exercisable at the offering price less the underwriting

                                        71
<PAGE>

discounts and commissions, each as set forth on the cover page of this
prospectus. If the underwriters exercise this option in whole or in part, then
each of the underwriters will be obliged to purchase additional shares of common
stock in proportion to their respective purchase commitments as shown in the
table set forth above, subject to various conditions.

INDEMNIFICATION AND CONTRIBUTION

     The underwriting agreement provides that we will indemnify the underwriters
against liabilities specified in the underwriting agreement under the Securities
Act, including liabilities arising from material misstatements or omissions in
connection with disclosures, or will contribute to payments that the
underwriters may be required to make in respect of those liabilities.

LOCK-UP AGREEMENTS

     Our directors and officers and certain of our stockholders of our
outstanding shares have agreed that they will not offer, sell or agree to sell,
directly or indirectly, or otherwise dispose of any shares of common stock in
the public market without the prior written consent of Bear, Stearns & Co. Inc.
for a period of 180 days from the date of this prospectus. Bona fide gifts by
individuals to immediate family members, transfers by a partnership to its
partners or transfers by Candover Investments PLC or a fund directly or
indirectly controlled by Candover Investments PLC to another fund controlled
directly or indirectly by Candover Investments PLC are excepted from the
restrictions of the lock-up agreements, provided the transferee agrees to be
bound by similar restrictions.

     In addition, we have agreed that for a period of 180 days from the date of
this prospectus, we will not, without the prior written consent of Bear, Stearns
& Co. Inc., offer, sell or otherwise dispose of any shares of common stock,
except that we may issue, and grant options to purchase, shares of common stock
and restricted stock under our equity compensation plans.

NASDAQ NATIONAL MARKET QUOTATION

     Prior to this offering, there has been no public market for our shares of
common stock. As a result, the initial offering price for the shares of common
stock was determined by negotiations between us and the representatives of the
underwriters. Among the factors considered in those negotiations, the primary
factors were our results of operations in recent periods, estimates of our
prospects and the industry in which we compete, an assessment of our management,
the general state of the securities markets at the time of this offering and the
prices of similar securities of generally comparable companies. We have received
approval for the quotation of our shares of common stock on the Nasdaq National
Market, under the symbol "IRGI." We cannot assure you, however, that an active
or orderly trading market will develop for the shares of common stock or that
the shares of common stock will trade in the public market after this offering
at or above the initial offering price.

STABILIZATION, SYNDICATE SHORT POSITION AND PENALTY BIDS

     In order to facilitate the offering of our shares of common stock, the
underwriters may engage in transactions that stabilize, maintain, or otherwise
affect the market price of our shares of common stock.

     The underwriters may over-allot shares of our common stock in connection
with this offering, thus creating a short position for their own account. Short
sales involve the sale by the underwriters of a greater number of shares than
they are committed to purchase in the offering. A short position may involve
either "covered" short sales or "naked" short sales. Covered short sales are
sales made in an amount not greater than the underwriters' over-allotment option
to purchase additional shares in the offering described above. The underwriters
may close out any covered short position by either exercising their
over-allotment option or purchasing shares in the open market. In determining
the source of shares to close the covered short position, the underwriters will
consider, among other things, the price of shares available for purchase in the
open market as compared to the price at which they may purchase shares through
the over-allotment option. Naked short sales are sales in excess of the
over-allotment option. The underwriters must close out
                                        72
<PAGE>

any naked short position by purchasing shares in the open market. A naked short
position is more likely to be created if the underwriters are concerned that
there may be downward pressure on the price of the shares in the open market
after pricing that could adversely affect investors who purchase in the
offering.

     Accordingly, to cover these short sales positions or to stabilize the
market price of our shares of common stock, the underwriters may bid for, and
purchase, shares of our common stock in the open market. These transactions may
be effected on the Nasdaq National Market or otherwise. Additionally, the
representatives, on behalf of the underwriters, may also reclaim selling
concessions allowed to an underwriter or dealer. Similar to other purchase
transactions, the underwriters' purchases to cover the syndicate short sales or
to stabilize the market price of our shares of common stock may have the effect
of raising or maintaining the market price of our shares of common stock or
preventing or mitigating a decline in the market price of our shares of common
stock. As a result, the price of the shares of our shares of common stock may be
higher than the price that might otherwise exist in the open market. No
representation is made as to the magnitude or effect of any such stabilization
or other activities. The underwriters are not required to engage in these
activities and, if commenced, may end any of these activities at any time.

DIRECTED SHARE PROGRAM

     At our request, the underwriters have reserved for sale at the initial
public offering price up to
shares of common stock to be sold in this offering for sale to our directors,
officers, employees, business associates, business and legal advisors and
related persons. Purchases of reserved shares are to be made through an account
at [               ] according to [               ]'s procedures for opening an
account and transacting in securities. The number of shares available for sale
to the general public will be reduced to the extent that any reserved shares are
purchased. Any reserved shares not purchased by our directors, officers,
employees, business associates, business and legal advisors and related persons
will be offered by the underwriters to the general public on the same terms as
the other shares offered by this prospectus.

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

     In connection with our acquisition of ClinTrials in April 2001, Bear,
Stearns & Co. Inc. served as our financial advisor and Bear Stearns Corporate
Lending Inc., an affiliate of Bear, Stearns & Co. Inc., provided us with
financing pursuant to a Facilities Agreement. In connection with these services,
such Bear Stearns entities received customary fees. In July 2001, Bear Stearns
Corporate Lending Inc. assigned its rights and obligations under such Facilities
Agreement to two unaffiliated commercial banks. D. J. Paul E. Cowan, our Chief
Financial Officer, was a Managing Director of Bear Stearns International Limited
until January 2002, when he assumed his current position with our company.

     Affiliates of Bear, Stearns & Co. Inc. and of UBS Warburg LLC have each
made investments in the Candover 2001 Fund. Each such investment involves less
than a 1% interest in such fund (assuming an anticipated final fund size of Euro
2.5 billion). In addition, a UBS Warburg staff coinvest plan has committed to
invest in such fund, and an affiliate of UBS Warburg LLC serves as general
partner of a partnership pursuant to which clients of UBS Warburg LLC invest in
such fund. An affiliate of UBS Warburg LLC is a placement agent for the Candover
2001 Fund, for which it will receive customary fees. The Candover 2001 Fund is
indirectly controlled by Candover Investments PLC, which, together with a
wholly-owned subsidiary of Candover Investments PLC and certain investment funds
indirectly controlled by Candover Investments PLC, are the principal
shareholders of Inveresk Research. See "Principal Stockholders."

                                        73
<PAGE>

                                 LEGAL MATTERS

     The validity of the shares of common stock offered hereby will be passed
upon for us by Clifford Chance Rogers & Wells LLP, New York, New York. Certain
legal matters in connection with the offering will be passed upon for the
underwriters by Coudert Brothers LLP.

                                    EXPERTS

     The audited consolidated financial statements of Inveresk Research as of
December 30, 2001 and 2000 and for the years ended December 31, 2001 and
December 31, 2000 and the periods ended December 26, 1999 and September 19, 1999
included in this prospectus and elsewhere in the registration statement have
been audited by Arthur Andersen, independent auditors, as indicated in their
report with respect thereto, and are included herein and therein in reliance
upon the authority of said firm as experts in accounting and auditing. The
consolidated financial statements of ClinTrials Research Inc. at December 31,
2000 and 1999, and for each of the three years in the period ended December 31,
2000, appearing in this Prospectus and Registration Statement have been audited
by Ernst & Young LLP, independent auditors, as set forth in their report thereon
appearing elsewhere herein, and are included in reliance upon such report given
on the authority of such firm as experts in accounting and auditing.

                      WHERE YOU CAN FIND MORE INFORMATION

     We have filed a registration statement on Form S-1 with the Securities and
Exchange Commission with respect to the common stock we are offering by this
prospectus. This prospectus, which constitutes a part of the registration
statement, does not contain all of the information set forth in the registration
statement and the exhibits to the registration statement. You should refer to
the registration statement, including its exhibits for further information with
respect to us and our common stock. Statements contained in this prospectus as
to the contents of any contract or other document are not necessarily complete
and, where the contract is an exhibit to the registration statement, each such
statement is qualified in all respects by the provisions of such exhibit. Copies
of the registration statement, including the related exhibits, are available for
examination without charge at the Public Reference Room of the Securities and
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, or at the
Commission's Midwest Regional Office at 175 West Jackson Boulevard, Suite 900,
Chicago IL, 60604 or the Northeast Regional Office at 233 Broadway, New York, NY
10279 or on the website of the Securities and Exchange Commission at
http://www.sec.gov. Copies of all or a portion of the registration statement can
be obtained from the Public Reference Room of the Securities and Exchange
Commission upon payment of prescribed fees, and information on the operation of
the Public Reference Room may be obtained by calling the Commission at (800)
SEC-0330.

     As a result of this offering, we will become subject to the information and
periodic reporting requirements of the Exchange Act and, in accordance
therewith, will file periodic reports, proxy statements and other information
with the Securities and Exchange Commission.

                                        74
<PAGE>

                         INDEX TO FINANCIAL STATEMENTS

<Table>
<Caption>
                                                                PAGE
                                                                ----
<S>                                                             <C>
INVERESK RESEARCH GROUP, INC.
Report of Independent Auditors..............................     F-2
Consolidated Statements of Operations.......................     F-3
Consolidated Balance Sheets.................................     F-4
Consolidated Statements of Cash Flows.......................     F-5
Consolidated Statements of Shareholders' Equity.............     F-6
Notes to Consolidated Financial Statements..................     F-7

CLINTRIALS RESEARCH INC.
Report of Independent Auditors..............................    F-29
Consolidated Balance Sheets as of December 31, 2000 and
  1999......................................................    F-30
Consolidated Statements of Operations for the Years Ended
  December 31, 2000, 1999 and 1998..........................    F-31
Consolidated Statements of Cash Flows for the Years Ended
  December 31, 2000, 1999 and 1998..........................    F-32
Consolidated Statements of Stockholders' Equity for the
  Years Ended December 31, 2000, 1999 and 1998..............    F-33
Notes to Consolidated Financial Statements..................    F-34
Quarterly Financial Information (Unaudited).................    F-48
Consolidated Financial Statement Schedule
  Schedule II -- Valuation and Qualifying Accounts..........    F-49
</Table>

                                       F-1
<PAGE>

                        [LETTERHEAD OF ARTHUR ANDERSEN]

                         INVERESK RESEARCH GROUP, INC.

                         REPORT OF INDEPENDENT AUDITORS

     After the change of ultimate parent company transaction discussed in Note 1
to Inveresk Research Group, Inc.'s consolidated financial statements is
effected, we expect to be able to render the following audit report.

/s/ ARTHUR ANDERSEN

2 April 2002

                         REPORT OF INDEPENDENT AUDITORS

To the Shareholders of Inveresk Research Group, Inc.:

     We have audited the accompanying consolidated balance sheets of Inveresk
Research Group, Inc. (a Delaware corporation) and its predecessor as of December
30, 2001 and December 31, 2000, and the related consolidated statements of
income, comprehensive income, shareholders' investment and cash flows for the
periods ended December 30, 2001, December 31, 2000, December 26, 1999 (98 day
period), and September 19, 1999 (266 day period). These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Inveresk
Research Group, Inc. as of December 30, 2001, December 31, 2000 and the results
of its operations and its cash flows for the periods ended December 30, 2001,
December 31, 2000, December 26, 1999 (98 day period) and September 19, 1999 (266
day period) in conformity with accounting principles generally accepted in the
United States.

     As explained in Note 2, effective January 1, 2001, the Company adopted FAS
133 "Accounting for Derivative Instruments and Hedging Activities."

Arthur Andersen
Edinburgh, Scotland

2 April 2002

                                       F-2
<PAGE>

                         INVERESK RESEARCH GROUP, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS

<Table>
<Caption>
                                                      SUCCESSOR
                                ------------------------------------------------------       PREDECESSOR
                                52 WEEKS ENDED    53 WEEKS ENDED    SEPTEMBER 20, 1999    DECEMBER 28, 1998
                                 DECEMBER 30,      DECEMBER 31,      TO DECEMBER 26,      TO SEPTEMBER 19,
                                     2001              2000                1999                 1999
                                --------------    --------------    ------------------    -----------------
                                               (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                             <C>               <C>               <C>                   <C>
Net service revenue...........   $   156,296       $    65,540         $    16,832            $ 47,088
  Direct costs................       (83,975)          (36,133)             (9,645)            (27,177)
                                 -----------       -----------         -----------            --------
Gross profit..................        72,321            29,407               7,187              19,911
  Selling, general and
     administrative
     expenses.................       (41,934)          (13,825)             (3,198)             (9,013)
  Depreciation................        (8,028)           (4,513)               (809)             (3,731)
  Amortization of goodwill and
     intangibles..............        (7,910)           (3,281)               (973)               (242)
                                 -----------       -----------         -----------            --------
Income from operations........        14,449             7,788               2,207               6,925
  Interest income.............           483               367                  87                 236
  Interest expense............       (17,584)           (7,889)             (2,091)               (796)
                                 -----------       -----------         -----------            --------
Income (loss) before income
  taxes.......................        (2,652)              266                 203               6,365
Provision for income taxes....        (2,049)             (682)               (325)             (2,308)
                                 -----------       -----------         -----------            --------
Net income (loss) before
  extraordinary item..........        (4,701)             (416)               (122)              4,057
Extraordinary item (note 9)...          (419)               --                  --                  --
                                 -----------       -----------         -----------            --------
Net income (loss).............   $    (5,120)      $      (416)        $      (122)           $  4,057
                                 ===========       ===========         ===========            ========
Loss per share pre
  extraordinary item:
  Basic.......................   $     (0.20)      $     (0.02)        $     (0.01)
  Diluted.....................   $     (0.20)      $     (0.02)        $     (0.01)
Loss per share post
  extraordinary item:
  Basic.......................   $     (0.22)      $     (0.02)        $     (0.01)
  Diluted.....................   $     (0.22)      $     (0.02)        $     (0.01)
Number of shares and common
  stock equivalents used in
  computing loss per shares:
  Basic.......................    23,349,278        17,171,327          17,171,327
  Diluted.....................    23,349,278        17,171,327          17,171,327
                                 -----------       -----------         -----------
</Table>

            See accompanying notes to consolidated financial statements.
                                       F-3
<PAGE>

                         INVERESK RESEARCH GROUP, INC.

                          CONSOLIDATED BALANCE SHEETS

<Table>
<Caption>
                                                              DECEMBER 30,    DECEMBER 31,
                                                                  2001            2000
                                                              ------------    ------------
                                                                 (DOLLARS IN THOUSANDS)
<S>                                                           <C>             <C>
ASSETS
Current assets:
  Cash and cash equivalents.................................    $ 16,118        $  9,686
  Accounts receivable, net of allowance for doubtful
     accounts of $760 in 2001 and $312 in 2000..............      32,646           8,760
  Unbilled receivables......................................      19,999           7,394
  Income taxes receivable...................................       4,335             295
  Inventories...............................................       2,173             458
  Other current assets......................................       2,164           1,041
                                                                --------        --------
Total current assets........................................      77,435          27,634
Property, plant and equipment...............................      87,922          48,759
Intangible assets...........................................     134,517          47,273
Deferred debt issue costs...................................       1,952             902
                                                                --------        --------
                                                                $301,826        $124,568
                                                                ========        ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................    $ 10,118        $  1,443
  Advance billings..........................................      30,380          15,342
  Accrued expenses..........................................      21,520           4,752
  Income taxes payable......................................       2,103             598
  Deferred income taxes.....................................         559             493
  Current portion of long term debt.........................     127,648              42
  Bank overdraft............................................          --           3,038
                                                                --------        --------
Total current liabilities...................................     192,328          25,708
Deferred income taxes.......................................      27,053          14,620
Long term debt..............................................      85,109          80,898
Defined benefit pension scheme obligation...................       4,721           3,095
Commitments and contingencies (Note 15).....................          --              --
Shareholders' equity
Preferred shares of common stock, $0.01 par
  value -- 10,000,000 authorized, none issued...............          --              --
Ordinary shares of common stock, $0.01 par
  value -- 150,000,000 authorized; issued and fully-paid
  25,500,120 and 17,171,327 at December 30, 2001 and
  December 31, 2000.........................................         255             172
                                                                --------        --------
  Total common stock........................................         255             172
  Additional paid-in capital................................       1,021             716
  Accumulated deficit.......................................      (5,707)           (587)
  Accumulated other comprehensive income (loss).............      (2,954)            (54)
                                                                --------        --------
Total shareholders' equity (accumulated deficit)............      (7,385)            247
                                                                --------        --------
                                                                $301,826        $124,568
                                                                ========        ========
</Table>

          See accompanying notes to consolidated financial statements.
                                       F-4
<PAGE>

                         INVERESK RESEARCH GROUP, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<Table>
<Caption>
                                                                 SUCCESSOR
                                              ------------------------------------------------    PREDECESSOR
                                                52 WEEKS       53 WEEKS                          DECEMBER 28,
                                                 ENDED          ENDED       SEPTEMBER 20, 1999      1998 TO
                                              DECEMBER 30,   DECEMBER 31,           TO           SEPTEMBER 19,
                                                  2001           2000       DECEMBER 26, 1999        1999
                                              ------------   ------------   ------------------   -------------
                                                                   (DOLLARS IN THOUSANDS)
<S>                                           <C>            <C>            <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)...........................   $  (5,120)      $  (416)          $   (122)          $ 4,057
Adjustments to reconcile net income (loss)
  to net cash provided by operating
  activities:
Depreciation of property, plant and
  equipment.................................       8,028         4,513                809             3,731
Amortization of goodwill and intangible
  assets....................................       7,910         3,281                973               242
Deferred pension obligations................         130          (195)                27              (538)
Deferred income taxes.......................         210           439               (263)              694
Amortization of deferred loan issue costs...       1,040           322                 --                --
Interest on Candover loan notes rolled up...       8,970         4,278              1,174                --
Changes in operating assets and liabilities:
  Accounts receivable.......................      (1,682)         (720)               852               112
  Advance billings..........................        (361)        1,369                 62               186
  Inventories...............................         176            87                (62)             (249)
  Accounts payable and accrued expenses.....         640          (616)               224               673
  Income taxes..............................      (1,277)         (919)            (1,051)            1,614
  Other assets and liabilities..............         829         1,270               (582)           (1,216)
                                               ---------       -------           --------           -------
Net cash provided by operating activities...      19,493        12,693              2,041             9,306
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of SGS Health Sector Holdings and
  IRNA, net of cash acquired of $9,080......          --            --            (78,792)               --
Purchase of ClinTrials Research Inc, net of
  cash acquired of $5,700...................    (115,147)           --                 --                --
Purchases of property, plant and
  equipment.................................     (11,145)       (6,792)            (1,307)           (5,305)
Proceeds from sale of investments...........          --            40                 --                --
                                               ---------       -------           --------           -------
Net cash used in investing activities.......    (126,292)       (6,752)           (80,099)           (5,305)
CASH FLOWS FROM FINANCING ACTIVITIES
Issue of common stock, net of issue costs...         388            --                839                --
Proceeds from short-term borrowings.........          --            --              3,206                --
Repayments of short-term borrowings.........      (3,038)         (109)                --               (56)
Proceeds from long-term borrowings, net of
  issue costs...............................     156,440            --             83,763                --
Repayments of long-term debt................     (38,311)       (3,031)                (9)              (27)
Repayment of balances owing to former parent
  company and its subsidiaries..............          --            --             (2,733)               --
                                               ---------       -------           --------           -------
Net cash provided (used) by financing
  activities................................     115,479        (3,140)            85,066               (83)
Effect on foreign currency exchange rate
  changes on cash...........................      (2,248)         (124)                 1             2,054
                                               ---------       -------           --------           -------
Increase in cash and cash equivalents.......       6,432         2,677              7,009             5,972
Cash and cash equivalents at beginning of
  period....................................       9,686         7,009                 --             3,108
                                               ---------       -------           --------           -------
Cash and cash equivalents at end of
  period....................................   $  16,118       $ 9,686           $  7,009           $ 9,080
                                               =========       =======           ========           =======
</Table>

          See accompanying notes to consolidated financial statements.
                                       F-5
<PAGE>

                         INVERESK RESEARCH GROUP, INC.

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<Table>
<Caption>
                                          NUMBER OF                            ADDITIONAL   RETAINED EARNINGS   ACCUMULATED OTHER
                                          ORDINARY      ORDINARY      SHARE     PAID-IN       (ACCUMULATED        COMPREHENSIVE
                                TOTAL      SHARES        SHARES      PREMIUM    CAPITAL         DEFICIT)          INCOME (LOSS)
                               -------   -----------   -----------   -------   ----------   -----------------   -----------------
                                                                     (DOLLARS IN THOUSANDS)
<S>                            <C>       <C>           <C>           <C>       <C>          <C>                 <C>
PREDECESSOR COMBINED BALANCE
  AT DECEMBER 28, 1998.......  $37,109                 $    21,702   $11,227     $   --          $ 5,229             $(1,049)
Comprehensive income (loss):
  Foreign currency
    translation
    adjustments..............     (907)                         --       --          --               --                (907)
Net income for period to
  September 19, 1999.........    4,057                          --       --          --            4,057                  --
                               -------
Comprehensive income.........    3,150
                               -------   -----------   -----------   -------     ------          -------             -------
---------------------------------------------------------------------------------------------------------------------------------
SUCCESSOR BALANCE AT
  SEPTEMBER 20, 1999.........       --            --   $        --   $   --      $   --          $    --             $    --
Issue of common stock........    1,269    17,171,327           172       --       1,097               --                  --
Share issue expenses.........     (430)                         --       --        (381)             (49)                 --
Comprehensive income (loss):
  Foreign currency
    translation
    adjustments..............       (5)                         --       --          --               --                  (5)
Net loss for period..........     (122)                         --       --          --             (122)                 --
                               -------
Comprehensive (loss).........     (127)
                               -------   -----------   -----------   -------     ------          -------             -------
BALANCE AT DECEMBER 26,
  1999.......................  $   712    17,171,327   $       172   $   --      $  716          $  (171)            $    (5)
Comprehensive income (loss):
  Foreign currency
    translation
    adjustments..............      (49)                         --       --          --               --                 (49)
Net loss for 2000............     (416)                         --       --          --             (416)                 --
                               -------
Comprehensive (loss).........     (465)
                               -------   -----------   -----------   -------     ------          -------             -------
BALANCE AT DECEMBER 31,
  2000.......................  $   247    17,171,327   $       172   $   --      $  716          $  (587)            $   (54)
Issue of shares..............      388     8,328,793            83       --         305               --                  --
Comprehensive income (loss):
  Foreign currency
    translation
    adjustments..............   (1,675)                         --       --          --               --              (1,675)
  Cumulative-effect
    adjustment for FAS 133
    (net of income taxes of
    $58).....................     (135)                         --       --          --               --                (135)
  Provision for accrued
    benefit obligation under
    FAS 87 (net of income
    taxes of $484)...........   (1,090)                         --       --          --               --              (1,090)
  Net loss for 2001..........   (5,120)                         --       --          --           (5,120)                 --
                               -------
Comprehensive (loss).........   (8,020)
                               -------   -----------   -----------   -------     ------          -------             -------
BALANCE AT DECEMBER 30,
  2001.......................  $(7,385)   25,500,120   $       255   $   --      $1,021          $(5,707)            $(2,954)
                               =======   ===========   ===========   =======     ======          =======             =======
</Table>

          See accompanying notes to consolidated financial statements.
                                       F-6
<PAGE>

                         INVERESK RESEARCH GROUP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (IN THOUSANDS)

1.  DESCRIPTION OF BUSINESS AND BASIS OF PREPARATION

  Description of Business

     Inveresk Research Group, Inc. (the "Company") is a provider of drug
development services to companies in the pharmaceutical and biotechnology
industries. Through the Company's pre-clinical and clinical business units, it
offers a broad range of drug development services, including pre-clinical safety
and pharmacology evaluation, laboratory sciences services and clinical
development services. The Company is 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. The Company's client base
includes major pharmaceutical companies in North America, Europe, and Japan, as
well as many biotechnology and specialty pharmaceutical companies.

     Information on the Company's operations by segment and geographic area is
included in Note 14.

     Inveresk Research Group Limited was incorporated in July 1999. It did not
trade until September 20, 1999 on which date it acquired SGS Health Sector
Services Holding Limited and Inveresk Research North America, Inc. These
entities were owned by SGS Societe Generale de Surveillance SA and their
combined operations are presented as the predecessor of Inveresk Research Group
Limited. On April 2, 2002 an agreement was signed, the effect of which will be
to change the ultimate parent company in the group to Inveresk Research Group,
Inc, a Delaware Corporation. This change of ultimate parent company is described
in further detail below.

  Basis of Preparation

     The fiscal year of the Group (as defined in Note 20 hereof) ends on the
last Sunday of each calendar year. In 2001 the fiscal year contained 52 weeks
and ended on December 30, 2001. In 2000 the fiscal year contained 53 weeks and
ended on December 31, 2000. In 1999 two periods are presented being the period
from December 28, 1998 to September 19, 1999 when the group's trading operations
were owned by SGS Societe Generale de Surveillance SA, and the period from
September 20, 1999 to December 26, 1999 after the acquisition of these
operations by the Group.

     The change of ultimate parent company referred to above will not be
effective until after the end of the period covered by the financial statements,
and will have no impact on the assets or liabilities of the Group. The financial
statements have been prepared on the basis that the change has taken place and
accordingly the shareholders funds and earnings per share are shown on the basis
of the capital structure of Inveresk Research Group, Inc. derived by applying
the weighted average number of shares in Inveresk Research Group, Inc that the
holders of each type of share in Inveresk Research Group Limited will receive
upon the change of ultimate parent company to the historic share capital of
Inveresk Research Group Limited.

     The Group has loan stock and accrued interest amounting to $119.13 million
at December 30, 2001, the majority of which is owing to its principal
shareholder. The terms of this loan stock are that it is repayable immediately
in the event of a listing of the Company's shares on a recognized stock exchange
or in the event of a sale of more than half of the Company's issued share
capital. Because the directors expect the offering to be successfully completed
and because it is envisaged that the loan stock and accrued interest will be
repaid from the net proceeds of the offering and debt facilities arranged at the
time of the offering, the loan stock has been shown as a short term liability in
the balance sheet at December 30, 2001. In the unlikely event that the net
proceeds of the offering and debt facilities arranged at the time of the
offering are inadequate to enable the loan stock to be repaid, the Company has
received assurances from the holders of the loan stock that they will not seek
any repayment of the loan stock

                                       F-7
<PAGE>
                         INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

greater than the net proceeds of the offering and the debt issuance at the time
of the offering prior to the 366th day after the consummation of this offering.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 Principles of Consolidation

     The accompanying financial statements include the accounts of Inveresk
Research Group, Inc. and its subsidiaries. All intercompany transactions,
balances and profits are eliminated. All business combinations have been
accounted for using the purchase method.

     Under the purchase method, goodwill represents the excess of the cost of an
acquisition over the fair value of the Group's share of the net assets of the
acquired subsidiary at the date of acquisition. Goodwill is reported in the
balance sheet as an intangible asset and, prior to December 30, 2001, is
amortized using the straight-line method over its estimated useful life. The
accounting policy for goodwill that takes effect from January 1, 2002 is
described in the Recent Accounting Pronouncements section of this note. The gain
or loss on disposal of an entity includes the unamortized balance of goodwill
relating to the entity disposed of.

  Accounting Estimates

     The preparation of financial statements in conformity with U.S. GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

   Foreign Currencies

     The consolidated financial statements are prepared in U.S. Dollars. The
functional currency of each of the Company's subsidiaries is the local currency
in which each subsidiary is located. Transactions in foreign currencies are
translated at the exchange rate in effect at the date of each transaction.
Differences in exchange rates during the period between the date a transaction
denominated in a foreign currency is consummated and the date on which it is
either settled or translated are recognized in the statement of operations.

     The financial statements of foreign subsidiaries are translated into U.S.
Dollars using the current-rate method. Accordingly, assets and liabilities
denominated in foreign currencies are translated at rates of exchange in effect
at the balance sheet date. Revenues and expenses are translated at average rates
of exchange in effect during the year. Differences arising from the translation
are recorded to accumulated other comprehensive income (loss).

     The foreign currency exchange gain or loss recognized in the statements of
operation and included in "Selling, general and administrative expenses" was a
gain of $1,207,000 for the 52 weeks ended December 30, 2001, a loss of $41,000
for the 53 weeks ended December 31, 2000, a loss of $13,000 for the period from
September 20, 1999 to December 26, 1999 and a loss of $34,000 for the period
from December 26, 1998 to September 19, 1999.

 Revenue Recognition

     Many of the Company's contracts are fixed-price contracts over one year in
duration. Revenue for such contracts is recorded in accordance with the American
Institute of Certified Public Accountants (AICPA) "Statement of Position (SOP)
81-1 Accounting for Performance of Construction-Type and Certain Production-Type
Contracts." Revenue is recognized as costs are incurred and includes estimated

                                       F-8
<PAGE>
                         INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

earned fees or profits calculated on the basis of the relationship between costs
incurred and total estimated costs (cost-to-cost type of
percentage-of-completion method of accounting). The Company also has contracts
with a duration of less than one year. Revenue is recognized on these contracts
in accordance with contract terms as services are provided. The Company
recognizes revenue related to contract modifications when realization is assured
and the amounts can be reasonably determined.

     The Company follows the guidance in the Securities and Exchange
Commission's Staff Accounting Bulletin No. 101 (SAB 101) on revenue recognition.
SAB 101 states that revenue should be recognized when all four of the following
conditions exist: persuasive evidence of an arrangement exists; services have
been rendered or delivery has occurred; the price is fixed or determinable; and
collectibility is reasonably assured. When estimated contract costs indicate
that a loss will be incurred on a contract, the entire loss is provided for in
such period.

     The Company routinely subcontracts with third party investigators in
connection with multi-site clinical trials and with other third party service
providers for laboratory analysis and other specialized services. Costs
associated with contracting with third party investigators are excluded from net
service revenue where they are the responsibility of the client and they are
passed through to clients without any mark up and are not recorded in revenues
or expenses.

  Earnings (Loss) Per Share

     Earnings (loss) per share is computed in accordance with FAS 128, "Earnings
per Share." FAS 128 requires presentation of both Basic Earnings per Share
(Basic EPS) and Diluted Earnings per Share (Diluted EPS). Basic EPS is based on
the weighted average number of shares of common stock outstanding during the
year while Diluted EPS also includes the dilutive effect of common stock
equivalents. The number of common stock equivalents not reflected in Diluted EPS
because they were anti-dilutive were 1,245,662 in 2001, 230,868 in 2000 and nil
in 1999.

  Cash and Cash Equivalents

     Cash and cash equivalents include demand deposits and money market accounts
held with a financial institution. The Company considers all highly liquid
investments with a maturity of three months or less when purchased to be cash
equivalents.

  Unbilled Receivables and Advance Billings

     Billings are generally determined by contractual provisions that include
predetermined date-certain payment schedules (which may include payment at or
near the time the trial is initiated), the achievement of negotiated performance
requirements or milestones, or the submission of required billing detail.
Unbilled receivables arise from those contracts under which billings are
rendered upon the achievement of certain negotiated performance requirements or
on a date-certain basis and services rendered exceed billings. The Company
expects to bill and collect these unbilled receivables within one year of
revenue recognition. Advance billings represent contractual billings for
services not yet rendered.

  Concentration of Credit Risk

     Financial instruments which potentially expose the Company to credit risk
include unsecured accounts receivable. Concentrations of credit risk on accounts
receivable is limited due to the large number of clients. Additionally, the
Company maintains allowances for potential credit losses and credit losses
incurred have not exceeded management's expectations. The Company's exposure to
credit loss in the event that payment is not received for revenue recognized
equals the outstanding accounts receivable and unbilled services balance.

                                       F-9
<PAGE>
                         INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Inventories

     Inventories which comprise consumables and supplies are stated at the lower
of cost and net realizable value. Cost is generally determined using the
first-in, first-out method.

  Property, Plant and Equipment

     Property, plant and equipment are stated at cost.

     Maintenance repairs and minor renewals are charged to expense as incurred.
Major renewals and betterments are capitalized and depreciated over their
estimated useful lives. When assets are retired or otherwise disposed of, the
cost is removed from the asset account and the corresponding accumulated
depreciation is removed from the related reserve account. Any gain or loss
resulting from such retirement or disposal is included in current income.

     Depreciation is provided on a straight-line basis over the estimated useful
economic lives of the assets as set out below:

<Table>
<Caption>

<S>                            <C>  <C>
Land                           --   not depreciated
Buildings                      --   40 years
Leasehold improvements         --   over the term of the lease
Machinery and equipment        --   5 to 10 years
Office furniture and machines  --   3 to 10 years
Vehicles                       --   3 to 5 years
</Table>

  Intangible Assets

     Intangible assets comprise goodwill and the value of the assembled
workforce of acquired businesses. Goodwill, which represents the excess of the
consideration given over the fair value of the identifiable assets and
liabilities acquired is capitalized and written off on a straight line basis
over its useful economic life, which is twenty years, in accordance with APB
Opinion No. 17. Enterprise level goodwill is assessed for impairment based on
estimated discounted cashflows in accordance with APB opinion 17. Other
intangible assets are capitalized and written off on a straight line basis over
their useful economic lives of 8 years.

  Impairment of Long-Lived Assets

     The Company evaluates long-lived assets and intangibles other than goodwill
for impairment whenever events or changes in circumstances indicate that the
value of an asset may not be recoverable. An impairment loss is recognized when
estimated undiscounted future cash flows expected to result from the use of the
asset and its eventual disposal are less than its carrying amount including any
attributable goodwill. In such instances, the carrying value of long-lived
assets is reduced to the estimated fair value, as determined using an appraisal
or discounted cash flow analysis, as appropriate.

  Income Taxes

     Income taxes are accounted for under the liability method in accordance
with FAS 109, "Accounting for Income Taxes." Deferred tax assets and liabilities
are determined based on differences between the financial reporting and tax
basis of assets and liabilities and are measured using the enacted tax rates and
laws that will be in effect when the differences are expected to reverse.
Deferred tax assets are reduced by a valuation allowance to the extent that it
is more likely than not that a portion of the asset will not be realized.

                                       F-10
<PAGE>
                         INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Stock-Based Compensation

     The Company accounts for stock-based awards to employees using the
intrinsic value method prescribed in APB Opinion No. 25, "Accounting for Stock
Issued to Employees." Compensation cost for stock options granted to employees
is based on the excess of the quoted market price of the Company's stock on the
measurement date over the amount an employee must pay to acquire the stock (the
"intrinsic value") and is recognized over the vesting period. The intrinsic
value of the options for which the measurement date has not been reached is
measured on the basis of the current market value of the Company's stock at the
end of each period. No compensation cost is recognized in respect of options
where the vesting of the options is conditional upon the listing of the
Company's shares on a recognized stock exchange, prior to the condition being
met. Once the condition has been met, the compensation expense will be recorded
in full on the date when the condition is satisfied.

  Research and Development

     Many of the Company's activities are directed towards the performance of
research on behalf of its clients and the Company is continually improving its
scientific methods and techniques. All costs relating to the performance of
client projects are expensed as incurred and there are no significant levels of
expenditure on research and development on the Company's own behalf.

  Derivative and Financial Instruments

     Foreign exchange forward contracts are legal agreements between two parties
to purchase and sell foreign currency for a specified price, with delivery and
settlement in the future. During the periods covered by the financial statements
the Company did not have any foreign currency derivative instruments and did not
engage in any foreign currency hedging activities.

     It is the strategy of the Company to enter into derivative contracts to
hedge exposure to variability in cash flows for floating rate financial
instruments and forecasted transactions, which primarily include the rollover of
short-term assets and liabilities and loan repayments. Interest rate cap and
collar and swaps are the most common instruments used to reduce the impact of
interest rate changes on future earnings.

     Until December 31, 2000, the premium paid for the interest rate cap and
collar transaction was deferred and amortized to income on a straight-line basis
over the term of the contract. The benefits or losses of the cap and collar
contract were recognized as they were received ("synthetic instrument
accounting").

     On January 1, 2001, the Company adopted FAS 133, which establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts and used for hedging
activities. All derivatives, whether designated for hedging relationships or
not, are required to be recorded on the balance sheet at fair value. If the
derivative is designated as a fair value hedge, all changes in the fair value of
the derivative and changes in the fair value of the hedged item attributable to
the hedged risk are recognized in earnings. If the derivative is designated as a
cash flow hedge, the effective portions of the changes in the fair value of the
derivative are recorded in other comprehensive income and are recognized in the
statement of operations when the hedged item affects earnings. The ineffective
portions of both fair value and cash flow hedges are immediately recognized in
earnings.

     The adoption of FAS 133 resulted in recording the fair value of the cap and
collar transaction at fair value and writing off the remaining unamortized
premium to other comprehensive income. The impact of this, net of deferred
taxes, was a charge of $135,000 to other comprehensive income.

                                       F-11
<PAGE>
                         INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Because of hedge ineffectiveness and management's decision no longer to
apply hedge accounting but to continue to enter into economic hedges to support
certain business strategies, adoption of FAS 133 may cause volatility in
quarterly earnings in the future.

     Following adoption of FAS 133, the interest rate cap and collar
transactions are accounted for at fair value, being the premium paid at the
inception date, and marking to market (fair value) any differences between
periods through the statement of operations at the end of each reporting period.
Swap contracts are recorded at fair value and any differences between periods
are recorded through the statement of operations at the end of each reporting
period.

  Debt Issuance Costs

     Debt issuance costs relating to the Company's bank loans and unsecured
fixed rate debt are deferred and amortized to interest expense using the
effective interest method over the respective terms of the debt concerned.

  Grant Income

     The European operations of ClinTrials has received two grants from the
Scottish Executive relating to projects to establish a clinical data management
operation in Glasgow. The grants concerned are Regional Selective Assistance
grants for pounds sterling 550,000 relating to the establishment of clinical
data management facilities in Glasgow, leasing premises and creating 98
permanent full time jobs, and for pounds sterling 100,000 for the development of
clinical data management systems and creating 20 permanent full time jobs. The
grants concerned can be claimed in stages once certain targets relating to
completion of the project have been achieved. The principal targets relate to
the number of jobs created, commitments for leasing of assets under operating
leases and other expenditures.

     Grant income is recognized at the point of receipt of each stage payment
subject to the conditions for receiving the payment still being met. Grant
income totalling pounds sterling 310,000 was recognized by the subsidiary in the
periods prior to its acquisition by the Company. No grant income has been
recognized in 2001, nor by the Company and its subsidiaries in any prior period
covered by these financial statements.

     The grants can potentially be reclaimed by the Scottish Executive within 18
months of the final stage payment in the case of the first grant or 36 months of
the final stage payment in the case of the second grant if the conditions for
receiving the grant are not maintained. In the event that, subsequent to
receiving a payment, the conditions for claiming a grant are no longer met, the
Company provides for its best estimate of the potential repayment of the grant
until such time as the period for potential repayment has expired. Management do
not believe that repayment of any grant recognized to date will be necessary.

  Recent Accounting Pronouncements

     In July 2001, the Financial Accounting Standards Board ("FASB") issued FAS
141, "Business Combinations," and FAS 142, "Goodwill and Other Intangible
Assets." FAS 141 requires that the purchase method of accounting be used for all
business combinations initiated after June 30, 2001. FAS 141 also specifies the
criteria that intangible assets acquired in a purchase method business
combination must meet to be recognized and reported apart from goodwill, noting
that any purchase price allocable to an assembled workforce may not be accounted
for separately. FAS 142 will require that goodwill and intangible assets with
indefinite useful lives no longer be amortized, but instead will be tested for
impairment at least annually in accordance with the provisions of FAS 142. FAS
142 will also require that intangible assets with definite useful lives be
amortized over their respective estimated useful lives to their

                                       F-12
<PAGE>
                         INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

estimated residual values, and reviewed for impairment in accordance with FAS
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of."

     FAS 142 is effective from January 1, 2002. Furthermore, any goodwill and
any intangible asset determined to have an indefinite useful life that is
acquired in a purchase business combination completed after June 30, 2001 will
not be amortized, but instead tested for impairment at least annually in
accordance with the provisions of FAS 142. Goodwill and intangible assets
acquired in business combinations completed before July 1, 2001 have continued
to be amortized prior to the effective date of FAS 142.

     On adoption of FAS 142 the net book value of the intangible assets relating
to the assembled workforce net of deferred tax will transfer to goodwill. Had
FAS 142 been applied from January 1, 2001 the amortization expense in 2001 would
have been reduced by approximately $7.91 million from the level it was under the
old standards.

     In June 2001, the FASB issued FAS 143, "Accounting for Asset Retirement
Obligations." FAS 143 requires the fair value of a liability for asset
retirement obligations to be recognized in the period in which it is incurred if
a reasonable estimate of the fair value can be made. The associated asset
retirement costs are capitalized as part of the carrying amount of the related
long-lived asset.

     FAS 143 is effective for financial statements issued for fiscal years
beginning after June 15, 2002. The Company has not yet assessed the potential
impact of the adoption of FAS 143.

     In August 2001, the FASB issued FAS 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." FAS 144 establishes a single accounting model
for long-lived assets to be disposed of by sale consistent with the fundamental
provisions of FAS 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of." While it supersedes APB Opinion 30,
"Reporting the Results of Operations -- Reporting the Effects of the Disposal of
a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions." FAS 144 retains the presentation of discontinued
operations but broadens that presentation to include a component of an entity
(rather than a segment of a business). However, discontinued operations are no
longer recorded at the net realizable value and future operating losses are no
longer recognized before they occur. Under FAS 144, there is no longer a
requirement to allocate goodwill to long-lived assets to be tested for
impairment. It also establishes a probability weighted cash flow estimation
approach to deal with situations in which there is a range of cash flows that
may be generated by the asset being tested for impairment. FAS 144 also
establishes criteria for determining when an asset should be treated as held for
sale.

     FAS 144 is effective for fiscal years beginning after December 15, 2001 and
interim periods within those fiscal years, with early application encouraged.
The provisions of FAS 144 are generally to be applied prospectively. The Company
currently has no plans to dispose of any operations and, accordingly, does not
anticipate that adoption of FAS 144 will have any material impact on its results
of operations or its financial position.

3. BUSINESS ACQUISITIONS

     The Company made two significant acquisitions during the three year period
ended December 30, 2001. Both acquisitions have been accounted for under the
purchase method of accounting. The results of operations are included from the
date of acquisition for the acquisition of ClinTrials Research Inc. on April 5,
2001. In the case of the September 20, 1999 acquisition of SGS Health Sector
Services Holdings Limited and Inveresk Research North America, Inc. by Inveresk
Research Group Limited, the accompanying financial statements present the
results of operations of the acquired businesses under their

                                       F-13
<PAGE>
                         INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

previous ownership structure. This is because Inveresk Research Group Limited
was not incorporated until July 1999 and had not traded prior to completing the
acquisition on September 20, 1999.

     On April 5, 2001, the Company acquired the whole of the outstanding stock
of ClinTrials Research Inc. for cash of $120.8 million. The estimated fair value
of assets acquired and liabilities assumed are summarized below:

<Table>
<S>                                                           <C>       <C>
Allocation of purchase price:
Net current assets (including cash of $5,700)...............            $  1,201
Property, plant and equipment...............................              37,353
Intangible assets
  Assembled Workforce.......................................  22,050
  Goodwill..................................................  73,649
                                                              ------    --------
                                                                          95,699
Deferred taxation liabilities...............................             (13,183)
Long term liabilities.......................................                (223)
                                                                        --------
Purchase price..............................................            $120,847
                                                                        ========
</Table>

     Tax losses at the acquisition date amounted to approximately $45 million.

     The following selected unaudited pro forma consolidated results of
operations are presented as if the acquisition had occurred as of the beginning
of the period immediately preceding the period of acquisition after giving
effect to certain adjustments for the amortization of goodwill, interest costs
relating to the financing of the acquisition and related income tax effects. The
pro forma data is for information purposes only and does not necessarily reflect
the results of operations had the companies operated as one during the period.
No effect has been included for synergies, if any, that may have been realized
through the acquisition.

<Table>
<Caption>
                                                                2001        2000
                                                              --------    --------
<S>                                                           <C>         <C>
Net service revenue.........................................  $180,553    $170,865
Gross profit................................................    80,379      71,714
Income from operations......................................    11,373       2,143
(Loss) before tax...........................................    (8,631)    (16,738)
Net income (loss)...........................................   (10,719)    (18,023)
  Loss per share............................................  $  (0.46)   $  (1.05)
                                                              ========    ========
</Table>

     Provision was made at acquisition for restructuring of the European
Clinical operation of ClinTrials Research Inc. This was based upon a plan
formulated at acquisition, approved by the directors of the Company in August
2001 and wholly implemented in 2001. The plan involved reducing the headcount in
the acquired business, relocating certain functions from Maidenhead in England
to various locations in Scotland and vacating office space in Maidenhead. The
movement on the restructuring provision was:

<Table>
<S>                                                           <C>
Amount established at acquisition...........................  $3,416
Utilized during 2001........................................   2,251
                                                              ------
Balance accrued at December 30, 2001........................  $1,165
</Table>

     The provision established at acquisition comprised $1.7 million in respect
of severance payments to 74 people in the statistical and data management and
various administrative functions, $1.3 million relating to rental and services
costs on the surplus space vacated at Maidenhead, $0.3 million relating to
dilapidations on the Maidenhead property and $0.1 million of other expenditures.
The residual balance

                                       F-14
<PAGE>
                         INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

accrued at December 30, 2001 of $1.165 million primarily relates to future lease
obligations on the vacated Maidenhead property.

     On September 20, 1999, the Company acquired SGS Health Sector Services
Holdings Limited and Inveresk Research North America, Inc. for a cash
consideration of $87,872. The estimated fair value of the assets acquired and
liabilities assumed are summarized below:

<Table>
<S>                                                           <C>       <C>
Allocation of purchase price:
Net current assets (including cash of $9,080)...............            $  1,724
Property, plant and equipment...............................              50,009
Other non-current assets....................................                  41
Intangible assets
  Assembled Workforce.......................................   9,587
  Goodwill..................................................  46,260
                                                              ------    --------
                                                                          55,847
Deferred taxation liabilities...............................             (16,206)
Defined benefit pension scheme obligation...................              (3,543)
                                                                        --------
Purchase price..............................................            $ 87,872
                                                                        ========
</Table>

     The following selected unaudited pro forma consolidated results of
operations are presented as if the acquisition had occurred as of the beginning
of the period immediately preceding the period of acquisition after giving
effect to certain adjustments for the amortization of goodwill, interest costs
relating to the financing of the acquisition and related income tax effects. The
pro forma data is for information purposes only and does not necessarily reflect
the results of operations had the companies operated as one during the period.
No effect has been included for synergies, if any, that may have been realized
through the acquisition.

<Table>
<Caption>
                                                               1999       1998
                                                              -------    -------
<S>                                                           <C>        <C>
Net service revenue.........................................  $63,920    $58,219
Gross profit................................................   27,098     26,403
Income from operations......................................    6,844      5,884
(Loss) before tax...........................................   (1,170)    (2,433)
Net (loss)..................................................   (2,168)    (2,344)
                                                              =======    =======
</Table>

     Pro forma earnings per share data is not provided since, for the reason
explained in Note 4, it is not meaningful to provide earnings per share data for
periods prior to September 20, 1999.

     Goodwill and other intangibles related to these acquisitions has been
amortized for the period from acquisition to December 30, 2001 over their
established lives which range from 8 to 20 years. As described in the intangible
assets section of Note 2, goodwill will not be amortized after January 1, 2002,
but will be subject to impairment reviews.

4. EARNINGS (LOSS) PER SHARE

     As more fully described under the Basis of Preparation section of Note 1,
the accompanying financial statements reflect the capital structure of Inveresk
Research Group Limited, which was significantly different from the capital
structure of the Company after the change of ultimate parent company described
in Note 1. As a result, the presentation of historical earnings per share data
using the Inveresk Research Group Limited capital structure prior to the
reorganization would not be meaningful and has not been included herein. Rather,
historical earnings (loss) per share has been computed assuming the historical

                                       F-15
<PAGE>
                         INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

outstanding shares in Inveresk Research Group Limited were converted to common
stock in Inveresk Research Group, Inc. using a weighted average conversion rate
derived from the conversion ratios which will apply when the change of ultimate
parent company becomes effective. For the period December 28, 1998 to September
19, 1999 the business was carried out by SGS Health Services Holdings Limited
and Inveresk Research North America Inc., which were owned by SGS Societe
Generale de Surveillance SA. The financial information for this period
represents the combined financial statements of these entities. Accordingly it
is not meaningful to present earnings per share data for this period.

5. SHAREHOLDERS' EQUITY

     As described in Note 1 in more detail, there will be a change of ultimate
parent company prior to the offering becoming effective. The share capital of
Inveresk Research Group Limited will be exchanged for common stock in Inveresk
Research Group, Inc. on the basis described in the section of the prospectus
entitled "Change in Ultimate Parent."

     The capital structure is as follows:

<Table>
<Caption>
                                                             DECEMBER 30,    DECEMBER 31,
                                                                 2001            2000
                                                             ------------    ------------
<S>                                                          <C>             <C>
Preferred shares of common stock, $0.01 par value
  10,000,000 authorized, none issued.......................      $ --            $ --
Ordinary shares of common stock, $0.01 par value
  150,000,000 authorized; issued and fully-paid 25,500,120
  and 17,171,327 at December 30, 2001 and December 31,
  2000.....................................................       255             172
                                                                 ----            ----
                                                                 $255            $172
                                                                 ====            ====
</Table>

     The increase of 8,328,793 ordinary shares of common stock during 2001
represents new shares issued for a consideration of $388,000.

6. PROPERTY, PLANT AND EQUIPMENT

     The composition of property, plant and equipment is as follows:

<Table>
<Caption>
                                                             DECEMBER 30,    DECEMBER 31,
                                                                 2001            2000
                                                             ------------    ------------
<S>                                                          <C>             <C>
Land, buildings and leasehold improvements.................    $ 79,394        $ 53,220
Plant and equipment........................................      76,291          31,810
                                                               --------        --------
                                                                155,685          85,030
Less accumulated depreciation..............................     (67,763)        (36,271)
                                                               --------        --------
                                                               $ 87,922        $ 48,759
                                                               ========        ========
</Table>

     Included in plant and equipment are assets with a cost of $2,013,000 which
are the subject of capital leases.

                                       F-16
<PAGE>
                         INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. INTANGIBLE ASSETS

<Table>
<Caption>
                                                             DECEMBER 30,    DECEMBER 31,
                                                                 2001            2000
                                                             ------------    ------------
<S>                                                          <C>             <C>
Goodwill...................................................    $115,709        $42,597
Workforce..................................................      30,831          8,828
                                                               --------        -------
                                                                146,540         51,425
Less accumulated amortization..............................     (12,023)        (4,152)
                                                               --------        -------
                                                               $134,517        $47,273
                                                               ========        =======
</Table>

8. ACCRUED EXPENSES

     The composition of accrued expenses is as follows:

<Table>
<Caption>
                                                             DECEMBER 30,    DECEMBER 31,
                                                                 2001            2000
                                                             ------------    ------------
<S>                                                          <C>             <C>
Restructuring provision in respect of European Clinical
  operations...............................................    $ 1,165          $   --
Fair value of Canadian $ interest rate swap................      1,763              --
Fair value of pounds sterling interest rate swap...........        218              --
Interest accrued on bank loans and interest rate swaps.....      2,956              18
Other accrued expenses.....................................     15,418           4,734
                                                               -------          ------
                                                               $21,520          $4,752
                                                               =======          ======
</Table>

9. CREDIT FACILITIES AND DEBT

     The Company has issued L71,772,000 (equal to $104,500,000 at December 30,
2001) unsecured subordinated loan stock, which is repayable at face value plus
accrued interest on the earlier of the date of listing of the Company's stock on
a recognized investment exchange, the date of sale of 50% or more of the
Company's issued equity share capital, or June 30, 2008. This loan stock
accumulates interest at 10% of the principal balance per annum, which is not
payable until redemption. It is not practicable to estimate the fair value of
the loan stock because it is held by the Company's principal shareholder and
because its repayment date is dependent upon uncertain future events.
Accordingly, it is carried at its original historic cost.

     The Company has bank loan facilities amounting to $109,278,000 which are
secured by a charge on the Company's assets. Of the above loan facilities $46.75
million are denominated in US$, L36.35 million (equal to $52.92 million at
December 30, 2001) are denominated in pounds sterling and C$15.3 million (equal
to $9.61 million at December 30, 2001) are denominated in Canadian Dollars.
$79.89 million of the facilities bear interest at LIBOR plus 2.25% and the
remaining $29.39 million bears interest at LIBOR plus 2.75%. The facilities are
repayable according to repayment schedules applicable to each part of the
facility between June 30, 2002 and December 31, 2008.

     The related Facilities Agreement contains certain financial covenants,
including but not limited to, covenants related to Minimum Net Worth, Minimum
Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA") to
Total Interest Charges, Maximum Senior Debt to EBITDA and Minimum Cash Flow to
Debt Service. These covenants are calculated with reference to the combined
financial results/statements of certain, but not all, of its consolidated
subsidiaries. The Company is in compliance with these covenants.

                                       F-17
<PAGE>
                         INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The extraordinary item of $419,000 in 2001 represents extinguishment of
debt issue costs of $593,000 net of income taxes of $174,000 relating to the
Company's previous bank debt facilities which were refinanced at the time of the
acquisition of ClinTrials Research Inc.

     The Company has entered into three transactions to hedge its exposure to
fluctuating interest rates.

     On December 20, 1999, the Company entered into an interest rate cap and
collar transaction for a cost of pounds sterling 172,972. This transaction
covers the period from December 20, 1999 to December 31, 2002 and related to
pounds sterling 16.2 million initially, reducing to pounds sterling 15.75
million on June 30, 2000, pounds sterling 15.3 million on December 29, 2000,
pounds sterling 14.7 million on June 29, 2001, pounds sterling 14.1 million on
December 31, 2001 and pounds sterling 13.35 million on June 28, 2002. Under the
terms of the agreement, the Company is compensated if LIBOR exceeds 7.5% but is
required to make payments if LIBOR falls below 5.0%. The estimated fair value is
based on the quoted market prices. At December 30, 2001, the fair value was
estimated to be a liability of $134,000. These unrealized losses have been
recorded as additional interest costs in the 52 week period ended December 30,
2001.

     On July 5, 2001, the Company entered into two interest rate swap
transactions to hedge its exposure to interest rate fluctuations. These
agreements did not require an initial investment by the Company. Net settlements
to be received or paid under the agreements are reflected as adjustments to
interest expense. Additionally, included in interest expense for the year ended
December 31, 2001 are unrealized losses of $1,982,000 related to these swap
agreements that were incurred in the year. The two swaps have notional amounts
as follows:

<Table>
<Caption>
                                                               POUNDS
                                                              STERLING
                                                              --------
<S>                                                           <C>
July 5, 2001 -- December 31, 2001...........................    5.6m
December 31, 2001 -- June 30, 2002..........................    6.0m
June 30, 2002 -- December 31, 2002..........................    5.1m
December 31, 2002 -- June 30, 2003..........................   17.3m
June 30, 2003 -- December 31, 2003..........................   16.2m
December 31, 2003 -- June 30, 2004..........................   14.7m
</Table>

<Table>
<Caption>
                                                              CANADIAN
                                                              DOLLARS
                                                              --------
<S>                                                           <C>
July 5, 2001 -- December 30, 2001...........................    60m
December 30, 2001 -- June 30, 2002..........................    60m
June 30, 2002 -- December 30, 2002..........................    55m
December 30, 2002 -- June 30, 2003..........................    55m
June 30, 2003 -- December 30, 2003..........................    50m
December 30, 2003 -- June 30, 2004..........................    45m
</Table>

     The Company pays a fixed rate 6.03% on the pounds sterling amounts and
5.41% on the Canadian Dollar amounts and receives a floating rate amount equal
to GBP LIBOR and CAD LIBOR. These agreements expire on June 30, 2004.

                                       F-18
<PAGE>
                         INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. LEASES AND CAPITAL COMMITMENTS

  Operating leases

     The Company leases office space and office equipment under various
operating leases. Minimum rental commitments payable in future years under
operating leases having initial or remaining noncancellable terms of one year or
more at December 31 are as follows (in thousands):

<Table>
<S>                                                          <C>
2002.......................................................  $ 6,138
2003.......................................................    5,427
2004.......................................................    4,803
2005.......................................................    4,543
2006.......................................................    4,290
Thereafter.................................................   27,183
                                                             -------
Total minimum rentals......................................   52,384
Less minimum rentals due under noncancellable subleases....   (1,604)
                                                             -------
                                                             $50,780
                                                             =======
</Table>

     Rent expense is comprised of the following:

<Table>
<Caption>
                                                    SUCCESSOR                       PREDECESSOR
                                  ---------------------------------------------    -------------
                                    52 WEEKS        53 WEEKS      SEPTEMBER 20,    DECEMBER 28,
                                     ENDED           ENDED           1999 TO          1998 TO
                                  DECEMBER 30,    DECEMBER 31,    DECEMBER 26,     SEPTEMBER 19,
                                      2001            2000            1999             1999
                                  ------------    ------------    -------------    -------------
<S>                               <C>             <C>             <C>              <C>
Minimum rentals.................     $5,466           $165             $39             $100
Less sublease rentals...........       (670)            --              --               --
                                     ------           ----             ---             ----
                                     $4,796           $165             $39             $100
                                     ======           ====             ===             ====
</Table>

  Capital leases

     The Company has capital lease obligations relating to scientific machinery,
vehicles and office equipment. The Company's commitments under capital leases
are:

<Table>
<S>                                                           <C>
2002........................................................  $198
2003........................................................   175
2004........................................................   151
2005........................................................    40
Thereafter..................................................    --
                                                              ----
                                                              $564
                                                              ====
</Table>

  Capital commitments

     The Company has commitments in relation to capital expenditure amounting to
$6.22 million at December 30, 2001.

                                       F-19
<PAGE>
                         INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. INCOME TAXES

     Significant components of the Company's deferred tax liabilities and assets
are as follows:

<Table>
<Caption>
                                                             DECEMBER 30,    DECEMBER 31,
                                                                 2001            2000
                                                             ------------    ------------
<S>                                                          <C>             <C>
Deferred tax assets:
Defined benefit pension obligation.........................    $  1,416        $    929
Federal and state net operating losses.....................      11,425             289
Foreign net operating losses...............................       2,400              --
Interest rate swaps........................................         658              --
                                                               --------        --------
Total deferred tax assets..................................      15,899           1,218
Valuation allowance for deferred tax assets................     (13,825)           (289)
                                                               --------        --------
Net deferred tax assets....................................    $  2,074        $    929
Deferred tax liabilities:
Property, plant and equipment..............................     (21,938)        (13,325)
Assembled workforce........................................      (6,884)         (2,224)
Unbilled receivables.......................................        (864)           (493)
                                                               --------        --------
Net deferred tax liabilities...............................    $(27,612)       $(15,113)
                                                               ========        ========
</Table>

     The balance sheet classification of the net deferred tax liabilities is as
follows:

<Table>
<Caption>
                                                             DECEMBER 30,    DECEMBER 31,
                                                                 2001            2000
                                                             ------------    ------------
<S>                                                          <C>             <C>
Current deferred tax liabilities...........................    $   (559)       $   (493)
Net noncurrent deferred tax liabilities....................     (27,053)        (14,620)
                                                               --------        --------
Net deferred tax liabilities...............................    $(27,612)       $(15,113)
                                                               ========        ========
</Table>

     For financial reporting purposes, profit (loss) before income taxes
includes the following components:

<Table>
<Caption>
                                                          SUCCESSOR
                                       ------------------------------------------------     PREDECESSOR
                                         52 WEEKS        53 WEEKS                          DECEMBER, 28
                                          ENDED           ENDED         SEPTEMBER 20,         1998 TO
                                       DECEMBER 30,    DECEMBER 31,    1999 TO DECEMBER    SEPTEMBER 19,
                                           2001            2000            26, 1999            1999
                                       ------------    ------------    ----------------    -------------
<S>                                    <C>             <C>             <C>                 <C>
Profit (loss) before income taxes:
  United States......................    $(2,920)         $(367)             $ (9)            $  (26)
  Foreign............................      1,045            633               212              6,391
                                         -------          -----              ----             ------
                                         $(1,875)         $ 266              $203             $6,365
                                         =======          =====              ====             ======
</Table>

     The Company's Canadian subsidiary qualifies for Federal and Quebec
Scientific Research and Development deductions and tax credits. Expenditures on
certain capital assets are fully deductible or may be carried forward
indefinitely until utilized. The tax credits are equal to 30% of certain capital
and current expenditures. The Federal tax credits are accounted for using the
flow through method, in which the Federal credits are recognized as a reduction
of income taxes in the year the credit arises. Quebec tax credits are reported
as a component of operating income in the income statement, rather than as a
reduction of income tax expense. The only period in which this is relevant is
the 52 week period ended December 30, 2001 where $1.8 million of Quebec tax
credits were offset against direct costs in the statements of operations.

