10-K

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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                   For the fiscal year ended December 31, 2000

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                         Commission file number: 0-12042

                                  BIOGEN, INC.
             (Exact name of Registrant as specified in its charter)


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


               14 Cambridge Center, Cambridge, Massachusetts 02142
               (Address of principal executive offices) (zip code)

       Registrant's telephone number, including area code: (617) 679-2000

        Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:
                          Common Stock, $.01 par value
                                (Title of class)


     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
                                      ---     ---

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

     Aggregate market value of Common Stock held by nonaffiliates of the
Registrant at March 29, 2001 (excludes shares held by directors):
$9,485,799,873. Exclusion of shares held by any person should not be construed
to indicate that such person possesses the power, direct or indirect, to direct
or cause the direction of management or policies of the Registrant, or that such
person is controlled by or under common control with the Registrant. Common
Stock outstanding at March 29, 2001: 150,270,097 shares.

                       DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the Registrant's definitive Proxy Statement for its 2001 Annual
Meeting of Stockholders are incorporated by reference into Part III of this
Report, and portions of the Registrant's 2000 Annual Report to Shareholders are
incorporated by reference into Parts II and IV of this Report.

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PART I

ITEM 1 - BUSINESS

OVERVIEW

     Biogen, Inc. ("Biogen" or the "Company") is a biopharmaceutical company
principally engaged in the business of developing, manufacturing and marketing
drugs for human health care. Biogen, which was founded in 1978, currently
derives revenues from sales of its AVONEX(R) (Interferon beta-1a) product for
the treatment of relapsing forms of multiple sclerosis and from royalties on
worldwide sales by the Company's licensees of a number of products covered under
patents controlled by the Company. Such products include certain forms of alpha
interferon, hepatitis B vaccines and hepatitis B diagnostic test kits, among
others. The Company's revenues from sales of AVONEX(R) in 2000 were
approximately $761.1 million, making AVONEX(R) the worldwide market leader among
multiple sclerosis therapies. The Company's royalty revenues in 2000 were
approximately $165.4 million.

     Biogen continues to have an active development program related to
AVONEX(R), and is conducting several important clinical trials of the product.
In 2000, Biogen announced the results of its CHAMPS trial, begun in 1996, to
study the effect of AVONEX(R) in delaying the development of clinically definite
multiple sclerosis in patients who had experienced an isolated, well-defined
neurologic event consistent with MS. The study showed a highly statistically
significant beneficial effect of AVONEX(R) on delaying the development of
clinically definite multiple sclerosis as compared to the placebo. A follow-on
open label trial is ongoing. In 2000, Biogen also completed a small Phase 2
pilot study of the use of AVONEX(R) in the treatment of patients with primary
progressive multiple sclerosis. In the study the patient group treated with
AVONEX(R) experienced a significant reduction in the size of brain lesions seen
on MRI, a measure of the extent of damage the disease has caused to the brain,
as compared to the placebo group. In January 2001, Biogen announced preliminary
results of a study of the use of AVONEX(R) in the treatment of patients with
secondary progressive multiple sclerosis. In the study the patient group treated
with AVONEX(R) showed a statistically significant reduction in the rate of
disability accumulation compared to the placebo group as measured by the
multiple sclerosis functional composite (MSFC) endpoint.

     Biogen also continues to devote significant resources to its other ongoing
development efforts. In 2000, the Company completed dosing in its Phase 3
clinical studies of its AMEVIVE(TM) (alafacept) product in patients with
moderate to severe chronic plaque psoriasis. Biogen anticipates that the results
of these studies will be made available during the second quarter of 2001. In
January 2001, the Company announced positive results from two large Phase 2
studies of the use of Antegren(R) (natalizumab) in the treatment of multiple
sclerosis and Crohn's Disease. Antegren(R) is being developed in a collaboration
between Biogen and Elan Corporation, plc ("Elan"). Based on the Phase 2 results,
Biogen and Elan plan to proceed with Phase 3 clinical studies of Antegren(R) in
both MS and Crohn's Disease in 2001. Biogen also plans to begin Phase 1 clinical
trials of several products in 2001, including its small molecule adenosine A1
receptor antagonist which is being developed as a potential treatment for
congestive heart failure and its soluble lymphotoxin beta receptor Ig fusion
protein being developed as a potential treatment for several autoimmune
diseases.

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     In addition to its development programs, Biogen also has many earlier-stage
research programs. Biogen's research strategy is to direct its efforts toward
finding therapeutics in four major research focus areas: Fibrosis, oncology,
immunomodulation, and neurodegeneration. The Company believes that this focused
research effort along with the leveraging of its traditional strengths in
biologics research, protein chemistry and protein manufacturing will allow the
Company to be in a position to capitalize on the potential of the genomics era.
The Company is exploring the use of functional genomics tools and technology to
find novel therapeutics through its collaborations with Eos Biotechnology, Inc.,
Lexicon Genetics Incorporated, MorphoSys AG, Gene Logic, Inc., Incyte Genomics,
Inc. and Genetica Incorporated.

AVONEX(R) (INTERFERON BETA-1A)

     Biogen currently markets and sells AVONEX(R) (Interferon beta-1a) for the
treatment of relapsing forms of multiple sclerosis. Multiple sclerosis is a
progressive neurological disease in which the body loses the ability to transmit
messages along nerve cells, leading to a loss of muscle control, paralysis and,
in some cases, death. Patients with active relapsing multiple sclerosis
experience an uneven pattern of disease progression characterized by periods of
stability interrupted by flareups of the disease after which the patient returns
to a new baseline of functioning. AVONEX(R) is a recombinant form of a protein
produced by fibroblast cells in response to viral infection. AVONEX(R) has been
shown in a pivotal clinical trial both to slow the accumulation of disability
and to reduce the frequency of exacerbations in patients with relapsing forms of
multiple sclerosis.

     Biogen began selling AVONEX(R) in the United States in 1996, and in the
European Union ("EU") in 1997. AVONEX(R) is on the market in over 50 countries,
including Argentina, Australia, Brazil, Canada, Chile, Columbia, Cyprus, the
Czech Republic, the countries of the EU, Hungary, Israel, Mexico, Norway,
Slovakia, South Africa, Switzerland, Turkey and the United States.

     In the United States, Canada and most of the major countries of the EU,
Biogen uses its own sales force to market AVONEX(R). In those countries, Biogen
distributes AVONEX(R) principally through wholesale distributors of
pharmaceutical products, mail order, specialty distributors or shipping service
providers. In other countries, Biogen sells AVONEX(R) to distribution partners
who are then responsible for most marketing and distribution activities. The
Company has entered into distribution agreements covering Australia, Eastern
Europe, Greece, Israel, Italy, Japan, Latin America, the Middle East, New
Zealand, Portugal, South Africa, Spain and Turkey. Under most of these
agreements, the distribution partners are responsible for marketing and
distributing AVONEX(R).

     Biogen continues to have an active development program related to
AVONEX(R). In February 2000, Biogen announced results of a clinical study of
AVONEX(R) in patients who had experienced only one confirmed demyelinating event
(multiple sclerosis-type exacerbation). The study, called the Controlled High
Risk AVONEX(R) Multiple Sclerosis Prevention Study (CHAMPS), which was initiated
in 1996, showed a highly statistically significant beneficial effect of
AVONEX(R) in delaying the development of clinically definite multiple sclerosis
compared to placebo. The CHAMPS study was stopped early following positive
results. Biogen also completed in 2000 a dose comparison study, initiated in
1996, comparing the approved dosage of AVONEX(R) with a higher dose. The study
confirmed that the higher dose provided no additional benefit as compared to the
currently marketed 30 mcg dose, and that the two doses were equally effective in
reducing disability progression in patients with relapsing/remitting MS. Biogen
also completed in 2000 a small Phase 2 pilot study of AVONEX(R)


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in the treatment of primary progressive multiple sclerosis. In the study, the
patient group treated with AVONEX(R) experienced a significant reduction in the
size of brain lesions seen on MRI as compared to the placebo group. In 2001,
Biogen announced completion of a double blinded, randomized clinical study of
AVONEX(R) in patients with secondary progressive multiple sclerosis. In the
study, initiated in 1998, treatment with AVONEX(R) was shown to reduce the
progression of disability in secondary progressive MS by 27% as compared to
treatment with the placebo and as measured by the multiple sclerosis functional
composite (MSFC) endpoint.

     Biogen is currently conducting several other clinical studies of AVONEX(R).
These include: an open-label follow-up study initiated in 1995 to obtain
long-term safety and antigenicity data and an open label follow-up study
initiated in 2000 to study the long-term effect of AVONEX(R) on patients who
participated in the CHAMPS study.

     Biogen is also exploring new ways to improve the formulation and delivery
of AVONEX(R). In February 1999, Biogen entered into a collaborative agreement
with Inhale Therapeutic Systems, Inc. under which the parties are working
towards development of a dry powder formulation of AVONEX(R) for pulmonary
delivery using Inhale's deep-lung delivery system. Biogen is also continuing to
work towards development of a pre-filled syringe formulation of AVONEX(R).

