PHARMACEUTICAL MARKETING SERVICES INC, DEF 14A, 1996-11-12

PHARMACEUTICAL MARKETING SERVICES INC
DEF 14A, 1996-11-12
COMPUTER PROGRAMMING, DATA PROCESSING, ETC.

Previous: SANFILIPPO JOHN B & SON INC, 10-Q, 1996-11-12

Next: SBS TECHNOLOGIES INC, 10-Q, 1996-11-12

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )

Filed by the Registrant /x/
Filed by a Party other than the Registrant /_/

Check the appropriate box:

/_/ Preliminary Proxy Statement
/x/ Definitive Proxy Statement
/_/ Definitive Additional Materials
/_/ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12

Pharmaceutical Marketing Services, Inc.
________________________________________________________________________________
(Name of Registrant as Specified In Its Charter)

________________________________________________________________________________
(Name of Person(s) Filing Proxy Statement)

Payment of Filing Fee (Check the appropriate box):

/x/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(j)(2).
/_/ $500 per each party to the controversy pursuant to
Exchange Act Rule 14a-6(i)(3).
/_/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

1) Title of each class of securities to which transaction applies:

_____________________________________________________________________________

2) Aggregate number of securities to which transaction applies:

_____________________________________________________________________________

3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:*

_____________________________________________________________________________

4) Proposed maximum aggregate value of transaction:

_____________________________________________________________________________

/_/ Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule
and the date of its filing.

1) Amount previously paid: _________________________________________________

2) Form, Schedule or Registration No. ______________________________________

3) Filing party: ___________________________________________________________

4) Date filed: _____________________________________________________________

___________
*Set forth the amount on which the filing fee is calculated and state how it was
determined.

<PAGE>

[LOGO]
PHARMACEUTICAL MARKETING SERVICES INC.
2394 EAST CAMELBACK ROAD
PHOENIX, ARIZONA 85016

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

NOVEMBER 22, 1996

The Annual Meeting of Stockholders of Pharmaceutical Marketing Services Inc.
("PMSI" or the "Company") will be held at The Hyatt Regency Princeton, U.S.
Route 1 and Alexander Road, 102 Carnegie Center, Princeton, New Jersey, on the
22nd day of November, 1996, at 10:00 A.M., for the following purposes:

1. To elect seven directors to hold office until the next Annual Meeting of
Stockholders and until their respective successors shall have been duly elected
and qualified;

2. To approve an increase in the number of shares available for distribution
under the Company's Stock Option and Restricted Stock Purchase Plan from
2,000,000 to 2,250,000 shares; and

3. To ratify the selection of Coopers & Lybrand L.L.P., independent public
accountants, as the auditors of the Company for the fiscal year ending June 30,
1997;

4. To transact such other business as may properly come before the meeting or
any adjournment thereof.

The Board of Directors has fixed the close of business on September 23, 1996
as the record date for the determination of the stockholders of the Company
entitled to notice of and to vote at the Annual Meeting of Stockholders. Each
share of the Company's Common Stock is entitled to one vote on all matters
presented at the Annual Meeting.

ALL HOLDERS OF THE COMPANY'S COMMON STOCK (WHETHER THEY EXPECT TO ATTEND THE
ANNUAL MEETING OR NOT) ARE REQUESTED TO COMPLETE, SIGN, DATE AND RETURN PROMPTLY
THE PROXY CARD ENCLOSED WITH THIS NOTICE.

By Order of the Board of Directors
Warren J. Hauser
Secretary

November 6, 1996

<PAGE>
PHARMACEUTICAL MARKETING SERVICES INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 22, 1996
INTRODUCTION

This Proxy Statement is being furnished to stockholders of record of
Pharmaceutical Marketing Services Inc. ("PMSI" or the "Company") as of September
23, 1996 in connection with the solicitation by the Board of Directors of PMSI
of proxies for the 1996 Annual Meeting of Stockholders to be held at The Hyatt
Regency Princeton, U.S. Route 1 and Alexander Road, 102 Carnegie Center,
Princeton, New Jersey, on November 22, 1996 at 10:00 A.M., or at any
adjournments thereof, for the purposes stated in the Notice of Annual Meeting.
The approximate date of mailing of this Proxy Statement and enclosed form of
proxy to stockholders is November 6, 1996.

As of the close of business on September 23, 1996, the Company had
outstanding 13,186,275 shares of Common Stock, $.01 par value ("Common Stock").
Each share of Common Stock is entitled to one vote on all matters presented at
the Annual Meeting. The presence, either in person or by properly executed
proxy, of the holders of record of a majority of the issued and outstanding
stock entitled to vote at the Annual Meeting shall constitute a quorum at the
Annual Meeting.

If the enclosed proxy is signed and returned, it may, nevertheless, be
revoked at any time prior to the voting thereof at the pleasure of the
stockholder signing it, either by a written notice of revocation received by the
person or persons named therein or by voting the shares covered thereby in
person or by the execution of another proxy dated subsequent to the date
thereof.

Shares represented by duly executed proxies in the accompanying form will be
voted in accordance with the instructions indicated on such proxies, and, if no
such instructions are indicated thereon, will be voted in favor of the nominees
for election as directors named below and for the other proposals referred to
below.

The vote required for approval of each of the proposals before the
stockholders at the Annual Meeting is specified in the description of such
proposal below. For the purposes of determining whether a proposal has received
the required vote, abstentions will be included in the vote total, with the
result that an abstention will have the same effect as a negative vote. Brokers
who are members of the New York Stock Exchange ("NYSE") and who hold shares in
"street name" for customers have, by NYSE rules, the authority to vote on
certain items in the absence of instructions from their customers, the
beneficial owners of the shares. Under these rules, brokers that do not receive
instructions are entitled to vote on the election of the seven nominees for
director and the increase in the number of authorized shares under the Company's
Stock Option and Restricted Stock Purchase Plan.

1. ELECTION OF DIRECTORS

The entire Board of Directors is comprised of seven directors. All directors
will be elected for terms expiring at the 1998 Annual Meeting. The directors
will continue to serve until their respective successors are duly elected and
qualified.

Shares represented by proxies returned duly executed will be voted, unless
otherwise specified, in favor of the seven nominees for the Board of Directors
named below. Each nominee for director will be elected by a plurality of the
votes cast at the Annual Meeting of Stockholders. If any (or all) of such
persons should be unable to serve, the persons named in the enclosed proxy will
vote the shares covered thereby for such substitute nominee (or nominees) as the
Board of Directors may select. Stockholders may withhold authority to vote for
any nominee(s) by entering the names of such nominee(s) in the space provided
for such purpose on the proxy card. Proxies will be voted "for" the election of
the seven nominees unless instructions to "withhold" votes are set forth on the
proxy card. Withheld votes will not

<PAGE>
influence voting results. Abstentions may not be specified as to the election of
directors. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE TO ELECT THE
SEVEN NOMINEES FOR THE BOARD OF DIRECTORS NAMED BELOW.

