Item 13. Certain Relationships and Related Transactions, and Director Independence

Certain Relationships and Related Person Transactions

Review and Approval of Related Person Transactions

The Audit Committee is responsible for the review and approval of all related person transactions. In connection with the IPO, our Board adopted a written policy regarding the approval of related person transactions. For purposes of this policy, a related person transaction includes any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K adopted by the SEC. In reviewing proposed related person transactions, our Audit Committee considers all relevant facts and circumstances, including without limitation the commercial reasonableness of the terms, the benefit and perceived benefit, or lack thereof, to our company, opportunity costs of alternate transactions, the materiality and character of the related person’s direct or indirect interest, and the actual or apparent conflict of interest of the related person. A related person transaction will not be approved unless it is determined that, upon consideration of all relevant information, the proposed related party transaction is in, or at least is not opposed to, the best interest of our company and its shareholders.

Each of the following transactions was approved by the Audit Committee. Unless otherwise indicated, all percentages in this “Certain Relationship and Related Person Transactions” section are as of December 31, 2013.

PharmaBio Development Inc.

In December 2009, we spun off PharmaBio to our shareholders at the time. As a result, Dr. Gillings, our Executive Chairman and former Chief Executive Officer, and his affiliates owned approximately 28.41% of PharmaBio, Bain Capital and TPG each owned approximately 21.96% of PharmaBio, Temasek owned approximately 9.37% of PharmaBio and 3i owned approximately 14.5% of PharmaBio. In addition, two of our current executive officers, Messrs. Mortimer and Winstanly, and our former Chief Operating Officer and President, Mr. Ratliff, also held, in the aggregate, less than a 1% interest in PharmaBio. In October 2013, Dr. Gillings purchased the outstanding shares of PharmaBio he did not already own for an undisclosed amount. Currently, Dr. Gillings (directly or through his wholly-owned affiliates) owns 100% of PharmaBio and is PharmaBio’s sole director.

Services Agreements with PharmaBio

Services Agreements

In connection with the spin-off, Quintiles Transnational and PharmaBio entered into a letter agreement (and in some cases, separate services agreements) providing for the continuation of certain development and commercialization services to third parties by Quintiles Transnational on behalf of PharmaBio. PharmaBio paid Quintiles Transnational $23.1 million, $26.3 million, and $26.1 million for these services in the years ended December 31, 2013, 2012 and 2011, respectively.

Consulting Services Agreement

In 2010, PharmaBio entered into a consulting services agreement with Quintiles Transnational pursuant to which Quintiles Transnational provides consulting services with respect to PharmaBio’s investments. PharmaBio paid Quintiles Transnational $288,000, $258,000 and $275,000 under the services agreement in the years ended December 31, 2013, 2012 and 2011, respectively.

NovaQuest Pharma Opportunities Fund III, L.P.

In November 2010, we and PharmaBio, as well as a third party investor, each committed to invest $60 million as investors in the Fund. In November 2013, we sold $10 million of our commitment to a third party, leaving us a $50 million commitment. We had funded approximately $2.9 million of this commitment which had a carrying value of approximately $2.2 million. We received approximately $2.3 million for the funded portion of the commitment sold. As of December 31, 2013, we have funded approximately $15.8 million (net of distributions subject to recall) of this commitment. As of that date, our commitment to invest approximated 10.9% of the Fund’s total commitments of $459.2 million. PharmaBio has reduced its commitment to the Fund to $20 million following a sale of $40 million of its original $60 million commitment to certain investors for an undisclosed amount. Messrs. Mortimer and Ratliff and Dr. Winstanly have each committed to invest in less than a 1% interest in the Fund.

Table of Contents

Dr. Gillings is a 6.94% limited partner of NQ HCIF General Partner, LP, which is the general partner of the Fund, or the GP, and a 9.99% owner of NQ HCIF GP, Ltd, which is the general partner of the GP, or GPLTD. PharmaBio is a 54.71% limited partner of the GP and a 55.01% owner of GPLTD. Certain of our related persons had and Dr. Gillings continues to have an indirect interest in the GP and in GPLTD as a result of their ownership in PharmaBio, as discussed above. Messrs. Mortimer and Ratliff and Dr. Winstanly are each less than 1% limited partners of the GP. Limited partners in the GP are entitled to receive distributions with respect to the GP’s carried interest in the Fund. The GP’s carried interest represents the right to receive a portion of the profit distributions from the Fund after the Fund’s investors have been repaid their capital contributions and a preferred return on those contributions. We and PharmaBio are not charged carried interest with respect to our limited partnership interests.

