(Dollars and shares in thousands, except per share data)

This discussion and analysis should be read in conjunction with the accompanying Condensed Consolidated Financial Statements (Unaudited) and related notes.

Executive Summary

Our Business

IMS Health Incorporated ("we," "us" or "our") is the leading global provider of market intelligence to the pharmaceutical and healthcare industries. We offer leading-edge market intelligence products and services that are integral to our clients' day-to-day operations, including portfolio optimization capabilities; launch and brand management solutions; sales force effectiveness innovations; managed markets and consumer health offerings; and consulting and services solutions that improve return on investment ("ROI") and the delivery of quality healthcare worldwide. Our information products are developed to meet client needs by using data secured from a worldwide network of suppliers in more than 100 countries. Key information products include:

† Sales Force Effectiveness to optimize sales force productivity and territory management;

† Portfolio Optimization to provide clients with insights into market opportunity and business development assessment; and

† Launch, Brand Management and Other to support client needs relative to market segmentation and positioning, life cycle management for prescription and consumer health products and health economics and outcomes research offerings.

Within these business lines, we provide consulting and services that use in-house capabilities and methodologies to assist pharmaceutical clients in analyzing and evaluating market trends, strategies and tactics, and to help in the development and implementation of customized software applications and data warehouse tools.

We operate in more than 100 countries.

We manage on a global business model with global leaders for the majority of our critical business processes and accordingly have one reportable segment.

We believe that important measures of our financial condition and results of operations include operating revenue, constant dollar revenue growth, operating income, constant dollar operating income growth, operating margin and cash flows.

Performance Overview

Our operating revenue grew 6.5% to $573,715 in the third quarter of 2008 as compared to $538,810 in the third quarter of 2007. Our operating revenue grew 10.2% to $1,748,604 in the nine months ended September 30, 2008 as compared to $1,586,631 in the nine months ended September 30, 2007. The three and nine month operating revenue increases were a result of growth in all three of our business lines. Our operating income grew 5.9% to $123,976 in the third quarter of 2008 as compared to $117,102 in the third quarter of 2007. Our operating income grew 7.3% to $371,735 in the nine months ended September 30, 2008 as compared to $346,302 in the nine months ended September 30, 2007. Both the three and nine month operating income growth were a result of increased operating revenues offset by increases in

operating costs, selling and administrative expenses and depreciation and amortization, as discussed below. Our net income was $75,912 for the third quarter of 2008 as compared to $57,125 for the third quarter of 2007 and $212,782 for the nine months ended September 30, 2008 as compared to $216,088 for the nine months ended September 30, 2007, due to the Non-Operating Loss, net items discussed below and certain tax items as discussed in Note 11 of the Condensed Consolidated Financial Statements (Unaudited). Our diluted earnings per share of Common Stock increased to $0.41 for the third quarter of 2008 as compared to $0.29 for the third quarter of 2007 and increased to $1.16 for the nine months ended September 30, 2008 as compared to $1.08 for the nine months ended September 30, 2007.

Results of Operations

Reclassifications. Certain prior-year amounts have been reclassified to conform to the 2008 presentation.

References to constant dollar results and results excluding the effect of foreign currency translations. We report results in U.S. dollars, but we do business on a global basis. Exchange rate fluctuations affect the rate at which we translate foreign revenues and expenses into U.S. dollars and may have significant effects on our results. In order to illustrate these effects, the discussion of our business in this report sometimes describes the magnitude of changes in constant dollar terms or results excluding the effect of foreign currency translations. We believe this information facilitates a comparative view of our business. In the first nine months of 2008, the U.S. dollar was generally weaker against other currencies as compared to the first nine months of 2007. As a result, growth at constant dollar exchange rates was lower than growth at actual currency exchange rates. See "How Exchange Rates Affect Our Results" below and the discussion of "Market Risk" in the Management's Discussion and Analysis of Financial Condition and Results of Operations section of our annual report on Form 10-K for the year ended December 31, 2007 for a more complete discussion regarding the impact of foreign currency translation on our business.