                                       F-20
<PAGE>
                         INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Provision has not been made for United States or additional foreign taxes
on undistributed earnings of foreign subsidiaries as those earnings have been
permanently reinvested and the Company has no plans in the foreseeable future to
remit these earnings to the United States.

     Significant components of the provision (benefit) for income taxes are as
follows:

<Table>
<Caption>
                                                    SUCCESSOR                       PREDECESSOR
                                  ---------------------------------------------    -------------
                                    52 WEEKS        53 WEEKS      SEPTEMBER 20,    DECEMBER 28,
                                     ENDED           ENDED           1999 TO          1998 TO
                                  DECEMBER 30,    DECEMBER 31,    DECEMBER 26,     SEPTEMBER 19,
                                      2001            2000            1999             1999
                                  ------------    ------------    -------------    -------------
<S>                               <C>             <C>             <C>              <C>
Current:
  Foreign.......................    $ 1,839           $243            $ 588           $1,614
Deferred:
  Foreign.......................      2,011            439             (263)             694
  Foreign Research and
     Development tax credits....     (1,801)            --               --               --
                                    -------           ----            -----           ------
Provision for income taxes......    $ 2,049           $682            $ 325           $2,308
                                    =======           ====            =====           ======
</Table>

     There are no amounts in respect of U.S. Federal, State and local current or
deferred taxes.

     The Company's consolidated effective tax rate differed from the U.S.
Federal statutory rate as set forth below:

<Table>
<Caption>
                                                    SUCCESSOR                        PREDECESSOR
                                 ------------------------------------------------   -------------
                                   52 WEEKS       53 WEEKS       SEPTEMBER 20,      DECEMBER 28,
                                    ENDED          ENDED            1999 TO            1998 TO
                                 DECEMBER 30,   DECEMBER 31,      DECEMBER 26,      SEPTEMBER 19,
                                     2001           2000              1999              1999
                                 ------------   ------------   ------------------   -------------
<S>                              <C>            <C>            <C>                  <C>
U.S. Federal statutory rate....    $  (928)        $  93              $ 71             $2,228
Canadian Research and
  Development tax credits......     (1,801)           --                --                 --
Amortization of excess of
  purchase price over net
  assets acquired..............      1,156           648               199                 73
Difference between foreign
  income taxed at U.S. Federal
  statutory rates and foreign
  income tax expense...........        776           (32)              (11)              (320)
Increase in U.S. Federal
  valuation allowance..........      1,103           128                 3                  9
Increase in valuation allowance
  against losses of foreign
  subsidiaries.................      1,247            --                --                 --
Other..........................        496          (155)               63                318
                                   -------         -----              ----             ------
                                   $ 2,049         $ 682              $325             $2,308
                                   =======         =====              ====             ======
</Table>

     A valuation allowance has been established for the amount of United States
deferred tax assets primarily related to the Company's potential tax benefit
associated with loss carryforwards. At December 30, 2001, the Company had
approximately $32.6 million of U.S. Federal net operating loss carryforwards
which begin to expire in 2018. Foreign tax losses available for offset against
future profits of the business in which they arose amount to approximately $8
million.

                                       F-21
<PAGE>
                         INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

12. STOCK OPTION PLANS AND WARRANTS

     On the basis that the change of ultimate parent company has occurred, at
December 30, 2001, the Company had issued options over 1,245,662 ordinary shares
of common stock to employees of the Company under unapproved UK share option
arrangements. The objectives of these arrangements include attracting and
retaining personnel and promoting the success of the Company by providing
employees with the opportunity to acquire shares.

     The option rights entitle the bearer to purchase shares in Inveresk
Research Group, Inc. at prices ranging from $0.02 to $0.37 per ordinary share.

     The options can only be exercised upon completion of the listing of the
Company's shares on a recognized stock exchange.

     A summary of the shares of common stock that are the subject of options is
as follows:

<Table>
<Caption>
                                                              ORDINARY
                                                               SHARES
                                                              ---------
<S>                                                           <C>
Outstanding at December 26, 1999............................         --
  Granted...................................................    235,315
  Forfeited.................................................     (4,447)
                                                              ---------
Outstanding at December 31, 2000............................    230,868
  Granted...................................................  1,028,771
  Forfeited.................................................    (13,977)
                                                              ---------
Outstanding at December 30, 2001............................  1,245,662
                                                              =========
</Table>

     The Company intends to continue to award options in future years and
          common stock in Inveresk Research Group, Inc are available for this
purpose.

     The following table summarizes the options outstanding at December 31,
2001:

<Table>
<Caption>
NO. OF OPTIONS OUTSTANDING
---------------------------
ORDINARY       EXERCISE
 SHARES          PRICE
--------    ---------------
<S>         <C>
  320,880   $0.02 per share
  221,974   $0.18 per share
  327,600   $0.19 per share
  375,208   $0.37 per share
---------
1,245,662
=========
</Table>

     Further options have been issued since December 30, 2001 and certain
options have been exercised. The weighted average exercise price of options was
$0.18 per share at December 31, 2000 and $0.20 at December 30, 2001.

     Compensation costs for these grants has not been recorded because the
exercise of the options are all contingent upon the completion of a listing of
the Company's shares on a recognized stock exchange. Upon completion of such a
listing, based on a listing price of $-- per share of common stock in Inveresk
Research Group, Inc., it is envisaged that compensation expense of $-- will be
recorded.

                                       F-22
<PAGE>
                         INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

13. EMPLOYEE BENEFITS

     The Company operates both a defined contribution and a defined benefit
pension plan, covering certain qualifying employees. Contributions under defined
contribution plans are determined as a percentage of gross salary. The expense
related to these plans for the 52 weeks ended December 30, 2001 was $1,362,000
and for the 53 weeks ended December 31, 2000 and prior periods was nil.

     The Company operates funded defined benefit pension plans. The benefits
under defined benefit plans are based on years of service and salary levels.
Plan assets are primarily comprised of marketable securities. The following
provides a reconciliation of benefit obligations, plan assets and the funded
status of the defined benefit plan.

<Table>
<Caption>
                                                              SUCCESSOR                     PREDECESSOR
                                             -------------------------------------------   -------------
                                               52 WEEKS       53 WEEKS     SEPTEMBER 20,   DECEMBER 28,
                                                ENDED          ENDED          1999 TO         1998 TO
                                             DECEMBER 30,   DECEMBER 31,   DECEMBER 26,    SEPTEMBER 19,
                                                 2001           2000           1999            1999
                                             ------------   ------------   -------------   -------------
<S>                                          <C>            <C>            <C>             <C>
CHANGE IN BENEFIT OBLIGATIONS
Benefit obligation at the beginning of the
  year.....................................    $48,801        $48,130         $46,615         $42,151
Service cost...............................      2,731          2,581             686           1,778
Interest cost..............................      2,796          2,913             833           1,756
Plan participants contribution.............        899            847             219             567
Actuarial (gains) and losses...............     (1,979)          (906)            613           2,255
Amendments.................................         --             --              --             488
Benefits paid..............................     (2,201)        (1,182)           (520)         (1,350)
Foreign currency exchange rate charges.....     (1,211)        (3,582)           (316)         (1,030)
                                               -------        -------         -------         -------
Benefit obligation at the end of the
  year.....................................    $49,836        $48,801         $48,130         $46,615
                                               =======        =======         =======         =======
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of
  the year.................................    $46,490        $49,403         $43,071         $40,442
Actual return on plan assets...............     (6,183)        (1,555)          6,248           2,115
Company contributions......................      2,638          2,601             694           2,288
Plan participants contributions............        899            847             219             567
Benefits paid..............................     (2,201)        (1,182)           (520)         (1,350)
Foreign currency exchange rate charges.....     (1,229)        (3,624)           (309)           (991)
                                               -------        -------         -------         -------
Fair value of plan assets at the end of the
  year.....................................    $40,414        $46,490         $49,403         $43,071
                                               =======        =======         =======         =======
</Table>

                                       F-23
<PAGE>
                         INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The following table sets forth the funded status of the defined benefit
pension plan:

<Table>
<Caption>
                                                         SUCCESSOR                     PREDECESSOR
                                        -------------------------------------------   -------------
                                          52 WEEKS       53 WEEKS     SEPTEMBER 20,   DECEMBER 28,
                                           ENDED          ENDED          1999 TO         1998 TO
                                        DECEMBER 30,   DECEMBER 31,   DECEMBER 26,    SEPTEMBER 19,
                                            2001           2000           1999            1999
                                        ------------   ------------   -------------   -------------
<S>                                     <C>            <C>            <C>             <C>
Funded status.........................    $(9,422)       $(2,311)        $ 1,273         $(3,543)
Unrecognized net actuarial loss
  (gain)..............................      6,275           (784)         (4,821)          4,151
Unrecognized prior service cost.......         --             --              --             458
Unrecognized transitional (asset).....         --             --              --            (406)
                                          -------        -------         -------         -------
Net amount recognized.................    $(3,147)       $(3,095)        $(3,548)        $   660
Accrued (liability)...................    $(1,574)            --              --              --
                                          -------        -------         -------         -------
(Accrued) prepaid benefit cost........    $(4,721)       $(3,095)        $(3,548)        $   660
                                          =======        =======         =======         =======
</Table>

     As of December 31, 2001, the accrued benefit obligation of $49,836,000
     exceeded the plan assets by $9,422,000.

     The weighted average assumptions used are:

<Table>
<Caption>
                                                     SUCCESSOR                            PREDECESSOR
                             ----------------------------------------------------------   ------------
                             DECEMBER 30,   DECEMBER 31,   DECEMBER 26,   SEPTEMBER 20,   DECEMBER 28,
                                 2001           2000           1999           1999            1998
                             ------------   ------------   ------------   -------------   ------------
<S>                          <C>            <C>            <C>            <C>             <C>
Discount rate..............      6.0%           6.0%           6.5%            6.5%           6.0%
Expected return on plan
  assets...................      6.0%           6.0%           6.5%            6.5%           6.0%
Rate of compensation
  increase.................      4.0%           4.0%           4.5%            4.5%           4.0%
Rate of increase in
  pensions in payment......      2.0%           2.5%           3.0%            3.0%           2.5%
Price inflation............      2.0%           2.5%           3.0%            3.0%           2.5%
                                 ===            ===            ===             ===            ===
</Table>

     Net periodic pension costs for the funded defined benefit plans include the
following components:

<Table>
<Caption>
                                                         SUCCESSOR                     PREDECESSOR
                                        -------------------------------------------   -------------
                                          52 WEEKS       53 WEEKS     SEPTEMBER 20,   DECEMBER 28,
                                           ENDED          ENDED          1999 TO         1998 TO
                                        DECEMBER 30,   DECEMBER 31,   DECEMBER 26,    SEPTEMBER 19,
                                            2001           2000           1999            1999
                                        ------------   ------------   -------------   -------------
<S>                                     <C>            <C>            <C>             <C>
Service cost..........................    $ 2,731        $ 2,581          $ 686          $ 1,778
Interest cost.........................      2,796          2,913            833            1,756
Return on plan assets (expected)......     (2,759)        (3,089)          (795)          (1,747)
Amortization of transition asset......         --             --             --              (68)
Amortization of prior service cost....         --             --             --               29
                                          -------        -------          -----          -------
Benefit cost..........................    $ 2,768        $ 2,405          $ 724          $ 1,748
                                          =======        =======          =====          =======
</Table>

14. SEGMENT REPORTING

     The Company is a full-service drug development services group serving the
pharmaceutical and biotechnology industries. These drug development services
comprise two reportable operating segments -- pre-clinical and clinical.
Clinical services consist of designing, monitoring and managing trials of new
pharmaceutical and biotechnology products on humans, and providing clinical data
management, biostatistical, product registration and pharmacoeconomic services.
Clinical service activities and revenues

                                       F-24
<PAGE>
                         INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

are performed and earned primarily in the United States and Europe. The
Company's European clinical operations are performed in Maidenhead, United
Kingdom and Edinburgh, Scotland with its primary satellite offices in Brussels,
Belgium and Glasgow, Scotland. The operating results of the Company in the
individual European countries apart from the United Kingdom are immaterial.
Pre-clinical services are performed in Edinburgh, Scotland and Montreal, Quebec,
Canada.

     Financial data by segment for 2001, 2000 and 1999 are as follows:

<Table>
<Caption>
                                                     CLINICAL    PRE-CLINICAL     TOTAL
                                                     --------    ------------    --------
<S>                                                  <C>         <C>             <C>
52 WEEKS ENDED DECEMBER 30, 2001
Net service revenues from external customers.......  $ 61,124      $ 95,172      $156,296
Inter segment revenues.............................     1,841         5,867         7,708
Depreciation and amortization......................     5,583        10,355        15,938
Segment income.....................................       899        17,958        18,857
Segment assets.....................................   159,252       239,360       398,612
Long-lived assets..................................    84,805       137,634       222,439
Expenditures for long-lived assets.................       505        10,640        11,143
53 WEEKS ENDED DECEMBER 31, 2000
Net service revenues from external customers.......  $ 20,404      $ 45,136      $ 65,540
Inter segment revenues.............................       855         4,224         5,079
Depreciation and amortization......................     1,272         6,522         7,794
Segment income.....................................     3,387         6,098         9,485
Segment assets.....................................    31,509       100,572       132,081
Long-lived assets..................................    19,101        76,931        96,032
Expenditures for long-lived assets.................       479         6,313         6,792
SEPTEMBER 20, 1999 TO DECEMBER 26, 1999
Net service revenues from external customers.......  $  4,648      $ 12,184      $ 16,832
Inter segment revenues.............................       147           971         1,118
Depreciation and amortization......................       320         1,462         1,782
Segment income.....................................     1,116         1,721         2,837
Expenditures for long-lived assets, September 20 to
  December 26, 1999................................       217         1,090         1,307
DECEMBER 28, 1998 TO SEPTEMBER 19, 1999
Net service revenues from external customers.......  $ 14,564      $ 32,524      $ 47,088
Inter segment revenues.............................       397         1,593         1,990
Depreciation and amortization......................       572         3,401         3,973
Segment income.....................................     3,514         5,052         8,566
Expenditures for long-lived assets, December 28,
  1998 to September 19, 1999.......................       443         4,862         5,305
</Table>

                                       F-25
<PAGE>
                         INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table summarises net service revenues and long-lived assets by
geographic area.

<Table>
<Caption>
                                              USA      CANADA      EUROPE      TOTAL
                                            -------    -------    --------    --------
<S>                                         <C>        <C>        <C>         <C>
52 WEEKS ENDED DECEMBER 30, 2001
Net service revenue from external
  customers...............................  $23,367    $48,150    $ 84,779    $156,296
Long-lived assets.........................   36,956     65,053     120,430     222,439
53 WEEKS ENDED DECEMBER 31, 2000
Net service revenues from external
  customers...............................  $ 1,240    $    --    $ 64,300    $ 65,540
Long-lived assets.........................      282         --      95,750      96,032
SEPTEMBER 20, 1999 TO DECEMBER 26, 1999
Net service revenues from external
  customers...............................  $   480    $    --    $ 16,352    $ 16,832
DECEMBER 28, 1998 TO SEPTEMBER 19, 1999
Net service revenues from external
  customers...............................  $ 1,555    $    --    $ 45,533    $ 47,088
</Table>

     The Company's operations in Europe comprise operations in a number of
countries that are co-ordinated from the United Kingdom. No country is
significant in terms of revenues generated or assets held apart from the United
Kingdom.

     The following table reconciles the above totals for net service revenues,
segment income (loss), segment assets and long-lived assets to the appropriate
figures in the financial statements.

<Table>
<Caption>
                                                                SUCCESSOR                        PREDECESSOR
                                             ------------------------------------------------   -------------
                                               52 WEEKS       53 WEEKS       SEPTEMBER 20,      DECEMBER 28,
                                                ENDED          ENDED            1999 TO            1998 TO
                                             DECEMBER 30,   DECEMBER 31,      DECEMBER 26,      SEPTEMBER 19,
                                                 2001           2000              1999              1999
                                             ------------   ------------   ------------------   -------------
<S>                                          <C>            <C>            <C>                  <C>
Net service revenue per above segment
  analysis.................................    $164,004       $ 70,619          $17,950            $49,078
Less elimination of inter segment
  revenues.................................      (7,708)        (5,079)          (1,118)            (1,990)
                                               --------       --------          -------            -------
Net service revenue from external customers
  per financial statements.................    $156,296       $ 65,540          $16,832            $47,088
                                               ========       ========          =======            =======
Segment income per above segment
  analysis.................................    $ 18,857       $  9,485          $ 2,837            $ 8,566
Central overheads..........................      (4,408)        (1,697)            (630)            (1,641)
                                               --------       --------          -------            -------
Income from operations per financial
  statements...............................    $ 14,449       $  7,788          $ 2,207            $ 6,925
                                               ========       ========          =======            =======
Segment assets per above segment
  analysis.................................    $398,612       $132,081
Elimination of inter segment balances......     (96,786)        (7,513)
                                               --------       --------
Assets per financial statements............    $301,826       $124,568
                                               ========       ========
Long-lived assets per above segment
  analysis.................................    $222,439       $ 96,032
Deferred debt issue costs not allocated to
  segments.................................       1,952            902
                                               --------       --------
                                               $224,391       $ 96,934
                                               ========       ========
</Table>

     No clients accounted for more than 10% of the Company's consolidated net
revenue for any of the periods covered by these financial statements.

15. CONTINGENCIES

     In March 1996, Apotex Inc., a Canadian pharmaceutical manufacturer, filed a
civil lawsuit against the Group in the Court of Ontario. The claim arises out of
research work undertaken by the Company in conjunction with Sheffield University
in the early 1990s relating to a product of Apotex. The claim alleges

                                       F-26
<PAGE>
                         INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

that the Company failed to conduct the study in a competent and timely manner,
causing Apotex to lose the advantage of being the first into the market with the
product under a brand name. The claim seeks damages in excess of Canadian $32
million for misrepresentation, breach of contract, special and punitive damages,
reimbursement of the contract price and costs in respect of the claim. The
proceedings relating to this claim are being managed by a third party which has
agreed to indemnify the Company for any damages it may incur as a result of this
claim. The Company has been advised that the third party intends to defend this
claim vigorously.

16. RELATED PARTY TRANSACTIONS

     The Company has entered into various transactions with its principal
shareholder, Candover Investments PLC. The Company's unsecured subordinated loan
stock described in more detail in Note 9 is held by Candover Investments PLC and
certain other Candover Investors. The Company paid costs associated with the
issue of the loan stock to Candover Investments PLC amounting to $445,000 in
1999 and $675,000 in 2001. The Company pays charges to Candover Investments PLC
for the services of Mr. I. Gray as a director of Inveresk Research Group Limited
amounting to $50,000 in 2001, $45,000 in 2000 and $10,000 in the period from
September 20, 1999 to December 26, 1999.

     The directors of Inveresk Research Group Limited own shares in the Company
and also hold share options.

17. PREDECESSOR SHAREHOLDERS' EQUITY

<Table>
<Caption>
                                                          INVERESK
                                                          RESEARCH
                                                          HOLDINGS
                                                          LIMITED     IRNA      TOTAL
                                                          --------    -----    -------
<S>                                                       <C>         <C>      <C>
COMBINED BALANCE AT DECEMBER 28, 1998
Ordinary shares.........................................  $21,501     $ 201    $21,702
Share premium...........................................   11,227        --     11,227
Retained earnings (accumulated deficit).................    5,715      (486)     5,229
Other comprehensive income..............................   (1,049)       --     (1,049)
                                                          -------     -----    -------
                                                          $37,394     $(285)   $37,109
                                                          =======     =====    =======
PERIOD FROM DECEMBER 28, 1998 TO SEPTEMBER 19, 1999
Foreign currency translation adjustments................  $  (907)    $  --    $  (907)
                                                          =======     =====    =======
Net income..............................................  $ 4,084     $ (27)   $ 4,057
                                                          =======     =====    =======
Comprehensive income....................................  $ 3,177     $ (27)   $ 3,150
                                                          =======     =====    =======
</Table>

     There are no consolidating entries reflected in the above combinations.

18. OTHER COMPREHENSIVE INCOME

     At December 30, 2001 other comprehensive income (loss) comprises:

<Table>
<Caption>
                                                         BEFORE-TAX      TAX     NET-OF-TAX
                                                           AMOUNT      BENEFIT     AMOUNT
                                                         ----------    -------   ----------
<S>                                                      <C>           <C>       <C>
Foreign currency translation...........................   $(1,729)      $ --      $(1,729)
Cumulative-effect adjustment for FAS 133...............      (193)        58         (135)
Minimum pension liability adjustment...................    (1,574)       484       (1,090)
                                                          -------       ----      -------
                                                          $(3,496)      $542      $(2,954)
                                                          =======       ====      =======
</Table>

                                       F-27
<PAGE>
                         INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

19. ALLOWANCE FOR DOUBTFUL ACCOUNTS AND WARRANTY RESERVE

     Doubtful accounts allowance:

<Table>
<Caption>
                                                          52 WEEKS             53 WEEKS
                                                     FUNDED DECEMBER 30   FUNDED DECEMBER 30
                                                            2001                 2000
                                                     ------------------   ------------------
<S>                                                  <C>                  <C>
Balance, beginning of year.........................        $ 312                 $389
Acquisition of subsidiaries........................          724                   --
Utilized...........................................         (163)                 (12)
Net charge (credit) to income......................          (24)                 (37)
Translation effect.................................          (89)                 (28)
                                                           -----                 ----
                                                           $ 760                 $312
                                                           =====                 ====
</Table>

     Unbilled receivable allowance:

<Table>
<S>                                                  <C>                  <C>
Balance, beginning of year.........................        $   --                $--
Acquisition of subsidiaries........................         1,376                 --
Utilized...........................................          (121)                --
Net charge (credit) to income......................          (230)                --
Translation effect.................................            (5)                --
                                                           ------                ---
                                                           $1,020                $--
                                                           ======                ===
</Table>

20. DETAILS OF SUBSIDIARIES CONSOLIDATED

     The consolidated accounts of the Group comprise the results of the Company
and following subsidiaries, all of which are wholly owned:

     Inveresk Research Group Limited (United Kingdom)
     Inveresk Research Holdings Limited (United Kingdom)
     Inveresk Research International Limited (United Kingdom)
     Inveresk Clinical Research Limited (United Kingdom)
     Inveresk Research Limited (United Kingdom)
     Healthmark Limited (United Kingdom)
     Inveresk Research (Canada) Limited (Canada)
     ClinTrials Bioresearch Limited (Canada)
     Quebec Inc (Canada)
     Inveresk Research Inc (USA)
     Inveresk Research (North America) Inc (USA)
     Inveresk Research North Carolina Inc (USA)
     Inveresk Research Kentucky Inc (USA)
     ClinTrials Acquisition Corp Inc (USA)
     Inveresk Research Chile (Chile)
     Inveresk Research Israel Limited (Israel)
     Inveresk Research Australia Pty Limited (Australia)
     Inveresk Research SARL (France)
     Inveresk Research Deutschland GmbH (Germany)
     Inveresk Research SRL (Italy)
     Inveresk Research SL (Spain)
     Inveresk Research Sp Z.O.O (Poland)
     Inveresk Research Czech Republic sro (Czech Republic)

                                       F-28
<PAGE>

                         REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders
ClinTrials Research Inc.

     We have audited the accompanying consolidated balance sheets of ClinTrials
Research Inc. and subsidiaries as of December 31, 2000 and 1999, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended December 31, 2000. Our audits also
included the financial statement schedule listed in the Index at Item 14(a).
These financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of ClinTrials
Research Inc. and subsidiaries at December 31, 2000 and 1999, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States. Also, in our opinion, the
related financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.

                                          /s/ ERNST & YOUNG LLP

Raleigh, North Carolina
February 13, 2001, except for Note 15,
as to which the date is February 22, 2001

                                       F-29
<PAGE>

                            CLINTRIALS RESEARCH INC.

                          CONSOLIDATED BALANCE SHEETS

<Table>
<Caption>
                                                                  DECEMBER 31
                                                              -------------------
                                                                2000       1999
                                                              --------   --------
                                                                (IN THOUSANDS,
                                                              EXCEPT SHARE DATA)
<S>                                                           <C>        <C>
ASSETS
Current assets:
  Cash and cash equivalents.................................  $  9,178   $  7,889
  Accounts receivable, net of allowance for doubtful
     accounts of $983 in 2000 and $1,420 in 1999............    35,408     31,084
  Income taxes receivable...................................     2,135      1,454
  Other current assets......................................     3,416      1,757
                                                              --------   --------
Total current assets........................................    50,137     42,184
Property, plant and equipment:
  Land, buildings and leasehold improvements................    23,630     22,995
  Equipment.................................................    35,253     32,725
  Furniture and fixtures....................................     4,929      4,946
                                                              --------   --------
                                                                63,812     60,666
  Less accumulated depreciation.............................    25,507     21,161
                                                              --------   --------
                                                                38,305     39,505
Excess of purchase price over net assets acquired...........    31,923     34,304
Other assets................................................       411        411
                                                              --------   --------
                                                              $120,776   $116,404
                                                              ========   ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................  $  5,719   $  4,095
  Advance billings..........................................    12,790      8,338
  Payables to investigators.................................     4,499      4,683
  Accrued expenses..........................................     6,644      7,469
  Income taxes payable......................................     1,148      1,174
  Current maturates of long-term debt.......................       112        114
  Revolving note payable to bank............................     4,400         --
                                                              --------   --------
Total current liabilities...................................    35,312     25,873
Deferred income taxes.......................................     7,243      4,982
Long-term debt..............................................       238        381
Commitments and contingencies...............................        --         --
Stockholders' equity:
  Preferred Stock, $.01 par value -- 1,000,000 shares
     authorized; no shares issued or outstanding............        --         --
  Common Stock, $.01 par value -- 50,000,000 shares
     authorized; issued and outstanding 18,402,172 shares in
     2000 and 1999..........................................       184        184
  Additional paid-in capital................................   126,651    126,651
  Accumulated deficit.......................................   (42,717)   (38,490)
  Accumulated other comprehensive loss......................    (6,135)    (3,177)
                                                              --------   --------
Total stockholders' equity..................................    77,983     85,168
                                                              --------   --------
                                                              $120,776   $116,404
                                                              ========   ========
</Table>

          See accompanying notes to consolidated financial statements.
                                       F-30
<PAGE>

                            CLINTRIALS RESEARCH INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS

<Table>
<Caption>
                                                                     YEAR ENDED DECEMBER 31
                                                             --------------------------------------
                                                                2000          1999          1998
                                                             ----------    ----------    ----------
                                                             (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                          <C>           <C>           <C>
Revenue:
  Gross service revenue....................................   $121,836      $113,892      $109,254
  Less subcontractor costs.................................     16,511        16,961        19,563
                                                              --------      --------      --------
Net service revenue........................................    105,325        96,931        89,691
Operating costs and expenses:
  Direct costs.............................................     66,164        58,317        62,936
  Selling, general and administrative expenses.............     35,749        36,034        38,823
  Depreciation and amortization............................      5,888         6,155         5,738
  Restructuring charge.....................................         --            --         6,364
  Gain on sale of Ovation..................................         --          (484)           --
  Nashville lease termination costs........................         --           845            --
  Write-off of purchase option costs.......................         --         2,178            --
                                                              --------      --------      --------
Loss from operations.......................................     (2,476)       (6,114)      (24,170)
Other income (expense):
  Interest income..........................................        498           442           841
  Interest expense.........................................       (195)          (25)          (29)
                                                              --------      --------      --------
Loss before income taxes...................................     (2,173)       (5,697)      (23,358)
Provision (benefit) for income taxes.......................      2,054         1,348        (1,226)
                                                              --------      --------      --------
Net loss...................................................   $ (4,227)     $ (7,045)     $(22,132)
                                                              ========      ========      ========
Loss per share:
  Basic....................................................   $  (0.23)     $  (0.39)     $  (1.22)
  Diluted..................................................   $  (0.23)     $  (0.39)     $  (1.22)
Number of shares and common stock equivalents used in
  computing loss per share:
  Basic....................................................     18,402        18,116        18,207
  Diluted..................................................     18,402        18,116        18,207
</Table>

          See accompanying notes to consolidated financial statements.
                                       F-31
<PAGE>

                            CLINTRIALS RESEARCH INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<Table>
<Caption>
                                                                 YEAR ENDED DECEMBER 31
                                                              ----------------------------
                                                               2000      1999       1998
                                                              -------   -------   --------
                                                                     (IN THOUSANDS)
<S>                                                           <C>       <C>       <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss..................................................  $(4,227)  $(7,045)  $(22,132)
  Adjustments to reconcile net loss to net cash provided by
     (used in) operating activities:
  Depreciation and amortization of property, plant and
     equipment..............................................    5,743     5,891      5,333
  Amortization of intangible assets.........................    1,243     1,242      1,277
  Provision for doubtful accounts...........................      189       146      2,159
  Deferred income taxes.....................................    2,261     1,571      2,820
  Gain on sale of Ovation...................................       --      (484)        --
  Write-off of purchase option costs........................       --     2,178         --
  Loss on disposal of fixed assets..........................       66       204        142
  Write down of assets associated with closing of Lexington
     facility...............................................       --        --      1,983
  Other.....................................................       --         2         29
  Changes in operating assets and liabilities:
     Accounts receivable....................................   (5,052)     (746)       672
     Advance billings.......................................    4,624    (4,338)     2,325
     Payables to investigators..............................     (184)    2,877        528
     Accounts payable and accrued expenses..................      734    (3,587)       893
     Advance payments to investigators......................       --       492        447
     Income taxes...........................................     (583)    2,869       (269)
     Other assets and liabilities...........................   (1,690)      393        403
                                                              -------   -------   --------
  Net cash provided by (used in) operating activities.......    3,124     1,665     (3,390)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment, net.............   (4,928)   (5,071)   (12,227)
Proceeds from sale of fixed assets..........................       38        --         --
Costs associated with option to acquire MPI.................       --      (456)    (1,722)
                                                              -------   -------   --------
  Net cash used in investing activities.....................   (4,890)   (5,527)   (13,949)
CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from short-term borrowings.......................    4,400        --         --
  Proceeds from long-term borrowings........................       --       118        382
  Proceeds from exercise of common stock options............       --       167        140
  Payments on long-term debt................................     (145)       --         --
                                                              -------   -------   --------
  Net cash provided by financing activities.................    4,255       285        522
Effect of foreign currency exchange rate changes on cash....   (1,200)      599       (591)
                                                              -------   -------   --------
Increase (decrease) in cash and cash equivalents............    1,289    (2,978)   (17,408)
Cash and cash equivalents at beginning of year..............    7,889    10,867     28,275
                                                              -------   -------   --------
Cash and cash equivalents at end of year....................  $ 9,178   $ 7,889   $ 10,867
                                                              =======   =======   ========
Supplemental cash flow information:
  Interest paid.............................................  $   180   $    23   $     38
                                                              =======   =======   ========
  Income tax refunds, net of taxes paid of $1,586, $853 and
     $1,580.................................................  $  (131)  $(2,956)  $ (2,601)
                                                              =======   =======   ========
  Equipment purchased included in accounts payable..........  $   566   $   616   $  1,518
                                                              =======   =======   ========
</Table>

          See accompanying notes to consolidated financial statements.
                                       F-32
<PAGE>

                            CLINTRIALS RESEARCH INC.

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<Table>
<Caption>
                                                                                              ACCUMULATED
                                                                                                 OTHER
                                               COMMON STOCK       ADDITIONAL                 COMPREHENSIVE
                                           --------------------    PAID-IN     ACCUMULATED      INCOME
                                 TOTAL       SHARES      AMOUNT    CAPITAL       DEFICIT        (LOSS)
                                --------   -----------   ------   ----------   -----------   -------------
                                                          (DOLLARS IN THOUSANDS)
<S>                             <C>        <C>           <C>      <C>          <C>           <C>
BALANCE AT JANUARY 1, 1998....  $115,778    18,181,765    $182     $127,160     $ (9,313)       $(2,251)
Exercises of stock options....       140        48,407      --          140           --             --
  Comprehensive income (loss):
     Foreign currency
       translation
       adjustments............    (4,259)                                                        (4,259)
     Net loss for 1998........   (22,132)                                        (22,132)
                                --------
  Comprehensive income
     (loss)...................   (26,391)
                                --------
  Other.......................        29                                 29
                                --------   -----------    ----     --------     --------        -------
BALANCE AT DECEMBER 31,
  1998........................    89,556    18,230,172     182      127,329      (31,445)        (6,510)
  Sale of Ovation.............      (838)     (213,000)     (2)        (836)          --             --
  Exercises of stock
     options..................       167       385,000       4          163           --             --
  Comprehensive income (loss):
     Foreign currency
       translation
       adjustments............     3,333                                                          3,333
     Net loss for 1999........    (7,045)                                         (7,045)
                                --------
  Comprehensive income
     (loss)...................    (3,712)
                                --------
  Other.......................        (5)                                (5)
                                --------   -----------    ----     --------     --------        -------
BALANCE AT DECEMBER 31,
  1999........................    85,168    18,402,172     184      126,651      (38,490)        (3,177)
Comprehensive income (loss):
Foreign currency translation
  adjustments.................    (2,958)                                                        (2,958)
Net loss for 2000.............    (4,227)                                         (4,227)
                                --------
  Comprehensive income
     (loss)...................    (7,185)
                                --------   -----------    ----     --------     --------        -------
BALANCE AT DECEMBER 31,
  2000........................  $ 77,983    18,402,172    $184     $126,651     $(42,717)       $(6,135)
                                ========   ===========    ====     ========     ========        =======
</Table>

          See accompanying notes to consolidated financial statements.
                                       F-33
<PAGE>

                            CLINTRIALS RESEARCH INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 (YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998)

1. ORGANIZATION

     ClinTrials Research Inc. (the Company) is a full service contract research
organization serving the pharmaceutical, biotechnology and medical device
industries. The Company designs, monitors and manages preclinical and clinical
trials, provides data management and biostatistical services, and offers product
registration and pharmacoeconomic services throughout the United States, Canada
and Europe.

     Information on the Company's operations by segment and geographic area is
included in Note 9.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Principles of Consolidation

     The accompanying financial statements include the accounts of ClinTrials
Research Inc. and its subsidiaries. All material intercompany balances and
transactions have been eliminated in consolidation.

  Accounting Estimates

     Judgment and estimation is exercised by management in certain areas of the
preparation of the financial statements including revenue recognition, reserves
for self-insurance risks and the allowance for uncollectible accounts.
Management believes that such estimates are fairly stated; however, actual
results could differ from amounts estimated.

  Foreign Currencies

     Assets and liabilities of the Company's subsidiaries located outside of the
United States that operate in a local currency environment are translated to
United States dollars at year-end foreign currency exchange rates in accordance
with FASB SFAS No. 52 "Foreign Currency Translation." Income statement amounts
have been translated at the average rates of exchange for the year. The gains
and losses resulting from the changes in exchange rates from year to year are
accumulated in a separate component of stockholders' equity entitled accumulated
other comprehensive income (loss). Transaction gains and losses are included in
the determination of net income (loss).

  Cash and Cash Equivalents

     For the purpose of the statement of cash flows, cash and cash equivalents
include demand deposits and money market accounts held with a financial
institution. The Company considers all highly liquid investments with a maturity
of three months or less when purchased to be cash equivalents.

  Revenue Recognition

     Many of the Company's contracts are fixed-price contracts over one year in
duration. Revenue for such contracts is recorded in accordance with the American
Institute of Certified Public Accountants (AICPA) Statement of Position (SOP)
81-1 Accounting for Performance of Construction-Type and Certain Production-Type
Contracts. Revenue is recognized as costs are incurred and includes estimated
earned fees or profits calculated on the basis of the relationship between costs
incurred and total estimated costs (cost-to-cost type of
percentage-of-completion method of accounting). Additionally, the Company may
begin work on a project before a contract is signed for customers with whom the
Company has formed a strategic alliance or has a long-term relationship. Revenue
is recognized in the same manner as signed contracts based upon terms orally
agreed with the customer. The Company also has contracts ranging in duration
from 28 days to one year. Revenue is recognized on these contracts in accordance
with contract terms as services are provided. The Company recognizes revenue
related to contract modifications

                                       F-34
<PAGE>
                            CLINTRIALS RESEARCH INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

when realization is assured and the amounts can be reasonably determined.
Contract milestone revenue contingent upon the Company's achievement of specific
targets is recognized when the milestone is achieved. The Company also follows
the views of the Staff of the Securities and Exchange Commission's Staff
Accounting Bulletin No. 101 (SAB 101) on revenue recognition. SAB 101 states
that revenue should be recognized when all four of these conditions exist:
persuasive evidence of an arrangement exists; services have been rendered or
delivery has occurred; the price is fixed or determinable; and collectibility is
reasonably assured. When estimated contract costs indicate that a loss will be
incurred on a contract, the entire loss is provided for in such period.

     The Company routinely subcontracts with third party investigators in
connection with multi-site clinical trials and with other third party service
providers for laboratory analysis and other specialized services. Subcontractor
costs are passed through to clients and, in accordance with industry practice,
are included in gross service revenue. Subcontractor costs are accrued on a
straight-line basis over the investigator phase of the contract. Investigator
payments are made based on predetermined contractual arrangements, which may
differ from the accrual of the expense. Payments to investigators in excess of
the accrued expense represent advance payments to investigators and accrued
expenses in excess of payments represent payables to investigators.

  Unbilled Receivables and Advance Billings

     Prerequisites for billings are generally established by contractual
provisions that include predetermined date certain payment schedules (which may
include payment at or near the time the trial is initiated), the achievement of
negotiated performance requirements or milestones, or the submission of required
billing detail. Unbilled receivables arise from those contracts under which
billings are rendered upon the achievement of certain negotiated performance
requirements or on a date-certain basis and services rendered exceed billings.
The Company expects to bill and collect these unbilled receivables within one
year of revenue recognition. Advance billings represent contractual billings for
services not yet rendered.

  Concentration of Credit Risk

     Financial instruments which potentially expose the Company to credit risk
include unsecured accounts receivable. Concentrations of credit risk on accounts
receivable is limited due to the large number of clients. Additionally, the
Company maintains allowances for potential credit losses and credit losses
incurred have not exceeded management's expectations. The Company's exposure to
credit loss in the event that payment is not received for revenue recognized
equals the outstanding accounts receivable and unbilled services balance.

  Property, Plant and Equipment

     Property, plant and equipment are stated at cost.

     Depreciation is provided on the straight-line method over the estimated
useful lives of the respective properties, which approximate 5 to 40 years.

  Income Taxes

     Income taxes are accounted for under the liability method in accordance
with Financial Accounting Standards Board (the FASB) Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." Deferred tax
assets, net of valuation allowance, and liabilities are determined based on
differences between financial reporting and tax basis of assets and liabilities
and are measured using the enacted tax rates and laws that will be in effect
when the differences are expected to reverse.

                                       F-35
<PAGE>
                            CLINTRIALS RESEARCH INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Excess of Purchase Price Over Net Assets Acquired

     The excess of the purchase price over net assets acquired is being
amortized over periods of 20 to 40 years using the straight-line method. The
carrying value of the excess of purchase price over net assets acquired is
reviewed if the facts and circumstances suggest that it may be impaired. If this
review indicates that the excess of purchase price over net assets acquired will
not be recoverable, as determined based on the undiscounted cash flows of the
entity acquired over the remaining amortization period, the Company's carrying
value of the excess of purchase price over net assets acquired is reduced by the
estimated shortfall of cash flows on a discounted basis. Accumulated
amortization of the excess of purchase price over fair value of assets acquired
was approximately $7,471,000 and $6,323,000 at December 31, 2000 and 1999,
respectively.

  Foreign Currency Hedging

     Foreign exchange forward contracts are legal agreements between two parties
to purchase and sell foreign currency for a specified price, with delivery and
settlement in the future. From time to time the Company uses foreign exchange
contracts to hedge the risk of changes in foreign currency exchange rates
associated with contracts in which the expenses for providing services are
incurred in the functional currency of the Company's foreign subsidiary, but
payments on contracts are made by the client in another currency. During the
year ended December 31, 2000, the Company did not have any derivative
instruments and did not engage in any hedging activities.

  Earnings (Loss) Per Share

     Earnings (loss) per share is computed in accordance with FASB SFAS No. 128,
"Earnings per Share" (SFAS No. 128). SFAS No. 128 requires presentation of both
Basic Earnings per Share (Basic EPS) and Diluted Earnings per Share (Diluted
EPS). Basic EPS is based on the weighted average number of shares of common
stock outstanding during the year while Diluted EPS also includes the dilutive
effect of common stock equivalents. Diluted loss per share for the years ended
December 31, 2000, 1999 and 1998 does not include common stock equivalents
(stock options) of 135,000, 390,000 and 430,000, respectively, as their effect
would be anti-dilutive. The Company's stock is currently traded in the Nasdaq
Stock Market and sale information is included on the Nasdaq National Market
Issues System under the symbol CCRO.

  Comprehensive Income (Loss)

     The Company adopted FASB SFAS No. 130, "Reporting Comprehensive Income"
(SFAS No. 130) on January 1, 1998. SFAS No. 130 established new rules for
reporting and displaying comprehensive income and its components; however, the
adoption of SFAS No. 130 had no impact on the Company's net income (loss) or
stockholders' equity. SFAS No. 130 requires the Company to include foreign
currency translation adjustments, which were previously reported by the Company
as a separate component of stockholders' equity, in other comprehensive income
and loss. Accumulated other comprehensive income (loss) consists entirely of
accumulated foreign currency translation adjustments and is a separate component
of stockholders' equity under SFAS No. 130.

  Stock-Based Compensation

     The Company accounts for employee stock awards using the intrinsic value
based method as prescribed by Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" because the Company believes the
alternative fair value accounting provided for under FASB SFAS No. 123
"Accounting for Stock-Based Compensation" requires the use of option valuation
models that were not developed for use in valuing employee stock options.
Accordingly, no compensation expense is
                                       F-36
<PAGE>
                            CLINTRIALS RESEARCH INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

recognized because the exercise price of the Company's stock options was equal
to the market price of the underlying stock on the date of grant.

  Reclassifications

     Certain prior period amounts have been reclassified in order to conform to
current period presentation. Such reclassifications had no material effect on
the financial position and results of operations as previously reported.

  Recent Accounting Pronouncements

     In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (SFAS No. 133) which was required to be
adopted in years beginning after June 15, 1999. In July 1999, SFAS No. 137 was
issued which deferred for one year the effective date of SFAS No. 133 to all
fiscal quarters of all fiscal years beginning after June 15, 2000. On June 15,
2000, the FASB issued SFAS No. 138 which clarified and amended certain
provisions of SFAS No. 133. Accordingly, the Company plans to adopt SFAS No. 133
and No. 138 effective January 1, 2001.

     From time to time, the Company uses foreign exchange forward contracts to
hedge the risk of changes in foreign currency exchange rates associated with
contracts in which the expenses for providing services are incurred in the
functional currency of the Company's foreign subsidiary, but payments on
contracts are made by the client in another currency. The Company does not
anticipate that the adoption of SFAS No. 133 and No. 138 will have a significant
effect on the financial statements of the Company. Furthermore, SFAS No. 133 and
No. 138 would not have affected the financial statements of the Company
contained herein. During the year ended December 31, 2000, the Company did not
have any derivative instruments and did not engage in any hedging activities.

     In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin 101, "Revenue Recognition in Financial Statements" (SAB No.
101). SAB No. 101 summarizes certain of the SEC staff's views on applying
generally accepted accounting principles to revenue recognition. The Company
adopted SAB No. 101 in the quarter ended December 31, 2000 and it did not have a
material effect on its financial position or results of operations.

3. ACCOUNTS RECEIVABLE

     Accounts receivable consisted of the following at December 31 (in
thousands):

<Table>
<Caption>
                                                               2000       1999
                                                              -------    -------
<S>                                                           <C>        <C>
Trade:
  Billed....................................................  $19,997    $17,449
  Unbilled..................................................   16,394     14,489
  Allowance for doubtful accounts...........................     (983)    (1,420)
                                                              -------    -------
                                                               35,408     30,518
Other.......................................................       --        566
                                                              -------    -------
                                                              $35,408    $31,084
                                                              =======    =======
</Table>

                                       F-37
<PAGE>
                            CLINTRIALS RESEARCH INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. CREDIT FACILITIES AND DEBT

     During the first quarter of 2000, the Company extended its $15.0 million
domestic credit facility through September 2001. The extension provides for
expansion capabilities to $25.0 million provided the Company meets certain
financial requirements. Credit availability under the Company's domestic line of
credit and foreign line of credit totals approximately $18.3 million. The
domestic credit facility is collateralized by certain of the Company's U.S.
based assets that have a net carrying value of approximately $16 million. The
foreign line of credit is collateralized by accounts receivable of the Company's
Canadian subsidiary. Borrowings under these agreements bear interest at a
fluctuating rate based either on the respective banks' prime interest rate or
the London Interbank Offered Rate (LIBOR), as elected by the Company.

     On December 31, 2000, $4.4 million was outstanding under the Company's
domestic credit facility. Interest on outstanding borrowings under the domestic
credit agreement was based upon the LIBOR plus an applicable margin. The
weighted average interest rate during the year 2000 and at December 31, 2000 was
8.9%. Credit availability at December 31, 2000 has been further reduced by
issued letters of credit of approximately $717,000. Borrowings available under
the lines of credit are subject to certain financial and operating covenants.
The Company is in compliance with these bank covenants.

     On or before September 30, 2001, the Company may elect to exercise an
extension option under its domestic credit agreement whereby any or all of the
then outstanding balance may be termed out over six quarters. Under this
extension option, interest is due monthly and 5% of outstanding principal is due
quarterly beginning on the second quarterly date after exercise of the extension
option.

     The Company's Canadian subsidiary has outstanding borrowings of
approximately $336,000 from the Canadian government. This borrowing bears no
interest and is repayable in four equal annual installments beginning August
2000 and ending in 2003.

5. OPERATING LEASES

     The Company leases office space and office equipment under various
operating leases. Minimum rental commitments payable in future years under
operating leases having an initial or remaining noncancelable terms of one year
or more at December 31 are as follows (in thousands):

<Table>
<S>                                                           <C>
2001........................................................  $ 5,734
2002........................................................    5,070
2003........................................................    4,112
2004........................................................    3,885
2005........................................................    3,876
Thereafter..................................................   30,635
                                                              -------
Total minimum rentals.......................................   53,312
Less minimum rentals due under noncancellable subleases.....    1,626
                                                              -------
                                                              $51,686
                                                              =======
</Table>

     Rent expense is comprised of the following for the years ended December 31
(in thousands):

<Table>
<Caption>
                                                            2000      1999      1998
                                                           ------    ------    ------
<S>                                                        <C>       <C>       <C>
Minimum rentals..........................................  $6,313    $5,796    $6,765
Less sublease rentals....................................     344       314       410
                                                           ------    ------    ------
                                                           $5,969    $5,482    $6,355
                                                           ======    ======    ======
</Table>

                                       F-38
<PAGE>
                            CLINTRIALS RESEARCH INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. INCOME TAXES

     Significant components of the Company's deferred tax liabilities and assets
as of December 31 are as follows (in thousands):

<Table>
<Caption>
                                                                2000        1999
                                                              --------    --------
<S>                                                           <C>         <C>
Deferred tax assets:
  Advance billings and receivables..........................  $  1,231    $  3,994
  Accrued expenses..........................................       387         682
  Research and development credit carryforward..............     1,657       1,343
  Undeducted research and development expenditures..........        81       2,008
  Federal and state net operating losses....................    18,362      12,495
  Foreign tax credits.......................................     1,679          --
  Other.....................................................       193         193
                                                              --------    --------
Total deferred tax assets...................................    23,590      20,715
Valuation allowance for deferred tax assets.................   (21,057)    (17,452)
                                                              --------    --------
Net deferred tax assets.....................................     2,533       3,263
Deferred tax liabilities:
  Depreciation and amortization.............................    (9,365)     (7,834)
                                                              --------    --------
Net deferred tax liabilities................................  $ (6,832)   $ (4,571)
                                                              ========    ========
</Table>

     The balance sheet classification of the net deferred tax assets
(liabilities) is as follows at December 31 (in thousands):

<Table>
<Caption>
                                                                2000        1999
                                                              --------    --------
<S>                                                           <C>         <C>
Current deferred tax assets.................................  $  5,147    $  6,212
Net noncurrent deferred tax assets (liabilities)............     9,078       6,669
                                                              --------    --------
                                                                14,225      12,881
Valuation allowance for deferred tax assets.................   (21,057)    (17,452)
                                                              --------    --------
Net deferred tax liabilities................................  $ (6,832)   $ (4,571)
                                                              ========    ========
</Table>

     For financial reporting purposes, income (loss) before income taxes for the
years ended December 31 includes the following components (in thousands):

<Table>
<Caption>
                                                       2000        1999        1998
                                                     --------    --------    --------
<S>                                                  <C>         <C>         <C>
Income (loss) before income taxes:
  United States....................................  $(11,382)   $(14,181)   $(20,308)
  Foreign..........................................     9,209       8,484      (3,050)
                                                     --------    --------    --------
                                                     $ (2,173)   $ (5,697)   $(23,358)
                                                     ========    ========    ========
</Table>

     The Company's Canadian subsidiary qualifies for federal and Quebec
Scientific Research and Development deductions and tax credits. Expenditures on
certain capital assets are fully deductible or may be carried forward
indefinitely until utilized. The tax credits are equal to 30% of certain capital
and current expenditures. The tax credits are accounted for using the flow
through method, in which the credits are recognized as a reduction of income
taxes in the year the credit arises.

     Undistributed earnings of the Company's foreign subsidiaries amounted to
approximately $27.6 million at December 31, 2000. Provision has not been made
for U.S. or additional foreign taxes on undistributed

                                       F-39
<PAGE>
                            CLINTRIALS RESEARCH INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

earnings of foreign subsidiaries as those earnings have been permanently
reinvested. Upon distribution of those earnings in the form of dividends or
otherwise, the Company would be subject to both U.S. income taxes (subject to an
adjustment for foreign tax credits) and withholding taxes payable to the various
countries. It is not practicable to estimate the amount of deferred tax
liability on foreign undistributed earnings which are intended to be permanently
reinvested. Significant components of the provision (benefit) for income taxes
for the years ended December 31 are as follows (in thousands):

<Table>
<Caption>
                                                             2000     1999     1998
                                                            ------   ------   -------
<S>                                                         <C>      <C>      <C>
Current:
  Foreign.................................................  $ (207)  $ (223)  $  (269)
  Federal.................................................      --       --    (3,777)
  State and local.........................................      --       --        --
Deferred:
  Foreign.................................................   2,261    1,571       819
  Federal.................................................      --       --     1,468
  State...................................................      --       --       533
                                                            ------   ------   -------
Provision (benefit) for income taxes......................  $2,054   $1,348   $(1,226)
                                                            ======   ======   =======
</Table>

     The Company's consolidated effective tax rate differed from the federal
statutory rate for the years ended December 31 as set forth below (in
thousands):

<Table>
<Caption>
                                                           2000      1999      1998
                                                          -------   -------   -------
<S>                                                       <C>       <C>       <C>
Federal statutory rate..................................  $  (739)  $(1,937)  $(7,942)
State and local income taxes net of federal benefit.....      (87)     (228)      352
Research and development tax credits....................   (1,495)     (991)   (2,703)
Amortization of excess of purchase price over net assets
  acquired and other intangible assets..................      137       137       484
Difference between foreign income taxed at U.S. Federal
  Statutory rates and foreign income tax expense........      633      (196)     (351)
Increase in federal valuation allowance.................    3,605     5,828     9,611
Other...................................................       --    (1,265)     (677)
                                                          -------   -------   -------
                                                          $ 2,054   $ 1,348   $(1,226)
                                                          =======   =======   =======
</Table>

     A valuation allowance has been established for the amount of United States
deferred tax assets primarily related to the Company's potential tax benefit
associated with loss carryforwards. At December 31, 2000, the Company had
approximately $46 million of federal net operating loss carryforwards which
begin to expire in 2018.

7. STOCK OPTION PLANS AND WARRANTS

  1999 Long-Term Incentive Compensation Plan

     In April 1999, the Board of Directors approved adoption of the Company's
1999 Long-Term Incentive Compensation Plan (1999 Plan). The 1999 Plan was
approved by the Company's stockholders on June 22, 1999 to replace the Company's
1989 Stock Option Plan. The 1989 Stock Option Plan expired in December 1999 and
could not be extended due to restrictions imposed by the Internal Revenue Code
of 1986, as amended (the Code).

     The purpose of the 1999 Plan is to provide an opportunity for certain
persons performing services to the Company, including officers, key employees
and directors of the Company and its subsidiaries to

                                       F-40
<PAGE>
                            CLINTRIALS RESEARCH INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

acquire shares of Common Stock and be rewarded for achieving certain performance
goals. Through the 1999 Plan, the Company seeks to continue to attract and
retain qualified personnel, and to further align the interests of its key
personnel with the success of the Company and its stockholders.

     The 1999 Plan provides for the grant of stock options, which may be either
incentive stock options meeting the requirements of Section 422 of the Code, or
non-qualified stock options, stock appreciation rights, restricted stock,
performance shares or performance units.

     The number of shares which may be issued under the 1999 Plan total
1,500,000 in the aggregate. Options under the 1999 Plan expire ten years from
the date of grant and vest at dates ranging from the issuance date to four
years.

     Information with respect to the 1999 Stock Option Plan is as follows:

<Table>
<Caption>
                                                                         WEIGHTED-AVERAGE
                                                                          EXERCISE PRICE
                                                            2000               2000
                                                       --------------    ----------------
<S>                                                    <C>               <C>
Options outstanding at January 1.....................              --         $0.00
  Granted............................................         306,000         $3.44
  Exercised..........................................              --         $0.00
  Cancelled..........................................         (35,500)        $3.31
                                                       --------------
Outstanding at December 31...........................         270,500         $3.45
                                                       ==============
Option price range at December 31....................  $3.06 to $5.31
                                                       ==============
Options exercisable at December 31...................          50,000         $3.31
                                                       ==============         =====
</Table>

     There were 1,229,500 shares available for grant at December 31, 2000. The
weighted-average fair value of options granted during 2000 was $2.36.

  1989 Stock Option Plan

     The Company's 1989 Stock Option Plan, as amended, provided for the grant of
options to purchase shares of Common Stock to directors, officers and other key
persons. On May 11, 1998, the stockholders approved an amendment to the 1989
Stock Option Plan to increase the options available to 2,625,000. The 1989 Stock
Option Plan expired in December 1999 and could not be extended due to
restrictions imposed by the Code.

                                       F-41
<PAGE>
                            CLINTRIALS RESEARCH INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Information with respect to the 1989 Stock Option Plan is as follows:

<Table>
<Caption>
                                                                                WEIGHTED-AVERAGE
                                                                                 EXERCISE PRICE
                                                                              ---------------------
                              2000              1999              1998        2000    1999    1998
                         ---------------   ---------------   --------------   -----   -----   -----
<S>                      <C>               <C>               <C>              <C>     <C>     <C>
Options outstanding at
  January 1............        1,746,651         1,589,196        1,336,579   $5.23   $4.29   $5.86
  Granted..............               --           943,150          906,975   $0.00   $5.13   $4.55
  Exercised............               --          (385,000)         (48,407)  $0.00   $0.44   $3.01
  Cancelled............         (258,611)         (400,695)        (605,951)  $5.16   $4.43   $6.29
                         ---------------   ---------------   --------------
Outstanding at December
  31...................        1,488,040         1,746,651        1,589,196   $5.24   $5.23   $4.29
                         ===============   ===============   ==============
Option price range at
  December 31..........  $2.77 to $12.92   $2.75 to $12.92   $.35 to $12.92
                         ===============   ===============   ==============
Options exercisable at
  December 31..........          908,991           503,533          613,900   $4.24   $4.18   $3.27
                         ===============   ===============   ==============   =====   =====   =====
</Table>

     There were no shares available for grant at December 31, 2000 and December
31, 1999 since the plan expired as discussed above. At December 31, 1998 there
were 588,067 shares available for grant. The weighted-average fair value of
options granted during 1999 and 1998 was $3.31 and $2.04, respectively.

     On February 6, 1998, the Company's board of directors approved the adoption
of the Company's 1998 Non Qualified Stock Option Plan for Directors (the 1998
Director Option Plan). The 1998 Director Option Plan was approved by the
Company's shareholders on May 11, 1998. The 1998 Director Option Plan is a
formula plan under which options to acquire 10,000 shares of the Company's
common stock are to be initially granted to each director of the Company who is
not an employee and does not beneficially own more than 2.5% of the Company's
outstanding stock upon the date of initial election to the board of directors.
Directors are automatically eligible to receive annual grants of options to
acquire 1,000 shares of the Company's common stock.

     Information with respect to the 1998 Director Option Plan is as follows:

<Table>
<Caption>
                                                                                WEIGHTED-AVERAGE
                                                                                 EXERCISE PRICE
                                                                              ---------------------
                                2000             1999             1998        2000    1999    1998
                           --------------   --------------   --------------   -----   -----   -----
<S>                        <C>              <C>              <C>              <C>     <C>     <C>
Options outstanding at
  January 1..............          19,000           18,000               --   $3.84   $2.95   $0.00
  Granted................          67,000            7,000           18,000   $3.67   $5.38   $2.95
  Exercised..............              --               --               --   $0.00   $0.00   $0.00
  Cancelled..............              --           (6,000)              --   $0.00   $2.95   $0.00
                           --------------   --------------   --------------
Outstanding at December
  31.....................          86,000           19,000           18,000   $3.71   $3.84   $2.95
                           ==============   ==============   ==============
Option price range at
  December 31............  $2.81 to $5.88   $2.81 to $5.88   $2.81 to $3.63
                           ==============   ==============   ==============
Options exercisable at
  December 31............          86,000           19,000           18,000   $3.71   $3.84   $2.95
                           ==============   ==============   ==============   =====   =====   =====
</Table>

                                       F-42
<PAGE>
                            CLINTRIALS RESEARCH INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The following table summarizes in more detail information regarding the
Company's stock options outstanding at December 31, 2000.

<Table>
<Caption>
                                  WEIGHTED AVERAGE
   RANGE OF        OPTIONS           REMAINING            OPTIONS
EXERCISE PRICES  OUTSTANDING   CONTRACTUAL LIFE YEARS   EXERCISABLE
---------------  -----------   ----------------------   -----------
<S>              <C>           <C>                      <C>
$2.77 - $ 6.00    1,507,314             7.4                772,759
$6.01 - $12.92      337,226             5.7                272,232
                  ---------             ---              ---------
$2.77 - $12.92    1,844,540             6.6              1,044,991
                  =========             ===              =========
</Table>

     On January 30, 1998, the Company granted four separate warrants to purchase
75,000 shares (300,000 shares in the aggregate) of common stock of the Company
to each Jerry R. Mitchell, M.D., Ph.D. and William U. Parfet at exercise prices
of $7.00, $9.00, $11.00 and $13.00 per share. Each 75,000 share warrant vests
ratably over a period of four years. Each warrant expires on January 30, 2004.
On September 4, 1998, the Company repriced all 600,000 warrants at an exercise
price of $3.25. In April 1999, the company cancelled three of the four warrants
issued to Mr. Parfet totaling 225,000 shares in the aggregate.

     On September 4, 1998, the Company repriced 250,000 stock options held by
Jerry R. Mitchell, M.D., Ph.D., then the Company's President, Chief Executive
Officer and Chairman of the Board to an exercise price of $3.25 which were
originally granted at an exercise price of $7.00 on February 1, 1998.

     Pro forma information regarding net loss and loss per share is required by
SFAS No. 123, and has been determined as if the Company had accounted for its
employee stock options under the fair value method of SFAS No. 123. The fair
value for these options was estimated at the date of grant using a Black-Scholes
option pricing model with the following weighted-average assumptions for 2000,
1999 and 1998, respectively; risk-free interest rates of 6.22%, 5.43%, and
5.10%; dividend yields of 0%, 0% and 0%; volatility factors of the expected
market price of the Company's common stock of .74, .74 and .72; and a
weighted-average expected life of the option of five years.

     The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.

     For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma information follows for the years ended December 31 (in thousands,
except for loss per share information):

<Table>
<Caption>
                                                        2000       1999        1998
                                                       -------    -------    --------
<S>                                                    <C>        <C>        <C>
Net loss.............................................  $(4,227)   $(7,045)   $(22,132)
Pro forma compensation expense from stock options,
  net of taxes.......................................    1,873      1,903       2,057
                                                       -------    -------    --------
Pro forma net loss...................................  $(6,100)   $(8,948)   $(24,189)
                                                       =======    =======    ========
Pro forma loss per share:
  Basic..............................................  $ (0.33)   $ (0.49)   $  (1.33)
  Diluted............................................  $ (0.33)   $ (0.49)   $  (1.33)
</Table>

                                       F-43
<PAGE>
                            CLINTRIALS RESEARCH INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. EMPLOYEE BENEFITS

     The Company provides defined contribution plans for substantially all of
its employees. Participation is generally subject to the employee's age and
length of employment with the Company. The Company's contributions to the plans
are generally based on employee contributions and may also include additional
discretionary contributions.

     The Company's expense for its contributions to the plans was approximately
$1,679,194, $1,507,000 and $1,639,000 for the years ended December 31, 2000,
1999 and 1998, respectively.

