Forward-Looking Information

In addition to historical information, this report contains forward-looking statements that are based on our current beliefs and expectations. These statements 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," "may," "plan," "project," "target," "will" and other words and terms of similar meaning. Reference is made in particular to forward-looking statements regarding the anticipated level and mix of future product sales, royalty revenues, milestone payments, expenses, liabilities, the value of our portfolio of marketable securities, the impact of competitive products, the incidence, outcome or impact of litigation, proceedings related to patents and other intellectual property rights, tax assessments and other legal proceedings, our effective tax rate for future periods, the adequacy of our reserves, the impact of accounting standards, our ability to improve the benefit-risk profile of TYSABRI, our ability to finance our operations and meet our manufacturing needs and the source of funding for such activities, the completion and use of our manufacturing facility in Hillerød, Denmark, our share repurchase program, and our plans to spend additional capital on external business development and research opportunities. Important 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.

Executive Summary

Business Overview

Biogen Idec Inc. ("Biogen Idec," "we," "us" or "the Company") is a global biotechnology company that creates new standards of care in therapeutic areas with high unmet medical needs. Our business strategy is focused on discovering and developing first-in-class or best-in-class products that we can deliver to specialty markets globally. Patients around the world benefit from Biogen Idec's significant products that address medical needs in the areas of neurology, oncology and immunology.

We currently have four marketed products. Our marketed products are used for the treatment of multiple sclerosis, or MS, non-Hodgkin's lymphoma, or NHL, rheumatoid arthritis, or RA, Crohn's disease and psoriasis, and are summarized in the table below.

      Product                                          Indications

      AVONEX®                                          Relapsing MS
      (interferon beta-1a)


      RITUXAN®*                                        Certain B-cell NHL
      (rituximab)                                      RA


      TYSABRI®**                                       Relapsing MS
      (natalizumab)                                    Crohn's disease


      FUMADERM®                                        Severe psoriasis
      (dimethylfumarate and monoethylfumarate salts)

* Outside the United States, Canada and Japan, MabThera is the trade name for rituximab. We refer to rituximab, RITUXAN and MabThera collectively as RITUXAN.

** TYSABRI is indicated in the United States for the treatment of some patients with moderately to severely active Crohn's disease.

As part of our on-going development efforts, we are seeking to expand our marketed products into treatment of other diseases, such as chronic lymphocytic leukemia, or CLL, ANCA-associated vasculitis, multiple myeloma and ulcerative colitis. In addition to the ongoing development of our marketed products, we continue to focus our research and development efforts on finding novel therapeutics in areas of high unmet medical needs, both within our current focus areas of neurology, oncology, immunology and cardiology, as well as in new therapeutic areas. As of June 30, 2009, we have 22 pipeline products in Phase 2 trials or beyond.

Financial Highlights

Results for the three months ended June 30, 2009 included total revenues of $1,093.3 million and net income attributable to Biogen Idec Inc. of $142.8 million. Diluted earnings per share attributable to Biogen Idec Inc. was $0.49 during the same period.

Revenues for the second quarter of 2009 increased 10.1% over the comparable period in 2008. These results were primarily driven by the continued growth of TYSABRI providing $187.6 million of revenue during the three months ended June 30, 2009 and a $64.0 million increase in AVONEX sales as compared to the comparable period in the prior year. Our diluted earnings per share amount of $0.49 for the three months ended June 30, 2009 reflects the impact of the $110.0 million upfront payment due to Acorda Therapeutics, Inc., or Acorda, which was recognized as research and development expense and is further described within "Business Highlights" below.

Global in-market net sales of TYSABRI achieved a $1.0 billion run rate during the second quarter of 2009. For the three months ended June 30, 2009, we have recognized, within our statement of income, $57.3 million of product revenue related to sales of TYSABRI in the United States and $130.3 million for the sale of product within our rest of world markets. The TYSABRI revenue amounts are inclusive of $1.8 million of revenue recognized based upon the current period amortization of the milestone payments received from Elan during 2008 and 2009. Overall, TYSABRI revenues for the three months ended June 30, 2009, have increased 27.4% as compared to the comparable three month period in the prior year. This growth is primarily due to an increase in number of patients using TYSABRI in both the United States and our rest of world markets.