NOMINEES FOR ELECTION AS DIRECTOR

<TABLE>
<CAPTION>
SERVED AS SHARES
DIRECTOR BENEFICIALLY PERCENT
NAME PRINCIPAL OCCUPATION SINCE OWNED(1) OF CLASS
- --------------------- ------------------------------------ ---------------- --------------- ----------
<S> <C> <C> <C> <C>
Carolyne K. Davis Healthcare consultant February 1992 24,000 (2) *
Handel E. Evans Chairman of the Board of PMSI and July 1991 526,136 (3) 4.0
Source Informatics Inc.
Robert J. Frattaroli President of PMSI February 1995 110,000 (4) *
Stuart Gold Retired, formerly Vice President, February 1992 24,000 (2) *
Marion Merrell Dow Inc.
Frederick W. Kyle Vice Chairman of PMSI November 1992 24,500 (5) *
Dennis M.J. Turner Chief Executive Officer of PMSI and July 1991 526,894 (3) 4.0
Source Informatics Inc.
Patrick J. Welsh General partner of Welsh, Carson, July 1991 2,748,517 (6) 20.8
Anderson & Stowe

All executive officers and directors as a group (nine persons) 3,881,542 (7) 29.4

</TABLE>
- ----------
* Less than 1.0%

(1) As of October 17, 1996. Unless otherwise noted, each nominee has sole
voting and investment power with respect to the shares shown as
beneficially owned by him or her.

(2) Includes (i) 16,000 shares issuable upon the exercise of currently vested
stock options and (ii) 8,000 shares issuable upon the exercise of stock
options that vest ratably over two years, commencing February 12, 1997.

(3) Includes (i) 250,000 shares issuable upon the exercise of currently vested
stock options and (ii) 208,550 shares owned by an investment company,
substantially all of which is owned by trusts administered for the benefit
of the members of the families of Messrs. Evans and Turner.

(4) Includes (i) 20,000 shares issuable upon the exercise of currently vested
stock options, (ii) 10,000 shares issuable upon the exercise of stock
options that vest ratably over five years, commencing November 16, 1996 and
(iii) 80,000 shares issuable upon the exercise of stock options that vest
ratably over four years, commencing February 20, 1997.

(5) Includes (i) 12,000 shares issuable upon the exercise of currently vested
stock options and (ii) 12,000 shares issuable upon the exercise of stock
options that vest ratably over three years, commencing November 11, 1996.

(6) Includes (i) 12,000 shares issuable upon the exercise of currently vested
stock options, (ii) 12,000 shares issuable upon the exercise of stock
options that vest ratably over three years, commencing March 17, 1997,
(iii) 1,507,640 shares owned by various partnerships affiliated with Welsh,
Carson, Anderson & Stowe ("WCAS") and (iv) 1,201,144 shares owned by Source
Informatics Inc. ("Source"). The WCAS partnerships own shares of capital
stock representing in the aggregate approximately 37.5% of the outstanding
capital of Source, on a fully-diluted basis. Mr. Welsh is a general partner
of the respective general partners of the WCAS partnerships and may
therefore be deemed to be the beneficial holder of the shares that are
owned or may be deemed to be owned by such partnerships.

(7) Includes, in addition to shares issuable upon the exercise of stock options
held by directors and the executive officers set forth above, an aggregate
100,500 shares issuable upon exercise of stock options held by other
executive officers.

<PAGE>
To the Company's knowledge, the only persons or groups that may be deemed to
own beneficially 5% or more of the Company's outstanding Common Stock are the
following:

SHARES
BENEFICIALLY PERCENT
NAME AND ADDRESS OWNED(1) OF CLASS
- ------------------------------------------------------- --------- --------
Welsh, Carson, Anderson & Stowe V...................... 1,507,640 11.4%
Welsh, Carson, Anderson & Stowe IV
WCAS Venture Partners L.P.
WCAS Capital Partners, L.P.
320 Park Avenue
New York, New York 10022
Source Informatics Inc. ............................... 1,201,144(2) 9.1%
45 Rockefeller Plaza
New York, New York 10111
- ----------

(1) As of October 17, 1996. See "Certain Transactions."

(2) The shares are owned either directly by Source Informatics Inc. or
indirectly through a wholly-owned subsidiary.

During the period from July 1, 1995 through June 30, 1996, the Board of
Directors of the Company held four meetings. Each director attended all of the
meetings. The only standing committees of the Board of Directors are the Audit
Committee, whose members are Carolyne K. Davis, Patrick J. Welsh and Stuart
Gold, and the Organization and Compensation Committee, whose members are Dr.
Davis and Mr. Welsh. Frederick W. Kyle was a member of the Organization and
Compensation Committee during the period from July 1, 1995 until September 30,
1996, but resigned his position on October 1, 1996, at the time of his
appointment as Vice Chairman of the Company.

The Audit Committee periodically consults with the Company's management and
independent public accountants on financial matters, including the Company's
internal financial controls and procedures. The Audit Committee held one meeting
during the 1996 fiscal year. The Organization and Compensation Committee reviews
and approves the compensation, including the granting of stock options, of
corporate officers of the Company. This Committee also reviews the performance
of the Company's Chairman, Chief Executive Officer and President. The
Organization and Compensation Committee held one meeting during the fiscal year.
The Company does not have a nominating committee.

DIRECTORS AND EXECUTIVE OFFICERS

Set forth below is certain information with respect to each of the nominees
for the office of director and each other executive officer of PMSI:

NOMINEES

Carolyne K. Davis, 64, has served as a director of the Company and as a
member of the Audit Committee and the Organization and Compensation Committee
since February 1992. Dr. Davis has been, since 1985, a national and
international healthcare consultant. From February 1981 until August 1985, Dr.
Davis served as Administrator of the Health Care Financing Administration,
Department of Health and Human Services, where she oversaw the Medicare and
Medicaid programs. She also has served as Dean of the School of Nursing and
Associate Vice President for academic affairs at the University of Michigan. In
addition, she has served on the board of trustees of Johns Hopkins University.
Dr. Davis serves as a director of Beckman Instruments, Merck Inc. and The
Prudential Insurance Company of America. She is also a member of the National
Academy of Sciences, Institute of Medicine, a trustee of the Medical Center of
the University of Pennsylvania, and a member of the Board of Directors of
Georgetown University.

<PAGE>
Handel E. Evans, 62, has served as a director and as Chairman of the Board
since the inception of the Company in July 1991. Mr. Evans has also served as a
director and as Chairman of the Board of Source Informatics Inc. ("Source"), a
database and information services company that, since it was spun off by Walsh
International Inc. ("Walsh") in April 1996 (the "Spin-Off"), has held 9.1% of
the outstanding shares of PMSI. From 1986 until immediately prior to the
Spin-Off, Mr. Evans served as Chairman of the Board of Walsh and its predecessor
company. From 1981 until September 1986, he was Joint Managing Director of SMS
International N.V. ("SMSI") which marketed hospital computer systems. Prior to
that, Mr. Evans spent eighteen years at IMS International Inc., where he most
recently served as Executive Vice President and as a director. Mr. Evans is a
director of Allergan Inc. and a former director of SmithKline Beecham plc.

Robert J. Frattaroli, 55, has served as a director and as President of the
Company since February 1995. Mr. Frattaroli was also Chief Operating Officer of
PMSI until September 1996 when he relinquished those responsibilities to
concentrate on the Company's program to divest its communications businesses.
From 1993 until immediately prior to joining the Company, Mr. Frattaroli served
as Deputy Chief Executive Officer of the Reed Elsevier Medical Group, a global
medical publishing and communications business. From 1988 until February 1993,
he was President of Excerpta Medica Inc., the medical publishing subsidiary of
the Reed Elsevier Group. Prior to joining Reed Elsevier, Mr. Frattaroli was a
Vice President and General Manager of the Fine Chemicals Group of
Hoffmann-LaRoche, Inc.

