(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 ("IMS," "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 product and portfolio management capabilities; commercial effectiveness innovations; managed care and consumer health offerings; and consulting and services solutions that improve productivity 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. Our business lines are:

† Commercial Effectiveness to increase clients' productivity across end-to-end sales, marketing, promotional and performance management processes;

† Product and Portfolio Management to provide clients with insights into market measurement so they can optimize their product portfolio and strategies; and

† New Business Areas that support pharmaceutical client business initiatives in managed markets, consumer health, and pricing and market access, and that also serve payer and government audiences.

Within these business lines, we provide consulting and services that use in-house capabilities and methodologies to assist 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 declined 8.2% to $526,944 in the first quarter of 2009 as compared to $574,180 in the first quarter of 2008. The operating revenue decrease was a result of a decline in all three of our business lines. Our operating income declined 13.3% to $100,865 in the first quarter of 2009 as compared to $116,382 in the first quarter of 2008. The operating income decline was a result of decreased operating revenues, partially offset by decreases in operating

costs and selling and administrative expenses, as discussed below. Our net income attributable to IMS was $133,332 for the first quarter of 2009, an increase of $74,157 as compared to $59,175 for the first quarter of 2008, 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 $0.73 for the first quarter of 2009 as compared to $0.32 for the first quarter of 2008.

Results of Operations

Reclassifications. Certain prior-year amounts have been reclassified to conform to the 2009 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 three months of 2009, the U.S. dollar was generally stronger against other currencies as compared to the first three months of 2008. The revenue decline at actual currency rates was greater than the decline at constant dollar 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, 2008 for a more complete discussion regarding the impact of foreign currency translation on our business.

                          Summary of Operating Results



                                                                                       % Variance
                                                    Three Months Ended March 31,          2009
                                                      2009               2008           vs 2008
Information and analytics revenue (I&A)          $       420,076    $       456,187          (7.9 )%
Consulting and services revenue (C&S)                    106,868            117,993          (9.4 )%
Operating Revenue                                        526,944            574,180          (8.2 )%

Operating costs of I&A                                   170,839            192,766          11.4 %
Direct and incremental costs of C&S                       61,145             68,505          10.7 %
External-use software amortization                        10,524             12,714          17.2 %
Selling and administrative expenses                      160,406            162,769           1.5 %
Depreciation and other amortization                       23,165             21,044         (10.1 )%
Operating Income                                 $       100,865    $       116,382         (13.3 )%

Operating Income

Our operating income for the first quarter of 2009 declined 13.3% to $100,865 from $116,382 in the first quarter of 2008. This was due to the decrease in our operating revenue, partially offset by decreases in our operating costs and selling and administrative expenses driven

by decreased cost of data and tight controls on hiring. Our operating income decreased 20.5% in constant dollar terms.

Operating Revenue

Our operating revenue for the first quarter of 2009 declined 8.2% to $526,944 from $574,180 in the first quarter of 2008. On a constant dollar basis, operating revenue declined 2.8%. On a constant dollar basis, acquisitions completed within the prior twelve months contributed approximately 1 percentage point revenue growth, partially offsetting our operating revenue decline for the first quarter of 2009. The decrease in our operating revenue resulted from revenue declines in all three of our business lines, together with the effect of approximately $32,000 of currency translation for the first quarter of 2009 as compared to the first quarter of 2008.

                          Summary of Operating Revenue



                                                                                     % Variance
                                                                                    2009 vs 2008
                                             Three Months Ended March 31,        Reported       Constant
                                               2009               2008            Rates          Dollar
Commercial Effectiveness                  $       259,640    $       286,048          (9.2 )%         (4.4 )%
Product & Portfolio Management                    171,689            183,091          (6.2 )%         (0.8 )%
New Business Areas                                 95,615            105,041          (9.0 )%         (1.9 )%
Operating Revenue                         $       526,944    $       574,180          (8.2 )%         (2.8 )%

† Commercial Effectiveness: EMEA contributed approximately three-quarters and the Americas contributed more than one-quarter to the constant dollar revenue decline for the first quarter of 2009, partially offset by revenue growth in Asia Pacific.

† Product & Portfolio Management: The Americas was the primary contributor to the constant dollar revenue decline for the first quarter of 2009, partially offset by revenue growth in EMEA and Asia Pacific.