The Fund is managed by NovaQuest Capital Management, L.L.C., or the Management Company, of which PharmaBio owns 35% and Dr. Gillings owns 20%. The board of directors of GPLTD makes all non-investment decisions for the GP and the Fund; the investment committee approves all Fund investments and dispositions. Through March 2012, Mr. Gordon and Dr. Cohen, two of our directors, were members of the management committee of the Management Company, which makes most decisions of the Management Company, and directors of GPLTD, in each case serving as PharmaBio’s representatives. Certain of our related persons had and Dr. Gillings continues to have an indirect interest in the Management Company as a result of their ownership in PharmaBio, as discussed above. The Management Company also advises PharmaBio.

We and PharmaBio have the right to invest in similar successor funds managed by the Management Company on substantially similar terms as they have in the Fund.

In connection with the formation of the Fund, we advanced certain expenses to the Fund. We received $2.2 million from the Fund in 2011 in repayment of these advances.

We have entered into a non-exclusive preferred provider agreement with the Fund, pursuant to which the Fund will first allow us the opportunity to provide any outsourcing services to the Fund, provided the pricing terms are consistent with those we charge to third party customers buying comparable services on comparable terms and conditions. We do not make or receive any payments in connection with the preferred provider agreement. As of the date of this amended Form 10-K, we have not entered into any transactions with the Fund, or in connection with a Fund investment, involving outsourcing services, pursuant to the preferred provider agreement or otherwise, but we anticipate that we may do so in the future.

We also have entered into a non-exclusive services agreement with the Fund, pursuant to which we will provide a variety of services to the Fund on an arm’s length basis, including due diligence support and strategic and planning expertise. Prices charged to the Fund equal, as near as reasonably practicable, the prices we charge to third-party customers buying comparable services on comparable terms and conditions. The Fund paid us approximately $111,000, $122,000 and $115,000 for services rendered pursuant to the services agreement in the years ended December 31, 2013, 2012 and 2011, respectively.

We also have entered into agreements with the Management Company in connection with the formation of the Fund. Under a service marks assignment agreement, we assigned the Management Company the service mark registrations for the NovaQuest name until the dissolution or cessation of the business of the Management Company or such date that the Management Company is no longer managing a private equity fund with at least $100 million in capital commitments or capital contributions. The Management Company has in turn licensed the service mark to the Fund. We also entered into a transition service agreement with the Management Company under which we agreed to provide non-decision-making administrative support services to the Management Company; however, the Management Company was able to provide these services on its own.

Management Agreement

On January 22, 2008, Quintiles Transnational entered into a management agreement whereby, in exchange for advisory services, Quintiles Transnational agreed to pay an annual management service fee of $5.0 million to affiliates of our investors which included (1) GFM, (2) Bain Capital, (3) TPG, (4) 3i, (5) Cassia and (6) Aisling Capital, LLC, or Aisling Capital. The following directors are affiliates of these investors: Dr. Gillings controls GFM, Mr. Connaughton and Mr. Gordon are Managing Directors of Bain Capital, Dr. Cohen is co-head of TPG’s biotechnology group, Mr. Coslet is a Senior Partner and the Chief Investment Officer of TPG, and Mr. Relyea is a Principal of 3i. Of this amount, Aisling Capital received $150,000 annually. The remaining approximately $4.9 million of the annual management service fee was paid to the other managers, in advance and in equal quarterly installments, in proportion to each manager’s (or such manager’s affiliates’) respective share ownership. The annual management service fee was subject to upward adjustment each year effective March 31 based on any increase in the Consumer Price Index for the preceding calendar year. The management agreement included customary indemnification provisions in favor of the investors party to the agreement and their affiliates. The management agreement’s initial term extended

Table of Contents

through December 31, 2010, after which it automatically renewed. We amended the management agreement in May 2013 that resulted in termination of the agreement immediately prior to the effectiveness of the IPO and we paid a one-time $25.0 million fee in connection with the termination. Of this amount, each of GFM, Bain Capital and TPG received $5.93 million, 3i received $3.92 million, Cassia received $2.53 million and Aisling Capital received $750,000. The amendment also included a one-time payment of $1.5 million to GFM as described below under “—Other Transactions.” For the years ended December 31, 2013, 2012 and 2011, we paid a total of approximately $27.7 million, $5.3 million and $5.2 million, respectively, to these investors (or their affiliates) pursuant to this arrangement.

Shareholders Agreement

In 2008, we entered into the Shareholders Agreement with Dr. Gillings and his affiliates, Bain Capital, the TPG Funds, 3i, Temasek and certain other investors who acquired equity securities in the going private transaction in 2003 or as a result of the Major Shareholder Reorganization. Mr. Pike also became party to the Shareholders Agreement in May 2012 in connection with his purchase of shares of our common stock. In August 2012, we entered into a supplement to the Shareholders Agreement, and the Shareholders Agreement was amended in May 2013 to, among other things, remove Temasek, Mr. Pike and certain other investors as parties to the agreement.