Stuart Gold, 60, has served as a director of the Company and as a member of
the Audit Committee since February 1992. Mr. Gold was Vice President, Strategic
Planning Services, at Marion Merrell Dow, Inc. and its predecessor, Marion
Laboratories, Inc. ("Marion"), a position he held from 1978 until his retirement
in 1991. He also served as a director of Marion from November 1983 through
November 1985. From 1968 through 1972, Mr. Gold was Director of Marketing
Research at Marion and in 1972 was appointed Vice President, Corporate Marketing
Research. Prior to that, he was a Director of Research at Lea Associates Inc.
(now IMS America Ltd.). Mr. Gold had previously practiced retail pharmacy and
was on the faculty of the Philadelphia College of Pharmacy and Science, where he
served as a member of the Board of Trustees from 1984 to 1993. He is a member of
the American Pharmaceutical Association.

Frederick W. Kyle, 64, has served as a director of the Company since November
1992 and, since October 1996, as Vice Chairman, responsible for PMSI's worldwide
commercial operations. Mr. Kyle was a member of the PMSI Organization and
Compensation Committee from March 1993 until September 1996 when he assumed his
current operating responsibilities. Prior thereto, Mr. Kyle was a managing
director of Finisterre Capital Partners, L.P., an investment fund specializing
in the pharmaceutical, medical device and diagnostic industries. From December
1991 until December 1993, Mr. Kyle was Senior Vice President of the American Red
Cross. Prior to joining the American Red Cross, Mr. Kyle was employed at
SmithKline Beecham Pharmaceuticals since 1981, most recently as President of
Commercial Operations, a position he held from June 1990. He also served as a
director of SmithKline Beecham plc. from July 1989 to December 1991. Mr. Kyle is
also a director of Virus Research Institute Inc., Cytomed Inc. and SoloPak
Pharmaceuticals Inc. and serves as a trustee of The Jackson Laboratory and
Temple University Health Systems.

Dennis M.J. Turner, 54, has served as a director and as the Company's Chief
Executive Officer since its inception in July 1991 and as President of the
Company during the period from inception through December 31, 1991. Mr. Turner
has also served as Chief Executive Officer and a director of Source since the
Spin-Off. From late 1986 through April 1996, he was Chief Executive Officer of
Walsh and its predecessor company. Until September 1986, he was Joint Managing
Director of SMSI. Mr. Turner is Chairman of the Board of Directors of Walsh and
is a director of International Biotechnology Trust plc.

Patrick J. Welsh, 53, has served as a director of the Company since its
inception in July 1991 and as a member of the Audit Committee and the
Organization and Compensation Committee since February 1992. He has served as a
director of Source since April 1996 and was a director of Walsh from April 1988
until April 1996. In 1979, Mr. Welsh co-founded WCAS, a venture capital and
buyout firm special-

<PAGE>
izing in the information processing and healthcare industries, and is a general
partner of the respective sole general partners of its associated limited
partnerships, which in the aggregate own approximately 37.5% and 11.4%,
respectively, of the outstanding Common Stock of Source and PMSI, on a
fully-diluted basis. Mr. Welsh is a director of MedCath, Incorporated, a
provider of cardiology and cardiovascular services, and Syntellect Inc., a
company in the business of interactive voice response systems.

Of the seven current members of the Board of Directors, four are officers of
the Company who do not receive additional compensation for their Board service.
The remaining directors receive an annual retainer of $10,000 and are reimbursed
for their expenses.

EXECUTIVE OFFICERS

Warren J. Hauser, 53, has served as Vice President, General Counsel and
Secretary of the Company since its inception. He served as Vice President,
General Counsel and Secretary of Walsh from April 1989 until April 1996 and has
served in the same capacity at Source since the Spin-Off. Before joining Walsh,
Mr. Hauser was employed for 19 years by SmithKline Beckman Corporation (now
SmithKline Beecham) where, for the last nine years, he served as Vice President,
Legal Affairs, for that company's international operations.

Lyle R. Scritsmier, 43, has served as Vice President, Chief Financial Officer
and Treasurer of the Company since June 1993. From September 1990 until his
appointment to his present position, he served as Vice President, Finance, of
Walsh America Ltd., a subsidiary of Walsh. During the period from December 1992
until June 1993, Mr. Scritsmier was also a Vice President of Walsh. From the
Company's inception, he has had responsibility for financial services in the
United States. Prior to joining Walsh, Mr. Scritsmier, who is a certified public
accountant, was Vice President, Finance of Alta Health Strategies, Inc., a
third-party health administrator. Mr. Scritsmier has advised the Company that he
will leave the full-time employ of PMSI at the end of October 1996 and will
thereafter until February 1997 provide financial and accounting consulting
services to the Company. The Company anticipates that the new Chief Financial
Officer will be appointed prior to the end of November.

To the Company's knowledge, all statements of beneficial ownership required
to be filed with the Securities and Exchange Commission (the "Commission")
during the 1996 fiscal year have been timely filed except that Source reported
late the acquisition of 1,201,144 shares from Walsh in the Spin-Off in April
1996 and Mr. Turner and Mr. Evans reported late the sale of 7,000 shares by
their investment company in March 1996.

CERTAIN TRANSACTIONS

Relationship with Walsh and Source. The Company was formed by Walsh in July
1991 by transferring to PMSI the stock or, in certain cases, assets of certain
of its subsidiaries. In return, PMSI issued shares of Common Stock to Walsh.
After the initial public offering in December 1991, a second public offering in
May 1992 in which Walsh sold shares of PMSI Common Stock, a distribution of PMSI
Common Stock in March 1993 by Walsh to its stockholders and option holders, the
sale by Walsh of shares of PMSI Common Stock in the NASDAQ National Market under
SEC Rule 144 in March 1994 and the sale by PMSI of shares of Common Stock in an
offshore private offering in accordance with Regulation S under the Securities
Act of 1933 in June 1995, Walsh held 1,201,144 shares (or approximately 9.1%) of
PMSI Common Stock.

The Spin-Off. On April 16, 1996, as part of the Spin-Off of the Walsh
database operations to Source, Walsh transferred all its shares of PMSI Common
Stock to Source. Simultaneously therewith, Walsh assigned to Source certain
long-term data supply and license agreements with PMSI. In addition, Walsh
assigned to Source certain other agreements with the Company under which Source
currently provides the Company with management, data processing and
administrative services and subleases certain facilities to the Company for
various periods through December 1997.

Since the Spin-Off, Messrs. Evans, Turner and Hauser, who were previously
officers of Walsh, serve as officers of Source and provide services to the
Company pursuant to the Management and Executive Services Agreement described
below (the "Management and Executive Services Agreement"). The

<PAGE>
Company has also contracted with Source for certain management services in the
United States and the United Kingdom and for other ancillary services in the
ordinary course of business. The total payment by the Company to Walsh and
Source for all these services, other than pursuant to the licensing agreement
(the "Alpha Database License Agreement") for Source's prescription database (the
"Alpha Database"), for the fiscal year ended June 30, 1996 aggregated
approximately $8,053,000 (with payments from Walsh and Source to the Company of
$1,597,000 for services rendered by the Company pursuant to these agreements).
The Company believes that the terms of these contracts are fair and reasonable
and are no less favorable to the Company than those that could have been
obtained in comparable transactions on an arm's-length basis with independent
third parties.

Long-Term Data Supply Licenses. As a result of the Spin-Off and the
assignment of certain agreements by Walsh to Source, the Company and Source are
parties to a long-term licensing agreement covering the use of prescription data
derived from the Alpha Database now owned by Source. In addition, the Company
continues to hold a license to Walsh's physician database, which contains lists
of physician names and addresses (the "Physician Database"). Prior to the
Spin-Off, the Company relinquished the right it previously had to acquire from
Walsh the SCRIPTRAC business that had been retained by Walsh in Canada,
Australia and New Zealand.