     Revenues from sales of AVONEX(R) in 2000 were $761.1 million or
approximately 82% of total revenues. Revenues from sales of AVONEX(R) in 1999
and 1998 were $620.6 million and $394.9 million, respectively, or approximately
78% and 71% of total revenues, respectively. Approximately 73% of AVONEX(R)
sales in 2000, 71% of AVONEX(R) sales in 1999 and 77% of AVONEX(R) sales in 1998
were generated in the United States. Sales to three major wholesale distributors
and a specialty distributor in the United States accounted for 18%, 13%, 12% and
11%, respectively, of total revenues in 2000.

MAJOR RESEARCH AND DEVELOPMENT PROGRAMS

     Biogen's research is focused on biological systems and processes where its
scientific expertise in molecular biology, cell biology, immunology and protein
chemistry can lead to a greater understanding of disease processes and, as a
result, to the creation of new pharmaceuticals. Biogen selects product
candidates from its research programs to test in clinical trials, focusing its
efforts on those agents which it believes have the greatest potential
competitive advantages and large commercial markets. Described below are
Biogen's major research programs.

         AMEVIVE(TM)  (ALAFACEPT)

     Inflammation is the result of the body's immune response to infection and
injury. In many autoimmune diseases, the inflammation process is directed
inappropriately against the body's own tissues, causing temporary or permanent
damage. Biogen has focused the efforts of its inflammation programs on
developing drugs to inhibit specific cellular interactions critical to the
inflammation process. Central to inflammation is the activation of T-cells,
specialized white blood cells which initiate and control the immune response.
One of the cellular pathways which is important for the activation of T-cells is
the LFA-3/CD2 pathway. AMEVIVE(TM) (alafacept) is a recombinantly engineered
protein designed to modulate immune responses by binding to the CD2 receptor.
Biogen is developing AMEVIVE(TM) as a treatment for certain autoimmune diseases.
In 1999, the Company completed a Phase


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2b clinical study of AMEVIVE(TM) in patients with moderate to severe chronic
plaque psoriasis. Based on positive data from the Phase 2b study, the Company
began Phase 3 studies in North America and Europe. The Company has completed
dosing of the Phase 3 studies, and expects that results of the studies will be
made available in the second quarter of 2001. Psoriasis is a chronic autoimmune
disease that is characterized by inflammation and thickening of the skin. An
estimated 500,000 psoriasis patients in the United States have a severe enough
form of the disease to need systemic therapies. Biogen also has begun initial
work for clinical trials of AMEVIVE(TM) in other indications.


     ANTEGREN(R) (NATALIZUMAB)

     Antegren(R) (natalizumab) is a humanized monoclonal antibody, the first of
a new class of potential therapeutics known as alpha 4 integrin inhibitors.
Antegren(R) is designed to block cell adhesion to blood vessel walls and
subsequent migration of white blood cells into tissue, by binding to the cell
surface receptors known as alpha-4-beta-1 (VLA-4) and alpha-4-beta-7 which are
found on most types of white blood cells. The migration of white blood cells
into tissue is part of the body's normal response during inflammation. This
inflammatory response can be severely damaging or even life threatening when it
is directed against the body's own tissue in autoimmune diseases and may cause
serious collateral injury in chronic immune inflammatory diseases.

     In August of 2000, Biogen entered into a collaborative research,
development and license agreement with Elan Corporation, plc ("Elan") under
which Biogen and Elan are working together to develop, manufacture and
commercialize Antegren(R) worldwide. In January of 2001, Biogen and Elan
announced positive results from two large Phase 2 clinical studies of
Antegren(R) in multiple sclerosis and Crohn's Disease. The companies expect to
initiate Phase 3 clinical studies of Antegren(R) in both of these diseases in
2001.


     ADENOSINE A1 RECEPTOR ANTAGONISTS

     In March 1997, Biogen entered into a research collaboration and license
agreement with CV Therapeutics, Inc. ("CVT") pursuant to which the Company
obtained rights under CVT's patents and know-how to develop and market molecules
that act as highly selective antagonists of the adenosine A1 receptor. The
adenosine A1 receptor is expressed principally in the heart, brain and kidney,
and in the kidney mediates vasoconstriction, renal function and reabsorption of
fluids. Biogen is developing small molecule adenosine A1 receptor antagonists as
a potential treatment for congestive heart failure. Congestive heart failure is
a chronic progressive disease that affects four to five million people in the
United States. Patients with the disease experience both a chronic course as
well as acute episodes of heart failure that usually require hospitalization.
Reduction in kidney function and the formation of edema, or fluid retention, in
lungs and extremities are significant symptoms of chronic heart failure, leading
to increased morbidity, hospitalization and death. In early 2000, Biogen
announced that it had successfully completed a Phase 2 study of a
proof-of-concept adenosine A1 receptor antagonist molecule in patients with
moderate to severe congestive heat failure. Since then, the Company has been
working on the development of a possible commercial compound and anticipates
commencing a Phase 1 study with the commercial compound in 2001 in both oral and
intravenous forms.


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     LT-BETA RECEPTOR

     The lymphotoxin-beta receptor ("LT-Beta Receptor") pathway is involved in
controlling the maintenance of proper immune interactions and the correct
positioning of key cell types in the immune system. Both elements are crucial
for the immune system to function properly. The LT-Beta Receptor pathway serves
as a novel access point to modulate autoimmune disease. Biogen is developing its
LT-Beta Receptor Ig fusion protein as a potential treatment for certain
autoimmune diseases via various routes of administration and completed dosing in
healthy patients for Phase 1 safety studies in March, 2001.

     GENE THERAPY

     In August 2000, the Company entered into a collaborative research agreement
with Targeted Genetics Corporation, successor in interest to Genovo, Inc.
("Genovo") continuing Biogen's agreement with Genovo for the development of
certain human gene therapy treatments.

     OTHER RESEARCH PROGRAMS

     Biogen's research strategy is to direct its efforts toward finding
therapeutics in four major research focus areas: fibrosis, oncology,
immunomodulation, and neurodegeneration. The Company believes that this focused
research effort along with the leveraging of its traditional strengths in
biologics research, protein chemistry and protein manufacturing will allow the
Company to be in a position to capitalize on the potential of the genomics era.
The Company is exploring the use of functional genomics tools and technology to
find novel therapeutics through its collaborations with Eos Biotechnology, Inc.,
Lexicon Genetics Incorporated, MorphoSys AG, Gene Logic, Inc., Incyte Genomics,
Inc. and Genetica Incorporated. As part of its further research efforts, Biogen
is also exploring the use of growth factors to prevent or treat the degeneration
of organs following damage and investigating new ways to modify immune responses
more specifically in order to treat diseases of the immune system.

     RESEARCH AND DEVELOPMENT COSTS

     For the years ended December 31, 2000, 1999 and 1998, Biogen's research and
development costs were approximately $302.8 million, $221.2 million and $177.2
million, respectively.

     RISKS ASSOCIATED WITH DRUG DEVELOPMENT AND COMMERCIALIZATION

     Certain of the statements set forth above regarding the Company's research
and development programs, such as statements regarding the anticipated
commencement of clinical trials of drugs in development, are forward-looking,
and are based upon the Company's current belief as to the outcome and timing of
such future events. These events are subject to a number of factors and
uncertainties which could cause actual results to differ materially from those
described in the forward-looking statements. Many important factors affect the
Company's ability to successfully develop and commercialize drugs, including the
need to demonstrate the 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 receive required regulatory approvals,
to be capable of producing drug candidates in commercial quantities at
reasonable costs, to obtain and maintain all necessary patents or licenses, to
compete successfully against other products, and to market products
successfully. There can


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be no assurance that any of the products described in this section or resulting
from Biogen's research and development programs will be successfully developed,
prove to be safe and efficacious at each stage of clinical trials, meet
applicable regulatory standards, be capable of being produced in commercial
quantities at reasonable costs, be successfully marketed or successfully meet
challenges from competitive products.

     For a detailed discussion of the risks associated with the Company's drug
development and commercialization program, see the Company's 2000 Annual Report
to Shareholders --- "Management's Discussion and Analysis of Financial Condition
and Results of Operations --- Outlook," which is incorporated herein by
reference under Item 7 hereof.

PRINCIPAL PRODUCTS BEING MARKETED OR DEVELOPED BY BIOGEN'S  LICENSEES

     ALPHA INTERFERON

     Alpha interferon is a naturally occurring protein produced by normal white
blood cells. Biogen has been granted patents covering the production of alpha
interferon through recombinant DNA techniques. See "Patents and Other
Proprietary Rights." Biogen's worldwide licensee for recombinant alpha
interferon, Schering-Plough Corporation ("Schering-Plough"), first began
commercial sales of its INTRON(R) A brand of alpha interferon in the United
States in 1986 for hairy-cell leukemia. Schering-Plough now sells INTRON(R) A
worldwide for as many as 16 indications. The United States Food and Drug
Administration (the "FDA") has approved INTRON(R) A for the treatment of chronic
hepatitis B and hepatitis C, hairy-cell leukemia, AIDS-related Kaposi's sarcoma,
condylomata acuminata, for injection as an adjuvant treatment to surgery in
patients at high risk for systemic recurrence of malignant melanoma, and for use
in conjunction with anthracycline-containing combination chemotherapy for the
initial treatment of patients with clinically aggressive non-Hodgkin's lymphoma.
Schering-Plough also sells alpha interferon in two other forms, REBETRON(R), a
combination product containing INTRON(R) A and REBETROL(R) (ribavirin, USP
capsules) and PEG-INTRON(R), a pegylated form of alpha interferon recently
approved by the FDA and approved in May 2000 by European Union regulatory
authorities for use in the treatment of hepatitis C.