9. SEGMENT REPORTING

     The Company is a full-service contract research organization (CRO) serving
the pharmaceutical, biotechnology and medical device industries. These research
services comprise two reportable operating segments -- Clinical and Preclinical.
Clinical services consist of designing, monitoring, and managing trials of new
pharmaceutical and biotechnology products on humans, and providing clinical data
management, biostatistical, product registration, and pharmacoeconomic services.
Clinical service activities and revenues are performed and earned primarily in
the United States and Europe. The Company's European operations are
headquartered in Maidenhead, U.K. with its primary satellite offices in
Brussels, Belgium and Glasgow, Scotland. The operating results of the Company in
the individual European countries are immaterial and therefore European
operations as a whole are disclosed below. Preclinical services are comprised of
designing and conducting trials of new pharmaceutical and biotechnology products
based primarily upon animal models to produce data required to assess and
evaluate efficacy in and potential risks to humans. Preclinical services are
performed in Montreal, Quebec, Canada. Activity which is not included in the
Clinical or Preclinical segments is shown as Other which includes corporate
expenses, operations not directly related to the business segments, and
restructuring charges.

     Financial data by segment for 2000, 1999, and 1998 are as follows:

<Table>
<Caption>
                                         U.S.      EUROPE     TOTAL       CANADA
                                       CLINICAL   CLINICAL   CLINICAL   PRECLINICAL    OTHER      TOTALS
                                       --------   --------   --------   -----------   --------   --------
<S>                                    <C>        <C>        <C>        <C>           <C>        <C>
YEAR ENDED DECEMBER 31, 2000
  Net revenues from external
     customers.......................  $26,262    $23,364    $ 49,626     $55,699     $     --   $105,325
  Depreciation and amortization......    2,662        812       3,474       2,384           30      5,888
  Segment profit (loss)..............   (7,419)    (3,058)    (10,477)     12,136       (4,135)    (2,476)
  Segment assets.....................   18,907     17,275      36,182      82,698        1,896    120,776
  Long-lived assets..................    9,723      2,736      12,459      57,751           18     70,228
  Expenditures for long-lived
     assets..........................      195        818       1,013       3,915           --      4,928
YEAR ENDED DECEMBER 31, 1999
  Net revenues from external
     customers.......................  $30,108    $19,914    $ 50,022     $46,909     $     --   $ 96,931
  Depreciation and amortization......    2,928      1,014       3,942       2,183           30      6,155
  Segment profit (loss)..............   (8,859)        12      (8,847)      8,231       (5,498)    (6,114)
  Segment assets.....................   18,024     15,374      33,398      78,195        4,811    116,404
  Long-lived assets..................   12,289      2,910      15,199      58,610           --     73,809
  Expenditures for long-lived
     assets..........................      854        690       1,544       3,527          456      5,527
</Table>

                                       F-44
<PAGE>
                            CLINTRIALS RESEARCH INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<Table>
<Caption>
                                         U.S.      EUROPE     TOTAL       CANADA
                                       CLINICAL   CLINICAL   CLINICAL   PRECLINICAL    OTHER      TOTALS
                                       --------   --------   --------   -----------   --------   --------
<S>                                    <C>        <C>        <C>        <C>           <C>        <C>
YEAR ENDED DECEMBER 31, 1998
  Net revenues from external
     customers.......................  $40,366    $11,128    $ 51,494     $38,197     $     --   $ 89,691
  Depreciation and amortization......    2,824      1,136       3,960       1,748           30      5,738
  Segment profit (loss)..............   (8,990)    (9,520)    (18,510)      5,851      (11,511)   (24,170)
  Segment assets.....................   33,148     10,018      43,166      70,419        9,511    123,096
  Long-lived assets..................   14,663      3,522      18,185      55,688        1,722     75,595
  Expenditures for long-lived
     assets..........................    5,487        972       6,459       5,768        1,722     13,949
</Table>

     In 1999 Segment profit (loss) for Other includes a write-off of purchase
option costs of $2.2 million, Nashville lease termination costs of $845,000, and
a gain on the sale of Ovation of $484,000. Segment profit (loss) for Other
includes a restructuring charge of $6.4 million in 1998.

     Net revenue generated under multiple contracts by clients who accounted for
more than 10% of the Company's consolidated net revenue for the years ended
December 31 are as follows:

<Table>
<Caption>
                                                              2000    1999    1998
                                                              ----    ----    ----
<S>                                                           <C>     <C>     <C>
Client A
  U.S. Clinical.............................................    1%      8%     16%
  Europe Clinical...........................................   14%     13%      9%
  Total Clinical............................................   15%     21%     25%
  Canada Preclinical........................................    3%      4%      2%
  Total Company.............................................    9%     12%     15%
</Table>

10. CONTINGENCIES

     In 1991, a customer commenced legal action against the predecessor of the
Company's preclinical subsidiary claiming damages resulting from statistical
errors in carrying out two clinical research studies. Judgment was rendered in
February 1997 by the Superior Court of Montreal against the Company's
preclinical subsidiary in the amount of approximately $536,000 plus interest to
accrue from September 1991. The Company's preclinical subsidiary, now
responsible for this action, has reserves adequate to cover the current judgment
amount. The Company's preclinical subsidiary has appealed the amount of the
judgment and the subsidiary's insurance company has appealed the portion of the
judgment which obligates the insurance company to pay the insurance claim
related to this litigation. The Company believes it is entitled, subject to
certain limitations, to indemnification from a former owner of the predecessor
for a portion of this claim. In the opinion of management, the ultimate
resolution of such pending legal proceedings will not have a material effect on
the Company's financial position or results of operations. The appeal was heard
in April 2000 by the Quebec court of appeals but no judgement has yet been
rendered.

11. OPTION TO ACQUIRE MPI

     On January 30, 1998, the Company entered into an option agreement (the MPI
Option) with MPI Research, LLC (MPI) and its shareholders, Jerry R. Mitchell,
M.D., Ph.D. and William U. Parfet, who each owned 50% of MPI. Dr. Mitchell was
the President, Chief Executive Officer and Chairman of the Board of Directors of
the Company until August 2000 and Mr. Parfet was the Company's Director of
Business Planning and Analysis until April 1999. Pursuant to the MPI Option, the
Company paid $1,500,000 in cash in exchange for an exclusive option to purchase
all of the outstanding stock of MPI at its fair market value at any time on or
prior to March 31, 2000. The shareholders of MPI had the right to cancel the
Option at any time after March 31, 1999, by returning the $1,500,000 cash
without interest,

                                       F-45
<PAGE>
                            CLINTRIALS RESEARCH INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

provided they gave the Company written notice of their intent to cancel the
option and the Company did not exercise the option within twenty business days
of receipt of such notice.

     The Company recorded an asset impairment charge of $2,178,000 in the fourth
quarter of 1999 to write-off the purchase option costs included in other assets
on the balance sheet relating to MPI Research. The option expired March 31, 2000
and it was determined that as of December 31, 1999, it was unlikely to be
exercised. The option was not exercised.

12. SALE OF OVATION

     On January 4, 1999, the Company sold its pharmacoeconomic subsidiary,
Ovation, back to the principals from whom the shares were originally purchased,
as part of the Company's ongoing consolidation of U.S. operations into its
Research Triangle Park, North Carolina (RTP) facility. Pharmacoeconomic services
are now performed out of the Company's RTP facility as the Company retains the
right to use the ClinTrials Ovation name. The Company received 213,000 shares of
its own stock in the sales transaction and recorded a gain on the sale of
$484,000.

13. NASHVILLE LEASE TERMINATION COSTS

     The Company entered into an agreement to terminate the lease of its
Nashville office and accrued $845,000 in the first quarter of 1999 for costs
related to the termination of this lease. The termination of this lease relieved
the Company of approximately $11.0 million of future minimum lease payments. The
Company relocated its Corporate office to Research Triangle Park, North Carolina
in the second quarter of 1999.

14. RESTRUCTURING CHARGE

     On April 24, 1998, the Company announced that its data management
operations in Lexington, Kentucky would be closed and consolidated into its new
clinical research center in Research Triangle Park, North Carolina. The Company
recorded a restructuring charge of $6.4 million in the second quarter of 1998 in
connection with the closing of the Company's Lexington facility, severance costs
for the termination of 90 employees and costs associated with lease commitments
following the Company's restructuring decision to consolidate facilities. The
1998 restructuring charge consists of the following (in thousands):

<Table>
<Caption>
                                                                AMOUNT OF
                                                              RESTRUCTURING
                                                                 CHARGE
                                                              -------------
<S>                                                           <C>
Write down of assets in connection with closure of Lexington
  facility..................................................     $1,983
Lease costs associated with consolidation of Facilities.....      1,976
Severance costs.............................................      2,132
Other.......................................................        273
                                                                 ------
                                                                 $6,364
                                                                 ======
</Table>

     The above lease, severance and other restructuring costs were paid in 1998
and 1999 at amounts that approximated the liabilities recorded and the related
accrued expenses were zero at December 31, 2000 and 1999.

                                       F-46
<PAGE>
                            CLINTRIALS RESEARCH INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

15. SUBSEQUENT EVENT

     On February 22, 2001, the Company, Inveresk Research Group Limited and
Indigo Acquisition Corp. ("Indigo") entered into a definitive merger agreement
for Indigo to acquire all of the outstanding shares of the Company for $6.00 per
share in cash. Under the terms of the agreement, Indigo will commence a tender
offer for all of the outstanding shares of the Company at $6.00 per share within
seven business days. The tender offer will be subject to at least a majority of
the outstanding Company shares, on a fully diluted basis, being validly tendered
and not withdrawn. The tender offer will also be subject to regulatory approvals
and other customary conditions. Any of the Company's shares not acquired
pursuant to a successful tender offer will be acquired in a subsequent merger at
the same $6.00 per share cash price. In connection with the execution of the
merger agreement, Indigo has entered into an agreement with the holders of
approximately 21% of the Company's outstanding shares under which such holders
have agreed to tender their shares in the tender offer.

                                       F-47
<PAGE>

                            CLINTRIALS RESEARCH INC.

                        QUARTERLY FINANCIAL INFORMATION
                  (IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
                                  (UNAUDITED)

<Table>
<Caption>
2000                                             FIRST    SECOND     THIRD    FOURTH(2)
----                                            -------   -------   -------   ---------
<S>                                             <C>       <C>       <C>       <C>
Net revenue...................................  $23,774   $25,545   $25,994    $30,012
Income (loss) before income taxes.............  $(2,006)  $  (736)  $(2,318)   $ 2,887
Net income (loss).............................  $(2,441)  $(1,187)  $(3,153)   $ 2,554
Income (loss) per share:
  Basic.......................................  $ (0.13)  $ (0.06)  $ (0.17)   $  0.14
  Diluted.....................................  $ (0.13)  $ (0.06)  $ (0.17)   $  0.14
Number of shares and dilutive common stock
  equivalents used in computing income (loss)
  per share:
  Basic.......................................   18,402    18,402    18,402     18,402
  Diluted.....................................   18,402    18,402    18,402     18,701
Market prices of common stock:
  High........................................  $  5.00   $  3.88   $  5.38    $  5.75
  Low.........................................  $  3.00   $  2.28   $  2.63    $  4.03
</Table>

<Table>
<Caption>
1999                                             FIRST    SECOND     THIRD    FOURTH(1)
----                                            -------   -------   -------   ---------
<S>                                             <C>       <C>       <C>       <C>
Net revenue...................................  $23,703   $25,214   $23,717    $24,297
Income (loss) before income taxes.............  $(2,702)  $   271   $  (403)   $(2,863)
Net income (loss).............................  $(2,941)  $   153   $  (959)   $(3,298)
Income (loss) per share:
  Basic.......................................  $  (.16)  $   .01   $  (.05)   $ (0.18)
  Diluted.....................................  $  (.16)  $   .01   $  (.05)   $ (0.18)
Number of shares and dilutive common stock
  equivalents used in computing income (loss)
  per share:
  Basic.......................................   18,024    18,017    18,120     18,300
  Diluted.....................................   18,024    18,678    18,120     18,300
Market prices of common stock:
  High........................................  $  6.63   $  6.31   $  6.88    $  5.38
  Low.........................................  $  3.41   $  3.75   $  4.75    $  3.00
</Table>

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

(1) The fourth quarter of 1999 includes a $2,178 charge to write-off the
    purchase option costs relating to MPI Research.

(2) The fourth quarter of 2000 includes revenue of $3.7 million from successful
    completion of a contract that had its only revenue milestone in December
    2000.

                                       F-48
<PAGE>

                            CLINTRIALS RESEARCH INC.

                SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
                                  FYE 12/31/00
                                 (IN THOUSANDS)

<Table>
<Caption>
               COL. A                  COL. B               COL. C                COL. D        COL. E
------------------------------------  ---------    ------------------------    -------------    -------
                                                          ADDITIONS
                                       BALANCE     ------------------------
                                         AT                       CHARGED                       BALANCE
                                      BEGINNING     CHARGED      TO OTHER                         AT
                                         OF        TO COST &    ACCOUNTS --    DEDUCTIONS --    END OF
DESCRIPTION                            PERIOD       EXPENSE      DESCRIBE        DESCRIBE       PERIOD
-----------                           ---------    ---------    -----------    -------------    -------
<S>                                   <C>          <C>          <C>            <C>              <C>
Year Ended December 31, 2000:
  Deducted from asset accounts
  Allowance for Doubtful Accounts...   $1,420       $  172          $0            $  609(B)     $  983
                                       ------       ------          --            ------        ------
Total...............................   $1,420       $  172          $0            $  609        $  983
                                       ======       ======          ==            ======        ======
  Year Ended December 31, 1999:
  Deducted from asset accounts
  Allowance for Doubtful Accounts...   $2,548       $  146          $0            $1,274(A)     $1,420
                                       ------       ------          --            ------        ------
Total...............................   $2,548       $  146          $0            $1,274        $1,420
                                       ======       ======          ==            ======        ======
  Year Ended December 31, 1998:
  Deducted from asset accounts
  Allowance for Doubtful Accounts...   $  883       $2,159          $0            $  494(A)     $2,548
                                       ------       ------          --            ------        ------
Total...............................   $  883       $2,159          $0            $  494        $2,548
                                       ======       ======          ==            ======        ======
</Table>

---------------
(A) -- Uncollectible accounts written off.

(B) -- Reclassified to provide for warranty reserves on unbilled accounts.

                                       F-49
<PAGE>

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

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM
THAT CONTAINED IN THIS PROSPECTUS. WE ARE OFFERING TO SELL, AND SEEKING OFFERS
TO BUY, SHARES OF OUR COMMON STOCK ONLY IN JURISDICTIONS WHERE OFFERS AND SALES
ARE PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS
OF THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS
PROSPECTUS OR OF ANY SALE OF OUR COMMON STOCK.

UNTIL                , 2002, ALL DEALERS THAT EFFECT TRANSACTIONS IN THE SHARES
OF COMMON STOCK OF INVERESK RESEARCH GROUP, INC., WHETHER OR NOT PARTICIPATING
IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION
TO THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS AN
UNDERWRITER AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

                               ------------------
                               TABLE OF CONTENTS
                               ------------------

<Table>
<Caption>
                                        PAGE
                                        ----
<S>                                     <C>
Prospectus Summary....................    1
Risk Factors..........................    8
Forward-Looking Statements............   16
Use of Proceeds.......................   17
Dividend Policy.......................   17
Capitalization........................   18
Dilution..............................   19
Selected Consolidated Financial and
  Other Data..........................   20
Management's Discussion and Analysis
  of Financial Condition and Results
  of Operations.......................   24
Business..............................   36
Management............................   51
Principal Stockholders................   58
Change in Ultimate Parent.............   60
Certain Relationships and Related
  Transactions........................   61
Description of Capital Stock..........   64
Shares Eligible for Future Sale.......   66
Tax Considerations in Connection with
  the Change in Our Ultimate Parent...   67
Underwriting..........................   71
Legal Matters.........................   74
Experts...............................   74
Where You Can Find More Information...   74
Index to Financial Statements.........  F-1
</Table>

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

                            [INVERESK RESEARCH LOGO]

                                           SHARES

                                  COMMON STOCK
                            -----------------------
                                   PROSPECTUS
                            -----------------------
                            BEAR, STEARNS & CO. INC.

                                  UBS WARBURG

                            WILLIAM BLAIR & COMPANY

                                    SG COWEN
                                              , 2002
------------------------------------------------------
------------------------------------------------------
<PAGE>

                                    PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

     The following table sets forth the expenses to be borne by the registrant,
other than underwriting discounts, in connection with the issuance and
distribution of the common stock hereunder:

<Table>
<Caption>
ITEM                                                            AMOUNT
----                                                            -------
<S>                                                             <C>
SEC registration fee........................................    $13,800
NASD filing fee.............................................     15,500
Nasdaq National Market listing fee..........................          *
Accounting fee and expenses.................................          *
Legal fees and expenses.....................................          *
Printing costs..............................................          *
Miscellaneous...............................................          *
Total.......................................................          *
</Table>

---------------
* To be filed by amendment

ITEM 14.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.

     Section 102 of the Delaware General Corporation Law, or DGCL, as amended,
allows a corporation to eliminate or limit the personal liability of directors
of a corporation to the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, except where the director breached the
duty of loyalty, failed to act in good faith, engaged in intentional misconduct
or knowingly violated a law, authorized the payment of a dividend or approved a
stock repurchase in violation of Delaware corporate law or obtained an improper
personal benefit.

     Section 145 of the DGCL provides, among other things, that a corporation
may indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding (other
than an action by or in the right of the corporation by reason of the fact that
the person is or was a director, officer, agent, or employee of the
corporation), or is or was serving at the corporation's request as a director,
officer, agent or employee of another corporation, partnership, joint venture,
trust or other enterprise against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by the person in connection with such action, suit or proceeding. The power to
indemnify applies (a) if such person is successful on the merits or otherwise in
defense of any action, suit or proceeding or (b) if such person acting in good
faith and in a manner he reasonably believed to be in the best interest, or not
opposed to the best interest of the corporation, and with respect to any
criminal action or proceeding had no reasonable cause to believe is or her
conduct was unlawful. The power to indemnify applies to actions brought by or in
the right of the corporation as well but only to the extent of defense expenses,
including attorneys' fees but excluding amounts paid in settlement, actually and
reasonably incurred and not to any satisfaction of judgment or settlement of the
claim itself, and with the further limitation that in such actions no
indemnification shall be made in the event of any adjudication of liability to
the corporation, unless the court believes that in light of all the
circumstances indemnification should apply.

     Section 174 of the DGCL provides, among other things, that a director, who
willfully or negligently approves of an unlawful payment of dividends or an
unlawful stock purchase or redemption, may be held liable for such actions. A
director who was either absent when the unlawful actions were approved or
dissented at the time, may avoid liability by causing his or her dissent to such
actions to be entered in the books containing minutes of the meetings of the
board of directors at the time such action occurred or immediately after such
absent director receives notice of the unlawful acts.

                                       II-1
<PAGE>

     Our certificate of incorporation, attached as Exhibit 3.1 hereto, and
bylaws, attached as Exhibit 3.2 hereto, provide that we shall indemnify our
directors, officers, employees and agents to the maximum extent permitted by the
DGCL, including in circumstances in which indemnification is otherwise
discretionary under the DGCL. We also intend to maintain director and officer
liability insurance, if available on reasonable terms. These indemnification
provisions and the indemnification agreements may be sufficiently board to
permit indemnification of our officers and directors for liabilities, including
reimbursement of expenses incurred, arising under the Securities Act of 1933, as
amended, which we refer to as the Securities Act.

     The Underwriting Agreement, attached as Exhibit 1.1 hereto, provides for
indemnification by the Underwriters of us and our officers and directors for
certain liabilities, including matters arising under the Securities Act.

ITEM 15.  RECENT SALES OF UNREGISTERED SECURITIES.

     Set forth below is information regarding all securities sold and employee
stock options granted by us in the previous three years.

     1.  Immediately prior to the consummation of this offering, we issued an
aggregate of 25,827,720 of our shares of common stock to the current
shareholders of Inveresk Research Group Limited in connection with the
transaction described under "Change in Ultimate Parent." The issuance of these
shares was not registered under the Securities Act in reliance upon Regulation D
under the Securities Act or Regulation S under the Securities Act, as
appropriate.

ITEM 16.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

<Table>
<Caption>
EXHIBIT
  NO.                            DESCRIPTION
-------                          -----------
<C>      <S>
    1.1  Form of Underwriting Agreement.*
    2.1  Exchange Agreement by Declaration of Trust, dated April 2,
         2002, among Inveresk Research Group, Inc., Paul Cowan, as
         escrow agent, and all of the shareholders of Inveresk
         Research Group Limited.
    3.1  Form of Amended and Restated Certificate of Incorporation of
         Inveresk Research Group, Inc.*
    3.2  Form of Bylaws of Inveresk Research Group, Inc.*
    4.1  Form of Stock Certificate.*
    5.1  Opinion of Clifford Chance Rogers & Wells LLP.*
    8.1  Opinion of Clifford Chance Rogers & Wells LLP regarding tax
         matters.*
   10.1  Investment Agreement, dated September 4, 1999, among
         Inveresk Research Group Limited, Walter Nimmo, Ian Sword,
         Stewart Leslie, Candover Investments PLC and other Candover
         investors listed on Schedule 2 thereto.
   10.2  Supplemental Investment Agreement, dated September 17, 1999,
         among Inveresk Research Group Limited, Walter Nimmo, Ian
         Sword, Stewart Leslie, Candover Investments PLC and other
         Candover investors listed on Schedule 2 thereto.
   10.3  Second Supplemental Investment Agreement, dated September
         20, 1999, among Inveresk Research Group Limited, Walter
         Nimmo, Ian Sword, Stewart Leslie, Candover Investments PLC
         and other Candover investors listed on Schedule 2 thereto.
   10.4  Instrument Constituting L27,037,500 10% unsecured
         subordinated loan stock due 2008, dated September 20, 1999.
   10.5  Investment Agreement, dated February 2001, among Inveresk
         Research Group Limited, Walter Nimmo, the other investors
         listed on Schedule 1 thereto, Candover Investments PLC and
         other Candover investors listed on Schedule 2 thereto.
   10.6  Instrument Constituting L44,734,481 10% unsecured
         subordinated loan stock due 2008, dated April 3, 2001.
</Table>

                                       II-2
<PAGE>

<Table>
<Caption>
EXHIBIT
  NO.                            DESCRIPTION
-------                          -----------
<C>      <S>
   10.7  Facilities Agreement, dated February 22, 2001, among
         Inveresk Research Group Limited, certain subsidiaries of
         Inveresk Research Group Limited and Bear Stearns Corporate
         Lending Inc.
   10.8  Security Agreement, dated April 3, 2001, by and between
         Inveresk Acquisition Corp. and Bear, Stearns Corporate
         Lending, Inc.
   10.9  Arranger, Agent and Security Trustee Substitution Deed,
         dated as of July 19, 2001, by and among Bear Stearns
         Corporate Lending Inc. as assignor and the commercial banks
         named therein as assignees.
  10.10  Lease Agreement, dated September 30, 1996, between
         Highwoods/Forsyth Limited Partnership and ClinTrials
         Research Inc.
  10.11  Lease Agreement, dated November 2, 1993, between Ortem
         Developments Limited and ClinTrials Research Limited.
  10.12  Lease Agreement, dated March 7, 1996, between Ortem
         Developments Limited and ClinTrials Research Limited.
  10.13  Lease Agreement, dated March 13, 1998, between Taylor
         Woodrow Property Company Limited and ClinTrials Research
         Limited.
  10.14  Registration Rights Agreement, dated as of           , 2002,
         among Inveresk Research Group, Inc. and the stockholders of
         Inveresk Research Group, Inc. listed therein.*
  10.15  Inveresk Research Group, Inc. 2002 Non-Employee Directors
         Stock Option Plan.*
  10.16  Inveresk Research Group, Inc. 2002 Stock Option Plan.*
  10.17  ClinTrials BioResearch Ltd. Pension Plan for Senior
         Management Employees, dated September 1, 2000.
  10.18  Pension Plan for Designated Employees of ClinTrials
         BioResearch Ltd., dated August 1, 1996.
  10.19  Memorandum of Agreement, dated June 19, 1997, between
         ClinTrials BioResearch Ltd. and Michael F. Ankcorn.
  10.20  Agreement, dated February 1997, among ClinTrials BioResearch
         Ltd., Bio-Research Laboratories Ltd. and Norah K. Taylor.
   21.1  List of Subsidiaries.
   23.1  Consent of Arthur Andersen.
   23.2  Consent of Ernst & Young LLP.
   23.3  Consent of Clifford Chance Rogers & Wells LLP (included in
         Exhibit 5.1).
   24.1  Power of Attorney (included in signature page).
   99.1  Letter to the Securities and Exchange Commission pursuant to
         Temporary Note 3T to Article 3 of Regulation S-X.
</Table>

---------------
* To be filed by an amendment to the Registration Statement.

ITEM 17.  UNDERTAKINGS

     The Registrant hereby undertakes the following:

          (1) Insofar as indemnification for liabilities arising under the
     Securities Act may be permitted to directors, officers and controlling
     persons of the registrant pursuant to the foregoing provisions, or
     otherwise, the registrant has been advised that in the opinion of the
     Commission such indemnification is against public policy as expressed in
     the Securities Act and is, therefore, unenforceable. In the event that a
     claim for indemnification against such liabilities (other than the payment
     by the registrant of expenses incurred or paid by a director, officer or
     controlling person of the registrant in the successful defense of any
     action, suit or proceeding) is asserted by such director, officer or
     controlling person in connection with the securities being registered, the
     registrant will, unless in the opinion of its counsel the matter has been
     settled by controlling precedent, submit to a court of

                                       II-3
<PAGE>

     appropriate jurisdiction the question whether such indemnification by it is
     against public policy as expressed in the Securities Act and will be
     governed by the final adjudication of such issue.

          (2) For purposes of determining any liability under the Securities
     Act, the information omitted from the form of prospectus filed as part of
     this registration statement in reliance upon Rule 430A and contained in a
     form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
     (4) or 497(h) under the Securities Act shall be deemed to be part of this
     registration statement as of the time it was declared effective.

          (3) For the purpose of determining any liability under the Securities
     Act, each post-effective amendment that contains a form of prospectus shall
     be deemed to be a new registration statement relating to the securities
     offered therein, and the offering of such securities at that time shall be
     deemed to be the initial bona fide offering thereof.

          (4) The undersigned registrant hereby undertakes to provide to the
     underwriters at the closing specified in the Underwriting Agreement,
     certificates in such denominations and registered in such names as required
     by the underwriters to permit prompt delivery to each purchaser.

                                       II-4
<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on April 2, 2002.

                                          INVERESK RESEARCH GROUP, INC.

                                          By: /s/ WALTER S. NIMMO
                                            ------------------------------------
                                              Walter S. Nimmo
                                              President, Chief Executive Officer
                                              and Director

     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated. Each person whose signature appears below
hereby constitutes and appoints Walter S. Nimmo and Paul Cowan his or her true
and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution for him or her and in his or her name and stead in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, or any registration statement for the same
offering that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act of 1933, and to file the same, with exhibits thereto and other
documents in connection therewith or in connection with the registration of the
common stock offered hereby under the Securities Exchange Act of 1934, with the
Securities and Exchange Commission, granting unto such attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary in connection with such matters and hereby ratifying and
confirming all that such attorney-in-fact and agent or his substitutes may
reasonably do or cause to be done by virtue hereof.

                                       II-5
<PAGE>

<Table>
<Caption>
                NAME AND SIGNATURE                                 TITLE                       DATE
                ------------------                                 -----                       ----
<S>     <C>                                          <C>                                  <C>

               /s/ WALTER S. NIMMO                   President, Chief Executive Officer   April 2, 2002
 -----------------------------------------------     and Director (Principal Executive
                 Walter S. Nimmo                                  Officer)


                  /s/ PAUL COWAN                     Chief Financial Officer (Principal   April 2, 2002
 -----------------------------------------------      Financial Officer and Principal
                    Paul Cowan                              Accounting Officer)


                 /s/ IAN P. SWORD                    Chairman of the Board of Directors   April 2, 2002
 -----------------------------------------------
                   Ian P. Sword


                /s/ JOHN URQUHART                           Vice Chairman of the          April 1, 2002
 -----------------------------------------------             Board of Directors
                  John Urquhart


              /s/ JOHN T. HENDERSON                               Director                April 2, 2002
 -----------------------------------------------
                John T. Henderson


              /s/ S. LOUISE MCCRARY                               Director                April 2, 2002
 -----------------------------------------------
                S. Louise McCrary
</Table>

                                       II-6
<PAGE>

                                 EXHIBIT INDEX

<Table>
<Caption>
EXHIBIT
  NO.                            DESCRIPTION
-------                          -----------
<C>      <S>
    1.1  Form of Underwriting Agreement.*
    2.1  Exchange Agreement by Declaration of Trust, dated April 2,
         2002, among Inveresk Research Group, Inc., Paul Cowan, as
         escrow agent, and all of the shareholders of Inveresk
         Research Group Limited.
    3.1  Form of Amended and Restated Certificate of Incorporation of
         Inveresk Research Group, Inc.*
    3.2  Form of Bylaws of Inveresk Research Group, Inc.*
    4.1  Form of Stock Certificate.*
    5.1  Opinion of Clifford Chance Rogers & Wells LLP.*
    8.1  Opinion of Clifford Chance Rogers & Wells LLP regarding tax
         matters.*
   10.1  Investment Agreement, dated September 4, 1999, among
         Inveresk Research Group Limited, Walter Nimmo, Ian Sword,
         Stewart Leslie, Candover Investments PLC and other Candover
         investors listed on Schedule 2 thereto.
   10.2  Supplemental Investment Agreement, dated September 17, 1999,
         among Inveresk Research Group Limited, Walter Nimmo, Ian
         Sword, Stewart Leslie, Candover Investments PLC and other
         Candover investors listed on Schedule 2 thereto.
   10.3  Second Supplemental Investment Agreement, dated September
         20, 1999, among Inveresk Research Group Limited, Walter
         Nimmo, Ian Sword, Stewart Leslie, Candover Investments PLC
         and other Candover investors listed on Schedule 2 thereto.
   10.4  Instrument Constituting L27,037,500 10% unsecured
         subordinated loan stock due 2008, dated September 20, 1999.
   10.5  Investment Agreement, dated February 2001, among Inveresk
         Research Group Limited, Walter Nimmo, the other investors
         listed on Schedule 1 thereto, Candover Investments PLC and
         other Candover investors listed on Schedule 2 thereto.
   10.6  Instrument Constituting L44,734,481 10% unsecured
         subordinated loan stock due 2008, dated April 3, 2001.
   10.7  Facilities Agreement, dated February 22, 2001, among
         Inveresk Research Group Limited, certain subsidiaries of
         Inveresk Research Group Limited and Bear Stearns Corporate
         Lending Inc.
   10.8  Security Agreement, dated April 3, 2001, by and between
         Inveresk Acquisition Corp. and Bear, Stearns Corporate
         Lending, Inc.
   10.9  Arranger, Agent and Security Trustee Substitution Deed,
         dated as of July 19, 2001, by and among Bear Stearns
         Corporate Lending Inc. as assignor and the commercial banks
         named therein as assignees.
  10.10  Lease Agreement, dated September 30, 1996, between
         Highwoods/Forsyth Limited Partnership and ClinTrials
         Research Inc.
  10.11  Lease Agreement, dated November 2, 1993, between Ortem
         Developments Limited and ClinTrials Research Limited.
  10.12  Lease Agreement, dated March 7, 1996, between Ortem
         Developments Limited and ClinTrials Research Limited.
  10.13  Lease Agreement, dated March 13, 1998, between Taylor
         Woodrow Property Company Limited and ClinTrials Research
         Limited.
  10.14  Registration Rights Agreement, dated as of           , 2002,
         among Inveresk Research Group, Inc. and the stockholders of
         Inveresk Research Group, Inc. listed therein.*
  10.15  Inveresk Research Group, Inc. 2002 Non-Employee Directors
         Stock Option Plan.*
  10.16  Inveresk Research Group, Inc. 2002 Stock Option Plan.*
  10.17  ClinTrials BioResearch Ltd. Pension Plan for Senior
         Management Employees, dated September 1, 2000.
  10.18  Pension Plan for Designated Employees of ClinTrials
         BioResearch Ltd., dated August 1, 1996.
</Table>
<PAGE>

<Table>
<Caption>
EXHIBIT
  NO.                            DESCRIPTION
-------                          -----------
<C>      <S>
  10.19  Memorandum of Agreement, dated June 19, 1997, between
         ClinTrials BioResearch Ltd. and Michael F. Ankcorn.
  10.20  Agreement, dated February 1997, among ClinTrials BioResearch
         Ltd., Bio-Research Laboratories Ltd. and Norah K. Taylor.
   21.1  List of Subsidiaries.
   23.1  Consent of Arthur Andersen.
   23.2  Consent of Ernst & Young LLP.
   23.3  Consent of Clifford Chance Rogers & Wells LLP (included in
         Exhibit 5.1).
   24.1  Power of Attorney (included in signature page).
   99.1  Letter to the Securities and Exchange Commission pursuant to
         Temporary Note 3T to Article 3 of Regulation S-X.
</Table>

---------------
* To be filed by an amendment to the Registration Statement.
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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 2, 2002

                                                     REGISTRATION NO. 333-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

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

                                    FORM S-1
                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933
                             ---------------------

                         INVERESK RESEARCH GROUP, INC.
             (Exact name of registrant as specified in its charter)
DELAWARE                             8731                            43-1955097
 (State or other jurisdiction of      (Primary Standard Industrial             (I.R.S. Employer
  incorporation or organization)      Classification Code Number)           Identification Number)
11000 WESTON PARKWAY
                                   SUITE 100
                                 CARY, NC 27513
                                 (919) 460-9005
  (Address, including zip code, and telephone number, including area code, of
                   registrant's principal executive offices)

                              DR. WALTER S. NIMMO
                              11000 WESTON PARKWAY
                                   SUITE 100
                                 CARY, NC 27513
                                 (919) 460-9005
 (Name, address, including zip code, and telephone number, including area code,
                             of agent for service)

                                   COPIES TO:
JOHN A. HEALY                                     JEFFREY E. COHEN
                 KARL A. ROESSNER                                  COUDERT BROTHERS LLP
        CLIFFORD CHANCE ROGERS & WELLS LLP                      1114 AVENUE OF THE AMERICAS
                  200 PARK AVENUE                                NEW YORK, NEW YORK 10036
             NEW YORK, NEW YORK 10166                                 (212) 626-4400
                  (212) 878-8000
---------------------
     APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE TO THE PUBLIC:  As
soon as practicable after this Registration Statement becomes effective.
     If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
     If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
     If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
     If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
     If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
                             ---------------------
                        CALCULATION OF REGISTRATION FEE
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
                                                                  PROPOSED             PROPOSED
       TITLE OF EACH CLASS OF              AMOUNT TO BE       MAXIMUM OFFERING    MAXIMUM AGGREGATE        AMOUNT OF
     SECURITIES TO BE REGISTERED          REGISTERED(1)       PRICE PER SHARE     OFFERING PRICE(2)     REGISTRATION FEE
--------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.01 per
  share..............................                                                $150,000,000           $13,800
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
(1) Includes a maximum of           shares that may be purchased by the
    Underwriters to cover over-allotments, if any.
(2) Estimated solely for the purpose of calculating the registration fee
    pursuant to Rule 457 under the Securities Act of 1933.

     THE REGISTRANT HEREBY AMENDS THE 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 THE 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 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 APRIL 2, 2002
                                              SHARES

                            [INVERESK RESEARCH LOGO]
                                  COMMON STOCK
                            ------------------------
     This is the initial public offering of common stock of Inveresk Research
Group, Inc. Inveresk Research Group, Inc. is selling all of the   shares of
common stock offered under this prospectus.

     There is currently no public market for our common stock. We expect the
initial public offering price to be between $[     ] and $[     ] per share. We
expect to apply to list our shares of common stock on The Nasdaq National Market
under the symbol "IRGI."

     SEE "RISK FACTORS" BEGINNING ON PAGE 8 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.
PER
                                                            SHARE                     TOTAL
                                                   ------------------------  ------------------------
Public offering price............................  $                         $
Underwriting discounts and commissions...........  $                         $
Proceeds.........................................  $                         $
The underwriters may, under certain circumstances, purchase up to an
additional        shares of common stock at the initial 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           , 2002.

BEAR, STEARNS & CO. INC.                                             UBS WARBURG
WILLIAM BLAIR & COMPANY                                                 SG COWEN
                     Prospectus dated                , 2002
ENFORCEABILITY OF CIVIL LIABILITIES

     Two of the current directors of Inveresk Research Group, Inc. and four of
its current non-director executive officers reside outside the United States and
a substantial portion of the assets of Inveresk Research Group, Inc. and
substantially all of the assets of such persons are located outside the United
States (principally in Scotland and Canada). Therefore, it may not be possible
for investors to effect service of process within the United States against such
persons or with respect to such assets. Furthermore, courts of Scotland and
Canada may not recognize or enforce against Inveresk Research Group, Inc. or
such persons judgments obtained in United States courts predicated upon the
civil liability provisions of the securities laws of the United States and may
not enter judgments in original actions brought in the Scottish and Canadian
courts predicated upon the securities laws of the United States.

                                        i
PROSPECTUS SUMMARY

     This summary highlights information contained elsewhere in this prospectus.
Because this is only a summary, it does not contain all of the information you
should consider before investing in shares of our common stock. You should read
carefully this entire prospectus, especially the section "Risk Factors" and our
financial statements and the notes to those statements.

     Inveresk Research Group, Inc. is a newly-formed holding company and was
incorporated solely for the purpose of changing the ultimate parent for the
Inveresk Research group of companies from a company organized under the laws of
Scotland to a corporation organized in the United States under the laws of the
State of Delaware. The change in ultimate parent for the Inveresk Research group
of companies will be completed immediately prior to the consummation of the
initial public offering described in this prospectus. When this change has been
effected, Inveresk Research Group, Inc. will own all of the share capital of
Inveresk Research Group Limited, which at present is the ultimate parent company
for the Inveresk group of companies. Unless otherwise indicated, all references
to "Inveresk Research," "we," "us" and "our" refer to Inveresk Research Group,
Inc. and its subsidiaries as if the change in ultimate parent described above
had been completed.

                                  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.

     In 2001 our business, including ClinTrials Research Inc., which we acquired
in April 2001, generated net service revenue of $156.3 million, income from
operations of $14.4 million, after $15.9 million of depreciation and
amortization charges, and a net loss of $5.1 million, after $19.6 million of
shareholder loan and bank interest charges, taxes and an extraordinary item.

     PRE-CLINICAL.  Our pre-clinical development business was established over
35 years ago, employs approximately 1,600 people and operates from two principal
facilities, one located in Tranent, Scotland and the other in Montreal, Canada.
This part of our business provides pre-clinical safety and pharmacology
evaluation services and laboratory sciences services (including clinical support
services). In 2001 our pre-clinical business generated net service revenue of
$95.2 million and income from operations of $18.0 million, excluding corporate
overhead and after $10.4 million of depreciation and amortization charges. Based
upon net service revenue, we estimate that we are the second 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 5% of
our net service revenue in 2001. More than 85% of the 2001 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 we committed over $15 million to the expansion of our
pre-clinical facility in Montreal. We intend to devote substantial resources in
the future towards enlarging our pre-clinical operations, with additional
expansion of our facilities in both Montreal and Tranent planned for completion
in 2003 and 2004. We expect to fund this expansion primarily with cash generated
from our operations. We will also consider opportunistically expanding our
pre-clinical business through acquisitions.

     CLINICAL.  Our clinical development business was established in 1988 and
operates from 14 facilities located across the United States and Europe,
employing approximately 700 people. This business conducts Phase I clinical
trials and provides Phase II-IV clinical trials management services (including
medical data
                                        1
sciences services and regulatory support). In 2001 our clinical development
business generated net service revenue of $61.1 million and income from
operations of $0.9 million, excluding corporate overhead and after depreciation
and amortization charges of $5.6 million. Our 62-bed clinic in Edinburgh
conducts a wide range of Phase I clinical trials and has completed an average of
12 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

     Prior to 1999 we operated as a division of SGS Societe Generale de
Surveillance SA. In 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. In
that transaction, 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.

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 major pharmaceutical 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 companies are seeking in many cases
to manage these risks by pursuing the parallel development of multiple compounds
with similar potential applications (to mitigate the risk of product failure),
while at the same time pursuing strategies to contain costs. Further, since the
profitability of a drug is greatest while it enjoys market exclusivity,
pharmaceutical companies continually seek ways to shorten the time from drug
discovery to marketing.

     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;
                                        2
- 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 expand our pre-clinical facilities in Tranent and Montreal
       to provide us with increased 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 to expand these services
       geographically;

     - continuing to position our Phase II-IV clinical development business as a
       provider of higher value-added services;

     - further leveraging the cross-selling opportunities between our two
       business units; and

     - to the extent appropriate opportunities become available, augmenting our
       pre-clinical and clinical development capabilities and market share by
       making strategic acquisitions.

CHANGE IN ULTIMATE PARENT

     In order to implement our growth strategy, we intend, among other things,
to expand further our operations in North America through internally-generated
growth and, to the extent appropriate opportunities become available, through
strategic acquisitions. In light of this desire to expand further in North
America, and particularly the United States, we have decided to change the
ultimate parent for the Inveresk Research group of companies from a company
organized under the laws of Scotland to a corporation organized in the United
States under the laws of the State of Delaware. Inveresk Research Group, Inc.
was incorporated in Delaware in March 2002 solely for the purpose of effecting
this change in ultimate parent for the Inveresk Research group of companies,
which will be completed immediately before consummation of the offering
described in this prospectus. When this change has been effected, Inveresk
Research Group, Inc. will own all of the issued share capital of Inveresk
Research Group Limited. The change will be effected by:

     - the exchange of shares of capital stock in Inveresk Research Group
       Limited by its existing stockholders for shares of common stock of
       Inveresk Research Group, Inc.; and

     - the cancellation of Inveresk Research Group Limited options in exchange
       for options to purchase shares of common stock of Inveresk Research
       Group, Inc.

OUR OFFICES

     Pursuant to the change in ultimate parent described above our headquarters
have been relocated to Cary, North Carolina. Our address there is 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.
                                        3
THE OFFERING

Common Stock offered..........             shares (          shares if the
                                 underwriters' over-allotment option is
                                 exercised in full).

Common Stock to be outstanding
after the offering............             shares (          shares if the
                                 underwriters exercise their over-allotment
                                 option in full).

Use of proceeds...............   Repayment of $          of debt owed to certain
                                 financial institutions and $          of debt
                                 substantially all of which is owed to Candover
                                 Investments PLC and certain investment funds
                                 indirectly controlled by Candover Investments
                                 PLC, our principal stockholders. See "Principal
                                 Stockholders."

Proposed NASDAQ symbol........   IRGI

                                        4
SUMMARY CONDENSED CONSOLIDATED DATA

     You should read the summary 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. The
financial information for each of the two years ended December 30, 2001 and
December 31, 2000 and for the period from September 20, 1999 to December 26,
1999 reflects the financial position and results of operations of Inveresk
Research Group Limited, which will become our direct subsidiary immediately
prior to the consummation of this offering, pursuant to the transactions
described under "Change in Ultimate Parent." The financial information for the
period from December 28, 1998 to September 19, 1999 and for the years ended
December 27, 1998 and December 28, 1997 reflect the financial position and
results of operations of our business while it was operated as a division of SGS
Societe Generale de Surveillance SA. Information for the year ended December 30,
2001 includes the results of operations of ClinTrials from April 5, 2001.

     The summary consolidated financial data presented below for each of the two
years ended December 30, 2001 and December 31, 2000 and for the periods from
September 20, 1999 to December 26, 1999 and from December 28, 1998 to September
19, 1999 have been derived from the audited consolidated financial statements of
Inveresk Research Group Limited included elsewhere in this prospectus, which
financial statements have been prepared in accordance with U.S. GAAP.

     The unaudited pro forma statement of operations and earnings per share data
presented below for the year ended December 30, 2001 give effect to our
acquisition of ClinTrials and this offering, including the use of proceeds to
repay an aggregate of approximately $     million of debt, as if each of them
had occurred on January 1, 2001. The pro forma balance sheet data is presented
as if this offering had occurred on December 30, 2001. The acquisition of
ClinTrials occurred prior to December 30, 2001 so it is already reflected in the
balance sheet at that date and accordingly no adjustment to the historical
balance sheet as of December 30, 2001 is presented in respect of the acquisition
of ClinTrials.

     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.

                                        5
INVERESK RESEARCH GROUP(1)                     PREDECESSOR
                                      ----------------------------------------------------------    -------------
                                      PRO FORMA 52     52 WEEKS       53 WEEKS     SEPTEMBER 20,    DECEMBER 28,
                                      WEEKS ENDED       ENDED          ENDED            TO             1998 TO
                                      DECEMBER 30,   DECEMBER 30,   DECEMBER 31,   DECEMBER 26,     SEPTEMBER 19,
                                          2001           2001           2000           1999             1999
                                      ------------   ------------   ------------   -------------    -------------
                                                     (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Net service revenue.................    $            $   156,296    $     65,540    $    16,832       $ 47,088
Direct costs........................                     (83,975)        (36,133)        (9,645)       (27,177)
                                        --------     -----------    ------------    -----------       --------
Gross profit........................                      72,321          29,407          7,187         19,911
Selling, general and administrative
  expenses..........................                     (41,934)        (13,825)        (3,198)        (9,013)
Depreciation........................                      (8,028)         (4,513)          (809)        (3,731)
Amortization........................                      (7,910)         (3,281)          (973)          (242)
                                        --------     -----------    ------------    -----------       --------
Income from operations..............                      14,449           7,788          2,207          6,925
Interest income (expense), net......                     (17,101)         (7,522)        (2,004)          (560)
                                        --------     -----------    ------------    -----------       --------
Income (loss) before income taxes...                      (2,652)            266            203          6,365
Provision for income taxes..........                      (2,049)           (682)          (325)        (2,308)
                                        --------     -----------    ------------    -----------       --------
Net income (loss) before
  extraordinary items...............                      (4,701)           (416)          (122)         4,057
                                        ========     -----------    ------------    -----------       --------
Extraordinary items.................                        (419)             --             --             --
                                                     -----------    ------------    -----------       --------
Net income (loss)...................                 $    (5,120)   $       (416)   $      (122)      $  4,057
                                                     ===========    ============    ===========       ========
Earnings per share pre extraordinary
  item(2):
  Basic.............................    $            $     (0.20)   $      (0.02)   $     (0.01)
  Diluted...........................    $            $     (0.20)   $      (0.02)   $     (0.01)
Earnings per share post
  extraordinary item:
  Basic.............................                 $     (0.22)   $      (0.02)   $     (0.01)
  Diluted...........................                 $     (0.22)   $      (0.02)   $     (0.01)
Number of shares and common stock
  equivalents used in computing loss
  per shares:
  Basic.............................                  23,349,278      17,171,327     17,171,327
  Diluted...........................                  23,349,278      17,171,327     17,171,327
Dividends per share.................    $     --     $        --    $         --    $        --
                                        ========     ===========    ============    ===========
The information for the periods prior to September 20, 1999 relates to
periods when the businesses were owned by SGS Societe Generale de Surveillance
Holdings SA. It is not meaningful to present earnings per share or dividends per
share data for these periods.

                                        6
Other Data:
PRE-
                                                        INVERESK RESEARCH GROUP                        DECESSOR
                                       ----------------------------------------------------------    -------------
                                       PRO FORMA 52     52 WEEKS       53 WEEKS     SEPTEMBER 20,    DECEMBER 28,
                                       WEEKS ENDED       ENDED          ENDED            TO             1998 TO
                                       DECEMBER 30,   DECEMBER 30,   DECEMBER 31,   DECEMBER 26,     SEPTEMBER 19,
                                           2001           2001           2000           1999             1999
                                       ------------   ------------   ------------   -------------    -------------
                                                                 (DOLLARS IN THOUSANDS)
EBITDA, as defined(3)................    $             $  30,387       $15,582        $  3,989          $10,898
Depreciation and amortization........                     15,938         7,794           1,782            3,973
Cash flow from operating
  activities(4)......................          --         19,493        12,693           2,041            9,306
Net cash (used in) investing
  activities(4)......................          --       (126,292)       (6,752)        (80,099)          (5,305)
Net cash provided by (used in)
  financing activities(4)............          --        115,479        (3,140)         85,066              (83)
                                         ========      =========       =======        ========          =======
Balance Sheet Data:
INVERESK RESEARCH GROUP
                                                              ---------------------------
                                                               PRO FORMA
                                                              DECEMBER 30,   DECEMBER 30,
                                                                  2001           2001
                                                              ------------   ------------
                                                                (DOLLARS IN THOUSANDS)
Cash and cash equivalents...................................                   $ 16,118
Total assets................................................                    301,826
Total short term debt.......................................                    127,648
Total long term debt........................................                     85,109
Total shareholders' equity..................................                     (7,385)
                                                                ========       ========
---------------
1. Our fiscal year ends on the last Sunday on or prior to December 31. Beginning
   in 2002 our fiscal year will end consistently on December 31.

2. As more fully described in note 4 to the financial statements, historical
   earnings per share have been calculated assuming that the historical
   outstanding shares in Inveresk Research Group Limited were converted to
   common stock in Inveresk Research Group, Inc. using a weighted average rate
   derived from the conversion ratios that will apply when the change of
   ultimate parent company becomes effective.

3. EBITDA, as defined, represents income from operations plus depreciation and
   amortization. EBITDA is presented because it is a widely accepted financial
   indicator used by investors to analyze and compare the operating performance
   of different companies.

   EBITDA, as defined, is not intended to represent cash flows for the period,
   nor is it presented as an alternative to income from operations or as an
   indicator of operating performance. It should not be considered in isolation
   or as a substitute for measures of performance prepared in accordance with
   GAAP in the United States and is not indicative of operating income or cash
   flow from operations as determined under GAAP. Our method of computation may
   or may not be similar to other similarly titled measures of other companies.

4. Cash flow information is not presented with respect to the unaudited pro
   forma data because a statement of cash flows is not required by Article 11 of
   Regulation S-X.

                                        7
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 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
relaxation in regulatory requirements or introduction of simplified drug
approval procedures could have a material adverse effect on the demand for our
services, which could adversely affect our business, financial condition and
operating results. Alternatively, changes in regulatory requirements could
require us to change the manner in which we conduct our operations and we may
have to incur significant capital expenditures in order to effect such changes.
For example, in Europe there are currently proposals to revise and augment the
regulations governing volunteer clinical trials. This change or 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.

WE ARE EXPOSED TO EXCHANGE RATE FLUCTUATIONS.

     We derived approximately 85% of our consolidated net service revenue in
2001 from our operations outside of the United States, primarily from our
operations in Canada and the United Kingdom. Our financial statements are
presented in U.S. dollars. Accordingly, changes in exchange rates between the
pound sterling, the Canadian dollar and the U.S. dollar will affect the
translation of a subsidiary's financial results into U.S. dollars for purposes
of reporting our financial results.

     In addition, our contracts with our clients are frequently denominated in
currencies other than the currency in which we incur expenses related to such
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 those in which contracts are
priced, fluctuations in the relative value of those currencies could have a
material adverse effect on our results of operations.

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

                                        8
WE COULD BE ADVERSELY AFFECTED BY CHANGES IN TAX LEGISLATION IN CANADA AND THE
UNITED KINGDOM.

     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 have
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/or our cash flow from our
Canadian and United Kingdom operations.

OUR QUARTERLY OPERATING RESULTS MAY VARY.

     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 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 may be unable to
compensate for periods of underutilization during one part of a fiscal period by
augmenting revenues during another part of that period. We believe that
operating results for any particular quarter are not necessarily a meaningful
indication of future results. Nonetheless, fluctuations in our quarterly
operating results could negatively affect the market price of our common stock.

THERE MAY BE RISKS RELATED TO OUR USE OF ARTHUR ANDERSEN AS OUR INDEPENDENT
AUDITORS.

     On March 14, 2002, Arthur Andersen LLP, an affiliate of our independent
auditors, was indicted on federal obstruction of justice charges arising from
the government's investigation of Enron Corporation. Arthur Andersen LLP has
publicly stated that it intends to contest vigorously the indictment. As a
public company, we are required to file with the Securities and Exchange
Commission annual financial statements audited by independent auditors. The
Securities and Exchange Commission has said that it will continue accepting
financial statements audited by Arthur Andersen, and interim financial
statements reviewed by it, so long as Arthur Andersen is able to make certain
representations to its clients. Certain investors, including significant funds
and institutional investors, may choose not to hold or invest in securities of a
company that does not have current financial reports available. Our access to
the capital markets and our ability to make timely Securities and Exchange
Commission filings could be impaired if the Securities and Exchange Commission
ceases accepting financial statements audited by Arthur Andersen, if Arthur
Andersen becomes unable to make required representations to us or if for any
reason (including the loss of key members of our audit team from Arthur
Andersen) Arthur Andersen is unable to perform required audit-related services
for us is a timely manner. In such case, we would promptly seek to engage new
independent auditors, but such actions could be disruptive to our operations and
affect the price and liquidity of our securities.

WE DEPEND ON OUR SENIOR MANAGEMENT TEAM, AND THE LOSS OF ANY MEMBER 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.

                                        9
WE MUST RECRUIT AND RETAIN QUALIFIED PERSONNEL.

     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.

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 clients may terminate the agreements that they enter into
with us or reduce the scope of services under these contracts upon little or no
notice. Contracts may be terminated 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.

     In most instances, 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 MAY BE SUBJECT TO UNDERPRICING AND COST OVERRUNS.

     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 these
contracts to adjust the price to be charged under these contracts 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.

WE ARE EXPOSED TO POTENTIAL LIABILITY 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
                                        10
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 damages or incur defense costs in connection
with a claim that is not indemnified, that is outside the scope of an indemnity
or where the indemnity, although applicable, is not honored in accordance with
its terms.

     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. We cannot assure you that our insurance coverage will
be adequate, or that insurance coverage will continue to be available on terms
acceptable to us.

OUR CLIENTS RETAIN US ON AN ENGAGEMENT-BY-ENGAGEMENT BASIS, WHICH REDUCES THE
PREDICTABILITY OF OUR REVENUES AND OUR PROFITABILITY.

     Our clients retain us on an engagement-by-engagement basis. Costs of
switching drug development services companies are relatively low when compared
with other industries and after we complete a project for a client we have no
assurance that 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.

     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, signed letter of intent or other written evidence
of commitment. Our backlog as of December 31, 2001 was approximately $174
million. Our backlog is subject to fluctuations and is not necessarily
indicative of future backlog or sales. Delayed or cancelled contracts are
removed from backlog. Our failure to replace items of backlog that have been
completed, delayed or canceled could result in lower revenues.

OUR BUSINESS IS SUBJECT TO THE RISKS OF INTERNATIONAL OPERATIONS.

     Approximately 85% of our net service revenue in 2001 was from outside of
the United States. Operations in other countries may involve risks inherent in
our operations, including risks relating to political and economic conditions,
changes in regulatory requirements, exposure to currency exchange rate
fluctuations, differences in legal standards, difficulties in staffing and
managing operations, currency exchange controls and other factors which could
have a material adverse effect on our business, financial conditions and
operating results.

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 of these operations through continued
capital investment and, to a lesser extent, through strategic

                                        11
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. We cannot assure you that we will be successful in
implementing this strategy. 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.

WE COULD BE ADVERSELY AFFECTED IF WE FAIL TO COMPLY WITH REGULATORY STANDARDS.

     The pre-clinical and clinical development services industries are highly
regulated and monitored closely by North American, European, Japanese and other
national and international regulatory authorities. 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.

     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 second largest provider of pre-clinical safety
evaluation services in the world, based on net service revenue. Our primary
pre-clinical competitor globally 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.

     We believe 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.
Based on this, 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
                                        12
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.

     We have traditionally competed effectively in the above areas, but there
can be no assurance that we will be able to continue to do so. If we fail to
compete successfully, our business could be seriously harmed.

HEALTH CARE INDUSTRY REFORM COULD REDUCE OR ELIMINATE OUR BUSINESS
OPPORTUNITIES.

     The health care industry is subject to changing political, economic and
regulatory influences that may affect the pharmaceutical and biotechnology
industries. In recent years, several comprehensive health care reform proposals
were introduced in the United States Congress. The intent of the proposals was,
generally, to expand health care coverage for the uninsured and reduce the
growth of total health care expenditures. While none of the proposals were
adopted, the United States Congress may again address health care reform. In
addition, foreign governments may also undertake health care reforms in their
respective countries. Business opportunities available to us could decrease if
the implementation of government health care reform adversely affects research
and development expenditures by pharmaceutical and biotechnology companies.

OUR BUSINESS MAY BE IMPAIRED BY NEGATIVE ATTENTION FROM SPECIAL INTEREST GROUPS.

     Research activities with animals have been the subject of adverse
attention, particularly in the United Kingdom. This has involved on-site
protests and other demonstrations at facilities operated by certain of our
competitors, clients and suppliers. Any negative attention or threats directed
against our animal research activities in the future could impair our ability to
operate our business efficiently and effectively. In addition, if regulatory
authorities were to mandate a significant reduction in safety testing procedures
which utilize laboratory animals (as has been advocated by certain groups), the
impact upon our business would be negative. However, we believe that this is
unlikely as there are currently no acceptable alternatives to animal testing
which would provide the scientific information necessary to obtain regulatory
approval for pharmaceuticals.

                                        13
RISKS RELATED TO THIS OFFERING

OUR EXISTING STOCKHOLDERS WILL CONTINUE TO CONTROL US AFTER THIS OFFERING, AND
THEY MAY MAKE DECISIONS WITH WHICH YOU DISAGREE.

     Upon consummation of this offering, our management, Candover Investments
PLC, together with a wholly-owned subsidiary of Candover Investments PLC and
certain investment funds indirectly controlled by Candover Investments PLC, will
continue to own an aggregate of approximately      % of our outstanding shares
of common stock (     % if the underwriters' over-allotment option is exercised
in full). See "Principal Stockholders." The interests of those Candover
stockholders and our management could differ from those of other stockholders.
As a result of its share ownership, Candover Investments PLC, together with our
management, will be able to:

     - elect our entire board of directors;

     - amend, without the consent of our other stockholders, our certificate of
       incorporation;

     - control our management and policies; and

     - determine, without the consent of our other stockholders, the outcome of
       any corporate transaction or other matter submitted to our stockholders
       for approval, including mergers, consolidations and the sale of all or
       substantially all our assets.

     The Candover stockholders, together with our management, will have
sufficient voting power to prevent a change in control of our company (which may
have the effect of discouraging third parties offers to acquire our company).

THE MARKET PRICE OF OUR SHARES OF COMMON STOCK COULD FLUCTUATE SIGNIFICANTLY,
AND YOU MAY NOT BE ABLE TO SELL YOUR COMMON STOCK AT A FAVORABLE PRICE OR AT
ALL.

     Currently there is no public market for our shares of common stock. We do
not know the extent to which investor interest will lead to the development of a
trading market or how liquid it may be. The initial public offering price will
be determined by negotiations among us and representatives of the underwriters
and may not be indicative of prices that will prevail in the trading market for
our common stock, should one develop.

     In recent years, the stock market has experienced significant price and
volume fluctuations that are often unrelated to the operating performance of
specific companies. Wide fluctuations in the trading price or volume of our
shares of common stock could be caused by many factors, including factors
relating to our company or to investor perception of our company (including
changes in financial estimates and recommendations by financial analysts who
follow us) but also factors relating to (or relating to investor perception of)
the drug development services industry, the pharmaceutical and biotechnology
industries or the economy in general.

THE SALE OF A SUBSTANTIAL NUMBER OF OUR SHARES OF COMMON STOCK IN THE PUBLIC
MARKET COULD ADVERSELY AFFECT THE MARKET PRICE OF OUR SHARES, WHICH IN TURN
COULD NEGATIVELY IMPACT YOUR INVESTMENT IN US.

     Future sales of substantial amounts of our shares of common stock in the
public market (or the perception that such sales may occur) could adversely
affect market prices of our common stock prevailing from time to time and could
impair our ability to raise capital through future sales of our equity
securities. Upon completion of this offering, we will have           shares of
common stock issued and outstanding. All of the shares we are selling in this
offering, plus any shares issued upon the exercise of the underwriters'
over-allotment option, will be freely tradable without restriction under the
Securities Act of 1933, unless purchased by our affiliates. Upon completion of
this offering, all of our shares of common stock issued and outstanding prior to
the completion of this offering (25,827,720) will be restricted securities
within the meaning of Rule 144 under the Securities Act of 1933. The rules
affecting the sale of these securities are summarized under "Shares Eligible for
Future Sale." We have granted registration

                                        14
rights to all holders of restricted securities. See "Principal
Stockholders -- Registration Rights Agreements." Upon any sale of such shares
pursuant to an effective registration statement, such shares would be freely
tradeable without restriction.

