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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period ended March 31, 2003

Commission File Number 0-12042

BIOGEN, INC.

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(Exact name of registrant as specified in its charter)


|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Massachusetts                                                  |  | 04-3002117                          
|                                                               |  |                                     
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)

14 Cambridge Center, Cambridge, MA 02142
(617) 679-2000

---

(Address, including zip code, and telephone number, including
area code, of registrants principal executive offices)


Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

| |  |       |  |      |  | 
| |  | ----- |  | ---- |  | 
| |  | Yes x |  | No o |  | 

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Securities Exchange Act of 1934

| |  |       |  |      |  | 
| |  | ----- |  | ---- |  | 
| |  | Yes x |  | No o |  | 

The number of shares of the registrants Common Stock, $0.01 par value,
outstanding as of April 1, 2003 was 148,457,921 shares.





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TABLE OF CONTENTS



|                                                                                                                    |  |  |  |  |  |  |  | 
|------------------------------------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|BIOGEN, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME                                          
|BIOGEN, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS                                                
|BIOGEN, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS                                      
|BIOGEN, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                                 
|BIOGEN, INC. AND SUBSIDIARIES MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|Part II  OTHER INFORMATION                                                                                        
|EX-99.1 SECTION 906 CERTIFICATION                                                                                  



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BIOGEN, INC.
INDEX

|                                                                                             |  |             |    | 
|-------------------------------------------------------------------------------------------- |  | ----------- | -- | 
|                                                                                             |  | Page Number
|                                                                                             |  |            
|PART I  FINANCIAL INFORMATION                                                               |  |             |    | 
|Condensed Consolidated Statements of Income  Three months ended March 31, 2003 and 2002     |  |             | 3  | 
|Condensed Consolidated Balance Sheets  March 31, 2003 and December 31, 2002                 |  |             | 4  | 
|Condensed Consolidated Statements of Cash Flows  Three months ended March 31, 2003 and 2002 |  |             | 5  | 
|Notes to Condensed Consolidated Financial Statements                                         |  |             | 6  | 
|Managements Discussion and Analysis of Financial Condition and Results of Operations        |  |             | 12 | 
|PART II  OTHER INFORMATION                                                                  |  |             | 20 | 
|Note concerning trademarks: AVONEX® and AMEVIVE® are registered trademarks
of Biogen, Inc.   |  |             |    | 

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BIOGEN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)
(in thousands, except per share amounts)


|                            |                                     |   |                    |         |      |   |         |         | 
|--------------------------- | ----------------------------------- | - | ------------------ | ------- | ---- | - | ------- | ------- | 
|                            |                                     |   | Three Months Ended
|                            |                                     |   | March 31,         
|                            |                                     |   |                   
|                            |                                     |   | 2003               |         | 2002
|                            |                                     |   |                    |         |     
|REVENUES:                   |                                     |   |                    |         |      |   |         |        
|                            | Product                             |   | $                  | 278,177 |      |   | $       | 265,985 | 
|                            | Royalties                           |   |                    | 41,373  |      |   |         | 22,358  | 
|                            | Contract                            |   |                    | 1,149   |      |   |         |        | 
|                            |                                     |   |                    |         |      |   |         |        
|Total revenues              |                                     |   | 320,699            |         |      |   | 288,343 |        
|                            |                                     |   |                    |         |      |   |         |        
|COSTS AND EXPENSES:         |                                     |   |                    |         |      |   |         |        
|                            | Cost of product revenues            |   |                    | 43,853  |      |   |         | 37,895  | 
|                            | Cost of royalty revenues            |   |                    | 2,413   |      |   |         | 1,423   | 
|                            | Research and development            |   |                    | 85,106  |      |   |         | 82,467  | 
|                            | Selling, general and administrative |   |                    | 95,423  |      |   |         | 73,390  | 
|                            |                                     |   |                    |         |      |   |         |        
|Total costs and expenses    |                                     |   | 226,795            |         |      |   | 195,175 |        
|                            |                                     |   |                    |         |      |   |         |        
|Income from operations      |                                     |   | 93,904             |         |      |   | 93,168  |        
|Other income (expense), net |                                     |   | (5,664             | )       |      |   | 7,028   |        
|                            |                                     |   |                    |         |      |   |         |        
|INCOME BEFORE INCOME TAXES  |                                     |   | 88,240             |         |      |   | 100,196 |        
|Income taxes                |                                     |   | 24,707             |         |      |   | 28,055  |        
|                            |                                     |   |                    |         |      |   |         |        
|NET INCOME                  |                                     | $ | 63,533             |         |      | $ | 72,141  |        
|                            |                                     |   |                    |         |      |   |         |        
|BASIC EARNINGS PER SHARE    |                                     | $ | 0.42               |         |      | $ | 0.49    |        
|                            |                                     |   |                    |         |      |   |         |        
|DILUTED EARNINGS PER SHARE  |                                     | $ | 0.42               |         |      | $ | 0.47    |        
|                            |                                     |   |                    |         |      |   |         |        
|SHARES USED IN COMPUTING:   |                                     |   |                    |         |      |   |         |        
|Basic earnings per share    |                                     |   | 149,611            |         |      |   | 148,660 |        
|                            |                                     |   |                    |         |      |   |         |        
|Diluted earnings per share  |                                     |   | 151,494            |         |      |   | 152,202 |        
|                            |                                     |   |                    |         |      |   |         |        

See Notes to Condensed Consolidated Financial Statements.

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BIOGEN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)


|                                     |                                        |   |             |           |              |   |           |           |  
|------------------------------------ | -------------------------------------- | - | ----------- | --------- | ------------ | - | --------- | --------- | -
|                                     |                                        |   | March 31,   |           | December 31,
|                                     |                                        |   | 2003        |           | 2002        
|                                     |                                        |   |             |           |             
|                                     |                                        |   | (unaudited) |           |              |   |          
|ASSETS                               |                                        |   |             |           |              |   |           |          
|Current assets                       |                                        |   |             |           |              |   |           |          
|                                     | Cash and cash equivalents              |   | $           | 36,260    |              |   | $         | 45,113    |  
|                                     | Marketable securities                  |   |             | 776,121   |              |   |           | 821,996   |  
|                                     | Accounts receivable, net               |   |             | 177,966   |              |   |           | 171,067   |  
|                                     | Deferred tax assets                    |   |             | 38,185    |              |   |           | 38,592    |  
|                                     | Inventory                              |   |             | 93,708    |              |   |           | 95,378    |  
|                                     | Other current assets                   |   |             | 58,236    |              |   |           | 43,878    |  
|                                     |                                        |   |             |           |              |   |           |          
|                                     | Total current assets                   |   |             | 1,180,476 |              |   |           | 1,216,024 |  
|                                     |                                        |   |             |           |              |   |           |          
|Property, plant and equipment        |                                        |   |             |           |              |   |           |          
|                                     | Cost                                   |   |             | 979,309   |              |   |           | 953,805   |  
|                                     | Less accumulated depreciation          |   |             | 230,126   |              |   |           | 215,746   |  
|                                     |                                        |   |             |           |              |   |           |          
|                                     | Property, plant and equipment, net     |   |             | 749,183   |              |   |           | 738,059   |  
|                                     |                                        |   |             |           |              |   |           |          
|Patents, net                         |                                        |   | 16,359      |           |              |   | 15,994    |          
|Other assets                         |                                        |   | 29,871      |           |              |   | 36,911    |          
|                                     |                                        |   |             |           |              |   |           |          
|                                     |                                        | $ | 1,975,889   |           |              | $ | 2,006,988 |          
|                                     |                                        |   |             |           |              |   |           |          
|LIABILITIES AND SHAREHOLDERS EQUITY |                                        |   |             |           |              |   |           |          
|Current liabilities                  |                                        |   |             |           |              |   |           |          
|                                     | Accounts payable                       |   | $           | 42,317    |              |   | $         | 64,876    |  
|                                     | Current portion of long-term debt      |   |             | 4,888     |              |   |           | 4,888     |  
|                                     | Current taxes payable                  |   |             | 88,770    |              |   |           | 73,824    |  
|                                     | Accrued expenses and other             |   |             | 135,035   |              |   |           | 182,745   |  
|                                     |                                        |   |             |           |              |   |           |          
|                                     | Total current liabilities              |   |             | 271,010   |              |   |           | 326,333   |  
|                                     |                                        |   |             |           |              |   |           |          
|Long-term debt, less current portion |                                        |   | 36,605      |           |              |   | 37,410    |          
|Long-term deferred tax liabilities   |                                        |   | 33,673      |           |              |   | 33,678    |          
|Other long-term liabilities          |                                        |   | 15,922      |           |              |   | 14,146    |          
|Commitments and contingencies        |                                        |   |            |           |              |   |          |          
|Shareholders equity                 |                                        |   |             |           |              |   |           |          
|                                     | Common stock                           |   |             | 1,517     |              |   |           | 1,517     |  
|                                     | Additional paid-in capital             |   |             | 831,479   |              |   |           | 829,993   |  
|                                     | Treasury stock, at cost                |   |             | (123,484  | )            |   |           | (90,844   | )
|                                     | Retained earnings                      |   |             | 892,458   |              |   |           | 838,756   |  
|                                     | Accumulated other comprehensive income |   |             | 16,709    |              |   |           | 15,999    |  
|                                     |                                        |   |             |           |              |   |           |          
|                                     | Total shareholders equity             |   |             | 1,618,679 |              |   |           | 1,595,421 |  
|                                     |                                        |   |             |           |              |   |           |          
|                                     |                                        | $ | 1,975,889   |           |              | $ | 2,006,988 |          
|                                     |                                        |   |             |           |              |   |           |          

See Notes to Condensed Consolidated Financial Statements.