                          Summary of Operating Results



                                                                                      % Variance
                                               Three Months Ended September 30,          2008
                                                  2008                 2007            vs 2007
Information and analytics revenue (I&A)     $         445,654    $         419,270           6.3 %
Consulting and services revenue (C&S)                 128,061              119,540           7.1 %
Operating Revenue                                     573,715              538,810           6.5 %

Operating costs of I&A                                191,114              177,021           8.0 %
Direct and incremental costs of C&S                    61,380               55,722          10.2 %
External-use software amortization                     12,291               12,209           0.7 %
Selling and administrative expenses                   161,708              157,281           2.8 %
Depreciation and other amortization                    23,246               19,475          19.4 %
Operating Income                            $         123,976    $         117,102           5.9 %

                                                                                     % Variance
                                              Nine Months Ended September 30,           2008
                                                 2008                 2007             vs 2007
Information and analytics revenue (I&A)    $       1,355,281    $       1,247,982            8.6 %
Consulting and services revenue (C&S)                393,323              338,649           16.1 %
Operating Revenue                                  1,748,604            1,586,631           10.2 %

Operating costs of I&A                               576,566              525,499            9.7 %
Direct and incremental costs of C&S                  203,102              170,046           19.4 %
External-use software amortization                    38,048               35,830            6.2 %
Selling and administrative expenses                  492,497              451,406            9.1 %
Depreciation and other amortization                   66,656               57,548           15.8 %
Operating Income                           $         371,735    $         346,302            7.3 %

Operating Income

Our operating income for the third quarter of 2008 grew 5.9% to $123,976 from $117,102 in the third quarter of 2007. This was due to the increase in our operating revenue, offset by increases in our operating costs and selling and administrative expenses driven by increased cost of data, investments in consulting and services capabilities and expense associated with a charge related to our Government Solutions business (see Note 7 of Notes to Condensed Consolidated Financial Statements (Unaudited) for a description of this charge). Our operating income increased 1.1% in constant dollar terms. Absent the Government Solutions charge, non-GAAP operating income would have increased 9.1% at reported rates (see "Reconciliation of U.S. GAAP Selling and Administrative Expenses and Operating Income to Non-GAAP Selling and Administrative Expenses and Operating Income" at the end of this Item 2) and 4.4% in constant dollar terms. Our operating income for the first nine months of 2008 grew 7.3% to $371,735 from $346,302 in the first nine months of 2007. This was due to the increase in our operating revenue, offset by increases in our operating costs and selling and administrative expenses driven by increased cost of data, investments in consulting and services capabilities and the Government Solutions charge. Our operating income decreased 0.1% in constant dollar terms. Absent the Government Solutions charge, non-GAAP operating income would have increased 8.4% at reported rates (see "Reconciliation of U.S. GAAP Selling and Administrative Expenses and Operating Income to Non-GAAP Selling and Administrative Expenses and Operating Income" at the end of this Item 2) and 1.0% at constant dollar terms.

Operating Revenue

Our operating revenue for the third quarter of 2008 grew 6.5% to $573,715 from $538,810 in the third quarter of 2007. On a constant dollar basis, operating revenue growth was 2.6%. Operating revenue for the first nine months of 2008 grew 10.2% to $1,748,604 from $1,586,631 in the first nine months of 2007. On a constant dollar basis our operating revenue growth was 4.2%. On a constant dollar basis, acquisitions completed within the prior twelve months contributed approximately 1.9 percentage points to our operating revenue growth for both the third quarter and first nine months of 2008. The increase in our operating revenue resulted from growth in revenue due to higher purchases of products and C&S offerings from existing customers in all three of our business lines, together with the effect of approximately $21,000 and $97,000 of currency translation for the third quarter and first nine months of 2008, respectively, as compared to the third quarter and first nine months of 2007. On a constant dollar basis, our Portfolio

Optimization and Launch, Brand Management and Other business lines grew.