The parties to the Shareholders Agreement, as amended, have agreed to vote their shares to elect members of our Board as set forth therein. See “Directors, Executive Officers and Corporate Governance—Composition and Qualifications of Our Board of Directors.” All decision-making by our Board generally requires the affirmative vote of a majority of the members of the entire Board, except that any transaction entered into between us or any of our subsidiaries and any shareholder, or affiliate or associate of any shareholder, will require the affirmative vote of a majority of our Board with the nominee(s) of the interested shareholder abstaining from such vote. In addition, the Shareholders Agreement requires a majority of our Board to approve any asset divestiture in excess of $10 million.

Registration Rights Agreement

In May 2013, we entered into an amended and restated registration rights agreement with Dr. Gillings and his affiliates, Bain Capital, the TPG Funds, 3i and Temasek. We refer to this agreement as the Registration Rights Agreement. The Registration Rights Agreement provides the shareholders party to the agreement with the right to require us to register their equity securities under the Securities Act. In addition, in most circumstances when we propose (other than pursuant to a demand registration) to register any of our equity securities under the Securities Act, the shareholders party to the Registration Rights Agreement will have the opportunity to register their registrable securities on such registration statement. We are required to pay the registration expenses, other than underwriting discounts and commissions and transfer taxes, associated with any registration of shares under the Registration Rights Agreement. The Registration Rights Agreement also contains certain restrictions on the sale of shares by the investors party to that agreement, as well as customary indemnification provisions.

Transactions with JV Partners

In April 2006, Quintiles Asia Pacific Commercial Holdings, Inc., or QAPCH, one of our indirect wholly owned subsidiaries, TLS Beta Pte. Ltd., or TLS, a Singapore company and an indirect wholly owned subsidiary of Temasek, and PharmaCo Investments Ltd, or PharmaCo, a company incorporated in Labuan, Malaysia and an indirect wholly owned subsidiary of Interpharma Asia Pacific, completed the formation of a joint venture to commercialize biopharmaceutical products in the Asia Pacific region, or the Joint Venture. We refer to QAPCH, TLS and PharmaCo collectively as the JV Partners. Temasek Life Sciences Private Limited, or Temasek Life Sciences, is a beneficial owner of more than 5% of our common stock. The JV Partners conducted the Joint Venture through Invida Pharmaceutical Holdings Pte. Ltd., which was formerly known as Asia Pacific Pharmaceutical Holdings Pte. Ltd., or Invida. As part of this arrangement, QAPCH was admitted as a 33.33% shareholder of Invida.

QAPCH and each of the JV Partners entered into a loan agreement with the Joint Venture to provide up to $65.0 million of financing to Invida in the form of cash and/or contribution of certain of the JV Partners’ existing businesses. QAPCH’s contribution included a cash loan facility of $31.7 million and the contribution of the Innovex businesses in Australia, New Zealand, Korea and India, negotiated by the JV Partners at a value of $33.3 million. In addition, three of our indirect wholly owned subsidiaries entered into term loan facility agreements for approximately $5.3 million, in the aggregate, with interest-free two-year terms to support specified working capital requirements of Invida. In November 2011, we and each of the other JV Partners sold our respective one-third investments in Invida to a third-party, each receiving approximately $103.6 million in net proceeds.

Table of Contents

Other Transactions

Dr. Gillings provides extensive use of the airplane owned and operated by GFM for business-related travel services for himself and other of our employees. Under the terms of Dr. Gillings’ employment agreement with us, we reimbursed GFM for our business use of the airplane at an hourly rate of $13,502. During the years ended December 31, 2013, 2012 and 2011, we reimbursed GFM for the business use of the airplane with cash payments totaling approximately $1.4 million, $4.3 million, and $5.1 million, respectively. In May 2013, we entered into an amendment to our management agreement to make a one-time payment of $1.5 million to GFM in connection with Dr. Gillings agreeing that the amount we will reimburse GFM for use of the airplane will be limited to $2.5 million per year.