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BIOGEN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)
(in thousands)


|                                                     |                                                                                     |                                                                |                                                                                                       |         |                    |         |        |         |         |         |  
|---------------------------------------------------- | ----------------------------------------------------------------------------------- | -------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------- | ------- | ------------------ | ------- | ------ | ------- | ------- | ------- | -
|                                                     |                                                                                     |                                                                |                                                                                                       |         | Three Months Ended
|                                                     |                                                                                     |                                                                |                                                                                                       |         | March 31,         
|                                                     |                                                                                     |                                                                |                                                                                                       |         |                   
|                                                     |                                                                                     |                                                                |                                                                                                       |         | 2003               |         | 2002  
|                                                     |                                                                                     |                                                                |                                                                                                       |         |                    |         |       
|CASH FLOWS FROM OPERATING ACTIVITIES                 |                                                                                     |                                                                |                                                                                                       |         |                    |         |        |        
|                                                     | Net income                                                                          |                                                                | $                                                                                                     | 63,533  |                    |         | $      | 72,141  |        
|                                                     | Adjustments to reconcile net income to net cash provided from operating activities: |                                                                |                                                                                                       |         |                    |         |        |         |        
|                                                     |                                                                                     | Depreciation and amortization                                  |                                                                                                       |         | 14,644             |         |        |         | 10,446  |        
|                                                     |                                                                                     | Tax benefit of stock options                                   |                                                                                                       |         | 1,486              |         |        |         | 8,395   |        
|                                                     |                                                                                     | Other                                                          |                                                                                                       |         |                   |         |        |         | (148    | )      
|                                                     |                                                                                     | Realized loss on sale of non-current marketable securities     |                                                                                                       |         |                   |         |        |         | 301     |        
|                                                     |                                                                                     | Impairment of non-current investments or marketable securities |                                                                                                       |         | 3,079              |         |        |         | 2,182   |        
|                                                     |                                                                                     | Writedown of inventory to net realizable value                 |                                                                                                       |         | 3,384              |         |        |         |        |        
|                                                     |                                                                                     | Changes in:                                                    |                                                                                                       |         |                    |         |        |         |         |        
|                                                     |                                                                                     |                                                                | Accounts receivable                                                                                   |         |                    | (5,727  | )      |         |         | 4,585   |  
|                                                     |                                                                                     |                                                                | Inventory                                                                                             |         |                    | (1,714  | )      |         |         | (9,760  | )
|                                                     |                                                                                     |                                                                | Other current and other assets                                                                        |         |                    | (16,441 | )      |         |         | (6,398  | )
|                                                     |                                                                                     |                                                                | Accounts payable, accrued
expenses, current taxes
payable and other current and
long-term liabilities |         |                    | (55,073 | )      |         |         | (20,377 | )
|                                                     |                                                                                     |                                                                |                                                                                                       |         |                    |         |        |        
|                                                     | Net cash flows from operating activities                                            |                                                                |                                                                                                       | 7,171   |                    |         |        | 61,367  |        
|                                                     |                                                                                     |                                                                |                                                                                                       |         |                    |         |        |        
|CASH FLOWS FROM INVESTING ACTIVITIES                 |                                                                                     |                                                                |                                                                                                       |         |                    |         |        |        
|                                                     | Purchases of current marketable securities                                          |                                                                |                                                                                                       | (76,769 | )                  |         |        | (73,638 | )      
|                                                     | Proceeds from sales and maturities of current marketable securities                 |                                                                |                                                                                                       | 121,366 |                    |         |        | 99,932  |        
|                                                     | Proceeds from sales of non-current marketable securities                            |                                                                |                                                                                                       |        |                    |         |        | 493     |        
|                                                     | Proceeds from withdrawal from an equity fund                                        |                                                                |                                                                                                       | 7,217   |                    |         |        |        |        
|                                                     | Acquisitions of property and equipment, net                                         |                                                                |                                                                                                       | (23,560 | )                  |         |        | (47,962 | )      
|                                                     | Additions to patents                                                                |                                                                |                                                                                                       | (786    | )                  |         |        | (980    | )      
|                                                     |                                                                                     |                                                                |                                                                                                       |         |                    |         |        |        
|                                                     |                                                                                     | Net cash flows from investing activities                       |                                                                                                       |         | 27,468             |         |        |         | (22,155 | )      
|                                                     |                                                                                     |                                                                |                                                                                                       |         |                    |         |        |        
|CASH FLOWS FROM FINANCING ACTIVITIES                 |                                                                                     |                                                                |                                                                                                       |         |                    |         |        |        
|                                                     | Repayments on long-term debt                                                        |                                                                |                                                                                                       | (805    | )                  |         |        | (805    | )      
|                                                     | Purchases of treasury stock                                                         |                                                                |                                                                                                       | (45,785 | )                  |         |        | (8,384  | )      
|                                                     | Issuance of treasury stock related to stock option exercises                        |                                                                |                                                                                                       | 3,320   |                    |         |        | 10,538  |        
|                                                     | Other                                                                               |                                                                |                                                                                                       | 56      |                    |         |        | (159    | )      
|                                                     |                                                                                     |                                                                |                                                                                                       |         |                    |         |        |        
|                                                     |                                                                                     | Net cash flows from financing activities                       |                                                                                                       |         | (43,214            | )       |        |         | 1,190   |        
|                                                     |                                                                                     |                                                                |                                                                                                       |         |                    |         |        |        
|                                                     | Effect of exchange rate changes on cash                                             |                                                                |                                                                                                       | (278    | )                  |         |        | 75      |        
|                                                     |                                                                                     |                                                                |                                                                                                       |         |                    |         |        |        
|NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS |                                                                                     |                                                                | (8,853                                                                                                | )       |                    |         | 40,477 |        
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD       |                                                                                     |                                                                | 45,113                                                                                                |         |                    |         | 54,042 |        
|                                                     |                                                                                     |                                                                |                                                                                                       |         |                    |         |        |        
|CASH AND CASH EQUIVALENTS, END OF PERIOD             |                                                                                     | $                                                              | 36,260                                                                                                |         |                    | $       | 94,519 |        
|                                                     |                                                                                     |                                                                |                                                                                                       |         |                    |         |        |        

See Notes to Condensed Consolidated Financial Statements.

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BIOGEN, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Biogen, Inc. (Biogen or the Company) is a global biopharmaceutical company
that develops, manufactures and markets novel human therapeutic products.
Biogens primary focus is developing pharmaceutical products that meet unmet
medical needs particularly in its core therapeutic areas of neurology,
dermatology and rheumatology. Biogen currently sells AVONEX® (Interferon
beta-1a) for the treatment of relapsing multiple sclerosis (MS) and,
commencing in 2003, AMEVIVE® (alefacept) for the treatment of adult patients
with moderate-to-severe chronic plaque psoriasis who are candidates for
systemic therapy or phototherapy. Biogen also receives revenues from royalties
on sales by our licensees of a number of products covered under patents that
Biogen controls and from contract revenues related to a collaborative
agreement.

In the opinion of management, the accompanying unaudited condensed consolidated
financial statements include all adjustments, consisting of only normal
recurring accruals, necessary to present fairly the financial position, results
of operations and cash flows of Biogen and its subsidiaries. The Companys
accounting policies are described in the Notes to the Consolidated Financial
Statements in the Companys 2002 Annual Report on Form 10-K
and updated, as necessary, in this Form 10-Q. Interim results
are not necessarily indicative of the operating results for the full year.

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

INVENTORIES

Inventories are stated at the lower of cost or market with cost determined
under the first-in/first-out (FIFO) method. Included in inventory are raw
materials used in the production of pre-clinical and clinical products which
are expensed as research and development costs when consumed. The components of
inventories are as follows:

|                |  |           |        |              |  |   |        | 
|--------------- |  | --------- | ------ | ------------ |  | - | ------ | 
|                |  | March 31, |        | December 31,
|(in thousands)  |  | 2003      |        | 2002        
|                |  |           |        |             
|Raw materials   |  | $         | 28,417 |              |  | $ | 27,027 | 
|Work in process |  |           | 24,746 |              |  |   | 25,892 | 
|Finished goods  |  |           | 40,545 |              |  |   | 42,459 | 
|                |  |           |        |              |  |   |        | 
|                |  | $         | 93,708 |              |  | $ | 95,378 | 
|                |  |           |        |              |  |   |        | 

Biogen capitalizes inventory costs associated with certain products prior to
regulatory approval, based on managements judgment of probable future
commercialization. Biogen would be required to expense previously capitalized
costs related to pre-approval inventory upon a change in such judgment, due to,
among other potential factors, a denial or delay of approval by necessary
regulatory bodies. At March 31, 2003 and December 31, 2002, capitalized
inventory related to pre-filled syringe formulation of AVONEX, which has not
yet received regulatory approval, was $9 million and $3.7 million,
respectively.

Biogen writes down obsolete or otherwise unmarketable inventory to its
estimated net realizable value. If the actual realizable value is less than
that estimated by Biogen, additional inventory write-downs may be required. The
Company wrote down $3.4 million of unmarketable inventory for the three months
ended March 31, 2003, all of which was charged to cost of revenues.

REVENUE RECOGNITION AND ACCOUNTS RECEIVABLE

SEC Staff Accounting Bulletin No. 101 (SAB 101) provides guidance on the
recognition, presentation, and disclosure of revenue in financial statements.
SAB 101 establishes the SECs view that it is not appropriate to recognize
revenue until all of the following criteria are met: persuasive evidence of an
arrangement exists; delivery has occurred or services have been rendered; the
sellers price to the buyer is fixed or determinable; and collectibility is
reasonably assured. Further, SAB 101 requires that both title and the risks

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and rewards of ownership be transferred to the buyer before revenue can be
recognized. The Company believes that its revenue recognition policies are in
compliance with SAB 101.

Revenues from product sales are recognized when product is shipped and title
and risk of loss has passed to the customer. When customers have inspection and
approval rights for products, Biogen defers revenue until lapse of that right.
Revenues are recorded net of applicable allowances for returns, rebates and
other applicable discounts and allowances. The Company prepares its estimates
for sales returns and allowances, discounts and rebates quarterly based
primarily on historical experience updated for changes in facts and
circumstances, as appropriate.

In January 2003, Biogen received regulatory approval to market AMEVIVE in the
U.S. There is a limited launch period initiative undertaken in cooperation
with one of Biogens distributors which provides a refund on purchases of
AMEVIVE made after a private payor has initially verified that it will cover
the product but later denies the insurance claim after appeal and where the
other requirements of the initiative are met. Under this initiative, Biogens
exposure is contractually limited to 10% of all AMEVIVE purchased by the
distributor. As a result, Biogen will defer recognition of revenue of 10% of
product purchased by the distributor until such time as evidence of insurance
claims reimbursement for AMEVIVE becomes available.