                          Summary of Operating Revenue



                                                                               % Variance
                                                                              2008 vs 2007
                                Three Months Ended September 30,         Reported      Constant
                                   2008                 2007               Rates         Dollar
Sales Force Effectiveness    $         258,261    $         252,560             2.3 %        (1.7 )%
Portfolio Optimization                 158,991              150,947             5.3 %         1.4 %
Launch, Brand and Other                156,463              135,303            15.6 %        11.9 %
Operating Revenue            $         573,715    $         538,810             6.5 %         2.6 %




                                                                               % Variance
                                                                              2008 vs 2007
                                Nine Months Ended September 30,          Reported      Constant
                                   2008                 2007               Rates         Dollar
Sales Force Effectiveness    $         794,900    $         731,812             8.6 %         2.4 %
Portfolio Optimization                 493,462              465,056             6.1 %         0.4 %
Launch, Brand and Other                460,242              389,763            18.1 %        12.0 %
Operating Revenue            $       1,748,604    $       1,586,631            10.2 %         4.2 %

† Sales Force Effectiveness: The Americas and EMEA contributed about equally to the revenue decline for the third quarter of 2008 partially offset by revenue growth in Asia Pacific. The Americas contributed more than one-half and EMEA contributed more than one-quarter to the revenue growth for the first nine months of 2008.

† Portfolio Optimization: EMEA was the primary contributor to the constant dollar revenue growth for the third quarter of 2008. Asia Pacific contributed more than one-half and the Americas contributed one-quarter to the constant dollar revenue growth for the first nine months of 2008 which was almost completely offset by the revenue decline in EMEA.

† Launch, Brand Management and Other: EMEA contributed more than one-half and the Americas contributed more than one-third to the revenue growth for the third quarter and first nine months of 2008.

Consulting and services ("C&S") revenue, as included in the business lines above, was $128,061 in the third quarter of 2008, up 7.1% from $119,540 in the third quarter of 2007 (up 4.0% on a constant dollar basis). All of the C&S revenue growth for the third quarter of 2008 was attributable to acquisitions completed during the prior twelve months. C&S revenue, as included in the business lines above, was $393,323 in the first nine months of 2008, up 16.1% from $338,649 in the first nine months of 2007 (up 10.2% on a constant dollar basis). Slightly more than one-half of the C&S revenue growth for the first nine months of 2008 was attributable to acquisitions completed during the prior twelve months.

Operating Costs of Information and Analytics

Operating costs of information and analytics ("I&A") include costs of data, data processing and

collection and costs attributable to personnel involved in production, data management and delivery of the Company's I&A offerings.

Our operating costs of I&A grew 8.0% to $191,114 in the third quarter of 2008 from $177,021 in the third quarter of 2007. Our operating costs of I&A grew 9.7% to $576,566 in the first nine months of 2008 from $525,499 in the first nine months of 2007.

† Foreign Currency Translation: The effect of foreign currency translation increased our operating costs of I&A by approximately $8,000 and $33,000 for the third quarter and first nine months of 2008, respectively, as compared to the third quarter and first nine months of 2007.

Excluding the effect of foreign currency translation, our operating costs of I&A grew 3.7% and 3.4% in the third quarter and first nine months of 2008, respectively, as compared to the third quarter and first nine months of 2007.

† Data: Data costs increased by approximately $7,000 and $18,000 in the third quarter and first nine months of 2008, respectively, as compared to the third quarter and first nine months of 2007.

† Production, Client Services and Other: Production, client services and other costs remained relatively constant for the third quarter and first nine months of 2008 as compared to the first nine months of 2007.

Direct and Incremental Costs of Consulting and Services

Direct and incremental costs of C&S include the costs of consulting staff directly involved with delivering revenue-generating engagements, related accommodations and the costs of primary market research data purchased specifically for certain individual C&S engagements. Direct and incremental costs of C&S do not include an allocation of direct costs of data that are included within I&A. Our direct and incremental costs of C&S grew 10.2% to $61,380 in the third quarter of 2008 from $55,722 in the third quarter of 2007. Our direct and incremental costs of C&S grew 19.4% to $203,102 in the first nine months of 2008 from $170,046 in the first nine months of 2007.

† Foreign Currency Translation: The effect of foreign currency translation increased our direct and incremental costs of C&S by approximately $2,000 and $12,000 for the third quarter and first nine months of 2008, respectively, as compared to the third quarter and first nine months of 2007.

Excluding the effect of foreign currency translation, our direct and incremental costs of C&S grew 5.8% and 12.7% in the third quarter and first nine months of 2008, respectively, as compared to the third quarter and first nine months of 2007.