Alpha Database License. Source Informatics America Inc., a subsidiary of
Source, has granted the Company an exclusive license in the United States to use
the Alpha Database to provide targeting information with respect to the
prescribing behavior of individual physicians. The initial term of the license
and three subsequent renewal terms provide the Company with the exclusive option
to maintain the license through 2011. Thereafter, the agreement will be renewed
for successive five-year terms unless terminated by either party. Source has
agreed that, for so long as the Alpha Database License Agreement is in effect,
it will not engage in the business of providing physician targeting services in
countries in which the Company is marketing such services.

Due to the movement by healthcare clients towards comprehensive database
contracts under which PMSI and Source jointly provide information services in
the United States, the Company and Source currently allocate certain revenues
arising from those client contracts. In addition, the Company has agreed to make
license payments to Source under the Alpha Database License Agreement based on
an allocation of the annual Alpha Database costs for data updating and
maintenance according to the relative revenues generated by Source and PMSI in
using the database. In the fiscal year ended June 30, 1996, the Company made
payments in the aggregate amount of $3,094,000 to Walsh and Source pursuant to
the Alpha Database License Agreement.

Physician Database License. In the United Kingdom, France, Germany, The
Netherlands and Belgium, Walsh has licensed to PMSI its Physician Database,
which is used by Walsh to provide direct mail marketing services in those
countries. Except in the United Kingdom, where the Company may sell such lists,
the Company may use such lists only for internal purposes and in connection with
the development and delivery of its SCRIPTRAC database. The initial term of the
license runs through 2001 and the license is renewable for two further five-year
periods, if not terminated by the Company six months prior to the renewal date.
Thereafter, the agreement is renewable for five-year terms unless terminated by
either party. The Company pays Walsh an annual royalty fee for each physician
supplied in the database, which fee covers delivery of information four times a
year. PMSI, in turn, provides Walsh with certain information with regard to
physicians on the lists provided by Walsh obtained by PMSI as a result of its
use of the Physician Database for physician targeting activities.

SCRIPTRAC Purchase Agreement. As part of the transfer to the Company of the
stock and/or assets of certain of its subsidiaries in 1991, Walsh retained the
SCRIPTRAC business in Belgium, The Netherlands, Italy, Spain, Canada, Australia
and New Zealand. On April 1, 1994, the Company purchased Walsh's SCRIPTRAC
operations in Belgium and The Netherlands, the SCRIPTRAC licenses in Italy and
Spain, and its pharmaceutical marketing research business in The Netherlands for
$6,355,000 in cash. As additional consideration for certain other benefits
derived by the Company under the agreement relating to the transaction, PMSI
advanced a $1.2 million interest-free loan to Walsh, payable in June 1999 (or
earlier if certain financial criteria required to be met by Walsh are not
achieved). As

<PAGE>
consideration for certain revisions to the loan arrangement between Walsh and
PMSI, the Company has released 120,000 shares of PMSI Common Stock owned by
Walsh which had previously been held by the Company as security for the loan.

In the original transaction with Walsh, the Company retained an option to
acquire from Walsh the SCRIPTRAC business in Canada, Australia and New Zealand,
as a whole, exercisable from January 1, 1995 through January 1, 2012. As of
December 1, 1995, the Company waived its option to purchase the SCRIPTRAC
business in those countries in consideration for the sum of $350,000. PMSI also
agreed not to compete with Walsh in those countries until the later of (i)
November 30, 2005 and (ii) the termination of the Alpha Database License
Agreement.

Management and Executive Services Agreement. Since the Spin-Off on April 16,
1996, Source has provided to the Company certain management services (previously
supplied by Walsh) covering executive management, accounting, legal and other
services principally in the United States, where comprehensive database
contracts have been negotiated, and in the United Kingdom. Under the agreement,
the services will be provided for various periods ranging to the end of 1997 and
are renewable automatically for one-year periods in the absence of notice of
termination by any party. The services provided by Source include executive,
management and legal services at the corporate level and management, accounting
and personnel services in the United States and the United Kingdom. The fees
paid by the Company to Walsh and Source in respect of the services provided
pursuant to the Management and Executive Services Agreement for the fiscal year
ended June 30, 1996 aggregated $3,257,000. In addition, as an incentive to
certain of the executives whose services are provided to the Company by Source,
the agreement provides for the payment of bonuses, in the sole discretion of the
Board of Directors of the Company, in the event the Company exceeds certain
objectives set by the Board of Directors.

Accordingly, for the foreseeable future, certain management functions in the
Company will continue to be performed by current members of the management of
Source who also devote significant time to the affairs of Source. If the
services of any such executives were to be unavailable to PMSI for any reason,
it is likely that the cost to the Company of recruiting full-time management to
replace such Source executives would exceed the management costs borne by PMSI
under the Management and Executive Services Agreement.

Other Agreements. The Company is also a party to the following agreements
with Source or Walsh, as the case may be, pursuant to which said parties
sublease facilities and provide certain management, personnel benefits and data
processing services to the Company. In addition, PMSI and Source jointly market
certain products in the United States.

Data Processing Agreement. The Company has contracted with Source to provide
specific data processing and software support services to PMSI and its customers
in the United States, and with Walsh in respect of those services in the United
Kingdom, Germany and The Netherlands. The terms of the respective agreements run
to the end of 1997 and will be automatically extended for subsequent one-year
periods if not terminated by either party. The fees payable by PMSI to each of
Walsh and Source for such services are based either on allocated costs or on
competitive rates for comparable services from alternative suppliers.

Facilities Agreement. PMSI sublets fully furnished office space from Source
in the United States and from Walsh in Belgium, and Walsh and/or Source sublet
similar facilities from the Company in the United Kingdom, Germany, France and
The Netherlands. The terms of the subleases each run through the end of 1997 and
will be renewed automatically in the absence of termination by either party.
Each company pays its pro rata share of the respective rental charges, based on
space actually occupied.

Collaborative Marketing Agreement. In the United States, the Company and
Source jointly market certain of their products, principally those derived from
the databases owned by the parties. The term of the joint marketing agreement
runs to the end of 1997 and is automatically renewable thereafter for one-year
periods, if not previously terminated.

Health and Benefits Agreement. In the United States, Source provides the
employees of the Company with health insurance and other benefits comparable
with those it offers to its own employees. In the United Kingdom, Walsh provides
similar benefits to PMSI employees. PMSI reimburses Source and Walsh for the
actual costs of such benefits.

<PAGE>
Agreements in the Ordinary Course of Business. PMSI has contracted at
standard commercial rates for certain other services that Walsh or Source
normally provide to third parties in the ordinary course of business. In
addition, Walsh provides its mailing services to the Company at discounted rates
in The Netherlands, Germany, France and the United Kingdom. The term of the
agreement runs to the end of 1997 and may be renewed thereafter for successive
one-year terms.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth certain compensation information with respect
to the Chief Executive Officer and the four highest paid executive officers of
the Company (together with the Chief Executive Officer, the "Named Executive
Officers") for each of the fiscal years ended June 30, 1994, 1995 and 1996.
Messrs. Evans, Turner and Hauser serve in their respective capacities pursuant
to the Management and Executive Services Agreement among the Company and Source
and several of its subsidiaries, pursuant to which they provide to the Company,
as appropriate, executive management on a part-time basis. See "Certain
Transactions -- Management and Executive Services Agreement." The extent of such
services varies between executives and from time to time, but, in general, the
time commitment required of the covered executives in the 1996 fiscal year was
substantial. Source pays the salary of these officers and PMSI pays a fee to
Source for the aggregate services rendered to PMSI. (Until the Spin-Off, Walsh
paid the salaries of these officers and, accordingly, the management fees due
from the Company until such time were paid to Walsh.) The management fees are
calculated in accordance with a formula set forth in the Management and
Executive Services Agreement. In the following table, the salary amount is shown
for each Named Executive Officer while the bonus paid is shown only for Messrs.
Frattaroli (who joined the Company in February 1995) and Scritsmier. While the
Management and Executive Services Agreement provides that Source pay the
bonuses, if any, of the covered executives, commencing in fiscal 1994 the
Company assumed the obligation of paying bonuses directly. However, no bonuses
have been awarded by the Company in any of the fiscal years covered by the
following table to any of the executives covered by the Management and Executive
Services Agreement.