In February 2002, the FASB Emerging Issues Task Force (EITF) released EITF
Issue No. 01-09 (EITF 01-09), Accounting for Consideration Given by a Vendor
to a Customer (Including a Reseller of the Vendors Products). EITF 01-09
states that cash consideration (including a sales incentive) given by a vendor
to a customer is presumed to be a reduction of the selling prices of the
vendors products or services and, therefore, should be characterized as a
reduction of revenue when recognized in the vendors income statement, rather
than a sales and marketing expense. The Company has various contracts with
distributors that provide for discounts and rebates. These contracts are
classified as a reduction of revenue. The Company also maintains select
customer service contracts with distributors and other customers in the
distribution channel. In accordance with EITF 01-09, the Company has
established the fair value of these contracts and, as provided by EITF 01-09,
classified these customer service contracts as sales and marketing expense. If
the Company should not be able to sustain the fair value of these contracts,
the Company would be required to classify these costs as a reduction of
revenue. The adoption of EITF 01-09 did not have a significant impact on the
Companys financial statements.

The Company receives royalty revenues under license agreements with a number of
third parties that sell products based on technology developed by the Company
or to which the Company has rights. The license agreements provide for the
payment of royalties to the Company based on sales of the licensed product. The
Company records these revenues based on estimates of the sales that occurred
during the relevant period. The relevant period estimates of sales are based on
interim data provided by licensees and analysis of historical royalties paid to
the Company (adjusted for any changes in facts and circumstances, as
appropriate). The Company maintains regular communication with its licensees in
order to gauge the reasonableness of its estimates. Differences between actual
royalty revenues and estimated royalty revenues are reconciled and adjusted for
in the period which they become known, typically the following quarter.
Historically, adjustments have not been material based on actual amounts paid
by licensees. There are no future performance obligations on the part of the
Company under these license agreements.

Revenue is not recognized in any circumstances unless collectibility is
reasonably assured.

Biogen maintains allowances for doubtful accounts for estimated losses
resulting from the inability of its customers to make required payments. If the
financial condition of Biogens customers were to deteriorate, resulting in an
impairment of their ability to make payments, additional allowances may be
required, which could affect future earnings.

In January 2003, the Company signed a collaboration agreement (the IDEC
Agreement) with IDEC Pharmaceuticals Corporation (IDEC), under which Biogen
and IDEC will collaborate on the development of three oncology therapeutics
from Biogens pipeline of early-stage product candidates. Under the terms of
the IDEC Agreement, IDEC initially will be responsible for the development
costs of the product candidates, until that time, if any, when the Company
exercises its opt-in rights (which must be done within a certain timeframe)
with respect to each specific product candidate. Prior to exercising its opt-in
rights, to the extent that the Company incurs any development costs in relation
to the programs contained in the IDEC Agreement, they will be recorded as
research and development expenses. The reimbursement by IDEC of these costs
will be recorded as contract revenue. For the first three months of 2003, the
Company recorded $1.1 million for contract revenues.

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ACCOUNTING FOR STOCK BASED COMPENSATION

The Company has several stock-based compensation plans. The Company applies APB
Opinion No. 25 Accounting for Stock Issued to Employees in accounting for
qualifying options granted to its employees under its plans and applies
Statement of Financial Accounting Standards No. 123 Accounting for Stock
Issued to Employees (SFAS 123) for disclosure purposes only. The SFAS 123
disclosures include pro forma net income and earnings per share as if the fair
value-based method of accounting had been used. Stock issued to non-employees
is accounted for in accordance with SFAS 123 and related interpretations.

If compensation for employee options had been determined based on SFAS 123, the
Companys pro forma net income, and pro forma earnings per share for the three
months ending March 31, would have been as follows:

|                                                 |  |      |        |      |  |   |        | 
|------------------------------------------------ |  | ---- | ------ | ---- |  | - | ------ | 
|(in thousands, except per share data)            |  | 2003 |        | 2002
|                                                 |  |      |        |     
|Reported net income                              |  | $    | 63,533 |      |  | $ | 72,141 | 
|Pro forma stock compensation expense,
net of tax |  |      | 10,562 |      |  |   | 11,323 | 
|                                                 |  |      |        |      |  |   |        | 
|Pro forma net income                             |  | $    | 52,971 |      |  | $ | 60,818 | 
|                                                 |  |      |        |      |  |   |        | 
|Reported basic earnings per share                |  | $    | 0.42   |      |  | $ | 0.49   | 
|                                                 |  |      |        |      |  |   |        | 
|Pro forma basic earnings per share               |  | $    | 0.35   |      |  | $ | 0.41   | 
|                                                 |  |      |        |      |  |   |        | 
|Reported diluted earnings per share              |  | $    | 0.42   |      |  | $ | 0.47   | 
|                                                 |  |      |        |      |  |   |        | 
|Pro forma diluted earnings per share             |  | $    | 0.35   |      |  | $ | 0.40   | 
|                                                 |  |      |        |      |  |   |        | 

The fair value of options granted was estimated on the date of grant using the
Black-Scholes option-pricing model with the following assumptions:

|                                |  |      |      |      |  |  |      |  
|------------------------------- |  | ---- | ---- | ---- |  |  | ---- | -
|                                |  | 2003 |      | 2002
|                                |  |      |      |     
|Expected dividend yield         |  |      | 0    | %    |  |  | 0    | %
|Expected stock price volatility |  |      | 45   | %    |  |  | 44   | %
|Risk-free interest rate         |  |      | 5.75 | %    |  |  | 5.75 | %
|Expected option term in years   |  |      | 7.4  |      |  |  | 7.4  |  

The effects of applying SFAS 123 in this pro forma disclosure are not
indicative of future amounts. SFAS 123 did not apply to awards prior to 1995.
Additional awards in future years are anticipated.

2. FINANCIAL INSTRUMENTS

Statement of Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities, (SFAS 133) requires that all derivatives
be recognized on the balance sheet at their fair value. Changes in the fair
value of derivatives are recorded each period in current earnings or other
comprehensive income, depending on whether a derivative is designated as part
of a hedge transaction and, if it is, the type of hedge transaction. The
Company assesses, both at its inception and on an on-going basis, whether the
derivatives that are used in hedging transactions are highly effective in
offsetting the changes in cash flows of hedged items. The Company assesses
hedge ineffectiveness on a quarterly basis and records the gain or loss related
to the ineffective portion to current earnings to the extent significant. If
the Company determines that a hedged forecasted transaction is no longer
probable of occurring, the Company discontinues hedge accounting for the
affected portion of the hedge instrument, and any unrealized gain or loss on
the contract is recognized in current earnings within other income (expense).

As of March 31, 2003, the Company had $12.5 million outstanding under a
floating rate loan collateralized by one of the Companys laboratory and office
buildings in Cambridge, Massachusetts and $29 million outstanding under a
floating rate loan agreement for financing the construction of its biological
manufacturing facility in North Carolina. The Company uses interest rate swap
agreements to mitigate the risk associated with its floating rate debt. The
fair value of the interest rate swap agreements, representing the cash
requirements of the Company to settle the agreements, was approximately $5.0
million and $5.1 million at March 31, 2003 and December 31, 2002, respectively,
and was included in accrued expenses and other. The Company has designated
the interest rate
swaps as cash flow hedges. There were no amounts of hedge ineffectiveness
related to the Companys interest rate swaps during the three months ended
March 31, 2003 or in the comparable period of 2002, and no gains or losses were
excluded from the assessment of hedge effectiveness. The Company records the
differential to be paid or received on the interest rate swaps as incremental
interest

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expense.

The Company has foreign currency forward contracts to hedge specific forecasted
transactions denominated in foreign currencies. All foreign currency forward
contracts have durations of ninety days to nine months. These contracts have
been designated as cash flow hedges and accordingly, to the extent effective,
any unrealized gains or losses on these foreign currency forward contracts are
reported in other comprehensive income. Realized gains and losses for the
effective portion are recognized with the underlying hedge transaction. The
notional settlement amount of the foreign currency forward contracts
outstanding at March 31, 2003 was approximately $74.8 million. These contracts
had a fair value of approximately $7.3 million, representing an unrealized
loss, and were included in other current liabilities at March 31, 2003.

For the three months ended March 31, 2003 and 2002, there were no significant
amounts recognized in earnings due to hedge ineffectiveness. For the three
months ended March 31, 2003 and 2002, there were no significant amounts
recognized as a result of the discontinuance of cash flow hedge accounting
because it was no longer probable that the hedge forecasted transaction would
occur. The Company recognized approximately $1.9 million of losses and $0.7
million of gains in product revenue for the settlement of certain effective
cash flow hedge instruments for the three months ended March 31, 2003 and 2002,
respectively. The Company recognized approximately $1.3 million of losses and
$0.1 million of gains in royalty revenue for the settlement of certain
effective cash flow hedge instruments for the three months ended March 31, 2003
and 2002, respectively. These settlements were recorded in the same period as
the related forecasted transactions affecting earnings.

3. COMPREHENSIVE INCOME

Comprehensive income is comprised of net income and other comprehensive income.
Other comprehensive income includes certain changes in equity that are excluded
from net income, such as translation adjustments and unrealized holding gains
and losses on available-for-sale marketable securities, net of tax and certain
derivative instruments, net of tax. Comprehensive income for the three months
ended March 31, 2003 and 2002 was $64.2 million and $65.8 million,
respectively.

4. EARNINGS PER SHARE

The Company calculates earnings per share in accordance with Statement of
Financial Accounting Standards No. 128, Earnings per Share (SFAS 128). SFAS
128 requires the presentation of basic earnings per share and diluted
earnings per share. Basic earnings per share is computed by dividing the net
income available to common shareholders by the weighted average number of
shares of common stock outstanding. For purposes of calculating diluted
earnings per share the denominator includes both the weighted average number of
shares of common stock outstanding and the number of dilutive common stock
equivalents such as stock options and warrants, as determined using the
treasury stock method.