† New Business Areas: The Americas was the primary contributor to the constant dollar revenue decline for the first quarter of 2009, partially offset by revenue growth in EMEA and Asia Pacific.

Consulting and services ("C&S") revenue, as included in the business lines above, was $106,868 in the first quarter of 2009, down 9.4% from $117,993 in the first quarter of 2008 (down 3.5% on a constant dollar basis).

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 declined 11.4% to $170,839 in the first quarter of 2009 from $192,766 in the first quarter of 2008.

† Foreign Currency Translation: The effect of foreign currency translation decreased our operating costs of I&A by approximately $14,000 for the first quarter of 2009 as compared to the first quarter of 2008.

Excluding the effect of foreign currency translation, our operating costs of I&A declined 4.1% in the first quarter of 2009 as compared to the first quarter of 2008.

† Data: Data costs decreased by approximately $6,000 in the first quarter of 2009 as compared to the first quarter of 2008.

† Production, Client Services and Other: Production, client services and other costs decreased by approximately $1,000 in the first quarter of 2009 as compared to the first quarter of 2008.

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 declined 10.7% to $61,145 in the first quarter of 2009 from $68,505 in the first quarter of 2008.

† Foreign Currency Translation: The effect of foreign currency translation decreased our direct and incremental costs of C&S by approximately $5,000 for the first quarter of 2009 as compared to the first quarter of 2008.

Excluding the effect of foreign currency translation, our direct and incremental costs of C&S declined 2.9% in the first quarter of 2009 as compared to the first quarter of 2008.

† C&S costs decreased by approximately $2,000 in the first quarter of 2009 as compared to the first quarter of 2008, due to decreased labor and primary market research data expense, all directly related to the C&S revenue decline.

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 declined 17.2% to $10,524 in the first quarter of 2009 from $12,714 in the first quarter of 2008. This was due to decreased software amortization associated with assets that were fully amortized prior to Q1 2009.

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. Our selling and administrative expenses declined 1.5% to $160,406 in the first quarter of 2009 from $162,769 in the first quarter of 2008.

† Foreign Currency Translation: The effect of foreign currency translation decreased our selling and administrative expenses by approximately $17,000 for the first quarter of 2009 as compared to the first quarter of 2008.

Excluding the effect of foreign currency translation, our selling and administrative expenses grew 9.8% in the first quarter of 2009 as compared to the first quarter of 2008.

† Sales and Marketing: Sales and marketing expenses decreased by approximately $3,000 in the first quarter of 2009 as compared to the first quarter of 2008.

† Consulting and Services: C&S expenses increased by approximately $5,000 in the first quarter of 2009 as compared to the first quarter of 2008.

† Administrative and Other: Other expenses increased by approximately $13,000 in the first quarter of 2009 as compared to the first quarter of 2008.

Depreciation and Other Amortization

Our depreciation and other amortization charges increased 10.1% to $23,165 in the first quarter of 2009 from $21,044 in the first quarter of 2008 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 Operations

Our operating margin for the first quarter of 2009 was 19.1% as compared to 20.3% in the first quarter of 2008. Margins in the first quarter of 2009 were negatively impacted by revenue declines partially offset by decreased costs of panel and decreased sales and marketing costs.

We have several offerings in the U.S. that utilize prescriber-identifiable information. Over the past several years, there have been a number of state legislative initiatives seeking to impose restrictions on the commercial use of such information. To date, three states, New Hampshire, Vermont and Maine, have passed laws placing certain restrictions on the license, use or transfer of prescriber-identifiable information for commercial purposes. Collectively, these three states represent approximately one percent of prescription activity in the U.S. and therefore the impact of these laws on our business, financial condition and results of operations is not expected to be material. However, as of April 24, 2009, sixteen states were considering similar legislation. For additional information regarding the status of the laws passed in the three states noted above and related developments in these other states, see Part II. Item 1A. Risk Factors.

Non-Operating Loss, net

Our non-operating loss, net, decreased to a loss of $3,574 in the first quarter of 2009 from a loss of $27,293 in the first quarter of 2008. This was due to the following factors:

† Interest Expense, net: Net interest expense was $8,469 for the first quarter of 2009 as compared to $8,671 for the first quarter of 2008. This improvement was due to lower debt levels in the first quarter of 2009 as compared to the first quarter of 2008.