In May 2009, we acquired a 10% interest in HUYA for $5.0 million, which we sold to PharmaBio on November 29, 2011 for approximately $5.0 million. In January 2010, we entered into a collaboration agreement with HUYA, to fund up to $2.3 million of HUYA’s R&D activity for a specific compound. The funding consisted of $1.0 million in cash that was paid during 2010 and $1.3 million of services which was provided by us during 2011 and 2012. In return for the $2.3 million in funding, we may receive milestone payments which contractually may not exceed $16.5 million excluding interest if certain events were to occur. In addition, during 2013, we entered into a number of contracts with HUYA, mostly in Asia, under which we will provide up to approximately $19.2 million of additional services on a fee for services basis at arm’s length and at market rates. During the year ended December 31, 2013, we provided approximately $772,000 of services under these agreements. Dr. Mireille Gillings, who is one of our directors and is married to Dr. Gillings, is the president, chief executive officer, executive chair and a director of HUYA. Dr. Winstanly, our Executive Vice President, Chief Customer and Governance Officer, is also a director of HUYA. Dr. Mireille Gillings, Dr. Gillings, PharmaBio and Dr. Winstanly own 27%, 34%, 5% and less than 1% interests, respectively, in HUYA on a fully diluted basis. In addition, certain related parties had an indirect interest in HUYA as a result of their ownership in PharmaBio, as discussed above.

In connection with joining our company as Chief Executive Officer and pursuant to the terms of his employment agreement, on May 31, 2012 Mr. Pike purchased 38,580 shares of our common stock at a purchase price of $25.92 per share (or $999,994 in the aggregate).

Les Gillings, Dr. Gillings’ brother, previously served as a Senior Vice President in our digital patient unit. Mr. Gillings received total compensation in respect of base salary, bonus and car allowance of $356,383 and $411,190 in the years ended December 31, 2012 and 2011, respectively. In connection with dividends paid to shareholders, in June 2011, February 2012 and October 2012, we reduced the exercise prices of certain of Mr. Gillings’ then-outstanding options, each in a manner approved by our Board or Compensation and Talent Development Committee and consistent with the treatment for other option holders. Mr. Gillings also participated in other employee benefit plans and arrangements that are made generally available to other employees at his level. In connection with the termination of Mr. Gillings’ employment in December 2012, Mr. Gillings received a lump sum severance payment of $1,345,120 in January 2013.

Dustin Gross, Dr. Gillings’ son-in-law, serves as Strategic Business Development Director. Mr. Gross received total compensation in respect of base salary and bonuses of $104,484, (plus an additional annual incentive bonus for 2013 that is expected to be approved in the first quarter of 2014) $128,761 and $111,788 for the years ended December 31, 2013, 2012 and 2011, respectively. Mr. Gross also participates in other employee benefit plans and arrangements that are made generally available to other employees at his level.

Paul Casey, Dr. Gillings’ former step-son, serves as Global Head, Cardiac Safety Services. Mr. Casey received total compensation in respect of base salary, bonus and certain perquisites relating to a car allowance and relocation benefits of $379,394 (plus an additional annual incentive bonus for 2013 that is expected to be approved in the first quarter of 2014), $599,228 and $507,134 for the years ended December 31, 2013, 2012 and 2011, respectively. In addition, Mr. Casey received grants of options to purchase 8,000, 10,000 and 5,500 shares of our common stock in the years ended December 31, 2013, 2012 and 2011, respectively. Prior to the IPO, each of these awards was originally issued with an exercise price equal to the then-current fair market value of our common stock, as determined reasonably and in good faith by the Compensation and Talent Development Committee and our Board. In connection with dividends paid to shareholders, in June 2011, February 2012 and October 2012, we reduced the exercise prices of certain of Mr. Casey’s then-outstanding options, each in a manner approved by our Board or Compensation and Talent Development Committee and consistent with the treatment for other option holders. Mr. Casey also participates in other employee benefit plans and arrangements that are made generally available to other employees at his level.

Table of Contents

Director Independence

The parties to the Shareholders Agreement control a majority of our outstanding common stock. As a result, we are a “controlled company” within the meaning of the NYSE corporate governance standards, and we have elected to rely on this exemption from compliance with certain NYSE corporate governance requirements, including the requirements that, within one year of the date of the listing of our common stock:

As a result, we do not have a majority of independent directors on our Board. In addition, our Compensation and Talent Development Committee and our Governance, Quality and Nominating Committee do not consist entirely of independent directors and are not subject to annual performance evaluations.

The Board has affirmatively determined that each of Messrs. Greenberg, Schaeffer and Evanisko meets the definition of “independent director” for purposes of the NYSE rules. As such, we believe that our Audit Committee is comprised entirely of independent directors. In addition, we plan to transition each of our Compensation and Talent Development Committee and our Governance, Quality and Nominating Committee to be comprised of a majority of independent directors. The current members of our Compensation and Talent Development Committee are Messrs. Evanisko (Chair), Connaughton, Coslet, Greenberg and Relyea, and the current members of our Governance, Quality and Nominating Committee are Messrs. Schaeffer (Chair), Evanisko, Gordon, Relyea and Drs. Cohen and Mireille Gillings.