AVONEX worldwide revenue was $591.2 million for the three months ended June 30, 2009, representing a 12.1% increase over the same period in the prior year. On a sequential basis, AVONEX worldwide revenue increased by 6.5% over the first quarter of 2009. Sales of AVONEX in the United States increased 19.7% to $365.8 million during the three months ended June 30, 2009 as compared to the comparable period in 2008. This increase was primarily due to price increases, partially offset by a decrease in patient demand. Rest of world sales increased 1.7%, to $225.4 million during the three months ended June 30, 2009 as compared to the comparable prior year period, primarily resulting from increased patient demand within our rest of world markets, offset by the negative impact of foreign currency exchange rate changes.

As described below under Results of Operations, we record our share of the pretax co-promotion profits from our joint business arrangement related to sales of RITUXAN. Revenues from our unconsolidated joint business totaled $275.6 million for the three months ended June 30, 2009 representing a 1.2% decrease over the same period in the prior year. Net sales of RITUXAN to third-party customers in the United States for the three months ended June 30, 2009 totaled $695.9 million as compared to $650.9 million in the comparable prior year period. The increase in third party sales within the United States was primarily due to increased unit sales resulting from continued growth of use for treatment of B-cell NHL, RA and CLL (an unapproved and unpromoted use of RITUXAN). Our share of co-promotion profits in the United States totaled $198.5 million for the second quarter of 2009, representing an increase of 11.7% over the same period in the prior year. The increase in our share of co-promotion profits was offset by a $24.8 million decrease in royalty revenues from sales of RITUXAN outside the United States as compared to the same period in the prior year. This decrease primarily resulted from royalty expirations in certain of our rest of world markets and the negative impact of foreign currency exchange rates.

In addition to the positive revenue and earnings growth achieved, net cash flows from operations, which are primarily driven by increases in our earnings, provided $529.3 million during the six months ended June 30, 2009. Cash and cash equivalents and marketable securities totaled approximately $2,670.7 million as of June 30, 2009.

Business Highlights

In July 2009, Cardiokine enrolled the 300th patient in the Phase III clinical trial for Lixivaptan. The achievement of this milestone has triggered a $20.0 million payment from us.

On June 30, 2009, we entered into a collaboration and license agreement with Acorda to develop and commercialize products containing Fampridine-SR in markets outside the United States. Fampridine-SR is an oral sustained-release compound being developed to improve walking ability in people with MS. The parties have also entered into a related supply agreement. Under the terms of the agreement, we will make a $110.0 million upfront payment, are responsible for funding all development and commercialization costs in our territory, and may incur up to an additional $400.0 million of milestone payments upon achievement of regulatory and commercial milestones, as well as royalties on commercial sales.

Product and Pipeline Highlights

In July 2009, the U.S. Food and Drug Administration, or FDA, granted PEGylated interferon beta-1a Fast Track designation for relapsing MS. We are currently enrolling patients in a global Phase III study evaluating the efficacy and safety of either bi-weekly or once-monthly injections of PEGylated interferon beta-1a in this patient population. The FDA's Fast Track program is designed to expedite the review of new drugs that are intended to treat serious or life-threatening conditions and demonstrate the potential to address unmet medical needs.

Acorda previously announced that the European Medicines Agency, or EMEA, notified Acorda that Fampridine-SR is eligible to be submitted for a Marketing Authorization Application via the Agency's Centralized Procedure as a new active substance.