Mr. Kyle was appointed Vice Chairman and given responsibility for the
worldwide commercial operations of the Company, effective October 1, 1996. In
this capacity, Mr. Kyle will receive compensation in the amount of $300,000 per
year and stock options commensurate with his responsibilities to be determined
by the PMSI Organization and Compensation Committee.

<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Long-Term Compensation
Annual Compensation Awards (1)
- ------------------------------------------------------------------------------------------------------------------------------------
(a) (b) (c) (d) (e) (f) (g) (h)
- -------------------------- -------- ------- -------- ----------------- ------------ ------------ -------------
Number of
Securities
Other Annual Restricted Underlying All Other
Name and Fiscal Salary Bonus Compensation Stock Options Compensation
Principal Position Year ($) ($) ($)(2) Award($) Granted ($)(3)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>

Dennis M.J. Turner 1996 352,500 N/A -- 0 60,301 (4)
Chief Executive Officer 1995 335,000 N/A -- -- 0 43,829
1994 317,500 N/A -- -- 0 7,145

Handel E. Evans 1996 352,500 N/A -- -- 0 76,797 (5)
Chairman of the Board 1995 335,000 N/A -- -- 0 21,670
1994 317,500 N/A -- -- 0 33,908

Robert J. Frattaroli 1996 245,000 30,000 43,469 (8) 10,000 7,139 (9)
President, Chief Operating 1995 86,461(7) 0 -- -- 100,000 1,996
Officer(6)

Warren J. Hauser 1996 214,250 N/A -- -- 3,000 5,560(10)
Vice President, Secretary 1995 212,000 N/A -- -- 7,500 7,324
and General Counsel 1994 207,000 N/A -- -- 10,000 10,609

Lyle R. Scritsmier 1996 170,834 25,200 -- -- 10,000 8,163(11)
Vice President, Chief 1995 161,667 35,000 -- -- 15,000 8,588
Financial Officer, 1994 140,000 0 -- -- 25,000 11,063
Treasurer
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) No pay-outs pursuant to long-term incentive plans have been made since the
inception of the Company.

(2) Other Annual Compensation for each named executive other than Mr.
Frattaroli aggregated less than 10% of such executive's salary and bonus.

(3) Amounts shown do not include options shown in column (g), which become
fully vested and immediately exercisable upon a change in control. For each
of Messrs. Turner, Evans and Hauser, the amounts shown are paid by Source.

(4) Amount shown includes payments made to the executive pension plan of
$52,875, life insurance premiums of $5,925 and medical insurance premiums
of $1,501.

(5) Amount shown includes payments made to the executive pension plan of
$52,875, life insurance premiums of $22,421 and medical insurance premiums
of $1,501.

(6) As of September 30, 1996, Mr. Frattaroli relinquished his responsibilities
as Chief Operating Officer.

(7) Amount shown refers to salary paid from date of commencement of employment,
February 20, 1995, to June 30, 1995.

(8) Amount shown refers to tax equalization payments related to moving expenses
of $33,469 and a car allowance of $10,000.

(9) Amount shown includes life insurance premiums of $576, medical and
disability insurance premiums of $3,713 and a contribution of $2,850 to the
Company's 401(k) Plan.

(10) Amount shown includes life insurance premiums of $509 and medical and
disability insurance premiums of $5,051.

(11) Amount shown includes life insurance premiums of $408, medical and
disability insurance premiums of $1,874 and a contribution of $5,881 to the
Company's 401(k) Plan.

<PAGE>
In the 1996 fiscal year, the Board of Directors granted to executive officers
a total of 35,000 options to purchase shares of Common Stock of the Company.
These included the following grants to the Named Executive Officers.

OPTIONS GRANTED IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT
ASSUMED ANNUAL RATES
OF STOCK
PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM
- --------------------------------------------------------------------------- ---------------------
(A) (B) (C) (D) (E) (F) (G)
- -------------------- ------------ ---------------- ---------- ------------ ---------- ----------
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES PRICE EXPIRATION
NAME GRANTED(1)(2)(#) IN FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ---- ---------------- -------------- ------ ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Dennis M.J. Turner . 0 0 N/A N/A 0 0
Handel E. Evans..... 0 0 N/A N/A 0 0
Robert J. Frattaroli 10,000 4.7% $ 13.50 11/15/05 $84,900 $215,150
Lyle R. Scritsmier . 10,000 4.7% $ 13.50 11/15/05 $84,900 $215,150
Warren J. Hauser ... 3,000 1.4% $ 13.50 11/15/05 $25,470 $ 64,546
- -------------------------------------------------------------------------------------------------
</TABLE>

(1) Stock options were granted in fiscal 1996 pursuant to the Stock Option and
Restricted Stock Purchase Plan of PMSI and its Subsidiaries at an option
price equal to the fair market value of the Common Stock at the date of
grant. The option price may be paid by delivery of already owned shares,
subject to certain conditions. The 1996 options become exercisable in 20%
increments after each successive anniversary of the date of grant beginning
with the first such anniversary. Options become immediately exercisable
upon a change in control. A change in control is deemed to have occurred if
(i) any person (other than Source, any subsidiary of the Company or any of
their respective affiliates) acquires more than 50% of the voting power of
the Company's securities; (ii) there is a sale or disposition of all or
substantially all the assets of the Company; or (iii) the Company is merged
or consolidated with another corporation (other than Source or any
subsidiary of the Company or any of their respective affiliates).

(2) Mr. Kyle, prior to his appointment as Vice Chairman of the Company in
October 1996, was granted an aggregate 12,000 options pursuant to the PMSI
Non-Employee Directors' Stock Option Plan at an exercise price of $13.87,
the fair market value of PMSI Common Stock on such date. The options vest
ratably over three years and expire on November 11, 2005 and, assuming
annual appreciation rates of 5% and 10%, would present a potential
realizable value over the term of $104,710 and $265,358, respectively.

AGGREGATED OPTION EXERCISES IN 1996 FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES

The following table sets forth the number of options exercised and the
estimated grant date present value for the Named Executive Officers during the
fiscal year ended June 30, 1996:

<TABLE>
<CAPTION>
(A) (B) (C) (D) (E)
- -------------------- --------------- ----------- ---------------- -----------------
VALUE OF
UNEXERCISED
NUMBER OF IN-THE-MONEY
UNEXERCISED OPTIONS AT
OPTIONS AT FISCAL YEAR
SHARES FISCAL YEAR END END($)
ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
---- -------------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Dennis M.J. Turner . 0 0 200,000/50,000 $270,000/$67,500
Handel E. Evans..... 0 0 200,000/50,000 $270,000/$67,500
Robert J.Frattaroli. 0 0 20,000/90,000 $ 20,000/$80,000
Warren J. Hauser ... 0 0 19,900/20,600 $ 13,325/$4,740
Lyle R. Scritsmier 0 0 20,200/39,800 $ 7,230/$4,620
</TABLE>

<PAGE>
ORGANIZATION AND COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION

The Organization and Compensation Committee (the "Committee") was comprised,
during the 1996 fiscal year, of Dr. Davis and Messrs. Kyle and Welsh. Mr. Kyle,
who became Vice Chairman of the Company responsible for worldwide commercial
operations on October 1, 1996, resigned from the Committee effective the date of
his appointment to the new position.

