Forward-Looking Information

In addition to historical information, this report contains forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those reflected in such forward-looking statements. You can identify these forward-looking statements by their use of words such as "anticipate," "believe," "estimate," "expect," "forecast," "intend," "plan," "project," "target," "may," "will" and other words and terms of similar meaning. You also can identify them by the fact that they do not relate strictly to historical or current facts. Reference is made in particular to forward-looking statements regarding the anticipated level of future product sales, royalty revenues, expenses, reserves and profits, regulatory approvals, our long-term growth, the development and marketing of additional products, the impact of competitive products, the anticipated outcome of pending or anticipated litigation, patent-related proceedings and tax assessments, our ability to finance our operations and meet our manufacturing needs, the completion of our manufacturing facility in Hillerod, Denmark, the value of investments in certain marketable securities, liquidity and capital resources, and our plans to spend additional capital on external business development and research opportunities. Risk factors which could cause actual results to differ from our expectations and which could negatively impact our financial condition and results of operations are discussed in the section entitled "Risk Factors" in Part II of this report and elsewhere in this report. Forward-looking statements, like all statements in this report, speak only as of the date of this report (unless another date is indicated). Unless required by law, we do not undertake any obligation to publicly update any forward-looking statements.

The following discussion should be read in conjunction with our consolidated financial statements and related notes beginning on page 3 of this quarterly report on Form 10-Q.

Overview

Biogen Idec Inc. ("We", "Biogen Idec" or "the Company") is a global biotechnology company that creates new standards of care in therapeutic areas with high unmet medical needs.

We currently have four products:

• AVONEX® (interferon beta-1a);

• RITUXAN® (rituximab);

• TYSABRI® (natalizumab); and,

• FUMADERM® (dimethylfumarate and monoethylfumarate salts).

Through December 2007, we recorded product revenues from sales of ZEVALIN® (ibritumomab tiuxetan). In December 2007, we sold the U.S. marketing, sales, and manufacturing and development rights of ZEVALIN to Cell Therapeutics, Inc., or CTI. As part of the overall agreement, we entered into a supply agreement with CTI to manufacture and supply ZEVALIN product through 2014 and a related services and security agreement under which CTI has agreed to reimburse us for expenses incurred in an ongoing randomized clinical trial for ZEVALIN with respect to aggressive non-Hodgkin's lymphoma, or NHL. Our supply of ZEVALIN to CTI and our sales of ZEVALIN to Bayer Schering Pharma AG, or Schering AG, for distribution in the EU will be recognized as product revenue. We will continue to receive royalty revenues from Schering AG on their sales of ZEVALIN in the EU.

Executive Overview

Results for the first six months of 2008 included total revenue of $1,935.6 million, net income of $369.7 million and diluted net income per share of $1.24. These results reflect continued growth in TYSABRI revenue, an increase in RITUXAN revenues from an unconsolidated joint business arrangement as well as the impact of price increases on our AVONEX product. The effect of the increase in revenue was partially offset by an increase in research and development expense due to clinical trials and other projects, and an increase in

selling, general and administrative expense related to increased personnel to support the ongoing AVONEX sales and TYSABRI growth.

Results of Operations

Revenues (in millions)


                                           Three Months Ended June 30,                            Six Months Ended June 30,
                                          2008                      2007                       2008                        2007

Product sales
U.S.                              $ 352.2         35.5 %    $ 295.2         38.2 %    $   702.2         36.3 %    $   586.4         39.4 %
Rest of world                       332.3         33.4 %      223.4         28.9 %        647.4         33.4 %        416.6         28.0 %

Total product sales                 684.5         68.9 %      518.6         67.1 %      1,349.6         69.7 %      1,003.0         67.4 %
Unconsolidated joint business       278.8         28.1 %      230.6         29.8 %        526.0         27.2 %        437.8         29.4 %
Royalties                            28.1          2.8 %       22.6          2.9 %         52.1          2.7 %         45.6          3.1 %
Corporate partner                     2.0          0.2 %        1.4          0.2 %          7.9          0.4 %          2.7          0.1 %

Total revenues                    $ 993.4        100.0 %    $ 773.2        100.0 %    $ 1,935.6        100.0 %    $ 1,489.1        100.0 %

Product Revenues (in millions)


                                        Three Months Ended June 30,                             Six Months Ended June 30,
                                       2008                      2007                       2008                         2007

AVONEX                         $ 527.2         77.0 %    $ 461.6         89.0 %    $ 1,063.3          78.8 %    $   910.4         90.8 %
TYSABRI                          147.2         21.5 %       47.5          9.2 %        261.8          19.4 %         77.3          7.7 %
FUMADERM                          10.0          1.5 %        5.2          1.0 %         21.7           1.6 %          5.2          0.5 %
ZEVALIN                              -            - %        4.3          0.8 %          2.5           0.2 %          9.9          1.0 %
AMEVIVE                            0.1          0.0 %          -            - %          0.3           0.0 %          0.2          0.0 %

Total product revenues         $ 684.5        100.0 %    $ 518.6        100.0 %    $ 1,349.6        100.0. %    $ 1,003.0        100.0 %

Cost of Sales, excluding Amortization of Intangibles (in millions)

                                             Three Months Ended June 30,                         Six Months Ended June 30,
                                            2008                     2007                      2008                      2007

Cost of product revenues             $ 91.2         98.7 %    $ 83.2         98.9 %    $ 190.9         98.8 %    $ 164.0         98.8 %
Cost of royalty revenues                1.2          1.3 %       0.9          1.1 %        2.4          1.2 %        2.0          1.2 %

Cost of sales, excluding
amortization of intangibles          $ 92.4        100.0 %    $ 84.1        100.0 %    $ 193.3        100.0 %    $ 166.0        100.0 %

During the three months ended June 30, 2008 and 2007, we wrote-down $5.5 million and $8.1 million, respectively, in unmarketable inventory, which was charged to cost of sales. During the six months ended June 30, 2008 and 2007, we wrote-down $9.8 million and $14.8 million, respectively, in unmarketable inventory, which was charged to cost of sales.

