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. These forward-looking statements do not relate strictly to historical or current facts and they may be accompanied by such words as "anticipate," "believe," "estimate," "expect," "forecast," "intend," "plan," "project," "target," "may," "will" and other words and terms of similar meaning. Reference is made in particular to forward-looking statements regarding the anticipated level of future product sales, royalty revenues, expenses, contractual obligations, regulatory approvals, our long-term growth, the development and marketing of additional products, the impact of competitive products, the incidence or anticipated outcome of pending or anticipated litigation, patent-related proceedings, tax assessments and other legal proceedings, our effective tax rate for future periods, our ability to finance our operations and meet our manufacturing needs, the completion of our manufacturing facility in Hillerod, Denmark, liquidity, 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 marketed 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 nine months of 2008 included total revenue of $3,028.6 million, net income of $576.5 million and diluted net income per share of $1.95. 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 and realized losses and impairments of $24.7 million in our marketable securities portfolio primarily related to mortgage and asset backed securities. In July 2008, we disclosed two confirmed cases of progressive multifocal leukoencephalopathy (PML), a known side effect, in patients taking TYSABRI. These patients were the first two confirmed cases of PML reported to us since the reintroduction of TYSABRI in the U.S. and approval in the EU in July 2006. We continue to monitor the growth of TYSABRI in light of these results.

Results of Operations

Revenues (in millions)


                                             Three Months Ended September 30,                    Nine Months Ended September 30,
                                               2008                     2007                     2008                      2007

Product sales
U.S.                                   $   380.5        34.9 %   $ 297.4        37.7 %   $ 1,084.8        35.8 %   $   883.8        38.8 %
Rest of world                              377.7        34.6 %     232.2        29.4 %     1,023.0        33.8 %       648.8        28.5 %

Total product sales                        758.2        69.5 %     529.6        67.1 %     2,107.8        69.6 %     1,532.6        67.3 %
Unconsolidated joint business              298.9        27.3 %     234.6        29.7 %       825.0        27.2 %       672.4        29.5 %
Royalties                                   35.2         3.2 %      23.5         3.0 %        87.3         2.9 %        69.2         3.0 %
Corporate partner                            0.6           - %       1.5         0.2 %         8.5         0.3 %         4.1         0.2 %

Total revenues                         $ 1,092.9       100.0 %   $ 789.2       100.0 %   $ 3,028.6       100.0 %   $ 2,278.3       100.0 %

Product Revenues (in millions)


                                        Three Months Ended September 30,                       Nine Months Ended September 30,
                                         2008                       2007                       2008                        2007

AVONEX                          $   573.5         75.6 %    $ 454.9         85.9 %    $ 1,636.8         77.7 %    $ 1,365.4         89.1 %
TYSABRI                             171.1         22.6 %       62.9         11.9 %        433.0         20.5 %        140.2          9.1 %
FUMADERM                             11.1          1.5 %        7.4          1.4 %         32.8          1.6 %         12.5          0.8 %
ZEVALIN                               2.5          0.3 %        4.4          0.8 %          5.0          0.2 %         14.2          0.9 %
AMEVIVE                                 -            - %          -            - %          0.2            - %          0.3          0.1 %

Total product revenues          $   758.2        100.0 %    $ 529.6        100.0 %    $ 2,107.8        100.0 %    $ 1,532.6        100.0 %

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

                                            Three Months Ended September 30,                      Nine Months Ended September 30,
                                             2008                       2007                      2008                       2007

Cost of product revenues            $   106.3          98.8 %    $ 80.6         98.8 %    $  297.2         98.8 %    $ 244.6         98.8 %
Cost of royalty revenues                  1.2           1.2 %       1.0          1.2 %         3.6          1.2 %        3.0          1.2 %

Cost of sales, excluding
amortization of intangibles         $   107.5         100.0 %    $ 81.6        100.0 %    $  300.8        100.0 %    $ 247.6        100.0 %

During the three months ended September 30, 2008 and 2007, we wrote-down $12.6 million and $4.7 million, respectively, in unmarketable inventory, which was charged to cost of sales. During the nine months ended September 30, 2008 and 2007, we wrote-down $22.5 million and $19.6 million, respectively, in unmarketable inventory, which was charged to cost of sales.