     Royalties from Schering-Plough on sales of INTRON(R) A accounted for
approximately 10%, 13% and 16% of Biogen's revenues in 2000, 1999 and 1998,
respectively.

     For a discussion of the length of Schering-Plough's royalty obligation to
Biogen on sales of alpha interferon products and a current dispute with
Schering-Plough related to royalty amounts, see "Patents and Other Proprietary
Rights - Recombinant Alpha Interferon."

     HEPATITIS B VACCINES AND DIAGNOSTICS

     Hepatitis B is a blood-borne disease which causes a serious infection of
the liver and substantially increases the risk of liver cancer. More than 250
million people worldwide have chronic hepatitis B virus infections. Biogen holds
several important patents related to hepatitis B antigens produced by genetic
engineering techniques. See "Patents and Other Proprietary Rights - Recombinant
Hepatitis B Antigens." These antigens are used in recombinant hepatitis B
vaccines and in diagnostic test kits used to detect hepatitis B infection.


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          Hepatitis B Vaccines

     Approximately 100 countries around the world, including the United States,
have added the vaccination against hepatitis B to their routine immunization
programs for all children. The United States Centers for Disease Control and the
American Academy of Pediatrics have also recommended universal immunization of
ten-year-old children and at-risk adolescents. The United States Occupational
Safety and Health Administration has recommended that all persons with an
occupational exposure to blood and other infectious material receive the
hepatitis B vaccine.

     GlaxoSmithKline plc ("SmithKline") and Merck and Co, Inc. ("Merck") are the
two major worldwide marketers of hepatitis B vaccines. Biogen has licensed to
SmithKline exclusive rights under Biogen's hepatitis B patents to market
hepatitis B vaccines in the major countries of the world, excluding Japan.
SmithKline currently pays Biogen royalties based on sales of SmithKline's
vaccine in the United States and in over 15 other countries. In 1990, SmithKline
and Biogen entered into a sublicense arrangement with Merck under which Biogen
currently receives royalties. Biogen has also licensed rights relating to
hepatitis B vaccines under its hepatitis B patents to Merck and The Green Cross
Corporation on a non-exclusive basis in Japan.

          Hepatitis B Diagnostics

     Biogen has licensed its proprietary hepatitis B rights, on an
antigen-by-antigen and nonexclusive basis, to diagnostic kit manufacturers.
Biogen currently has hepatitis B license or license and supply agreements for
diagnostic use with more than 15 companies, including Abbott Laboratories, the
major worldwide marketer of hepatitis B diagnostic kits, Ortho-Clinical
Diagnostics, Organon Teknika B.V. and Roche Diagnostic Systems, Inc.

     For a discussion of the length of the royalty obligation of SmithKline and
Merck on sales of hepatitis B vaccines and the obligation of Biogen's other
licensees on sales of hepatitis B-related diagnostic products, see "Patents and
Other Proprietary Rights - Recombinant Hepatitis B Antigens."

     OTHER PRODUCTS

     In 1996, Biogen granted a sublicense to Pharmacia & Upjohn AB ("Pharmacia &
Upjohn") under certain patent rights to proprietary protein secretion technology
exclusively licensed to Biogen by Harvard University. Under the terms of the
license agreement, Biogen receives ongoing royalties on sales of Pharmacia &
Upjohn's recombinant human growth hormone product, Genotropin(R), in the United
States, Canada and Japan.

     In March 1997, Biogen granted to The Medicines Company ("TMC") exclusive
worldwide rights to develop and market Biogen's bivalirudin product, a direct
thrombin inhibitor now known as ANGIOMAX(TM). Biogen will receive milestone and
royalty payments from TMC if TMC is successful in its efforts to develop and
commercialize the drug. In December 2000, TMC received clearance from the FDA to
market and sell ANGIOMAX(TM) in the United States for use as an anticoagulant in
patients undergoing coronary angioplasty. TMC currently markets ANGIOMAX(TM) in
New Zealand for this use. In Europe, the filing for marketing approval of
ANGIOMAX(TM) is under regulatory review by the European Agency for the
Evaluation of Medicinal Products.


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     Financial information about foreign operations and export sales is included
in the Company's 2000 Annual Report to Shareholders --- Notes to Consolidated
Financial Statements --- Note 11, incorporated herein by reference under Item 8
hereof.

PATENTS AND OTHER PROPRIETARY RIGHTS

     Biogen has filed numerous patent applications in the United States and
various other countries seeking protection of a number of its processes and
products. Patents have been issued on many of these applications. The Company
has also obtained rights to various patents and patent applications under
licenses with third parties which provide for the payment of royalties by the
Company. The ultimate degree of patent protection that will be afforded to
biotechnology products and processes, including those of Biogen, in the United
States and in other important markets remains uncertain and is dependent upon
the scope of protection decided upon by the patent offices, courts and lawmakers
in these countries. There is no certainty that Biogen's existing patents or
others, if obtained, will afford substantial protection or commercial benefit to
Biogen. Similarly, there is no assurance that the Company's pending patent
applications or patent applications licensed from third parties will ultimately
be granted as patents or that those patents that have been issued or are issued
in the future will prevail if they are challenged in court. There has been, and
Biogen expects that there may continue to be, significant litigation in the
industry regarding patents and other intellectual property rights. Intellectual
property litigation could therefore create uncertainty and consume substantial
resources.

     RECOMBINANT ALPHA INTERFERON

     Biogen has obtained approximately 67 patents in countries around the world,
including the United States and numerous other countries, covering the
production of recombinant alpha interferons. Biogen has granted an exclusive
worldwide license to Schering-Plough under Biogen's alpha interferon patents,
and receives royalties from Schering-Plough on sales of its brands of alpha
interferon, including INTRON(R) A. See "Principal Products Being Marketed or
Developed by Biogen's Licensees - Alpha Interferon". Many of Biogen's alpha
interferon patents have recently expired or will expire during 2001.
Schering-Plough's royalty obligation to Biogen on sales of INTRON(R) A in Japan
and Europe terminated upon expiration of Biogen's alpha interferon patent in
such territories in January 2001, except in France and Italy where Biogen has
obtained supplementary protection certificates extending the coverage in France
until 2003 and in Italy until 2007.

     In December 1996, Schering-Plough filed suit in its own name, as Biogen's
exclusive licensee, against Amgen, Inc. ("Amgen") to enforce Biogen's United
States alpha interferon patent claiming it to be infringed by Amgen's consensus
interferon product known as Infergen(R). In July 1998, the United States
District Court for the District of Delaware construed the claims of the patent
narrowly, which precluded finding Amgen's consensus interferon product to be an
infringing product. Schering-Plough appealed the 1998 ruling and in a ruling by
the Court of Appeals for the Federal Circuit in August 2000, the District
Court's narrow claim construction was affirmed, resulting in a determination
that Amgen's consensus interferon product did not infringe the Biogen patent.

     Schering-Plough has taken the position that as a result of the Court of
Appeal's decision in the Amgen case narrowing the scope of Biogen's United
States alpha interferon patent, the patent no longer covers Schering-Plough's
alpha interferon product, and that, as a result, Schering-Plough no longer has
an obligation to pay royalties under that patent on sales of its alpha
interferon products in the United


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States. Until January 2001 when Biogen's EU patent expired, Schering-Plough
continued to pay royalties on sales of INTRON(R) A in the United States based on
the manufacture of the product in the EU. The dispute related to the impact of
the Amgen decision on Schering-Plough's royalty obligation does not affect its
obligation to pay royalties on U.S. sales of its alpha interferon products after
July 2002. In consideration of assignment to Schering-Plough by Biogen of a
Biogen patent application claiming recombinant mature human alpha interferon,
Schering-Plough has agreed to pay to Biogen certain sums on sales by
Schering-Plough of alpha interferon products in the United States from the date
when Biogen's existing United States alpha interferon patent expires (i.e., July
2002) until expiration of an alpha interferon patent expected to be issued to
Hoffman-LaRoche Inc. ("Roche") and Genentech, Inc. ("Genentech"). The
Roche/Genentech patent was the subject of a lawsuit brought by Biogen which was
ultimately settled. Schering-Plough entered into an agreement with Roche as part
of the settlement of the matter. Biogen is currently in discussions with
Schering-Plough to work to resolve the twelve to eighteen month royalty issue
and to resolve claims by Biogen related to underpayment of royalties by
Schering- Plough.