AVONEX

Revenues from AVONEX in the three and six months ended June 30, 2008 and 2007
were as follows (in millions):


                                           Three Months Ended June 30,                           Six Months Ended June 30,
                                          2008                      2007                       2008                       2007

AVONEX
U.S.                              $ 305.6         58.0 %    $ 269.6         58.4 %    $   614.0         57.7 %    $ 539.6         59.3 %
Rest of World                       221.6         42.0 %      192.0         41.6 %        449.3         42.3 %      370.8         40.7 %

Total AVONEX revenues             $ 527.2        100.0 %    $ 461.6        100.0 %    $ 1,063.3        100.0 %    $ 910.4        100.0 %

In the three months ended June 30, 2008, compared to the three months ended June 30, 2007, U.S. sales of AVONEX increased $36.0 million, or 13.4%, due to price increases, partially offset by decreased product demand resulting in lower volume. In the six months ended June 30, 2008, compared to the six months ended June 30, 2007, U.S. sales of AVONEX increased $74.4 million, or 13.8%, due to price increases, partially offset by a decreased product demand resulting in lower volume.

In the three months ended June 30, 2008, compared to the three months ended June 30, 2007, Rest of World sales of AVONEX increased $29.6 million, or 15.4% due to the impact of exchange rates. In the six months ended June 30, 2008, compared to the six months ended June 30, 2007, Rest of World sales of AVONEX increased $78.5 million, or 21.2%, due to increased unit shipments and the impact of exchange rates.

We are facing increasing competition in the multiple sclerosis, or MS, marketplace in and outside the U.S. from existing and new MS treatments, including TYSABRI, which may have a negative impact on sales of AVONEX. We expect future sales of AVONEX to be dependent, to a large extent, on our ability to compete successfully with the products of our competitors.

TYSABRI

Revenues from TYSABRI for the three and six months ended June 30, 2008 and 2007
were as follows (in millions):


                                              Three Months Ended June 30,                         Six Months Ended June 30,
                                             2008                     2007                      2008                     2007

TYSABRI
U.S.                                 $  46.5         31.6 %    $ 22.3         46.9 %    $  87.7         33.5 %    $ 39.4         51.0 %
Rest of World                          100.7         68.4 %      25.2         53.1 %      174.1         66.5 %      37.9         49.0 %

Total TYSABRI revenues               $ 147.2        100.0 %    $ 47.5        100.0 %    $ 261.8        100.0 %    $ 77.3        100.0 %

In the three months ended June 30, 2008, compared to the three months ended June 30, 2007, sales of TYSABRI increased $99.7 million, or 209.9%, and in the six months ended June 30, 2008, compared to the six months ended June 30, 2007, sales of TYSABRI increased $184.5 million, or 238.7%. These increases are primarily due to an increase in patients using TYSABRI in both the U.S. and Rest of World. Net sales of TYSABRI from our collaboration partner, Elan, to third-party customers in the U.S. for the three months ended June 30, 2008 and 2007 was $99.3 million and $46.8 million, respectively. Net sales of TYSABRI to third-party customers in the U.S. for the six months ended June 30, 2008 and 2007 was $185.6 million and $82.6 million, respectively. We recognize revenue for sales of TYSABRI in the U.S. upon Elan's shipment of the product to third party customers. We recognize revenue for sales of TYSABRI outside the U.S. at the time of product delivery to our customers.

FUMADERM

In connection with our June 2006 acquisition of Fumapharm, we began recognizing revenue on sales of FUMADERM to our distributor, Fumedica, in July 2006. In December 2006, we acquired the right to distribute FUMADERM in Germany from Fumedica effective May 1, 2007. In connection with the acquisition of the FUMADERM distribution rights in Germany, we committed to the repurchase of any inventory Fumedica did not sell by May 1, 2007. As a result of this provision, we deferred the recognition of revenue on shipments made to Fumedica through April 30, 2007. We resumed recognizing revenue on sales of FUMADERM into the German market in May 2007. Accordingly, we recognized no revenue of FUMADERM through April 30, 2007. For the three months ended June 30, 2008 and 2007, we recognized $10.0 million and $5.2 million, respectively, of sales of FUMADERM. For the six months ended June 30, 2008 and 2007, we recognized $21.7 million and $5.2 million, respectively, of sales of FUMADERM.

ZEVALIN

In the three months ended June 30, 2008, compared to the three months ended June 30, 2007, sales of ZEVALIN decreased from $4.3 million to zero, due to the sale of the rights to market, sell, manufacture and develop ZEVALIN in the U.S. to CTI during the fourth quarter of 2007.

In the six months ended June 30, 2008, compared to the three months ended June 30, 2007, sales of ZEVALIN decreased from $9.9 million to $2.5 million, primarily due to the sale of the rights to market, sell, manufacture and develop ZEVALIN in the U.S. to CTI during the fourth quarter of 2007.