     Subject to certain exceptions described under the caption "Underwriting,"
we, all of our directors and officers and certain of our stockholders have
agreed not to offer, sell or agree to sell, directly or indirectly, any shares
of common stock without the permission of Bear, Stearns for a period of 180 days
from the date of this prospectus. When this period expires we and our locked-up
stockholders will be able to sell our shares in the public market. Our
stockholders who are subject to the lock-up agreements own 25,827,720 of our
shares constituting all of our issued and outstanding shares immediately prior
to the completion of this offering. Sales of a substantial number of such shares
upon expiration, or early release, of the lock-up (or the perception that such
sales may occur) could cause our share price to fall.

     In addition, simultaneously with this offering, we intend to file one or
more registration statements under the Securities Act of 1933 covering all of
our shares of common stock reserved for issuance under our stock option plans.
Shares registered under these registration statements would be available for
sale in the open market, unless these shares are subject to vesting restrictions
contained in the applicable award agreement, if any.

     We also may issue our shares of common stock from time to time as
consideration for future acquisitions and investments. If any such acquisition
or investment is significant, the number of shares that we may issue may in turn
be significant. In addition, we may also grant registration rights covering
those shares in connection with any such acquisitions and investments.

YOU WILL BE IMMEDIATELY AND SUBSTANTIALLY DILUTED IF YOU PURCHASE SHARES IN THIS
OFFERING BECAUSE THE $     PER SHARE PRICE IN THIS OFFERING IS SUBSTANTIALLY
HIGHER THAN THE NET TANGIBLE BOOK VALUE OF EXISTING SHARES OF COMMON STOCK.

     If you purchase shares in this offering, you will pay more for your shares
than the net tangible book value of existing shares of common stock. As a
result, you will experience an immediate and substantial dilution in the net
tangible book value of your shares of $     per share. See "Dilution." In
addition, if outstanding options to purchase shares of common stock are
exercised, there could be substantial additional dilution. See
"Management -- Executive Compensation" for information regarding outstanding
stock options and additional stock options which we may grant.

WE HAVE IMPLEMENTED ANTI-TAKEOVER PROVISIONS THAT COULD MAKE ANY CHANGE IN
CONTROL OF OUR COMPANY MORE DIFFICULT. THIS COULD ADVERSELY AFFECT OUR SHARE
PRICE.

     Our certificate of incorporation, our bylaws and Delaware law contain
provisions that could delay or prevent a change in control, may discourage bids
at a premium over the market price of our shares of common stock and may
adversely affect the market price of our shares and the voting and other rights
of the holders of our shares. For example, our certificate of incorporation
contains provisions:

     - classifying our board of directors into three groups so that the
       directors in each group will serve staggered three-year terms, which
       could make it difficult for a potential acquiror to gain control of our
       board of directors; and

     - authorizing, without a vote of stockholders, the issuance of one or more
       series of preferred stock, which could have voting and/or conversion
       rights that could impede the ability of a potential acquiror to acquire a
       majority of our voting shares.

     In addition, we are subject to Section 203 of the Delaware General
Corporation Law, which contains provisions restricting the ability of
"interested stockholders" to take action to acquire control of us or to
otherwise engage in a transaction with us.

                                        15
FORWARD-LOOKING STATEMENTS

     This prospectus contains forward-looking statements under the captions
"Prospectus Summary," "Risk Factors," "Management's Discussion and Analysis of
Financial Condition and Results of Operations," "Business" and elsewhere.

     When used in this prospectus, the terms "believe," "anticipate,"
"estimate," "expect," "seek," "intend," "could," "will," "predict," "plan,"
"potential," "continue," and "may" or other similar terminology, or the negative
of these terms, are generally intended to identify "forward-looking statements."
Our forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause our actual results, performance or
achievements, to be materially different from any future results, performance or
achievements express or implied by these forward-looking statements. We discuss
these factors in more detail elsewhere in this prospectus, including under the
captions "Prospectus Summary," "Risk Factors," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business." You
should not place undue reliance on our forward-looking statements. We do not
intend to update any of these factors or to publicly announce the result of any
revisions to any of these forward-looking statements.

                                        16
USE OF PROCEEDS

     We estimate that the net proceeds from the sale of the shares of common
stock that we are offering will be approximately $     million, or approximately
$     million if the underwriters' overallotment option is exercised in full, in
each case based on an initial public offering price of $     per share and after
deducting underwriting discounts and commissions and estimated offering
expenses.

     We anticipate using the net proceeds of this offering to repay $
million of outstanding indebtedness, plus accrued interest, under our existing
bank facilities and $     million of 10% unsecured subordinated loan stock due
2008, substantially all of which are held by Candover Investments PLC and
certain investment funds indirectly controlled by Candover Investments PLC.

     The $     million of outstanding indebtedness under our existing bank
facilities which is being repaid with a portion of the proceeds of this offering
includes $     million principal amount of indebtedness plus $     million of
accrued interest (as of           ). $     million of this indebtedness bears
interest at LIBOR plus 2.25% and the remaining $     million bears interest at
LIBOR plus 2.75%. The facilities are repayable in accordance with repayment
schedules between June 30, 2002 and December 31, 2008. The proceeds of these
facilities were used (i) to refinance previously existing indebtedness, (ii) to
finance the acquisition of ClinTrials in April 2001 and (iii) for general
working capital purposes.

     The first tranche of 10% unsecured subordinated loan stock due 2008, in the
aggregate amount of $43.8 million, was issued to Candover Investments PLC and
certain investment funds indirectly controlled by Candover Investments PLC in
September 1999 in connection with the management buyout from SGS Societe
Generale de Surveillance SA. We issued an additional $64.8 million of 10%
unsecured subordinated loan stock due 2008 in April 2001, the proceeds of which
were used to finance the acquisition of ClinTrials. The indebtedness under the
10% unsecured subordinated loan stock due 2008 accumulates interest on the
principal amount at 10% per year and is due and payable with accumulated
interest no later than June 30, 2008. Immediately prior to this offering,
Candover Investments PLC, together with a wholly-owned subsidiary of Candover
Investments PLC and certain investment funds indirectly controlled by Candover
Investments PLC own an aggregate of 79.0% of our issued and outstanding shares
of common stock. See "Principal Stockholders" and "Certain Transactions."

                                DIVIDEND POLICY

     We have not paid any dividends in the past and currently do not expect to
pay cash dividends or make any other distributions in the foreseeable future. We
expect to retain our future earnings, if any, for use in the operation and
expansion of our business. Any future determination to pay dividends will be at
the discretion of our board of directors and will depend upon our financial
condition, operating results, capital requirements and such other factors as our
board deems relevant. In addition, our ability to declare and pay dividends on
our shares of common stock will be restricted by (i) covenants in the revolving
credit facility which we anticipate entering into upon consummation of this
offering and (ii) our current corporate organizational structure which imposes a
significant tax burden on intercompany dividends and distributions of earnings
to us by our operating subsidiaries.

                                        17
CAPITALIZATION

     The following table presents:

     - the capitalization of Inveresk Research Group, Inc. as of December 31,
       2001, which assumes the transactions described under "Change in Ultimate
       Parent" had occurred on that date; and

     - our pro forma capitalization as of December 31, 2001, which has been
       adjusted to give effect to the sale of      of our shares of common stock
       in this offering.

     You should read this table in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the consolidated
financial statements and the accompanying notes included in this prospectus
beginning on page F-1.
AS OF DECEMBER 31, 2001
                                                              -------------------------------------
                                                              INVERESK RESEARCH   INVERESK RESEARCH
                                                                 GROUP, INC.          PRO FORMA
                                                              -----------------   -----------------
                                                                     (DOLLARS IN THOUSANDS)
Total long-term debt........................................       $85,109             $
Stockholders' equity:
Common stock................................................           255
Addition to paid-in capital.................................         1,021
Accumulated deficit.........................................        (5,707)
Other comprehensive income (loss)...........................        (2,954)
                                                                   -------
Total stockholders' equity..................................        (7,385)
                                                                   -------
     Total capitalization...................................        77,724
                                                                   =======
The above information does not reflect (i) the           shares which we
will issue if the underwriters exercise in full their option to purchase
additional shares from us, (ii) the           shares issuable upon the exercise
of stock options outstanding after this offering as of           , 2002 or (iii)
the           shares (which includes the           shares issuable upon the
exercise of outstanding stock options) authorized and reserved for issuance
under our stock plan as of           , 2002.

                                        18
DILUTION

     Our net tangible book value as of December 31, 2001, before giving effect
to this offering, were approximately $(141.9) million, or $(5.56) per share of
common stock.

     Purchasers of shares in this offering will experience dilution in net
tangible book value per share equal to the difference between the amount per
share paid by those purchasers in this offering and the net tangible book value
per share immediately following this offering.

     After giving effect to the issuance of the           shares of common stock
that we are selling in this offering at an assumed offering price of $   , and
after deducting underwriting discounts and commissions and estimated offering
expenses that we will incur in connection with this offering, our pro forma net
tangible book value as of December 31, 2001 would have been $     million, or
$     per share. This represents an immediate increase in net tangible book
value of $     per share equivalent to existing stockholders. This also
represents an immediate dilution of $     per share to new investors purchasing
shares in this offering. The following table illustrates this dilution per
share:
PER SHARE
                                                              ---------
Assumed initial public offering price.......................  $
  Net tangible book value per share prior to this
     offering...............................................  $
                                                              --------
  Increase in pro forma net tangible book value per share
     attributable to new investors..........................
Pro forma net tangible book value per share after giving
  effect to the offering....................................
                                                              --------
Dilution in pro forma net tangible book value to new
  investors.................................................  $
The analysis presented above does not give effect to the issuance and sale
of [          ] of our shares of common stock that will occur if the
underwriters exercise their option to purchase additional shares from us. If the
underwriters exercise such option in full, the pro forma net tangible book value
after giving effect to this offering would be $  per share, the increase in pro
forma net tangible book value to existing stockholders would be $  per share and
the dilution in pro forma net tangible book value to new investors would be $
per share.

     The following table summarizes as of December 31, 2001, on a pro forma
basis, the number of shares purchased from us, the total consideration paid and
the average price per share paid by our existing stockholders and by the
investors in this offering with respect to the number of shares purchased from
us at an assumed offering price of $          per share and before deduction of
underwriting discounts and commissions and estimated expenses:
SHARES PURCHASED    TOTAL CONSIDERATION
                                         ------------------   -------------------   AVERAGE PRICE
                                         NUMBER    PERCENT     AMOUNT    PERCENT      PER SHARE
                                         -------   --------   --------   --------   -------------
Existing stockholders..................  $                 %  $                  %    $
New investors..........................
                                         -------   --------   --------   --------     --------
     Total.............................  $                 %  $                  %    $
The analysis presented in this table does not take into account the
1,245,662 shares underlying stock options granted as of December 31, 2001.

                                        19
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA

     You should read the selected consolidated financial information presented
below in conjunction with the audited consolidated financial statements
appearing elsewhere in this prospectus and the notes to those statements and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." The financial information for each of the two years ended December
30, 2001 and December 31, 2000 and for the period from September 20, 1999 to
December 26, 1999 reflects the financial position and results of operations of
Inveresk Research Group Limited, which will become our direct subsidiary
immediately before the completion of this offering, pursuant to the transactions
described under "Change in Ultimate Parent." The financial information for the
period from December 28,1998 to September 19, 1999 and for each of the two years
ended December 27, 1998 and December 28, 1997 reflects the financial position
and results of operations of our business while it was operated as a division of
SGS Societe Generale de Surveillance SA. Information for the year ended December
30, 2001 includes the results of operations of ClinTrials Research Inc. from
April 5, 2001.

     The selected consolidated financial data presented below for each of the
two years ended December 30, 2001 and December 31, 2000 and the periods from
September 20, 1999 to December 26, 1999 and from December 28, 1998 to September
19, 1999 have been derived from the audited consolidated financial statements of
Inveresk Research Group Limited included elsewhere in this prospectus, which
financial statements have been prepared in accordance with generally accepted
accounting principles in the United States, or U.S. GAAP. The summary
consolidated financial data presented below for each of the two years ended
December 27, 1998 and December 28, 1997 have been derived from unaudited
financial statements prepared on the basis of data furnished by SGS Societe
Generale de Surveillance SA. Those unaudited financial statements, which were
prepared in accordance with U.S. GAAP, are not included in this prospectus.
INVERESK RESEARCH GROUP(1)                            PREDECESSOR
                                   -------------------------------------------   -------------------------------------------
                                     52 WEEKS       53 WEEKS     SEPTEMBER 20,   DECEMBER 28,      52 WEEKS       52 WEEKS
                                      ENDED          ENDED            TO            1998 TO         ENDED          ENDED
                                   DECEMBER 30,   DECEMBER 31,   DECEMBER 26,    SEPTEMBER 19,   DECEMBER 27,   DECEMBER 28
                                   ------------   ------------   -------------   -------------   ------------   ------------
                                       2001           2000           1999            1999          1998(2)        1997(2)
                                   ------------   ------------   -------------   -------------   ------------   ------------
                                                         (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Net service revenue..............    $156,296       $ 65,540       $ 16,832        $ 47,088        $ 58,219       $ 51,573
Direct costs.....................     (83,975)       (36,133)        (9,645)        (27,177)        (31,816)       (26,531)
                                     --------       --------       --------        --------        --------       --------
Gross profit.....................      72,321         29,407          7,187          19,911          26,403         25,042
Selling, general and
  administrative expenses........     (41,934)       (13,825)        (3,198)         (9,013)        (12,746)       (12,800)
Depreciation.....................      (8,028)        (4,513)          (809)         (3,731)         (4,268)        (4,105)
Amortization.....................      (7,910)        (3,281)          (973)           (242)           (345)          (341)
                                     --------       --------       --------        --------        --------       --------
Income from operations...........      14,449          7,788          2,207           6,925           9,044          7,796
Interest income (expense), net...     (17,101)        (7,522)        (2,004)           (560)            195            222
                                     --------       --------       --------        --------        --------       --------
Income (loss) before income
  taxes..........................      (2,652)           266            203           6,365           9,239          8,018
Provision for income taxes.......      (2,049)          (682)          (325)         (2,308)         (2,465)        (2,070)
                                     --------       --------       --------        --------        --------       --------
Net income (loss) before
  extraordinary items............      (4,701)          (416)          (122)          4,057           6,774          5,948
                                     --------       --------       --------        --------        --------       --------
Extraordinary items..............        (419)            --             --              --              --             --
                                     --------       --------       --------        --------        --------       --------
Net income (loss)................    $ (5,120)      $   (416)      $   (122)       $  4,057        $  6,774       $  5,948
                                     ========       ========       ========        ========        ========       ========
20
INVERESK RESEARCH GROUP(1)                            PREDECESSOR
                                   -------------------------------------------   -------------------------------------------
                                     52 WEEKS       53 WEEKS     SEPTEMBER 20,   DECEMBER 28,      52 WEEKS       52 WEEKS
                                      ENDED          ENDED            TO            1998 TO         ENDED          ENDED
                                   DECEMBER 30,   DECEMBER 31,   DECEMBER 26,    SEPTEMBER 19,   DECEMBER 27,   DECEMBER 28
                                   ------------   ------------   -------------   -------------   ------------   ------------
                                       2001           2000           1999            1999          1998(2)        1997(2)
                                   ------------   ------------   -------------   -------------   ------------   ------------
                                                         (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Earnings per share pre
  extraordinary item(3):
  Basic..........................    $  (0.20)      $  (0.02)      $  (0.01)
  Diluted........................    $  (0.20)      $  (0.02)      $  (0.01)
Earnings per share post
  extraordinary item:
  Basic..........................    $  (0.22)      $  (0.02)      $  (0.01)
  Diluted........................    $  (0.22)      $  (0.02)      $  (0.01)
Number of shares and common stock
  equivalents used in computing
  loss per shares:
  Basic..........................  23,349,278     17,171,327     17,171,327
  Diluted........................  23,349,278     17,171,327     17,171,327
Dividends per share..............    $     --       $     --       $     --
                                     ========       ========       ========
OTHER DATA:
Depreciation and amortization....    $ 15,938       $  7,794       $  1,782        $  3,973        $  4,613       $  4,446
Capital expenditures.............    $ 11,145       $  6,792       $  1,307        $  5,305        $  6,725       $  6,970
BALANCE SHEET DATA:
INVERESK RESEARCH GROUP                                     PREDECESSOR
                                   -------------------------------------------                   ---------------------------
                                   DECEMBER 30,   DECEMBER 31,   DECEMBER 26,                    DECEMBER 27,   DECEMBER 28
                                       2001           2000          1999(2)                        1998(2)        1997(2)
                                   ------------   ------------   -------------                   ------------   ------------
                                                                    (DOLLARS IN THOUSANDS)
Cash and cash equivalents........    $ 16,118       $  9,686       $  7,009                        $  4,039       $  2,433
Total assets.....................     301,826        124,568        129,180                          79,039         73,384
Total short term debt............     127,648          3,080          3,261                           1,041            362
Total long term debt.............      85,109         80,898         84,653                              70            174
Total shareholders' equity.......      (7,385)           247            712                          37,109         29,978
                                     ========       ========       ========                        ========       ========
---------------
1. Our fiscal year ends on the last Sunday on or prior to December 31. Beginning
   in 2002 our fiscal year will end consistently on December 31.

2. Unaudited.

3. The information for the periods prior to September 20, 1999 relates to
   periods when the businesses were owned by SGS Societe Generale de
   Surveillance Holdings SA. It is not meaningful to present earnings per share
   or dividends per share data for these periods.

                                        21
PRO FORMA FINANCIAL DATA

     The unaudited pro forma statement of operations and earnings per share data
for the fiscal year ended December 30, 2001 give effect to our acquisition of
ClinTrials and this offering, including the use of proceeds to repay an
aggregate of approximately $       million of debt as if each of them had
occurred on January 1, 2001. The pro forma balance sheet data is presented as if
this offering had occurred on December 30, 2001.

     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.

     The pro forma adjustments reflected in the accompanying unaudited pro forma
condensed consolidated financial information reflect estimates and assumptions
made by our management that it believes to be reasonable.

     Furthermore, we have not taken account of any synergies, including cost
savings, or any severance and restructuring costs which may or are expected to
occur as a result of the acquisition of ClinTrials in the future.

     There are no pro forma adjustments in the accompanying pro forma statement
of operations to eliminate transactions between Inveresk and ClinTrials because
there are no such transactions.

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE 52 WEEKS ENDED
DECEMBER 30, 2001.
PRE       CLINTRIALS
                                              HISTORICAL   ACQUISITION   ACQUISITION   PRO FORMA      SHARE
                                               INVERESK    RESULTS OF     PRO FORMA    INVERESK     OFFERING
                                                GROUP      CLINTRIALS    ADJUSTMENTS     GROUP     ADJUSTMENTS   PRO FORMA
                                              ----------   -----------   -----------   ---------   -----------   ---------
                                                                         (DOLLARS IN THOUSANDS)
Net service revenues........................   $156,296     $ 24,257       $    --     $ 180,553
Direct costs................................    (83,975)     (16,199)           --      (100,174)
                                               --------     --------       -------     ---------     -------      -------
Gross profit................................     72,321        8,058            --        80,379
Selling, general and administrative
  expenses..................................    (41,934)      (7,989)           --       (49,923)
Depreciation................................     (8,028)      (1,535)           --        (9,563)
Amortization................................     (7,910)        (304)       (1,306)       (9,520)
                                               --------     --------       -------     ---------     -------      -------
Income (loss) from operations...............     14,449       (1,770)       (1,306)       11,373
Interest expense, net.......................    (17,101)          (5)       (2,898)      (20,004)
                                               --------     --------       -------     ---------     -------      -------
Income (loss) before income taxes...........     (2,652)      (1,775)       (4,204)       (8,631)
Provision (benefit) for income taxes........     (2,049)      (1,082)        1,043        (2,088)
                                               --------     --------       -------     ---------     -------      -------
Net income (loss) from continuing
  operations................................   $ (4,701)    $ (2,857)      $(3,161)    $ (10,719)
                                               ========     ========       =======     =========     =======      =======
The above pro forma consolidated statements of operations do not include
the estimated non-recurring compensation expense of $          which will arise
on the exchange of shares and the share options at the point of completion of
the offering and which will be recorded by the Company in 2002.

     The unaudited pro forma financial data has been prepared from our published
financial information and from the management accounts of ClinTrials for the
period from December 31, 2000 to the acquisition date.

     The ClinTrials acquisition pro forma adjustments reflect the estimated
additional amortization of goodwill of $921,000 and other intangible assets of
$689,000 less an adjustment to remove the amortization of $304,000 recorded in
the pre-acquisition accounts of ClinTrials. The goodwill amortization is
calculated based on the goodwill of $73.6 million arising on the acquisition for
the 3 month pre-acquisition period using a 20 year life. The other intangible
assets amortization is calculated based on the assembled workforce intangible
assets of $22.0 million for the 3 month pre-acquisition period using an 8 year
life.

                                        22
You should read note 3 to our financial statements, which begin at page F-1 of
this prospectus, for details of the purchase price allocation made in respect of
the ClinTrials acquisition. The estimated additional interest cost on the debt
finance for the acquisition comprises additional interest of $1,702,000 on 10%
unsecured subordinated interest loan stock due 2008, additional bank debt
interest of $1,154,000 together with additional debt amortization costs of
$42,000. These costs are based on the issuance of additional loan stock of $64.8
million and bank debt of $56.0 million (a total of $120.8 million) at the
interest rate applicable to these facilities. The adjustment for the related tax
effects that would have arisen had the acquisition been completed on the date
assumed comprises tax on the interest adjustment of $869,000 calculated at the
UK tax rate of 30% together with a deferred tax credit on the amortization of
the assembled workforce intangible of $174,000. No tax effect has been recorded
in respect of the assembled workforce attributable to operations with surplus
net operating losses.
PRO FORMA
                                                              ---------
Earnings per share..........................................
                                                              ========
Pro forma unaudited earnings per share are based on the above pro forma
unaudited net income (loss) from continued operations divided by        ordinary
shares of common stock. The number of shares of common stock is calculated as
the weighted average number of shares in issue during 2001 on the basis that the
offering took place on January 1, 2001.

UNAUDITED PRO FORMA BALANCE SHEET AT DECEMBER 30, 2001.
HISTORICAL      SHARE
                                                               INVERESK     OFFERING
                                                                GROUP      ADJUSTMENTS   PRO FORMA
                                                              ----------   -----------   ---------
                                                                     (DOLLARS IN THOUSANDS)
CURRENT ASSETS
  Cash and cash equivalents.................................   $ 16,118
  Other current assets......................................     61,317
                                                               --------      ------      --------
  Total current assets......................................     77,435
Property, plant and equipment...............................     87,922
Intangible assets...........................................    134,517
Other assets................................................      1,952
                                                               --------      ------      --------
                                                               $301,826
                                                               ========      ------      --------
CURRENT LIABILITIES
  Current portion of long term debt.........................    127,648
  Other current liabilities.................................     64,680
                                                               --------      ------      --------
  Total current liabilities.................................    192,328
Deferred income taxes.......................................     27,053
Long term debt..............................................     85,109
Pension obligation..........................................      4,721
SHAREHOLDERS' EQUITY
  Issued share capital......................................        255
  Other shareholders' equity................................     (7,640)
                                                               --------      ------      --------
  Total shareholders' equity................................     (7,385)
                                                               --------      ------      --------
                                                               $301,826
                                                               ========      ------      --------
The Historical Inveresk Group is taken from our published financial information
at December 30, 2001. No adjustments are required to be made to this balance
sheet in respect of the acquisition of ClinTrials as the balance sheet already
reflects this acquisition.

                                        23
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The following discussion should be read in conjunction with our
consolidated financial statements and our unaudited pro forma condensed
consolidated financial data, including the related notes, contained elsewhere in
this prospectus.

OVERVIEW

     On September 20, 1999 we completed a management buyout supported by
Candover Investments PLC. In that transaction, Inveresk Research Group Limited,
a newly created Scottish company, acquired the businesses that comprise our
European pre-clinical operations, our Phase I clinical trials operations located
in Edinburgh and the original Inveresk Research Phase II-IV clinical development
services operations. As part of the transaction, we also acquired Inveresk
Research North America, Inc., a small Phase II-IV clinical development services
business located in the United States. The total acquisition cost was $78.8
million, net of cash acquired of $9.1 million. In connection with financing this
acquisition we received a $0.8 million equity investment from the Candover
Investments PLC, together with a wholly-owned subsidiary of Candover Investments
PLC and certain investment funds indirectly controlled by Candover Investments
PLC (the "Candover Investors") and management, issued $43.8 million of 10%
unsecured subordinated loan stock due 2008 to certain of the Candover Investors
and borrowed $41.4 million under our bank facilities.

     The financial information in this prospectus divides the 1999 financial
year into two periods -- the period prior to September 20, 1999, when the
original Inveresk Research businesses were under the ownership and control of
its previous parent company, and the post acquisition period from September 20,
1999 to December 26, 1999.

     On April 5, 2001 we completed the acquisition of ClinTrials. The total
acquisition cost was $115.1 million, net of cash acquired of $5.7 million. To
finance this acquisition we received a $0.4 million equity investment from the
Candover Investors, issued $64.8 million of 10% unsecured subordinated loan
stock due 2008 to certain of the Candover Investors and borrowed $93.7 million
under our bank facilities, $38.3 million of which was used to repay loans under
our then existing bank facilities.

     Because of the way in which we financed the original management buyout and
subsequent acquisition of ClinTrials, we have a very high level of shareholder
loans and bank finance and related debt servicing costs. Our interest expense
has therefore been high relative to our income before taxes. We therefore
believe that income from operations (i.e. before interest) is a better measure
of the performance of the business historically than income or loss before
income taxes. We intend to use the net proceeds from this offering, together
with borrowings under a new bank facility which we intend to put in place as of
the effective date of this offering, to repay the 10% unsecured subordinated
loan stock due 2008 and the current borrowing under our bank facilities referred
to above.

                                        24
We operate in two segments for financial reporting purposes: pre-clinical
and clinical. The following table shows, for the past three years, a summary of
our financial performance.
SUCCESSOR                                   PREDECESSOR
                           ------------------------------------------------------------    ---------------------
                               52 WEEKS             53 WEEKS         SEPTEMBER 20, 1999      DECEMBER 28, 1998
                                 ENDED                ENDED           TO DECEMBER 26,        TO SEPTEMBER 19,
                           DECEMBER 30, 2001    DECEMBER 31, 2000           1999                   1999
                           -----------------    -----------------    ------------------    ---------------------
                                                          (DOLLARS IN THOUSANDS)
NET SERVICE REVENUE:
Pre-clinical.............      $ 95,172             $ 45,136              $12,184                $ 32,524
Clinical.................        61,124               20,404                4,648                  14,564
                               --------             --------              -------                --------
                                156,296               65,540               16,832                  47,088
                               --------             --------              -------                --------
DIRECT COSTS:
Pre-clinical.............       (44,952)             (22,666)              (6,681)                (17,496)
Clinical.................       (39,023)             (13,467)              (2,964)                 (9,681)
                               --------             --------              -------                --------
                                (83,975)             (36,133)              (9,645)                (27,177)
                               --------             --------              -------                --------
  GROSS PROFIT:
  Pre-clinical...........        50,220               22,470                5,503                  15,028
  Clinical...............        22,101                6,937                1,684                   4,883
                               --------             --------              -------                --------
                                 72,321               29,407                7,187                  19,911
                               --------             --------              -------                --------
SELLING, GENERAL AND
  ADMINISTRATIVE:
Pre-clinical.............       (21,907)              (9,850)              (2,320)                 (6,575)
Clinical.................       (15,619)              (2,278)                (248)                   (797)
Central overheads........        (4,408)              (1,697)                (630)                 (1,641)
                               --------             --------              -------                --------
                                (41,934)             (13,825)              (3,198)                 (9,013)
                               --------             --------              -------                --------
DEPRECIATION:
Pre-clinical.............        (6,062)              (4,158)                (759)                 (3,401)
Clinical.................        (1,966)                (355)                 (50)                   (330)
                               --------             --------              -------                --------
                                 (8,028)              (4,513)                (809)                 (3,731)
                               --------             --------              -------                --------
AMORTIZATION:
Pre-clinical.............        (4,293)              (2,364)                (703)                      0
Clinical.................        (3,617)                (917)                (270)                   (242)
                               --------             --------              -------                --------
                                 (7,910)              (3,281)                (973)                   (242)
                               --------             --------              -------                --------
  INCOME FROM OPERATIONS:
  Pre-clinical...........        17,958                6,098                1,721                   5,052
  Clinical...............           899                3,387                1,116                   3,514
  Central overheads......        (4,408)              (1,697)                (630)                 (1,641)
                               --------             --------              -------                --------
                                 14,449                7,788                2,207                   6,925
Interest expense (net)...       (17,101)              (7,522)              (2,004)                   (560)
                               --------             --------              -------                --------
  INCOME (LOSS) BEFORE
    TAX..................        (2,652)                 266                  203                   6,365
Provision for income
  taxes..................        (2,049)                (682)                (325)                 (2,308)
                               --------             --------              -------                --------
  NET INCOME (LOSS)
    BEFORE EXTRAORDINARY
    ITEM.................        (4,701)                (416)                (122)                  4,057
Extraordinary item.......          (419)                  --                   --                      --
                               --------             --------              -------                --------
  NET INCOME (LOSS)......      $ (5,120)            $   (416)             $  (122)               $  4,057
                               ========             ========              =======                ========
25
The following table summarizes historical results of operations as a
percentage of net service revenue for the periods shown:
SUCCESSOR                                 PREDECESSOR
                           ------------------------------------------------------------    -----------------
                                                                     SEPTEMBER 20, 1999    DECEMBER 28, 1998
                            52 WEEKS ENDED       53 WEEKS ENDED       TO DECEMBER 26,      TO SEPTEMBER 19,
                           DECEMBER 30, 2001    DECEMBER 31, 2000           1999                 1999
                           -----------------    -----------------    ------------------    -----------------
NET SERVICE REVENUE:
Pre-clinical.............        100.0%               100.0%               100.0%                100.0%
Clinical.................        100.0%               100.0%               100.0%                100.0%
TOTAL....................        100.0%               100.0%               100.0%                100.0%

DIRECT COSTS:
Pre-clinical.............         47.2%                50.2%                54.8%                 53.8%
Clinical.................         63.8%                66.0%                63.8%                 66.5%
TOTAL....................         53.7%                55.1%                57.3%                 57.7%

  GROSS PROFIT:
  Pre-clinical...........         52.8%                49.8%                45.2%                 46.2%
  Clinical...............         36.2%                34.0%                36.2%                 33.5%
  TOTAL..................         46.3%                44.9%                42.7%                 42.3%

SELLING, GENERAL AND
  ADMINISTRATIVE:
Pre-clinical.............         23.0%                21.8%                19.0%                 20.2%
Clinical.................         25.6%                11.2%                 5.3%                  5.5%
TOTAL....................         26.8%                21.1%                19.0%                 19.1%

DEPRECIATION:
Pre-clinical.............          6.4%                 9.2%                 6.2%                 10.5%
Clinical.................          3.2%                 1.7%                 1.1%                  2.3%
TOTAL....................          5.1%                 6.9%                 4.8%                  7.9%

AMORTIZATION:
Pre-clinical.............          4.5%                 5.2%                 5.8%                  0.0%
Clinical.................          5.9%                 4.5%                 5.8%                  1.7%
TOTAL....................          5.1%                 5.0%                 5.8%                  0.5%

  INCOME FROM OPERATIONS:
  Pre-clinical...........         18.9%                13.5%                14.1%                 15.5%
  Clinical...............          1.5%                16.6%                24.0%                 24.1%
  TOTAL..................          9.2%                11.9%                13.1%                 14.7%

Interest expense (net)...         10.9%                11.5%                11.9%                  1.2%

INCOME (LOSS) BEFORE
  TAX....................         (1.7%)                0.4%                 1.2%                 13.5%
26
Net service revenue.  We recognize revenue as costs are incurred and
include estimated earned fees or profits calculated on the basis of the
relationship between costs incurred and total estimated costs (cost-to-cost type
of percentage-of-completion method of accounting). We recognize revenue related
to contract modifications when realization is assured and the amounts can be
reasonably determined. When estimated contract costs indicate that a loss will
be incurred on a contract, the entire loss is provided for in such period.

     Costs associated with contracting with third party investigators are
excluded from net service revenue where they are the direct responsibility of
the clients and are passed through to our clients without any markup.

     Once a contract for a pre-clinical or clinical trial has been signed, the
commencement date may vary depending upon the preparedness of the client's drug
candidate and our capacity availability. This requires efficient capacity
planning and flexible management of our facilities.

     Direct costs.  These comprise the costs of the direct work force,
laboratory consumables and other direct costs associated with the studies we
perform for clients.

     Selling, general and administrative expenses.  These comprise
administration costs, marketing expenditure and overhead costs such as the costs
of running our facilities that are not allocated to direct costs.

     These expenses also include central overhead costs that are not directly
attributable to our operating businesses and include certain costs related to
group management, insurance, marketing, professional fees and property.

     Depreciation and amortization.  Depreciation represents the depreciation
charged on our tangible fixed assets in accordance with the accounting policies
set out in note 2 of our Financial Statements included herein, Summary of
Significant Accounting Policies -- Property, Plant and Equipment. Amortization
represents the amortization of goodwill and other intangible assets over their
estimated useful lives. As described in note 2 of our Financial Statements
included herein, Summary of Significant Accounting Policies -- Recent Accounting
Pronouncements, the accounting policy relating to amortization of goodwill will
change from January 1, 2002 such that unless it is necessary to record an
impairment of the goodwill, there will be no amortization of the goodwill
recorded in 2002.

     Interest expense (net).  This includes interest on our bank debt and our
10% unsecured subordinated loan stock due 2008. The bank debt bears interest at
rates that range between LIBOR plus 2.25% and LIBOR plus 2.75%. The unsecured
subordinated loan stock due 2008 accumulates interest at a fixed rate of 10%. We
entered into an interest rate cap and collar transaction in 1999 on borrowings
in connection with our management buyout. In 2001 we entered into two interest
rate swap arrangements in connection with the incremental borrowings used to
fund the ClinTrials acquisition. These swaps have the effect of fixing the LIBOR
rate at 6.03% on the pounds sterling borrowings and 5.41% on the Canadian dollar
borrowings. In years prior to 2001, interest expense included the amortization
of costs associated with the cap and collar transaction, in line with the
accounting standards then in force. In 2001, interest expense includes the cost
of recording the cap and collar transaction and the interest rate swaps at their
fair values. We intend to use the net proceeds from this offering, together with
borrowings under a new bank facility, to repay the 10% unsecured subordinated
loan stock due 2008 and current borrowings under our existing bank facilities.

EXCHANGE RATE FLUCTUATIONS

     Our consolidated financial statements are prepared in U.S. dollars. Our
principal businesses are based in the United States, United Kingdom and Canada.
Our United Kingdom and Canadian operations record their transactions in local
currencies. Accordingly, fluctuations in pounds sterling and Canadian dollar
exchange rates will impact the results of operations reported in U.S. dollars.

                                        27
The results of our non-U.S. operations have been translated from pounds
sterling and Canadian dollars using the following average exchange rates:
U.S. DOLLARS
                                                               PER          U.S. DOLLARS PER
FISCAL YEAR                                               POUND STERLING    CANADIAN DOLLAR
-----------                                               --------------    ----------------
1999..................................................      1.6178                N/A
  2000..................................................      1.5156                N/A
  2001..................................................      1.4405             0.6428(1)
---------------
(1) Average for the period from April 5, 2001, the date we acquired ClinTrials,
    until December 30, 2001.

     As a result of the acquisition of ClinTrials in 2001, the percentage of our
net service revenue arising from our United Kingdom operations decreased,
although a significant component of our net service revenue now arises in
Canada. The following table sets forth, for the fiscal years indicated, the
percentage of our revenues arising in the United Kingdom and Canada:
FISCAL YEAR                                                   UNITED KINGDOM    CANADA
-----------                                                   --------------    ------
1999......................................................        97%            0%
  2000......................................................        98%            0%
  2001......................................................        54%           31%
In addition, our Canadian business invoices a significant proportion of its
revenues in U.S. dollars, although its costs are largely incurred in Canadian
dollars and it records its transactions in Canadian dollars. This can result in
transaction exchange gains or losses which are reflected in its statements of
operations.

     The foreign currency exchange gain or loss recognized in the statements of
operations and included in "Selling, general and administrative expenses" was a
gain of $1,207,000 for the fiscal year ended December 30, 2001, a loss of
$41,000 for the fiscal year ended December 31, 2000, a loss of $13,000 in the
period from September 20, 1999 to December 26, 1999 and loss of $36,000 for the
period from December 28, 1998 to September 19, 1999. A significant portion of
the foreign exchange gain in 2001 arose from our Canadian pre-clinical
operations.

RESULTS OF OPERATIONS

FISCAL 2001 COMPARED TO FISCAL 2000

     NET SERVICE REVENUE.  Net service revenue in 2001 was $156.3 million, an
increase of $90.8 million, or 138%, over 2000 net service revenue of $65.5
million.

     Pre-clinical.  Net service revenue in 2001 was $95.2 million, an increase
of $50.1 million, or 111%, over revenues of $45.1 million in 2000. The
acquisition of the Canadian pre-clinical operations of ClinTrials in April 2001
increased net service revenue in 2001 by $48.2 million, or 107%. Net service
revenue for the original Inveresk pre-clinical operations increased by $1.9
million, or 4%. Net service revenue for the original Inveresk pre-clinical
operations when expressed in local currency, pounds sterling, grew by 10% in
2001. Net service revenue from our acquired Canadian pre-clinical operations
increased by $5.0 million, or 12%, for the period from April 6, 2001 (the date
we acquired ClinTrials) to December 30, 2001 over revenues of $43.2 million in
the comparable period from April 2000 to December 31, 2000 when such operations
were under prior ownership. Net service revenue for our Canadian pre-clinical
operations when expressed in local currency, Canadian dollars, grew by 16% in
2001. Both of our pre-clinical facilities experienced strong demand for their
services in 2001. The utilization rates in both of our operations also increased
in 2001, permitting the pre-clinical segment to further improve its business mix
by increasing the proportion of its revenues represented by higher value-added
safety and pharmacology evaluation services. Our laboratory sciences and
clinical support operations also continued to experience increased revenue
levels in 2001.

                                        28
Clinical.  Net service revenue in 2001 was $61.1 million, an increase of
$40.7 million, or 200%, over revenues of $20.4 million in 2000. The acquisition
of ClinTrials in April 2001 increased net service revenue in 2001 by $40.3
million, or 198%. Net service revenue at the original Inveresk Research clinical
development operations increased by $0.4 million, or 2%. Net service revenue for
the original Inveresk Research clinical operations when expressed in local
currency, pounds sterling, grew by 7% in 2001. Net service revenue in the
acquired ClinTrials clinical trials operations increased by $2.1 million, or 5%,
over revenues of $38.3 million in the comparable period from April 2000 to
December 31, 2000. Our clinical trials management business experienced stronger
demand for its services in 2001. Our Phase I clinical trials operation benefited
from expanded capacity for the whole of 2001 and improved business mix. Our
Phase II-IV revenues increased as the result of a full year's revenues from the
opening of our offices in Prague and Warsaw in 2000 and from increased stability
in the client base at the acquired ClinTrials clinical operations.

     DIRECT COSTS.  In 2001 direct costs totaled $84.0 million, an increase of
$47.9 million, or 132%, from $36.1 million in 2000. Direct costs were 53.7% of
net service revenue in 2001 compared to 55.1% in 2000.

     Pre-clinical.  Direct costs in 2001 were $45.0 million, an increase of
$22.3 million, or 98%, over costs of $22.7 million in 2000. In 2001 direct costs
were 47.2% of net service revenue, compared to 50.2% in 2000. Both of our
pre-clinical facilities contributed to improved margins in 2001. This was
attributable to more efficient use of our facilities, an improvement in the
business mix and continuing attention to cost control.

     Clinical.  Direct costs in 2001 were $39.0 million, an increase of $25.6
million, or 190%, over costs of $13.5 million in 2000. In 2001 direct costs were
63.8% of net service revenue, compared to 66.0% in 2000. The margin improvement
in 2001 was due primarily to stronger demand for our services, improved pricing
and continuing attention to cost control, as well as restructuring measures
undertaken within the acquired ClinTrials clinical operations.

     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.  In 2001 selling, general and
administrative expenses totaled $41.9 million, an increase of $28.1 million, or
203%, from $13.8 million in 2000. Selling, general and administrative expenses
in 2001 were 26.8% of net service revenue in 2001 compared to 21.1% in 2000.

     Pre-clinical.  Selling, general and administrative costs in 2001 were $21.9
million, an increase of $12.1 million, or 122%, over costs of $9.8 million in
2000. Selling general and administrative costs increased from 21.8% of net
service revenue in 2000 to 23.0% in 2001. The increased level of costs was
associated with additional investment in infrastructure, including quality
assurance and IT, to support the growth of our pre-clinical business. This was
offset partially by transaction exchange gains in our Canadian operations.

     Clinical.  Selling, general and administrative costs in 2001 were $15.6
million, an increase of $13.3 million, or 586%, over costs of $2.3 million in
2000. Selling, general and administrative expenses increased from 11.2% of net
service revenue in 2000 to 25.6% in 2001. This increase is wholly attributable
to the cost structure levels in the acquired ClinTrials clinical development
operations. The selling, general and administrative costs in our original
Inveresk clinical operations, as a percentage of net service revenues,
marginally declined from 2000 levels. The clinical development operations
acquired with ClinTrials were unprofitable at the time they were acquired, which
resulted primarily from an excessive overhead cost structure. We have
successfully implemented a restructuring plan in the acquired ClinTrials
European clinical business. This resulted in a reduction in head count and the
relocation of certain operations from Maidenhead in England to more
cost-effective locations in Scotland. Additional cost reduction measures were
undertaken in the ClinTrials U.S. clinical development operations.

     Corporate overhead.  The 160% increase in these costs during 2001 is
attributable to the increased corporate overhead following the ClinTrials
acquisition.

     AMORTIZATION OF INTANGIBLE ASSETS.  In 2001 amortization of intangible
assets totaled $7.9 million ($4.3 million relating to our pre-clinical and $3.6
million relating to our clinical business), an increase of
                                        29
$4.6 million, or 141%, from $3.3 million in 2000. The increase was due to the
additional amortization resulting from the ClinTrials acquisition in April 2001.
As described in note 2 to our Financial Statements included herein, Summary of
Significant Accounting Policies -- Recent Accounting Pronouncements, the
accounting policy relating to amortization of goodwill will change from January
1, 2002 such that unless it is necessary to record an impairment of the goodwill
values, there will be no amortization of the goodwill in 2002.

     INCOME FROM OPERATIONS.  Income from operations in 2001 was $14.4 million,
an increase of $6.7 million, or 86%, from $7.8 million in 2000. Income from
operations in 2001 was 9.2% of net service revenue, compared to 11.9% in 2000.

     Pre-clinical.  Income from operations increased by $11.9 million, or 194%,
from $6.1 million in 2000 to $18.0 million in 2001 for the reasons set forth
above.

     Clinical.  Income from operations decreased by $2.5 million, or 73%, from
$3.4 million in 2000 to $0.9 million in 2001, for the reasons set forth above.

FISCAL 2000 COMPARED TO FISCAL 1999

     The figures for Fiscal 1999 described below represent the aggregate of the
predecessor period from December 28, 1998 to September 19, 1999 and the
successor period from September 20, 1999 to December 26, 1999.

     NET SERVICE REVENUE.  Net service revenue in 2000 was $65.5 million, an
increase of $1.6 million, or 3%, over 1999 net service revenue of $63.9 million.

     Pre-clinical.  Net service revenue in 2000 was $45.1 million, an increase
of $0.4 million, or 1%, over revenues of $44.7 million in 1999. Net service
revenue for the pre-clinical business when expressed in local currency, pounds
sterling, grew by 8% in 2000. This growth was primarily attributable to strong
performance in pre-clinical safety evaluation services, due to a higher level of
new studies being awarded to Inveresk Research. Our laboratory sciences and
clinical support operations also continued to experience increased revenue
levels in 2000.

     Clinical.  Net service revenue in 2000 was $20.4 million, an increase of
$1.2 million, or 6%, over revenues of $19.2 million in 1999. Net service revenue
for the clinical business when expressed in local currency, pounds sterling,
grew by 13% in 2000. Net service revenue at our Phase I operations increased due
to improved occupancy levels in our Phase I clinic. Phase II-IV net service
revenue increased by 43% as a consequence of being awarded several large Phase
III projects, as well as opening our offices in Prague and Warsaw.

     DIRECT COSTS.  In 2000 direct costs totaled $36.1 million, a decrease of
$0.7 million, or 2%, from $36.8 million in 1999.

     Pre-clinical.  Direct costs in 2000 were $22.7 million, a decrease of $1.5
million, or 6%, over costs of $24.2 million in 1999. In 2000 direct costs were
50.2% of net service revenue, compared to 54.1% in 1999. This was attributable
to improved labor utilization and continued emphasis on maintaining tight cost
controls.

     Clinical.  Direct costs in 2000 were $13.5 million, an increase of $0.9
million, or 7%, over costs of $12.6 million in 1999. In 2000 direct costs were
66.0% of net service revenue, a slight increase over 65.8% in 1999.

     SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.  In 2000 selling, general and
administrative expenses were $13.8 million, an increase of $1.6 million, or 13%,
over costs of $12.2 million in 1999. Selling, general and administrative
expenses were 21.1% of net service revenue in 2000, compared to 19.1% in 1999.

     Pre-clinical.  Selling, general and administrative expenses in 2000 were
$9.9 million, an increase of $1.0 million, or 11%, over costs of $8.9 million in
1999. Selling, general and administrative expenses in

                                        30
2000 were 21.8% of net service revenue, compared to 19.9% in 1999. This increase
resulted primarily from increased marketing expenditure and a small increase in
indirect staff levels in 2000.

     Clinical.  Selling, general and administrative expenses in 2000 were $2.3
million, an increase of $1.3 million, or 118%, over costs of $1.0 million in
1999. Selling, general and administrative expenses in 2000 were 11.2% of net
service revenue, compared to 5.4% in 1999. In 1999, selling, general and
administrative expenses were reduced by recovery of debts of $0.15 million
against which we had previously reserved. The remaining increase in 2000
resulted from increased marketing expenditure and costs associated with opening
our offices in Prague and Warsaw.

     Corporate overhead.  In 2000 unallocated corporate overhead amounted to
$1.7 million, a decrease of $0.6 million, or 25%, over the charge of $2.3
million in 1999.

     AMORTIZATION OF INTANGIBLE ASSETS.  In 2000 amortization of intangible
assets totaled $3.3 million ($2.4 million relating to our pre-clinical and $0.9
million relating to our clinical business), an increase of $2.1 million, or
170%, from $1.2 million in 1999. This increase arose due to additional
amortization resulting from the management buyout in September 1999.

     INCOME FROM OPERATIONS.  In 2000 income from operations amounted to $7.8
million, a decrease of $1.3 million, or 15%, from $9.1 million in 1999. Income
from operations in 2000 was 11.9% of net service revenue, compared to 14.3% in
1999.

     Pre-clinical.  Income from operations decreased from $6.8 million in 1999
to $6.1 million in 2000, for the reasons set forth above.

     Clinical.  Income from operations decreased from $4.6 million in 1999 to
$3.4 million in 2000, for the reasons set forth above.

QUARTERLY RESULTS FROM OPERATIONS

     Certain of our operations have experienced and may continue to experience,
period-to-period fluctuations in net service revenue and results from
operations. Our results of operations in any one 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
proportion of our revenue from service provided on 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. See "Risk
Factors -- Risks Relating to our Business -- Our quarterly operating results may
vary."

                                        31
The following table sets out the unaudited quarterly consolidated financial
data for the four quarters in the period January 1, 2001 to December 30, 2001.
The unaudited quarterly consolidated financial data has been prepared on a basis
consistent with the audited consolidated financial data, which are included in
this prospectus. In the opinion of management they reflect all adjustments of a
normal and recurring nature which are necessary to present fairly the results of
operations for the quarterly periods.
QUARTER ENDED
                                                ------------------------------------------------------
                                                MARCH 31,    JUNE 30,    SEPTEMBER 30,    DECEMBER 30,
                                                  2001         2001          2001             2001
                                                ---------    --------    -------------    ------------
                                                                (DOLLARS IN MILLIONS)
NET SERVICE REVENUE:
Pre-clinical..................................    $11.4       $27.2          $28.0           $28.5
Clinical......................................      4.6        19.0           18.9            18.7
                                                  -----       -----          -----           -----
                                                  $16.0       $46.2          $46.9           $47.2
                                                  -----       -----          -----           -----
INCOME FROM OPERATIONS:
Pre-clinical..................................    $ 1.1       $ 4.8          $ 5.9           $ 6.1
Clinical......................................      0.8        (1.4)           0.4             1.1
Corporate overhead............................     (0.4)       (1.4)          (1.2)           (1.4)
                                                  -----       -----          -----           -----
                                                  $ 1.5       $ 2.0          $ 5.1           $ 5.8
                                                  -----       -----          -----           -----
NET INCOME (LOSS).............................    $(0.2)      $(2.5)         $(1.5)          $(0.9)
                                                  =====       =====          =====           =====
The quarterly financial data set out above reflects the acquisition of
ClinTrials on April 5, 2001.

LIQUIDITY AND CAPITAL RESOURCES

     Prior to our management buyout from SGS Societe Generale de Surveillance
SA, our principal source of liquidity was cash flow from operations. Following
the consummation of our management buyout, our principal sources of liquidity
have been cash flow from operations and borrowings under our bank facilities and
our 10% unsecured subordinated loan stock due 2008.

     In September 1999, we received a $0.8 million equity investment from the
Candover Investors and management, issued $43.8 million of 10% unsecured
subordinated loan stock due 2008 to the Candover Investors and borrowed $41.4
million under our bank facilities. In connection with the acquisition of
ClinTrials, we received a $0.4 million equity investment from the Candover
Investors, issued $64.8 million of 10% unsecured subordinated loan notes due
2008 to the Candover Investors and borrowed $93.7 million under our bank
facilities, $38.3 million of which was used to repay loans under our then
existing bank facilities.

     The total amount available to us under our bank facilities is $109.3
million which is secured by a charge on our assets. Borrowings under these
facilities bear interest at a rate per year equal to a margin over LIBOR. Of the
amounts currently available under our facilities, $46.8 million are denominated
in U.S. dollars, $52.9 million are denominated in pounds sterling and $9.6
million are denominated in Canadian dollars. $79.9 million of the bank loan
facilities bear interest at LIBOR plus 2.25%, and the remaining $29.4 million
bears interest at LIBOR plus 2.75%. The facilities are repayable according to
repayment schedules applicable to each part of the facility between June 30,
2002 and December 31, 2008.

     We are currently negotiating the terms of a new senior secured credit
facility with a number of lenders, including an affiliate of one of the
underwriters in this offering, to replace our existing bank loan facilities.

     We intend to use the net proceeds from this offering, together with
available borrowings under such new bank facility, to repay the 10% unsecured
subordinated loan stock due 2008 and the current borrowings under our existing
bank facilities.

                                        32
We anticipate that our operating cash flow, together with available
borrowings under our new credit facility, will be sufficient to meet our
anticipated future operating expenses, capital expenditures and debt service
obligations as they become due over the next twelve months.

  Fiscal 2001 compared to Fiscal 2000

     Cash flow from operations in 2001 was $19.5 million compared to $12.7
million in 2000. Net cash used in investing activities in 2001 was $126.3
million compared to $6.8 million in 2000. The increase was due primarily to the
acquisition of ClinTrials for $115.1 million net of cash acquired of $5.7
million. Capital expenditures in 2001 were $11.1 million compared to $6.8
million in 2000, the increase being accounted for primarily by capital
expenditures at our pre-clinical operations in Montreal.

     Net cash flows from financing activities in 2001 were $115.5 million versus
net cash flows used in financing activities of $3.1 million in 2000. The
activities in 2001 consisted of the repayment of long-term debt amounting to
$38.3 million, repayment of short-term debt of $3.0 million, the issue of new
equity for $0.4 million and the receipt of proceeds from long-term borrowings,
net of issue costs, of $156.4 million in connection with the financing
arrangements for the acquisition of ClinTrials.

  Fiscal 2000 compared to Fiscal 1999

     The figures for Fiscal 1999 described below represent the aggregate of its
predecessor period from December 28, 1998 to September 19, 1999 and the
successor period from September 20, 1999 to December 26, 1999.

     Cash flow from operations in 2000 was $12.7 million compared to $11.3
million in 1999. Net cash used in investing activities in 2000 was $6.8 million
compared to $85.4 million in 1999. The use of net cash in 1999 related to our
management buyout from SGS Societe Generale de Surveillance SA for $78.8 million
net of cash acquired of $9.1 million. Capital expenditures in 2000 were $6.8
million compared to $6.6 million in 1999.

     Net cash flows used in financing activities in 2000 were $3.1 million
versus net cash flows provided by financing activities of $85.0 million in 1999.
The activities in 2000 consisted primarily of the repayment of long-term debt
amounting to $3.0 million. The activities in 1999 consisted primarily of the
receipt of financing proceeds in connection with our management buyout, together
with short-term borrowings of $3.2 million.

QUANTITATIVE AND QUALITATIVE DISCLOSURES AND MARKET RISKS

     We are subject to market risks arising from changes in interest rates and
foreign currency exchange rates.

     Our primary interest rate exposure results from changes in LIBOR or the
base rates which are used to determine the applicable interest rates under our
bank facilities. Our bank debt currently bears interest at rates that range
between LIBOR plus 2.25% and LIBOR plus 2.75%. We have entered into interest
rate protection agreements designed to protect us against fluctuations in
interest rates with respect to at least 61% of the aggregate principal amount of
our bank facilities at December 31, 2001. In 1999 we entered into an interest
rate cap and collar transaction on borrowings in connection with our management
buyout. This interest rate cap and collar transaction remains effective. In 2001
we entered into two interest rate swap agreements in connection with the
incremental borrowings to fund the ClinTrials acquisition. These swaps have the
effect of fixing the LIBOR rate at 6.03% on the pounds sterling borrowings and
5.41% on the Canadian dollar borrowings.

     Our potential loss over one year that would result from a hypothetical,
instantaneous and unfavorable change of 100 basis points in the interest rate on
all of our variable rate obligations would be less than $0.5 million.
Fluctuations in interest rates will not affect the interest payable on the 10%
unsecured subordinated loan stock due 2008, which is fixed.

                                        33
Our consolidated financial statements are prepared in U.S. dollars. The
functional currency of each of our subsidiaries is the local currency of the
country in which the subsidiary is located. Our principal operating subsidiaries
are located in the United Kingdom and Canada and, together, they accounted for
85% of our net service revenue in 2001. Accordingly, fluctuations in the
exchange rates between the pounds sterling, Canadian dollars and the U.S.
dollars will affect any translation of our results for financial reporting
purposes.

     We also have exposure to some foreign currency exchange rate fluctuations
for the cash flows received from our foreign affiliates. This risk is mitigated
by the fact that their operations are conducted in their respective local
currencies, and it is not our intention to repatriate earnings prospectively.
Currently, we do not engage in any foreign currency hedging activities as we do
not believe that our foreign currency exchange rate risk is material.

     We do not use financial instruments for trading or other speculative
purposes.

     Management does not believe that inflation in past years has had a
significant impact on our results from operations. Management believes that, in
the event inflation affects our costs in the future, we will offset the effect
of inflation and maintain operating margins through increases in fees.

RECENT ACCOUNTING PRONOUNCEMENTS

     In July 2001, the Financial Accounting Standards Board ("FASB") issued FAS
141, "Business Combinations," and FAS 142, "Goodwill and Other Intangible
Assets." FAS 141 requires that the purchase method of accounting be used for all
business combinations initiated after June 30, 2001. FAS 141 also specifies the
criteria that intangible assets acquired in a purchase method business
combination must meet to be recognized and reported apart from goodwill, noting
that any purchase price allocable to an assembled workforce may not be accounted
for separately. FAS 142 will require that goodwill and intangible assets with
indefinite useful lives no longer be amortized, but instead will be tested for
impairment at least annually in accordance with the provisions of FAS 142. FAS
142 will also require that intangible assets with definite useful lives be
amortized over their respective estimated useful lives to their estimated
residual values, and reviewed for impairment in accordance with FAS 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of."

     FAS 142 is effective from January 1, 2002. Furthermore, any goodwill and
any intangible asset determined to have an indefinite useful life that is
acquired in a purchase business combination completed after June 30, 2001 will
not be amortized, but instead tested for impairment at least annually in
accordance with the provisions of FAS 142. Goodwill and intangible assets
acquired in business combinations completed before July 1, 2001 have continued
to be amortized prior to the effective date of FAS 142.

     On adoption of FAS 142 the net book value of the intangible assets relating
to the assembled workforce net of deferred tax will transfer to goodwill. Had
FAS 142 been applied from January 1, 2001 the amortization expense in 2001 would
have been reduced by approximately $7.91 million from the level it was under the
old standards.

     In June 2001, the FASB issued FAS 143, "Accounting for Asset Retirement
Obligations." FAS 143 requires the fair value of a liability for asset
retirement obligations to be recognized in the period in which it is incurred if
a reasonable estimate of the fair value can be made. The associated asset
retirement costs are capitalized as part of the carrying amount of the related
long-lived asset.

     FAS 143 is effective for financial statements issued for fiscal years
beginning after June 15, 2002. The Company has not yet assessed the potential
impact of the adoption of FAS 143.

     In August 2001, the FASB issued FAS 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." FAS 144 establishes a single accounting model
for long-lived assets to be disposed of by sale consistent with the fundamental
provisions of FAS 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of." While it supersedes APB Opinion 30,

                                        34
"Reporting the Results of Operations -- Reporting the Effects of the Disposal of
a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions." FAS 144 retains the presentation of discontinued
operations but broadens that presentation to include a component of an entity
(rather than a segment of a business). However, discontinued operations are no
longer recorded at the net realizable value and future operating losses are no
longer recognized before they occur. Under FAS 144, there is no longer a
requirement to allocate goodwill to long-lived assets to be tested for
impairment. It also establishes a probability weighted cash flow estimation
approach to deal with situations in which there is a range of cash flows that
may be generated by the asset being tested for impairment. FAS 144 also
establishes criteria for determining when an asset should be treated as held for
sale.

     FAS 144 is effective for fiscal years beginning after December 15, 2001 and
interim periods within those fiscal years, with early application encouraged.
The provisions of FAS 144 are generally to be applied prospectively. The Company
currently has no plans to dispose of any operations and, accordingly, does not
anticipate that adoption of FAS 144 will have any material impact on its results
of operations or its financial position.

                                        35
BUSINESS

     In this prospectus, "Inveresk Research," "we," "us," or "our" refers to
Inveresk Research and its consolidated subsidiaries after giving effect to the
transactions described under "Change in Ultimate Parent."

OVERVIEW

     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.

     In 2001 our business, including ClinTrials Research Inc., which we acquired
in April 2001, generated net service revenue of $156.3 million, income from
operations of $14.4 million, after $15.9 million of depreciation and
amortization charges, and a net loss of $5.1 million, after $19.6 million of
shareholder loan and bank interest charges, taxes and an extraordinary item.

     PRE-CLINICAL.  Our pre-clinical development business was established over
35 years ago, employs approximately 1,600 people and operates from two principal
facilities, one located in Tranent, Scotland and the other in Montreal, Canada.
This part of our business provides pre-clinical safety and pharmacology
evaluation services and laboratory sciences services (including clinical support
services). In 2001 our pre-clinical business generated net service revenue of
$95.2 million and income from operations of $18.0 million, excluding corporate
overhead and after $10.4 million of depreciation and amortization charges. Based
upon net service revenue, we estimate that we are the second 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 5% of
our net service revenue in 2001. More than 85% of the 2001 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 we committed over $15 million to the expansion of our
pre-clinical facility in Montreal. We intend to devote substantial resources in
the future towards enlarging our pre-clinical operations, with additional
expansion of our facilities in both Montreal and Tranent planned for completion
in 2003 and 2004. We expect to fund this expansion primarily with cash generated
from our operations. We will also consider opportunistically expanding our
pre-clinical business through acquisitions.

     CLINICAL.  Our clinical development business was established in 1988 and
operates from 14 facilities located across the United States and Europe,
employing approximately 700 people. This business conducts Phase I clinical
trials and provides Phase II-IV clinical trials management services (including
medical data sciences services and regulatory support). In 2001 our clinical
development business generated net service revenue of $61.1 million and income
from operations of $0.9 million, excluding corporate overhead and after
depreciation and amortization charges of $5.6 million. Our 62-bed clinic in
Edinburgh conducts a wide range of Phase I clinical trials and has completed an
average of 12 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

     Prior to 1999 we operated as a division of SGS Societe Generale de
Surveillance SA. In 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. In
that transaction, 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

                                        36
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.

THE NEW DRUG DEVELOPMENT PROCESS

     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. The drug development process, together with typical
corresponding time periods for each stage of the process, in the United States
is described below. A similar process must be undertaken elsewhere, including in
other major pharmaceutical markets in Europe and Japan, before a drug can be
approved for use in those markets. The approval procedure and the time required
for approval vary from country to country and may involve additional evaluation.