Shares used in calculating basic and diluted earnings per share for the three
month periods ending March 31, are as follows:

|                                                              |  |                    |         |      |  |  |         | 
|------------------------------------------------------------- |  | ------------------ | ------- | ---- |  |  | ------- | 
|                                                              |  | Three Months Ended
|                                                              |  | March 31,         
|                                                              |  |                   
|(in thousands)                                                |  | 2003               |         | 2002
|                                                              |  |                    |         |     
|Weighted average number of shares of common stock outstanding |  |                    | 149,611 |      |  |  | 148,660 | 
|Dilutive stock options and warrants                           |  |                    | 1,883   |      |  |  | 3,542   | 
|                                                              |  |                    |         |      |  |  |         | 
|Shares used in calculating diluted earnings per share         |  |                    | 151,494 |      |  |  | 152,202 | 
|                                                              |  |                    |         |      |  |  |         | 

Options to purchase approximately 13.5 million and 6.5 million shares were
outstanding at March 31, 2003 and 2002, respectively, but not included in the
computation of diluted earnings per share because the options exercise prices
were greater than the average market price during the period.

5. SHARE REPURCHASE PROGRAM

On December 18, 2000, the Company announced that its Board of Directors had
authorized the repurchase of up to 4 million shares of the Companys common
stock. The repurchased stock provides the Company with treasury shares for
general corporate purposes, such as stock to be issued under employee stock
option and stock purchase plans. During the first quarter of 2003, the Company
repurchased approximately 1.2 million shares of the common stock under this
program at a cost of $45.8 million. The Company
purchased 145,000 shares during 2002 at a cost of $8.4 million. Approximately
1.2 million shares remain authorized for repurchase under this program at March
31, 2003.

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6. OTHER INCOME (EXPENSE), NET

Other income (expense), net consists of the following (in thousands):

|                                  |  |                    |         |      |  |   |        |  
|--------------------------------- |  | ------------------ | ------- | ---- |  | - | ------ | -
|                                  |  | Three Months Ended
|                                  |  | March 31,         
|                                  |  |                   
|                                  |  | 2003               |         | 2002
|                                  |  |                    |         |     
|Interest income                   |  | $                  | 9,439   |      |  | $ | 10,598 |  
|Interest expense                  |  |                    | (645    | )    |  |   | (1,013 | )
|Other expense                     |  |                    | (14,458 | )    |  |   | (2,557 | )
|                                  |  |                    |         |      |  |   |        |  
|Total other income (expense), net |  | $                  | (5,664  | )    |  | $ | 7,028  |  
|                                  |  |                    |         |      |  |   |        |  

Other expense for the three months ended March 31, 2003 consists primarily of a
$12.9 million charge related to the settlement of a patent infringement dispute
discussed in Note 8. Other expense also included a writedown due to
the third party acquisition of Eos Biotechnology Inc.
(EOS) in the first quarter of 2003. Biogens
investment in Eos was written down by approximately
$3.1 million. In addition, the Company recorded $1.3
million of foreign exchange remeasurement gains during the first three months
of 2003.

Other expense for the three months ended March 31, 2002 consisted primarily of
a $2.2 million charge for the impairment of certain noncurrent marketable
securities that were determined to be other than temporary.

7. INCOME TAX EXPENSE

Income tax expense as a percentage of pre-tax income was 28% for the three
months ended March 31, 2003 and 2002. The effective tax rate varied from the
U.S. statutory rates for the first three months of 2003 and 2002 primarily due
to higher sales in European jurisdictions with lower tax rates and to the
utilization of research and development credits. The Company expects its
effective tax rate to remain consistent throughout 2003.

8. LITIGATION

On October 13, 1998, the Company filed an opposition with the Opposition
Division of the European Patent Office opposing the grant of a European patent
(the Rentschler II Patent) issued to Dr. Rentschler Biotechnologie GmbH
(Rentschler) claiming compositions of matter of beta interferon having
specific glycosylation patterns. On November 6, 2002, a hearing took place with
regard to the Companys opposition of the Rentschler II Patent in the European
Patent Office. The Opposition Board of the European Patent Office ruled that
the present claims of the Rentschler II Patent should be maintained. Following
this decision, Rentschler Biotechnologie GmbH & Co. KG sued our German
subsidiary, Biogen GmbH, for infringement of the Rentschler II Patent in
Germany. In April 2003, the Company and Rentschler settled their litigation
which brought to a close all pending legal proceedings in the German district
court and the European Patent Office. Under the Settlement and License
Agreement the Company agreed to pay Rentschler $12.9 million as a one-time
payment in settlement of litigation and has agreed to an ongoing royalty of
sales of AVONEX in the relevant European countries in which the Rentschler II
patent is in effect. As part of the settlement, both parties agreed not to
pursue further litigation on these patents, including any appeal of the
decision in the European Patent Office.

Because the substantive terms of the Rentschler settlement arrangement were
agreed to in the first quarter of 2003, the Company determined that the
provisions of SFAS 5, Accounting for Contingencies, required that the Company
account for this settlement in its March 31, 2003 financial statements. As a
result, the Company recorded a charge of $12.9 million related to the
settlement in other income (expense), net in its March 31, 2003 financial
statements.

Along with most other major pharmaceutical and biotechnology companies, the
Company has been named as a defendant in a lawsuit filed by the County of
Suffolk, New York, in the U.S. District Court in the Eastern District of New
York in January 2003. In March 2003, the case was transferred to the U.S.
District Court for the District of Massachusetts. The complaint alleges that
the defendants overstated the Average Wholesale Price (AWP) for drugs for
which Medicaid provides reimbursement (Covered Drugs), marketed and promoted
the sale of Covered Drugs to providers based on the providers ability to
collect inflated payments from the government and Medicaid beneficiaries that
exceeded payments possible for competing drugs, provided financing incentives
to providers to
over-prescribe Covered Drugs or prescribe Covered Drugs in place of competing
drugs, and overcharged Medicaid for illegally inflated Covered Drugs
reimbursements. The complaint further alleges that the defendants failed to
accurately report the best price on the Covered Drugs to New Yorks Medicaid
program. Under Medicaid, pharmaceutical and biotechnology companies agree to
pay Medicaid programs a rebate for each product reimbursed by Medicaid. The
amount of the rebate is often the difference between

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the average manufacturers
price and the best price reported by companies to the Medicaid program.
Plaintiff claims that it was harmed because it could have allotted the dollars
that it wrongfully spent on Medicaid to other public needs. Plaintiff has
brought the action under the Racketeering Influence and Corrupt Organizations
Act (RICO), and for breach of contract, unjust enrichment, Medicaid fraud and
common law fraud. The Company intends to vigorously defend itself against all
of the allegations and claims in this lawsuit. An estimate of any potential
loss or range of loss cannot be made at this time.

9. SEGMENT INFORMATION

The Company operates in one segment, which is the business of developing,
manufacturing and marketing drugs for human health care. The chief operating
decision-makers review the profit and loss of the Company on an aggregate basis
and manage the operations of the Company as a single operating segment. The
Company currently derives product revenues primarily from sales of its AVONEX
product for the treatment of relapsing forms of MS, and to a lesser extent,
from sales of its AMEVIVE product, approved by the U.S. Food and Drug
Administration in January 2003 for the treatment of adult patients with
moderate-to-severe chronic plaque psoriasis who are candidates for systemic
therapy or phototherapy. The Company also derives revenue from royalties on
sales by the Companys licensees of a number of products covered under patents
controlled by the Company and from contract revenues related to a collaborative
agreement.

10. GUARANTEES

In November 2002, the FASB issued FASB Interpretation No. 45 (FIN 45),
Guarantors Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others, an interpretation of FASB
Statements No. 5, 57, and 107 and Rescission of FASB Interpretation No. 34.
FIN 45 elaborates on the disclosures to be made by a guarantor in its interim
and annual financial statements about its obligations under certain guarantees
that it has issued. It also requires that a guarantor recognize, at the
inception of a guarantee, a liability for the fair value of certain guarantees.
The initial recognition and measurement provisions of FIN 45 are applicable on
a prospective basis to guarantees issued or modified after December 31, 2002.

Under its charter, the Company has agreed to indemnify any person who is made a
party to any action or threatened with any action as a result of such persons
serving or having served as an officer or director of the Company or having
served, at the Companys request, as an officer or director of another company.
The indemnification does not apply if the person is adjudicated not to have
acted in good faith in the reasonable belief that his or her actions were in
the best interests of the Company. The indemnification obligation survives
termination of the indemnified partys involvement with the Company but only as
to those claims arising from such persons role as an officer or director. The
Company has separate indemnification agreements with certain of its officers
and directors that do not provide any greater coverage than that found in the
charter provisions. The maximum potential amount of future payments that the
Company could be required to make under the charter provision and the
corresponding indemnification agreements is unlimited; however, the Company has
Director and Officer insurance policies that, in most cases, would limit its
exposure and enable it to recover a portion of any future amounts paid. The
estimated fair value of these indemnification provisions is minimal. Most of
these indemnification provisions were grandfathered under the provisions of FIN
45 as they were in effect prior to December 31, 2002. Accordingly, we have no
liabilities recorded for these provisions as of March 31, 2003.

The Company enters into indemnification provisions under its agreements with
other companies in its ordinary course of business, typically with business
partners, contractors, clinical sites and customers. Under these provisions the
Company generally indemnifies and hold harmless the indemnified party for
losses suffered or incurred by the indemnified party as a result of the
Companys activities. These indemnification provisions generally survive
termination of the underlying agreement. The maximum potential amount of future
payments the Company could be required to make under these indemnification
provisions is unlimited. The Company has not incurred material costs to defend
lawsuits or settle claims related to these indemnification agreements. As a
result, the
estimated fair value of these agreements is minimal. Accordingly, the Company
has no liabilities recorded for these agreements as of March 31, 2003.

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BIOGEN, INC. AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

OVERVIEW

Biogen, Inc. (Biogen or the Company) is a global biopharmaceutical company
that develops, manufactures and markets novel human therapeutic products.
Biogens primary focus is developing pharmaceutical products that meet unmet
medical needs, particularly in its core therapeutic areas of neurology,
dermatology and rheumatology. Biogen currently sells AVONEX® (Interferon
beta-1a) for the treatment of relapsing multiple sclerosis (MS) and,
commencing in 2003, AMEVIVE® (alefacept) for the treatment of adult patients
with moderate-to-severe chronic plaque psoriasis who are candidates for
systemic therapy or phototherapy. Biogen also receives revenues from royalties
on sales by the Companys licensees of a number of products covered under
patents that Biogen controls. In addition, Biogen has a pipeline of development
stage products and a number of research programs in our core therapeutic areas
and in other areas of interest.