† Other Income (Expense), net: Other income (expense), net, grew by $23,517 in the first quarter of 2009 as compared to the first quarter of 2008. This was a result of net foreign exchange gains of $4,884 in the first quarter of 2009 as compared to net foreign exchange losses of $18,598 in the first quarter of 2008.

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 March 31, 2009, our effective tax rate was reduced primarily as a result of the reorganization of certain subsidiaries which resulted in a foreign exchange loss recognized for tax purposes (tax benefit of approximately $63,200), the repayment of a certain intercompany loan which resulted in a foreign exchange loss recognized for tax purposes (tax benefit of approximately $6,100) and the expiration of certain statutes of limitation (tax benefits of approximately $4,000). For the three months ended March 31, 2008, our effective tax rate was reduced primarily as a result of the filing of an advance pricing agreement ("APA") between two taxing jurisdictions (tax benefit of approximately $4,900). 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.

For the three months ended March 31, 2009, we recorded approximately $3,800 of tax expense related to unrecognized tax benefits that if recognized, would favorably affect the effective tax rate. Included in this amount is approximately $1,700 of interest and penalties. For the three months ended March 31, 2008, we recorded approximately $4,800 of tax expense related to unrecognized tax benefits including approximately $2,700 of interest and penalties.

We file numerous consolidated and separate income tax returns in U.S. (federal and state) and non-U.S. jurisdictions. We are no longer subject to U.S. federal income tax examinations by tax authorities for years before 2004. We are no longer subject to state and local income tax examination by tax authorities for years before 1997. Further, with few exceptions, we are no longer subject to examination by tax authorities in our material non-U.S. jurisdictions prior to 2004. It is reasonably possible that within the next twelve months we could realize approximately $28,300 of unrecognized tax benefits as a result of the expiration of certain statutes of limitation.

While we intend to continue to seek global tax planning initiatives, there can be no assurance that we will be able to successfully identify and implement such initiatives to reduce or maintain our overall tax rate and therefore rates may go up in the future.

Net Income Attributable to Noncontrolling Interests

On January 1, 2009, we adopted SFAS No. 160, "Noncontrolling Interests in Consolidated Financial Statements-an Amendment of ARB No. 51" ("SFAS 160"), which established accounting and reporting standards pertaining to ownership interests in subsidiaries held by parties other than the parent, the amount of net income attributable to the parent and to the noncontrolling interests, changes in a parent's ownership interests, and the valuation of any retained noncontrolling equity investment when a subsidiary is deconsolidated. As a result of the adoption of SFAS 160, net income attributable to noncontrolling interests, which previously was included in Other expense, net on a pretax basis, is shown separately from net income attributable to the Company in our Condensed Consolidated Statements of Income (Unaudited). Net Income Attributable to Noncontrolling Interests decreased to $1,124 in the first quarter of 2009 from $1,635 in the first quarter of 2008. See Note 13 to our Condensed Consolidated Financials Statements (Unaudited).

Operating Results by Geographic Region


The following represents selected geographic information for the regions in
which we operate for the three months ended March 31, 2009 and 2008:



                                      Americas       EMEA        Asia Pacific       Corporate &       Total
                                         (1)          (2)             (3)              Other           IMS
Three months ended March 31, 2009:
Operating Revenue (4)                 $ 236,593    $ 206,256    $        84,095                -    $ 526,944
Operating Income (Loss) (5)           $  67,842    $  20,495    $        31,288    $     (18,760 )  $ 100,865

Three months ended March 31, 2008:
Operating Revenue (4)                 $ 252,431    $ 240,870    $        80,879                -    $ 574,180
Operating Income (Loss) (5)           $  79,255    $  17,222    $        30,563    $     (10,658 )  $ 116,382

Notes to Geographic Financial Information:



(1)                Americas includes the United States, Canada and Latin
America.

(2)                EMEA includes countries in Europe, the Middle East and
Africa.

(3)                Asia Pacific includes Japan, Australia and other countries in

(4) Operating Revenue relates to external customers and is primarily based on the location of the customer. The Operating Revenue for the geographic regions includes the impact of foreign exchange in converting results into U.S. dollars.

(5) Operating Income for the three geographic regions does not reflect the allocation of certain expenses that are maintained in Corporate and Other and as such, is not a true measure of the respective regions' profitability. The Operating Income amounts for the geographic segments include the impact of foreign exchange in converting results into U.S. dollars.