     RECOMBINANT HEPATITIS B ANTIGENS

     Biogen has obtained numerous patents in countries around the world,
including in the United States and in European countries, covering the
recombinant production of hepatitis B surface, core and "e" antigens. Biogen has
licensed its recombinant hepatitis B antigen patent rights to manufacturers and
marketers of hepatitis B vaccines and diagnostic test kits, and receives
royalties on sales of the vaccines and test kits by its licensees. See
"Principal Products Being Marketed or Developed by Biogen's Licensees -
Hepatitis B Vaccines and Diagnostics." The obligation of SmithKline and Merck to
pay royalties on sales of hepatitis B vaccines and the obligation of Biogen's
other licensees under its hepatitis B patents to pay royalties on sales of
diagnostic products will terminate upon expiration of Biogen's hepatitis B
patents in each licensed country. Biogen's existing United States hepatitis B
patent will expire in 2004. Biogen's European hepatitis B patents expired at the
end of 1999, except in those countries in which Biogen has obtained
supplementary protection certificates. To date, Biogen has received
supplementary protection certificates in Austria, Belgium, France, Great
Britain, Ireland, Italy, Luxembourg, The Netherlands, Sweden and Switzerland,
and has a number of granted or pending registrations of the Great Britain
supplementary protection certificates in various British Territories. The
additional coverage afforded by the supplementary protection certificates, or
related registrations, ranges from two to eight years.

     RECOMBINANT BETA INTERFERON

     In 1997, the Technical Board of Appeal of the European Patent Office
revoked Biogen's European patent covering the production of recombinant beta
interferon. Biogen appealed the decision, but a recent decision in another case
denied that such a right of appeal exists. Consequently, Biogen's appeal stands
dismissed and the patent stands revoked. Biogen had sued InterPharm Laboratories
Ltd. ("InterPharm"), an affiliate of Ares Serono, S.A. ("Serono"), and related
defendants under a related Israeli patent claiming that the manufacture by
InterPharm of Serono's Rebif(R) (Interferon Beta-1a) infringes Biogen's Israeli
patent. In October 2000, Biogen reached a settlement with the defendants and the
case was dismissed in Israel. In Germany, a patent with similar claims was the
subject of a nullity proceeding instituted by Schering AG in the German Federal
Patent Court. In March 1998, the German Federal Patent Court upheld the German
patent but with substantially narrower claims. Biogen has appealed the decision
but does not anticipate any decision until sometime during 2002.


                                       10

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     Other parties have pending patent applications or issued patents in the
United States, Europe and other countries with claims to key intermediates in
the production of beta interferon (the "Taniguchi patents") and to beta
interferon itself (the "Roche patents"). Biogen has obtained non-exclusive
rights in various countries of the world, including the United States, Japan and
most European countries, to manufacture, use and sell AVONEX(R) under the
Taniguchi patents and has obtained worldwide, non-exclusive rights under the
Roche patents.

     On July 3, 1996, Berlex Laboratories, Inc. ("Berlex") filed suit against
Biogen in the United States District Court for the District of New Jersey
alleging infringement by Biogen of Berlex's "McCormick" patent (U.S. Patent No.
5,376,567) in the United States in the production AVONEX(R). In November 1996,
Berlex's New Jersey action was transferred to the United States District Court
in Massachusetts and consolidated for pre-trial purposes with a related
declaratory judgment action previously filed by Biogen. On August 18, 1998,
Berlex filed a second suit against Biogen alleging infringement by Biogen of a
patent which was issued to Berlex in August 1998 and which is related to the
McCormick patent (U.S. Patent No. 5,795,779). On September 23, 1998, the cases
were consolidated for pre-trial and trial purposes. Berlex sought a judgment
granting it damages, a trebling of any damages awarded and a permanent
injunction restraining Biogen from the alleged infringement. A hearing on the
parties' summary judgment motions in the case was completed in March 2000. In
September 2000, the District Court rendered final judgment in favor of Biogen
and against Berlex determining that Biogen's production of AVONEX(R) did not
infringe any of the claims of the Berlex patents. Berlex has appealed this
decision to the Court of Appeals for the Federal Circuit, and the parties are in
the process of briefing the matter for oral argument before the court. For a
further discussion, see Item 3 hereof - Legal Proceedings, and the Company's
2000 Annual Report to Shareholders --- Notes to Consolidated Financial
Statements --- Note 9, incorporated herein by reference under Item 8 hereof.

     In 1995, the Company filed an opposition with the Opposition Division of
the European Patent Office opposing a European patent (the "Rentschler I
Patent") issued to Dr. Rentschler Biotechnologie GmbH ("Rentschler") relating to
compositions of matter of beta interferon. In 1997, the European Patent Office
issued a decision revoking the Rentschler I Patent. Rentschler appealed that
decision. An oral hearing on the appeal took place in December 2000. At the oral
hearing in order to gain reinstatment of the patent, Rentschler narrowed the
patent claims so as to claim only a specific cell line. Biogen does not use the
specific cell line now claimed. On October 13, 1998, the Company filed another
opposition with the Opposition Division of the European Patent Office to oppose
a second European patent issued to Rentschler (the "Rentschler II Patent") with
certain claims regarding compositions of matter of beta interferon with specific
regard to the structure of the glycosylated molecule. The parties are in the
process of filing further evidence and arguments with the European Oppositon
Division. A decision on the Rentschler II Patent has not been issued to date.
For a more detailed discussion, see the Company's 2000 Annual Report to
Shareholders --- "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Legal Matters" incorporated herein by reference
under Item 7 hereof.


     OTHER PATENTS

     In March 1995, Biogen filed suit in the U.S. District Court for the
District of Massachusetts seeking to enjoin Amgen from manufacturing and selling
its Neupogen(R) human granulocyte colony stimulating factor in the United States
and asking for damages for infringing activities. Biogen believes


                                       11

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that to make Neupogen(R) Amgen uses technology claimed in certain of Biogen's
gene expression patents. In 1998, the court interpreted the broad vector claim
of one of the Biogen patents in such a way as to preclude Amgen's literal
infringement of the claim. Amgen thereafter filed a motion for summary judgment
based on the court's 1998 claim construction as well as a motion for a
declaration of noninfringement under the doctrine of equivalents. The matter was
argued to the court in November 1999 and the Court issued a decision in
September 2000 allowing Amgen's motions for a declaration of noninfringement.
Amgen made a motion asking the court to apply its decisions with respect to
noninfringement to the remaining Biogen patents in suit and arguing that Biogen
may not assert infringement under the doctrine of equivalents as a result of
arguments Biogen made in obtaining the patent. On March 1, 2001, the court ruled
in favor of Amgen with respect to one of the patents in the suit and ordered a
hearing on Amgen's arguments with respect to the remaining patents in the suit.
Biogen intends to seek reconsideration of the court's ruling.

     In July 1997, Biogen filed suit in the U.S. District Court for the District
of Massachusetts to enjoin Amgen from manufacturing and selling its Infergen(R)
consensus interferon in the United States and asking for damages for infringing
activities. Biogen believes that to make Infergen(R) Amgen uses technology
claimed in certain of Biogen's gene expression patents. Biogen's request to have
the case consolidated with the Neupogen(R) suit was denied by the court. The
case has been stayed pending resolution of the Biogen suit pertaining to
Neupogen(R). In the court's March 1, 2001 decision in the Neupogen(R) suit, the
court ordered a hearing on Amgen's contention that the court's ruling in the
Neupogen(R) suit compels dismissal of the Infergen(R) suit. In 1994, Biogen
granted Eli Lilly and Company ("Lilly") a non-exclusive license under the same
patents for gene expression involved in the Amgen case. Under the license,
Biogen has received royalties from Lilly since 1994 on products which use the
patented vectors and methods. Based on the court's claims construction decision
in the Amgen case, Lilly recently has notified Biogen that Lilly believes that
it no longer owes royalties to Biogen under the agreement on any of its
products. Biogen's European patent relating to gene expression was opposed by
Biotechnology General Corp. in December 1993. A hearing was held by the
Opposition Division of the European Patent Office in March 1996. In March 1997,
the Opposition Division decided to revoke Biogen's patent. Biogen appealed the
decision and a hearing is scheduled on Biogen's appeal in June 2001. Biogen
successfully defended a similar opposition against issuance of a counterpart
patent in Japan.

     THIRD-PARTY PATENTS

     Biogen is aware that others, including various universities and companies
working in the biotechnology field, have also filed patent applications and have
been granted patents in the United States 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 United
States 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 microbial hosts. Genentech has offered to Biogen and others in the
industry non-exclusive licenses under 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


                                       12

   13


under such patents and the availability and cost of acquiring such rights,
currently cannot be determined by Biogen.

     TRADE SECRETS AND CONFIDENTIAL KNOW-HOW

     Trade secrets and confidential know-how are important to Biogen's
scientific and commercial success. Although Biogen seeks to protect its
proprietary information by generally requiring its employees, consultants,
advisors and corporate partners to sign confidentiality agreements, there can be
no assurance that third parties will not either independently develop the same
or similar information or obtain access to Biogen's proprietary information.