  Pre-clinical Evaluation

     Once a drug candidate is identified for development, it will enter the
pre-clinical development stage. Pre-clinical evaluation generally lasts from one
week to three years (long term repeat dose studies). It is comprised of both in
vitro ("test tube" based) and in vivo (animal based) studies conducted to
establish the toxic effects of a drug and how it is absorbed, distributed and
cleared from the body. Initially, acute, or short term, toxicology studies are
conducted to ascertain the noxious characteristics of the drug on target organs,
following which an investigational new drug application will typically be made.
Longer-term chronic safety studies to determine the drug's longer-term safety
and toxicological profile, such as carcinogenicity studies, will typically run
in parallel with Phase II clinical trials.

  Investigational New Drug Application

     In the United States, when the results of pre-clinical evaluation have
addressed the regulatory requirements of the United States Food and Drug
Administration ("FDA"), an investigational new drug application is filed with
the FDA to seek authorization to begin human testing (Phase I clinical trials)
of the drug candidate. An Institutional Review Board, comprised of appropriate
experts and lay persons at the hospital or clinic where the initial Phase I
studies will be conducted, must review and approve the study. The Institutional
Review Board also continues to monitor the study throughout its duration. A
similar process must be undertaken elsewhere, including in other major
pharmaceutical markets in Europe and Japan.

  Clinical Trials

     Clinical development generally lasts from three to seven years and is
usually comprised of four sequential phases, with multiple studies conducted
within each phase.

  Phase I

     Phase I trials are usually conducted on healthy volunteers, typically 20 to
80 persons, to identify basic tolerability and safety data as well as
absorption, metabolism, excretion and pharmacological actions. Phase I
development generally takes six months to one year to complete and offers an
early indication of the side effects of the drug, how the drug works, how it
might be affected by other drugs, where it goes in the body, how long it remains
active and how it is broken down and eliminated from the body.

  Phase II

     Phase II trials are conducted on a small number of patients who suffer from
a targeted disease or condition, typically 100 to 400 people. Phase II
development generally lasts for up to two years and offers the first evidence of
efficacy and determines the optimum dose for the drug. It also helps to provide
additional safety data.

                                        37
Phase III

     Phase III trials are conducted on several hundred to several thousand
patients who suffer from the targeted disease or condition. Phase III
development generally lasts for up to two to three years and is intended to
provide information on drug safety and efficacy, an evaluation of the
risk-benefit relationship for the drug, and information for the adequate
labeling of the product. It involves numerous multinational investigational
sites, where patients participating in the trial will be enrolled, the drug
administered and the patient monitored.

  Regulatory Review and Approval

     After the completion of all three clinical trial phases, if the sponsor
concludes that there is evidence that the drug is safe and effective, a New Drug
Application ("NDA") is filed with the FDA. The NDA must contain all of the
information on the drug gathered to that date, including the results of all pre-
clinical and clinical studies, information about the drug's composition and the
sponsor's plans for producing, packaging and labeling the drug. The FDA
undertakes an in-depth review of the NDA which can last from several months to
several years. Drugs that successfully complete this review may be marketed in
the United States, subject to the conditions imposed by the FDA in its approval.

  Phase IV or Post Marketing Clinical Studies

     As a condition of granting marketing approval, the FDA may require that a
sponsor continue to conduct additional clinical trials, known as Phase IV or
post marketing clinical studies, to monitor long-term risks and benefits, study
different dosages, or evaluate different safety and efficacy in target patient
populations.

  Pharmacovigilance

     Any serious adverse events that are identified after a drug has been
launched in the market must be submitted to the regulatory authorities in all
markets where the product is licensed. Therefore, even after a drug has been
approved and launched in the market, there is a need for ongoing
pharmacovigilance and safety monitoring for any adverse drug reactions, drug
interactions and safety issues with the drug that may become apparent only when
the drug is in general use.

INDUSTRY BACKGROUND

GENERAL

     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 major pharmaceutical 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 companies are seeking in many cases
to manage these risks by pursuing the parallel development of multiple compounds
with similar potential applications (to mitigate the risk of product failure),
while at the same time pursuing strategies to contain costs. Further, since the
profitability of a drug is greatest while it enjoys market exclusivity,
pharmaceutical companies continually seek ways to shorten the time from drug
discovery to marketing.

     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
                                        38
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.

     While there are numerous drug development services companies, including
Inveresk Research, offering clinical development services, there are only a
small number of companies able to offer a full range of sophisticated
pre-clinical and clinical development services on a worldwide basis. Barriers to
entry include:

     - availability of capital to invest in infrastructure (including capital
       equipment and labor), particularly in connection with the pre-clinical
       and Phase I business;

     - broad experience in sophisticated drug development;

     - comprehensive databases;

     - long-standing reputation for excellence; and

     - ability to manage complex clinical trials involving large patient
       populations in numerous countries simultaneously.

INDUSTRY TRENDS

  General

     The drug development services industry has evolved from providing limited
clinical trial services in the 1970s to a full-service industry today that
encompasses broader relationships with clients, covering the entire drug
development process, including pre-clinical safety evaluation, pharmacology,
study design, clinical trial management, data collection, statistical analysis,
product support and regulatory services. Pharmaceutical companies are now using
drug development services companies not only to cover gaps in capacity, but also
to increase their skills base, help to control costs and reduce drug development
timelines.

  Demand for New Drugs Based on Changing Population Demographics

     There is a strong demand in the marketplace to treat diseases such as
cancer and HIV as well as illnesses associated with aging such as osteoporosis,
arthritis and Alzheimer's disease. The development and testing of some of the
compounds that treat such illnesses require complex clinical trials. In
addition, the cost of developing therapies for chronic disorders, such as
arthritis, Alzheimer's disease and osteoporosis, is higher because the
treatments must be studied for a longer period to demonstrate their
effectiveness and to determine any possible long-term side effects. The
complexity and expense of these trials prompts pharmaceutical and biotechnology
companies to outsource all or a portion of these trials to drug development
services organizations to take advantage of the experience and expertise of such
organizations in conducting complicated trials.

  Escalating Research and Development Expenditures by Pharmaceutical Companies

     Increases in global research and development expenditures by the major
pharmaceutical companies have broadly tracked the increase in pharmaceutical
revenues over the past ten years. The outsourcing of pre-clinical and clinical
trials for pharmaceutical, biotechnology and medical device products is
estimated to be growing at least as much as the rate of growth in global
research and development expenditures by major pharmaceutical companies.

                                        39
The Growth of the Biotechnology Industry

     The United States, European and Japanese biotechnology industries and the
number of drugs produced by them have grown substantially over the past decade.
According to the Biotechnology Industry Organization, 24 new biotechnology drugs
and vaccines received approval in 2001 compared with seven in 1993. The
biotechnology industry is expected to increase its expenditure on drug
development in the coming years. Biotechnology companies typically do not have
the staff, operating procedures, experience or expertise in-house to conduct
their own pre-clinical testing or clinical trials. In addition, while
biotechnology companies have historically sought to defray the costs of
pre-clinical and clinical development by licensing their products to
pharmaceutical companies, they are now increasingly seeking to license out their
technology at a later stage of clinical development.

  The Emergence of New Research and Development Technologies

     Over the past 20 years, technological advances have dramatically changed
the drug discovery process. New and improved technologies have evolved such as
combinatorial chemistry, ultra high-throughput screening, new in vitro and in
vivo pre-clinical profiling techniques, and the evolution in genetic-based drug
research commonly referred to as genomics and proteomics. The objective of these
innovations is to find more drug targets and to screen against targets much more
quickly with literally millions of chemical compounds. This process should
produce many more molecules having the ability to affect biological activity.
The increased numbers of drug candidates will make it imperative that the
development and regulatory processes be rapid and cost-effective. Pharmaceutical
and biotechnology companies may also find that they do not have sufficient
internal development resources or know-how to cope with the increased number of
new drug candidates emerging as a consequence of the emergence of new
technologies. These resource shortages are expected to increase demand for the
services of drug development services companies.

  The Need for Improved Productivity and Cost Effectiveness

     Pharmaceutical companies face increased pressure and competition to bring
new drugs to market in the shortest possible time. The development time of a
potential new drug is crucial to the competitive advantage and profitability of
that drug because it determines the market exclusivity available to a
pharmaceutical company to recoup its research and development expenditure. We
believe that drug development services organizations are able to perform the
needed services with a higher level of expertise or specialization, and more
quickly, than a pharmaceutical company could perform such services internally.

  The Increasingly Complex and Demanding Regulatory Environment

     Increasingly complex and stringent regulatory requirements throughout the
world have increased the volume of high quality data required for regulatory
filings and escalated the demand for data collection and analysis during the
drug development process. As regulatory requirements become more complex, we
believe the pharmaceutical and biotechnology industries will increasingly
outsource to drug development services organizations to take advantage of their
data management and regulatory expertise, technological capabilities and global
presence.

  Globalization of Clinical Research Development

     With the increasing cost of new drug development, pharmaceutical companies
are increasingly attempting to maximize returns from a given drug by pursuing
regulatory approvals in multiple countries simultaneously rather than
sequentially. A pharmaceutical company seeking approval in a country in which it
lacks experience or internal resources will frequently turn to a drug
development services organization for assistance in interacting with regulators
or in organizing and conducting clinical trials.

                                        40
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 Expand Our Pre-clinical Facilities in Tranent and Montreal

     We intend to expand further our pre-clinical business organically to meet
the anticipated continued growth in demand for pre-clinical development
services. During 2001, we committed over $15 million to the expansion of our
pre-clinical facility in Montreal. We intend to devote substantial resources in
the future towards enlarging our pre-clinical operations, with additional
expansion of our facilities in both Montreal and Tranent planned for completion
in 2003 and 2004. The planned facilities expansion will provide us with
additional laboratory sciences and clinical support capacity and the ability to
conduct additional pre-clinical safety pharmacological evaluation studies.

     Leveraging our Phase I Capabilities

     We intend to continue to maintain and enhance our position in the provision
of Phase I clinical development services by building on our core competence and
global reputation for first administration of drugs to man. We will also
consider selected geographic expansion of our Phase I capability.

     Continuing to Position our Phase II-IV Clinical Development Business as a
     Provider of Higher Value-added Services

     Inveresk Research established a highly successful and profitable Phase II
and III clinical trials business over many years. Our acquisition of ClinTrials
in 2001 provided a geographic network, an additional client base and enhanced
personnel allowing expanded access to important European and North American
markets. We can now combine our successful business approach and high quality
service offering with the capacity to deliver large or small projects on an
international or national scale. We intend to continue to provide high quality
services that accurately and efficiently address customers needs.

     Further Leveraging the Cross-selling Opportunities Between our Pre-clinical
     and Clinical Business Units

     Our two business units are complementary. Our ability to offer a
comprehensive range of pre-clinical and clinical development services in an
integrated manner will permit us to differentiate our clinical trials services
business in the marketplace. In addition, our laboratory sciences business
within the pre-clinical business unit will have the opportunity to source
additional clinical support assignments through our clinical development
business unit.

     Augmenting our Pre-clinical and Clinical Development Capabilities and
     Market Share by Making Strategic Acquisitions

     We intend to consider selective acquisitions designed to expand or
complement our existing services and our ability to service our clients. This
strategy may include geographic expansion of an existing core service or an
extension or strengthening of one of our core services.

OUR SERVICES

  General

     We provide a full range of product development services on a worldwide
basis. We derive approximately 94% of our net service revenue from services that
we provide to the pharmaceutical and

                                        41
biotechnology industries. We also service the product development needs of the
veterinary products, agrochemical and chemical industries. One of our primary
objectives is to assist our clients to optimize the time for new product
development and provide regulatory advice and direction.

     Our pre-clinical development services business offers pre-clinical safety
evaluation and pharmacology services as well as selected laboratory sciences
services. Our clinical development services business offers a wide range of drug
development services including Phase I clinical safety evaluation, Phase II - IV
clinical trials and regulatory services. Our approach is to work in partnership
with our clients, providing regulatory advice and direction and tailoring our
services to their requirements at every stage of a project.

  Pre-clinical Development Services

     Our pre-clinical development services business offers a broad range of
services including pre-clinical safety evaluation, pharmacology and laboratory
sciences. In 2001, this business generated net service revenue of $95.2 million
and operating income, excluding corporate overhead, of $18.0 million and after
$10.4 million of depreciation and amortization charges.

     Pre-clinical Safety

     We conduct pre-clinical safety and evaluation studies and efficacy and
pharmacological services in our laboratories located in Tranent and Montreal. We
conduct product development and safety evaluation programs, involving both
mammalian and in vitro toxicology and we have the necessary resources in
specialist ancillary groups to support fully toxicology studies and provide a
complete safety evaluation service. We perform standard or tailored safety
evaluation studies designed to satisfy the needs of our clients and the
different requirements of regulatory agencies across the world. Both of our
facilities are compliant with the regulations imposed by the regulatory
authorities in North America, Europe and Japan including Good Laboratory
Practice ("GLP"). We are one of the few Western drug development services
organizations with an established market presence for pre-clinical development
services in Japan.

     The design of each study is agreed with the client at the beginning of the
study and set out in a protocol. We also establish a development strategy for
each pre-clinical study with input from our scientific, medical and regulatory
teams. This integrated process is aimed at reducing the time taken to bring a
product through pre-clinical testing to the first human studies.

     Pre-clinical safety evaluation and pharmacological services that we
undertake on behalf of our clients are wide-ranging and include:

     - PRE-CLINICAL TOXICOLOGY STUDIES designed to detect physiological,
       biochemical and hematological, neurological and pathological effects of a
       pharmaceutical candidate;

     - GENETIC TOXICOLOGY STUDIES conducted on materials to assess the potential
       for induction of genetic mutations or chromosomal damage. Materials that
       we test include pharmaceuticals, industrial chemicals, food additives and
       agrochemicals;

     - IMMUNOTOXICOLOGY STUDIES designed to detect, in vitro, the effects of a
       pharmaceutical candidate on the human immune system;

     - BIOANALYTICAL CHEMISTRY STUDIES undertaken to provide a quantitative
       analysis of parent compounds (pharmaceutical candidates) and metabolites
       in a variety of biological matrices. These studies play a pivotal role in
       providing support for toxicology studies; and

     - TOXICOKINETIC EVALUATIONS designed to assess how a pharmaceutical
       candidate is absorbed by and eventually eliminated from the body. These
       studies are important for interpreting toxicology findings and providing
       information to support clinical studies.

     In addition, we have an established reputation for the provision of
specialist toxicology safety evaluation services relating to specific routes of
administration, including infusion and inhalation studies, highly specialized
areas in which we have experienced increasing demands for our services.

                                        42
We utilize modern, industry-standard validated software systems wherever
possible to assist in the collection, analysis and reporting of toxicology data.

     Laboratory Sciences

     We provide a wide range of laboratory-based analytical services, primarily
to the pharmaceutical and biotechnology industries. These services are provided
from our laboratories located in Tranent and Montreal. All of the activities of
our laboratory sciences business unit are conducted in compliance with GLP.

     Our laboratory sciences service offering has been expanded over many years
and encompasses:

     - BIOANALYTICAL SERVICES -- our bioanalytical group specializes in the
       quantitative analysis of drug candidates and metabolites in biological
       fluids and tissues to support toxicokinetic and clinical investigations.
       Over the past five years we have made considerable investment, including
       in LC-MS/MS technology, and in facilities and instrumentation;

     - DRUG METABOLISM SERVICES -- our drug metabolism group has more than 25
       years experience in a range of in vivo and in vitro ADME (absorption,
       distribution, metabolism and elimination) disciplines. Our in vitro group
       supports discovery and development programs and performs studies to
       investigate metabolic stability, P450 induction and inhibition, reaction
       phenotyping, extrahepatic and non-P450 metabolism and drug absorption.
       Our in vivo metabolism group conducts studies to investigate the
       disposition of radio labeled and non-radio labeled test items, both in
       pre-clinical and in clinical studies;

     - CENTRAL LABORATORY SERVICES -- our clinical pathology laboratory offers a
       full range of services from clinical chemistry and hematology to more
       specialized molecular and microbiology techniques (e.g. clinical
       immunology, genotyping and PCR and flow cytometry) and biochemical
       pharmacology (particularly for drugs targeting cardiovascular disease).
       We expanded this pre-clinical research group first to support our own
       Phase I clinical safety evaluation unit and then further to become a
       central laboratory for international multi-center clinical trials;

     - PRODUCT CHARACTERIZATION AND STABILITY TESTING -- we offer a range of
       chemistry quality-testing services and can test a wide range of drug
       candidates and products including demonstration that the source material
       is free from detectable contaminants, demonstration that the
       manufacturing process is capable of removing and/or inactivating
       contaminants, characterization of the product and demonstration of the
       storage stability of the product.

     We also offer a wide range of studies to register new compounds and support
existing materials worldwide for the agrochemical, animal health, biocide and
chemical industries. In addition to the services described above, we carry out
environmental toxicity and related investigations, environmental fate studies,
veterinary clinical trials, livestock studies, plant metabolism studies and
field trials for agricultural products on behalf of these clients.

  Clinical Development Services

     Our clinical development services business offers a broad range of services
including Phase I clinical safety evaluation, Phase II-IV clinical trials
services (including medical data sciences) and regulatory support. In 2001, this
business generated net service revenue of $61.1 million and operating income,
excluding corporate overhead, of $0.9 million, after depreciation and
amortization charges of $5.6 million.

     Phase I Clinical Safety Evaluation

     Our Phase I clinical safety evaluation service is designed to move lead
pharmaceutical candidates rapidly from pre-clinical development through Phase I
tolerability assessments to explore the human pharmacology. Blending the
experience of our physicians, scientists, project managers and specialist
nursing staff, we can design for our clients an optimal program for the early
and later stage development of

                                        43
their drug candidates. We are one of the few drug development services
organizations worldwide able to offer this breadth of service.

     We conduct Phase I safety evaluations at our facility in Edinburgh which is
capable of housing up to 62 volunteers at any one time. This facility is in
close proximity to our laboratory sciences unit in Tranent, which is responsible
for performing the analysis of biological samples generated by our Phase I
clinic, guaranteeing fast response times. All of our volunteers go through an
intensive screening process to ensure suitability for our studies.

     We believe one of our core competencies is our ability to provide in-depth
analysis of the results of Phase I clinical safety evaluation and meaningful
information for our clients with respect to the product being tested.

     Our clinic in Edinburgh conducts a wide range of Phase I clinical trials
and has completed an average of 12 first-in-man studies annually over the past
five years.

     Phase I in Patients and Special Populations

     We conduct Phase I trials in patients for specific indications at
investigational sites throughout the United States. We also have the ability to
undertake special population studies, including in groups such as the elderly,
post-menopausal women or patients with specific diagnoses, such as renal failure
or asymptomatic HIV disease.

     Phase II-IV Clinical Development

     From our 14 offices worldwide, we can manage every aspect of clinical
trials from clinical development plans and protocol design to New Drug
Applications. In addition to providing small or single site studies, we have the
ability to conduct large international multi-center trials. We also have
extensive experience in managing small, medium and large trials in many parts of
the world. We have a proven track record of managing integrated projects in
Europe and North America, as well as single-continent and country specific
projects, culminating in regulatory filings. We have supported studies in over
20 countries, working in 17 different languages.

     We offer customized program management to co-ordinate and manage a clinical
trial development program. The design of each study is agreed with the client at
the beginning of the study and set out in a protocol.

     As part of conducting clinical trials, we provide the following core
services, either on an individual or integrated basis, depending on our clients'
needs:

     - STUDY DESIGN -- in the critical area of study design, we assist clients
       in protocol design and prepare study protocols and case report forms
       taking into account current products and competing clinical trials with a
       view to building an effective database for regulatory authorities and
       post-marketing studies;

     - INVESTIGATOR RECRUITMENT -- during a clinical trial, physicians, also
       referred to as investigators, supervise the administration of the drugs
       to patients. We solicit the participation of investigators, who contract
       directly either with our clients or us. We maintain, and continually
       expand and refine, our investigator databases containing information
       regarding our experience with these investigators, including factors
       relevant to rapid study initiation, patient enrollment and quality of
       participation;

     - PROJECT MANAGEMENT -- our skilled project management professionals
       oversee all aspects of our work on Phase II, III and IV clinical studies.
       They are responsible for overall service delivery to a client, working to
       ensure that studies proceed to agreed milestones on agreed terms, and for
       communicating with the client promptly and accurately on all relevant
       matters. Good project management plays a vital role in successful
       completion of a study;

                                        44
- QUALITY ASSURANCE -- all of our activities are audited by staff
       independent of the study to ensure the quality and compliance. We also
       offer this service to our clients;

     - PATIENT RECRUITMENT SERVICES -- we assist our clients in recruiting
       patients to participate in clinical trials through investigator
       relationships, media advertising and other methods;

     - STUDY MONITORING -- we provide study-monitoring services by visiting
       investigator sites. These visits ensure that data is gathered according
       to Good Clinical Practice, the requirements of the sponsor, and other
       applicable regulations. Monitoring staff and project managers provide
       training to investigators and hospital staff, both on study and protocol
       specific matters, and, as necessary, on the regulatory requirements
       associated with the particular study. As patients are examined and tests
       are conducted in accordance with the study protocol, data are recorded on
       case report forms and laboratory reports. Specially trained Clinical
       Research Associates ("CRAs") collect the data from study sites. CRAs
       visit sites regularly to ensure that the case report forms are completed
       correctly and that all data specified in the protocol are collected. We
       review case report forms for consistency and accuracy before we enter
       their data into an electronic database for purposes of medical and
       statistical analysis;

     - CLINICAL DATA MANAGEMENT -- our data management professionals assist in
       the design of protocols and case report forms, as well as training
       manuals and training sessions for investigational staff, to ensure that
       data are collected and coded in an organized and consistent format.
       Databases are designed according to the analytical specifications of the
       project and the particular needs of the sponsor. We provide clients with
       data abstraction, data review and coding, data entry, database
       verification and editing and problem data resolution. We have expertise
       in electronically capturing and using diverse study data from different
       locations and we have invested in our data management capability to
       ensure the provision of current technology, experienced resources and
       innovative ideas;

     - BIOSTATISTICAL ANALYSIS -- our biostatistics professionals provide
       biostatistical consulting, database design, data analysis and statistical
       reporting. They often participate in assessing the number of patients
       required in particular programs and trials. Our biostatisticians provide
       sponsors with assistance in all phases of drug development.
       Biostatisticians develop and review protocols, design appropriate
       analysis plans and design report formats to address the objectives of the
       study protocol as well as the sponsor's individual objectives and report
       results according to the analysis plan. Additionally, biostatisticians
       assist our clients before panel hearings at the FDA;

     - MEDICAL WRITING SERVICES -- we write integrated clinical/statistical
       reports, manuscripts, risk/benefit assessment reports and regulatory
       submissions. These services are fully integrated with our other clinical
       services and are designed to reduce overall drug development time;

     - MEDICAL OVERVIEW -- throughout the course of a development program, our
       physicians provide a wide range of medical research and consulting
       services to improve the speed and quality of clinical development,
       including medical supervision of clinical trials and compliance with
       medical standards and safety regulation;

     - PRODUCT SAFETY -- we provide pharmacovigilance support for both full
       service and self-standing projects. We are experienced in writing safety
       narratives and reconciliation of Serious Adverse Events with the clinical
       database. In addition, in conjunction with our regulatory affairs group,
       we can provide regulatory reporting of all Serious Adverse Events to
       worldwide regulatory authorities;

     - PHASE IV STUDIES -- post-marketing studies are conducted after a drug has
       successfully undergone clinical efficacy and safety testing and the NDA
       has been submitted to the FDA. We offer a range of post-marketing
       studies, including: post-marketing surveillance (Phase IV trials);
       periodic safety update reports; support in regulatory agency liaison;
       advice on product claims and labeling; consumer acceptability studies;
       and pharmacovigilance; and

                                        45
- RX TO OTC SWITCHES -- we provide consultancy for and conduct specifically
       designed studies to support clients in switching product classifications
       from prescription only to over the counter (OTC) approvals, including
       labeling requirements and new indications.

     Regulatory Support

     Before a product can be launched in any country, it must be approved by the
regulatory agency in that particular country. We offer comprehensive global
regulatory product registration services at all stages of development for
pharmaceutical and biotechnology products and have particular expertise with the
regulations in Europe, North America and Japan. Our regulatory affairs experts
review existing published literature, assess the scientific background of a
product, assess the competitive and regulatory environment, identify
deficiencies and define the steps necessary to obtain registration in the most
expeditious manner. Through this service, we help our clients determine the
feasibility of developing a particular product or product line.

CLIENTS AND MARKETING

     We provide product development services on a global basis to, among others,
the pharmaceutical and biotechnology industries. In 2001, no single client
accounted for more than 5% of our net service revenue, and in 2001 our top 20
clients accounted for less than 45% of our net service revenue.

     Our pre-clinical business has historically been successful in maintaining
clients, as is evidenced by the fact that more than 85% of our pre-clinical
revenues in 2001 came from repeat clients. Our clinical operations are marketed
primarily to our existing pre-clinical clients. In addition, we have appointed a
business development manager who, together with a team of business development
personnel, markets our clinical operations on a global basis. We also engage in
promotional activities including organizing scientific symposia, publishing
scientific papers, making presentations and exhibiting at scientific conferences
and trade shows in North America, Europe and Japan.

CONTRACTUAL ARRANGEMENTS

     Most of our contracts with our clients are fixed priced contracts.
Contracts may range from a few weeks to several years depending upon the nature
of the work performed. In many cases of multi-year contracts, a portion of the
contract fee is paid at the time the study or trial is started with the balance
of the contract fee payable in installments over the study or trial duration.
Sometimes the installments are tied to meeting performance milestones; for
example, in clinical trials, installment payments may be related to investigator
recruitment, patient enrollment or delivery of a report.

     We generally bill our clients upon the completion of negotiated performance
requirements and, to a lesser extent, on a date certain basis. In cases where
our contracts are fixed price, we generally bear the cost of overruns, but we
benefit if the costs are lower than we anticipated. Where there are material
changes in the scope of review or any study-specific assumptions, we typically
negotiate appropriate amendments of the contract price.

     Most of our contracts may be terminated by the client with or without cause
upon little or no notice. These contracts typically require payment to us of
expenses to wind down and close out a study, payment to us of fees earned to
date and payment to us for committed resources that cannot be reallocated to
existing studies. Contracts may be terminated for various reasons, including our
failure to discharge our obligations properly, the failure of a product to
satisfy safety requirements, unexpected or undesired results of the product,
inadequate patient enrollment or investigator recruitment, production problems
resulting in shortages of the drug being tested or adverse patient reactions to
the drug being tested or clients' decisions to forego or terminate a particular
study.

                                        46
BACKLOG

     Our studies and projects are performed over varying times, from a short
period of time to extended periods of time, which may be as long as several
years. We maintain an order backlog to track anticipated revenue from projects
that either have not started, but are anticipated to begin in the near future,
or are in process and have not been completed. We only recognize a contract in
backlog when it is evidenced by a signed contract, signed letter of intent or
other written evidence of commitment. Delayed or cancelled contracts are removed
from backlog. Based upon the foregoing, our aggregate backlog at December 31,
2001 was approximately $174 million.

     We believe our aggregate backlog as of any date is not necessarily a
meaningful indicator of our future results for a variety of reasons, including
the following. First, studies vary in duration. For instance, some studies that
are included in 2001 backlog may be completed in 2002, while others may be
completed in later years. Second, the scope of studies may change, which may
either increase or decrease their value. Third, studies included in backlog may
be subject to bonus or penalty payments. Fourth, studies may be terminated or
delayed at any time by the client or regulatory authorities. Terminations or
delays can result from a number of reasons. Delayed contracts remain in our
backlog until a determination of whether to continue, modify or cancel the study
has been made.

COMPETITION

     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 second largest provider of pre-clinical safety
evaluation services in the world, based on net service revenue. Our primary
pre-clinical competitor globally 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.

     We believe 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.
Based on this, 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.

                                        47
Although there can be no assurance that we will continue to do so, we
believe we compete favorably in the above areas.

UNITED STATES AND FOREIGN GOVERNMENT REGULATION

     Our laboratory services are subject to various regulatory requirements
designed to ensure the quality and integrity of the development processes. The
industry standards for conducting pre-clinical laboratory testing are embodied
in the GLP and Good Manufacturing Practice ("GMP") regulations. The standards of
GLP and GMP are required by the FDA, the U.S. Environmental Protection Agency,
the Department of Health in the United Kingdom, the Health Protection Branch of
Health Canada, the Japanese Ministry of Health and Welfare, the European Agency
for the Evaluation of Medicinal Products and similar regulatory authorities in
other parts of the world. Such standards are also the subject of guidance
endorsed by the Organisation for Economic Co-operation and Development. GLP and
GMP stipulate requirements for facilities, equipment and professional staff. The
regulations require standardized procedures for conducting studies, including
procedures for recording and reporting data and for managing study materials and
records. To help satisfy our compliance obligations, we have established quality
assurance and quality control systems at our laboratories that monitor ongoing
compliance with GLP and GMP regulations and the Clinical Laboratory Improvement
Amendments, as applicable, by auditing development data and conducting
inspections of development procedures. In addition, we have obtained FDA
approval to conduct Stability and Lot Release Testing in compliance with GMP.

     The industry standards for the conduct of clinical research and development
studies are embodied in the regulations for Good Clinical Practice ("GCP"). The
FDA and other regulatory authorities require that results of clinical trials
that are submitted to such authorities be based on studies conducted in
accordance with GCP. These regulations require that we, among other things:

     - comply with specific requirements governing the selection of qualified
       investigators;

     - obtain specific written commitments from the investigators;

     - verify that appropriate patient informed consent is obtained;

     - ensure adverse drug reactions are medically evaluated and reported;

     - monitor the validity and accuracy of data;

     - verify drug or device accountability;

     - instruct investigators and studies staff to maintain records and reports;
       and

     - permit appropriate governmental authorities access to data for their
       review.

     We must also maintain reports for each study for specified periods for
auditing by the study sponsor and by the FDA or similar regulatory authorities
in other parts of the world. As with GLP, noncompliance with GCP can result in
the disqualification of data collected and reports issued during the clinical
trial. In addition, under certain clinical contracts, we have directly assumed
certain obligations of the study sponsor under FDA regulations.

     Our standard operating procedures are written in accordance with
regulations and guidelines appropriate to the region and the nation where they
will be used. All clinical research is carried out in accordance with the
International Conference on Harmonization -- Good Clinical Practice Guidelines,
and the requirements of the applicable country. Although the United States is a
signatory to these guidelines, the FDA has not adopted all of the guidelines as
statutory regulations, but has currently adopted them only as guidelines. From
an international perspective, when applicable, we have implemented common
standard operating procedures across regions to assure consistency whenever it
is feasible and appropriate to do so.

                                        48
Our animal import facilities are subject to a variety of national,
regional, and local laws and regulations, including the U.K. Home Office Code of
Practice for the Housing and Care of Animals, the U.K. Animals (Scientific
Procedures) Act of 1986, the Canadian Health of Animals Act and regulations
promulgated under such act by the Canada Food Inspection Agency, the Japanese
Basic Law on Food, Agriculture and Rural Areas and regulations promulgated under
such law by the Japanese Ministry of Agriculture, Forestry and Fisheries. We
also incorporate the U.S. Department of Agriculture Animal Welfare Regulation
into our standard operating procedures. These regulations establish the
standards for the humane treatment, care and handling of animals by dealers and
research facilities. Our animal import facilities maintain the certificates,
licenses, detailed standard operating procedures and other documentation
necessary to comply with applicable regulations for the humane treatment of the
animals in our custody. In addition, our animal research facilities in Canada
are accredited by the American Association for Accreditation of Laboratory
Animal Care and maintain a Certification of Good Animal Practice with the
Canadian Council on Animal Care.

     Our pre-clinical laboratories are subject to licensing and regulation under
national, regional and local laws relating to the surface and air transportation
of laboratory specimens, the handling, storage and disposal of laboratory
specimens, hazardous waste and radioactive materials, and the safety and health
of laboratory employees, including, but not limited to, the regulations of the
U.K. Home Office, the Scottish Environmental Protection Agency, the
International Air Transport Association, Environment Canada, the Canadian
Nuclear Safety Commission, the Quebec Ministry of the Environment and Health and
Social Services Quebec. Although we believe we are currently in compliance in
all material respects with such national, regional and local laws, failure to
comply could subject us to denial of the right to conduct business, fines,
criminal penalties and other enforcement actions.

     To ensure that we comply with all scientific regulatory matters we are
subject to, each division of our business has established an independent quality
assurance group that is responsible for monitoring compliance and that reports
directly to the relevant division president. In compliance with GCP, we conduct
our Phase I clinical trials under the supervision of an Ethics Committee and
have undertaken measures to ensure the protection of personal data.

POTENTIAL PRODUCT LIABILITY AND INSURANCE

     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 damages or incur defense costs in connection
with a claim that is not indemnified, that is outside the scope of an indemnity
or where the indemnity, although applicable, is not honored in accordance with
its terms.

     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

                                        49
or omission by us. We cannot assure you that our insurance coverage will be
adequate, or that insurance coverage will continue to be available on terms
acceptable to us.

INTELLECTUAL PROPERTY RIGHTS

     We have developed, and continually develop and update, certain computer
software related methodologies intended to maximize the quality and
effectiveness of our services. We believe such factors as the technical
expertise, knowledge, ability and experience of our professionals are
significantly more important to our performance than are any intellectual
property rights developed by us.

EMPLOYEES

     At December 31, 2001, we had 2,288 employees, of which 101 held a Ph.D. or
M.D. degree, 15 held D.V.M. degrees and 166 held master's degrees. 11% of our
employees are located in the United States, 44% are located in Canada, 44% are
located in Europe and less than 1% are located in other international locations.
We believe our relations with our employees are good.

     Our performance depends on our ability to attract and retain a qualified
management, professional, scientific and technical staff. Competition from both
our clients and competitors for skilled personnel is high. While we have not
experienced any significant problems in attracting or retaining qualified staff
to date, there can be no assurance we will be able to continue to attract and
retain personnel in future.

FACILITIES

     We both own and lease our facilities. Our corporate headquarters are
located in Cary, North Carolina. Our pre-clinical operations are conducted from
our 300,000 square foot facility located in Tranent, Scotland and our 260,000
square foot facility located in Montreal, Canada, both of which we own. Our
clinical operations are conducted from our 180,000 square foot leased facility
in Cary, North Carolina, our 20,700 square foot owned Phase I facility in
Edinburgh, our smaller owned facility in Edinburgh, our pre-clinical facility in
Tranent and our leased facilities in Maidenhead (England), Glasgow, Brussels,
Milan, Paris, Tel Aviv, Warsaw, Madrid, Prague, and Munich.

     We believe the space we own and lease is adequate for our operations.

SUPPLIERS

     We purchase the animals used in our in vivo studies from a number of
different suppliers. We do not have long-term contracts with any of these
suppliers. However, we believe that we will continue to be able to meet our
current supply needs and any increase in these needs resulting from the planned
expansion of our pre-clinical operations.

LEGAL PROCEEDINGS

     We are from time to time subject to claims and suits arising in the
ordinary course of business. In the opinion of our management, except as set
forth below, there are currently no proceedings to which we are a party that
could have a material adverse effect upon our operations or financial condition.

     In March 1996, Apotex Inc., a Canadian pharmaceutical manufacturer, filed a
civil lawsuit against us in the Court of Ontario. The claim arises out of
research work undertaken by us in conjunction with Sheffield University in the
early 1990s relating to a product of Apotex. The claim alleges that we failed to
conduct the study in a competent and timely manner, causing Apotex to lose the
advantage of being the first into the market with the product under a brand
name. The claim seeks damages in excess of Canadian $32 million for
misrepresentation, breach of contract, special and punitive damages,
reimbursement of the contract price and costs in respect of the claim. The
proceedings relating to this claim are being managed by a third party which has
agreed to indemnify us for any damages we may incur as a result of this claim.
We have been advised that the third party intends to defend this claim
vigorously.

                                        50
MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

     Set forth below is certain information concerning our executive officers
and directors as of March 31, 2002.
NAME                                           AGE                   GROUP POSITION
----                                           ---                   --------------
Dr. Ian P. Sword.............................  60    Chairman of the Board of Directors
Dr. Walter S. Nimmo..........................  54    Chief Executive Officer, President and Director
D. J. Paul E. Cowan..........................  41    Chief Financial Officer
Michael F. Ankcorn...........................  59    Vice President
Dr. Brian Bathgate...........................  42    Vice President
Alastair S. McEwan...........................  46    Vice President
Nicholas J. Thornton.........................  40    Vice President
Dr. John Urquhart............................  67    Vice Chairman of the Board of Directors
Dr. John T. Henderson........................  57    Director
Ms. S. Louise McCrary........................  43    Director (Candover nominee)
Dr. Ian P. Sword is Chairman of our Board of Directors and has served as
Chairman of the Board of Directors of Inveresk Research Group Limited since
September 1999. Dr. Sword has served as director and Senior Executive Vice
President of SGS Societe Generale de Surveillance SA since September 1993. Dr.
Sword was the Chairman of Scottish Enterprise Edinburgh and Lothian Ltd, an
entity that engages in the development of enterprises in the Edinburgh area,
from April 2000 until March 2002. Dr. Sword earned a Ph.D. from Glasgow
University.

     Dr. Walter S. Nimmo is our Chief Executive Officer, President and serves on
our Board of Directors and has served as Chief Executive and as a Director of
Inveresk Research Group Limited since September 1999. From 1993 until September
1999, Dr. Nimmo was Chief Executive Officer at Inveresk Clinical Research; Dr.
Nimmo had established Inveresk Clinical Research, which was purchased by SGS
Societe Generale de Surveillance SA in 1993, in 1988. Dr. Nimmo holds a BSc in
medical sciences and qualified as a medical doctor in 1971. He became of Member
of the Royal College of Physicians in 1975 and a Fellow in 1980. He also became
a Fellow of the Royal College of Anaesethetists in 1977. He has lectured at
Harvard, Duke and other prominent universities.

     Mr. D. J. Paul E. Cowan is our Chief Financial Officer and has served as
Chief Financial Officer of Inveresk Research Group Limited since January 2002.
Prior to joining Inveresk Research, Mr. Cowan worked as an investment banker at
Bear, Stearns International Limited from May 2000 until January 2002,
specializing in the European health care and biotechnology industries. From
September 1997 until December 1999, Mr. Cowan was Chief Financial Officer of
Cerebrus plc, a privately owned biotechnology company. Mr. Cowan worked as an
investment banker at Societe Generale from April 1997 until August 1997 and at
Deutsche Bank from November 1988 until April 1997, in each case specializing in
mergers and acquisitions. Mr. Cowan received his Bachelor's degree in business
in 1981 from Queensland University of Technology in Australia.

     Mr. Michael F. Ankcorn is a Vice President of Inveresk Research Group, Inc.
and the President and CEO of CTBR, our Canadian pre-clinical operation. He has
served as Chairman, President and Chief Executive Officer of ClinTrials
BioResearch Ltd., a subsidiary of Inveresk Research Limited, since August 1996.
From December 1978, Mr. Ankcorn served as President and Chief Executive Officer
of Bio-Research Laboratories Ltd. until all of its assets were purchased and the
business of ClinTrials BioResearch Ltd. commenced in August 1996. Prior to this,
he served as Assistant Vice-President of the Canada Development Corporation and
as a director on the board of a number of health care venture capital investee
companies.

                                        51
Dr. Brian Bathgate is a Vice President of Inveresk Research Group, Inc. and
the President of our Pre-Clinical Europe operations and has served as President,
Pre-Clinical Europe of Inveresk Research since April 2001. Dr. Bathgate served
as General Manager of Inveresk Research International Limited from September
1996 until April 2001, responsible for all activities relating to the European
pre-clinical division. Dr. Bathgate earned a Bachelor's degree in 1982 from
Glasgow University, a Ph.D. in 1985 from Nottingham University, a Business
Management Diploma (HND) in 1988 and completed the Young Managers Programme at
INSEAD in 1996.

     Mr. Alastair S. McEwan is a Vice President of Inveresk Research Group, Inc.
and the President of our Clinical Americas operations and has served as
President, Clinical Americas since April 2001. Mr. McEwan was Head of Corporate
Development of Inveresk Research Group Limited from January 2000 until March
2001, focusing on mergers and acquisitions, and served as General Manager,
Clinical, of Inveresk Research Group Limited from June 1996 until December 1999,
with operational responsibility for the clinical division. Mr. McEwan has served
as a Director of Inveresk Research Inc. since April 2001. Mr. McEwan qualified
as a Chartered Accountant in 1979 with the Institute of Chartered Accountants of
Scotland after receiving a Bachelor of Commerce degree in 1976 from the
University of Edinburgh.

     Mr. Nicholas J. Thornton is a Vice President of Inveresk Research Group,
Inc. and President of our Clinical Europe operations and has served as
President, Clinical Europe since March 2001. Mr. Thornton has served as
President of Inveresk Research Limited and Inveresk Clinical Research Limited
since April 2001. Prior to joining Inveresk Research, Mr. Thornton worked at SGS
Societe Generale de Surveillance Holding SA as Senior Vice President of
eBusiness from April 2000 until February 2001, where he established the
corporate eBusiness unit, and as Vice President Group Corporate Development from
January 1998 until March 2000, where he was responsible for acquisitions and
development of the business unit. Mr. Thornton was the Managing Director of SGS
Medlab Holdings Australia Limited from February 1997 until December 1997, where
he was responsible for acquisitions. Mr. Thornton received an M.B.A. in 1992 and
a law degree (LLB) in 1984, each from Auckland University in New Zealand.

     Dr. John Urquhart is our Vice Chairman of the Board of Directors and has
served as a director of Inveresk Research Group Limited since January 2000.
Since September 1995, Dr. Urquhart has been the Chief Scientist of AARDEX Ltd.,
acting as the chief technical officer of the pharmaceutical packaging company,
and the Chief Executive Officer of APREX, also a pharmaceutical packaging
company and a subsidiary of AARDEX. Dr. Urquhart has been Extraordinary
Professor of Pharmacoepidemiology at Maastrict University in the Netherlands
since 1991, concentrating on graduate education and research, and an Adjunct
Professor of Biopharmaceutical Sciences at University of California San
Francisco Medical Center since 1986. In addition, Dr. Urquhart occasionally
serves as a paid consultant to the pharmaceutical industry. Dr. Urquhart
received his M.D. from Harvard Medical School in 1959 and his Bachelor's degree
from Rice University in 1955.

     Dr. John T. Henderson is one of our Directors. Since January 1, 2001, Dr.
Henderson has served as a consultant to the pharmaceutical industry through
Futurepharm LLC, a company founded and owned by him. Dr. Henderson held various
positions at Pfizer Inc. from December 1974 until December 2001, where he was
responsible for medical and regulatory affairs in support of marketed products
since 1993. Dr. Henderson earned his primary medical degree in 1968 and a
Bachelor's degree in 1965, each from the University of Edinburgh.

     S. Louise McCrary is one of our Directors and has worked at WellPoint
Health Networks Inc., a Fortune 200 managed care company, since December, 1996.
She has served as Senior Vice President and Chief of Staff and Corporate
Planning, Office of the Chairman since February 2000 and prior to that, she
served as Senior Vice President, Chief Accounting Officer and Controller and
Chief Financial Officer of all WellPoint subsidiaries, including Blue Cross of
California. From July 1985 until November 1996, Ms. McCrary worked at Coopers &
Lybrand and was a Partner at Coopers & Lybrand from 1993 until 1996. Ms. McCrary
earned a B.A. in accounting from Golden Gate University in 1984.

                                        52
BOARD COMPOSITION

     Our board of directors consists of seven members. There are currently two
vacancies on our board of directors. We intend to appoint two additional
directors prior to the consummation of this offering. All directors hold office
until their successors have been elected and qualified or until their earlier
death, resignation, disqualification or removal. The terms of office of the
directors are divided into three classes:

     - Class I, whose term will expire at the annual meeting of stockholders to
       be held in 2003;

     - Class II, whose term will expire at the annual meeting of stockholders to
       be held in 2004; and

     - Class III, whose term will expire at the annual meeting of stockholders
       to be held in 2005.

     Currently, Class I consists of John Urquhart; Class II consists of Ian
Sword and John Henderson; and Class III consists of S. Louise McCrary and Walter
Nimmo. At each annual meeting of stockholders after the initial classification
or special meeting in lieu thereof, the successors to directors whose terms will
then expire serve from the time of election and qualification until the third
annual meeting following election or special meeting held in lieu thereof and
until their successors are duly elected and qualified. In addition, a resolution
of the board of directors may change the authorized number of directors. Any
additional directorships resulting from an increase in the number of directors
will be distributed among the three classes so that, as nearly as possible, each
class will consist of one third of the directors. This classification of the
board of directors may have the effect of delaying or preventing changes in
control or management of our company.

     There are no family relationships among any of our directors, executive
officers or key employees.

BOARD COMMITTEES

     Our board of directors has an audit committee and a compensation committee
and may from time to time establish other committees.

  Audit Committee

     The audit committee of our board of directors recommends the appointment of
our independent auditors, reviews our internal accounting procedures and
financial statements and consults with and reviews the services provided by our
internal and independent auditors, including the results and scope of their
audit. The audit committee currently consists of John Henderson, Louise McCrary
and           .

  Compensation Committee

     The compensation committee of our board of directors reviews and recommends
to the board the compensation and benefits of all of our executive officers,
administers our stock option plans and establishes and reviews general policies
relating to compensation and benefits of our employees. The compensation
committee currently consists of John Henderson and Louise McCrary.

COMPENSATION OF DIRECTORS

     During the year ended December 31, 2001, Drs. Sword and Urquhart received
approximately $43,000 and $36,000, respectively, as consideration for their
services as directors of Inveresk Research Group Limited. We paid the
consideration for Dr. Sword's services to his employer, SGS Societe Generale de
Surveillance SA. We also reimbursed Drs. Sword and Urquhart $7,200 and $9,300,
respectively, in connection with their attendance at directors meetings.
Following this offering, members of the board of directors who are neither our
officers nor employees will receive $37,500 per year as consideration for their
services as directors plus reasonable expenses incurred in connection with their
attendance at directors' meetings. Directors who are also our officers or
employees will not receive compensation for their services as directors.

                                        53
EMPLOYMENT AGREEMENTS

     We intend to enter into Employment Agreements with each of Walter Nimmo,
Paul Cowan, Nick Thornton, Michael Ankcorn, Brian Bathgate and Alastair McEwan.

EXECUTIVE COMPENSATION

     The table below summarizes information concerning the compensation paid by
Inveresk Research Group Limited during 2001 to our Chief Executive Officer and
our four other most highly paid executive officers. We refer to those persons as
our named executive officers:

                           SUMMARY COMPENSATION TABLE
LONG-TERM
                                                                         COMPENSATION
                                                                         ------------
                                       ANNUAL COMPENSATION                NUMBER OF
                             ----------------------------------------     SECURITIES
                                                       OTHER ANNUAL       UNDERLYING        ALL OTHER
NAME AND PRINCIPAL POSITION  SALARY(1)    BONUS(1)    COMPENSATION(1)      OPTIONS       COMPENSATION(1)
---------------------------  ---------    --------    ---------------    ------------    ---------------
Dr. Walter S. Nimmo.......   $201,676     $366,718        $17,896(2)        96,360           $34,445(3)
  President and Chief
  Executive Officer
D. J. Paul E. Cowan(4)....         --           --             --               --                --
  Chief Financial Officer
Michael F. Ankcorn........   $222,795     $111,397        $10,415(5)       271,912(6)          4,625(7)
  Vice President
Alastair S. McEwan........   $160,209     $ 98,700          3,453(8)       147,600           $99,063(9)
  Vice President
Nicholas J. Thornton(10)...  $158,567     $115,150        $11,852(11)      327,600           $25,658(12)
  Vice President
Stewart G. Leslie(13).....   $118,844     $ 40,835        $13,292(14)           --           $18,112(15)
  Chief Financial Officer
---------------
 (1) Remuneration of Dr. Nimmo, Mr. Thornton and Mr. Leslie was paid in pounds
     sterling and converted to U.S. dollars based on the average pounds sterling
     to U.S. dollars exchange rate for 2001 of L1:$1.4405. Remuneration of Mr.
     Ankcorn was paid in Canadian dollars and converted to U.S. dollars based on
     the average Canadian dollars to U.S. dollars exchange rate for 2001 of
     C$1:U.S.$.6428. Remuneration of Mr. McEwan through March 2001 was paid in
     pounds sterling and converted to U.S. dollars based on the average pounds
     sterling to U.S. dollars exchange rate for 2001 of L1:$1.4405. For the
     remainder of 2001, Mr. McEwan was paid in U.S. dollars.

 (2) Includes car allowance of $11,910 and fuel allowance of $5,059.

 (3) Includes payments for pension plan of $30,251, premiums for life assurance
     of $2,251, premiums for private health cover of $415, premiums for
     permanent health insurance of $1,198 and premiums for spouse's death in
     service benefits of $330.

 (4) Mr. Cowan became Chief Financial Officer of Inveresk Research Group Limited
     in January 2002. If he had been an executive officer in 2001 he would have
     been one of our four other most highly paid executive officers.

 (5) Includes car allowance of $10,415.

 (6) Mr. Ankcorn purchased these options for an aggregate purchase price of
     $100,000.

 (7) Includes payments for pension plan of $1,107, premiums for life insurance
     of $1,084, premiums for medical coverage of $1,410, premiums for hospital
     coverage of $122, premiums for dental coverage of $2,000 and premiums for
     dependent life insurance of $8.

 (8) Includes car allowance of $2,612.

                                        54
(9) Includes payments for pension plan of $29,868, premiums for life insurance
     of $557, premiums for private health coverage of $1,859, premiums for
     permanent health insurance of $736, premiums for spouse's death in service
     benefits of $330, a relocation package valued at $64,822, disability
     premiums of $630 and premiums for dental coverage of $243.

(10) Mr. Thornton joined Inveresk Research Group Limited in February 2001.

(11) Includes car allowance of $7,273 and fuel allowance of $3,995.

(12) Includes payments for pension plan of $23,786, premiums for life assurance
     of $390, premiums for private health cover of $406, premiums for permanent
     health insurance of $820 and premiums for spouse's death in service
     benefits of $256.

(13) In January 2002, Mr. Leslie became our European Vice President, Finance.

(14) Includes car allowance of $10,445.

(15) Includes payments for pension plan of $16,205, premiums for life assurance
     of $307, premiums for private health cover of $415, premiums for permanent
     health insurance of $396 and premiums for spouse's death in service
     benefits of $789.

                             OPTION GRANTS IN 2001

     The following table sets forth information regarding stock options granted
pursuant to Option Plans during 2001 to each of the named executive officers.
The information in this table assumes consummation of the transactions described
in "Change in Ultimate Parent" as of January 1, 2001. These figures do not
represent our estimate of future share prices.
POTENTIAL
                                                 INDIVIDUAL GRANTS(1)                           REALIZED VALUE
                            ---------------------------------------------------------------       AT ASSUMED
                                            PERCENT OF                                           ANNUAL RATES
                            NUMBER OF      TOTAL OPTIONS                                        OF SHARE PRICE
                            SECURITIES      GRANTED TO                                         APPRECIATION FOR
                            UNDERLYING     EMPLOYEES IN      EXERCISE OR                         OPTION TERM
                             OPTIONS          FISCAL         BASE PRICE                        ----------------
NAME                         GRANTED           2001          (PER SHARE)    EXPIRATION DATE      5%       10%
----                        ----------    ---------------    -----------    ---------------    ------    ------
Dr. Walter S. Nimmo.......   121,860            8.4%           $ 1.44       March 2012             []        []
D. J. Paul E. Cowan.......   290,971           20.0%           $11.68       March 2012             []        []
Michael F. Ankcorn........   303,677           20.8%           $11.68       March 2012             []        []
Alastair S. McEwan........   160,306           11.0%           $ 1.44       March 2012             []        []
Nicholas J. Thornton......    12,706            0.9%           $11.68       March 2012             []        []
Stewart G. Leslie.........    12,706            0.9%           $11.68       March 2012            --        --
---------------
(1) All of the options listed in this table were issued in connection with the
    transactions described in "Change in Ultimate Parent" upon cancellation of
    existing options to purchase shares of Inveresk Research Group Limited.

                                        55
YEAR-END OPTION VALUES

     None of our named executive officers exercised any stock options during
2001. The following table sets forth information concerning options held by our
named executive officers as of December 31, 2001. The information in this table
assumes consummation of the transactions described in "Change in Ultimate
Parent" as of January 1, 2001. There was no public market for our shares of
common stock as of December 31, 2001. Accordingly, the fair market value on
December 31, 2001 is based on the initial public offering price of $     per
share.
NUMBER OF SECURITIES
                                              UNDERLYING UNEXERCISED            VALUE OF UNEXERCISED
                                                    OPTIONS AT                IN-THE-MONEY OPTIONS AT
                                               DECEMBER 31, 2001(1)           DECEMBER 31, 2001(1)($)
                                           ----------------------------     ----------------------------
NAME                                       EXERCISABLE    UNEXERCISABLE     EXERCISABLE    UNEXERCISABLE
----                                       -----------    -------------     -----------    -------------
Dr. Walter S. Nimmo......................    121,860               --                              --
D. J. Paul E. Cowan......................    290,971               --
Michael F. Ankcorn.......................    303,677               --                              --
Alastair S. McEwan.......................    160,306               --                              --
Nicholas J. Thornton.....................     12,706               --                              --
Stewart G. Leslie........................     12,706               --
---------------
(1) All of the options listed in this table were issued in connection with the
    transactions described in "Change in Ultimate Parent" upon cancellation of
    existing options to purchase shares of Inveresk Research Group Limited.

EMPLOYEE BENEFIT PLANS

     Our Stock Option Plan reserves, upon consummation of this offering,
          shares (which amount is adjustable upon the occurrence of certain
events) of our shares of common stock for grant of stock options to our
employees, directors and consultants, and employees, directors and consultants
of our subsidiaries.

     The plan is administrated by a committee designated by our board of
directors. At least two directors serving on the administrative committee are
required to be "Non-Employee Directors" as that term is defined under Rule
16b-3(b)(3)(i) under the Securities Exchange Act of 1934, as amended, and shall,
at such time as we are subject to Section 162(m) of the United States Internal
Revenue Code of 1986, as amended (the "Code") qualify as "Outside Directors"
within the meaning of Section 162(m) of the Code. The administrative committee
has all the discretionary authority that may be necessary or helpful to enable
it to discharge its responsibilities with respect to the plan, including but not
limited to the following:

     - to determine eligibility for participation;

     - to determine the type and amount of any award granted under the plan;

     - to make such changes to the plan as may be necessary or appropriate to
       comply with the rules and regulations of any government authority or to
       obtain tax and certain other benefits applicable to stock options;

     - to make rules and regulations and establish procedures for carrying out
       and administering the plan and to make changes in such rules as it deems
       proper;

     - to determine, in accordance with the terms of the plan, the fair market
       value of shares underlying an award;

     - to accelerate the vesting of any award; and

     - to take any and all other actions it deems necessary or advisable for the
       proper operation or administration of the plan.

                                        56
Under the plan, the administrative committee also determines the exercise
price at the time of grant; provided, that the exercise price for options will
not be less than 100% of the fair market value of a share on the date of grant.
Options under the plan are generally granted for a ten-year term, but may
terminate earlier if the employment or service of the option holder with us
terminates before the end of the ten-year period.

     In the event of a change in control, the administrative committee may make
certain adjustments to outstanding options, including the immediate vesting of
such options. For purposes of the plan, a change in control means the occurrence
of any one of the following events:

     - the acquisition of beneficial ownership by any individual, partnership or
       entity of 50% or more of our voting securities (other than by us);
       provided, however, that any acquisition of beneficial ownership shall not
       constitute a change in control by reason of an increase in the percentage
       of beneficial ownership of any person or group that results from a
       reduction in the number of outstanding shares or by reason of an increase
       in the beneficial ownership of a person or group of less than 5% per
       year;

     - any consolidation or merger of us where our stockholders immediately
       prior to the consolidation or merger, would not, immediately after the
       consolidation or merger, beneficially own, directly or indirectly, shares
       representing in the aggregate 50% or more of the combined voting power of
       the securities of the corporation issuing cash or securities in the
       consolidation or merger (or of its ultimate parent corporation, if any);

     - the sale, lease, exchange or other transfer of all or substantially all
       of our assets to a third party other than to an entity, at least a
       majority of the combined voting power of the voting securities of which
       are owned by persons in substantially the same proportion as their
       ownership of Inveresk Research immediately prior to such sale;

     - our stockholders approve a plan for the dissolution of us in accordance
       with applicable state law; or

     - during any period of 24 consecutive months, individuals who at the
       beginning of such period constitute our board of directors cease for any
       reason to constitute a majority thereof unless the election, or the
       nomination for election, by our stockholders of each director who was not
       a director at the beginning of the period was approved by a vote of at
       least a majority of the directors then still in office who were directors
       at the beginning of such period.

     Special rules may apply with respect to certain non-U.S. employees.

                                        57
PRINCIPAL STOCKHOLDERS

BENEFICIAL OWNERSHIP

     The following table sets forth certain information known to us regarding
the beneficial ownership of our shares of common stock as of April 2, 2002 and
as adjusted to reflect the sale of our shares in this offering, by

     - each person (or group within the meaning of Section 13(d)(3) of the
       Securities Exchange Act of 1934) known by us to own beneficially 5% or
       more of our shares of common stock;

     - each of our directors and named executive officers; and

     - all directors and executive officers as a group.

     Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. In computing the number of shares beneficially
owned by a person and the percentage ownership of that person, shares of common
stock that could be issued upon the exercise of outstanding options and warrants
held by that person that are currently exercisable or exercisable within 60 days
of April 2, 2002 are considered outstanding. These shares, however, are not
considered outstanding when computing the percentage ownership of each other
person.

     Except as indicated in the footnotes to this table and pursuant to state
community property laws, each stockholder named in the table has sole voting and
investment power for the shares shown as beneficially owned by them. Percentage
of ownership is based on 25,827,720 shares of common stock outstanding on April
2, 2002 and           shares of common stock outstanding after completion of
this offering. This table assumes no exercise of the underwriters'
over-allotment option.
PERCENTAGE OF SHARES OF
                                                                         COMMON STOCK BENEFICIALLY OWNED
NAME AND ADDRESS OF                       SHARES OF COMMON STOCK   --------------------------------------------
BENEFICIAL OWNERS                           BENEFICIALLY OWNED     PRIOR TO THIS OFFERING   AFTER THIS OFFERING
-------------------                       ----------------------   ----------------------   -------------------
Stockholders Owning Approximately 5% or
  More
Candover Investments PLC(1).............        20,107,088                  79.0%
  20 Old Bailey
  London EC4M 7LN
  United Kingdom

Directors and Executive Officers
Dr. Walter S. Nimmo(2)..................         2,029,680                   7.8%
  11000 Weston Parkway
  Suite 100
  Cary, North Carolina 27513
D. J. Paul E. Cowan(3)..................           290,971                   1.1%
  11000 Weston Parkway
  Suite 100
  Cary, North Carolina 27513
Michael F. Ankcorn(4)...................           303,677                   1.2%
  87 Senneville Road
  Senneville (Montreal)
  Quebec, Canada H9X3R3
58
PERCENTAGE OF SHARES OF
                                                                         COMMON STOCK BENEFICIALLY OWNED
NAME AND ADDRESS OF                       SHARES OF COMMON STOCK   --------------------------------------------
BENEFICIAL OWNERS                           BENEFICIALLY OWNED     PRIOR TO THIS OFFERING   AFTER THIS OFFERING
-------------------                       ----------------------   ----------------------   -------------------
Alastair S. McEwan(5)...................           340,306                   1.3%
  11000 Weston Parkway
  Suite 100
  Cary, North Carolina 27513
Nicholas J. Thornton(6).................           340,306                   1.3%
  Elphinstone Research Centre
  Tranent, EH 332NE
  Scotland, United Kingdom
Stewart G. Leslie(7)....................           533,026                   2.1%
  Elphinstone Research Centre
  Tranent, EH 332NE
  Scotland, United Kingdom
Dr. Ian P. Sword........................           879,240                   3.4%
  Elphinstone Research Centre
  Tranent, EH 332NE
  Scotland, United Kingdom
Dr. John Urquhart.......................           120,015                   0.5%
  11000 Weston Parkway
  Suite 100
  Cary, North Carolina 27513
Dr. John Henderson......................                --                    --                    --
  11000 Weston Parkway
  Suite 100
  Cary, North Carolina 27513
S. Louise McCrary.......................                --                    --                    --
  11000 Weston Parkway
  Suite 100
  Cary, North Carolina 27513
All directors and executive officers as
  a group (9 persons)...................         5,125,907                  19.1%
---------------
(1) Candover Investments PLC shares voting and investment power with Candover
    Partners Limited, a wholly-owned subsidiary of Candover Investments PLC,
    over (a) 2,128,995 shares of common stock directly held by Candover
    Investments PLC, pursuant to a Coinvestment Agreement dated December 16,
    1997, and (b) 17,741,567 shares of common stock held collectively by five
    limited partnerships that make up the Candover 1997 Fund of which Candover
    Partners Limited is general partner. Candover Investments PLC shares voting
    and investment power with Candover (Trustees) Limited, a wholly-owned
    subsidiary of Candover Investments PLC, over 236,527 shares of common stock
    held directly by Candover (Trustees) Limited.