RESULTS OF OPERATIONS

For the quarter ended March 31, 2003, the Company reported net income of $63.5
million or $0.42 per diluted share as compared to $72.1 million or $0.47 per
diluted share for the comparable period of 2002.

Revenues

|                  |               |       |       |                    |       |        |       |       |       |  |     |    |    |  
|----------------- | ------------- | ----- | ----- | ------------------ | ----- | ------ | ----- | ----- | ----- |  | --- | -- | -- | -
|                  |               |       |       | Three months ended |       |        |       |      
|                  |               |       |       | March 31,          |       |        |       |      
|                  |               |       |       |                    |       | %     
|(in millions)     |               | 2003  |       | 2002               |       | Change
|                  |               |       |       |                    |       |       
|Product revenues  |               |       |       |                    |       |        |       |       |       |  |     |   
|                  | United States |       | $     | 193.2              |       |        | $     | 197.3 |       |  |     | (2 | )%
|                  | Rest of world |       |       | 85.0               |       |        |       | 68.7  |       |  |     | 24 | % 
|                  |               |       |       |                    |       |        |       |       |       |  |     |   
|                  |               | Total |       |                    | 278.2 |        |       |       | 266.0 |  |     |    | 5  | %
|Royalty revenues  |               |       | 41.4  |                    |       |        | 22.3  |       |       |  | 86  | % 
|Contract revenues |               |       | 1.1   |                    |       |        |      |       |       |  | 100 | % 
|                  |               |       |       |                    |       |        |       |       |       |  |     |   
|Total revenues    |               | $     | 320.7 |                    |       | $      | 288.3 |       |       |  | 11  | % 
|                  |               |       |       |                    |       |        |       |       |       |  |     |   

Product revenues

Product revenues, consisting primarily of revenues from sales of AVONEX,
represented approximately 87% and 92%, respectively, of the Companys total
revenues in the three months ended March 31, 2003 and 2002. U.S. product
revenues growth was affected by increased competition and a softening of the MS
marketplace growth rate. Product revenues outside of the U.S. increased 24%
compared to the three months ended March 31, 2002, consisting of an 11%
increase based on higher sales volume in 2003 and a 13% increase from the
impact of foreign exchange rate changes.

The Company expects to face increasing competition in the MS marketplace in and
outside the U.S. from existing and new MS treatments that may impact sales of
AVONEX. The Company expects future growth in AVONEX revenues to be dependent to
a large extent on the Companys ability to compete successfully. Biogen also
expects that future AVONEX sales may be affected by slower growth in the MS
market. See Outlook  Dependence on AVONEX and AMEVIVE Sales and Outlook 
Competition. The Company expects a substantial portion of its product revenue
growth in subsequent quarters to be related to sales of AMEVIVE in the U.S.
AMEVIVE was approved by the U.S. Food and Drug Administration (FDA) in
January 2003 for the treatment of adult patients with moderate-to-severe
chronic plaque psoriasis who are candidates for systemic therapy or
phototherapy. For further discussion of AMEVIVE and the factors that may
affect the revenues generated by AMEVIVE sales, see Outlook  Competition and
Outlook  Dependence on AVONEX and AMEVIVE Sales.

There is a limited launch period initiative undertaken in cooperation with one
of Biogens distributors which provides a refund on purchases of AMEVIVE made
after a private payor has initially verified that it will cover the product but
later denies the insurance claim after appeal and where the other requirements
of the initiative are met. Under this initiative, Biogens exposure is
contractually limited to 10% of all AMEVIVE purchased by the distributor. As a
result, Biogen will defer recognition of revenue of 10% of product purchased by
the distributor until such time as evidence of insurance claims reimbursement
for AMEVIVE becomes available.

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Royalty revenues

Revenues from royalties represented approximately 13% and 8%, respectively, of
total revenues for the three months ended March 31, 2003 and 2002. The increase
in royalty revenues in the first three months of 2003 over the comparable
period in 2002 is primarily attributable to the resumption of royalty payments
from Schering-Plough Corporation starting in the fourth quarter of 2002 on U.S.
sales of its alpha interferon products.

Royalty revenues may fluctuate as a result of fluctuations in sales levels of
products sold by the Companys licensees from quarter to quarter due to the
timing and extent of major events such as new indication approvals or
government-sponsored programs. For a discussion of some of the other factors
that may affect royalty revenues in the future, see Outlook  Royalty Revenue
and Outlook  Patents and Other Proprietary Rights. The Company expects
royalty revenues as a percentage of total revenues to decrease in
the long term as the Company continues to market and sell AVONEX
worldwide, and begins marketing and selling AMEVIVE. See Outlook  Royalty
Revenue and Outlook  Patents and Other Proprietary Rights.

Contract revenues

In January 2003, the Company signed a collaboration agreement (the IDEC
Agreement) with IDEC Pharmaceuticals Corporation (IDEC), under which Biogen
and IDEC will collaborate on the development of three oncology therapeutics
from Biogens pipeline of early-stage product candidates. Under the terms of
the IDEC Agreement, IDEC initially will be responsible for the development
costs of the product candidates, until that time, if any, when the Company
exercises its opt-in rights (which must be done within a certain timeframe)
with respect to each specific product candidate. Prior to exercising its opt-in
rights, to the extent that the Company incurs any development costs in relation
to the programs contained in the IDEC Agreement, they will be recorded as
research and development expenses. The reimbursement by IDEC of these costs
will be recorded as contract revenue. For the first three months of 2003, the
Company recorded $1.1 million for contract revenues.

COSTS AND EXPENSES

|                                  |  |                    |       |      |  |        |       |  |  |  |    |  
|--------------------------------- |  | ------------------ | ----- | ---- |  | ------ | ----- |  |  |  | -- | -
|                                  |  | Three months ended |       |      |  |       
|                                  |  | March 31,          |       |      |  |       
|                                  |  |                    |       | %   
|(in millions)                     |  | 2003               |       | 2002 |  | Change
|                                  |  |                    |       |      |  |       
|Cost of product revenues          |  | $                  | 43.9  |      |  | $      | 37.9  |  |  |  | 16 | %
|Cost of royalty revenues          |  |                    | 2.4   |      |  |        | 1.4   |  |  |  | 71 | %
|Research and development          |  |                    | 85.1  |      |  |        | 82.5  |  |  |  | 3  | %
|Selling, general & administrative |  |                    | 95.4  |      |  |        | 73.4  |  |  |  | 30 | %
|                                  |  |                    |       |      |  |        |       |  |  |  |    |  
|                                  |  | $                  | 226.8 |      |  | $      | 195.2 |  |  |  | 16 | %
|                                  |  |                    |       |      |  |        |       |  |  |  |    |  

The increase in cost of product revenues in the first three months of 2003
compared to the comparable period of 2002 was primarily attributable to the
higher sales volume of AVONEX, and, to a lesser extent, to $3.4 million of
writedowns in 2003 of commercial inventory which did not meet quality
specifications to its net realizable value. Gross margins on product sales
were approximately 84% for the three months ended March 31, 2003 compared to
86% for the same period in 2002. The Company expects that gross margins on
product revenues will fluctuate in the future based on changes in product mix
and new product initiatives. The increase in cost of royalty revenues was
primarily attributable to increased royalties from sales on alpha interferon
products sold in the first quarter of 2003 over the comparable period of 2002.
Gross margins on royalty revenue were approximately 94% for the three months
ended March 31, 2003 and 2002. The Company expects that gross margins on
royalty revenues will fluctuate in the future based on changes in sales volumes
for specific products from which the Company receives royalties.

Research and development expenses increased 3% in the first three months of
2003 from the comparable period in 2002. The increase was due primarily to
higher clinical trial costs of approximately $8.6 million primarily related to
ANTEGREN® (natalizumab), increased production and development costs of
approximately $5.0 million, and $6.2 for other research, production and
infrastructure costs. These increases were offset by a reduction of
approximately $17.2 million in costs related to collaborative projects. The
Company expects that, in the near and long-term, research and development
expenses may increase as the Company continues to expand its development
efforts with respect to new products, conducts clinical trials of these
products and continues to work on new formulations for AVONEX. Costs for
upfront fees and milestone payments may cause variability in future research
and development expense.

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Selling, general and administrative expenses increased 30% in the first three
months of 2003 compared to the same period in 2002. The increase was primarily
due to an increase in selling and marketing expenses of $21 million related to
both the sale of AVONEX and costs incurred for the launch of AMEVIVE, which
received FDA approval in the U.S., in January 2003. AVONEX-related increases
were driven by heightened competition in the U.S. market. The Company expects
that selling, general and administrative expenses will continue to increase in
the near and long term as the Company continues to expand its sales and
marketing organizations and efforts necessary to sell AVONEX worldwide in
response to increased competition, continues to expand its sales and marketing
organizations and efforts necessary to sell AMEVIVE in the U.S., and prepares
for the possible future approval of additional products.

OTHER INCOME (EXPENSE), NET

Total other income (expense), net consists of the following (in thousands):

|                                  |  |                    |         |      |  |   |        |  
|--------------------------------- |  | ------------------ | ------- | ---- |  | - | ------ | -
|                                  |  | Three Months Ended
|                                  |  | March 31,         
|                                  |  |                   
|                                  |  | 2003               |         | 2002
|                                  |  |                    |         |     
|Interest income                   |  | $                  | 9,439   |      |  | $ | 10,598 |  
|Interest expense                  |  |                    | (645    | )    |  |   | (1,013 | )
|Other expense                     |  |                    | (14,458 | )    |  |   | (2,557 | )
|                                  |  |                    |         |      |  |   |        |  
|Total other income (expense), net |  | $                  | (5,664  | )    |  | $ | 7,028  |  
|                                  |  |                    |         |      |  |   |        |  

Total other income (expense), net consists primarily of interest income, offset
by interest expenses and other non-operating income and expenses. Total other
income (expense), net in the first quarter of 2003 was $5.7 million in losses
as compared to $7.0 million in income in the first quarter of 2002, a decrease
of $12.7 million.