COMPETITION AND MARKETING

     IN GENERAL

     Competition in the biotechnology and pharmaceutical industries is intense
and comes from many and varied sources. Biogen does not believe that it or any
of the other industry leaders can be considered dominant in view of the rapid
technological change in the industry. Biogen experiences significant competition
from specialized biotechnology firms in the United States, Europe and elsewhere
and from many large pharmaceutical, chemical and other companies. Certain of
these companies have substantially greater financial, marketing, research and
development and human resources than Biogen. Most pharmaceutical companies have
considerable experience in undertaking clinical trials and in obtaining
regulatory approval to market pharmaceutical products.

     Biogen believes that competition and leadership in the industry will be
based on managerial and technological superiority and establishing proprietary
positions through research and development. Leadership in the industry may also
be influenced significantly by patents and other forms of protection of
proprietary information. See "Patents and Other Proprietary Rights". A key
aspect of such competition is recruiting and retaining qualified scientists and
technicians. Biogen believes that it has been successful in attracting skilled
and experienced scientific personnel. The achievement of a leadership position
depends largely upon Biogen's continued ability to attract and retain skilled
and experienced personnel, its ability to identify and exploit commercially the
products resulting from research and the availability of adequate financial
resources to fund facilities, equipment, personnel, clinical testing,
manufacturing and marketing.

     Many of Biogen's competitors are working to develop products similar to
those under development by Biogen. The timing of the entry of a new
pharmaceutical product into the market can be an important factor in determining
the product's eventual success and profitability. Early entry may have important
advantages in gaining product acceptance and market share. Moreover, for certain
diseases with limited patient populations, the FDA is prevented under the Orphan
Drug Act, for a period of seven years, from approving more than one application
for the "same" product for a single orphan drug designation, unless a later
product is considered clinically superior. The EU and other jurisdictions have
or are considering similar laws. Accordingly, the relative speed with which
Biogen can develop products, complete the testing and approval process and
supply commercial quantities of the product to the market will have an important
impact on Biogen's competitive position. In addition, competition among products
approved for sale may be based, among other things, on patent position, product
efficacy, safety, reliability, availability and price.


                                       13

   14

     AVONEX(R) (INTERFERON BETA - 1a)

     As a treatment for multiple sclerosis, AVONEX(R) competes with interferon
beta-1b which is sold in the United States under the brand name Betaseron(R) by
Berlex Laboratories, a United States affiliate of Schering AG, and is sold in
Europe under the brand name Betaferon(R) by Schering AG. AVONEX(R) also faces
competition from Copaxone(R) glatiramer acetate (also known as copolymer-1). In
the United States, Copaxone(R) is marketed by a partnership between Teva
Pharmaceutical Industries, Ltd. and Hoechst Marion Roussel, Inc. In most
countries outside of the United States, AVONEX(R) also competes with Rebif(R), a
recombinant interferon beta-1a product sold by Serono. In response to an
application from Serono for approval of Rebif(R) in the United States for
relapsing multiple sclerosis, the FDA, in March 1999, upheld its earlier ruling
that, based on the data from existing clinical trials, Serono cannot market
Rebif(R) in the United States for relapsing multiple sclerosis while the orphan
drug status afforded to AVONEX(R) and Betaseron(R) for that indication is still
in effect. AVONEX(R)'s orphan drug status for relapsing forms of the disease
expires in 2003. The ruling by the FDA prompted Serono in 2000 to initiate a
12-month head-to-head study of Rebif(R) and AVONEX(R) to determine if Serono can
show whether Rebif(R) is clinically superior to AVONEX(R). If positive, Serono
will most likely use the results of this study in its attempts to overcome the
orphan drug status of AVONEX(R) and to get Rebif(R) approved in the United
States before 2003. Biogen expects Serono to release the results of the study in
the third quarter of 2001. AVONEX(R) also competes in the United States with
Novantrone(R) (mitoxantrone for injection) which is produced and marketed by
Immunex Corporation, a majority-owned subsidiary of American Home Products
Corporation. Novantrone(R) is approved for use in patients with clinically
worsening forms of relapsing-remitting and secondary progressive multiple
sclerosis.

     A number of other companies are working to develop products to treat
multiple sclerosis which may in the future compete with AVONEX(R), the worldwide
market leader among multiple sclerosis therapies. AVONEX(R) may also in the
future face competition from off-label uses of drugs approved for other
indications. Biogen believes that competition among treatments for multiple
sclerosis will be based on product performance, service and price.

REGULATION

     Biogen's current and contemplated activities and the products and processes
that will result from such activities are, and will be, subject to substantial
government regulation.

     Before new pharmaceutical products may be sold in the United States and
other countries, clinical trials of the products must be conducted and the
results submitted to appropriate regulatory agencies for approval. These
clinical trial programs generally involve a three-phase process. Typically, in
Phase 1, trials are conducted in volunteers or patients to determine the early
side effect profile and, perhaps, the pattern of drug distribution and
metabolism. In Phase 2, trials are conducted in groups of patients with a
specific disease in order to determine appropriate dosages, expand evidence of
the safety profile and, perhaps, determine preliminary efficacy. In Phase 3,
large scale, comparative trials are conducted on patients with a target disease
in order to generate enough data to provide the statistical proof of efficacy
and safety required by national regulatory agencies. The receipt of regulatory
approvals often takes a number of years, involving the expenditure of
substantial resources and depends on a number of factors, including the severity
of the disease in question, the availability of alternative


                                       14

   15

treatments and the risks and benefits demonstrated in clinical trials. On
occasion, regulatory authorities may require larger or additional studies,
leading to unanticipated delay or expense.

     In connection with the commercialization of products resulting from
Biogen's research and development projects, it is necessary, in a number of
countries, to comply with certain regulations relating to the manufacturing and
marketing of such products and to the products themselves. For example, the
commercial manufacturing, marketing and exporting of pharmaceutical products
require the approval of the FDA in the United States and of comparable agencies
in other countries. The FDA has established mandatory procedures and safety
standards which apply to the manufacture, clinical testing and marketing of
pharmaceutical products in the United States. The regulatory requirements and
approval processes for new products in the EU operate under similar principles
as those applied in the United States. The process of seeking and obtaining
approval of the FDA or regulatory authorities in the EU or other regulatory
authorities worldwide for a new product and licensing of the facilities in which
the product is produced takes a number of years and involves the expenditure of
substantial resources. In addition, the regulatory approval processes for
products in the United States, the countries of the EU and other countries
around the world are undergoing or may undergo changes. Biogen cannot determine
what effect any changes in regulatory approval processes may have on its
business.

     In the United States, the federal government regularly considers reforming
health care coverage and costs. Resulting legislation or regulatory actions may
have a significant effect on the Company's business. Biogen's ability to
successfully commercialize human pharmaceutical products also may depend in part
on the extent to which reimbursement for the costs of such products and related
treatments will be available worldwide from government health administration
authorities, private health insurers and other organizations. Currently,
substantial uncertainty exists as to the reimbursement status of newly approved
health care products by third-party payors.

     Biogen conducts relevant research in compliance with the current United
States National Institutes of Health Guidelines for Research Involving
Recombinant DNA Molecules (the "NIH Guidelines") and all other applicable
federal and state regulations. By local ordinance, Biogen is required, among
other things, to comply with the NIH Guidelines in relation to its facilities in
Cambridge, Massachusetts, and is required to operate pursuant to certain
permits.

     Various laws, regulations and recommendations relating to safe working
conditions, laboratory practices, the experimental use of animals, and the
purchase, storage, movement, import and export and use and disposal of hazardous
or potentially hazardous substances, including radioactive compounds and
infectious disease agents, used in connection with Biogen's research work are or
may be applicable to its activities. The extent of government regulation which
might result from future legislation or administrative action cannot accurately
be predicted. Certain agreements entered into by Biogen involving exclusive
license rights may be subject to national or supranational antitrust regulatory
control, the effect of which also cannot be predicted.

EMPLOYEES

     At December 31, 2000, Biogen employed 1,475 full-time employees worldwide,
of whom 1,217 were located in the United States. Of the 1,475 employees, 424
were engaged in, or directly supported, research, including medical research,
454 were involved in, or directly supported, manufacturing, product and process
development, and quality assurance/quality control, and 291 were involved in
sales


                                       15

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and marketing. In addition, Biogen maintains consulting arrangements with a
number of scientists at various universities and other research institutions in
Europe and the United States, including the ten outside members of its
Scientific Board.