Results of Operations

Revenues

Revenues were as follows (in millions):


                                       For the Three Months Ended June 30,                        For the Six Months Ended June 30,
                                         2009                        2008                         2009                         2008

Product revenues
United States                   $   423.1         38.7 %     $  352.2         35.5 %     $   816.0         38.3 %     $   702.2         36.3 %
Rest of world                       367.9         33.7 %        332.3         33.4 %         708.4         33.3 %         647.4         33.4 %

Total product revenues          $   791.0         72.4 %     $  684.5         68.9 %     $ 1,524.4         71.6 %     $ 1,349.6         69.7 %
Unconsolidated joint business       275.6         25.2 %        278.8         28.1 %         554.4         26.0 %         526.0         27.2 %
Other revenues                       26.7          2.4 %         30.1          3.0 %          51.0          2.4 %          60.0          3.1 %

Total revenues                  $ 1,093.3        100.0 %     $  993.4        100.0 %     $ 2,129.8        100.0 %     $ 1,935.6        100.0 %

Product Revenues

Product revenues were as follows (in millions):


                                 For the Three Months Ended June 30,                        For the Six Months Ended June 30,
                                  2009                         2008                        2009                          2008

AVONEX                   $   591.2          74.8 %    $  527.2          77.0 %    $ 1,146.5          75.2 %    $  1,063.3          78.8 %
TYSABRI                      187.6          23.7 %       147.2          21.5 %        352.8          23.1 %         261.8          19.4 %
FUMADERM                      12.2           1.5 %        10.0           1.5 %         22.8           1.5 %          21.7           1.6 %
Other                            -           0.0 %         0.1           0.0 %          2.3           0.2 %           2.8           0.2 %

Total product revenues   $   791.0         100.0 %    $  684.5         100.0 %    $ 1,524.4         100.0 %    $  1,349.6         100.0 %

AVONEX

We currently market and sell AVONEX for the treatment of relapsing MS, including
patients with a first clinical episode and MRI features consistent with MS.
AVONEX has been shown in clinical trials in relapsing MS both to slow the
accumulation of disability and to reduce the frequency of flare-ups.

Revenues from AVONEX were as follows (in millions):


                                            For the Three Months Ended June 30,                     For the Six Months Ended June 30,
                                              2009                        2008                       2009                        2008

AVONEX
United States                        $   365.8          61.9 %    $ 305.6         58.0 %    $   705.7         61.6 %    $   614.0         57.7 %
Rest of world                            225.4          38.1 %      221.6         42.0 %        440.8         38.4 %        449.3         42.3 %

Total AVONEX revenues                $   591.2         100.0 %    $ 527.2        100.0 %    $ 1,146.5        100.0 %    $ 1,063.3        100.0 %

Total AVONEX revenues for the three and six months ended June 30, 2009 increased 12.1% and 7.8%, respectively, as compared to the prior year comparative periods.

Sales of AVONEX in the United States for the three and six months ended June 30, 2009 totaled $365.8 million and $705.7 million, respectively, representing increases of 19.7% and 14.9%, as compared to the prior year comparative periods. The increases for both the three and six month periods were primarily due to price increases, partially offset by decreased patient demand.

Rest of world sales of AVONEX for the three months ended June 30, 2009 totaled $225.4 million, representing an increase of 1.7% over the prior year comparative period. This increase was primarily due to an increase in patient demand, offset by the negative impact of foreign currency exchange rate changes. Rest of world sales of AVONEX for the six months ended June 30, 2009 totaled $440.8 million, representing a 1.9% decrease as compared to the same period in the prior year. The decrease for the comparative six month periods was primarily due to the negative impact of foreign currency exchange rate changes, partially offset by increased patient demand.

We expect to face increasing competition in the MS marketplace in both the United States and rest of world from existing and new MS treatments, including TYSABRI and our other pipeline products, which may have a continued negative impact on the unit sales of AVONEX. We expect future unit sales of AVONEX to be dependent to a large extent on our ability to compete successfully with the products of our competitors.

TYSABRI

In August 2000, we entered into a collaboration agreement with Elan Pharma International, Ltd, or Elan, an affiliate of Elan Corporation, plc. Under the terms of the agreement with Elan, we manufacture TYSABRI and collaborate with Elan on the product's marketing, commercial distribution and on-going development activities. TYSABRI is sold as a monotherapy treatment for relapsing MS to slow the progression of disability and reduce the frequency of clinical relapses.