(2) Includes 121,860 shares of common stock issuable upon the exercise of stock
    options.

(3) Includes 290,971 shares of common stock issuable upon the exercise of stock
    options.

(4) Includes 303,677 shares of common stock issuable upon the exercise of stock
    options.

(5) Includes 160,306 shares of common stock issuable upon the exercise of stock
    options.

(6) Includes 12,706 shares of common stock issuable upon the exercise of stock
    options. The remainder of these shares are held of record by the Thornton
    Settlement trust but are beneficially owned by Mr. Thornton.

(7) Includes 12,706 shares of common stock issuable upon the exercise of stock
    options.

                                        59
REGISTRATION RIGHTS AGREEMENT

     In connection with the transactions described under "Change in Ultimate
Parent," we have entered into a registration rights agreement with Candover
Investments PLC, a wholly-owned subsidiary of Candover Investments PLC, certain
investment funds indirectly controlled by Candover Investments PLC and all of
the other holders of our common stock immediately before this offering,
including certain members of our management and our employees. Under the
registration rights agreement, subject to a number of conditions and
limitations, Candover Investments PLC, a wholly-owned subsidiary of Candover
Investments PLC, and certain investment funds indirectly controlled by Candover
Investments PLC may require us to file a registration statement under the
Securities Act to register the sale of our shares of common stock held by them.
We may be required to file up to five registration statements. The registration
rights agreement also provides that all of our stockholders named in this
agreement have "piggy-back" registration rights in connection with registered
offerings of our shares that we, or the Candover stockholders, initiate, not
including this offering. Under the agreement, we will be required to pay all
registration expenses with the exception of fees and expenses of counsel to the
stockholders named in the agreement and underwriters discounts and commissions.
We and the stockholders named in the agreement are required to indemnify one
another against certain liabilities in respect of an offering covered by the
registration rights agreement.

                           CHANGE IN ULTIMATE PARENT

     In order to implement our growth strategy, we intend, among other things,
to expand further our operations in North America through internally-generated
growth and, to the extent appropriate opportunities become available, through
strategic acquisitions. In light of this desire to expand further in North
America, and particularly the United States, we have decided to change the
ultimate parent for the Inveresk Research group of companies from a company
organized under the laws of Scotland to a corporation organized in the United
States under the laws of the State of Delaware. Inveresk Research Group, Inc.
was incorporated in Delaware in March 2002 solely for the purpose of effecting
this change in ultimate parent for the Inveresk Research group of companies,
which will be completed immediately before consummation of the offering
described in this prospectus. When this change has been effected, Inveresk
Research Group, Inc. will own all of the issued share capital of Inveresk
Research Group Limited.

     In connection with the change in ultimate parent described above, all of
the existing shareholders of Inveresk Research Group Limited have agreed to
exchange their shares in Inveresk Research Group Limited for our shares of
common stock. The mechanics for this share-for-share exchange are set forth in
an Exchange Agreement by Declaration of Trust that we entered into on April 2,
2002 with all of the shareholders of Inveresk Research Group Limited. Under that
agreement, each shareholder of Inveresk Research Group Limited agreed that,
commencing shortly before the execution of the underwriting agreement in
connection with this offering, such stockholder will hold all of such
shareholder's shares of Inveresk Research Group Limited in trust absolutely for
us. In furtherance of this obligation, each shareholder has placed all of such
shareholder's shares of Inveresk Research Group Limited in escrow with Paul
Cowan, as escrow agent. In addition, each shareholder has agreed that, at any
time after the trust described above is established, we can instruct the escrow
agent to transfer legal title of such shareholder's shares in Inveresk Research
Group Limited to us. In connection with this obligation, each shareholder has
placed his, her or its share certificates and share transfer forms in escrow
with the escrow agent referred to above. In consideration for these actions by
the shareholders, we have agreed to issue to each shareholder shares of common
stock. Each ordinary share and A ordinary share of Inveresk Research Group
Limited will be exchanged for 60 and 28.028 of our shares of common stock,
respectively. Under the existing Articles of Inveresk Research Group Limited,
the A ordinary shares and B ordinary shares are convertible into ordinary shares
upon the occurrence of certain events based upon a formula set forth in the
Articles. There are no B ordinary shares of Inveresk Research Group Limited
issued and outstanding. All of the current shareholders of Inveresk Research
Group Limited have agreed that the conversion of the A ordinary shares and the B
ordinary shares will not be triggered by the share-for-share exchange. However,
the exchange ratio used in calculating the number of shares of our common stock
issuable in
                                        60
exchange for A ordinary shares will be determined by taking into account this
formula. Upon consummation of all of the transactions contemplated by the
Exchange Agreement by Declaration of Trust, we will own all of the issued share
capital of Inveresk Research Group Limited.

     Pursuant to the Exchange Agreement by Declaration of Trust all of the
current shareholders of Inveresk Research Group Limited have agreed that if the
share-for-share exchange is completed but the offering of our common stock
pursuant to this prospectus does not occur within certain time periods, if
requested by any Candover shareholder, the shareholders will take all actions
reasonably necessary to place each party to the Exchange Agreement by
Declaration of Trust in the position that such party was in with respect to its
relative shareholdings in Inveresk Research Group Limited prior to the
share-for-share exchange described in the preceding paragraph. If this request
is made by any Candover shareholder, each shareholder also agreed to enter into
an agreement to provide the Candover shareholders with similar rights and
protections as those they previously enjoyed with respect to Inveresk Research
Group Limited.

     All of the existing option awards granted by Inveresk Research Group
Limited provide that, upon a sale of more than 50% of the shares in Inveresk
Research Group Limited, the options will be cancelled and options to purchase
shares of the acquiring entity issued in their place. Therefore, upon
consummation of the share-for-share exchange described above, all of the
outstanding options of Inveresk Research Group Limited shall automatically be
cancelled and, in their place, we will issue options to purchase shares of our
common stock to the holders of the cancelled options. The options granted by us
will have a similar exercise cost and economic value to those which have been
cancelled Inveresk Research Group Limited currently has outstanding options to
purchase ordinary shares and B ordinary shares in Inveresk Research Group
Limited. Holders of options to purchase ordinary shares will be issued options
to purchase our shares of common stock based upon the same exchange ratio used
to calculate the number of shares of our common stock issuable in exchange for
ordinary shares and A ordinary shares under the Exchange Agreement by
Declaration of Trust described above. Holders of options to purchase B ordinary
shares will be issued options to purchase our shares of common stock in
accordance with an exchange ratio that is also based upon the conversion formula
for the A ordinary shares and the B ordinary shares set forth in the Articles of
Inveresk Research Group Limited. As a result, we will issue options to purchase
31.765 of our shares of common stock in return for each option to purchase one B
ordinary share. Immediately following the consummation of this offering, as
required by the option arrangements of Inveresk Research Group Limited, all of
the options we issue to the former option holders of Inveresk Research Group
Limited to purchase shares of our common stock following the change in ultimate
parent will be fully vested and immediately exercisable.

     For a description of our capitalization see "Capitalization" and for a
description of our option plans and employment arrangements see
"Management -- Employee Benefit Plans."

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

INITIAL CANDOVER INVESTMENT

     Candover Investments PLC, together with a wholly-owned subsidiary of
Candover Investments PLC and certain investment funds indirectly controlled by
Candover Investments PLC, own approximately 79.0% of our shares of common stock.
In September 1999, Candover Investments PLC, together with a wholly-owned
subsidiary of Candover Investments PLC and certain investment funds indirectly
controlled by Candover Investments PLC, purchased an aggregate of 462,500 A
ordinary shares of Inveresk Research Group Limited for $0.7 million and Candover
Investments PLC and certain investment funds indirectly controlled by Candover
Investments PLC purchased an aggregate of $43.8 million 10% unsecured
subordinated loan stock due 2008 of Inveresk Research Group Limited. Under the
investment agreement pursuant to which these shares and 10% unsecured
subordinated loan stock due 2008 were issued, Inveresk Research Group Limited
agreed not to, among other things, change the authorized share capital of any of
its subsidiaries, reorganize or consolidate its share capital, create any
mortgage, or commence or terminate the employment of any of its directors or
management, without the prior written consent of Candover

                                        61
Partners Limited, as agent for Candover Investments PLC and the other Candover
investors. In addition, if Inveresk Research Group Limited offers or sells any
of its equity shares, Candover Investments PLC and the other Candover investors
have the right to participate in the offer or sale in the same proportion that
their holdings of equity shares bear to the aggregate number of equity shares
held by all other shareholders. If Inveresk Research Group Limited lists any of
its equity shares on a recognized investment exchange, such listing must extend
to the A ordinary shares held by Candover Investments PLC and the other Candover
investors. All of the parties to this investment agreement have agreed that this
agreement will automatically terminate upon consummation of this offering and
that it will not apply to this offering of our shares.

ADDITIONAL CANDOVER INVESTMENT

     In connection with the acquisition of ClinTrials in April 2001, Candover
Investments PLC, together with a wholly-owned subsidiary of Candover Investments
PLC and certain investment funds indirectly controlled by Candover Investments
PLC, purchased an aggregate of 264,128 A ordinary shares of Inveresk Research
Group Limited and Candover Investments PLC and certain investment funds
indirectly controlled by Candover Investments PLC purchased an aggregate of
$64.8 million of 10% unsecured subordinated loan stock due 2008 of Inveresk
Research Group Limited. An investment agreement similar to the investment
agreement described above was entered into at the time of this investment. All
of the parties to this investment agreement have agreed that this agreement will
automatically terminate upon consummation of this offering.

DESCRIPTION OF 10% UNSECURED SUBORDINATED LOAN STOCK DUE 2008

     The indebtedness under the 10% unsecured subordinated loan stock due 2008
bears interest at 10% per year and is due and payable in full no later than June
30, 2008. Inveresk Research Group Limited is obligated to repay any 10%
unsecured subordinated loan stock due 2008 not redeemed or repaid upon the sale
of more than fifty percent of its equity or assets or upon the listing of any of
its shares on the London Stock Exchange. Therefore, the change in our ultimate
parent described in "Change in Ultimate Parent" will trigger repayment of the
10% unsecured subordinated loan stock due 2008. The holders of the loan stock,
including Candover Investments PLC, and certain investment funds indirectly
controlled by Candover Investments PLC, have agreed not to require repayment of
the 10% unsecured subordinated loan stock due 2008 until this offering is
consummated. We intend to repay all of the 10% unsecured subordinated loan stock
due 2008 out of the proceeds of this offering and the bank facilities that we
intend to enter into upon consummation of this offering. See "Use of Proceeds."
We have received assurances from the holders of the loan stock, including
Candover Investments PLC, and certain investment funds indirectly controlled by
Candover Investment PLC, that, if the net proceeds of this offering and such
bank facilities are inadequate to enable the loan stock to be repaid, they will
not seek repayment of any portion of the loan stock in excess of the net
proceeds of this offering and such bank facilities until the 366th day after the
date on which this offering is consummated.

INCREASE IN MANAGEMENT OWNERSHIP

     Under the existing Articles of Inveresk Research Group Limited, its A
ordinary shares and B ordinary shares are convertible into ordinary shares upon
the occurrence of certain events, including the listing of the ordinary shares
of Inveresk Research Group Limited, based upon a formula set forth in the
Articles. The purpose of the conversion formula of the A ordinary shares and B
ordinary shares is, depending upon the overall return on investment received by
the holders of A ordinary shares, to give ordinary shareholders (who are
comprised entirely of managers and officers of Inveresk Research Group Limited)
an increased percentage of the outstanding share capital of Inveresk Research
Group Limited prior to certain events, including a listing. Because we have
changed the location of our ultimate parent, the ordinary shares of Inveresk
Research Group Limited will not be listed. Therefore the conversion of the A
ordinary shares and the B ordinary shares will not be triggered in this
offering. In order to put the shareholders and optionholders of Inveresk
Research Group Limited in the position that they would have been in if the

                                        62
change in our ultimate parent had not occurred prior to this offering, the rate
at which the A ordinary shares and options to purchase B ordinary shares were
exchanged for shares of our common stock or options to purchase shares of our
common stock, as applicable, in connection with the change in our ultimate
parent was based on the number of ordinary shares that the A ordinary shares and
B ordinary shares would have been convertible into if they had been converted
into ordinary shares prior to the change in our ultimate parent. As a
consequence, in connection with the change in our ultimate parent, our
management's percentage ownership in our outstanding share capital increased
from 11.2% prior to the change in ultimate parent to 21.2% following the change
in ultimate parent. The members of this management group include Walter S.
Nimmo, Ian Sword, Nicholas J. Thornton, Brian Bathgate and Stewart G. Leslie.
See "Change in Ultimate Parent."

                                        63
DESCRIPTION OF CAPITAL STOCK

GENERAL

     Upon completion of this offering and the transactions described under
"Change in Ultimate Parent," our authorized capital stock will consist of
150,000,000 shares of common stock, par value $0.01 per share, and 10,000,000
shares of preferred stock, par value $0.01 per share, which our board of
directors has the power and authority to designate into classes or shares.
Immediately after the sale of common stock in this offering our issued and
outstanding share capital will consist of           shares of common stock.

     The following is a summary of various provisions of our shares of common
stock and shares of preferred stock. The following summary is not complete and
you should also refer to our certificate of incorporation and bylaws, both of
which have been filed with the Securities and Exchange Commission as exhibits to
our registration statement, of which this prospectus forms a part.

COMMON STOCK

     The holders of our shares of common stock are entitled to one vote per
share on all matters to be voted on by our stockholders. Holders of our shares
of common stock are not entitled to cumulate their votes in the election of
directors. Generally, all matters on which stockholders will vote must be
approved by a majority of the votes entitled to be cast by all shares of common
stock present in person or represented by proxy, subject to any voting rights
granted to holders of any shares of preferred stock. Holders of our shares of
common stock are entitled to share ratably in any dividends declared by our
board of directors, subject to any priority dividend rights of any shares of
preferred stock we may issue in the future. If we are liquidated, dissolved, or
wound up, we must first pay all amounts we owe our creditors and then pay the
full amounts required to be paid to holders of any shares of preferred stock
then outstanding before we may make any payments to holders of our shares of
common stock. All holders of our shares of common stock are entitled to share
ratably in any assets available for distribution to them, after all of our
creditors have been satisfied and we have paid the liquidation preferences of
any of our shares of preferred stock. None of our shares of common stock are
subject to redemption by us. Holders of our shares of common stock do not have
any preemptive rights to purchase additional shares of common stock. In
addition, holders of our shares of common stock do not have subscription rights,
sinking fund rights or conversion rights. Our outstanding shares of common stock
are, and the shares of common stock to be issued upon completion of this
offering will be, fully paid and non-assessable.

PREFERRED STOCK

     Our board of directors has the authority, without further action by our
stockholders, to issue up to an aggregate of 10,000,000 shares of preferred
stock in one or more series and to fix the rights, preferences, privileges and
restrictions of those shares, subject to limitations prescribed by law. The
issuance of shares of preferred stock may have the effect of delaying, deferring
or preventing a change in control of us without further action by the
stockholders. The issuance of shares of preferred stock with voting and
conversion rights may also adversely affect the voting power of the holders of
shares of common stock. In some circumstances, an issuance of shares of
preferred stock could have the effect of decreasing the market price of the
shares of common stock. As of the closing of the offering, no shares of
preferred stock will be outstanding. We currently have no plans to issue any
shares of preferred stock.

LIMITATION ON DIRECTORS' LIABILITIES

     As permitted by the Delaware General Corporation Law, as amended, the
"DGCL," our certificate of incorporation limits the liability of our directors
to our company or our stockholders for monetary damages for breach of fiduciary
duty as directors to the fullest extent permitted by the DGCL as it now exists
or as

                                        64
it may be amended. As of the date of this prospectus, the DGCL permits
limitations of liability for director's breach of fiduciary duty other than
liability:

     - for any breach of the director's duty of loyalty to our company or our
       stockholders,

     - for acts or omissions not in good faith or that involve intentional
       misconduct or a knowing violation of law,

     - under Section 174 of the DGCL, or

     - for any transaction from which the director derived an improper personal
       benefit.

     In addition, our bylaws provide that we will indemnify, to the fullest
extent permitted under the DGCL, all of our directors, officers, employees and
agents for acts performed on our behalf in such capacity.

DELAWARE ANTI-TAKEOVER PROVISIONS

     We are subject to the provisions of Section 203 of the DGCL, an
anti-takeover law. In general, this provision prohibits a publicly held Delaware
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, unless, with some exceptions,
the business combination is approved in the prescribed manner. Generally, an
"interested stockholder" is a person who, together with affiliates and
associates, owns, or within three years prior, did own, 15% or more of the
corporation's voting stock. The statute broadly defines business combinations to
include:

     - mergers;

     - consolidations;

     - sales or other dispositions of assets having an aggregate value in excess
       of 10% of the consolidated assets of the corporation or aggregate market
       value of all outstanding stock of the corporation; and

     - certain transactions that would increase the interested stockholder's
       proportionate share ownership in the corporation.

These provisions may have the effect of delaying, deferring or preventing a
change in control of us without further action by our stockholders.

CERTIFICATE OF INCORPORATION AND BYLAW PROVISIONS

     Our certificate of incorporation provides for the issuance by our board of
directors of up to           shares of preferred stock, with voting power,
designations, preferences and other special rights. The issuance of shares of
preferred stock could decrease the amount of earnings and assets available for
distribution to the holders of shares of common stock or could adversely affect
the rights and powers, including voting rights, of holders of shares of common
stock. In certain circumstances, such issuance could have the effect of
decreasing the market price of our shares of common stock. Holders of our shares
of preferred stock could also make it more difficult for a third party to
acquire our company. At the closing of this offering, no shares of preferred
stock will be outstanding and we currently have no plans to issue any shares of
preferred stock.

     Our certificate of incorporation provides that our board of directors will
be divided into three classes of directors, with the number of directors in each
class to be as nearly equal as possible. Our classified board staggers terms of
the three classes and will be implemented through one, two and three-year terms
for the initial three classes, followed in each case by full three-year terms.
With a classified board, only one-third of the members of our board of directors
will be elected each year. This classification of directors will have the effect
of making it more difficult for stockholders to change the composition of our
board of directors. Our certificate of incorporation and bylaws provide that the
number of directors will be fixed from time to time exclusively pursuant to a
resolution adopted by our board of directors, but must consist

                                        65
of not less than three directors. This provision will prevent stockholders from
circumventing the provisions of our classified board.

NASDAQ LISTING

     We expect to list our shares of common stock for quotation on the Nasdaq
National Market under the trading symbol "IRGI."

TRANSFER AGENT AND REGISTRAR

     The transfer agent and registrar for our shares of common stock is
          .

                        SHARES ELIGIBLE FOR FUTURE SALE

     Before this offering, there has been no market for our shares of common
stock, and we cannot assure you that a significant public market for our shares
of common stock will develop or be substantial after this offering. Future sales
of substantial amounts of our shares of common stock, including shares issued
upon the exercise of outstanding options, in the public market (or the
perception that such sales may occur) could adversely affect market prices
prevailing from time to time and could impair our ability to raise capital
through sale of our equity securities. After this offering is completed, the
resale of certain of our outstanding shares into public markets will be subject
to legal and contractual restrictions, some of which are described below. The
lapsing of these restrictions will permit sales of substantial amounts of our
shares of common stock or could create the perception that such sales may occur,
which could adversely affect the market price for our shares of common stock.

     Upon completion of this offering, we will have           shares of common
stock outstanding, plus up to           additional shares if the underwriters
exercise the over-allotment option in full, without taking into account
          shares that may be issued upon exercise of options outstanding as of
December 31, 2001.

     The           shares of common stock being sold in this offering will be
freely tradable (other than by an affiliate of our company as that term is
defined in the Securities Act of 1933, or Securities Act, which generally
includes officers, directors or 10% stockholders) without restriction or
registration under the Securities Act. All remaining shares were issued and sold
by us in private transactions and are eligible for public sale solely if
registered under the Securities Act or sold under an applicable exemption. We
have entered into a registration rights agreement with all of our stockholders
with respect to the shares of common stock they hold. See
"Stockholders -- Registration Rights Agreements." Upon any sale of such shares
pursuant to an effective registration statement, such shares would be fully
transferable without restriction.

     In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person who has beneficially owned restricted
shares for at least one year, including a person who may be deemed an affiliate
of ours, would be entitled to sell within any three-month period a number of
shares that does not exceed the greater of:

     - 1% of the number of the shares then outstanding, which will be
       approximately           shares immediately after this offering, assuming
       no exercise of the underwriters' over-allotment option and no exercise of
       outstanding options; or

     - the average weekly trading volume of our shares of common stock on the
       Nasdaq National Market during the four calendar weeks before the filing
       of a Form 144 with respect to that sale.

     Sales under Rule 144 are also subject to requirements relating to manner of
sale, notice and availability of current public information about us. Under Rule
144(k), a person who is not deemed to have been an affiliate of ours at any time
during the three months preceding a sale and who has beneficially owned the
shares proposed to be sold for at least two years, including the holding period
of any

                                        66
previous owner except an affiliate of ours, is entitled to sell those shares
without complying with the manner of sale, public information, volume limitation
or notice provisions of Rule 144.

     Our officers, directors and stockholders, who collectively hold an
aggregate of approximately 25,827,720 shares of common stock, constituting all
of our issued and outstanding shares immediately prior to completion of this
offering, have agreed, under lock-up agreements that, subject to certain
exceptions described under the caption "Underwriting," they will not sell any
shares of common stock owned by them without the prior written consent of Bear,
Stearns & Co. Inc. for a period of at least 180 days from the date of this
prospectus.

     In addition, simultaneously with this offering we intend to file one or
more registration statements on Form S-8 under the Securities Act to register
the shares of common stock reserved for issuance under our stock option plan
and, as a result, all shares of common stock acquired upon exercise of stock
options under this plan (subject to vesting requirements contained in the
applicable award agreement, if any) will also be freely tradable in the open
market unless purchased by our affiliates.

     We also may issue our shares of common stock from time to time as
consideration for future acquisitions and investments. In the event any such
acquisition or investment is significant, the number of shares that we may issue
may in turn be significant. In addition, we may also grant registration rights
covering those shares in connection with any such acquisitions and investments.

                TAX CONSIDERATIONS IN CONNECTION WITH THE CHANGE
                             IN OUR ULTIMATE PARENT

U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR THE EXISTING LIMITED SHAREHOLDERS

     The following discussion is a summary of the material United States federal
income tax considerations applicable to a U.S. holder in connection with the
transactions described under the caption "Change in Our Ultimate Parent." The
discussion is based on the U.S. Internal Revenue Code of 1986, as amended (the
"Code"), U.S. Treasury Regulations promulgated under the Code, administrative
rulings and pronouncements and judicial decisions as of the date of this
prospectus, all of which are subject to change, possibly with retroactive
effect.

     The discussion below is for general information only and, except where
specially noted, does not address the effects of any state, local or non-U.S.
tax laws. In addition, the discussion below relates only to persons who hold
shares of Inveresk Research Group Limited as capital assets. The tax treatment
of a U.S. holder may vary depending upon such holder's particular situation, and
some U.S. holders may be subject to special rules not discussed below. These
holders would include, for example, dealers in securities or currencies,
tax-exempt organizations, persons owning 10% or more of Inveresk Research Group
Limited's voting shares or persons who receive our shares pursuant to the
exercise of employee stock options or otherwise as compensation. If a
partnership holds shares of Inveresk Research Group Limited, the tax treatment
of a partner will generally depend upon the status of the partner and the
activities of the partnership. A partner of a partnership holding shares of
Inveresk Research Group Limited should consult its own tax adviser.

     As used in this section, a "U.S. Holder" means: (i) a citizen or resident
of the United States, (ii) a corporation, partnership or other entity, other
than a trust, created or organized in or under the laws of the United States or
any political subdivision thereof, (iii) an estate whose income is subject to
U.S. federal income tax regardless of its source, or (iv) a trust if a U.S.
court is able to exercise primary supervision over its administration and one or
more U.S. persons have the authority to control all of its substantial
decisions.

     Inveresk Research Group Limited has been advised by its U.S. counsel,
Clifford Chance Rogers & Wells, LLP, that based on certain assumptions and
representations provided by us, Inveresk Research Group Limited and certain of
its principal stockholders, and pursuant to Sections 351 and 368(a) of the Code,
U.S. Holders of shares of Inveresk Research Group Limited should not recognize
any gain or loss
                                        67
for United States Federal income tax purposes upon the receipt of our shares in
exchange for shares of Inversek Research Group Limited provided that Inveresk
Research Group Limited has not been a passive foreign investment company during
any portion of the U.S. Holder's holding period for such shares.

     A foreign corporation will be classified as a "passive foreign investment
company" for U.S. federal income tax purposes if 75% or more of its gross income
for the taxable year is passive income or, on average for the taxable year, 50%
or more of its assets produce or are held for the production of passive income.
For this purpose, passive income generally includes interest, dividends,
royalties and gains from assets that produce passive income. However, passive
income does not generally include rents and royalties derived in the active
conduct of a trade or business and not derived from a related persons. If a
foreign corporation owns at least 25% by value of the stock of another
corporation, the foreign corporation is treated for purposes of the passive
foreign investment company tests as owning its proportionate share of the assets
of the other corporation and as receiving directly its proportionate share of
the other corporation's income. If a foreign corporation is classified as a
passive foreign investment company in any year with respect to which a U.S.
Holder owns its stock, it generally will continue to be treated as a passive
foreign investment company with respect to such shareholder in all succeeding
years. Based upon the current and historical income, assets and activities of
Inveresk Research Group Limited, we do not believe it likely that its shares
would be considered shares of a passive foreign investment company.

     U.S. Holders of shares of Inveresk Research Group Limited should have a tax
basis in the shares of our common stock that they receive in transactions
described under "Change in our Ultimate Parent" equal to the tax basis of the
shares of Inveresk Research Group Limited surrendered in exchange therefor. The
holding period for our shares of common stock received by a U.S. Holder in the
share exchange should include the period during which the shares of Inveresk
Research Group Limited surrendered in exchange therefor were held prior to that
share exchange.

     U.S. Holders who receive our shares in exchange for shares of Inveresk
Research Group Limited are subject to certain U.S. information reporting
requirements. Holders of shares of Inveresk Research Group Limited are urged to
consult their tax advisors as to these reporting obligations.

     We will not seek a ruling from the Internal Revenue Service concerning the
tax consequences of the transaction described under "Change in Ultimate Parent."
An opinion of counsel is not binding on the Internal Revenue Service and we
cannot assure you that the Internal Revenue Service will not take a position
contrary to one or more positions set forth in this section or that the courts
will uphold such positions if challenged by the Internal Revenue Service.

     The United States Federal income tax discussion set forth above is included
for general information only. U.S. HOLDERS OF SHARES OF INVERESK RESEARCH GROUP
LIMITED ARE URGED TO CONSULT THEIR TAX ADVISORS TO DETERMINE THE PARTICULAR TAX
CONSEQUENCES TO THEM OF THE SHARE EXCHANGE, INCLUDING THE APPLICATION AND EFFECT
OF FOREIGN, STATE AND LOCAL INCOME TAX AND OTHER TAX LAWS.

U.K. TAX CONSIDERATIONS FOR THE EXISTING HOLDERS OF SHARES OF INVERESK RESEARCH
GROUP LIMITED

     The following is intended as a general guide only and is based on current
U.K. taxation legislation and Inland Revenue Practice. Please note that the
levels and bases of taxation can change. The following summarizes certain
limited aspects of the U.K. taxation treatment applicable in connection with the
exchange of shares of Inveresk Research Group Limited for our shares and relates
only to the position of shareholders who hold their shares of Inveresk Research
Group Limited beneficially as a capital asset (and otherwise than under a
personal equity plan or an individual savings plan) and who are resident in the
U.K. for taxation purposes ("U.K. holders"). The taxation position of U.K.
holders such as banks, insurance companies and collective investments schemes,
and of non-taxpayers, such as pension funds and other tax exempts is not
specifically addressed. In addition, the tax treatment of a U.K. holder may vary
depending upon such U.K. holder's particular situation.

                                        68
IF IN ANY DOUBT AS TO THEIR TAXATION POSITION OR IF THEY ARE SUBJECT TO TAXATION
IN ANY JURISDICTION OUTSIDE THE U.K. HOLDERS SHOULD CONSULT THEIR TAX ADVISOR.

  "Roll-over" relief

     A U.K. holder who, either alone or together with persons connected with
him, does not hold more than 5 per cent. of, or any class of, shares in or
debentures of Inveresk Research Group Limited should not be treated as having
made a disposal of shares of Inveresk Research Group Limited for capital gains
tax ("CGT") purposes to the extent that he receives shares of our common stock.
Any gain or loss which would otherwise have arisen on a disposal of such U.K.
holder's shares of Inveresk Research GroupLimited will be "rolled over" into the
shares of our common stock and our shares will be treated as the same asset as
such U.K. holder's shares of Inveresk Research Group Limited acquired at the
same time and for the same consideration as he acquired his shares of Inveresk
Research Group Limited.

     Any U.K. Holder who, either alone or together with persons connected with
him, holds more than 5 per cent. of, or any class of, shares in or debentures of
Inveresk Research Group Limited is advised that an application for clearance has
been made to the Inland Revenue under section 138 of the Taxation of Chargeable
Gains Act 1992 in respect of the share exchange. If, as expected, such clearance
is given, any such U.K. Holder will be treated in the same manner described in
the proceeding paragraph. The share exchange is not conditional on such
clearance being obtained.

  Disposal

     A subsequent disposal by a U.K. Holder of all or any of the Company shares
received in exchange for Limited shares may, depending on individual
circumstances, give rise to a liability to U.K. CGT.

  Section 707 of the Income and Corporation Taxes Act 1988 ("ICTA")

     U.K. Holders should note that clearance is also being sought under section
707 ICTA that the share exchange is being carried out for bona fide commercial
reasons and that no tax advantage is being sought to be obtained thereby.

  Stamp Duty and Stamp Duty Reserve Tax ("SDRT")

     No stamp duty or SDRT will be payable by shareholders of Inveresk Research
Group Limited as a result of accepting shares of our common in exchange for
shares in Inveresk Research Group Limited. Stamp duty or SDRT will be payable by
Inveresk Research Group Limited (at broadly the rate of 0.5% of the value of the
shares issued by us in exchange for the shares in Inveresk Research Group
Limited) in respect of the acquisition of shares of our common stock.

U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR INVERESK RESEARCH

     The following discussion is a summary of the material U.S. federal income
tax considerations to us as a result of the share exchange. The discussion is
based on the Code, U.S. Treasury Regulations promulgated under the Code,
administrative rulings and pronouncements and judicial decisions as of the date
hereof, all of which are subject to change, possibly with retroactive effect.

     As a result of the share exchange, Inveresk Research Group, Inc. will hold
all the shares of Inveresk Research Group Limited and its subsidiaries. Thus,
the earnings distributed by Inveresk Research Group Limited and its subsidiaries
to Inveresk Research Group, Inc, will be subject to a U.S. Federal income tax at
a maximum rate of 35% (plus any state and local taxes). In addition, all of our
subsidiaries that are not organized or created in the U.S. (or under the laws of
the U.S. or any state) will become "controlled foreign corporations" by virtue
of the share exchange. Certain earnings of those controlled foreign corporations
from passive activities, related party transactions and U.S. investments may be
currently taxable to Inveresk Research Group, Inc. even if not remitted to
Inveresk Research Group, Inc. in the

                                        69
year they are earned. U.S. controlled foreign corporations are also subject to
substantial information reporting to the Internal Revenue Service.

     Credits for non-U.S. taxes paid by Inveresk Research Group, Inc. and by our
controlled foreign corporations are available to reduce the U.S. tax subject to
limitations.

     The interposition of Inveresk Research Group, Inc. between Inveresk
Research Group Limited and its former shareholders may decrease the net amount
available for distribution to our shareholders as a result of the 35% U.S. tax
payable on funds remitted to Inveresk Research Group, Inc. for distribution and
the potential increase in non-U.S. withholding tax on payments from Inveresk
Research Group Limited to Inveresk Research Group, Inc., rather than directly to
our shareholders. In addition, the withholding obligations with respect to
payments from Inveresk Research Group, Inc. to the former shareholders of
Inveresk Research Group Limited may be greater than the previous withholding
obligations with respect to payments from Inveresk Research Group Limited to the
former shareholders of Inveresk Research Group Limited because U.S. withholding
provisions and treaties (as opposed to U.K. provisions) will now govern the new
relationship.

                                        70
UNDERWRITING

     Under the terms and subject to the conditions contained in an underwriting
agreement among the underwriters and us, each of the underwriters named below,
through their representatives, Bear, Stearns & Co. Inc., UBS Warburg LLC,
William Blair & Company, L.L.C. and SG Cowen Securities Corporation, have
severally agreed to purchase from us the aggregate number of shares of common
stock set forth opposite its name below:
UNDERWRITERS                                                  NUMBER OF SHARES
------------                                                  ----------------
Bear, Stearns & Co. Inc.....................................
UBS Warburg LLC.............................................
William Blair & Company, L.L.C. ............................
SG Cowen Securities Corporation.............................
     Total..................................................
The underwriting agreement provides that the obligations of the several
underwriters are subject to approval of various legal matters by their counsel
and to various other conditions, including delivery of legal opinions by our
counsel, the delivery of a letter by our independent auditors and the accuracy
of the representations and warranties made by us in the underwriting agreement.
Under the underwriting agreement, the underwriters are obliged to purchase and
pay for all of the above shares of our shares of common stock if any are
purchased.

PUBLIC OFFERING PRICE

     The underwriters propose to offer the shares of common stock directly to
the public at the offering price set forth on the cover page of this prospectus
and at that price less a concession not in excess of $     per share to other
dealers who are members of the National Association of Securities Dealers, Inc.
The underwriters may allow, and those dealers may reallow, concessions not in
excess of $     per share to other dealers. After this offering, the offering
price, concessions and other selling terms may be changed by the underwriters.
Our shares of common stock are offered subject to receipt and acceptance by the
underwriters and subject to other conditions, including the right to reject
orders in whole or in part. The underwriters have informed us that the
underwriters do not expect to confirm sales of shares of common stock to any
accounts over which they exercise discretionary authority.

     The following table summarizes the per share and total public offering
price of the shares of common stock in the offering, the underwriting
compensation to be paid to the underwriters by us and the proceeds of the
offering, before expenses, to us. The information presented assumes either no
exercise or full exercise by the underwriters of their over-allotment option.
TOTAL
                                                            -------------------------------
                                                   PER         WITHOUT            WITH
                                                  SHARE     OVER-ALLOTMENT   OVER-ALLOTMENT
                                                 --------   --------------   --------------
Public offering price..........................  $             $                $
Underwriting discounts and commissions.........
Proceeds before expenses.......................
The underwriting discount and commission per share is equal to the public
offering price per share of common stock less the amount paid by the
underwriters to us per share of common stock.

     We estimate total expenses payable by us in connection with this offering,
other than the underwriting discounts and commissions referred to above, will be
approximately $          .

OVER-ALLOTMENT OPTION TO PURCHASE ADDITIONAL SHARES

     We have granted a 30-day over-allotment option to the underwriters to
purchase up to an aggregate of           additional shares of common stock
exercisable at the offering price less the underwriting

                                        71
discounts and commissions, each as set forth on the cover page of this
prospectus. If the underwriters exercise this option in whole or in part, then
each of the underwriters will be obliged to purchase additional shares of common
stock in proportion to their respective purchase commitments as shown in the
table set forth above, subject to various conditions.

INDEMNIFICATION AND CONTRIBUTION

     The underwriting agreement provides that we will indemnify the underwriters
against liabilities specified in the underwriting agreement under the Securities
Act, including liabilities arising from material misstatements or omissions in
connection with disclosures, or will contribute to payments that the
underwriters may be required to make in respect of those liabilities.

LOCK-UP AGREEMENTS

     Our directors and officers and certain of our stockholders of our
outstanding shares have agreed that they will not offer, sell or agree to sell,
directly or indirectly, or otherwise dispose of any shares of common stock in
the public market without the prior written consent of Bear, Stearns & Co. Inc.
for a period of 180 days from the date of this prospectus. Bona fide gifts by
individuals to immediate family members, transfers by a partnership to its
partners or transfers by Candover Investments PLC or a fund directly or
indirectly controlled by Candover Investments PLC to another fund controlled
directly or indirectly by Candover Investments PLC are excepted from the
restrictions of the lock-up agreements, provided the transferee agrees to be
bound by similar restrictions.

     In addition, we have agreed that for a period of 180 days from the date of
this prospectus, we will not, without the prior written consent of Bear, Stearns
& Co. Inc., offer, sell or otherwise dispose of any shares of common stock,
except that we may issue, and grant options to purchase, shares of common stock
and restricted stock under our equity compensation plans.

NASDAQ NATIONAL MARKET QUOTATION

     Prior to this offering, there has been no public market for our shares of
common stock. As a result, the initial offering price for the shares of common
stock was determined by negotiations between us and the representatives of the
underwriters. Among the factors considered in those negotiations, the primary
factors were our results of operations in recent periods, estimates of our
prospects and the industry in which we compete, an assessment of our management,
the general state of the securities markets at the time of this offering and the
prices of similar securities of generally comparable companies. We have received
approval for the quotation of our shares of common stock on the Nasdaq National
Market, under the symbol "IRGI." We cannot assure you, however, that an active
or orderly trading market will develop for the shares of common stock or that
the shares of common stock will trade in the public market after this offering
at or above the initial offering price.

STABILIZATION, SYNDICATE SHORT POSITION AND PENALTY BIDS

     In order to facilitate the offering of our shares of common stock, the
underwriters may engage in transactions that stabilize, maintain, or otherwise
affect the market price of our shares of common stock.

     The underwriters may over-allot shares of our common stock in connection
with this offering, thus creating a short position for their own account. Short
sales involve the sale by the underwriters of a greater number of shares than
they are committed to purchase in the offering. A short position may involve
either "covered" short sales or "naked" short sales. Covered short sales are
sales made in an amount not greater than the underwriters' over-allotment option
to purchase additional shares in the offering described above. The underwriters
may close out any covered short position by either exercising their
over-allotment option or purchasing shares in the open market. In determining
the source of shares to close the covered short position, the underwriters will
consider, among other things, the price of shares available for purchase in the
open market as compared to the price at which they may purchase shares through
the over-allotment option. Naked short sales are sales in excess of the
over-allotment option. The underwriters must close out
                                        72
any naked short position by purchasing shares in the open market. A naked short
position is more likely to be created if the underwriters are concerned that
there may be downward pressure on the price of the shares in the open market
after pricing that could adversely affect investors who purchase in the
offering.

     Accordingly, to cover these short sales positions or to stabilize the
market price of our shares of common stock, the underwriters may bid for, and
purchase, shares of our common stock in the open market. These transactions may
be effected on the Nasdaq National Market or otherwise. Additionally, the
representatives, on behalf of the underwriters, may also reclaim selling
concessions allowed to an underwriter or dealer. Similar to other purchase
transactions, the underwriters' purchases to cover the syndicate short sales or
to stabilize the market price of our shares of common stock may have the effect
of raising or maintaining the market price of our shares of common stock or
preventing or mitigating a decline in the market price of our shares of common
stock. As a result, the price of the shares of our shares of common stock may be
higher than the price that might otherwise exist in the open market. No
representation is made as to the magnitude or effect of any such stabilization
or other activities. The underwriters are not required to engage in these
activities and, if commenced, may end any of these activities at any time.

DIRECTED SHARE PROGRAM

     At our request, the underwriters have reserved for sale at the initial
public offering price up to
shares of common stock to be sold in this offering for sale to our directors,
officers, employees, business associates, business and legal advisors and
related persons. Purchases of reserved shares are to be made through an account
at [               ] according to [               ]'s procedures for opening an
account and transacting in securities. The number of shares available for sale
to the general public will be reduced to the extent that any reserved shares are
purchased. Any reserved shares not purchased by our directors, officers,
employees, business associates, business and legal advisors and related persons
will be offered by the underwriters to the general public on the same terms as
the other shares offered by this prospectus.

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

     In connection with our acquisition of ClinTrials in April 2001, Bear,
Stearns & Co. Inc. served as our financial advisor and Bear Stearns Corporate
Lending Inc., an affiliate of Bear, Stearns & Co. Inc., provided us with
financing pursuant to a Facilities Agreement. In connection with these services,
such Bear Stearns entities received customary fees. In July 2001, Bear Stearns
Corporate Lending Inc. assigned its rights and obligations under such Facilities
Agreement to two unaffiliated commercial banks. D. J. Paul E. Cowan, our Chief
Financial Officer, was a Managing Director of Bear Stearns International Limited
until January 2002, when he assumed his current position with our company.

     Affiliates of Bear, Stearns & Co. Inc. and of UBS Warburg LLC have each
made investments in the Candover 2001 Fund. Each such investment involves less
than a 1% interest in such fund (assuming an anticipated final fund size of Euro
2.5 billion). In addition, a UBS Warburg staff coinvest plan has committed to
invest in such fund, and an affiliate of UBS Warburg LLC serves as general
partner of a partnership pursuant to which clients of UBS Warburg LLC invest in
such fund. An affiliate of UBS Warburg LLC is a placement agent for the Candover
2001 Fund, for which it will receive customary fees. The Candover 2001 Fund is
indirectly controlled by Candover Investments PLC, which, together with a
wholly-owned subsidiary of Candover Investments PLC and certain investment funds
indirectly controlled by Candover Investments PLC, are the principal
shareholders of Inveresk Research. See "Principal Stockholders."

                                        73
LEGAL MATTERS

     The validity of the shares of common stock offered hereby will be passed
upon for us by Clifford Chance Rogers & Wells LLP, New York, New York. Certain
legal matters in connection with the offering will be passed upon for the
underwriters by Coudert Brothers LLP.

                                    EXPERTS

     The audited consolidated financial statements of Inveresk Research as of
December 30, 2001 and 2000 and for the years ended December 31, 2001 and
December 31, 2000 and the periods ended December 26, 1999 and September 19, 1999
included in this prospectus and elsewhere in the registration statement have
been audited by Arthur Andersen, independent auditors, as indicated in their
report with respect thereto, and are included herein and therein in reliance
upon the authority of said firm as experts in accounting and auditing. The
consolidated financial statements of ClinTrials Research Inc. at December 31,
2000 and 1999, and for each of the three years in the period ended December 31,
2000, appearing in this Prospectus and Registration Statement have been audited
by Ernst & Young LLP, independent auditors, as set forth in their report thereon
appearing elsewhere herein, and are included in reliance upon such report given
on the authority of such firm as experts in accounting and auditing.

                      WHERE YOU CAN FIND MORE INFORMATION

     We have filed a registration statement on Form S-1 with the Securities and
Exchange Commission with respect to the common stock we are offering by this
prospectus. This prospectus, which constitutes a part of the registration
statement, does not contain all of the information set forth in the registration
statement and the exhibits to the registration statement. You should refer to
the registration statement, including its exhibits for further information with
respect to us and our common stock. Statements contained in this prospectus as
to the contents of any contract or other document are not necessarily complete
and, where the contract is an exhibit to the registration statement, each such
statement is qualified in all respects by the provisions of such exhibit. Copies
of the registration statement, including the related exhibits, are available for
examination without charge at the Public Reference Room of the Securities and
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, or at the
Commission's Midwest Regional Office at 175 West Jackson Boulevard, Suite 900,
Chicago IL, 60604 or the Northeast Regional Office at 233 Broadway, New York, NY
10279 or on the website of the Securities and Exchange Commission at
http://www.sec.gov. Copies of all or a portion of the registration statement can
be obtained from the Public Reference Room of the Securities and Exchange
Commission upon payment of prescribed fees, and information on the operation of
the Public Reference Room may be obtained by calling the Commission at (800)
SEC-0330.

     As a result of this offering, we will become subject to the information and
periodic reporting requirements of the Exchange Act and, in accordance
therewith, will file periodic reports, proxy statements and other information
with the Securities and Exchange Commission.

                                        74
INDEX TO FINANCIAL STATEMENTS
PAGE
                                                                ----
INVERESK RESEARCH GROUP, INC.
Report of Independent Auditors..............................     F-2
Consolidated Statements of Operations.......................     F-3
Consolidated Balance Sheets.................................     F-4
Consolidated Statements of Cash Flows.......................     F-5
Consolidated Statements of Shareholders' Equity.............     F-6
Notes to Consolidated Financial Statements..................     F-7

CLINTRIALS RESEARCH INC.
Report of Independent Auditors..............................    F-29
Consolidated Balance Sheets as of December 31, 2000 and
  1999......................................................    F-30
Consolidated Statements of Operations for the Years Ended
  December 31, 2000, 1999 and 1998..........................    F-31
Consolidated Statements of Cash Flows for the Years Ended
  December 31, 2000, 1999 and 1998..........................    F-32
Consolidated Statements of Stockholders' Equity for the
  Years Ended December 31, 2000, 1999 and 1998..............    F-33
Notes to Consolidated Financial Statements..................    F-34
Quarterly Financial Information (Unaudited).................    F-48
Consolidated Financial Statement Schedule
  Schedule II -- Valuation and Qualifying Accounts..........    F-49
F-1
[LETTERHEAD OF ARTHUR ANDERSEN]

                         INVERESK RESEARCH GROUP, INC.

                         REPORT OF INDEPENDENT AUDITORS

     After the change of ultimate parent company transaction discussed in Note 1
to Inveresk Research Group, Inc.'s consolidated financial statements is
effected, we expect to be able to render the following audit report.

/s/ ARTHUR ANDERSEN

2 April 2002

                         REPORT OF INDEPENDENT AUDITORS

To the Shareholders of Inveresk Research Group, Inc.:

     We have audited the accompanying consolidated balance sheets of Inveresk
Research Group, Inc. (a Delaware corporation) and its predecessor as of December
30, 2001 and December 31, 2000, and the related consolidated statements of
income, comprehensive income, shareholders' investment and cash flows for the
periods ended December 30, 2001, December 31, 2000, December 26, 1999 (98 day
period), and September 19, 1999 (266 day period). These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Inveresk
Research Group, Inc. as of December 30, 2001, December 31, 2000 and the results
of its operations and its cash flows for the periods ended December 30, 2001,
December 31, 2000, December 26, 1999 (98 day period) and September 19, 1999 (266
day period) in conformity with accounting principles generally accepted in the
United States.

     As explained in Note 2, effective January 1, 2001, the Company adopted FAS
133 "Accounting for Derivative Instruments and Hedging Activities."

Arthur Andersen
Edinburgh, Scotland

2 April 2002

                                       F-2
INVERESK RESEARCH GROUP, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS
SUCCESSOR
                                ------------------------------------------------------       PREDECESSOR
                                52 WEEKS ENDED    53 WEEKS ENDED    SEPTEMBER 20, 1999    DECEMBER 28, 1998
                                 DECEMBER 30,      DECEMBER 31,      TO DECEMBER 26,      TO SEPTEMBER 19,
                                     2001              2000                1999                 1999
                                --------------    --------------    ------------------    -----------------
                                               (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Net service revenue...........   $   156,296       $    65,540         $    16,832            $ 47,088
  Direct costs................       (83,975)          (36,133)             (9,645)            (27,177)
                                 -----------       -----------         -----------            --------
Gross profit..................        72,321            29,407               7,187              19,911
  Selling, general and
     administrative
     expenses.................       (41,934)          (13,825)             (3,198)             (9,013)
  Depreciation................        (8,028)           (4,513)               (809)             (3,731)
  Amortization of goodwill and
     intangibles..............        (7,910)           (3,281)               (973)               (242)
                                 -----------       -----------         -----------            --------
Income from operations........        14,449             7,788               2,207               6,925
  Interest income.............           483               367                  87                 236
  Interest expense............       (17,584)           (7,889)             (2,091)               (796)
                                 -----------       -----------         -----------            --------
Income (loss) before income
  taxes.......................        (2,652)              266                 203               6,365
Provision for income taxes....        (2,049)             (682)               (325)             (2,308)
                                 -----------       -----------         -----------            --------
Net income (loss) before
  extraordinary item..........        (4,701)             (416)               (122)              4,057
Extraordinary item (note 9)...          (419)               --                  --                  --
                                 -----------       -----------         -----------            --------
Net income (loss).............   $    (5,120)      $      (416)        $      (122)           $  4,057
                                 ===========       ===========         ===========            ========
Loss per share pre
  extraordinary item:
  Basic.......................   $     (0.20)      $     (0.02)        $     (0.01)
  Diluted.....................   $     (0.20)      $     (0.02)        $     (0.01)
Loss per share post
  extraordinary item:
  Basic.......................   $     (0.22)      $     (0.02)        $     (0.01)
  Diluted.....................   $     (0.22)      $     (0.02)        $     (0.01)
Number of shares and common
  stock equivalents used in
  computing loss per shares:
  Basic.......................    23,349,278        17,171,327          17,171,327
  Diluted.....................    23,349,278        17,171,327          17,171,327
                                 -----------       -----------         -----------
See accompanying notes to consolidated financial statements.
                                       F-3
INVERESK RESEARCH GROUP, INC.

                          CONSOLIDATED BALANCE SHEETS
DECEMBER 30,    DECEMBER 31,
                                                                  2001            2000
                                                              ------------    ------------
                                                                 (DOLLARS IN THOUSANDS)
ASSETS
Current assets:
  Cash and cash equivalents.................................    $ 16,118        $  9,686
  Accounts receivable, net of allowance for doubtful
     accounts of $760 in 2001 and $312 in 2000..............      32,646           8,760
  Unbilled receivables......................................      19,999           7,394
  Income taxes receivable...................................       4,335             295
  Inventories...............................................       2,173             458
  Other current assets......................................       2,164           1,041
                                                                --------        --------
Total current assets........................................      77,435          27,634
Property, plant and equipment...............................      87,922          48,759
Intangible assets...........................................     134,517          47,273
Deferred debt issue costs...................................       1,952             902
                                                                --------        --------
                                                                $301,826        $124,568
                                                                ========        ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................    $ 10,118        $  1,443
  Advance billings..........................................      30,380          15,342
  Accrued expenses..........................................      21,520           4,752
  Income taxes payable......................................       2,103             598
  Deferred income taxes.....................................         559             493
  Current portion of long term debt.........................     127,648              42
  Bank overdraft............................................          --           3,038
                                                                --------        --------
Total current liabilities...................................     192,328          25,708
Deferred income taxes.......................................      27,053          14,620
Long term debt..............................................      85,109          80,898
Defined benefit pension scheme obligation...................       4,721           3,095
Commitments and contingencies (Note 15).....................          --              --
Shareholders' equity
Preferred shares of common stock, $0.01 par
  value -- 10,000,000 authorized, none issued...............          --              --
Ordinary shares of common stock, $0.01 par
  value -- 150,000,000 authorized; issued and fully-paid
  25,500,120 and 17,171,327 at December 30, 2001 and
  December 31, 2000.........................................         255             172
                                                                --------        --------
  Total common stock........................................         255             172
  Additional paid-in capital................................       1,021             716
  Accumulated deficit.......................................      (5,707)           (587)
  Accumulated other comprehensive income (loss).............      (2,954)            (54)
                                                                --------        --------
Total shareholders' equity (accumulated deficit)............      (7,385)            247
                                                                --------        --------
                                                                $301,826        $124,568
                                                                ========        ========
See accompanying notes to consolidated financial statements.
                                       F-4
INVERESK RESEARCH GROUP, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
SUCCESSOR
                                              ------------------------------------------------    PREDECESSOR
                                                52 WEEKS       53 WEEKS                          DECEMBER 28,
                                                 ENDED          ENDED       SEPTEMBER 20, 1999      1998 TO
                                              DECEMBER 30,   DECEMBER 31,           TO           SEPTEMBER 19,
                                                  2001           2000       DECEMBER 26, 1999        1999
                                              ------------   ------------   ------------------   -------------
                                                                   (DOLLARS IN THOUSANDS)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)...........................   $  (5,120)      $  (416)          $   (122)          $ 4,057
Adjustments to reconcile net income (loss)
  to net cash provided by operating
  activities:
Depreciation of property, plant and
  equipment.................................       8,028         4,513                809             3,731
Amortization of goodwill and intangible
  assets....................................       7,910         3,281                973               242
Deferred pension obligations................         130          (195)                27              (538)
Deferred income taxes.......................         210           439               (263)              694
Amortization of deferred loan issue costs...       1,040           322                 --                --
Interest on Candover loan notes rolled up...       8,970         4,278              1,174                --
Changes in operating assets and liabilities:
  Accounts receivable.......................      (1,682)         (720)               852               112
  Advance billings..........................        (361)        1,369                 62               186
  Inventories...............................         176            87                (62)             (249)
  Accounts payable and accrued expenses.....         640          (616)               224               673
  Income taxes..............................      (1,277)         (919)            (1,051)            1,614
  Other assets and liabilities..............         829         1,270               (582)           (1,216)
                                               ---------       -------           --------           -------
Net cash provided by operating activities...      19,493        12,693              2,041             9,306
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of SGS Health Sector Holdings and
  IRNA, net of cash acquired of $9,080......          --            --            (78,792)               --
Purchase of ClinTrials Research Inc, net of
  cash acquired of $5,700...................    (115,147)           --                 --                --
Purchases of property, plant and
  equipment.................................     (11,145)       (6,792)            (1,307)           (5,305)
Proceeds from sale of investments...........          --            40                 --                --
                                               ---------       -------           --------           -------
Net cash used in investing activities.......    (126,292)       (6,752)           (80,099)           (5,305)
CASH FLOWS FROM FINANCING ACTIVITIES
Issue of common stock, net of issue costs...         388            --                839                --
Proceeds from short-term borrowings.........          --            --              3,206                --
Repayments of short-term borrowings.........      (3,038)         (109)                --               (56)
Proceeds from long-term borrowings, net of
  issue costs...............................     156,440            --             83,763                --
Repayments of long-term debt................     (38,311)       (3,031)                (9)              (27)
Repayment of balances owing to former parent
  company and its subsidiaries..............          --            --             (2,733)               --
                                               ---------       -------           --------           -------
Net cash provided (used) by financing
  activities................................     115,479        (3,140)            85,066               (83)
Effect on foreign currency exchange rate
  changes on cash...........................      (2,248)         (124)                 1             2,054
                                               ---------       -------           --------           -------
Increase in cash and cash equivalents.......       6,432         2,677              7,009             5,972
Cash and cash equivalents at beginning of
  period....................................       9,686         7,009                 --             3,108
                                               ---------       -------           --------           -------
Cash and cash equivalents at end of
  period....................................   $  16,118       $ 9,686           $  7,009           $ 9,080
                                               =========       =======           ========           =======
See accompanying notes to consolidated financial statements.
                                       F-5
INVERESK RESEARCH GROUP, INC.

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
NUMBER OF                            ADDITIONAL   RETAINED EARNINGS   ACCUMULATED OTHER
                                          ORDINARY      ORDINARY      SHARE     PAID-IN       (ACCUMULATED        COMPREHENSIVE
                                TOTAL      SHARES        SHARES      PREMIUM    CAPITAL         DEFICIT)          INCOME (LOSS)
                               -------   -----------   -----------   -------   ----------   -----------------   -----------------
                                                                     (DOLLARS IN THOUSANDS)
PREDECESSOR COMBINED BALANCE
  AT DECEMBER 28, 1998.......  $37,109                 $    21,702   $11,227     $   --          $ 5,229             $(1,049)
Comprehensive income (loss):
  Foreign currency
    translation
    adjustments..............     (907)                         --       --          --               --                (907)
Net income for period to
  September 19, 1999.........    4,057                          --       --          --            4,057                  --
                               -------
Comprehensive income.........    3,150
                               -------   -----------   -----------   -------     ------          -------             -------
---------------------------------------------------------------------------------------------------------------------------------
SUCCESSOR BALANCE AT
  SEPTEMBER 20, 1999.........       --            --   $        --   $   --      $   --          $    --             $    --
Issue of common stock........    1,269    17,171,327           172       --       1,097               --                  --
Share issue expenses.........     (430)                         --       --        (381)             (49)                 --
Comprehensive income (loss):
  Foreign currency
    translation
    adjustments..............       (5)                         --       --          --               --                  (5)
Net loss for period..........     (122)                         --       --          --             (122)                 --
                               -------
Comprehensive (loss).........     (127)
                               -------   -----------   -----------   -------     ------          -------             -------
BALANCE AT DECEMBER 26,
  1999.......................  $   712    17,171,327   $       172   $   --      $  716          $  (171)            $    (5)
Comprehensive income (loss):
  Foreign currency
    translation
    adjustments..............      (49)                         --       --          --               --                 (49)
Net loss for 2000............     (416)                         --       --          --             (416)                 --
                               -------
Comprehensive (loss).........     (465)
                               -------   -----------   -----------   -------     ------          -------             -------
BALANCE AT DECEMBER 31,
  2000.......................  $   247    17,171,327   $       172   $   --      $  716          $  (587)            $   (54)
Issue of shares..............      388     8,328,793            83       --         305               --                  --
Comprehensive income (loss):
  Foreign currency
    translation
    adjustments..............   (1,675)                         --       --          --               --              (1,675)
  Cumulative-effect
    adjustment for FAS 133
    (net of income taxes of
    $58).....................     (135)                         --       --          --               --                (135)
  Provision for accrued
    benefit obligation under
    FAS 87 (net of income
    taxes of $484)...........   (1,090)                         --       --          --               --              (1,090)
  Net loss for 2001..........   (5,120)                         --       --          --           (5,120)                 --
                               -------
Comprehensive (loss).........   (8,020)
                               -------   -----------   -----------   -------     ------          -------             -------
BALANCE AT DECEMBER 30,
  2001.......................  $(7,385)   25,500,120   $       255   $   --      $1,021          $(5,707)            $(2,954)
                               =======   ===========   ===========   =======     ======          =======             =======
See accompanying notes to consolidated financial statements.
                                       F-6
INVERESK RESEARCH GROUP, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (IN THOUSANDS)

1.  DESCRIPTION OF BUSINESS AND BASIS OF PREPARATION

  Description of Business

     Inveresk Research Group, Inc. (the "Company") is a provider of drug
development services to companies in the pharmaceutical and biotechnology
industries. Through the Company's pre-clinical and clinical business units, it
offers a broad range of drug development services, including pre-clinical safety
and pharmacology evaluation, laboratory sciences services and clinical
development services. The Company is 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. The Company's client base
includes major pharmaceutical companies in North America, Europe, and Japan, as
well as many biotechnology and specialty pharmaceutical companies.

     Information on the Company's operations by segment and geographic area is
included in Note 14.

     Inveresk Research Group Limited was incorporated in July 1999. It did not
trade until September 20, 1999 on which date it acquired SGS Health Sector
Services Holding Limited and Inveresk Research North America, Inc. These
entities were owned by SGS Societe Generale de Surveillance SA and their
combined operations are presented as the predecessor of Inveresk Research Group
Limited. On April 2, 2002 an agreement was signed, the effect of which will be
to change the ultimate parent company in the group to Inveresk Research Group,
Inc, a Delaware Corporation. This change of ultimate parent company is described
in further detail below.

  Basis of Preparation

     The fiscal year of the Group (as defined in Note 20 hereof) ends on the
last Sunday of each calendar year. In 2001 the fiscal year contained 52 weeks
and ended on December 30, 2001. In 2000 the fiscal year contained 53 weeks and
ended on December 31, 2000. In 1999 two periods are presented being the period
from December 28, 1998 to September 19, 1999 when the group's trading operations
were owned by SGS Societe Generale de Surveillance SA, and the period from
September 20, 1999 to December 26, 1999 after the acquisition of these
operations by the Group.

     The change of ultimate parent company referred to above will not be
effective until after the end of the period covered by the financial statements,
and will have no impact on the assets or liabilities of the Group. The financial
statements have been prepared on the basis that the change has taken place and
accordingly the shareholders funds and earnings per share are shown on the basis
of the capital structure of Inveresk Research Group, Inc. derived by applying
the weighted average number of shares in Inveresk Research Group, Inc that the
holders of each type of share in Inveresk Research Group Limited will receive
upon the change of ultimate parent company to the historic share capital of
Inveresk Research Group Limited.

     The Group has loan stock and accrued interest amounting to $119.13 million
at December 30, 2001, the majority of which is owing to its principal
shareholder. The terms of this loan stock are that it is repayable immediately
in the event of a listing of the Company's shares on a recognized stock exchange
or in the event of a sale of more than half of the Company's issued share
capital. Because the directors expect the offering to be successfully completed
and because it is envisaged that the loan stock and accrued interest will be
repaid from the net proceeds of the offering and debt facilities arranged at the
time of the offering, the loan stock has been shown as a short term liability in
the balance sheet at December 30, 2001. In the unlikely event that the net
proceeds of the offering and debt facilities arranged at the time of the
offering are inadequate to enable the loan stock to be repaid, the Company has
received assurances from the holders of the loan stock that they will not seek
any repayment of the loan stock

                                       F-7
INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

greater than the net proceeds of the offering and the debt issuance at the time
of the offering prior to the 366th day after the consummation of this offering.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 Principles of Consolidation

     The accompanying financial statements include the accounts of Inveresk
Research Group, Inc. and its subsidiaries. All intercompany transactions,
balances and profits are eliminated. All business combinations have been
accounted for using the purchase method.