ITEM 2 - PROPERTIES

     Biogen's principal executive offices and a majority of its administrative,
manufacturing and research and development facilities are located in Cambridge,
Massachusetts. The Company owns a 150,000 square foot building in Cambridge that
houses laboratories and office space. The Company also leases a total of
approximately 482,987 square feet of additional office, manufacturing, and
research and development space in all or part of six other buildings in
Cambridge, consisting of: a 67,362 square foot building housing manufacturing
facilities, laboratories and office space; a building with 65,792 square feet of
space containing laboratories, purification and aseptic bottling facilities, and
office space; a multi-tenant building where the Company leases approximately
156,069 square feet of office space; a 17,000 square foot building housing
office space and distribution facilities; a 24,100 square foot warehouse
facility; and a 152,164 square foot office building. The lease expiration dates
for the leased sites range from 2002 to 2015. In February 2001, Biogen completed
construction of a new 224,000 square foot facility in Cambridge primarily to
house research and development and process development operations. The Company
also has development options for additional property in Cambridge.

     In addition to its Cambridge facilities, the Company has a 100,000 square
foot biologics manufacturing facility in Research Triangle Park, North Carolina.
The Company uses the Research Triangle Park facility as a site for the
manufacture of AVONEX(R). In 1999, the Company commenced construction of a
250,000 square foot addition to the Research Triangle Park facility to add large
scale cell culture manufacturing capacity which it expects to complete in the
first half of 2001. In addition, in 2000, the Company commenced construction at
the Research Triangle Park location of a 150,000 square foot office and
laboratory facility.

     Biogen financed construction of the buildings which it owns in Cambridge,
Massachusetts and Research Triangle Park, North Carolina with term loans. The
loans are secured by the buildings. See the Company's 2000 Annual Report to
Shareholders --- "Management's Discussion and Analysis of Financial Condition
and Results of Operations" incorporated herein by reference under Item 7 hereof.

     The Company's European headquarters consists of 4,150 square meters of
office space in a multi-tenant building in Nanterre, France and the company is
currently negotiating for an additional 1,500 square meters. The lease for the
Nanterre space terminates in 2008 with Biogen having the right to terminate the
lease earlier under specified circumstances. The Company also leases 2,250
square meters of office and manufacturing space in The Netherlands, 1,400 square
meters of office space in Germany, of which 450 square meters is subleased to a
third party through the second quarter of 2001, 800 square meters of office
space in England, 450 square meters of office space in Denmark and small offices
in Austria, Canada, Finland, Norway and Sweden.

     The Company believes that its production plants in Cambridge, Massachusetts
and Research Triangle Park, North Carolina and existing outside sources will
allow it to meet, in the near term, its production needs for products in
clinical trials and AVONEX(R). Biogen believes that its existing facilities are
in compliance with applicable regulatory standards. The Company expects that
additional


                                       16

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facilities and outside sources will be required to meet the Company's future
research, development and commercial production needs.

ITEM 3 - LEGAL PROCEEDINGS

     On July 3, 1996, Berlex Laboratories, Inc. ("Berlex") filed suit against
Biogen in the United States District Court for the District of New Jersey
alleging infringement by Biogen of Berlex's "McCormick" patent (U.S. Patent No.
5,376,567) in the United States in the production of AVONEX(R). In November
1996, Berlex's New Jersey action was transferred to the United States District
Court in Massachusetts and consolidated for pre-trial purposes with a related
declaratory judgment action previously filed by Biogen. On August 18, 1998,
Berlex filed a second suit against Biogen alleging infringement by Biogen of a
patent which was issued to Berlex in August 1998 and which is related to the
McCormick patent (U.S. Patent No. 5,795,779). On September 23, 1998, the cases
were consolidated for pre-trial and trial purposes. Berlex sought a judgment
granting it damages, a trebling of any damages awarded and a permanent
injunction restraining Biogen from the alleged infringement. A hearing on the
parties' summary judgment motions in the case was completed in March 2000. In
September 2000, the District Court rendered final judgment in favor of Biogen
and against Berlex determining that Biogen's production of AVONEX(R) did not
infringe any of the claims of the Berlex patents. Berlex has appealed this
decision with the Court of Appeals for the Federal Circuit and the parties are
in the process of briefing the appeal for oral argument. An unfavorable ruling
on appeal would result in the case being remanded to the District Court for
trial. If Berlex were to be successful in its appeal and the case were to be
remanded, an unfavorable ruling in the remanded case could have a material
adverse effect on the Company's results of operations and financial position.
The Company believes that the decision of the District Court that Biogen does
not infringe the Berlex patents is sound, but the ultimate outcome of the appeal
is not currently determinable. As a result, an estimate of any potential loss or
range of loss cannot be made at this time.

     For a description of legal proceedings relating to certain patent rights,
see Item 1 hereof, "Business - Patents and Other Proprietary Rights."


ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     Not Applicable


                                       17

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     EXECUTIVE OFFICERS OF THE REGISTRANT

     The following is a list of each executive officer of the Company, their
respective age as of December 31, 2000 and their principal positions with the
Company. Officers are elected and may be removed by the Board of Directors.




Name                           Age          Positions
- ----                           ---          ---------

                                      
James L. Vincent...........    61           Chairman of the Board of Directors

James C. Mullen............    42           President, Chief Executive Officer and Director

Burt A. Adelman............    48           Vice President - Medical Research

Cornelis "Kees" Been.......    42           Vice President - Business and Market Development

Thomas J. Bucknum..........    54           Vice President - General Counsel, Secretary and Clerk

Frank A. Burke, Jr.........    57           Vice President - Human Resources

Nadine D. Cohen............    51           Vice President - Regulatory Affairs

Michael Gilman ............    45           Vice President - Research

Sylvie L. Gregoire.........    39           Vice President - Manufacturing

Robert A. Hamm.............    49           Vice President - Sales and Marketing

Peter N. Kellogg ..........    44           Vice President - Finance and Chief Financial Officer

Mark W. Leuchtenberger.....    44           Vice President - International

Toshio Nakata..............    57           President - Biogen Japan, Ltd.,
                                            Vice President - Japan, Asia and Oceana

John W. Palmer.............    49           Vice President - Program Management

David D. Pendergast........    52           Vice President - Product Development and Quality Assurance

Patrick J. Purcell.........    40           Vice President - Information Systems and Chief Information
                                            Officer


The background of these officers is as follows:

     James L. Vincent has been Chairman of the Board of Directors since October
1985. Mr. Vincent served as Chief Executive Officer from December 1998 to June
2000. He previously served as Chief

                                       18

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Executive Officer of the Company from October 1985 until February 1997. He
served in the additional capacities of Chief Operating Officer and President
from April 1988 until February 1994. Before joining Biogen, Mr. Vincent served
as Group Vice President, Allied Corporation and as President, Allied Health &
Scientific Products Company, a subsidiary of Allied Corporation. Before joining
Allied Corporation, Mr. Vincent was with Abbott Laboratories, Inc. where he
served in various capacities, including Executive Vice President, Chief
Operating Officer and Director of the parent corporation.

     James C. Mullen was appointed President and Chief Executive Officer in June
2000 after serving as President and Chief Operating Officer since January 1999.
He was appointed as a Director of the Company in April 1999. Mr. Mullen
previously served as Vice President - International from August 1996 until
January 1999, and Vice President - Operations from December 1991 until August
1996 and served as Senior Director - Operations from February 1991 to December
1991. Mr. Mullen joined the Company in 1989. Before coming to Biogen, Mr. Mullen
held various positions of responsibility from 1984 through 1988 at
SmithKline-Beckman Corporation (now GlaxoSmithKline plc), including Director,
Engineering, SmithKline and French Laboratories, Worldwide.

     Burt A. Adelman, M.D. was appointed Vice President - Medical Research in
January 1999 after serving as Vice President - Development Operations since
August 1996. Dr. Adelman served as Vice President - Regulatory Affairs of the
Company from May 1995 until August 1996. From 1991 until May 1995, Dr. Adelman
was Director of Medical Research at Biogen. Dr. Adelman has served as Lecturer
of Medicine at Harvard Medical School and Brigham and Women's Hospital since
1992.

     Cornelis "Kees" Been was appointed Vice President - Business and Market
Development in August 1999. Prior to joining the Company, Mr. Been held a
variety of management positions from 1996 until April 1999 with Monsanto Life
Sciences, most recently as Vice President - Global Strategy. From 1988 through
1995, Mr. Been worked at Gemini Consulting, where his positions included Vice
President, responsible for building Gemini's pharmaceuticals practice. Mr. Been
began his career in 1983 as a Trade and Licensing Manager with Biogen, based in
Geneva, Switzerland.

     Thomas J. Bucknum was appointed Vice President - General Counsel, Secretary
and Clerk in July 1999, after serving as the Company's Chief Corporate Counsel
since 1996. Prior to joining the Company, Mr. Bucknum was Senior Vice President
and General Counsel of DuPont Merck Pharmaceutical Company from 1990 to 1995
with responsibility for legal, government and public affairs matters. Prior to
joining DuPont Merck, Mr. Bucknum held a number of domestic and international
positions with E.I. DuPont de Nemours & Company, Inc in the legal, marketing and
regulatory affairs departments.

     Frank A. Burke, Jr., was appointed Vice President - Human Resources in May
1986 after serving for 12 years in various human resource management positions
at Allied-Signal, Inc., including Director of Compensation and Employee Benefits
of the Engineered Materials Sector.