AVONEX

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


                                          Three Months Ended September 30,                     Nine Months Ended September 30,
                                           2008                      2007                      2008                       2007

AVONEX
U.S.                               $   321.9        56.1 %    $ 266.4        58.6 %    $   935.9        57.2 %    $   806.1        59.0 %
Rest of World                          251.6        43.9 %      188.5        41.4 %        700.9        42.8 %        559.3        41.0 %

Total AVONEX revenues              $   573.5       100.0 %    $ 454.9       100.0 %    $ 1,636.8       100.0 %    $ 1,365.4       100.0 %

In the three months ended September 30, 2008, compared to the three months ended September 30, 2007, U.S. sales of AVONEX increased $55.5 million, or 20.8%, due to price increases, partially offset by decreased product demand. In the nine months ended September 30, 2008, compared to the nine months ended September 30, 2007, U.S. sales of AVONEX increased $129.8 million, or 16.1%, due to price increases, partially offset by a decreased product demand.

In the three months ended September 30, 2008, compared to the three months ended September 30, 2007, Rest of World sales of AVONEX increased $63.1 million, or 33.5% primarily due to increased unit shipments and the impact of exchange rates. In the nine months ended September 30, 2008, compared to the nine months ended September 30, 2007, Rest of World sales of AVONEX increased $141.6 million, or 25.3%, due to increased unit shipments and the impact of exchange rates.

We are facing increasing competition in the multiple sclerosis, or MS, marketplace in both the U.S. and Rest of World 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 nine months ended September 30, 2008 and
2007 were as follows (in millions):


                                              Three Months Ended September 30,                    Nine Months Ended September 30,
                                                2008                      2007                     2008                     2007

TYSABRI
U.S.                                   $    56.2         32.8 %    $ 28.1        44.7 %    $  144.0        33.3 %    $  67.4        48.1 %
Rest of World                              114.9         67.2 %      34.8        55.3 %       289.0        66.7 %       72.8        51.9 %

Total TYSABRI revenues                 $   171.1        100.0 %    $ 62.9       100.0 %    $  433.0       100.0 %    $ 140.2       100.0 %

In the three months ended September 30, 2008, compared to the three months ended September 30, 2007, sales of TYSABRI increased $108.2 million, or 172.0%, and in the nine months ended September 30, 2008, compared to the nine months ended September 30, 2007, sales of TYSABRI increased $292.8 million, or 208.8%. 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 September 30, 2008 and 2007 were $121.5 million and $58.5 million, respectively. Net sales of TYSABRI to third-party customers in the U.S. for the nine months ended September 30, 2008 and 2007 were $307.0 million and $141.1 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. In July 2008, we disclosed two confirmed cases of PML, a known side effect, in patients taking TYSABRI. These patients were the first two confirmed cases of PML reported to us since the reintroduction of TYSABRI in the U.S. and approval in the EU in July 2006. We continue to monitor the growth of TYSABRI in light of these results. During the three months ended September 30, 2008, pursuant to our collaboration agreement with Elan, Elan paid us a $75 million milestone payment in order to maintain the current profit sharing split. We will

recognize this $75 million as product revenue in our consolidated statement of income over the term of our agreement with Elan on a units of revenue method, whereby the revenue recognized is based on the ratio of units shipped in the current period over the total units expected to be shipped over the collaboration. We have recognized $0.6 million of this milestone as revenue in the three months ended September 30, 2008. Based on the expected TYSABRI sales levels for the fourth quarter of 2008, we anticipate that Elan will have the option to pay us a second milestone payment of $50M in the first quarter of 2009 in order to maintain the current profit sharing split.

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 September 30, 2008 and 2007, we recognized $11.1 million and $7.4 million, respectively, of sales of FUMADERM. For the nine months ended September 30, 2008 and 2007, we recognized $32.8 million and $12.5 million, respectively, of sales of FUMADERM.

ZEVALIN

In the three months ended September 30, 2008, compared to the three months ended September 30, 2007, sales of ZEVALIN decreased from $4.4 million to $2.5 million, 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 nine months ended September 30, 2008, compared to the nine months ended September 30, 2007, sales of ZEVALIN decreased from $14.2 million to $5.0 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.