Interest income for the three months ended March 31, 2003 was $9.4 million
compared to $10.6 million in the same period of 2002, a decrease of $1.2
million or 11%. The decrease in interest income for the three months ended
March 31, 2003 was due primarily to lower average yields on invested funds. The
Company expects interest income to vary based on changes in the amount of funds
invested and fluctuations in interest rates.

Interest expense in the three months ended March 31, 2003 was approximately
$0.6 million compared to $1.0 million for the same period in 2002, a decrease
of $0.4 million or 40%. The decrease in interest expense was due to lower
borrowings outstanding.

Other expense for the three months ended March 31, 2003 consists primarily of a
$12.9 million charge related to the settlement of a patent infringement
dispute. Other expense also included a writedown due to the third
party acquisition of Eos Biotechnology Inc. (Eos) in
the first quarter of 2003. Biogens investment in Eos was
written down by approximately $3.1 million. In addition, the Company recorded $1.3 million of
foreign exchange remeasurement gains during the first three months of 2003.

Other expense for the three months ended March 31, 2002 consisted primarily of
a $2.2 million charge for the impairment of certain noncurrent marketable
securities that were determined to be other than temporary.

INCOME TAXES

Income tax expense as a percentage of pre-tax income was 28% for the three
months ended March 31, 2003 and 2002. The effective tax rate varied from the
U.S. statutory rates for the first three months of 2003 and 2002 primarily due
to higher sales in European jurisdictions with lower tax rates and to the
utilization of research and development credits. The Company expects its
effective tax rate to remain consistent throughout 2003.

FINANCIAL CONDITION

At March 31, 2003, cash, cash equivalents and short-term marketable securities
were $812.4 million compared with $867.1 million at December 31, 2002, a
decrease of $54.7 million. Working capital increased $19.8 million to $909.5
million. Net cash from operating activities which included net income, for the
three-month period ending March 31, 2003 was $7.2 million compared with $61.4
million for the same period in 2002, and included tax benefits related to stock
options of $1.5 million, the $3.1 million writedown of the Companys investment
in Eos, and a non-cash adjustment of $3.4 million related to the writedowns of
inventory to its net realizable value. Cash outflows from investing activities
during the three months ended March 31, 2003 included investments in
property and equipment and patents of $24.3 million and net cash outflows from
investing activities related to marketable securities totaling $44.6 million.
Cash inflows from investing consisted of $7.2 million of proceeds from
withdrawal from an equity fund

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investment. Significant cash outflows from
financing activities included $45.8 million for purchases of the Companys
common stock under its stock repurchase program and $0.8 million for repayments
on loan agreements with banks. Cash inflows from financing included $3.3
million from common stock option exercises and employee stock purchase plan
activity.

On December 18, 2000, the Company announced that its Board of Directors
had authorized the repurchase of up to 4 million shares of the Companys common
stock. The repurchased stock provides the Company with treasury shares for
general corporate purposes, such as stock to be issued under employee stock
option and stock purchase plans. During the first quarter of 2003, the Company
repurchased approximately 1.2 million shares of its common stock under this
program at a cost of $45.8 million. The Company purchased 145,000 shares during
2002 at a cost of $8.4 million. Approximately 1.2 million shares remain
authorized for repurchase under this program at March 31, 2003.

The Company has commenced preliminary work on a large-scale manufacturing
facility (LSM) in Hillerod, Denmark, which is intended to have 90,000 liters
of bioreactor capacity. The estimated cost of the 340,000 square foot LSM is
$275 million. At March 31, 2003, approximately $60 million had been authorized
for costs related to the LSM, of which approximately $43 million had been
spent. In addition, the Company is continuing further expansion of its Research
Triangle Park, North Carolina complex with ongoing construction of several
projects to create additional manufacturing capacity. These additional projects
are expected to be completed by the summer of 2003 at a total cost of
approximately $90 million. As of March 31, 2003, the Company had committed
approximately $85 million for construction costs related to these additional
projects, of which $80.1 million had been spent.

Several legal proceedings involving the Company were pending during the current
quarter. See Note 8 of the Notes to the Condensed Consolidated Financial
Statements and Legal Proceedings of the Companys Annual Report on Form 10-K
for the fiscal year ended December 31, 2002 for discussions of these legal
proceedings.

The Company currently generates cash from operations primarily due to the sale
of AVONEX and AMEVIVE, and from royalties on sales generated by the Companys
licensees. In the future, the Company expects to continue generating cash from
these sources. The Company believes that existing funds and cash generated from
operations are adequate to satisfy its working capital and capital expenditure
requirements in the foreseeable future. However, the Company may raise
additional capital to take advantage of favorable conditions in the market or
in connection with the Companys development activities.

CRITICAL ACCOUNTING ESTIMATES

REVENUE RECOGNITION AND ACCOUNTS RECEIVABLE

SEC Staff Accounting Bulletin No. 101 (SAB 101) provides guidance on the
recognition, presentation, and disclosure of revenue in financial statements.
SAB 101 establishes the SECs view that it is not appropriate to recognize
revenue until all of the following criteria are met: persuasive evidence of an
arrangement exists; delivery has occurred or services have been rendered; the
sellers price to the buyer is fixed or determinable; and collectibility is
reasonably assured. Further, SAB 101 requires that both title and the risks and
rewards of ownership be transferred to the buyer before revenue can be
recognized. The Company believes that its revenue recognition policies are in
compliance with SAB 101.

Revenues from product sales are recognized when product is shipped and title
and risk of loss has passed to the customer. When customers have inspection and
approval rights for products, Biogen defers revenue until lapse of that right.
Revenues are recorded net of applicable allowances for returns, rebates and
other applicable discounts and allowances. The Company prepares its estimates
for sales returns and allowances, discounts and rebates quarterly based
primarily on historical experience updated for changes in facts and
circumstances, as appropriate.

In January 2003, Biogen received regulatory approval to market AMEVIVE in the
U.S. There is a limited launch period initiative undertaken in cooperation
with one of Biogens distributors which provides a refund on purchases of
AMEVIVE made after a private payor has initially verified that it will cover
the product but later denies the insurance claim after appeal and where the
other requirements of the initiative are met. Under this initiative, Biogens
exposure is contractually limited to 10% of all AMEVIVE purchased by the
distributor. As a result, Biogen will defer recognition of revenue of 10% of
product purchased by the distributor until such time as evidence of insurance
claims reimbursement for AMEVIVE becomes available.

In February 2002, the FASB Emerging Issues Task Force (EITF) released EITF
Issue No. 01-09 (EITF 01-09), Accounting for Consideration Given by a Vendor
to a Customer (Including a Reseller of the Vendors Products). EITF 01-09
states that cash consideration (including a sales incentive) given by a vendor
to a customer is presumed to be a reduction of the selling prices of the

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vendors products or services and, therefore, should be characterized as a
reduction of revenue when recognized in the vendors income statement, rather
than a sales and marketing expense. The Company has various contracts with
distributors that provide for discounts and rebates. These contracts are
classified as a reduction of revenue. The Company also maintains select
customer service contracts with distributors and other customers in the
distribution channel. In accordance with EITF 01-09, the Company has
established the fair value of these contracts and, as provided by EITF 01-09,
classified these customer service contracts as sales and marketing expense. If
the Company should not be able to sustain the fair value of these contracts,
the Company would be required to classify these costs as a reduction of
revenue. The adoption of EITF 01-09 did not have a significant impact on the
Companys financial statements.

The Company receives royalty revenues under license agreements with a number of
third parties that sell products based on technology developed by the Company
or to which the Company has rights. The license agreements provide for the
payment of royalties to the Company based on sales of the licensed product. The
Company records these revenues based on estimates of the sales that occurred
during the relevant period. The relevant period estimates of sales are based on
interim data provided by licensees and analysis of historical royalties paid to
the Company (adjusted for any changes in facts and circumstances, as
appropriate). The Company maintains regular communication with its licensees in
order to gauge the reasonableness of its estimates. Differences between actual
royalty revenues and estimated royalty revenues are reconciled and adjusted for
in the period which they become known, typically the following quarter.
Historically, adjustments have not been material based on actual amounts paid
by licensees. There are no future performance obligations on the part of the
Company under these license agreements.

Revenue is not recognized in any circumstances unless collectibility is
reasonably assured.

Biogen maintains allowances for doubtful accounts for estimated losses
resulting from the inability of its customers to make required payments. If the
financial condition of Biogens customers were to deteriorate, resulting in an
impairment of their ability to make payments, additional allowances may be
required, which could affect future earnings.

In January 2003, the Company signed a collaboration agreement (the IDEC
Agreement) with IDEC Pharmaceuticals Corporation (IDEC), under which Biogen
and IDEC will collaborate on the development of three oncology therapeutics
from Biogens pipeline of early-stage product candidates. Under the terms of
the IDEC Agreement, IDEC initially will be responsible for the development
costs of the product candidates, until that time, if any, when the Company
exercises its opt-in rights (which must be done within a certain timeframe)
with respect to each specific product candidate. Prior to exercising its opt-in
rights, to the extent that the Company incurs any development costs in relation
to the programs contained in the IDEC Agreement, they will be recorded as
research and development expenses. The reimbursement by IDEC of these costs
will be recorded as contract revenue. For the first three months of 2003, the
Company recorded $1.1 million for contract revenues.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures. The Companys Chief
Executive Officer and Executive Vice President  Finance and Chief Financial
Officer, after evaluating the effectiveness of the Companys disclosure
controls and procedures (as defined in Exchange Act Rules 13a-14(c) and
15d-14(c)) on April 17, 2003, have concluded that the Companys disclosure
controls and procedures were adequate and effective to ensure that material
information relating to the Company, including its consolidated subsidiaries,
was made known to them by others within those entities, particularly during the
period in which this Form 10-Q was being prepared.

Changes in Internal Controls. There were no significant changes in the
Companys internal controls or in other factors that could significantly affect
these controls subsequent to the date of their evaluation, nor were there any
significant deficiencies or material weaknesses in the Companys internal
controls. Accordingly, no corrective actions were required or undertaken.