     Nadine D. Cohen, Ph.D., was appointed Vice President - Regulatory Affairs
in October 2000 after serving as Director of Regulatory Affairs since September
1999. Dr. Cohen joined Biogen in 1999 from the Massachusetts Biologics
Laboratories, where she was Senior Director of Quality Control and Technical
Services. Prior to that, she was Vice President of Regulatory Affairs and
Quality at Alpha Beta Technology, Inc.

                                       19

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     Michael Gilman, Ph.D., was appointed Vice President - Research in April
2000. Dr. Gilman joined Biogen in 1999 as Director, Molecular Biology from ARIAD
Pharmaceuticals, Inc., where he served as Executive Vice President and Chief
Scientific Officer. From 1986-1994, Dr. Gilman worked at Cold Spring Harbor
Laboratory.

     Sylvie L. Gregoire, Pharm.D., was appointed Vice President - Manufacturing
in October 2000 after serving as Vice President - Regulatory Affairs from
January 1999 to October 2000. From July 1998 to January 1999, Dr. Gregoire was
the Program Executive for the Company's LT-Beta Receptor program and from 1995
until July 1998, served as Director, European Regulatory Affairs of the Company.
Prior to joining Biogen, Dr. Gregoire was Associate Director of European
Regulatory Affairs for Merck Sharp and Dohme (Europe) Inc. from 1991 until the
end of 1994.

     Robert A. Hamm was appointed Vice President - Sales and Marketing in
October 2000 after serving as Vice President - Manufacturing from June 1999 to
October 2000. Mr. Hamm served as Director, Northern Europe and Distributors of
the Company from November 1996 until June 1999 and as the Company's Associate
Director, Logistics from April 1994 until November 1996. From 1987 until April
1994, Mr. Hamm held a variety of management positions at Syntex Laboratories
Corporation, including Director of Operations and New Product Planning, and
Manager of Materials, Logistics and Contract Manufacturing.

     Peter N. Kellogg was appointed Vice President - Finance and Chief Financial
Officer in July 2000. Mr. Kellogg joined Biogen from PepsiCo where from 1987 to
2000, he served in a variety of senior financial, international and general
management positions, including Senior Vice President, PepsiCo. E-Commerce from
March to July 2000. From March 1998 to March 2000, he served as Senior Vice
President and Chief Financial Officer, Frito-Lay International; from November
1996 to March 1998 as Vice President and Chief Financial Officer, Frito-Lay
Latin America; from March 1994 to November 1996 as Vice President and Chief
Financial Officer, Central/Eastern Europe and Russia, Pepsi-Cola International;
and from February 1993 through March 1994 as Vice President and General
Manager-Pepsi, South Franchise Business Unit. Prior to joining PepsiCo, Mr.
Kellogg was a senior consultant with Booz Allen & Hamilton and Arthur Andersen &
Co.

     Mark W. Leuchtenberger was appointed Vice President - International in
January 1999 after serving as Vice President - Sales, Marketing and Business
Development since January 1998. Mr. Leuchtenberger was the Company's Vice
President - Marketing and Sales from October 1996 until January 1998, Director
of Distributor Operations, Europe from September 1996 until October 1996,
Director of Marketing and the Program Executive for AVONEX(R) from 1993 until
September 1996, a Product Manager from 1992 to 1993, and a Market Development
Manager from 1990 to 1992. Prior to joining Biogen, Mr. Leuchtenberger worked
for the consulting firm of Bain & Company from 1987 to 1990.

     Toshio Nakata was appointed President - Biogen Japan, Ltd. and Vice
President - Japan, Asia and Oceana in October 2000. Mr. Nakata joined Biogen
from Mitsui & Co., Ltd. where he served as: Associate Director and General
Manager of the Global Environment Department, Corporate Planning Division, from
January 2000 to October 2000; General Manager of New Business and Technology
Development Department and Global Environment Department, Corporate Planning
Division, from April 1997 to January 2000; and General Manager of Technology
Planning and Development

                                       20

   21

Department and Global Environment Department, Corporate Planning Division, from
May 1994 to April 1997.

     John W. Palmer was appointed as Vice President - Program Management in May
2000, after serving as Program Executive for Biogen's Adensoine A1 antagonist
program since 1997. From 1993 until 1997, Mr. Palmer was the Company's Director
of Operations, and from 1989 until 1993 served as Director of Marketing and
Business Development. Prior to joining Biogen, Mr. Palmer was a Marketing and
Business Development Director at General Foods Corporation. He was also
previously Founder, President and Chief Operating Officer of Caribbean Emergency
Medical Air Transport, Inc., a novel air ambulance service operating throughout
the Caribbean market, and a managing consultant with Strategic Planning
Associates in Washington, D.C.

     David D. Pendergast, Ph.D. was appointed Vice President - Product
Development and Quality Assurance in January 1998 after serving as Vice
President - Quality Assurance and Quality Control of the Company since April
1996. Dr. Pendergast joined Biogen from Fisons Pharmaceuticals, Manchester U.K.
where he served as Director, Quality Assurance/Quality Control of Fisons PLC
from 1992 to 1996. Prior to joining Fisons, Dr. Pendergast served, over a
twenty-year period, in various capacities at The Upjohn Company, including Vice
President - Quality Assurance from 1989 to 1992.

     Patrick J. Purcell was appointed Vice President - Information Systems and
Chief Information Officer in February 2000. Mr. Purcell joins Biogen from Sprint
PCS, where he worked from 1992 to 2000 in a variety of finance and information
technology management capacities, most recently serving as Vice President, IT
Planning, Resource & Performance Management. Prior to joining Sprint, Mr.
Purcell worked at Deloitte & Touche Management Consulting from 1988 to 1992, as
a consulting manager with primary focus on business and financial planning,
financing and operations analysis, and change management in a variety of
industries.


PART II

ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The section entitled "Market for Securities" in the Company's 2000 Annual
Report to Shareholders is hereby incorporated herein by reference.

ITEM 6 - SELECTED FINANCIAL DATA

     The section entitled "Selected Financial Data" in the Company's 2000 Annual
Report to Shareholders is hereby incorporated herein by reference.

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

     The section entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in the Company's 2000 Annual Report to
Shareholders is hereby incorporated herein by reference.

ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


                                       21

   22

     The section entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Outlook - Market Risk" in the Company's
2000 Annual Report to Shareholders is hereby incorporated herein by reference.

ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The sections entitled "Consolidated Statements of Income," "Consolidated
Balance Sheets," "Consolidated Statements of Cash Flows," "Consolidated
Statements of Shareholders' Equity," "Notes to Consolidated Financial
Statements" and "Report of Independent Accountants" in the Company's 2000 Annual
Report to Shareholders are hereby incorporated herein by reference.

ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

     Not Applicable

PART III

ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The sections entitled "Election of Directors" and "Section 16(a) Beneficial
Ownership Reporting Compliance" in the Company's definitive proxy statement for
its 2001 Annual Meeting of Stockholders, which the Company intends to file with
the Commission no later than April 30, 2001, are hereby incorporated herein by
reference.

     Information concerning the Company's Executive Officers is set forth in
Item 4 of Part I of this Annual Report on Form 10-K.

ITEM 11 - EXECUTIVE COMPENSATION

     The sections entitled "Election of Directors" and "Executive Compensation"
in the Company's definitive proxy statement for its 2001 Annual Meeting of
Stockholders, which the Company intends to file with the Commission no later
than April 30, 2001, are hereby incorporated herein by reference.

ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The section entitled "Share Ownership" in the Company's definitive proxy
statement for its 2001 Annual Meeting of Stockholders, which the Company intends
to file with the Commission no later than April 30, 2001, is hereby incorporated
herein by reference.

ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The section entitled "Executive Compensation - Employment Arrangements with
the Company and Certain Transactions" in the Company's definitive proxy
statement for its 2001 Annual Meeting of Stockholders, which the Company intends
to file with the Commission no later than April 30, 2001, is hereby incorporated
herein by reference.


                                       22
   23

PART IV

ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)  The following documents are filed as a part of this report:

         (1) The Company's Financial Statements are incorporated herein by
         reference from the Company's 2000 Annual Report to Shareholders
         attached hereto as Exhibit 13. The specific items and the locations of
         such items are set forth below:



Item                                                    Location
- ----                                                    --------

                                                     
Consolidated Statements of Income                       Annual Report under the caption "Biogen,
                                                        Inc. and Subsidiaries Consolidated
                                                        Statements of Income."

Consolidated Balance Sheets                             Annual Report under the caption "Biogen,
                                                        Inc. and Subsidiaries Consolidated Balance
                                                        Sheets."

Consolidated Statements of Cash Flows                   Annual Report under the caption "Biogen,
                                                        Inc. and Subsidiaries Consolidated
                                                        Statements of Cash Flows."

Consolidated Statements of Shareholders' Equity         Annual Report under the caption "Biogen,
                                                        Inc. and Subsidiaries Consolidated
                                                        Statements of Shareholders' Equity."

Notes to Consolidated Financial Statements              Annual Report under the caption "Biogen,
                                                        Inc. and Subsidiaries Notes to Consolidated
                                                        Financial Statements."