     Under the purchase method, goodwill represents the excess of the cost of an
acquisition over the fair value of the Group's share of the net assets of the
acquired subsidiary at the date of acquisition. Goodwill is reported in the
balance sheet as an intangible asset and, prior to December 30, 2001, is
amortized using the straight-line method over its estimated useful life. The
accounting policy for goodwill that takes effect from January 1, 2002 is
described in the Recent Accounting Pronouncements section of this note. The gain
or loss on disposal of an entity includes the unamortized balance of goodwill
relating to the entity disposed of.

  Accounting Estimates

     The preparation of financial statements in conformity with U.S. GAAP
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

   Foreign Currencies

     The consolidated financial statements are prepared in U.S. Dollars. The
functional currency of each of the Company's subsidiaries is the local currency
in which each subsidiary is located. Transactions in foreign currencies are
translated at the exchange rate in effect at the date of each transaction.
Differences in exchange rates during the period between the date a transaction
denominated in a foreign currency is consummated and the date on which it is
either settled or translated are recognized in the statement of operations.

     The financial statements of foreign subsidiaries are translated into U.S.
Dollars using the current-rate method. Accordingly, assets and liabilities
denominated in foreign currencies are translated at rates of exchange in effect
at the balance sheet date. Revenues and expenses are translated at average rates
of exchange in effect during the year. Differences arising from the translation
are recorded to accumulated other comprehensive income (loss).

     The foreign currency exchange gain or loss recognized in the statements of
operation and included in "Selling, general and administrative expenses" was a
gain of $1,207,000 for the 52 weeks ended December 30, 2001, a loss of $41,000
for the 53 weeks ended December 31, 2000, a loss of $13,000 for the period from
September 20, 1999 to December 26, 1999 and a loss of $34,000 for the period
from December 26, 1998 to September 19, 1999.

 Revenue Recognition

     Many of the Company's contracts are fixed-price contracts over one year in
duration. Revenue for such contracts is recorded in accordance with the American
Institute of Certified Public Accountants (AICPA) "Statement of Position (SOP)
81-1 Accounting for Performance of Construction-Type and Certain Production-Type
Contracts." Revenue is recognized as costs are incurred and includes estimated

                                       F-8
INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

earned fees or profits calculated on the basis of the relationship between costs
incurred and total estimated costs (cost-to-cost type of
percentage-of-completion method of accounting). The Company also has contracts
with a duration of less than one year. Revenue is recognized on these contracts
in accordance with contract terms as services are provided. The Company
recognizes revenue related to contract modifications when realization is assured
and the amounts can be reasonably determined.

     The Company follows the guidance in the Securities and Exchange
Commission's Staff Accounting Bulletin No. 101 (SAB 101) on revenue recognition.
SAB 101 states that revenue should be recognized when all four of the following
conditions exist: persuasive evidence of an arrangement exists; services have
been rendered or delivery has occurred; the price is fixed or determinable; and
collectibility is reasonably assured. When estimated contract costs indicate
that a loss will be incurred on a contract, the entire loss is provided for in
such period.

     The Company routinely subcontracts with third party investigators in
connection with multi-site clinical trials and with other third party service
providers for laboratory analysis and other specialized services. Costs
associated with contracting with third party investigators are excluded from net
service revenue where they are the responsibility of the client and they are
passed through to clients without any mark up and are not recorded in revenues
or expenses.

  Earnings (Loss) Per Share

     Earnings (loss) per share is computed in accordance with FAS 128, "Earnings
per Share." FAS 128 requires presentation of both Basic Earnings per Share
(Basic EPS) and Diluted Earnings per Share (Diluted EPS). Basic EPS is based on
the weighted average number of shares of common stock outstanding during the
year while Diluted EPS also includes the dilutive effect of common stock
equivalents. The number of common stock equivalents not reflected in Diluted EPS
because they were anti-dilutive were 1,245,662 in 2001, 230,868 in 2000 and nil
in 1999.

  Cash and Cash Equivalents

     Cash and cash equivalents include demand deposits and money market accounts
held with a financial institution. The Company considers all highly liquid
investments with a maturity of three months or less when purchased to be cash
equivalents.

  Unbilled Receivables and Advance Billings

     Billings are generally determined by contractual provisions that include
predetermined date-certain payment schedules (which may include payment at or
near the time the trial is initiated), the achievement of negotiated performance
requirements or milestones, or the submission of required billing detail.
Unbilled receivables arise from those contracts under which billings are
rendered upon the achievement of certain negotiated performance requirements or
on a date-certain basis and services rendered exceed billings. The Company
expects to bill and collect these unbilled receivables within one year of
revenue recognition. Advance billings represent contractual billings for
services not yet rendered.

  Concentration of Credit Risk

     Financial instruments which potentially expose the Company to credit risk
include unsecured accounts receivable. Concentrations of credit risk on accounts
receivable is limited due to the large number of clients. Additionally, the
Company maintains allowances for potential credit losses and credit losses
incurred have not exceeded management's expectations. The Company's exposure to
credit loss in the event that payment is not received for revenue recognized
equals the outstanding accounts receivable and unbilled services balance.

                                       F-9
INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Inventories

     Inventories which comprise consumables and supplies are stated at the lower
of cost and net realizable value. Cost is generally determined using the
first-in, first-out method.

  Property, Plant and Equipment

     Property, plant and equipment are stated at cost.

     Maintenance repairs and minor renewals are charged to expense as incurred.
Major renewals and betterments are capitalized and depreciated over their
estimated useful lives. When assets are retired or otherwise disposed of, the
cost is removed from the asset account and the corresponding accumulated
depreciation is removed from the related reserve account. Any gain or loss
resulting from such retirement or disposal is included in current income.

     Depreciation is provided on a straight-line basis over the estimated useful
economic lives of the assets as set out below:
Land                           --   not depreciated
Buildings                      --   40 years
Leasehold improvements         --   over the term of the lease
Machinery and equipment        --   5 to 10 years
Office furniture and machines  --   3 to 10 years
Vehicles                       --   3 to 5 years
Intangible Assets

     Intangible assets comprise goodwill and the value of the assembled
workforce of acquired businesses. Goodwill, which represents the excess of the
consideration given over the fair value of the identifiable assets and
liabilities acquired is capitalized and written off on a straight line basis
over its useful economic life, which is twenty years, in accordance with APB
Opinion No. 17. Enterprise level goodwill is assessed for impairment based on
estimated discounted cashflows in accordance with APB opinion 17. Other
intangible assets are capitalized and written off on a straight line basis over
their useful economic lives of 8 years.

  Impairment of Long-Lived Assets

     The Company evaluates long-lived assets and intangibles other than goodwill
for impairment whenever events or changes in circumstances indicate that the
value of an asset may not be recoverable. An impairment loss is recognized when
estimated undiscounted future cash flows expected to result from the use of the
asset and its eventual disposal are less than its carrying amount including any
attributable goodwill. In such instances, the carrying value of long-lived
assets is reduced to the estimated fair value, as determined using an appraisal
or discounted cash flow analysis, as appropriate.

  Income Taxes

     Income taxes are accounted for under the liability method in accordance
with FAS 109, "Accounting for Income Taxes." Deferred tax assets and liabilities
are determined based on differences between the financial reporting and tax
basis of assets and liabilities and are measured using the enacted tax rates and
laws that will be in effect when the differences are expected to reverse.
Deferred tax assets are reduced by a valuation allowance to the extent that it
is more likely than not that a portion of the asset will not be realized.

                                       F-10
INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Stock-Based Compensation

     The Company accounts for stock-based awards to employees using the
intrinsic value method prescribed in APB Opinion No. 25, "Accounting for Stock
Issued to Employees." Compensation cost for stock options granted to employees
is based on the excess of the quoted market price of the Company's stock on the
measurement date over the amount an employee must pay to acquire the stock (the
"intrinsic value") and is recognized over the vesting period. The intrinsic
value of the options for which the measurement date has not been reached is
measured on the basis of the current market value of the Company's stock at the
end of each period. No compensation cost is recognized in respect of options
where the vesting of the options is conditional upon the listing of the
Company's shares on a recognized stock exchange, prior to the condition being
met. Once the condition has been met, the compensation expense will be recorded
in full on the date when the condition is satisfied.

  Research and Development

     Many of the Company's activities are directed towards the performance of
research on behalf of its clients and the Company is continually improving its
scientific methods and techniques. All costs relating to the performance of
client projects are expensed as incurred and there are no significant levels of
expenditure on research and development on the Company's own behalf.

  Derivative and Financial Instruments

     Foreign exchange forward contracts are legal agreements between two parties
to purchase and sell foreign currency for a specified price, with delivery and
settlement in the future. During the periods covered by the financial statements
the Company did not have any foreign currency derivative instruments and did not
engage in any foreign currency hedging activities.

     It is the strategy of the Company to enter into derivative contracts to
hedge exposure to variability in cash flows for floating rate financial
instruments and forecasted transactions, which primarily include the rollover of
short-term assets and liabilities and loan repayments. Interest rate cap and
collar and swaps are the most common instruments used to reduce the impact of
interest rate changes on future earnings.

     Until December 31, 2000, the premium paid for the interest rate cap and
collar transaction was deferred and amortized to income on a straight-line basis
over the term of the contract. The benefits or losses of the cap and collar
contract were recognized as they were received ("synthetic instrument
accounting").

     On January 1, 2001, the Company adopted FAS 133, which establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts and used for hedging
activities. All derivatives, whether designated for hedging relationships or
not, are required to be recorded on the balance sheet at fair value. If the
derivative is designated as a fair value hedge, all changes in the fair value of
the derivative and changes in the fair value of the hedged item attributable to
the hedged risk are recognized in earnings. If the derivative is designated as a
cash flow hedge, the effective portions of the changes in the fair value of the
derivative are recorded in other comprehensive income and are recognized in the
statement of operations when the hedged item affects earnings. The ineffective
portions of both fair value and cash flow hedges are immediately recognized in
earnings.

     The adoption of FAS 133 resulted in recording the fair value of the cap and
collar transaction at fair value and writing off the remaining unamortized
premium to other comprehensive income. The impact of this, net of deferred
taxes, was a charge of $135,000 to other comprehensive income.

                                       F-11
INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Because of hedge ineffectiveness and management's decision no longer to
apply hedge accounting but to continue to enter into economic hedges to support
certain business strategies, adoption of FAS 133 may cause volatility in
quarterly earnings in the future.

     Following adoption of FAS 133, the interest rate cap and collar
transactions are accounted for at fair value, being the premium paid at the
inception date, and marking to market (fair value) any differences between
periods through the statement of operations at the end of each reporting period.
Swap contracts are recorded at fair value and any differences between periods
are recorded through the statement of operations at the end of each reporting
period.

  Debt Issuance Costs

     Debt issuance costs relating to the Company's bank loans and unsecured
fixed rate debt are deferred and amortized to interest expense using the
effective interest method over the respective terms of the debt concerned.

  Grant Income

     The European operations of ClinTrials has received two grants from the
Scottish Executive relating to projects to establish a clinical data management
operation in Glasgow. The grants concerned are Regional Selective Assistance
grants for pounds sterling 550,000 relating to the establishment of clinical
data management facilities in Glasgow, leasing premises and creating 98
permanent full time jobs, and for pounds sterling 100,000 for the development of
clinical data management systems and creating 20 permanent full time jobs. The
grants concerned can be claimed in stages once certain targets relating to
completion of the project have been achieved. The principal targets relate to
the number of jobs created, commitments for leasing of assets under operating
leases and other expenditures.

     Grant income is recognized at the point of receipt of each stage payment
subject to the conditions for receiving the payment still being met. Grant
income totalling pounds sterling 310,000 was recognized by the subsidiary in the
periods prior to its acquisition by the Company. No grant income has been
recognized in 2001, nor by the Company and its subsidiaries in any prior period
covered by these financial statements.

     The grants can potentially be reclaimed by the Scottish Executive within 18
months of the final stage payment in the case of the first grant or 36 months of
the final stage payment in the case of the second grant if the conditions for
receiving the grant are not maintained. In the event that, subsequent to
receiving a payment, the conditions for claiming a grant are no longer met, the
Company provides for its best estimate of the potential repayment of the grant
until such time as the period for potential repayment has expired. Management do
not believe that repayment of any grant recognized to date will be necessary.

  Recent Accounting Pronouncements

     In July 2001, the Financial Accounting Standards Board ("FASB") issued FAS
141, "Business Combinations," and FAS 142, "Goodwill and Other Intangible
Assets." FAS 141 requires that the purchase method of accounting be used for all
business combinations initiated after June 30, 2001. FAS 141 also specifies the
criteria that intangible assets acquired in a purchase method business
combination must meet to be recognized and reported apart from goodwill, noting
that any purchase price allocable to an assembled workforce may not be accounted
for separately. FAS 142 will require that goodwill and intangible assets with
indefinite useful lives no longer be amortized, but instead will be tested for
impairment at least annually in accordance with the provisions of FAS 142. FAS
142 will also require that intangible assets with definite useful lives be
amortized over their respective estimated useful lives to their

                                       F-12
INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

estimated residual values, and reviewed for impairment in accordance with FAS
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of."

     FAS 142 is effective from January 1, 2002. Furthermore, any goodwill and
any intangible asset determined to have an indefinite useful life that is
acquired in a purchase business combination completed after June 30, 2001 will
not be amortized, but instead tested for impairment at least annually in
accordance with the provisions of FAS 142. Goodwill and intangible assets
acquired in business combinations completed before July 1, 2001 have continued
to be amortized prior to the effective date of FAS 142.

     On adoption of FAS 142 the net book value of the intangible assets relating
to the assembled workforce net of deferred tax will transfer to goodwill. Had
FAS 142 been applied from January 1, 2001 the amortization expense in 2001 would
have been reduced by approximately $7.91 million from the level it was under the
old standards.

     In June 2001, the FASB issued FAS 143, "Accounting for Asset Retirement
Obligations." FAS 143 requires the fair value of a liability for asset
retirement obligations to be recognized in the period in which it is incurred if
a reasonable estimate of the fair value can be made. The associated asset
retirement costs are capitalized as part of the carrying amount of the related
long-lived asset.

     FAS 143 is effective for financial statements issued for fiscal years
beginning after June 15, 2002. The Company has not yet assessed the potential
impact of the adoption of FAS 143.

     In August 2001, the FASB issued FAS 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." FAS 144 establishes a single accounting model
for long-lived assets to be disposed of by sale consistent with the fundamental
provisions of FAS 121, "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed Of." While it supersedes APB Opinion 30,
"Reporting the Results of Operations -- Reporting the Effects of the Disposal of
a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions." FAS 144 retains the presentation of discontinued
operations but broadens that presentation to include a component of an entity
(rather than a segment of a business). However, discontinued operations are no
longer recorded at the net realizable value and future operating losses are no
longer recognized before they occur. Under FAS 144, there is no longer a
requirement to allocate goodwill to long-lived assets to be tested for
impairment. It also establishes a probability weighted cash flow estimation
approach to deal with situations in which there is a range of cash flows that
may be generated by the asset being tested for impairment. FAS 144 also
establishes criteria for determining when an asset should be treated as held for
sale.

     FAS 144 is effective for fiscal years beginning after December 15, 2001 and
interim periods within those fiscal years, with early application encouraged.
The provisions of FAS 144 are generally to be applied prospectively. The Company
currently has no plans to dispose of any operations and, accordingly, does not
anticipate that adoption of FAS 144 will have any material impact on its results
of operations or its financial position.

3. BUSINESS ACQUISITIONS

     The Company made two significant acquisitions during the three year period
ended December 30, 2001. Both acquisitions have been accounted for under the
purchase method of accounting. The results of operations are included from the
date of acquisition for the acquisition of ClinTrials Research Inc. on April 5,
2001. In the case of the September 20, 1999 acquisition of SGS Health Sector
Services Holdings Limited and Inveresk Research North America, Inc. by Inveresk
Research Group Limited, the accompanying financial statements present the
results of operations of the acquired businesses under their

                                       F-13
INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

previous ownership structure. This is because Inveresk Research Group Limited
was not incorporated until July 1999 and had not traded prior to completing the
acquisition on September 20, 1999.

     On April 5, 2001, the Company acquired the whole of the outstanding stock
of ClinTrials Research Inc. for cash of $120.8 million. The estimated fair value
of assets acquired and liabilities assumed are summarized below:
Allocation of purchase price:
Net current assets (including cash of $5,700)...............            $  1,201
Property, plant and equipment...............................              37,353
Intangible assets
  Assembled Workforce.......................................  22,050
  Goodwill..................................................  73,649
                                                              ------    --------
                                                                          95,699
Deferred taxation liabilities...............................             (13,183)
Long term liabilities.......................................                (223)
                                                                        --------
Purchase price..............................................            $120,847
                                                                        ========
Tax losses at the acquisition date amounted to approximately $45 million.

     The following selected unaudited pro forma consolidated results of
operations are presented as if the acquisition had occurred as of the beginning
of the period immediately preceding the period of acquisition after giving
effect to certain adjustments for the amortization of goodwill, interest costs
relating to the financing of the acquisition and related income tax effects. The
pro forma data is for information purposes only and does not necessarily reflect
the results of operations had the companies operated as one during the period.
No effect has been included for synergies, if any, that may have been realized
through the acquisition.
2001        2000
                                                              --------    --------
Net service revenue.........................................  $180,553    $170,865
Gross profit................................................    80,379      71,714
Income from operations......................................    11,373       2,143
(Loss) before tax...........................................    (8,631)    (16,738)
Net income (loss)...........................................   (10,719)    (18,023)
  Loss per share............................................  $  (0.46)   $  (1.05)
                                                              ========    ========
Provision was made at acquisition for restructuring of the European
Clinical operation of ClinTrials Research Inc. This was based upon a plan
formulated at acquisition, approved by the directors of the Company in August
2001 and wholly implemented in 2001. The plan involved reducing the headcount in
the acquired business, relocating certain functions from Maidenhead in England
to various locations in Scotland and vacating office space in Maidenhead. The
movement on the restructuring provision was:
Amount established at acquisition...........................  $3,416
Utilized during 2001........................................   2,251
                                                              ------
Balance accrued at December 30, 2001........................  $1,165
The provision established at acquisition comprised $1.7 million in respect
of severance payments to 74 people in the statistical and data management and
various administrative functions, $1.3 million relating to rental and services
costs on the surplus space vacated at Maidenhead, $0.3 million relating to
dilapidations on the Maidenhead property and $0.1 million of other expenditures.
The residual balance

                                       F-14
INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

accrued at December 30, 2001 of $1.165 million primarily relates to future lease
obligations on the vacated Maidenhead property.

     On September 20, 1999, the Company acquired SGS Health Sector Services
Holdings Limited and Inveresk Research North America, Inc. for a cash
consideration of $87,872. The estimated fair value of the assets acquired and
liabilities assumed are summarized below:
Allocation of purchase price:
Net current assets (including cash of $9,080)...............            $  1,724
Property, plant and equipment...............................              50,009
Other non-current assets....................................                  41
Intangible assets
  Assembled Workforce.......................................   9,587
  Goodwill..................................................  46,260
                                                              ------    --------
                                                                          55,847
Deferred taxation liabilities...............................             (16,206)
Defined benefit pension scheme obligation...................              (3,543)
                                                                        --------
Purchase price..............................................            $ 87,872
                                                                        ========
The following selected unaudited pro forma consolidated results of
operations are presented as if the acquisition had occurred as of the beginning
of the period immediately preceding the period of acquisition after giving
effect to certain adjustments for the amortization of goodwill, interest costs
relating to the financing of the acquisition and related income tax effects. The
pro forma data is for information purposes only and does not necessarily reflect
the results of operations had the companies operated as one during the period.
No effect has been included for synergies, if any, that may have been realized
through the acquisition.
1999       1998
                                                              -------    -------
Net service revenue.........................................  $63,920    $58,219
Gross profit................................................   27,098     26,403
Income from operations......................................    6,844      5,884
(Loss) before tax...........................................   (1,170)    (2,433)
Net (loss)..................................................   (2,168)    (2,344)
                                                              =======    =======
Pro forma earnings per share data is not provided since, for the reason
explained in Note 4, it is not meaningful to provide earnings per share data for
periods prior to September 20, 1999.

     Goodwill and other intangibles related to these acquisitions has been
amortized for the period from acquisition to December 30, 2001 over their
established lives which range from 8 to 20 years. As described in the intangible
assets section of Note 2, goodwill will not be amortized after January 1, 2002,
but will be subject to impairment reviews.

4. EARNINGS (LOSS) PER SHARE

     As more fully described under the Basis of Preparation section of Note 1,
the accompanying financial statements reflect the capital structure of Inveresk
Research Group Limited, which was significantly different from the capital
structure of the Company after the change of ultimate parent company described
in Note 1. As a result, the presentation of historical earnings per share data
using the Inveresk Research Group Limited capital structure prior to the
reorganization would not be meaningful and has not been included herein. Rather,
historical earnings (loss) per share has been computed assuming the historical

                                       F-15
INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

outstanding shares in Inveresk Research Group Limited were converted to common
stock in Inveresk Research Group, Inc. using a weighted average conversion rate
derived from the conversion ratios which will apply when the change of ultimate
parent company becomes effective. For the period December 28, 1998 to September
19, 1999 the business was carried out by SGS Health Services Holdings Limited
and Inveresk Research North America Inc., which were owned by SGS Societe
Generale de Surveillance SA. The financial information for this period
represents the combined financial statements of these entities. Accordingly it
is not meaningful to present earnings per share data for this period.

5. SHAREHOLDERS' EQUITY

     As described in Note 1 in more detail, there will be a change of ultimate
parent company prior to the offering becoming effective. The share capital of
Inveresk Research Group Limited will be exchanged for common stock in Inveresk
Research Group, Inc. on the basis described in the section of the prospectus
entitled "Change in Ultimate Parent."

     The capital structure is as follows:
DECEMBER 30,    DECEMBER 31,
                                                                 2001            2000
                                                             ------------    ------------
Preferred shares of common stock, $0.01 par value
  10,000,000 authorized, none issued.......................      $ --            $ --
Ordinary shares of common stock, $0.01 par value
  150,000,000 authorized; issued and fully-paid 25,500,120
  and 17,171,327 at December 30, 2001 and December 31,
  2000.....................................................       255             172
                                                                 ----            ----
                                                                 $255            $172
                                                                 ====            ====
The increase of 8,328,793 ordinary shares of common stock during 2001
represents new shares issued for a consideration of $388,000.

6. PROPERTY, PLANT AND EQUIPMENT

     The composition of property, plant and equipment is as follows:
DECEMBER 30,    DECEMBER 31,
                                                                 2001            2000
                                                             ------------    ------------
Land, buildings and leasehold improvements.................    $ 79,394        $ 53,220
Plant and equipment........................................      76,291          31,810
                                                               --------        --------
                                                                155,685          85,030
Less accumulated depreciation..............................     (67,763)        (36,271)
                                                               --------        --------
                                                               $ 87,922        $ 48,759
                                                               ========        ========
Included in plant and equipment are assets with a cost of $2,013,000 which
are the subject of capital leases.

                                       F-16
INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

7. INTANGIBLE ASSETS
DECEMBER 30,    DECEMBER 31,
                                                                 2001            2000
                                                             ------------    ------------
Goodwill...................................................    $115,709        $42,597
Workforce..................................................      30,831          8,828
                                                               --------        -------
                                                                146,540         51,425
Less accumulated amortization..............................     (12,023)        (4,152)
                                                               --------        -------
                                                               $134,517        $47,273
                                                               ========        =======
8. ACCRUED EXPENSES

     The composition of accrued expenses is as follows:
DECEMBER 30,    DECEMBER 31,
                                                                 2001            2000
                                                             ------------    ------------
Restructuring provision in respect of European Clinical
  operations...............................................    $ 1,165          $   --
Fair value of Canadian $ interest rate swap................      1,763              --
Fair value of pounds sterling interest rate swap...........        218              --
Interest accrued on bank loans and interest rate swaps.....      2,956              18
Other accrued expenses.....................................     15,418           4,734
                                                               -------          ------
                                                               $21,520          $4,752
                                                               =======          ======
9. CREDIT FACILITIES AND DEBT

     The Company has issued L71,772,000 (equal to $104,500,000 at December 30,
2001) unsecured subordinated loan stock, which is repayable at face value plus
accrued interest on the earlier of the date of listing of the Company's stock on
a recognized investment exchange, the date of sale of 50% or more of the
Company's issued equity share capital, or June 30, 2008. This loan stock
accumulates interest at 10% of the principal balance per annum, which is not
payable until redemption. It is not practicable to estimate the fair value of
the loan stock because it is held by the Company's principal shareholder and
because its repayment date is dependent upon uncertain future events.
Accordingly, it is carried at its original historic cost.

     The Company has bank loan facilities amounting to $109,278,000 which are
secured by a charge on the Company's assets. Of the above loan facilities $46.75
million are denominated in US$, L36.35 million (equal to $52.92 million at
December 30, 2001) are denominated in pounds sterling and C$15.3 million (equal
to $9.61 million at December 30, 2001) are denominated in Canadian Dollars.
$79.89 million of the facilities bear interest at LIBOR plus 2.25% and the
remaining $29.39 million bears interest at LIBOR plus 2.75%. The facilities are
repayable according to repayment schedules applicable to each part of the
facility between June 30, 2002 and December 31, 2008.

     The related Facilities Agreement contains certain financial covenants,
including but not limited to, covenants related to Minimum Net Worth, Minimum
Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA") to
Total Interest Charges, Maximum Senior Debt to EBITDA and Minimum Cash Flow to
Debt Service. These covenants are calculated with reference to the combined
financial results/statements of certain, but not all, of its consolidated
subsidiaries. The Company is in compliance with these covenants.

                                       F-17
INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The extraordinary item of $419,000 in 2001 represents extinguishment of
debt issue costs of $593,000 net of income taxes of $174,000 relating to the
Company's previous bank debt facilities which were refinanced at the time of the
acquisition of ClinTrials Research Inc.

     The Company has entered into three transactions to hedge its exposure to
fluctuating interest rates.

     On December 20, 1999, the Company entered into an interest rate cap and
collar transaction for a cost of pounds sterling 172,972. This transaction
covers the period from December 20, 1999 to December 31, 2002 and related to
pounds sterling 16.2 million initially, reducing to pounds sterling 15.75
million on June 30, 2000, pounds sterling 15.3 million on December 29, 2000,
pounds sterling 14.7 million on June 29, 2001, pounds sterling 14.1 million on
December 31, 2001 and pounds sterling 13.35 million on June 28, 2002. Under the
terms of the agreement, the Company is compensated if LIBOR exceeds 7.5% but is
required to make payments if LIBOR falls below 5.0%. The estimated fair value is
based on the quoted market prices. At December 30, 2001, the fair value was
estimated to be a liability of $134,000. These unrealized losses have been
recorded as additional interest costs in the 52 week period ended December 30,
2001.

     On July 5, 2001, the Company entered into two interest rate swap
transactions to hedge its exposure to interest rate fluctuations. These
agreements did not require an initial investment by the Company. Net settlements
to be received or paid under the agreements are reflected as adjustments to
interest expense. Additionally, included in interest expense for the year ended
December 31, 2001 are unrealized losses of $1,982,000 related to these swap
agreements that were incurred in the year. The two swaps have notional amounts
as follows:
POUNDS
                                                              STERLING
                                                              --------
July 5, 2001 -- December 31, 2001...........................    5.6m
December 31, 2001 -- June 30, 2002..........................    6.0m
June 30, 2002 -- December 31, 2002..........................    5.1m
December 31, 2002 -- June 30, 2003..........................   17.3m
June 30, 2003 -- December 31, 2003..........................   16.2m
December 31, 2003 -- June 30, 2004..........................   14.7m
CANADIAN
                                                              DOLLARS
                                                              --------
July 5, 2001 -- December 30, 2001...........................    60m
December 30, 2001 -- June 30, 2002..........................    60m
June 30, 2002 -- December 30, 2002..........................    55m
December 30, 2002 -- June 30, 2003..........................    55m
June 30, 2003 -- December 30, 2003..........................    50m
December 30, 2003 -- June 30, 2004..........................    45m
The Company pays a fixed rate 6.03% on the pounds sterling amounts and
5.41% on the Canadian Dollar amounts and receives a floating rate amount equal
to GBP LIBOR and CAD LIBOR. These agreements expire on June 30, 2004.

                                       F-18
INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. LEASES AND CAPITAL COMMITMENTS

  Operating leases

     The Company leases office space and office equipment under various
operating leases. Minimum rental commitments payable in future years under
operating leases having initial or remaining noncancellable terms of one year or
more at December 31 are as follows (in thousands):
2002.......................................................  $ 6,138
2003.......................................................    5,427
2004.......................................................    4,803
2005.......................................................    4,543
2006.......................................................    4,290
Thereafter.................................................   27,183
                                                             -------
Total minimum rentals......................................   52,384
Less minimum rentals due under noncancellable subleases....   (1,604)
                                                             -------
                                                             $50,780
                                                             =======
Rent expense is comprised of the following:
SUCCESSOR                       PREDECESSOR
                                  ---------------------------------------------    -------------
                                    52 WEEKS        53 WEEKS      SEPTEMBER 20,    DECEMBER 28,
                                     ENDED           ENDED           1999 TO          1998 TO
                                  DECEMBER 30,    DECEMBER 31,    DECEMBER 26,     SEPTEMBER 19,
                                      2001            2000            1999             1999
                                  ------------    ------------    -------------    -------------
Minimum rentals.................     $5,466           $165             $39             $100
Less sublease rentals...........       (670)            --              --               --
                                     ------           ----             ---             ----
                                     $4,796           $165             $39             $100
                                     ======           ====             ===             ====
Capital leases

     The Company has capital lease obligations relating to scientific machinery,
vehicles and office equipment. The Company's commitments under capital leases
are:
2002........................................................  $198
2003........................................................   175
2004........................................................   151
2005........................................................    40
Thereafter..................................................    --
                                                              ----
                                                              $564
                                                              ====
Capital commitments

     The Company has commitments in relation to capital expenditure amounting to
$6.22 million at December 30, 2001.

                                       F-19
INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

11. INCOME TAXES

     Significant components of the Company's deferred tax liabilities and assets
are as follows:
DECEMBER 30,    DECEMBER 31,
                                                                 2001            2000
                                                             ------------    ------------
Deferred tax assets:
Defined benefit pension obligation.........................    $  1,416        $    929
Federal and state net operating losses.....................      11,425             289
Foreign net operating losses...............................       2,400              --
Interest rate swaps........................................         658              --
                                                               --------        --------
Total deferred tax assets..................................      15,899           1,218
Valuation allowance for deferred tax assets................     (13,825)           (289)
                                                               --------        --------
Net deferred tax assets....................................    $  2,074        $    929
Deferred tax liabilities:
Property, plant and equipment..............................     (21,938)        (13,325)
Assembled workforce........................................      (6,884)         (2,224)
Unbilled receivables.......................................        (864)           (493)
                                                               --------        --------
Net deferred tax liabilities...............................    $(27,612)       $(15,113)
                                                               ========        ========
The balance sheet classification of the net deferred tax liabilities is as
follows:
DECEMBER 30,    DECEMBER 31,
                                                                 2001            2000
                                                             ------------    ------------
Current deferred tax liabilities...........................    $   (559)       $   (493)
Net noncurrent deferred tax liabilities....................     (27,053)        (14,620)
                                                               --------        --------
Net deferred tax liabilities...............................    $(27,612)       $(15,113)
                                                               ========        ========
For financial reporting purposes, profit (loss) before income taxes
includes the following components:
SUCCESSOR
                                       ------------------------------------------------     PREDECESSOR
                                         52 WEEKS        53 WEEKS                          DECEMBER, 28
                                          ENDED           ENDED         SEPTEMBER 20,         1998 TO
                                       DECEMBER 30,    DECEMBER 31,    1999 TO DECEMBER    SEPTEMBER 19,
                                           2001            2000            26, 1999            1999
                                       ------------    ------------    ----------------    -------------
Profit (loss) before income taxes:
  United States......................    $(2,920)         $(367)             $ (9)            $  (26)
  Foreign............................      1,045            633               212              6,391
                                         -------          -----              ----             ------
                                         $(1,875)         $ 266              $203             $6,365
                                         =======          =====              ====             ======
The Company's Canadian subsidiary qualifies for Federal and Quebec
Scientific Research and Development deductions and tax credits. Expenditures on
certain capital assets are fully deductible or may be carried forward
indefinitely until utilized. The tax credits are equal to 30% of certain capital
and current expenditures. The Federal tax credits are accounted for using the
flow through method, in which the Federal credits are recognized as a reduction
of income taxes in the year the credit arises. Quebec tax credits are reported
as a component of operating income in the income statement, rather than as a
reduction of income tax expense. The only period in which this is relevant is
the 52 week period ended December 30, 2001 where $1.8 million of Quebec tax
credits were offset against direct costs in the statements of operations.

                                       F-20
INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Provision has not been made for United States or additional foreign taxes
on undistributed earnings of foreign subsidiaries as those earnings have been
permanently reinvested and the Company has no plans in the foreseeable future to
remit these earnings to the United States.

     Significant components of the provision (benefit) for income taxes are as
follows:
SUCCESSOR                       PREDECESSOR
                                  ---------------------------------------------    -------------
                                    52 WEEKS        53 WEEKS      SEPTEMBER 20,    DECEMBER 28,
                                     ENDED           ENDED           1999 TO          1998 TO
                                  DECEMBER 30,    DECEMBER 31,    DECEMBER 26,     SEPTEMBER 19,
                                      2001            2000            1999             1999
                                  ------------    ------------    -------------    -------------
Current:
  Foreign.......................    $ 1,839           $243            $ 588           $1,614
Deferred:
  Foreign.......................      2,011            439             (263)             694
  Foreign Research and
     Development tax credits....     (1,801)            --               --               --
                                    -------           ----            -----           ------
Provision for income taxes......    $ 2,049           $682            $ 325           $2,308
                                    =======           ====            =====           ======
There are no amounts in respect of U.S. Federal, State and local current or
deferred taxes.

     The Company's consolidated effective tax rate differed from the U.S.
Federal statutory rate as set forth below:
SUCCESSOR                        PREDECESSOR
                                 ------------------------------------------------   -------------
                                   52 WEEKS       53 WEEKS       SEPTEMBER 20,      DECEMBER 28,
                                    ENDED          ENDED            1999 TO            1998 TO
                                 DECEMBER 30,   DECEMBER 31,      DECEMBER 26,      SEPTEMBER 19,
                                     2001           2000              1999              1999
                                 ------------   ------------   ------------------   -------------
U.S. Federal statutory rate....    $  (928)        $  93              $ 71             $2,228
Canadian Research and
  Development tax credits......     (1,801)           --                --                 --
Amortization of excess of
  purchase price over net
  assets acquired..............      1,156           648               199                 73
Difference between foreign
  income taxed at U.S. Federal
  statutory rates and foreign
  income tax expense...........        776           (32)              (11)              (320)
Increase in U.S. Federal
  valuation allowance..........      1,103           128                 3                  9
Increase in valuation allowance
  against losses of foreign
  subsidiaries.................      1,247            --                --                 --
Other..........................        496          (155)               63                318
                                   -------         -----              ----             ------
                                   $ 2,049         $ 682              $325             $2,308
                                   =======         =====              ====             ======
A valuation allowance has been established for the amount of United States
deferred tax assets primarily related to the Company's potential tax benefit
associated with loss carryforwards. At December 30, 2001, the Company had
approximately $32.6 million of U.S. Federal net operating loss carryforwards
which begin to expire in 2018. Foreign tax losses available for offset against
future profits of the business in which they arose amount to approximately $8
million.

                                       F-21
INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

12. STOCK OPTION PLANS AND WARRANTS

     On the basis that the change of ultimate parent company has occurred, at
December 30, 2001, the Company had issued options over 1,245,662 ordinary shares
of common stock to employees of the Company under unapproved UK share option
arrangements. The objectives of these arrangements include attracting and
retaining personnel and promoting the success of the Company by providing
employees with the opportunity to acquire shares.

     The option rights entitle the bearer to purchase shares in Inveresk
Research Group, Inc. at prices ranging from $0.02 to $0.37 per ordinary share.

     The options can only be exercised upon completion of the listing of the
Company's shares on a recognized stock exchange.

     A summary of the shares of common stock that are the subject of options is
as follows:
ORDINARY
                                                               SHARES
                                                              ---------
Outstanding at December 26, 1999............................         --
  Granted...................................................    235,315
  Forfeited.................................................     (4,447)
                                                              ---------
Outstanding at December 31, 2000............................    230,868
  Granted...................................................  1,028,771
  Forfeited.................................................    (13,977)
                                                              ---------
Outstanding at December 30, 2001............................  1,245,662
                                                              =========
The Company intends to continue to award options in future years and
          common stock in Inveresk Research Group, Inc are available for this
purpose.

     The following table summarizes the options outstanding at December 31,
2001:
NO. OF OPTIONS OUTSTANDING
---------------------------
ORDINARY       EXERCISE
 SHARES          PRICE
--------    ---------------
320,880   $0.02 per share
  221,974   $0.18 per share
  327,600   $0.19 per share
  375,208   $0.37 per share
---------
1,245,662
=========
Further options have been issued since December 30, 2001 and certain
options have been exercised. The weighted average exercise price of options was
$0.18 per share at December 31, 2000 and $0.20 at December 30, 2001.

     Compensation costs for these grants has not been recorded because the
exercise of the options are all contingent upon the completion of a listing of
the Company's shares on a recognized stock exchange. Upon completion of such a
listing, based on a listing price of $-- per share of common stock in Inveresk
Research Group, Inc., it is envisaged that compensation expense of $-- will be
recorded.

                                       F-22
INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

13. EMPLOYEE BENEFITS

     The Company operates both a defined contribution and a defined benefit
pension plan, covering certain qualifying employees. Contributions under defined
contribution plans are determined as a percentage of gross salary. The expense
related to these plans for the 52 weeks ended December 30, 2001 was $1,362,000
and for the 53 weeks ended December 31, 2000 and prior periods was nil.

     The Company operates funded defined benefit pension plans. The benefits
under defined benefit plans are based on years of service and salary levels.
Plan assets are primarily comprised of marketable securities. The following
provides a reconciliation of benefit obligations, plan assets and the funded
status of the defined benefit plan.
SUCCESSOR                     PREDECESSOR
                                             -------------------------------------------   -------------
                                               52 WEEKS       53 WEEKS     SEPTEMBER 20,   DECEMBER 28,
                                                ENDED          ENDED          1999 TO         1998 TO
                                             DECEMBER 30,   DECEMBER 31,   DECEMBER 26,    SEPTEMBER 19,
                                                 2001           2000           1999            1999
                                             ------------   ------------   -------------   -------------
CHANGE IN BENEFIT OBLIGATIONS
Benefit obligation at the beginning of the
  year.....................................    $48,801        $48,130         $46,615         $42,151
Service cost...............................      2,731          2,581             686           1,778
Interest cost..............................      2,796          2,913             833           1,756
Plan participants contribution.............        899            847             219             567
Actuarial (gains) and losses...............     (1,979)          (906)            613           2,255
Amendments.................................         --             --              --             488
Benefits paid..............................     (2,201)        (1,182)           (520)         (1,350)
Foreign currency exchange rate charges.....     (1,211)        (3,582)           (316)         (1,030)
                                               -------        -------         -------         -------
Benefit obligation at the end of the
  year.....................................    $49,836        $48,801         $48,130         $46,615
                                               =======        =======         =======         =======
CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of
  the year.................................    $46,490        $49,403         $43,071         $40,442
Actual return on plan assets...............     (6,183)        (1,555)          6,248           2,115
Company contributions......................      2,638          2,601             694           2,288
Plan participants contributions............        899            847             219             567
Benefits paid..............................     (2,201)        (1,182)           (520)         (1,350)
Foreign currency exchange rate charges.....     (1,229)        (3,624)           (309)           (991)
                                               -------        -------         -------         -------
Fair value of plan assets at the end of the
  year.....................................    $40,414        $46,490         $49,403         $43,071
                                               =======        =======         =======         =======
F-23
INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The following table sets forth the funded status of the defined benefit
pension plan:
SUCCESSOR                     PREDECESSOR
                                        -------------------------------------------   -------------
                                          52 WEEKS       53 WEEKS     SEPTEMBER 20,   DECEMBER 28,
                                           ENDED          ENDED          1999 TO         1998 TO
                                        DECEMBER 30,   DECEMBER 31,   DECEMBER 26,    SEPTEMBER 19,
                                            2001           2000           1999            1999
                                        ------------   ------------   -------------   -------------
Funded status.........................    $(9,422)       $(2,311)        $ 1,273         $(3,543)
Unrecognized net actuarial loss
  (gain)..............................      6,275           (784)         (4,821)          4,151
Unrecognized prior service cost.......         --             --              --             458
Unrecognized transitional (asset).....         --             --              --            (406)
                                          -------        -------         -------         -------
Net amount recognized.................    $(3,147)       $(3,095)        $(3,548)        $   660
Accrued (liability)...................    $(1,574)            --              --              --
                                          -------        -------         -------         -------
(Accrued) prepaid benefit cost........    $(4,721)       $(3,095)        $(3,548)        $   660
                                          =======        =======         =======         =======
As of December 31, 2001, the accrued benefit obligation of $49,836,000
     exceeded the plan assets by $9,422,000.

     The weighted average assumptions used are:
SUCCESSOR                            PREDECESSOR
                             ----------------------------------------------------------   ------------
                             DECEMBER 30,   DECEMBER 31,   DECEMBER 26,   SEPTEMBER 20,   DECEMBER 28,
                                 2001           2000           1999           1999            1998
                             ------------   ------------   ------------   -------------   ------------
Discount rate..............      6.0%           6.0%           6.5%            6.5%           6.0%
Expected return on plan
  assets...................      6.0%           6.0%           6.5%            6.5%           6.0%
Rate of compensation
  increase.................      4.0%           4.0%           4.5%            4.5%           4.0%
Rate of increase in
  pensions in payment......      2.0%           2.5%           3.0%            3.0%           2.5%
Price inflation............      2.0%           2.5%           3.0%            3.0%           2.5%
                                 ===            ===            ===             ===            ===
Net periodic pension costs for the funded defined benefit plans include the
following components:
SUCCESSOR                     PREDECESSOR
                                        -------------------------------------------   -------------
                                          52 WEEKS       53 WEEKS     SEPTEMBER 20,   DECEMBER 28,
                                           ENDED          ENDED          1999 TO         1998 TO
                                        DECEMBER 30,   DECEMBER 31,   DECEMBER 26,    SEPTEMBER 19,
                                            2001           2000           1999            1999
                                        ------------   ------------   -------------   -------------
Service cost..........................    $ 2,731        $ 2,581          $ 686          $ 1,778
Interest cost.........................      2,796          2,913            833            1,756
Return on plan assets (expected)......     (2,759)        (3,089)          (795)          (1,747)
Amortization of transition asset......         --             --             --              (68)
Amortization of prior service cost....         --             --             --               29
                                          -------        -------          -----          -------
Benefit cost..........................    $ 2,768        $ 2,405          $ 724          $ 1,748
                                          =======        =======          =====          =======
14. SEGMENT REPORTING

     The Company is a full-service drug development services group serving the
pharmaceutical and biotechnology industries. These drug development services
comprise two reportable operating segments -- pre-clinical and clinical.
Clinical services consist of designing, monitoring and managing trials of new
pharmaceutical and biotechnology products on humans, and providing clinical data
management, biostatistical, product registration and pharmacoeconomic services.
Clinical service activities and revenues

                                       F-24
INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

are performed and earned primarily in the United States and Europe. The
Company's European clinical operations are performed in Maidenhead, United
Kingdom and Edinburgh, Scotland with its primary satellite offices in Brussels,
Belgium and Glasgow, Scotland. The operating results of the Company in the
individual European countries apart from the United Kingdom are immaterial.
Pre-clinical services are performed in Edinburgh, Scotland and Montreal, Quebec,
Canada.

     Financial data by segment for 2001, 2000 and 1999 are as follows:
CLINICAL    PRE-CLINICAL     TOTAL
                                                     --------    ------------    --------
52 WEEKS ENDED DECEMBER 30, 2001
Net service revenues from external customers.......  $ 61,124      $ 95,172      $156,296
Inter segment revenues.............................     1,841         5,867         7,708
Depreciation and amortization......................     5,583        10,355        15,938
Segment income.....................................       899        17,958        18,857
Segment assets.....................................   159,252       239,360       398,612
Long-lived assets..................................    84,805       137,634       222,439
Expenditures for long-lived assets.................       505        10,640        11,143
53 WEEKS ENDED DECEMBER 31, 2000
Net service revenues from external customers.......  $ 20,404      $ 45,136      $ 65,540
Inter segment revenues.............................       855         4,224         5,079
Depreciation and amortization......................     1,272         6,522         7,794
Segment income.....................................     3,387         6,098         9,485
Segment assets.....................................    31,509       100,572       132,081
Long-lived assets..................................    19,101        76,931        96,032
Expenditures for long-lived assets.................       479         6,313         6,792
SEPTEMBER 20, 1999 TO DECEMBER 26, 1999
Net service revenues from external customers.......  $  4,648      $ 12,184      $ 16,832
Inter segment revenues.............................       147           971         1,118
Depreciation and amortization......................       320         1,462         1,782
Segment income.....................................     1,116         1,721         2,837
Expenditures for long-lived assets, September 20 to
  December 26, 1999................................       217         1,090         1,307
DECEMBER 28, 1998 TO SEPTEMBER 19, 1999
Net service revenues from external customers.......  $ 14,564      $ 32,524      $ 47,088
Inter segment revenues.............................       397         1,593         1,990
Depreciation and amortization......................       572         3,401         3,973
Segment income.....................................     3,514         5,052         8,566
Expenditures for long-lived assets, December 28,
  1998 to September 19, 1999.......................       443         4,862         5,305
F-25
INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following table summarises net service revenues and long-lived assets by
geographic area.
USA      CANADA      EUROPE      TOTAL
                                            -------    -------    --------    --------
52 WEEKS ENDED DECEMBER 30, 2001
Net service revenue from external
  customers...............................  $23,367    $48,150    $ 84,779    $156,296
Long-lived assets.........................   36,956     65,053     120,430     222,439
53 WEEKS ENDED DECEMBER 31, 2000
Net service revenues from external
  customers...............................  $ 1,240    $    --    $ 64,300    $ 65,540
Long-lived assets.........................      282         --      95,750      96,032
SEPTEMBER 20, 1999 TO DECEMBER 26, 1999
Net service revenues from external
  customers...............................  $   480    $    --    $ 16,352    $ 16,832
DECEMBER 28, 1998 TO SEPTEMBER 19, 1999
Net service revenues from external
  customers...............................  $ 1,555    $    --    $ 45,533    $ 47,088
The Company's operations in Europe comprise operations in a number of
countries that are co-ordinated from the United Kingdom. No country is
significant in terms of revenues generated or assets held apart from the United
Kingdom.

     The following table reconciles the above totals for net service revenues,
segment income (loss), segment assets and long-lived assets to the appropriate
figures in the financial statements.
SUCCESSOR                        PREDECESSOR
                                             ------------------------------------------------   -------------
                                               52 WEEKS       53 WEEKS       SEPTEMBER 20,      DECEMBER 28,
                                                ENDED          ENDED            1999 TO            1998 TO
                                             DECEMBER 30,   DECEMBER 31,      DECEMBER 26,      SEPTEMBER 19,
                                                 2001           2000              1999              1999
                                             ------------   ------------   ------------------   -------------
Net service revenue per above segment
  analysis.................................    $164,004       $ 70,619          $17,950            $49,078
Less elimination of inter segment
  revenues.................................      (7,708)        (5,079)          (1,118)            (1,990)
                                               --------       --------          -------            -------
Net service revenue from external customers
  per financial statements.................    $156,296       $ 65,540          $16,832            $47,088
                                               ========       ========          =======            =======
Segment income per above segment
  analysis.................................    $ 18,857       $  9,485          $ 2,837            $ 8,566
Central overheads..........................      (4,408)        (1,697)            (630)            (1,641)
                                               --------       --------          -------            -------
Income from operations per financial
  statements...............................    $ 14,449       $  7,788          $ 2,207            $ 6,925
                                               ========       ========          =======            =======
Segment assets per above segment
  analysis.................................    $398,612       $132,081
Elimination of inter segment balances......     (96,786)        (7,513)
                                               --------       --------
Assets per financial statements............    $301,826       $124,568
                                               ========       ========
Long-lived assets per above segment
  analysis.................................    $222,439       $ 96,032
Deferred debt issue costs not allocated to
  segments.................................       1,952            902
                                               --------       --------
                                               $224,391       $ 96,934
                                               ========       ========
No clients accounted for more than 10% of the Company's consolidated net
revenue for any of the periods covered by these financial statements.

15. CONTINGENCIES

     In March 1996, Apotex Inc., a Canadian pharmaceutical manufacturer, filed a
civil lawsuit against the Group in the Court of Ontario. The claim arises out of
research work undertaken by the Company in conjunction with Sheffield University
in the early 1990s relating to a product of Apotex. The claim alleges

                                       F-26
INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

that the Company failed to conduct the study in a competent and timely manner,
causing Apotex to lose the advantage of being the first into the market with the
product under a brand name. The claim seeks damages in excess of Canadian $32
million for misrepresentation, breach of contract, special and punitive damages,
reimbursement of the contract price and costs in respect of the claim. The
proceedings relating to this claim are being managed by a third party which has
agreed to indemnify the Company for any damages it may incur as a result of this
claim. The Company has been advised that the third party intends to defend this
claim vigorously.

16. RELATED PARTY TRANSACTIONS

     The Company has entered into various transactions with its principal
shareholder, Candover Investments PLC. The Company's unsecured subordinated loan
stock described in more detail in Note 9 is held by Candover Investments PLC and
certain other Candover Investors. The Company paid costs associated with the
issue of the loan stock to Candover Investments PLC amounting to $445,000 in
1999 and $675,000 in 2001. The Company pays charges to Candover Investments PLC
for the services of Mr. I. Gray as a director of Inveresk Research Group Limited
amounting to $50,000 in 2001, $45,000 in 2000 and $10,000 in the period from
September 20, 1999 to December 26, 1999.

     The directors of Inveresk Research Group Limited own shares in the Company
and also hold share options.

17. PREDECESSOR SHAREHOLDERS' EQUITY
INVERESK
                                                          RESEARCH
                                                          HOLDINGS
                                                          LIMITED     IRNA      TOTAL
                                                          --------    -----    -------
COMBINED BALANCE AT DECEMBER 28, 1998
Ordinary shares.........................................  $21,501     $ 201    $21,702
Share premium...........................................   11,227        --     11,227
Retained earnings (accumulated deficit).................    5,715      (486)     5,229
Other comprehensive income..............................   (1,049)       --     (1,049)
                                                          -------     -----    -------
                                                          $37,394     $(285)   $37,109
                                                          =======     =====    =======
PERIOD FROM DECEMBER 28, 1998 TO SEPTEMBER 19, 1999
Foreign currency translation adjustments................  $  (907)    $  --    $  (907)
                                                          =======     =====    =======
Net income..............................................  $ 4,084     $ (27)   $ 4,057
                                                          =======     =====    =======
Comprehensive income....................................  $ 3,177     $ (27)   $ 3,150
                                                          =======     =====    =======
There are no consolidating entries reflected in the above combinations.

18. OTHER COMPREHENSIVE INCOME

     At December 30, 2001 other comprehensive income (loss) comprises:
BEFORE-TAX      TAX     NET-OF-TAX
                                                           AMOUNT      BENEFIT     AMOUNT
                                                         ----------    -------   ----------
Foreign currency translation...........................   $(1,729)      $ --      $(1,729)
Cumulative-effect adjustment for FAS 133...............      (193)        58         (135)
Minimum pension liability adjustment...................    (1,574)       484       (1,090)
                                                          -------       ----      -------
                                                          $(3,496)      $542      $(2,954)
                                                          =======       ====      =======
F-27
INVERESK RESEARCH GROUP, INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

19. ALLOWANCE FOR DOUBTFUL ACCOUNTS AND WARRANTY RESERVE

     Doubtful accounts allowance:
52 WEEKS             53 WEEKS
                                                     FUNDED DECEMBER 30   FUNDED DECEMBER 30
                                                            2001                 2000
                                                     ------------------   ------------------
Balance, beginning of year.........................        $ 312                 $389
Acquisition of subsidiaries........................          724                   --
Utilized...........................................         (163)                 (12)
Net charge (credit) to income......................          (24)                 (37)
Translation effect.................................          (89)                 (28)
                                                           -----                 ----
                                                           $ 760                 $312
                                                           =====                 ====
Unbilled receivable allowance:
Balance, beginning of year.........................        $   --                $--
Acquisition of subsidiaries........................         1,376                 --
Utilized...........................................          (121)                --
Net charge (credit) to income......................          (230)                --
Translation effect.................................            (5)                --
                                                           ------                ---
                                                           $1,020                $--
                                                           ======                ===
20. DETAILS OF SUBSIDIARIES CONSOLIDATED

     The consolidated accounts of the Group comprise the results of the Company
and following subsidiaries, all of which are wholly owned:

     Inveresk Research Group Limited (United Kingdom)
     Inveresk Research Holdings Limited (United Kingdom)
     Inveresk Research International Limited (United Kingdom)
     Inveresk Clinical Research Limited (United Kingdom)
     Inveresk Research Limited (United Kingdom)
     Healthmark Limited (United Kingdom)
     Inveresk Research (Canada) Limited (Canada)
     ClinTrials Bioresearch Limited (Canada)
     Quebec Inc (Canada)
     Inveresk Research Inc (USA)
     Inveresk Research (North America) Inc (USA)
     Inveresk Research North Carolina Inc (USA)
     Inveresk Research Kentucky Inc (USA)
     ClinTrials Acquisition Corp Inc (USA)
     Inveresk Research Chile (Chile)
     Inveresk Research Israel Limited (Israel)
     Inveresk Research Australia Pty Limited (Australia)
     Inveresk Research SARL (France)
     Inveresk Research Deutschland GmbH (Germany)
     Inveresk Research SRL (Italy)
     Inveresk Research SL (Spain)
     Inveresk Research Sp Z.O.O (Poland)
     Inveresk Research Czech Republic sro (Czech Republic)

                                       F-28
REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders
ClinTrials Research Inc.

     We have audited the accompanying consolidated balance sheets of ClinTrials
Research Inc. and subsidiaries as of December 31, 2000 and 1999, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended December 31, 2000. Our audits also
included the financial statement schedule listed in the Index at Item 14(a).
These financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of ClinTrials
Research Inc. and subsidiaries at December 31, 2000 and 1999, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States. Also, in our opinion, the
related financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.

                                          /s/ ERNST & YOUNG LLP

Raleigh, North Carolina
February 13, 2001, except for Note 15,
as to which the date is February 22, 2001

                                       F-29
CLINTRIALS RESEARCH INC.

                          CONSOLIDATED BALANCE SHEETS
DECEMBER 31
                                                              -------------------
                                                                2000       1999
                                                              --------   --------
                                                                (IN THOUSANDS,
                                                              EXCEPT SHARE DATA)
ASSETS
Current assets:
  Cash and cash equivalents.................................  $  9,178   $  7,889
  Accounts receivable, net of allowance for doubtful
     accounts of $983 in 2000 and $1,420 in 1999............    35,408     31,084
  Income taxes receivable...................................     2,135      1,454
  Other current assets......................................     3,416      1,757
                                                              --------   --------
Total current assets........................................    50,137     42,184
Property, plant and equipment:
  Land, buildings and leasehold improvements................    23,630     22,995
  Equipment.................................................    35,253     32,725
  Furniture and fixtures....................................     4,929      4,946
                                                              --------   --------
                                                                63,812     60,666
  Less accumulated depreciation.............................    25,507     21,161
                                                              --------   --------
                                                                38,305     39,505
Excess of purchase price over net assets acquired...........    31,923     34,304
Other assets................................................       411        411
                                                              --------   --------
                                                              $120,776   $116,404
                                                              ========   ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................  $  5,719   $  4,095
  Advance billings..........................................    12,790      8,338
  Payables to investigators.................................     4,499      4,683
  Accrued expenses..........................................     6,644      7,469
  Income taxes payable......................................     1,148      1,174
  Current maturates of long-term debt.......................       112        114
  Revolving note payable to bank............................     4,400         --
                                                              --------   --------
Total current liabilities...................................    35,312     25,873
Deferred income taxes.......................................     7,243      4,982
Long-term debt..............................................       238        381
Commitments and contingencies...............................        --         --
Stockholders' equity:
  Preferred Stock, $.01 par value -- 1,000,000 shares
     authorized; no shares issued or outstanding............        --         --
  Common Stock, $.01 par value -- 50,000,000 shares
     authorized; issued and outstanding 18,402,172 shares in
     2000 and 1999..........................................       184        184
  Additional paid-in capital................................   126,651    126,651
  Accumulated deficit.......................................   (42,717)   (38,490)
  Accumulated other comprehensive loss......................    (6,135)    (3,177)
                                                              --------   --------
Total stockholders' equity..................................    77,983     85,168
                                                              --------   --------
                                                              $120,776   $116,404
                                                              ========   ========
See accompanying notes to consolidated financial statements.
                                       F-30
CLINTRIALS RESEARCH INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31
                                                             --------------------------------------
                                                                2000          1999          1998
                                                             ----------    ----------    ----------
                                                             (IN THOUSANDS, EXCEPT PER SHARE DATA)
Revenue:
  Gross service revenue....................................   $121,836      $113,892      $109,254
  Less subcontractor costs.................................     16,511        16,961        19,563
                                                              --------      --------      --------
Net service revenue........................................    105,325        96,931        89,691
Operating costs and expenses:
  Direct costs.............................................     66,164        58,317        62,936
  Selling, general and administrative expenses.............     35,749        36,034        38,823
  Depreciation and amortization............................      5,888         6,155         5,738
  Restructuring charge.....................................         --            --         6,364
  Gain on sale of Ovation..................................         --          (484)           --
  Nashville lease termination costs........................         --           845            --
  Write-off of purchase option costs.......................         --         2,178            --
                                                              --------      --------      --------
Loss from operations.......................................     (2,476)       (6,114)      (24,170)
Other income (expense):
  Interest income..........................................        498           442           841
  Interest expense.........................................       (195)          (25)          (29)
                                                              --------      --------      --------
Loss before income taxes...................................     (2,173)       (5,697)      (23,358)
Provision (benefit) for income taxes.......................      2,054         1,348        (1,226)
                                                              --------      --------      --------
Net loss...................................................   $ (4,227)     $ (7,045)     $(22,132)
                                                              ========      ========      ========
Loss per share:
  Basic....................................................   $  (0.23)     $  (0.39)     $  (1.22)
  Diluted..................................................   $  (0.23)     $  (0.39)     $  (1.22)
Number of shares and common stock equivalents used in
  computing loss per share:
  Basic....................................................     18,402        18,116        18,207
  Diluted..................................................     18,402        18,116        18,207
See accompanying notes to consolidated financial statements.
                                       F-31
CLINTRIALS RESEARCH INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31
                                                              ----------------------------
                                                               2000      1999       1998
                                                              -------   -------   --------
                                                                     (IN THOUSANDS)
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss..................................................  $(4,227)  $(7,045)  $(22,132)
  Adjustments to reconcile net loss to net cash provided by
     (used in) operating activities:
  Depreciation and amortization of property, plant and
     equipment..............................................    5,743     5,891      5,333
  Amortization of intangible assets.........................    1,243     1,242      1,277
  Provision for doubtful accounts...........................      189       146      2,159
  Deferred income taxes.....................................    2,261     1,571      2,820
  Gain on sale of Ovation...................................       --      (484)        --
  Write-off of purchase option costs........................       --     2,178         --
  Loss on disposal of fixed assets..........................       66       204        142
  Write down of assets associated with closing of Lexington
     facility...............................................       --        --      1,983
  Other.....................................................       --         2         29
  Changes in operating assets and liabilities:
     Accounts receivable....................................   (5,052)     (746)       672
     Advance billings.......................................    4,624    (4,338)     2,325
     Payables to investigators..............................     (184)    2,877        528
     Accounts payable and accrued expenses..................      734    (3,587)       893
     Advance payments to investigators......................       --       492        447
     Income taxes...........................................     (583)    2,869       (269)
     Other assets and liabilities...........................   (1,690)      393        403
                                                              -------   -------   --------
  Net cash provided by (used in) operating activities.......    3,124     1,665     (3,390)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment, net.............   (4,928)   (5,071)   (12,227)
Proceeds from sale of fixed assets..........................       38        --         --
Costs associated with option to acquire MPI.................       --      (456)    (1,722)
                                                              -------   -------   --------
  Net cash used in investing activities.....................   (4,890)   (5,527)   (13,949)
CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from short-term borrowings.......................    4,400        --         --
  Proceeds from long-term borrowings........................       --       118        382
  Proceeds from exercise of common stock options............       --       167        140
  Payments on long-term debt................................     (145)       --         --
                                                              -------   -------   --------
  Net cash provided by financing activities.................    4,255       285        522
Effect of foreign currency exchange rate changes on cash....   (1,200)      599       (591)
                                                              -------   -------   --------
Increase (decrease) in cash and cash equivalents............    1,289    (2,978)   (17,408)
Cash and cash equivalents at beginning of year..............    7,889    10,867     28,275
                                                              -------   -------   --------
Cash and cash equivalents at end of year....................  $ 9,178   $ 7,889   $ 10,867
                                                              =======   =======   ========
Supplemental cash flow information:
  Interest paid.............................................  $   180   $    23   $     38
                                                              =======   =======   ========
  Income tax refunds, net of taxes paid of $1,586, $853 and
     $1,580.................................................  $  (131)  $(2,956)  $ (2,601)
                                                              =======   =======   ========
  Equipment purchased included in accounts payable..........  $   566   $   616   $  1,518
                                                              =======   =======   ========
See accompanying notes to consolidated financial statements.
                                       F-32
CLINTRIALS RESEARCH INC.