OUTLOOK

SAFE HARBOR

In addition to historical information, this quarterly 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. Reference is made in particular
to forward-looking statements regarding the Companys expectations regarding
its level of future product sales, profits, product revenues, royalty revenues,
costs and expenses, gross margins on product revenues and royalty revenues, its
effective tax rate, regulatory approvals, development and commercialization of
additional products, competition and the impact of competitive products,

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the outcome of pending or anticipated litigation and patent-related proceedings,
facility expansion and the value of investments in certain marketable
securities. These and all other forward-looking statements in this report are
made based on Biogens current belief as to the outcome and timing of such
future events. Factors which could cause actual results to differ from Biogens
expectations and which could negatively impact Biogens financial condition and
results of operations are discussed below and elsewhere in Managements
Discussion and Analysis of Financial Condition and Results of Operations.
Unless required by law, Biogen does not undertake any obligation to publicly
update any forward-looking statements.

DEPENDENCE ON AVONEX AND AMEVIVE SALES

Biogens ability to sustain increases in revenues and profitability is
primarily dependent on the level of revenues and profitability from AVONEX and
AMEVIVE sales.

The level of revenues from sales of AVONEX will depend on a number of factors,
including: Biogens ability to sustain market share of AVONEX in light of
competitive products for the treatment of MS, continued market acceptance of
AVONEX worldwide; Biogens ability to maintain a high level of physician and
patient satisfaction with AVONEX; the nature of regulatory and pricing
decisions related to AVONEX worldwide; the overall growth of the MS market; the
extent to which AVONEX continues to receive and maintains reimbursement
coverage; the success of ongoing development related to AVONEX in expanded MS
indications; the success of ongoing development of the pre-filled syringe
formulation of AVONEX; and the continued accessibility of third parties to
vial, label, and distribute AVONEX on acceptable terms.

AMEVIVE was approved in the U.S. in January 2003. The level of revenues from
sales of AMEVIVE in the U.S. will depend on a number of factors, including: the
ability to gain and to sustain market share and to continue to increase market
share of AMEVIVE as the competitive landscape for AMEVIVE becomes more
challenging; Biogens ability to maintain a high level of physician and patient
satisfaction with AMEVIVE; the nature of regulatory and pricing decisions
related to AMEVIVE; the extent to which AMEVIVE receives and maintains adequate
reimbursement coverage; and the accessibility of third parties to vial, label,
and distribute AMEVIVE on acceptable terms. In February 2003, Biogen withdrew
its application for approval to market AMEVIVE in the EU. Biogens decision was
based on a determination by the Committee for Proprietary Medicinal Products,
the scientific advisory board of the regulatory authority in the EU, that more
clinical information is needed to approve AMEVIVE. Biogen plans to develop the
additional information necessary to obtain approval of AMEVIVE for psoriasis
patients in the EU. Developing the data and re-filing the application may take
several years and there is no assurance that Biogen will ever obtain approval
of AMEVIVE in the EU. There is also no assurance that our commercial efforts in
the U.S. will be successful.

COMPETITION

AVONEX competes in the U.S. and EU markets primarily with four products:
COPAXONE® glatiramer acetate, sold by Teva Neuroscience, Inc. (Teva) in the
U.S. and co-promoted in by Teva and Aventis Pharma in the EU; BETASERON®,
sold by Berlex in the U.S. and sold under the name BETAFERON® by Schering
A.G. in the EU; NOVANTRONE® (mitoxantrone for injection) sold by Amgen, Inc.
(Amgen) and Serono S.A. in the U.S. and sold by Amgen in the EU; and
REBIF®, sold in the EU by Serono and sold in the U.S. by Serono, with Pfizer
Inc. as a co-promotion partner. A number of companies, including Biogen, are
working to develop products to treat MS which may in the future compete with
AVONEX. AVONEX also faces competition from off-label uses of drugs approved for
other indications. Some of Biogens current competitors are also working to
develop alternative formulations for delivery of their products which may in
the future compete with AVONEX. Biogen believes that competition among
treatments for MS will be based on product performance, service and price.

AMEVIVE competes with existing therapies for moderate-to-severe psoriasis, such
as oral retinoids, steroids, methotrexate and cyclosporin, along with other
drugs, as discussed below, approved for other indications. In the future,
AMEVIVE will also compete with new drugs currently in development for
psoriasis, drugs now approved for other indications that may be approved for
psoriasis, and off-label uses of drugs approved for other indications.
Genentech and Xoma Corporation are co-developing RAPTIVA® (efalizumab), an
antibody designed to block certain immune cells as a potential treatment for
moderate-to-severe psoriasis. Genentech has filed for regulatory approval of
the drug in the U.S. Serono has an exclusive license to RAPTIVA in the EU and
other countries and has filed for regulatory approval of the drug in the EU.
ENBREL® (etanercept), a drug sold by Amgen, has been approved by the
FDA as a treatment for psoriatic arthritis, a joint disease that can be
associated with the skin plaques of moderate to severe chronic plaque
psoriasis. In January 2003, Amgen announced positive results from a Phase 3
clinical study of ENBREL in the
treatment of moderate to severe plaque psoriasis and is conducting a second
Phase 3 clinical study in psoriasis. Centocor, Inc., a subsidiary of Johnson &
Johnson, sells REMICADE® (infliximab) worldwide as a treatment for other
indications, including rheumatoid arthritis, and has completed a Phase 2 proof
of concept study for REMICADE as a potential treatment for psoriasis.

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HUMIRA® (adalimumab), a drug sold by Abbott Laboratories, was also recently approved by
the FDA as a treatment for rheumatoid arthritis. Abbott is undertaking clinical
trials in psoriasis and psoriatic arthritis. In addition, a number of other
companies are working to develop products to treat psoriasis which may
ultimately compete with AMEVIVE.

See the Competition section of the Companys Annual Report on Form 10-K for
the fiscal year ended December 31, 2002.

ROYALTY REVENUE

Biogen receives royalty revenues which, prior to 2001, contributed a
significant amount to its overall profitability. Royalty revenues decreased
significantly in recent years and through the third quarter of 2002 primarily
as the result of patent expirations and a royalty dispute with Schering-Plough
Corporation, which was settled in October 2002. Royalty revenues increased in
the fourth quarter of 2002 and the first quarter of 2003, and the Company
expects that royalty revenues will continue to increase in the near future.
However, royalty revenues may fluctuate as a result of future patent
expirations and other factors such as pricing reforms, health care reform
initiatives, other legal and regulatory developments and the introduction of
competitive products that may have an impact on product sales by Biogens
licensees. In addition, sales levels of products sold by Biogens licensees may
fluctuate from quarter to quarter due to the timing and extent of major events
such as new indication approvals or government-sponsored programs. Since Biogen
is not involved in the development or sale of products by its licensees, it
cannot be certain of the timing or potential impact of factors which may affect
sales by licensees. For a further discussion of risks regarding drug
development, patent matters, including future patent expirations affecting
royalty revenues, and regulatory matters, see   Outlook  Patents and Other
Proprietary Rights, Outlook  Litigation and Government Regulation, and the
Business  Risks Associated with Drug Development, Business  Patents and
Other Proprietary Rights, and Business  Regulation sections of the
Companys Annual Report on Form 10-K for the fiscal year ended December 31,
2002.

PATENTS AND OTHER PROPRIETARY RIGHTS

Biogen has numerous issued patents and patent applications pending on a number
of its processes and products. Biogen has also obtained rights to certain
patents under licenses with third parties, which provide for the payment of
royalties by Biogen. There can be no assurances that Biogens existing patents
or others, if obtained, will substantially protect or commercially benefit
Biogen. In addition, Biogen does not know to what extent its pending patent
applications or patent applications licensed from third parties will be granted
or whether any of Biogens patents will prevail if they are challenged in
litigation. Also, there is also no assurance that third parties have not or
will not be granted patents claiming subject matter necessary to Biogens
business. Biogen is aware that others, including various universities and
companies working in the biotechnology field, have filed patent applications
and have been granted patents in the U.S. and in other countries claiming
subject matter potentially useful or necessary to Biogens business. Some of
those patents and patent applications claim only specific products or methods
of making such products, while others claim more general processes or
techniques useful or now used in the biotechnology industry. For example,
Genentech has been granted patents and is prosecuting other patent applications
in the U.S. and certain other countries, which it may allege are currently used
by Biogen and the rest of the biotechnology industry to produce recombinant
proteins in host cells. Genentech has offered to Biogen and others in the
industry non-exclusive licenses under some of those patents and patent
applications for various proteins and in various fields of use, but not for
others. The ultimate scope and validity of Genentechs patents, of other
existing patents, or of patents which may be granted to third parties in the
future, and the extent to which Biogen may wish or be required to acquire
rights under such patents and the availability and cost of acquiring such
rights, currently cannot be determined by Biogen. Biogen is also aware that
Genentech has been granted patents and is presently prosecuting other patent
applications in the U.S. and certain other countries pertaining to technology
referred to as immunoadheson technology. Genentech may allege that its patents
on such immunoadheson technology are infringed by Biogens commercial
activities with AMEVIVE. Biogen has had discussions with Genentech and is
evaluating these patents to determine if a license should be taken. The
ultimate scope and validity of Genentechs immunoadheson patents and the
availability and ultimate cost of acquiring such rights currently cannot be
determined.

There has been, and Biogen expects that there may continue to be significant
litigation in the industry regarding patents and other intellectual property
rights. Such litigation could create uncertainty and consume substantial
resources. See Outlook  Litigation and Government Regulation, and the
Business  Risks Associated with Drug Development and Business  Patents and
Other Proprietary Rights sections of the Companys Annual Report on Form 10-K
for the fiscal year ended December 31, 2002.

PRODUCTS

AVONEX and AMEVIVE are currently the only products sold by Biogen. Biogens
long-term viability and growth will depend on the successful development and
commercialization of other products from its research and development
activities and collaborations.

