For the first quarter, the contract research organisation saw its pre-tax profit soar by 85 per cent to $7.9m (€5.8m) and also reported an operating profit jump of 38 per cent to $8.6m on the back of sales revenue of $84.8m, a 13 per cent rise compared to the comparable 2006 period.

Impressively, margins also doubled to 10 per cent. These profits would have been more dramatic except the 2006 figures have been adjusted by PharmaNet to discount the discontinued Phase I operations that had dragged the company into making a loss.

As a result, PharmaNet has been clawing its way back from a defensive position after a long period of trouble with its Early Clinical unit.

The segment, offering Phase I clinical trials and support services as well as bioanalytical laboratory and clinical laboratory services, had been plagued by government and media scrutiny since 2004 after allegations were made over its inadequate clinical trial patient recruitment and informed consent practices at its site in Miami.

In addition, its 350-bed Miami facility, which it bought in 2004 for $12m as part of an expansion plan, was found to be unsafe and in breach of serious building code violations.

This all resulted in a significant decline in business and large legal bills.

PharmaNet, formerly known as SFBC, has since shut down its Miami site and is in the process of moving all early-phase operations to two existing sites in Canada - Quebec and Toronto - which are currently being prepared for the business shift.

Meanwhile, things are finally turning around as all the costs that the firm has been hit with as a result of all the abovementioned have began to ebb away.

The company's early stage segment was also responsible for much of the ground gained by the firm. Revenue increased 14 per cent to $29.7m and operating margin grew nearly 5 percentage points to 17 per cent. The company attributed this primarily to "higher volume in its bioanalytical laboratories for both branded and generic clients and increased pricing in generic segment of the clinics".

The late stage segment also grew its revenues by 14 per cent to come in at $55m, although profit margin only crept up by 0.9 per cent. PharmaNet said this was "primarily due to the reclassification of its Specialised Pharmaceutical Services (SPS) business into the late stage segment as well as higher direct costs".

During the quarter the SPS unit saw its revenues drop 27 per cent to $ 921,394 and its profit more than margin halved to 22.4 per cent compared to last year's Q1.

"With the improvement in the operating performance of the early stage segment, record direct revenues in the late stage segment and significant backlog growth, we are continuing to see the results of our organisational and operational improvements, business development initiatives and capacity expansions," said PharmaNet president and CEO Jeffrey McMullen.

Looking forward, PharmaNet reiterated that its new Quebec facility, which replaces two existing facilities and houses the new clinic, laboratory and offices, has opened. The move of staff and equipment began in March and is expected to be completed by end of May 2007 and the number of beds at the site will increase from 168 to 200.

It is intended that the Quebec site will become a hub for branded early-phase work, which PharmaNet has been focusing on growing - this year it accounted for roughly 35 per cent of early-phase business, while last year it was around 10 per cent.

"I believe we are beginning to make progress here, although it will take a while to migrate clients to this new location," said McMullen in a recent webcast.

The company is also completing the leasehold improvements at its Toronto site which will soon house 150 clinical beds. The company expects to have the site ready by April and open the facility mid-year 2007.

"We won't open this new facility until we have enough volume of work to make sure it is profitable," said McMullen.

Meanwhile, PharmaNet said it is also completing leasehold improvements to expand the laboratory capacity of its Barcelona joint venture and expects to occupy the new Barcelona facilities mid-year 2007.