It is the responsibility of the Committee to review and approve the
compensation (including bonuses) of the Company's executive officers and to make
recommendations to the Board of Directors regarding grants under the Company's
Stock Option and Restricted Stock Purchase Plan (the "Stock Plan"). In addition,
the Committee reviews the performances of the Chairman of the Board, the Vice
Chairman, the Chief Executive Officer, the Chief Operating Officer and the Chief
Financial Officer of the Company.

The Committee's recommendations are based on the Company's policy of relating
individual compensation to the performance of the Company and to the individual
officer's contribution to the Company's success in attaining its goals. In
addition, the Committee looks at the compensation packages of executive officers
of similarly situated companies in order to insure that the Company is providing
competitive levels of compensation to its management and remains capable of
retaining and attracting qualified executives.

Base Salary. The base salary and bonus of each of the Chairman of the Board,
Chief Executive Officer, and Vice President, General Counsel, are determined and
paid by Source and their services are provided to the Company pursuant to the
Management and Executive Services Agreement described in this Proxy Statement.
The Committee does review the performance of, and determine the base and
incentive compensation for the Vice Chairman, the President, and the Vice
President, Chief Financial Officer, of the Company. In reviewing the executive
officers' salaries, the Committee considered three factors: individual
performance, market parity and changes in responsibilities. In assessing market
parity, the Company targets to pay base salaries that are, overall, at or above
the median of base salaries for similar positions with similarly situated
companies.

In order to insure that salaries of the executive officers are commensurate
with the compensation paid to executives with similar responsibilities in
comparable companies, the Committee, along with Source's Organization and
Compensation Committee, authorized an increase in the salaries of the Company's
executive officers during the 1996 fiscal year by amounts ranging from 1.4% to
5.6%.

Bonuses. The Committee, in its discretion, authorizes the payment of bonuses
to the executive officers of the Company, including those employed by Source,
which are related to the achievement of Corporate and individual objectives. An
executive's performance is measured against short-term goals, such as the
financial performance of the Company in the current year, and long-term
objectives relating to the growth and strategic restructuring and development of
the business.

Commencing in Fiscal 1994, the Committee has determined and paid directly the
bonuses of the executive officers of the Company employed by Source as well as
the Company that are tied to the performance of PMSI. In each of the 1994, 1995
and 1996 fiscal years, however, the Company did not meet the revenue and the
operating income objectives established by the Board of Directors. As a result,
the Company has not awarded bonuses linked to Company financial performance to
any of its executive officers with respect to the 1994, 1995 and 1996 fiscal
years. The Committee determined, however, that in fiscal year 1995 Mr.
Frattaroli and Mr. Scritsmier had achieved certain individual objectives
established by the Board of Director related to performance improvements of
certain commercial operations, enhanced financial controls and the restructuring
of certain business units. In recognition of their contributions in this regard,
the Committee awarded bonuses of $30,000 and $25,200 to Mr. Frattaroli and Mr.
Scritsmier, respectively, which were paid in fiscal 1996.

Stock Options. All executive officers of the Company participate in the
Company's Stock Plan. The plan's primary purpose is to align more closely the
financial success of management with that of the Company's stockholders and to
offer the Company's executives an incentive to contribute to the

<PAGE>
achievement of the long-term performance goals of the Company. Option grants for
executive officers have therefore been determined by establishing, with the
advice of outside consultants, a percentage of total cash compensation as a
target future value (net of exercise price) for aggregate stock option grants.
Annual grants toward this target are based on an assessment of an officer's
contribution to the development of the business and the officer's individual
performance.

The Chairman and Chief Executive Officer were granted significant options in
1991 at the inception of the Company. However, they have not been granted any
further options since that initial grant. In 1995, the Committee elected to
grant options to three executive officers. The President of the Company and the
Vice President, Chief Financial Officer, were each granted 10,000 options and
the Vice President, Secretary, was granted 3,000 options at the time of the
Company-wide review of options. In addition, prior to his appointment as Vice
Chairman, Mr. Kyle was granted 12,000 options in November 1995 in accordance
with the provisions of the Company's Non-Employee Directors' Stock Option Plan.

Pension Plan. A pension plan for certain executive officers of the Company
has been approved and is being implemented. The plan will recognize the prior
service to the Company of its officers. While the plan has not been fully
implemented, the Committee has approved an annual contribution by the Company to
the plan equal to 15% of the executive's base salary. Upon implementation, the
plan will be administered by a committee appointed by the Board of Directors.
All pension contributions due to be made by the Company attributable to
executive officers covered by the Plan have been accrued in fiscal year 1996 and
are reflected in the Company's financial statements.

Organization and Compensation Committee
Carolyne K. Davis
Patrick J. Welsh

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION
PLANS

Messrs. Evans and Turner, Chairman of the Board and Chief Executive Officer,
respectively, of the Company, are directors and executive officers of Source,
which pays their cash compensation. See "Certain Transactions -- Management and
Executive Services Agreement" and "Executive Compensation -- Summary
Compensation Table."

In addition, Mr. Welsh, who serves on the Organization and Compensation
Committee, is a director of Source and a general partner of the respective sole
general partners of various limited partnerships owning 37.5% of the outstanding
voting stock of Source on a fully-diluted basis.

<PAGE>

STOCK PERFORMANCE GRAPH

The following graph shows a comparison of the cumulative total stockholder
return on the Company's Common Stock with the cumulative total return of the
NASDAQ-US Composite Index, the S&P Diversified Health Care Index and a
Customized Peer Group Index for the period from December 23, 1991 (the date of
the Company's initial public offering) to June 30, 1996.

PMSI has chosen to compare itself against two peer groups. The first is a
customized group including GMIS, Inc., Information Resources, Inc. and Medaphis
Corporation. These companies all provide decision support systems and/or
proprietary information to the healthcare industry.

The second peer group which provides a comparison is the S&P Diversified
Health Care Index. The Company has charted this index because the market has
historically linked the Company's value to that of the healthcare and
pharmaceutical industries.

- ----------
Assumes $100 invested on 12/23/91

#############################################################################

IMAGE OMITTED
(SEE NARRATIVE DESCRIPTION BELOW OR IN "APPENDIX FOR GRAPHICS AND IMAGES".)

#############################################################################

<TABLE>
<CAPTION>
12/23/91 12/31/91 12/31/92 6/30/93 6/30/94 6/30/95 6/30/96
---------- ---------- ---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
PMSI............................. $100.00 $178.60 $137.50 $128.60 $ 55.36 $ 65.18 $ 69.64
NASDAQ........................... $100.00 $107.80 $124.50 $129.40 $129.79 $171.62 $217.87
S&P Health Care Diversified
Index............................ $100.00 $104.70 $ 88.50 $ 78.30 $ 76.39 $108.94 $146.04
Customized Peer Group Index ..... $100.00 $111.11 $134.38 $129.68 $106.19 $153.77 $236.17
</TABLE>

<PAGE>
The above report of the Organization and Compensation Committee and the Stock
Performance Graph will not be deemed to be soliciting material or to be filed
with or incorporated by reference into any filing by the Company under the
Securities Act of 1933 or the Securities Exchange Act of 1934, except to the
extent that the Company specifically incorporates such report or graph by
reference.