Americas Region

Operating revenue declined 6.3% in the Americas region in the first quarter of 2009 as compared to the first quarter of 2008. Excluding the effect of foreign currency translations, operating revenue declined 3.7% in the first quarter of 2009 as compared to the first quarter of 2008. This was driven equally by all of our business lines due to a decline in demand for our I&A and C&S offerings.

Operating income in the Americas region declined 14.4% in the first quarter of 2009 as

compared to the first quarter of 2008. The operating income decline reflected revenue declines in the regions which were partially offset by decreases in operating expenses of $4,000 in the first quarter of 2009. Excluding the effect of foreign currency translations, operating income decreased 12.3% in the first quarter of 2009 as compared to the first quarter of 2008.

EMEA Region

Operating revenue decreased in the EMEA region by 14.4% in the first quarter of 2009 as compared to the first quarter of 2008. Excluding the effect of foreign currency translations, operating revenue declined 3.2% in the first quarter of 2009 as compared to the first quarter of 2008. The revenue decline in the first quarter of 2009 was driven by Commercial Effectiveness, partially offset by revenue growth in Product & Portfolio Management and New Business Areas business lines.

Operating income in the EMEA region grew 19.0% in the first quarter of 2009 as compared to the first quarter of 2008. The operating income growth reflected revenue declines in the region more than offset by decreases in operating expenses of $38,000 in the first quarter of 2009. Excluding the effect of foreign currency translations, operating income decreased 20.1% in the first quarter of 2009 as compared to the first quarter of 2008.

Asia Pacific Region

Operating revenue in the Asia Pacific region increased 4.0% in the first quarter of 2009 as compared to the first quarter of 2008. Excluding the effect of foreign currency translations, operating revenue grew 1.8% in the first quarter of 2009 as compared to the first quarter of 2008. The revenue growth in the first quarter of 2009 was driven more than one-half by Commercial Effectiveness and one-third by the Product & Portfolio Management business line.

Operating income in the Asia Pacific region increased by 2.4% in the first quarter of 2009 as compared to the first quarter of 2008. The operating income growth reflected revenue growth in the region offset by increases in operating expenses of $2,000 in the first quarter of 2009, respectively. Excluding the effect of foreign currency translations, operating income decreased by 2.1% in the first quarter of 2009 as compared to the first quarter of 2008.

How Exchange Rates Affect Our Results

We operate globally, deriving a significant portion of our operating income from non-U.S. operations. As a result, fluctuations in the value of foreign currencies relative to the U.S. dollar may increase the volatility of U.S. dollar operating results. We enter into foreign currency forward contracts to partially offset the effect of currency fluctuations. Foreign currency translation increased the U.S. dollar revenue decline by approximately 5.4 percentage points while the impact on the operating income decline was an approximate decrease of 7.2 percentage points in the first quarter of 2009. In the first quarter of 2008, foreign currency translation increased U.S. dollar revenue growth by approximately 6.8 percentage points, while the impact on operating income growth was an approximate increase of 7.7 percentage points.

Non-U.S. monetary assets are maintained in currencies other than the U.S. dollar,

principally the Euro, the Japanese Yen and the Swiss Franc. Where monetary assets are held in the functional currency of the local entity, changes in the value of these currencies relative to the U.S. dollar are reflected in Cumulative translation adjustment in the Condensed Consolidated Statements of Financial Position (Unaudited). The effect of exchange rate changes during the first three months of 2009 decreased the U.S. dollar amount of Cash and cash equivalents by $5,910. The effect of exchange rate changes during the first three months of 2008 increased the US dollar amount of cash and cash equivalents by $7,908.

Liquidity and Capital Resources

Our cash and cash equivalents decreased $41,091 during the first quarter of 2009 to $174,591 at March 31, 2009 compared to $215,682 at December 31, 2008. The decrease reflects cash used in investing and financing activities of $25,498 and $26,147, respectively, and a decrease of $5,910 due to the effect of exchange rate changes, partially offset by cash provided by operating activities of $16,464.

We currently expect that we will use our Cash and cash equivalents primarily to fund:

† development of software to be used in our new products and capital expenditures to expand and upgrade our information technology capabilities and to build or acquire facilities to house our business (we currently expect to spend approximately $110,000 to $135,000 during 2009 for software development and capital expenditures);

† acquisitions (see Note 5 to our Condensed Consolidated Financial Statements (Unaudited));

† dividends to our shareholders (we expect 2009 dividends will be $0.12 per . . .