Revenues from TYSABRI were as follows (in millions):

                                             For the Three Months Ended June 30,                    For the Six Months Ended June 30,
                                               2009                        2008                      2009                       2008

TYSABRI
United States                         $    57.3          30.5 %    $  46.5         31.6 %    $  110.3         31.3 %    $  87.7         33.5 %
Rest of world                             130.3          69.5 %      100.7         68.4 %       242.5         68.7 %      174.1         66.5 %

Total TYSABRI revenues                $   187.6         100.0 %    $ 147.2        100.0 %    $  352.8        100.0 %    $ 261.8        100.0 %

Total TYSABRI revenues for the three and six months ended June 30, 2009 increased 27.4% and 34.8%, respectively, as compared to the prior year comparative periods.

In the United States, Elan and we co-market TYSABRI, with us primarily responsible for marketing TYSABRI for MS and Elan primarily responsible for marketing TYSABRI for Crohn's disease. We sell TYSABRI

to Elan who sells the product to third party distributors. Our sales price to Elan in the United States is set prior to the beginning of each quarterly period to effect an approximate equal sharing of the gross margin on sales in the United States between Elan and us. We recognize revenue for sales of TYSABRI in the United States upon Elan's shipment of the product to the third party distributors. We incur manufacturing and distribution costs, research and development expenses, commercial expenses and general and administrative expenses. We record these expenses to their respective line items within our consolidated statement of income when they are incurred. Research and development and sales and marketing expenses are shared with Elan and the reimbursement of these expenses is recorded as reductions of the respective expense categories.

Sales of TYSABRI in the United States for the three and six months ended June 30, 2009 totaled $57.3 million and $110.3 million, respectively, representing an increase of 23.2% and 25.8% as compared to the prior year comparative periods. The increases for both the three and six month periods were primarily due to an increase in the number of patients using TYSABRI in the United States.

Net sales of TYSABRI from our collaboration partner, Elan, to third-party customers in the United States for the three and six months ended June 30, 2009 totaled $124.5 million and $240.4 million, respectively, as compared to $99.3 million and $185.6 million, respectively, in the prior year comparative periods.

In the rest of world markets, we are responsible for distributing TYSABRI to customers and are primarily responsible for all operating activities. We recognize revenue for sales of TYSABRI in the rest of world at the time of product delivery to our customers. Payments are made to Elan for their share of rest of world net operating profits to effect an equal sharing of collaboration operating profit. These payments include the reimbursement of our portion of third-party royalties that Elan pays on behalf of the collaboration, relating to the rest of world sales. These amounts are reflected in the collaboration profit sharing line in our consolidated statement of income. As rest of world sales of TYSABRI increase, our collaboration profit sharing expense is expected to increase.

Rest of world sales of TYSABRI for the three and six months ended June 30, 2009 totaled $130.3 million and $242.5 million, respectively, representing increases of 29.4% and 39.3% over the prior year comparative periods. These increases were primarily due to increased patient demand, partially offset by the negative impact of foreign currency exchange rate changes.

TYSABRI is marketed under risk management or minimization plans as agreed to with local regulatory authorities. In the United States, TYSABRI was reintroduced with a risk minimization action plan known as the TOUCH Prescribing Program, a rigorous system intended to educate physicians and patients about the risks involved and help assure appropriate use of the product. Since the reintroduction of TYSABRI to the market in July 2006, we have disclosed cases of progressive multifocal leukoencephalopathy, or PML, a known side effect, in patients taking TYSABRI in the post-marketing setting. We continue to monitor the growth of TYSABRI unit sales in light of these results and we continue to develop protocols to potentially mitigate the outcome of PML in patients being treated with TYSABRI. We believe that the reported cases of PML have slowed the growth of TYSABRI in both the United States and rest of world.

Elan has paid to us $75.0 million in 2008 and $50.0 million in 2009 representing milestone payments made in accordance with our collaboration agreement. We have recorded these amounts as deferred revenue upon receipt and are recognizing the entire $125.0 million as product revenue in our consolidated statement of income over the term of our collaboration with Elan based 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 remaining term of the collaboration. As of June 30, 2009, we have recognized $4.7 million of these milestones as revenue, of which $1.8 million and $3.2 million were recognized during the three and six months ended June 30, 2009, respectively.