2. AMENDMENT OF STOCK OPTION AND RESTRICTED STOCK PURCHASE PLAN

In October 1996, the Board of Directors of the Company approved an amendment
(the "Amendment") to the Pharmaceutical Marketing Services Inc. and its
Subsidiaries Stock Option and Restricted Stock Purchase Plan (the "Employee
Stock Option Plan") to increase the maximum number of shares that may be issued
under the Employee Stock Option Plan from 2,000,000 to 2,250,000 shares, subject
to stockholder approval. The Employee Stock Option Plan provides an opportunity
for employees, officers and directors of the Company to purchase Common Stock.
By encouraging such stock ownership, the Company seeks to remain competitive in
attracting, retaining and motivating such employees and persons and in
encouraging such employees and persons to devote their best efforts to making
the Company more profitable and thereby increasing stockholder value. The
granting of stock options and restricted stock purchase rights (each, an
"Award") serves as partial consideration and additional inducement to work
towards the financial success of the Company.

Options to purchase a total of 212,250 shares were granted to 92 employees
under the Employee Stock Option Plan in fiscal 1996. As of September 30, 1996,
(after taking into account the cancellation of certain options but without
giving effect to the Amendment) an aggregate 1,867,000 shares were outstanding
under the Employee Stock Option Plan and options to purchase 133,000 shares
remain available for future grant.

On October 1, 1996, the Company realigned the management of its commercial
operations for the purpose of accelerating the future growth and development of
the business. In order to provide sufficient incentive to the new management to
drive the performance of the PMSI business toward greater profitability, the
Company believes it needs additional shares available under the Employee Stock
Option Plan to allow for future grants to such executives and other employees.
This Amendment is being proposed for that purpose. No other amendments to the
Employee Stock Option Plan are proposed.

The Employee Stock Option Plan provides for the granting of "non-qualified
stock options" and "incentive stock options" to acquire Common Stock and/or the
granting of rights to purchase Common Stock on a "restricted stock" basis. The
terms and conditions of individual option agreements may vary, subject to the
following guidelines: (i) the option price of incentive stock options may not be
less than market value on the date of grant; the option price of non-qualified
options may be less than market value on the date of grant, (ii) the term of all
incentive stock options may not exceed ten years from the date of grant; the
term of all non-qualified stock options may exceed ten years, and (iii) no
options may be granted after August 17, 2001.

The Employee Stock Option Plan is administered by the Organization and
Compensation Committee (the "Committee") of the Board of Directors. The
Committee determines (i) which employees of the Company and its subsidiaries
shall be granted an Award; (ii) the number of shares for which an employee will
be granted such an Award; (iii) the amount to be paid by a grantee upon exercise
of an Award; (iv) the time or times and the conditions subject to which Awards
may be made and become exercisable; and (v) the form of consideration that may
be used to pay for shares issued upon exercise of such Award. The Committee is
also responsible for other questions involving the administration and
interpretation of the Employee Stock Option Plan. The Committee determines when
Awards granted under the Employee Stock Option Plan become exercisable.

The Board of Directors has the authority to amend the Employee Stock Option
Plan at any time, provided that stockholder approval is required (i) to increase
the aggregate number of shares of Common Stock as to which Awards may be granted
(except for increases due to certain adjustments), (ii) to decrease the minimum
exercise price specified by the Employee Stock Option Plan in respect of
incentive stock options or (iii) to change the class of employees eligible to
receive stock options under the Employee Stock Option Plan.

<PAGE>
The Board of Directors may terminate the Employee Stock Option Plan at any
time. The Employee Stock Option Plan will terminate on, and Awards may not be
granted after, August 17, 2001, unless terminated by the Board of Directors
prior thereto. The termination of the Employee Stock Option Plan will not alter
or impair any rights or obligations under any Award previously granted under the
Employee Stock Option Plan.

Set forth below is certain information with respect to options granted in
fiscal 1996. For additional information with respect to options granted to the
Named Executive Officers, see "Executive Compensation -- Option Grants in Last
Fiscal Year."

NEW PLAN BENEFITS
STOCK OPTION AND RESTRICTED STOCK PURCHASE PLAN

<TABLE>
<CAPTION>
DOLLAR VALUE(1) NUMBER OF
NAME AND POSITION ($) UNITS
- ---------------------------------------------- ---------------- ---------------
<S> <C> <C>
Dennis M.J. Turner........................... -- --
Chief Executive Officer
Handel E. Evans.............................. -- --
Chairman of the Board
Robert J. Frattaroli......................... 0 10,000
President
Warren J. Hauser............................. 0 3,000
Vice President, Secretary
Lyle R. Scritsmier........................... 0 10,000
Vice President, Chief Financial Officer
and Treasurer
All executive officers as a group............. 0 35,000
All non-employee directors as a group(2) .... N/A N/A
All non-executive officer employees as a group 30,000
</TABLE>
- ----------

(1) The exercise price of all stock options granted to executive officers in
fiscal 1996 under the Employee Stock Option Plan was $13.50 per share. The
closing price of the Company's shares on the NASDAQ National Market on
September 30, 1996 was $9.00.

(2) Non-employee directors receive options to purchase 12,000 shares of Common
Stock upon initial election to the Board of Directors and upon the
conclusion of each subsequent three-year period of service as a director
pursuant to the Pharmaceutical Marketing Services Inc. Non-Employee
Directors' Stock Option Plan.

Federal Income Tax Consequences. The consequences of incentive stock options,
non-qualified options and restricted stock options are quite complex. Therefore,
the description of tax consequences set forth below is necessarily general in
nature and does not purport to be complete. Moreover, statutory provisions are
subject to change, as are their interpretations, and their application may vary
in individual circumstances. Finally, the tax consequences under applicable
state and local income tax laws may not be the same as under the federal income
tax laws.

Incentive stock options granted pursuant to the Employee Stock Option Plan
are intended to qualify as "Incentive Stock Options" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). If an
optionee makes no disposition of the shares acquired pursuant to exercise of an
incentive stock option within one year after the transfer of shares to such
optionee and within two years from grant of the option, such optionee will
realize no taxable income as a result of the grant or exercise of such option;
and any gain or loss that is subsequently realized may be treated as

<PAGE>
long-term capital gain or loss, as the case may be. Under these circumstances,
the Company will not be entitled to a deduction for federal income tax purposes
with respect to either the issuance of such incentive stock options or the
transfer of shares upon the exercise.

If shares subject to incentive stock options are disposed of prior to the
expiration of the above time periods, the optionee will recognize ordinary
income in the year in which the disqualifying disposition occurs, the amount of
which will generally be the lesser of (i) the excess of the market value of the
shares on the date of exercise over the option price or (ii) the gain recognized
on such disposition. Such amount will ordinarily be deductible by the Company
for federal income tax purposes in the same year, provided that the Company
satisfies certain federal income tax withholding requirements. In addition, the
excess, if any, of the amount realized on a disqualifying disposition over the
market value of the shares on the date of exercise will be treated as capital
gain.

Non-qualified options may also be granted under the Employee Stock Option
Plan. An optionee who exercises a non-qualified option will recognize as taxable
ordinary income, at the time of exercise, an amount equal to the excess of the
fair market value of the shares on the date of exercise over the exercise price.
Such amount will ordinarily be deductible by the Company in the same year,
provided that the Company satisfies certain federal income tax withholding
requirements that may be applicable.

Restricted stock purchase awards may also be granted pursuant to the Employee
Stock Option Plan. A recipient of a restricted stock purchase award generally
will not recognize taxable income upon the purchase of shares of restricted
stock, unless he or she makes a timely election under Section 83(b) of the Code.
Such a recipient, however, would recognize ordinary income at the time that such
shares become vested in an amount equal to the excess of the fair market value
of the shares at that time over the purchase price paid for such shares. If, on
the other hand, the recipient makes a timely election under Section 83(b), he or
she would recognize ordinary income equal to the excess of the fair market value
of the shares at the time of purchase (determined without regard to any transfer
restrictions imposed on the shares, the vesting provisions or any restrictions
imposed by the securities laws) over the purchase price for such shares. In
either case, the Company should be entitled to a deduction of an amount equal to
the amount of ordinary income, provided that the Company satisfies certain
federal income tax withholding requirements that may be applicable.