† C&S costs increased by approximately $3,000 and $21,000 in the third quarter and first nine months of 2008, respectively, as compared to the third quarter and first nine months of 2007, due to increased labor, accommodations and primary market research data expense, all directly related to C&S revenue growth.

External-Use Software Amortization

Our external-use software amortization charges represent the amortization associated with

software we capitalized under the provisions of Statement of Financial Accounting Standards ("SFAS") No. 86, "Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed." Our external-use software amortization charges grew 0.7% to $12,291 in the third quarter of 2008 from $12,209 in the third quarter of 2007. Our external-use software amortization charges grew 6.2% to $38,048 in the first nine months of 2008 from $35,830 in the first nine months of 2007. These were due to increased software amortization associated with new products.

Selling and Administrative Expenses

Our selling and administrative expenses consist primarily of the expenses attributable to sales, marketing, and administration, including human resources, legal, management and finance. During the third quarter of 2008, we also incurred approximately $3,700 of expense for a charge related to our Government Solutions business (see Note 7 of Notes to Condensed Consolidated Financial Statements (Unaudited)). Our selling and administrative expenses grew 2.8% in the third quarter of 2008, to $161,708 from $157,281 in the third quarter of 2007. Absent the Government Solutions charge, our non-GAAP selling and administrative expenses would have remained relatively constant as compared to third quarter of 2007 (see "Reconciliation of U.S. GAAP Selling and Administrative Expenses and Operating Income to Non-GAAP Selling and Administrative Expenses and Operating Income" at the end of this Item 2). Our selling and administrative expenses grew 9.1% to $492,497 in the first nine months of 2008 as compared to $451,406 in the first nine months of 2007. Absent the Government Solutions charge, our non-GAAP selling and administrative expenses would have grown 8.3% in the first nine months of 2008 as compared to the first nine months of 2007 (see "Reconciliation of U.S. GAAP Selling and Administrative Expenses and Operating Income to Non-GAAP Selling and Administrative Expenses and Operating Income" at the end of this Item 2).

† Foreign Currency Translation: The effect of foreign currency translation increased our selling and administrative expenses by approximately $4,000 and $22,000 for the third quarter and first nine months of 2008, respectively, as compared to the third quarter and first nine months of 2007.

Excluding the effect of foreign currency translation and the Government Solutions charge, our selling and administrative expenses declined 2.4% in the third quarter of 2008 as compared to the third quarter of 2007 and grew 3.4% in the first nine months of 2008 as compared to the first nine months of 2007 to support revenue growth.

† Sales and Marketing: Sales and marketing expenses decreased by approximately $3,000 both in the third quarter and first nine months of 2008, respectively, as compared to the third quarter and first nine months of 2007.

† Consulting and Services: C&S expenses increased by approximately $3,000 and $4,000 in the third quarter and first nine months of 2008, respectively, as compared to the third quarter and first nine months of 2007. Absent the Government Solutions charge, C&S expenses would have decreased by approximately $1,000 in the third quarter of 2008 as compared to the third quarter of 2007 and increased by approximately $1,000 in the first nine months of 2008 as compared to the first nine months of 2007.

† Administrative and Other: Other expenses remained relatively constant in the third quarter of 2008 as compared to the third quarter of 2007 and increased by approximately $18,000 in the first nine

months of 2008 as compared to the first nine months of 2007.

Depreciation and Other Amortization

Our depreciation and other amortization charges increased 19.4% to $23,246 in the third quarter of 2008 from $19,475 in the third quarter of 2007, and 15.8% to $66,656 in the first nine months of 2008 from $57,548 in the first nine months of 2007 due to increased depreciation related to new facilities and technology to upgrade our financial systems and increased amortization related to internal-use software additions.

Trends in our Operating Margins

Our operating margin for the third quarter of 2008 was 21.6%, as compared to 21.7% in the third quarter of 2007. Our operating margin for the first nine months of 2008 was 21.3%, as compared to 21.8% in the first nine months of 2007. Margins in the third quarter and for the first nine months of 2008 were negatively impacted by increased cost of data and our continuing investments in new products and consulting and services capabilities. During the third quarter of 2008 we incurred $3,700 of expense for a charge related to our Government Solutions business (see Note 7 of Notes to Condensed Consolidated Financial Statements (Unaudited)). Excluding this expense, our non-GAAP operating margin for the third quarter and first nine months of 2008 would have been 22.3% and 21.5%, respectively (see "Reconciliation of U.S. GAAP Selling and Administrative Expenses and Operating Income to Non-GAAP Selling and Administrative Expenses and Operating Income" at the end of this Item 2).