Unconsolidated Joint Business Revenue

We collaborate with Genentech, Inc., a wholly-owned subsidiary of Roche Holdings, Inc., on the development and commercialization of RITUXAN. RITUXAN is approved for:

• treatment of relapsed or refractory, low-grade or follicular, CD20-positive, B-cell NHL as a single agent;

• previously untreated diffuse large B-cell, CD20-positive, NHL in combination with CHOP (cyclophosphamide, doxorubicin, vincristine and prednisone) or other anthracycline-based chemotherapy regimens;

• previously untreated follicular, CD20-positive, B-cell NHL in combination with CVP (cyclophosphamide, vincristine and prednisolone) chemotherapy; and

• for the treatment of non-progressing (including stable disease), low-grade, CD20-positive, B-cell NHL as a single agent, after first-line CVP chemotherapy.

RITUXAN is also approved for use in combination with methotrexate (MTX) for reducing signs and symptoms and to slow the progression of structural damage in adult patients with moderately- to severely-active rheumatoid arthritis who have had an inadequate response to one or more tumor necrosis factor antagonist therapies.

While Genentech is responsible for the worldwide manufacturing of RITUXAN, development and commercialization rights and responsibilities under this collaboration are divided as follows:

United States

We share with Genentech co-exclusive rights to develop, commercialize and market RITUXAN and New Anti-CD20 Products in the United States. Although we contribute to the marketing and continued development of RITUXAN, we have a limited sales force dedicated to RITUXAN and limited development activity. Genentech is primarily responsible for the commercialization of RITUXAN in the United States. Its responsibilities include selling and marketing, customer service, order entry, distribution, shipping and billing, and other administrative support. Genentech also incurs the majority of continuing development costs for RITUXAN.

Canada

We and Genentech have assigned our rights to develop, commercialize and market RITUXAN, in Canada to F. Hoffman-La Roche Ltd., or Roche.

Outside the United States and Canada

We have granted Genentech exclusive rights to develop, commercialize and market RITUXAN outside the United States and Canada. Under the terms of separate sublicense agreements between Genentech and Roche, development and commercialization of RITUXAN outside the United States and Canada is the responsibility of Roche, except in Japan where RITUXAN is co-marketed by Zenyaku Kogyo Co. Ltd., or Zenyaku, and Chugai Pharmaceutical Co. Ltd, or Chugai, an affiliate of Roche. We do not have any direct contractual arrangements with Roche, Zenyaku or Chugai for such development or commercialization.

Revenues from unconsolidated joint business consists of (1) our share of pretax co-promotion profits in the United States; (2) reimbursement of selling and development expense in the United States; and (3) revenue on sales of RITUXAN outside the United States, which consist of our share of pretax co-promotion profits in Canada and royalty revenue on sales of RITUXAN outside the United States and Canada by Roche, Zenyaku and Chugai. Pre-tax co-promotion profits are calculated and paid to us by Genentech in the United States and by Roche in Canada. Pre-tax co-promotion profits consist of United States and Canadian sales of RITUXAN to third-party customers net of discounts and allowances less the cost to manufacture RITUXAN, third-party royalty expenses, distribution, selling and marketing, and joint development expenses incurred by Genentech, Roche and us.

Revenues from unconsolidated joint business consist of the following (in millions):

                                                          For the                     For the
                                                        Three Months                 Six Months
                                                           Ended                       Ended
                                                          June 30,                    June 30,
                                                     2009          2008          2009          2008

Co-promotion profits in the United States          $  198.5      $  177.7      $  378.0      $  335.7
Reimbursement of selling and development
expenses in the United States                          16.7          15.9          31.7          28.6
Revenue on sales of RITUXAN outside the United
States                                                 60.4          85.2         144.7         161.7

Total unconsolidated joint business                $  275.6      $  278.8      $  554.4      $  526.0

Co-promotion profits in the United States consist of the following (in millions):

                                                          For the                      For the
                                                        Three Months                  Six Months
                                                           Ended                        Ended
                                                          June 30,                     June 30,
                                                     2009          2008          2009           2008

Product revenues, net                              $  695.9      $  650.9      $ 1,337.6      $ 1,255.5
Costs and expenses                                    199.7         206.6          379.9          403.8
. . .