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
ACCUMULATED
                                                                                                 OTHER
                                               COMMON STOCK       ADDITIONAL                 COMPREHENSIVE
                                           --------------------    PAID-IN     ACCUMULATED      INCOME
                                 TOTAL       SHARES      AMOUNT    CAPITAL       DEFICIT        (LOSS)
                                --------   -----------   ------   ----------   -----------   -------------
                                                          (DOLLARS IN THOUSANDS)
BALANCE AT JANUARY 1, 1998....  $115,778    18,181,765    $182     $127,160     $ (9,313)       $(2,251)
Exercises of stock options....       140        48,407      --          140           --             --
  Comprehensive income (loss):
     Foreign currency
       translation
       adjustments............    (4,259)                                                        (4,259)
     Net loss for 1998........   (22,132)                                        (22,132)
                                --------
  Comprehensive income
     (loss)...................   (26,391)
                                --------
  Other.......................        29                                 29
                                --------   -----------    ----     --------     --------        -------
BALANCE AT DECEMBER 31,
  1998........................    89,556    18,230,172     182      127,329      (31,445)        (6,510)
  Sale of Ovation.............      (838)     (213,000)     (2)        (836)          --             --
  Exercises of stock
     options..................       167       385,000       4          163           --             --
  Comprehensive income (loss):
     Foreign currency
       translation
       adjustments............     3,333                                                          3,333
     Net loss for 1999........    (7,045)                                         (7,045)
                                --------
  Comprehensive income
     (loss)...................    (3,712)
                                --------
  Other.......................        (5)                                (5)
                                --------   -----------    ----     --------     --------        -------
BALANCE AT DECEMBER 31,
  1999........................    85,168    18,402,172     184      126,651      (38,490)        (3,177)
Comprehensive income (loss):
Foreign currency translation
  adjustments.................    (2,958)                                                        (2,958)
Net loss for 2000.............    (4,227)                                         (4,227)
                                --------
  Comprehensive income
     (loss)...................    (7,185)
                                --------   -----------    ----     --------     --------        -------
BALANCE AT DECEMBER 31,
  2000........................  $ 77,983    18,402,172    $184     $126,651     $(42,717)       $(6,135)
                                ========   ===========    ====     ========     ========        =======
See accompanying notes to consolidated financial statements.
                                       F-33
CLINTRIALS RESEARCH INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 (YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998)

1. ORGANIZATION

     ClinTrials Research Inc. (the Company) is a full service contract research
organization serving the pharmaceutical, biotechnology and medical device
industries. The Company designs, monitors and manages preclinical and clinical
trials, provides data management and biostatistical services, and offers product
registration and pharmacoeconomic services throughout the United States, Canada
and Europe.

     Information on the Company's operations by segment and geographic area is
included in Note 9.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Principles of Consolidation

     The accompanying financial statements include the accounts of ClinTrials
Research Inc. and its subsidiaries. All material intercompany balances and
transactions have been eliminated in consolidation.

  Accounting Estimates

     Judgment and estimation is exercised by management in certain areas of the
preparation of the financial statements including revenue recognition, reserves
for self-insurance risks and the allowance for uncollectible accounts.
Management believes that such estimates are fairly stated; however, actual
results could differ from amounts estimated.

  Foreign Currencies

     Assets and liabilities of the Company's subsidiaries located outside of the
United States that operate in a local currency environment are translated to
United States dollars at year-end foreign currency exchange rates in accordance
with FASB SFAS No. 52 "Foreign Currency Translation." Income statement amounts
have been translated at the average rates of exchange for the year. The gains
and losses resulting from the changes in exchange rates from year to year are
accumulated in a separate component of stockholders' equity entitled accumulated
other comprehensive income (loss). Transaction gains and losses are included in
the determination of net income (loss).

  Cash and Cash Equivalents

     For the purpose of the statement of cash flows, cash and cash equivalents
include demand deposits and money market accounts held with a financial
institution. The Company considers all highly liquid investments with a maturity
of three months or less when purchased to be cash equivalents.

  Revenue Recognition

     Many of the Company's contracts are fixed-price contracts over one year in
duration. Revenue for such contracts is recorded in accordance with the American
Institute of Certified Public Accountants (AICPA) Statement of Position (SOP)
81-1 Accounting for Performance of Construction-Type and Certain Production-Type
Contracts. Revenue is recognized as costs are incurred and includes estimated
earned fees or profits calculated on the basis of the relationship between costs
incurred and total estimated costs (cost-to-cost type of
percentage-of-completion method of accounting). Additionally, the Company may
begin work on a project before a contract is signed for customers with whom the
Company has formed a strategic alliance or has a long-term relationship. Revenue
is recognized in the same manner as signed contracts based upon terms orally
agreed with the customer. The Company also has contracts ranging in duration
from 28 days to one year. Revenue is recognized on these contracts in accordance
with contract terms as services are provided. The Company recognizes revenue
related to contract modifications

                                       F-34
CLINTRIALS RESEARCH INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

when realization is assured and the amounts can be reasonably determined.
Contract milestone revenue contingent upon the Company's achievement of specific
targets is recognized when the milestone is achieved. The Company also follows
the views of the Staff of the Securities and Exchange Commission's Staff
Accounting Bulletin No. 101 (SAB 101) on revenue recognition. SAB 101 states
that revenue should be recognized when all four of these conditions exist:
persuasive evidence of an arrangement exists; services have been rendered or
delivery has occurred; the price is fixed or determinable; and collectibility is
reasonably assured. When estimated contract costs indicate that a loss will be
incurred on a contract, the entire loss is provided for in such period.

     The Company routinely subcontracts with third party investigators in
connection with multi-site clinical trials and with other third party service
providers for laboratory analysis and other specialized services. Subcontractor
costs are passed through to clients and, in accordance with industry practice,
are included in gross service revenue. Subcontractor costs are accrued on a
straight-line basis over the investigator phase of the contract. Investigator
payments are made based on predetermined contractual arrangements, which may
differ from the accrual of the expense. Payments to investigators in excess of
the accrued expense represent advance payments to investigators and accrued
expenses in excess of payments represent payables to investigators.

  Unbilled Receivables and Advance Billings

     Prerequisites for billings are generally established by contractual
provisions that include predetermined date certain payment schedules (which may
include payment at or near the time the trial is initiated), the achievement of
negotiated performance requirements or milestones, or the submission of required
billing detail. Unbilled receivables arise from those contracts under which
billings are rendered upon the achievement of certain negotiated performance
requirements or on a date-certain basis and services rendered exceed billings.
The Company expects to bill and collect these unbilled receivables within one
year of revenue recognition. Advance billings represent contractual billings for
services not yet rendered.

  Concentration of Credit Risk

     Financial instruments which potentially expose the Company to credit risk
include unsecured accounts receivable. Concentrations of credit risk on accounts
receivable is limited due to the large number of clients. Additionally, the
Company maintains allowances for potential credit losses and credit losses
incurred have not exceeded management's expectations. The Company's exposure to
credit loss in the event that payment is not received for revenue recognized
equals the outstanding accounts receivable and unbilled services balance.

  Property, Plant and Equipment

     Property, plant and equipment are stated at cost.

     Depreciation is provided on the straight-line method over the estimated
useful lives of the respective properties, which approximate 5 to 40 years.

  Income Taxes

     Income taxes are accounted for under the liability method in accordance
with Financial Accounting Standards Board (the FASB) Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." Deferred tax
assets, net of valuation allowance, and liabilities are determined based on
differences between financial reporting and tax basis of assets and liabilities
and are measured using the enacted tax rates and laws that will be in effect
when the differences are expected to reverse.

                                       F-35
CLINTRIALS RESEARCH INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Excess of Purchase Price Over Net Assets Acquired

     The excess of the purchase price over net assets acquired is being
amortized over periods of 20 to 40 years using the straight-line method. The
carrying value of the excess of purchase price over net assets acquired is
reviewed if the facts and circumstances suggest that it may be impaired. If this
review indicates that the excess of purchase price over net assets acquired will
not be recoverable, as determined based on the undiscounted cash flows of the
entity acquired over the remaining amortization period, the Company's carrying
value of the excess of purchase price over net assets acquired is reduced by the
estimated shortfall of cash flows on a discounted basis. Accumulated
amortization of the excess of purchase price over fair value of assets acquired
was approximately $7,471,000 and $6,323,000 at December 31, 2000 and 1999,
respectively.

  Foreign Currency Hedging

     Foreign exchange forward contracts are legal agreements between two parties
to purchase and sell foreign currency for a specified price, with delivery and
settlement in the future. From time to time the Company uses foreign exchange
contracts to hedge the risk of changes in foreign currency exchange rates
associated with contracts in which the expenses for providing services are
incurred in the functional currency of the Company's foreign subsidiary, but
payments on contracts are made by the client in another currency. During the
year ended December 31, 2000, the Company did not have any derivative
instruments and did not engage in any hedging activities.

  Earnings (Loss) Per Share

     Earnings (loss) per share is computed in accordance with FASB SFAS No. 128,
"Earnings per Share" (SFAS No. 128). SFAS No. 128 requires presentation of both
Basic Earnings per Share (Basic EPS) and Diluted Earnings per Share (Diluted
EPS). Basic EPS is based on the weighted average number of shares of common
stock outstanding during the year while Diluted EPS also includes the dilutive
effect of common stock equivalents. Diluted loss per share for the years ended
December 31, 2000, 1999 and 1998 does not include common stock equivalents
(stock options) of 135,000, 390,000 and 430,000, respectively, as their effect
would be anti-dilutive. The Company's stock is currently traded in the Nasdaq
Stock Market and sale information is included on the Nasdaq National Market
Issues System under the symbol CCRO.

  Comprehensive Income (Loss)

     The Company adopted FASB SFAS No. 130, "Reporting Comprehensive Income"
(SFAS No. 130) on January 1, 1998. SFAS No. 130 established new rules for
reporting and displaying comprehensive income and its components; however, the
adoption of SFAS No. 130 had no impact on the Company's net income (loss) or
stockholders' equity. SFAS No. 130 requires the Company to include foreign
currency translation adjustments, which were previously reported by the Company
as a separate component of stockholders' equity, in other comprehensive income
and loss. Accumulated other comprehensive income (loss) consists entirely of
accumulated foreign currency translation adjustments and is a separate component
of stockholders' equity under SFAS No. 130.

  Stock-Based Compensation

     The Company accounts for employee stock awards using the intrinsic value
based method as prescribed by Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" because the Company believes the
alternative fair value accounting provided for under FASB SFAS No. 123
"Accounting for Stock-Based Compensation" requires the use of option valuation
models that were not developed for use in valuing employee stock options.
Accordingly, no compensation expense is
                                       F-36
CLINTRIALS RESEARCH INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

recognized because the exercise price of the Company's stock options was equal
to the market price of the underlying stock on the date of grant.

  Reclassifications

     Certain prior period amounts have been reclassified in order to conform to
current period presentation. Such reclassifications had no material effect on
the financial position and results of operations as previously reported.

  Recent Accounting Pronouncements

     In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (SFAS No. 133) which was required to be
adopted in years beginning after June 15, 1999. In July 1999, SFAS No. 137 was
issued which deferred for one year the effective date of SFAS No. 133 to all
fiscal quarters of all fiscal years beginning after June 15, 2000. On June 15,
2000, the FASB issued SFAS No. 138 which clarified and amended certain
provisions of SFAS No. 133. Accordingly, the Company plans to adopt SFAS No. 133
and No. 138 effective January 1, 2001.

     From time to time, the Company uses foreign exchange forward contracts to
hedge the risk of changes in foreign currency exchange rates associated with
contracts in which the expenses for providing services are incurred in the
functional currency of the Company's foreign subsidiary, but payments on
contracts are made by the client in another currency. The Company does not
anticipate that the adoption of SFAS No. 133 and No. 138 will have a significant
effect on the financial statements of the Company. Furthermore, SFAS No. 133 and
No. 138 would not have affected the financial statements of the Company
contained herein. During the year ended December 31, 2000, the Company did not
have any derivative instruments and did not engage in any hedging activities.

     In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin 101, "Revenue Recognition in Financial Statements" (SAB No.
101). SAB No. 101 summarizes certain of the SEC staff's views on applying
generally accepted accounting principles to revenue recognition. The Company
adopted SAB No. 101 in the quarter ended December 31, 2000 and it did not have a
material effect on its financial position or results of operations.

3. ACCOUNTS RECEIVABLE

     Accounts receivable consisted of the following at December 31 (in
thousands):
2000       1999
                                                              -------    -------
Trade:
  Billed....................................................  $19,997    $17,449
  Unbilled..................................................   16,394     14,489
  Allowance for doubtful accounts...........................     (983)    (1,420)
                                                              -------    -------
                                                               35,408     30,518
Other.......................................................       --        566
                                                              -------    -------
                                                              $35,408    $31,084
                                                              =======    =======
F-37
CLINTRIALS RESEARCH INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

4. CREDIT FACILITIES AND DEBT

     During the first quarter of 2000, the Company extended its $15.0 million
domestic credit facility through September 2001. The extension provides for
expansion capabilities to $25.0 million provided the Company meets certain
financial requirements. Credit availability under the Company's domestic line of
credit and foreign line of credit totals approximately $18.3 million. The
domestic credit facility is collateralized by certain of the Company's U.S.
based assets that have a net carrying value of approximately $16 million. The
foreign line of credit is collateralized by accounts receivable of the Company's
Canadian subsidiary. Borrowings under these agreements bear interest at a
fluctuating rate based either on the respective banks' prime interest rate or
the London Interbank Offered Rate (LIBOR), as elected by the Company.

     On December 31, 2000, $4.4 million was outstanding under the Company's
domestic credit facility. Interest on outstanding borrowings under the domestic
credit agreement was based upon the LIBOR plus an applicable margin. The
weighted average interest rate during the year 2000 and at December 31, 2000 was
8.9%. Credit availability at December 31, 2000 has been further reduced by
issued letters of credit of approximately $717,000. Borrowings available under
the lines of credit are subject to certain financial and operating covenants.
The Company is in compliance with these bank covenants.

     On or before September 30, 2001, the Company may elect to exercise an
extension option under its domestic credit agreement whereby any or all of the
then outstanding balance may be termed out over six quarters. Under this
extension option, interest is due monthly and 5% of outstanding principal is due
quarterly beginning on the second quarterly date after exercise of the extension
option.

     The Company's Canadian subsidiary has outstanding borrowings of
approximately $336,000 from the Canadian government. This borrowing bears no
interest and is repayable in four equal annual installments beginning August
2000 and ending in 2003.

5. OPERATING LEASES

     The Company leases office space and office equipment under various
operating leases. Minimum rental commitments payable in future years under
operating leases having an initial or remaining noncancelable terms of one year
or more at December 31 are as follows (in thousands):
2001........................................................  $ 5,734
2002........................................................    5,070
2003........................................................    4,112
2004........................................................    3,885
2005........................................................    3,876
Thereafter..................................................   30,635
                                                              -------
Total minimum rentals.......................................   53,312
Less minimum rentals due under noncancellable subleases.....    1,626
                                                              -------
                                                              $51,686
                                                              =======
Rent expense is comprised of the following for the years ended December 31
(in thousands):
2000      1999      1998
                                                           ------    ------    ------
Minimum rentals..........................................  $6,313    $5,796    $6,765
Less sublease rentals....................................     344       314       410
                                                           ------    ------    ------
                                                           $5,969    $5,482    $6,355
                                                           ======    ======    ======
F-38
CLINTRIALS RESEARCH INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. INCOME TAXES

     Significant components of the Company's deferred tax liabilities and assets
as of December 31 are as follows (in thousands):
2000        1999
                                                              --------    --------
Deferred tax assets:
  Advance billings and receivables..........................  $  1,231    $  3,994
  Accrued expenses..........................................       387         682
  Research and development credit carryforward..............     1,657       1,343
  Undeducted research and development expenditures..........        81       2,008
  Federal and state net operating losses....................    18,362      12,495
  Foreign tax credits.......................................     1,679          --
  Other.....................................................       193         193
                                                              --------    --------
Total deferred tax assets...................................    23,590      20,715
Valuation allowance for deferred tax assets.................   (21,057)    (17,452)
                                                              --------    --------
Net deferred tax assets.....................................     2,533       3,263
Deferred tax liabilities:
  Depreciation and amortization.............................    (9,365)     (7,834)
                                                              --------    --------
Net deferred tax liabilities................................  $ (6,832)   $ (4,571)
                                                              ========    ========
The balance sheet classification of the net deferred tax assets
(liabilities) is as follows at December 31 (in thousands):
2000        1999
                                                              --------    --------
Current deferred tax assets.................................  $  5,147    $  6,212
Net noncurrent deferred tax assets (liabilities)............     9,078       6,669
                                                              --------    --------
                                                                14,225      12,881
Valuation allowance for deferred tax assets.................   (21,057)    (17,452)
                                                              --------    --------
Net deferred tax liabilities................................  $ (6,832)   $ (4,571)
                                                              ========    ========
For financial reporting purposes, income (loss) before income taxes for the
years ended December 31 includes the following components (in thousands):
2000        1999        1998
                                                     --------    --------    --------
Income (loss) before income taxes:
  United States....................................  $(11,382)   $(14,181)   $(20,308)
  Foreign..........................................     9,209       8,484      (3,050)
                                                     --------    --------    --------
                                                     $ (2,173)   $ (5,697)   $(23,358)
                                                     ========    ========    ========
The Company's Canadian subsidiary qualifies for federal and Quebec
Scientific Research and Development deductions and tax credits. Expenditures on
certain capital assets are fully deductible or may be carried forward
indefinitely until utilized. The tax credits are equal to 30% of certain capital
and current expenditures. The tax credits are accounted for using the flow
through method, in which the credits are recognized as a reduction of income
taxes in the year the credit arises.

     Undistributed earnings of the Company's foreign subsidiaries amounted to
approximately $27.6 million at December 31, 2000. Provision has not been made
for U.S. or additional foreign taxes on undistributed

                                       F-39
CLINTRIALS RESEARCH INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

earnings of foreign subsidiaries as those earnings have been permanently
reinvested. Upon distribution of those earnings in the form of dividends or
otherwise, the Company would be subject to both U.S. income taxes (subject to an
adjustment for foreign tax credits) and withholding taxes payable to the various
countries. It is not practicable to estimate the amount of deferred tax
liability on foreign undistributed earnings which are intended to be permanently
reinvested. Significant components of the provision (benefit) for income taxes
for the years ended December 31 are as follows (in thousands):
2000     1999     1998
                                                            ------   ------   -------
Current:
  Foreign.................................................  $ (207)  $ (223)  $  (269)
  Federal.................................................      --       --    (3,777)
  State and local.........................................      --       --        --
Deferred:
  Foreign.................................................   2,261    1,571       819
  Federal.................................................      --       --     1,468
  State...................................................      --       --       533
                                                            ------   ------   -------
Provision (benefit) for income taxes......................  $2,054   $1,348   $(1,226)
                                                            ======   ======   =======
The Company's consolidated effective tax rate differed from the federal
statutory rate for the years ended December 31 as set forth below (in
thousands):
2000      1999      1998
                                                          -------   -------   -------
Federal statutory rate..................................  $  (739)  $(1,937)  $(7,942)
State and local income taxes net of federal benefit.....      (87)     (228)      352
Research and development tax credits....................   (1,495)     (991)   (2,703)
Amortization of excess of purchase price over net assets
  acquired and other intangible assets..................      137       137       484
Difference between foreign income taxed at U.S. Federal
  Statutory rates and foreign income tax expense........      633      (196)     (351)
Increase in federal valuation allowance.................    3,605     5,828     9,611
Other...................................................       --    (1,265)     (677)
                                                          -------   -------   -------
                                                          $ 2,054   $ 1,348   $(1,226)
                                                          =======   =======   =======
A valuation allowance has been established for the amount of United States
deferred tax assets primarily related to the Company's potential tax benefit
associated with loss carryforwards. At December 31, 2000, the Company had
approximately $46 million of federal net operating loss carryforwards which
begin to expire in 2018.

7. STOCK OPTION PLANS AND WARRANTS

  1999 Long-Term Incentive Compensation Plan

     In April 1999, the Board of Directors approved adoption of the Company's
1999 Long-Term Incentive Compensation Plan (1999 Plan). The 1999 Plan was
approved by the Company's stockholders on June 22, 1999 to replace the Company's
1989 Stock Option Plan. The 1989 Stock Option Plan expired in December 1999 and
could not be extended due to restrictions imposed by the Internal Revenue Code
of 1986, as amended (the Code).

     The purpose of the 1999 Plan is to provide an opportunity for certain
persons performing services to the Company, including officers, key employees
and directors of the Company and its subsidiaries to

                                       F-40
CLINTRIALS RESEARCH INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

acquire shares of Common Stock and be rewarded for achieving certain performance
goals. Through the 1999 Plan, the Company seeks to continue to attract and
retain qualified personnel, and to further align the interests of its key
personnel with the success of the Company and its stockholders.

     The 1999 Plan provides for the grant of stock options, which may be either
incentive stock options meeting the requirements of Section 422 of the Code, or
non-qualified stock options, stock appreciation rights, restricted stock,
performance shares or performance units.

     The number of shares which may be issued under the 1999 Plan total
1,500,000 in the aggregate. Options under the 1999 Plan expire ten years from
the date of grant and vest at dates ranging from the issuance date to four
years.

     Information with respect to the 1999 Stock Option Plan is as follows:
WEIGHTED-AVERAGE
                                                                          EXERCISE PRICE
                                                            2000               2000
                                                       --------------    ----------------
Options outstanding at January 1.....................              --         $0.00
  Granted............................................         306,000         $3.44
  Exercised..........................................              --         $0.00
  Cancelled..........................................         (35,500)        $3.31
                                                       --------------
Outstanding at December 31...........................         270,500         $3.45
                                                       ==============
Option price range at December 31....................  $3.06 to $5.31
                                                       ==============
Options exercisable at December 31...................          50,000         $3.31
                                                       ==============         =====
There were 1,229,500 shares available for grant at December 31, 2000. The
weighted-average fair value of options granted during 2000 was $2.36.

  1989 Stock Option Plan

     The Company's 1989 Stock Option Plan, as amended, provided for the grant of
options to purchase shares of Common Stock to directors, officers and other key
persons. On May 11, 1998, the stockholders approved an amendment to the 1989
Stock Option Plan to increase the options available to 2,625,000. The 1989 Stock
Option Plan expired in December 1999 and could not be extended due to
restrictions imposed by the Code.

                                       F-41
CLINTRIALS RESEARCH INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Information with respect to the 1989 Stock Option Plan is as follows:
WEIGHTED-AVERAGE
                                                                                 EXERCISE PRICE
                                                                              ---------------------
                              2000              1999              1998        2000    1999    1998
                         ---------------   ---------------   --------------   -----   -----   -----
Options outstanding at
  January 1............        1,746,651         1,589,196        1,336,579   $5.23   $4.29   $5.86
  Granted..............               --           943,150          906,975   $0.00   $5.13   $4.55
  Exercised............               --          (385,000)         (48,407)  $0.00   $0.44   $3.01
  Cancelled............         (258,611)         (400,695)        (605,951)  $5.16   $4.43   $6.29
                         ---------------   ---------------   --------------
Outstanding at December
  31...................        1,488,040         1,746,651        1,589,196   $5.24   $5.23   $4.29
                         ===============   ===============   ==============
Option price range at
  December 31..........  $2.77 to $12.92   $2.75 to $12.92   $.35 to $12.92
                         ===============   ===============   ==============
Options exercisable at
  December 31..........          908,991           503,533          613,900   $4.24   $4.18   $3.27
                         ===============   ===============   ==============   =====   =====   =====
There were no shares available for grant at December 31, 2000 and December
31, 1999 since the plan expired as discussed above. At December 31, 1998 there
were 588,067 shares available for grant. The weighted-average fair value of
options granted during 1999 and 1998 was $3.31 and $2.04, respectively.

     On February 6, 1998, the Company's board of directors approved the adoption
of the Company's 1998 Non Qualified Stock Option Plan for Directors (the 1998
Director Option Plan). The 1998 Director Option Plan was approved by the
Company's shareholders on May 11, 1998. The 1998 Director Option Plan is a
formula plan under which options to acquire 10,000 shares of the Company's
common stock are to be initially granted to each director of the Company who is
not an employee and does not beneficially own more than 2.5% of the Company's
outstanding stock upon the date of initial election to the board of directors.
Directors are automatically eligible to receive annual grants of options to
acquire 1,000 shares of the Company's common stock.

     Information with respect to the 1998 Director Option Plan is as follows:
WEIGHTED-AVERAGE
                                                                                 EXERCISE PRICE
                                                                              ---------------------
                                2000             1999             1998        2000    1999    1998
                           --------------   --------------   --------------   -----   -----   -----
Options outstanding at
  January 1..............          19,000           18,000               --   $3.84   $2.95   $0.00
  Granted................          67,000            7,000           18,000   $3.67   $5.38   $2.95
  Exercised..............              --               --               --   $0.00   $0.00   $0.00
  Cancelled..............              --           (6,000)              --   $0.00   $2.95   $0.00
                           --------------   --------------   --------------
Outstanding at December
  31.....................          86,000           19,000           18,000   $3.71   $3.84   $2.95
                           ==============   ==============   ==============
Option price range at
  December 31............  $2.81 to $5.88   $2.81 to $5.88   $2.81 to $3.63
                           ==============   ==============   ==============
Options exercisable at
  December 31............          86,000           19,000           18,000   $3.71   $3.84   $2.95
                           ==============   ==============   ==============   =====   =====   =====
F-42
CLINTRIALS RESEARCH INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The following table summarizes in more detail information regarding the
Company's stock options outstanding at December 31, 2000.
WEIGHTED AVERAGE
   RANGE OF        OPTIONS           REMAINING            OPTIONS
EXERCISE PRICES  OUTSTANDING   CONTRACTUAL LIFE YEARS   EXERCISABLE
---------------  -----------   ----------------------   -----------
$2.77 - $ 6.00    1,507,314             7.4                772,759
$6.01 - $12.92      337,226             5.7                272,232
                  ---------             ---              ---------
$2.77 - $12.92    1,844,540             6.6              1,044,991
                  =========             ===              =========
On January 30, 1998, the Company granted four separate warrants to purchase
75,000 shares (300,000 shares in the aggregate) of common stock of the Company
to each Jerry R. Mitchell, M.D., Ph.D. and William U. Parfet at exercise prices
of $7.00, $9.00, $11.00 and $13.00 per share. Each 75,000 share warrant vests
ratably over a period of four years. Each warrant expires on January 30, 2004.
On September 4, 1998, the Company repriced all 600,000 warrants at an exercise
price of $3.25. In April 1999, the company cancelled three of the four warrants
issued to Mr. Parfet totaling 225,000 shares in the aggregate.

     On September 4, 1998, the Company repriced 250,000 stock options held by
Jerry R. Mitchell, M.D., Ph.D., then the Company's President, Chief Executive
Officer and Chairman of the Board to an exercise price of $3.25 which were
originally granted at an exercise price of $7.00 on February 1, 1998.

     Pro forma information regarding net loss and loss per share is required by
SFAS No. 123, and has been determined as if the Company had accounted for its
employee stock options under the fair value method of SFAS No. 123. The fair
value for these options was estimated at the date of grant using a Black-Scholes
option pricing model with the following weighted-average assumptions for 2000,
1999 and 1998, respectively; risk-free interest rates of 6.22%, 5.43%, and
5.10%; dividend yields of 0%, 0% and 0%; volatility factors of the expected
market price of the Company's common stock of .74, .74 and .72; and a
weighted-average expected life of the option of five years.

     The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.

     For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma information follows for the years ended December 31 (in thousands,
except for loss per share information):
2000       1999        1998
                                                       -------    -------    --------
Net loss.............................................  $(4,227)   $(7,045)   $(22,132)
Pro forma compensation expense from stock options,
  net of taxes.......................................    1,873      1,903       2,057
                                                       -------    -------    --------
Pro forma net loss...................................  $(6,100)   $(8,948)   $(24,189)
                                                       =======    =======    ========
Pro forma loss per share:
  Basic..............................................  $ (0.33)   $ (0.49)   $  (1.33)
  Diluted............................................  $ (0.33)   $ (0.49)   $  (1.33)
F-43
CLINTRIALS RESEARCH INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

8. EMPLOYEE BENEFITS

     The Company provides defined contribution plans for substantially all of
its employees. Participation is generally subject to the employee's age and
length of employment with the Company. The Company's contributions to the plans
are generally based on employee contributions and may also include additional
discretionary contributions.

     The Company's expense for its contributions to the plans was approximately
$1,679,194, $1,507,000 and $1,639,000 for the years ended December 31, 2000,
1999 and 1998, respectively.

9. SEGMENT REPORTING

     The Company is a full-service contract research organization (CRO) serving
the pharmaceutical, biotechnology and medical device industries. These research
services comprise two reportable operating segments -- Clinical and Preclinical.
Clinical services consist of designing, monitoring, and managing trials of new
pharmaceutical and biotechnology products on humans, and providing clinical data
management, biostatistical, product registration, and pharmacoeconomic services.
Clinical service activities and revenues are performed and earned primarily in
the United States and Europe. The Company's European operations are
headquartered in Maidenhead, U.K. with its primary satellite offices in
Brussels, Belgium and Glasgow, Scotland. The operating results of the Company in
the individual European countries are immaterial and therefore European
operations as a whole are disclosed below. Preclinical services are comprised of
designing and conducting trials of new pharmaceutical and biotechnology products
based primarily upon animal models to produce data required to assess and
evaluate efficacy in and potential risks to humans. Preclinical services are
performed in Montreal, Quebec, Canada. Activity which is not included in the
Clinical or Preclinical segments is shown as Other which includes corporate
expenses, operations not directly related to the business segments, and
restructuring charges.

     Financial data by segment for 2000, 1999, and 1998 are as follows:
U.S.      EUROPE     TOTAL       CANADA
                                       CLINICAL   CLINICAL   CLINICAL   PRECLINICAL    OTHER      TOTALS
                                       --------   --------   --------   -----------   --------   --------
YEAR ENDED DECEMBER 31, 2000
  Net revenues from external
     customers.......................  $26,262    $23,364    $ 49,626     $55,699     $     --   $105,325
  Depreciation and amortization......    2,662        812       3,474       2,384           30      5,888
  Segment profit (loss)..............   (7,419)    (3,058)    (10,477)     12,136       (4,135)    (2,476)
  Segment assets.....................   18,907     17,275      36,182      82,698        1,896    120,776
  Long-lived assets..................    9,723      2,736      12,459      57,751           18     70,228
  Expenditures for long-lived
     assets..........................      195        818       1,013       3,915           --      4,928
YEAR ENDED DECEMBER 31, 1999
  Net revenues from external
     customers.......................  $30,108    $19,914    $ 50,022     $46,909     $     --   $ 96,931
  Depreciation and amortization......    2,928      1,014       3,942       2,183           30      6,155
  Segment profit (loss)..............   (8,859)        12      (8,847)      8,231       (5,498)    (6,114)
  Segment assets.....................   18,024     15,374      33,398      78,195        4,811    116,404
  Long-lived assets..................   12,289      2,910      15,199      58,610           --     73,809
  Expenditures for long-lived
     assets..........................      854        690       1,544       3,527          456      5,527
F-44
CLINTRIALS RESEARCH INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
U.S.      EUROPE     TOTAL       CANADA
                                       CLINICAL   CLINICAL   CLINICAL   PRECLINICAL    OTHER      TOTALS
                                       --------   --------   --------   -----------   --------   --------
YEAR ENDED DECEMBER 31, 1998
  Net revenues from external
     customers.......................  $40,366    $11,128    $ 51,494     $38,197     $     --   $ 89,691
  Depreciation and amortization......    2,824      1,136       3,960       1,748           30      5,738
  Segment profit (loss)..............   (8,990)    (9,520)    (18,510)      5,851      (11,511)   (24,170)
  Segment assets.....................   33,148     10,018      43,166      70,419        9,511    123,096
  Long-lived assets..................   14,663      3,522      18,185      55,688        1,722     75,595
  Expenditures for long-lived
     assets..........................    5,487        972       6,459       5,768        1,722     13,949
In 1999 Segment profit (loss) for Other includes a write-off of purchase
option costs of $2.2 million, Nashville lease termination costs of $845,000, and
a gain on the sale of Ovation of $484,000. Segment profit (loss) for Other
includes a restructuring charge of $6.4 million in 1998.

     Net revenue generated under multiple contracts by clients who accounted for
more than 10% of the Company's consolidated net revenue for the years ended
December 31 are as follows:
2000    1999    1998
                                                              ----    ----    ----
Client A
  U.S. Clinical.............................................    1%      8%     16%
  Europe Clinical...........................................   14%     13%      9%
  Total Clinical............................................   15%     21%     25%
  Canada Preclinical........................................    3%      4%      2%
  Total Company.............................................    9%     12%     15%
10. CONTINGENCIES

     In 1991, a customer commenced legal action against the predecessor of the
Company's preclinical subsidiary claiming damages resulting from statistical
errors in carrying out two clinical research studies. Judgment was rendered in
February 1997 by the Superior Court of Montreal against the Company's
preclinical subsidiary in the amount of approximately $536,000 plus interest to
accrue from September 1991. The Company's preclinical subsidiary, now
responsible for this action, has reserves adequate to cover the current judgment
amount. The Company's preclinical subsidiary has appealed the amount of the
judgment and the subsidiary's insurance company has appealed the portion of the
judgment which obligates the insurance company to pay the insurance claim
related to this litigation. The Company believes it is entitled, subject to
certain limitations, to indemnification from a former owner of the predecessor
for a portion of this claim. In the opinion of management, the ultimate
resolution of such pending legal proceedings will not have a material effect on
the Company's financial position or results of operations. The appeal was heard
in April 2000 by the Quebec court of appeals but no judgement has yet been
rendered.

11. OPTION TO ACQUIRE MPI

     On January 30, 1998, the Company entered into an option agreement (the MPI
Option) with MPI Research, LLC (MPI) and its shareholders, Jerry R. Mitchell,
M.D., Ph.D. and William U. Parfet, who each owned 50% of MPI. Dr. Mitchell was
the President, Chief Executive Officer and Chairman of the Board of Directors of
the Company until August 2000 and Mr. Parfet was the Company's Director of
Business Planning and Analysis until April 1999. Pursuant to the MPI Option, the
Company paid $1,500,000 in cash in exchange for an exclusive option to purchase
all of the outstanding stock of MPI at its fair market value at any time on or
prior to March 31, 2000. The shareholders of MPI had the right to cancel the
Option at any time after March 31, 1999, by returning the $1,500,000 cash
without interest,

                                       F-45
CLINTRIALS RESEARCH INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

provided they gave the Company written notice of their intent to cancel the
option and the Company did not exercise the option within twenty business days
of receipt of such notice.

     The Company recorded an asset impairment charge of $2,178,000 in the fourth
quarter of 1999 to write-off the purchase option costs included in other assets
on the balance sheet relating to MPI Research. The option expired March 31, 2000
and it was determined that as of December 31, 1999, it was unlikely to be
exercised. The option was not exercised.

12. SALE OF OVATION

     On January 4, 1999, the Company sold its pharmacoeconomic subsidiary,
Ovation, back to the principals from whom the shares were originally purchased,
as part of the Company's ongoing consolidation of U.S. operations into its
Research Triangle Park, North Carolina (RTP) facility. Pharmacoeconomic services
are now performed out of the Company's RTP facility as the Company retains the
right to use the ClinTrials Ovation name. The Company received 213,000 shares of
its own stock in the sales transaction and recorded a gain on the sale of
$484,000.

13. NASHVILLE LEASE TERMINATION COSTS

     The Company entered into an agreement to terminate the lease of its
Nashville office and accrued $845,000 in the first quarter of 1999 for costs
related to the termination of this lease. The termination of this lease relieved
the Company of approximately $11.0 million of future minimum lease payments. The
Company relocated its Corporate office to Research Triangle Park, North Carolina
in the second quarter of 1999.

14. RESTRUCTURING CHARGE

     On April 24, 1998, the Company announced that its data management
operations in Lexington, Kentucky would be closed and consolidated into its new
clinical research center in Research Triangle Park, North Carolina. The Company
recorded a restructuring charge of $6.4 million in the second quarter of 1998 in
connection with the closing of the Company's Lexington facility, severance costs
for the termination of 90 employees and costs associated with lease commitments
following the Company's restructuring decision to consolidate facilities. The
1998 restructuring charge consists of the following (in thousands):
AMOUNT OF
                                                              RESTRUCTURING
                                                                 CHARGE
                                                              -------------
Write down of assets in connection with closure of Lexington
  facility..................................................     $1,983
Lease costs associated with consolidation of Facilities.....      1,976
Severance costs.............................................      2,132
Other.......................................................        273
                                                                 ------
                                                                 $6,364
                                                                 ======
The above lease, severance and other restructuring costs were paid in 1998
and 1999 at amounts that approximated the liabilities recorded and the related
accrued expenses were zero at December 31, 2000 and 1999.

                                       F-46
CLINTRIALS RESEARCH INC.

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

15. SUBSEQUENT EVENT

     On February 22, 2001, the Company, Inveresk Research Group Limited and
Indigo Acquisition Corp. ("Indigo") entered into a definitive merger agreement
for Indigo to acquire all of the outstanding shares of the Company for $6.00 per
share in cash. Under the terms of the agreement, Indigo will commence a tender
offer for all of the outstanding shares of the Company at $6.00 per share within
seven business days. The tender offer will be subject to at least a majority of
the outstanding Company shares, on a fully diluted basis, being validly tendered
and not withdrawn. The tender offer will also be subject to regulatory approvals
and other customary conditions. Any of the Company's shares not acquired
pursuant to a successful tender offer will be acquired in a subsequent merger at
the same $6.00 per share cash price. In connection with the execution of the
merger agreement, Indigo has entered into an agreement with the holders of
approximately 21% of the Company's outstanding shares under which such holders
have agreed to tender their shares in the tender offer.

                                       F-47
CLINTRIALS RESEARCH INC.

                        QUARTERLY FINANCIAL INFORMATION
                  (IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
                                  (UNAUDITED)
2000                                             FIRST    SECOND     THIRD    FOURTH(2)
----                                            -------   -------   -------   ---------
Net revenue...................................  $23,774   $25,545   $25,994    $30,012
Income (loss) before income taxes.............  $(2,006)  $  (736)  $(2,318)   $ 2,887
Net income (loss).............................  $(2,441)  $(1,187)  $(3,153)   $ 2,554
Income (loss) per share:
  Basic.......................................  $ (0.13)  $ (0.06)  $ (0.17)   $  0.14
  Diluted.....................................  $ (0.13)  $ (0.06)  $ (0.17)   $  0.14
Number of shares and dilutive common stock
  equivalents used in computing income (loss)
  per share:
  Basic.......................................   18,402    18,402    18,402     18,402
  Diluted.....................................   18,402    18,402    18,402     18,701
Market prices of common stock:
  High........................................  $  5.00   $  3.88   $  5.38    $  5.75
  Low.........................................  $  3.00   $  2.28   $  2.63    $  4.03
1999                                             FIRST    SECOND     THIRD    FOURTH(1)
----                                            -------   -------   -------   ---------
Net revenue...................................  $23,703   $25,214   $23,717    $24,297
Income (loss) before income taxes.............  $(2,702)  $   271   $  (403)   $(2,863)
Net income (loss).............................  $(2,941)  $   153   $  (959)   $(3,298)
Income (loss) per share:
  Basic.......................................  $  (.16)  $   .01   $  (.05)   $ (0.18)
  Diluted.....................................  $  (.16)  $   .01   $  (.05)   $ (0.18)
Number of shares and dilutive common stock
  equivalents used in computing income (loss)
  per share:
  Basic.......................................   18,024    18,017    18,120     18,300
  Diluted.....................................   18,024    18,678    18,120     18,300
Market prices of common stock:
  High........................................  $  6.63   $  6.31   $  6.88    $  5.38
  Low.........................................  $  3.41   $  3.75   $  4.75    $  3.00
---------------

(1) The fourth quarter of 1999 includes a $2,178 charge to write-off the
    purchase option costs relating to MPI Research.

(2) The fourth quarter of 2000 includes revenue of $3.7 million from successful
    completion of a contract that had its only revenue milestone in December
    2000.

                                       F-48
CLINTRIALS RESEARCH INC.

                SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS
                                  FYE 12/31/00
                                 (IN THOUSANDS)
COL. A                  COL. B               COL. C                COL. D        COL. E
------------------------------------  ---------    ------------------------    -------------    -------
                                                          ADDITIONS
                                       BALANCE     ------------------------
                                         AT                       CHARGED                       BALANCE
                                      BEGINNING     CHARGED      TO OTHER                         AT
                                         OF        TO COST &    ACCOUNTS --    DEDUCTIONS --    END OF
DESCRIPTION                            PERIOD       EXPENSE      DESCRIBE        DESCRIBE       PERIOD
-----------                           ---------    ---------    -----------    -------------    -------
Year Ended December 31, 2000:
  Deducted from asset accounts
  Allowance for Doubtful Accounts...   $1,420       $  172          $0            $  609(B)     $  983
                                       ------       ------          --            ------        ------
Total...............................   $1,420       $  172          $0            $  609        $  983
                                       ======       ======          ==            ======        ======
  Year Ended December 31, 1999:
  Deducted from asset accounts
  Allowance for Doubtful Accounts...   $2,548       $  146          $0            $1,274(A)     $1,420
                                       ------       ------          --            ------        ------
Total...............................   $2,548       $  146          $0            $1,274        $1,420
                                       ======       ======          ==            ======        ======
  Year Ended December 31, 1998:
  Deducted from asset accounts
  Allowance for Doubtful Accounts...   $  883       $2,159          $0            $  494(A)     $2,548
                                       ------       ------          --            ------        ------
Total...............................   $  883       $2,159          $0            $  494        $2,548
                                       ======       ======          ==            ======        ======
---------------
(A) -- Uncollectible accounts written off.

(B) -- Reclassified to provide for warranty reserves on unbilled accounts.

                                       F-49
------------------------------------------------------
------------------------------------------------------

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM
THAT CONTAINED IN THIS PROSPECTUS. WE ARE OFFERING TO SELL, AND SEEKING OFFERS
TO BUY, SHARES OF OUR COMMON STOCK ONLY IN JURISDICTIONS WHERE OFFERS AND SALES
ARE PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS
OF THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS
PROSPECTUS OR OF ANY SALE OF OUR COMMON STOCK.

UNTIL                , 2002, ALL DEALERS THAT EFFECT TRANSACTIONS IN THE SHARES
OF COMMON STOCK OF INVERESK RESEARCH GROUP, INC., WHETHER OR NOT PARTICIPATING
IN THIS OFFERING, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN ADDITION
TO THE OBLIGATIONS OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS AN
UNDERWRITER AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

                               ------------------
                               TABLE OF CONTENTS
                               ------------------
PAGE
                                        ----
Prospectus Summary....................    1
Risk Factors..........................    8
Forward-Looking Statements............   16
Use of Proceeds.......................   17
Dividend Policy.......................   17
Capitalization........................   18
Dilution..............................   19
Selected Consolidated Financial and
  Other Data..........................   20
Management's Discussion and Analysis
  of Financial Condition and Results
  of Operations.......................   24
Business..............................   36
Management............................   51
Principal Stockholders................   58
Change in Ultimate Parent.............   60
Certain Relationships and Related
  Transactions........................   61
Description of Capital Stock..........   64
Shares Eligible for Future Sale.......   66
Tax Considerations in Connection with
  the Change in Our Ultimate Parent...   67
Underwriting..........................   71
Legal Matters.........................   74
Experts...............................   74
Where You Can Find More Information...   74
Index to Financial Statements.........  F-1
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------

                            [INVERESK RESEARCH LOGO]

                                           SHARES

                                  COMMON STOCK
                            -----------------------
                                   PROSPECTUS
                            -----------------------
                            BEAR, STEARNS & CO. INC.

                                  UBS WARBURG

                            WILLIAM BLAIR & COMPANY

                                    SG COWEN
                                              , 2002
------------------------------------------------------
------------------------------------------------------
PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

     The following table sets forth the expenses to be borne by the registrant,
other than underwriting discounts, in connection with the issuance and
distribution of the common stock hereunder:
ITEM                                                            AMOUNT
----                                                            -------
SEC registration fee........................................    $13,800
NASD filing fee.............................................     15,500
Nasdaq National Market listing fee..........................          *
Accounting fee and expenses.................................          *
Legal fees and expenses.....................................          *
Printing costs..............................................          *
Miscellaneous...............................................          *
Total.......................................................          *
---------------
* To be filed by amendment

ITEM 14.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.

     Section 102 of the Delaware General Corporation Law, or DGCL, as amended,
allows a corporation to eliminate or limit the personal liability of directors
of a corporation to the corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, except where the director breached the
duty of loyalty, failed to act in good faith, engaged in intentional misconduct
or knowingly violated a law, authorized the payment of a dividend or approved a
stock repurchase in violation of Delaware corporate law or obtained an improper
personal benefit.

     Section 145 of the DGCL provides, among other things, that a corporation
may indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding (other
than an action by or in the right of the corporation by reason of the fact that
the person is or was a director, officer, agent, or employee of the
corporation), or is or was serving at the corporation's request as a director,
officer, agent or employee of another corporation, partnership, joint venture,
trust or other enterprise against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement actually and reasonably incurred
by the person in connection with such action, suit or proceeding. The power to
indemnify applies (a) if such person is successful on the merits or otherwise in
defense of any action, suit or proceeding or (b) if such person acting in good
faith and in a manner he reasonably believed to be in the best interest, or not
opposed to the best interest of the corporation, and with respect to any
criminal action or proceeding had no reasonable cause to believe is or her
conduct was unlawful. The power to indemnify applies to actions brought by or in
the right of the corporation as well but only to the extent of defense expenses,
including attorneys' fees but excluding amounts paid in settlement, actually and
reasonably incurred and not to any satisfaction of judgment or settlement of the
claim itself, and with the further limitation that in such actions no
indemnification shall be made in the event of any adjudication of liability to
the corporation, unless the court believes that in light of all the
circumstances indemnification should apply.

     Section 174 of the DGCL provides, among other things, that a director, who
willfully or negligently approves of an unlawful payment of dividends or an
unlawful stock purchase or redemption, may be held liable for such actions. A
director who was either absent when the unlawful actions were approved or
dissented at the time, may avoid liability by causing his or her dissent to such
actions to be entered in the books containing minutes of the meetings of the
board of directors at the time such action occurred or immediately after such
absent director receives notice of the unlawful acts.

                                       II-1
Our certificate of incorporation, attached as Exhibit 3.1 hereto, and
bylaws, attached as Exhibit 3.2 hereto, provide that we shall indemnify our
directors, officers, employees and agents to the maximum extent permitted by the
DGCL, including in circumstances in which indemnification is otherwise
discretionary under the DGCL. We also intend to maintain director and officer
liability insurance, if available on reasonable terms. These indemnification
provisions and the indemnification agreements may be sufficiently board to
permit indemnification of our officers and directors for liabilities, including
reimbursement of expenses incurred, arising under the Securities Act of 1933, as
amended, which we refer to as the Securities Act.

     The Underwriting Agreement, attached as Exhibit 1.1 hereto, provides for
indemnification by the Underwriters of us and our officers and directors for
certain liabilities, including matters arising under the Securities Act.

ITEM 15.  RECENT SALES OF UNREGISTERED SECURITIES.

     Set forth below is information regarding all securities sold and employee
stock options granted by us in the previous three years.

     1.  Immediately prior to the consummation of this offering, we issued an
aggregate of 25,827,720 of our shares of common stock to the current
shareholders of Inveresk Research Group Limited in connection with the
transaction described under "Change in Ultimate Parent." The issuance of these
shares was not registered under the Securities Act in reliance upon Regulation D
under the Securities Act or Regulation S under the Securities Act, as
appropriate.

ITEM 16.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
EXHIBIT
  NO.                            DESCRIPTION
-------                          -----------
1.1  Form of Underwriting Agreement.*
    2.1  Exchange Agreement by Declaration of Trust, dated April 2,
         2002, among Inveresk Research Group, Inc., Paul Cowan, as
         escrow agent, and all of the shareholders of Inveresk
         Research Group Limited.
    3.1  Form of Amended and Restated Certificate of Incorporation of
         Inveresk Research Group, Inc.*
    3.2  Form of Bylaws of Inveresk Research Group, Inc.*
    4.1  Form of Stock Certificate.*
    5.1  Opinion of Clifford Chance Rogers & Wells LLP.*
    8.1  Opinion of Clifford Chance Rogers & Wells LLP regarding tax
         matters.*
   10.1  Investment Agreement, dated September 4, 1999, among
         Inveresk Research Group Limited, Walter Nimmo, Ian Sword,
         Stewart Leslie, Candover Investments PLC and other Candover
         investors listed on Schedule 2 thereto.
   10.2  Supplemental Investment Agreement, dated September 17, 1999,
         among Inveresk Research Group Limited, Walter Nimmo, Ian
         Sword, Stewart Leslie, Candover Investments PLC and other
         Candover investors listed on Schedule 2 thereto.
   10.3  Second Supplemental Investment Agreement, dated September
         20, 1999, among Inveresk Research Group Limited, Walter
         Nimmo, Ian Sword, Stewart Leslie, Candover Investments PLC
         and other Candover investors listed on Schedule 2 thereto.
   10.4  Instrument Constituting L27,037,500 10% unsecured
         subordinated loan stock due 2008, dated September 20, 1999.
   10.5  Investment Agreement, dated February 2001, among Inveresk
         Research Group Limited, Walter Nimmo, the other investors
         listed on Schedule 1 thereto, Candover Investments PLC and
         other Candover investors listed on Schedule 2 thereto.
   10.6  Instrument Constituting L44,734,481 10% unsecured
         subordinated loan stock due 2008, dated April 3, 2001.
II-2
EXHIBIT
  NO.                            DESCRIPTION
-------                          -----------
10.7  Facilities Agreement, dated February 22, 2001, among
         Inveresk Research Group Limited, certain subsidiaries of
         Inveresk Research Group Limited and Bear Stearns Corporate
         Lending Inc.
   10.8  Security Agreement, dated April 3, 2001, by and between
         Inveresk Acquisition Corp. and Bear, Stearns Corporate
         Lending, Inc.
   10.9  Arranger, Agent and Security Trustee Substitution Deed,
         dated as of July 19, 2001, by and among Bear Stearns
         Corporate Lending Inc. as assignor and the commercial banks
         named therein as assignees.
  10.10  Lease Agreement, dated September 30, 1996, between
         Highwoods/Forsyth Limited Partnership and ClinTrials
         Research Inc.
  10.11  Lease Agreement, dated November 2, 1993, between Ortem
         Developments Limited and ClinTrials Research Limited.
  10.12  Lease Agreement, dated March 7, 1996, between Ortem
         Developments Limited and ClinTrials Research Limited.
  10.13  Lease Agreement, dated March 13, 1998, between Taylor
         Woodrow Property Company Limited and ClinTrials Research
         Limited.
  10.14  Registration Rights Agreement, dated as of           , 2002,
         among Inveresk Research Group, Inc. and the stockholders of
         Inveresk Research Group, Inc. listed therein.*
  10.15  Inveresk Research Group, Inc. 2002 Non-Employee Directors
         Stock Option Plan.*
  10.16  Inveresk Research Group, Inc. 2002 Stock Option Plan.*
  10.17  ClinTrials BioResearch Ltd. Pension Plan for Senior
         Management Employees, dated September 1, 2000.
  10.18  Pension Plan for Designated Employees of ClinTrials
         BioResearch Ltd., dated August 1, 1996.
  10.19  Memorandum of Agreement, dated June 19, 1997, between
         ClinTrials BioResearch Ltd. and Michael F. Ankcorn.
  10.20  Agreement, dated February 1997, among ClinTrials BioResearch
         Ltd., Bio-Research Laboratories Ltd. and Norah K. Taylor.
   21.1  List of Subsidiaries.
   23.1  Consent of Arthur Andersen.
   23.2  Consent of Ernst & Young LLP.
   23.3  Consent of Clifford Chance Rogers & Wells LLP (included in
         Exhibit 5.1).
   24.1  Power of Attorney (included in signature page).
   99.1  Letter to the Securities and Exchange Commission pursuant to
         Temporary Note 3T to Article 3 of Regulation S-X.
---------------
* To be filed by an amendment to the Registration Statement.

ITEM 17.  UNDERTAKINGS

     The Registrant hereby undertakes the following:

          (1) Insofar as indemnification for liabilities arising under the
     Securities Act may be permitted to directors, officers and controlling
     persons of the registrant pursuant to the foregoing provisions, or
     otherwise, the registrant has been advised that in the opinion of the
     Commission such indemnification is against public policy as expressed in
     the Securities Act and is, therefore, unenforceable. In the event that a
     claim for indemnification against such liabilities (other than the payment
     by the registrant of expenses incurred or paid by a director, officer or
     controlling person of the registrant in the successful defense of any
     action, suit or proceeding) is asserted by such director, officer or
     controlling person in connection with the securities being registered, the
     registrant will, unless in the opinion of its counsel the matter has been
     settled by controlling precedent, submit to a court of

                                       II-3
appropriate jurisdiction the question whether such indemnification by it is
     against public policy as expressed in the Securities Act and will be
     governed by the final adjudication of such issue.

          (2) For purposes of determining any liability under the Securities
     Act, the information omitted from the form of prospectus filed as part of
     this registration statement in reliance upon Rule 430A and contained in a
     form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
     (4) or 497(h) under the Securities Act shall be deemed to be part of this
     registration statement as of the time it was declared effective.

          (3) For the purpose of determining any liability under the Securities
     Act, each post-effective amendment that contains a form of prospectus shall
     be deemed to be a new registration statement relating to the securities
     offered therein, and the offering of such securities at that time shall be
     deemed to be the initial bona fide offering thereof.

          (4) The undersigned registrant hereby undertakes to provide to the
     underwriters at the closing specified in the Underwriting Agreement,
     certificates in such denominations and registered in such names as required
     by the underwriters to permit prompt delivery to each purchaser.

                                       II-4
SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on April 2, 2002.

                                          INVERESK RESEARCH GROUP, INC.

                                          By: /s/ WALTER S. NIMMO
                                            ------------------------------------
                                              Walter S. Nimmo
                                              President, Chief Executive Officer
                                              and Director

     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated. Each person whose signature appears below
hereby constitutes and appoints Walter S. Nimmo and Paul Cowan his or her true
and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution for him or her and in his or her name and stead in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, or any registration statement for the same
offering that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act of 1933, and to file the same, with exhibits thereto and other
documents in connection therewith or in connection with the registration of the
common stock offered hereby under the Securities Exchange Act of 1934, with the
Securities and Exchange Commission, granting unto such attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary in connection with such matters and hereby ratifying and
confirming all that such attorney-in-fact and agent or his substitutes may
reasonably do or cause to be done by virtue hereof.

                                       II-5
NAME AND SIGNATURE                                 TITLE                       DATE
                ------------------                                 -----                       ----
/s/ WALTER S. NIMMO                   President, Chief Executive Officer   April 2, 2002
 -----------------------------------------------     and Director (Principal Executive
                 Walter S. Nimmo                                  Officer)

                  /s/ PAUL COWAN                     Chief Financial Officer (Principal   April 2, 2002
 -----------------------------------------------      Financial Officer and Principal
                    Paul Cowan                              Accounting Officer)

                 /s/ IAN P. SWORD                    Chairman of the Board of Directors   April 2, 2002
 -----------------------------------------------
                   Ian P. Sword

                /s/ JOHN URQUHART                           Vice Chairman of the          April 1, 2002
 -----------------------------------------------             Board of Directors
                  John Urquhart

              /s/ JOHN T. HENDERSON                               Director                April 2, 2002
 -----------------------------------------------
                John T. Henderson

              /s/ S. LOUISE MCCRARY                               Director                April 2, 2002
 -----------------------------------------------
                S. Louise McCrary
II-6
EXHIBIT INDEX
EXHIBIT
  NO.                            DESCRIPTION
-------                          -----------
1.1  Form of Underwriting Agreement.*
    2.1  Exchange Agreement by Declaration of Trust, dated April 2,
         2002, among Inveresk Research Group, Inc., Paul Cowan, as
         escrow agent, and all of the shareholders of Inveresk
         Research Group Limited.
    3.1  Form of Amended and Restated Certificate of Incorporation of
         Inveresk Research Group, Inc.*
    3.2  Form of Bylaws of Inveresk Research Group, Inc.*
    4.1  Form of Stock Certificate.*
    5.1  Opinion of Clifford Chance Rogers & Wells LLP.*
    8.1  Opinion of Clifford Chance Rogers & Wells LLP regarding tax
         matters.*
   10.1  Investment Agreement, dated September 4, 1999, among
         Inveresk Research Group Limited, Walter Nimmo, Ian Sword,
         Stewart Leslie, Candover Investments PLC and other Candover
         investors listed on Schedule 2 thereto.
   10.2  Supplemental Investment Agreement, dated September 17, 1999,
         among Inveresk Research Group Limited, Walter Nimmo, Ian
         Sword, Stewart Leslie, Candover Investments PLC and other
         Candover investors listed on Schedule 2 thereto.
   10.3  Second Supplemental Investment Agreement, dated September
         20, 1999, among Inveresk Research Group Limited, Walter
         Nimmo, Ian Sword, Stewart Leslie, Candover Investments PLC
         and other Candover investors listed on Schedule 2 thereto.
   10.4  Instrument Constituting L27,037,500 10% unsecured
         subordinated loan stock due 2008, dated September 20, 1999.
   10.5  Investment Agreement, dated February 2001, among Inveresk
         Research Group Limited, Walter Nimmo, the other investors
         listed on Schedule 1 thereto, Candover Investments PLC and
         other Candover investors listed on Schedule 2 thereto.
   10.6  Instrument Constituting L44,734,481 10% unsecured
         subordinated loan stock due 2008, dated April 3, 2001.
   10.7  Facilities Agreement, dated February 22, 2001, among
         Inveresk Research Group Limited, certain subsidiaries of
         Inveresk Research Group Limited and Bear Stearns Corporate
         Lending Inc.
   10.8  Security Agreement, dated April 3, 2001, by and between
         Inveresk Acquisition Corp. and Bear, Stearns Corporate
         Lending, Inc.
   10.9  Arranger, Agent and Security Trustee Substitution Deed,
         dated as of July 19, 2001, by and among Bear Stearns
         Corporate Lending Inc. as assignor and the commercial banks
         named therein as assignees.
  10.10  Lease Agreement, dated September 30, 1996, between
         Highwoods/Forsyth Limited Partnership and ClinTrials
         Research Inc.
  10.11  Lease Agreement, dated November 2, 1993, between Ortem
         Developments Limited and ClinTrials Research Limited.
  10.12  Lease Agreement, dated March 7, 1996, between Ortem
         Developments Limited and ClinTrials Research Limited.
  10.13  Lease Agreement, dated March 13, 1998, between Taylor
         Woodrow Property Company Limited and ClinTrials Research
         Limited.
  10.14  Registration Rights Agreement, dated as of           , 2002,
         among Inveresk Research Group, Inc. and the stockholders of
         Inveresk Research Group, Inc. listed therein.*
  10.15  Inveresk Research Group, Inc. 2002 Non-Employee Directors
         Stock Option Plan.*
  10.16  Inveresk Research Group, Inc. 2002 Stock Option Plan.*
  10.17  ClinTrials BioResearch Ltd. Pension Plan for Senior
         Management Employees, dated September 1, 2000.
  10.18  Pension Plan for Designated Employees of ClinTrials
         BioResearch Ltd., dated August 1, 1996.
EXHIBIT
  NO.                            DESCRIPTION
-------                          -----------
10.19  Memorandum of Agreement, dated June 19, 1997, between
         ClinTrials BioResearch Ltd. and Michael F. Ankcorn.
  10.20  Agreement, dated February 1997, among ClinTrials BioResearch
         Ltd., Bio-Research Laboratories Ltd. and Norah K. Taylor.
   21.1  List of Subsidiaries.
   23.1  Consent of Arthur Andersen.
   23.2  Consent of Ernst & Young LLP.
   23.3  Consent of Clifford Chance Rogers & Wells LLP (included in
         Exhibit 5.1).
   24.1  Power of Attorney (included in signature page).
   99.1  Letter to the Securities and Exchange Commission pursuant to
         Temporary Note 3T to Article 3 of Regulation S-X.
---------------
* To be filed by an amendment to the Registration Statement.