The Company intends to file a Registration Statement under the Securities Act
of 1933, as amended, with respect to the Common Stock issuable pursuant to the
Amendment subsequent to the approval by the Company's stockholders of the
Amendment. The Company previously filed Registration Statements covering an
aggregate 2,000,000 shares issuable upon the exercise of options granted under
the Employee Stock Option Plan.

The affirmative vote of the holders of a majority of the shares of the
Company's Common Stock present, in person, or by proxy and entitled to vote, is
required for approval of the Amendment.

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ADOPTION OF THE
AMENDMENT TO THE EMPLOYEE STOCK OPTION PLAN. BROKER NON-VOTES AND PROXIES MARKED
"ABSTAIN" WITH RESPECT TO THIS PROPOSAL WILL BE COUNTED TOWARDS A QUORUM.
ABSTENTIONS WILL BE COUNTED AS A VOTE AGAINST THE PROPOSAL AND BROKER NON-VOTES
WILL NOT BE COUNTED FOR PURPOSES OF DETERMINING WHETHER THIS PROPOSAL HAS BEEN
APPROVED.

3. RATIFICATION OF APPOINTMENT OF AUDITORS

The Board of Directors has appointed the firm of Coopers & Lybrand L.L.P.,
independent public accountants, as the auditors of the Company for the fiscal
year ending June 30, 1997, subject to the ratification of such appointment by
stockholders at the Annual Meeting. Coopers & Lybrand L.L.P. has audited the
Company's financial statements since the Company's inception in 1991.

If the foregoing appointment of Coopers & Lybrand L.L.P. is not ratified by
stockholders, the Board of Directors will appoint other independent accountants
whose appointment for any period subsequent to the 1998 Annual Meeting of
Stockholders will be subject to the approval of stockholders at

<PAGE>
that meeting. A representative of Coopers & Lybrand L.L.P. will be present at
the Annual Meeting and will have an opportunity to make a statement should he so
desire and to respond to appropriate questions.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE TO RATIFY THE
APPOINTMENT OF THE FIRM OF COOPERS & LYBRAND L.L.P.

* * *
GENERAL

OTHER MATTERS

The Board of Directors does not know of any matters that are to be presented
at the Annual Meeting other than those stated in the Notice of Annual Meeting
and referred to in this Proxy Statement. If any other matters should properly
come before the Meeting, it is intended that the proxies in the accompanying
form will be voted as the persons named therein may determine in their
discretion.

The Company's Annual Report to Stockholders for the fiscal year ended June
30, 1996 is being mailed to stockholders together with this Proxy Statement.

SOLICITATION OF PROXIES

The cost of solicitation of proxies in the accompanying form will be borne by
the Company, including expenses in connection with preparing and mailing this
Proxy Statement. In addition to solicitation of proxies by mail, directors,
officers and employees of the Company (who will receive no additional
compensation therefor) may solicit the return of proxies by telephone, telegram
or personal interview. Arrangements have also been made with brokerage houses
and other custodians, nominees and fiduciaries for the forwarding of
solicitation material to the beneficial owners of stock held of record by such
persons, and the Company will reimburse them for reasonable out-of-pocket
expenses incurred by them in connection therewith.

Each holder of the Company's Common Stock who does not expect to be present
at the Annual Meeting or who plans to attend but who does not wish to vote in
person is urged to fill in, date and sign the proxy and return it promptly in
the enclosed return envelope.

STOCKHOLDER PROPOSALS

If any stockholder of the Company intends to present a proposal for
consideration at the 1998 Annual Meeting of Stockholders and desires to have
such proposal included in the proxy statement and form of proxy distributed by
the Board of Directors with respect to such meeting, such proposal must be
received at the Company's offices at 45 Rockefeller Plaza, Suite 912, New York,
New York 10111, Attention: Secretary and General Counsel, not later than July
19, 1997.

ANNUAL REPORT ON FORM 10-K

A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED
JUNE 30, 1996, FILED BY THE COMPANY WITH THE COMMISSION, WILL BE FURNISHED,
WITHOUT EXHIBITS, WITHOUT CHARGE TO ANY PERSON REQUESTING A COPY THEREOF IN
WRITING AND STATING THAT SUCH PERSON IS A BENEFICIAL HOLDER OF SHARES OF COMMON
STOCK OF THE COMPANY ON THE RECORD DATE FOR THE ANNUAL MEETING OF STOCKHOLDERS.
REQUESTS AND INQUIRIES SHOULD BE ADDRESSED TO PHARMACEUTICAL MARKETING SERVICES
INC., C/O THE ANNE MCBRIDE COMPANY, 767 THIRD AVENUE, NEW YORK, NEW YORK 10017.

By Order of the Board of Directors

WARREN J. HAUSER
Secretary

<PAGE>

PROXY
PHARMACEUTICAL MARKETING SERVICES INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Stockholders, Friday, November 22, 1996

The undersigned stockholder of PHARMACEUTICAL MARKETING SERVICES INC.,
a Delaware corporation, hereby appoints Handel E. Evans, Dennis M.J. Turner and
Warren J. Hauser or any of them, voting singly in the absence of the others,
attorneys and proxies, with fu;; power of substitution and revocation, to vote,
as designated below, all shares of Common Stock of Pharmaceutical Marketing
Services Inc. That the undersigned is entitled to vote at the Annual Meeting of
Stockholders of said corporation to be held at The Hyatt Regency Princeton, U.S.
Route 1 and Alexander Road, 102 Carnegie Center, Princeton, New Jersey on
November 22, 1996 at 10:00 A.M. (local time) or any adjournment thereof, in
accordance with the instructions on the reverse side.

This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder. If no direction is made, the proxy will
be voted "FOR" all nominees in Proposal No. 1 and "FOR" Proposal No. 2 and No.
3. The proxies are authorized to vote as they may determine in their discretion
upon such other business as may properly come before the meeting.

PLEASE MARK, DATE AND SIGN ON THE REVERSE SIDE AND RETURN PROMPTLY
USING THE ENCLOSED ENVELOPE.

(Continued and to be signed on reverse side.)

(Continued from other side)
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY

[ ]

The Board of Directors recommends a vote "FOR" all nominees in Proposal No. 1
and "FOR" Proposal No. 2 and "FOR Proposal No. 3.
<TABLE>
<CAPTION>
<S> <C> <C>
1. Election of the following Nominees as Directors For All 3. The ratification of the
Carolyne K. Davis, Handel E. Evans, Robert J. For Withheld Except Nominees Written appoinment of Coopers For Against Abstain
Frattaroli, Stuart Gold, Federick W. Kyle, [ ] [ ] [ ] Below & Lybrand L.L.P. as [ ] [ ] [ ]
Dennis M.J. Turner and Patrick J. Welsh ________________ as auditors for the
fiscal year ending
June 30, 1997.

2. The increase in the number of shares available For Withheld Abstain 4. The proxies are authorized
distribution under the Company's Stock Option [ ] [ ] [ ] to vote as they may determine
in their discretion upon such
other business as may properly
come before the meeting.
Date:_____________ , 199

Signature_______________

Signature if held
jointly_________________

Please sign exactly as
name appears above

When shares are held in
name of joint holders,
each should sign. When.
Signing as attorney,
executor, trustee,
guardian, etc., please
so indicate.
</TABLE>