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Biogen continues to expand its development
efforts related to other potential products in its pipeline. The expansion of
the pipeline may include increases in spending on internal projects, the
acquisition of third-party technologies or products or other types of
investments. Product development involves a high degree of risk. Only a small
number of research and development programs result in the commercialization of
a product. Many
important factors affect Biogens ability to successfully develop and
commercialize its other potential products, including the ability to obtain and
maintain necessary patents and licenses, to demonstrate safety and efficacy of
drug candidates at each stage of the clinical trial process, to overcome
technical hurdles that may arise, to meet applicable regulatory standards, to
obtain reimbursement coverage for the products, to receive required regulatory
approvals, to be capable of producing drug candidates in commercial quantities
at reasonable costs, to compete successfully against other products and to
market products successfully. Success in early stage clinical trials or
preclinical work does not ensure that later stage or larger scale clinical
trials will be successful. Even if later stage clinical trials are successful,
the risk exists that unexpected concerns may arise from analysis of data or
from additional data or that obstacles may arise or issues be identified in
connection with review of clinical data with regulatory authorities or that
regulatory authorities may disagree with Biogens view of the data or require
additional data or information or additional studies. There can be no assurance
that Biogen will be successful in its efforts to develop and commercialize new
products.

PRICING PRESSURES

In the U.S., many pharmaceutical and biologic products are subject to
increasing pricing pressures, which could be significantly impacted by the
outcome of the current national debate over Medicare reform. If the Medicare
program provided outpatient pharmaceutical coverage for its beneficiaries, the
federal government, through its enormous purchasing power under the program,
could demand discounts from pharmaceutical and biotechnology companies that may
implicitly create price controls on prescription drugs. On the other hand, a
Medicare drug reimbursement provision may increase the volume of pharmaceutical
drug purchases, offsetting at least in part these potential price discounts. In
addition, Managed Care Organizations (MCOs), institutions and other
government agencies continue to seek price discounts. Government efforts to
reduce Medicare and Medicaid expenses are expected to increase the use of MCOs.
This may result in managed cares influencing prescription decisions for a
larger segment of the population. In addition, certain states have proposed and
certain other states have adopted various programs to control prices for their
seniors drug programs, including price or patient reimbursement constraints,
restrictions on access to certain products, importation from other countries
and bulk purchasing of drugs. Biogen encounters similar regulatory and
legislative issues in most other countries. In the EU and some other
international markets, the government provides health care at low direct cost
to consumers and regulates pharmaceutical prices or patient reimbursement
levels to control costs for the government-sponsored health care system. This
international patchwork of price regulation may lead to inconsistent prices and
some third-party trade in Biogens products from markets with lower prices.
Such trade exploiting price differences between countries could undermine our
sales in markets with higher prices. See the Business  Regulation section
of the Companys Annual Report on Form 10-K for the fiscal year ended December
31, 2002.

MANUFACTURING

Biogen currently produces all of its bulk drug products at its manufacturing
facilities located in Cambridge, Massachusetts and Research Triangle Park,
North Carolina. Problems with manufacturing processes could result in product
defects, which could require Biogen to delay shipment of products, recall
products previously shipped or be unable to supply products at all. In
addition, any prolonged interruption in the operations of Biogens
manufacturing facilities could result in cancellations of shipments or loss of
product in the process of being manufactured. Because Biogens manufacturing
processes are highly complex and are subject to a lengthy FDA approval process,
alternative qualified production capacity may not be available on a timely
basis or at all. Biogen sources all of its fill-finish and final product
storage operations, along with a substantial portion of its packaging
operations, to a concentrated group of third party contractors. Problems with
the operations of these third party contractors could also require Biogen to
delay shipment of saleable products, recall products previously shipped or be
unable to supply products at all. Difficulties or delays in Biogens
manufacturing of existing or new products, including difficulties or delays in
the operations of third party contractors retained by Biogen to perform
fill-finish, packaging and storage of saleable products, could increase
Biogens costs, cause Biogen to lose revenue or market share and damage
Biogens reputation. See the Business  Manufacturing and Raw Materials
section of the Companys Annual Report on Form 10-K for the fiscal year ended
December 31, 2002.

LITIGATION AND GOVERNMENT REGULATION

Pharmaceutical companies have been the target of lawsuits and investigations
including: those with claims asserting antitrust violations, claims asserting
violations of the Federal False Claim Act, Anti-Kickback Act, the Prescription
Drug Marketing Act or other violations in connection with Medicare and/or
Medicaid reimbursement, derivative actions, product liability claims and
disputes

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over intellectual property rights (including patents). Public
companies may also be the subject of certain other types of claims, including
those asserting violations of securities laws or related to environmental
matters. There is no assurance that if Biogen were to be involved in any such
lawsuits or investigation, that Biogen would be successful in defending itself
or asserting its rights. There is also no assurance, for example, that Biogen
will be successful in defending itself in the current AWP litigation. Biogens
business is also subject to extensive government regulation and oversight.
Biogen may also become subject to other governmental actions which could
adversely affect its business or financial condition, including: (i) new laws,
regulations and judicial decisions related to health care availability, method
of delivery and payment for health care products and services, (ii) changes in
the Federal Food and Drug Administration and foreign regulatory approval
processes that may delay or prevent the approval of new products and result in
lost market opportunity, (iii) new laws, regulations and judicial decisions
affecting pricing or marketing and (iv) changes in the tax laws relating to
Biogens operations. See Outlook  Patents and Other Proprietary Rights,
and the Business  Risks Associated with Drug Development, Business -
Patents and Other Proprietary Rights, and Business  Legal Proceedings
sections of the Companys Annual Report on Form 10-K for the fiscal year ended
December 31, 2002.




Part II  OTHER INFORMATION

Item 1. Legal Proceedings.

| |  |                                                                                                                                                                
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The section Notes to
Condensed Consolidated Financial Statements in Part I of this Quarterly Report on
Form 10-Q is incorporated into this item by reference.

Item 6. Exhibits and Reports on Form 8-K

|    |  |         
|--- |  | --------
|(a) |  | Exhibits

|     |  |                                                                         
|---- |  | ------------------------------------------------------------------------
|99.1 |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

|    |  |                    
|--- |  | -------------------
|(b) |  | Reports on Form 8-K

|      |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|----- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(i)   |  | On January 31, 2003, the Company filed a Current
Report on Form 8-K to publicly disseminate a press release
announcing the approval of AMEVIVE® (alefacept) for the
treatment of adult patients with moderate-to-severe chronic
plaque psoriasis who are candidates for systemic therapy or
phototherapy.                                                                                                                                                             
|(ii)  |  | On February 20, 2003, the Company filed a Current
Report on Form 8-K to publicly disseminate a press release
announcing that the Company decided to withdraw its application
for approval of AMEVIVE® (alefacept) for psoriasis in the
European Union because the Committee for Proprietary Medicinal
Products, the scientific advisory body of the European Medicines
Evaluation Agency, determined that more clinical information was
needed to approve the product.
|(iii) |  | On March 14, 2003, the Company filed a Current
Report on Form 8-K to furnish the written statement of the
Companys principal executive officer and principal financial
officer required by Section 906 of the Sarbanes-Oxley Act of
2002 in connection with the Companys Annual Report on Form 10-K
for the fiscal year ended December 31, 2002.                                                                                                                    

20



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##### Table of Contents



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                      |  |                                                             
|--------------------- |  | ------------------------------------------------------------
|                      |  | BIOGEN, INC.                                                
|                      |  |                                                             
|Dated: April 17, 2003 |  | /s/ Peter N. Kellogg                                        
|                      |  |                                                             
|                      |  | Executive Vice President-Finance and
Chief Financial Officer

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##### Table of Contents



CERTIFICATIONS

Certifications:

I, James C. Mullen, certify that:

|   |  |                                                                                                                                                                                                                                                                                                                               
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. |  | I have reviewed this quarterly report on Form 10-Q of Biogen, Inc.:                                                                                                                                                                                                                                                           
|2. |  | Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;                   
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:                                                                                                     

|   |  |                                                                                                                                                                                                                                                                                                
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|a. |  | designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this quarterly report is being prepared;
|b. |  | evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the Evaluation
Date); and                                                                                                  
|c. |  | presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;                                                                                                                        

|   |  |                                                                                                                                                                                                                                               
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|5. |  | The registrants other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of registrants board of directors (or persons
performing the equivalent function):

|   |  |                                                                                                                                                                                                                                                                                               
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|a. |  | all significant deficiencies in the design or operation
of internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data
and have identified for the registrants auditors any material
weaknesses in internal controls; and
|b. |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrants internal controls; and                                                                                                                                        

|   |  |                                                                                                                                                                                                                                                                                                                                                                                   
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|6. |  | The registrants other certifying officers and I have indicated in
this quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.

| |  |                                                                
| |  | ---------------------------------------------------------------
| |  | Date: April 17, 2003                                           
| |  |                                                                
| |  |                                                                
| |  | James C. Mullen
Chairman, Chief Executive Officer and
President

22



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##### Table of Contents



I, Peter N. Kellogg, certify that:

|   |  |                                                                                                                                                                                                                                                                                                                               
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. |  | I have reviewed this quarterly report on Form 10-Q of Biogen, Inc.:                                                                                                                                                                                                                                                           
|2. |  | Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;                   
|4. |  | The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:                                                                                                     

|   |  |                                                                                                                                                                                                                                                                                                
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|a. |  | designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this quarterly report is being prepared;
|b. |  | evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the Evaluation
Date); and                                                                                                  
|c. |  | presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;                                                                                                                        

|   |  |                                                                                                                                                                                                                                               
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|5. |  | The registrants other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrants auditors and
the audit committee of registrants board of directors (or persons
performing the equivalent function):

|   |  |                                                                                                                                                                                                                                                                                               
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|a. |  | all significant deficiencies in the design or operation
of internal controls which could adversely affect the registrants
ability to record, process, summarize and report financial data
and have identified for the registrants auditors any material
weaknesses in internal controls; and
|b. |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrants internal controls; and                                                                                                                                        

|   |  |                                                                                                                                                                                                                                                                                                                                                                                   
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|6. |  | The registrants other certifying officers and I have indicated in
this quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.

| |  |                                                                                
| |  | -------------------------------------------------------------------------------
| |  | Date: April 17, 2003                                                           
| |  |                                                                                
| |  |                                                                                
| |  | Peter N. Kellogg
Executive Vice President  Finance and
Chief Financial Officer

23