Recent acquisitions have also had an adverse effect on our operating margins due to the fact that some of the small businesses we have acquired have historically experienced lower operating margins than ours, and the revenue and cost synergies that we incorporate into our business plans are not all immediately realized. We also experience higher intangible amortization in the first years after completing an acquisition and may incur additional costs in integrating the acquired operations into ours, both of which tend to increase our costs and thus decrease our operating margins in the initial years of each completed acquisition.

Non-Operating Loss, net

Our non-operating loss, net decreased to a loss of $13,606 in the third quarter of 2008 from a loss of $17,210 in the third quarter of 2007. Our non-operating loss, net increased to a loss of $59,895 in the first nine months of 2008 from a loss of $32,489 in the first nine months of 2007. This was due to the following factors:

† Interest Expense, net: Net interest expense was $9,012 and $26,670 for the third quarter and first nine months of 2008, respectively, as compared to $7,994 and $22,439 for the third quarter and first nine months of 2007. This was due to higher debt levels in the third quarter and first nine months of 2008 as compared to the third quarter and first nine months of 2007.

† Gains from Investments, net: Gains from investments of $379 for the third quarter and first nine months of 2008 were the result of the sale of marketable securities. Net gains from investments of $353 during the third quarter of 2007 were a result of the sale of marketable securities and venture capital investments. Gains from investments of $2,317 during the first nine months of 2007 were the result of the final distribution from our Enterprise portfolio, offset by related management fees, and the sale of marketable securities and venture capital investments.

† Other Expense, net: Other expense, net, declined by $4,596 in the third quarter of 2008 as compared to the third quarter of 2007. This was a result of net foreign exchange losses of $2,934 in the third quarter of 2008 as compared to net foreign exchange losses of $7,602 in the third quarter of 2007. Other expense, net, grew by $21,237 in the first nine months of 2008 as compared to the first nine months of 2007. This was a result of net foreign exchange losses of $27,662 in the first nine months of 2008 as compared to net foreign exchange losses of $6,417 in the first nine months of 2007.

Taxes

We operate in more than 100 countries around the world and our earnings are taxed at the applicable income tax rate in each of these countries.

For the three months ended September 30, 2008, our effective tax rate was reduced by approximately $5,900 in connection with the resolution of a certain legacy tax matter (see Note 7 of Notes to Condensed Consolidated Financial Statements (Unaudited)). For the nine months ended September 30, 2008, our effective tax rate was reduced by approximately $5,900 in connection with the resolution of such certain legacy tax matter, by approximately $10,300 due to audit settlements with taxing authorities, and by approximately $4,900 due to the filing of an advance pricing agreement ("APA") between two taxing jurisdictions. The APA ensures conformity between the jurisdictions' taxing authorities regarding the treatment of certain intercompany transactions, thereby allowing us to record a corresponding tax benefit. Also during this period, we recorded tax expense for tax positions related to non-U.S. transactions offset by a benefit related to the expiration of certain statutes of limitation, resulting in a net tax expense of approximately $4,300. For the three months ended September 30, 2007, we recognized a tax charge of approximately $7,500 to revalue net deferred tax assets related to Germany as a result of the enactment, during the third quarter, of the German 2008 Business Tax Reform Act which reduced the German federal tax rate from 25% to 15%. For the nine months ended September 30, 2007, our effective tax rate was reduced primarily due to a favorable non-U.S. audit settlement for tax years 1998 through 2002 of approximately $16,500 and a reorganization of certain non-U.S. subsidiaries yielding a tax benefit of approximately $4,400, partially offset by a tax charge of $7,500 to revalue net deferred tax assets related to Germany as discussed above.

The IRS concluded its audit of our 2004 and 2005 federal income tax returns during the second quarter of 2008. The resolution of the audit resulted in a tax payment of approximately $5,300 for which a reserve had been previously . . .