Report of Independent Accountants                       Annual Report under the caption "Report of
                                                        Independent Accountants."


     With the exception of the portions of the Company's 2000 Annual Report to
Shareholders specifically incorporated herein by reference, such report shall
not be deemed filed as part of this Annual Report on Form 10-K.

     (2) The Company's Financial Statement Schedules, as required by Item 8 of
this Form 10-K, are incorporated herein by reference from the Company's 2000
Annual Report to Shareholders attached hereto as Exhibit 13. A list of such
Financial Statement Schedules is set forth below:

     Report of Independent Accountants on Financial Statement Schedule.
     Schedule II - Valuation and Qualifying Accounts and Reserves

     (3) Exhibits

                                       23
   24


Exhibit No.    Description
- -----------    -----------

(3.1)          Articles of Organization, as amended (m)

(3.2)          By-Laws, as amended (f)

(4.1)          Form of Common Stock Share Certificate (h)

(4.2)          Certificate of Designation of Series A Junior Participating
               Preferred Stock (d)

(4.3)          Rights Agreement dated as of May 8, 1989 between the Registrant
               and The First National Bank of Boston, as Rights Agent (d)

(10.1)         Independent Consulting and Project Agreement dated as of June 29,
               1979 between the Registrant and Kenneth Murray (a)**

(10.2)         Letter Agreement dated September 11, 1998 with Kenneth Murray
               related to renewal of Independent Consulting Agreement (q) **

(10.3)         Minute of Agreement dated February 5, 1981 among the Registrant,
               The University Court of the University of Edinburgh and Kenneth
               Murray (a)**

(10.4)         Independent Consulting Agreement dated as of June 29, 1979
               between the Registrant and Phillip A. Sharp (a)**

(10.5)         Letter Agreement dated December 11, 1998 with Phillip A. Sharp
               related to chairmanship of Scientific Board and renewal of
               Independent Consulting Agreement (q)**

(10.6)         Project Agreement dated as of December 15, 1979 between the
               Registrant and Phillip A. Sharp (a)**

(10.7)         Share Restriction and Repurchase Agreement dated as of December
               15, 1979 between the Registrant and Phillip A. Sharp (a)**

(10.10)        Form of Amendment dated July 1, 1988 to Independent Consulting
               Agreement between the Registrant and Scientific Board Members
               (c)**

(10.11)        Letter regarding employment of James L. Vincent dated September
               23, 1985 (b)**

(10.12)        Letter agreement amending employment arrangement between the
               Registrant and James L. Vincent dated as of November 21, 1996
               (n)**

(10.13)        Form of Stock Option Agreement with James L. Vincent under 1985
               Non-Qualified Stock Option Plan (f)**


                                       24

   25


(10.14)        Form of Stock Option Agreement with James L. Vincent under 1985
               Non-Qualified Stock Option Plan (1995) (l)**

(10.15)        Form of Stock Option Agreement with James L. Vincent under 1985
               Non-Qualified Stock Option Plan (1997) (o)**

(10.17)        Form of Indemnification Agreement between the Registrant and each
               Director and Executive Officer (c)**

(10.18)        Cambridge Center Lease dated October 4, 1982 between Mortimer
               Zuckerman, Edward H. Linde and David Barrett, as Trustees of
               Fourteen Cambridge Center Trust, and B. Leasing, Inc. (a)

(10.19)        First Amendment to Lease dated January 19, 1989, amending
               Cambridge Center Lease dated October 4, 1982 (f)

(10.20)        Second Amendment to Lease dated March 8, 1990, amending Cambridge
               Center Lease dated October 4, 1982 (f)

(10.21)        Third Amendment to Lease dated September 25, 1991, amending
               Cambridge Center Lease dated October 4, 1982 (f)

(10.22)        Fourth Amendment to Lease dated October 6, 1993, amending
               Cambridge Center Lease dated October 4, 1982 (o)

(10.23)        Fifth Amendment to Lease dated October 9, 1997, amending
               Cambridge Center Lease dated October 4, 1982 (o)

(10.24)        Lease dated October 6, 1993 between North Parcel Limited
               Partnership and Biogen Realty Limited Partnership (i)

(10.25)        1983 Employee Stock Purchase Plan, as amended and restated
               through September 12, 1997 (o)**

(10.26)        1982 Incentive Stock Option Plan, as amended through June 15,
               2000 and restated, with form of Option Agreement (s)**

(10.27)        1985 Non-Qualified Stock Option Plan, as amended through June 15,
               2000 and restated (s)**

(10.28)        1987 Scientific Board Stock Option Plan, as amended through
               June 15, 2000 and restated (s)**

(10.29)        Voluntary Executive Supplemental Savings Plan (k)**

(10.30)        Amendment No. 1 dated April 25, 1997 to Voluntary Executive
               Supplemental Savings Plan (o)**

                                       25
   26

(10.31)        Amendment No. 2 dated March 11, 1998 to Voluntary Executive
               Supplemental Savings Plan (q)**

(10.32)        Amendment No. 3 dated September 27, 1999 to Voluntary Executive
               Supplemental Savings Plan (r) **

(10.33)        Amendment No. 4 dated December 13, 1999 to Voluntary Executive
               Supplemental Savings Plan (r)**

(10.34)        Amended and Restated Supplemental Executive Retirement Plan (o)**

(10.35)        Amendment No. 1 dated September 27, 1999 to Amended and Restated
               Supplemental Executive Retirement Plan (r), **

(10.36)        Voluntary Board of Directors Savings Plan  (k)**

(10.37)        Amendment No. 1 dated April 25, 1997 to Voluntary Board of
               Directors Savings Plan (o)**

(10.38)        Amendment No. 2 dated March 11, 1998 to Voluntary Board of
               Directors Savings Plan (q)**

(10.39)        Amendment No. 3 dated September 27, 1999 to Voluntary Board of
               Directors Savings Plan (r)**

(10.40)        Amendment No. 4 dated December 13, 1999 to Voluntary Board of
               Directors Savings Plan (r)**

(10.41)        Exclusive License and Development Agreement dated December 8,
               1979 between the Registrant and Schering Corporation (a)

(10.42)        Amendatory Agreement dated May 14, 1985 to Exclusive License and
               Development Agreement dated December 8, 1979 between the
               Registrant and Schering Corporation (b)

(10.43)        Amendment and Settlement Agreement dated September 29, 1988 to
               Exclusive License and Development Agreement dated December 8,
               1979 between the Registrant and Schering Corporation (f)

(10.44)        Amendment dated March 20, 1989 to Exclusive License and
               Development Agreement dated December 8, 1979 between the
               Registrant and Schering Corporation (f)

(10.45)        License Agreement (United States) dated March 28, 1988 between
               the Registrant and SmithKline Beecham Biologicals, s.a. (as
               successor to Smith Kline-R.I.T, s.a.) (f)

(10.46)        License Agreement (International) dated March 28, 1988 between
               the Registrant and SmithKline Beecham Biologicals, s.a. (as
               successor to Smith Kline-R.I.T., s.a.) (f)


                                       26

   27

(10.47)        Sublicense Agreement dated as of February 15, 1990 among the
               Registrant, SmithKline Beecham Biologicals, s.a (as successor to
               SmithKline Biologicals, s.a.) and Merck and Co., Inc. (f)

(10.48)        Supplemental Amendment and Agreement dated as of March 1, 1994
               between the Registrant and Schering Corporation (j)

(10.49)        Agreement and Amendment between the Registrant and Schering
               Corporation dated May 1, 1998 (p)

(10.50)        Letter agreement amending employment arrangement between the
               Registrant and James L. Vincent dated March 10, 2000 * **

(10.51)        Letter regarding employment of James C. Mullen dated March 18,
               1993 (r)**

(10.52)        Letter amending employment arrangement between the Registrant and
               James C. Mullen dated January 7, 1999 (r)**

(10.53)        Letter regarding employment of Burt Adelman, M.D. dated April 2,
               1996 (r)**

(10.54)        Letter regarding employment of Mark Leuchtenberger dated November
               14, 1996 (r)**

(10.55)        Letter agreement amending employment arrangement between the
               Registrant and Mark Leuchtenberger dated May 12, 1999 (r)**

(10.56)        Letter regarding employment of Thomas J. Bucknum, dated June 11,
               1999 * **

(10.57)        Letter agreement regarding employment arrangement between the
               Registrant and Cornelis Been, dated July 19, 1999 * **

(10.58)        Letter amending employment arrangement between the Registrant
               and James C. Mullen, dated May 3, 2000 * **

(13)           Incorporated portions of the Registrant's Financial Statements
               from its 2000 Annual Report to Shareholders *

(21)           Subsidiaries of the Registrant *

(23)           Consent of PricewaterhouseCoopers LLP *

- -------------

     (a)  Previously filed with the Commission as an exhibit to the Registrant's
          Registration Statement on Form S-1, File No. 2-81689, and incorporated
          herein by reference.

     (b)  Previously filed with the Commission as an exhibit to the Registrant's
          Annual Report on Form 10-K for the fiscal year ended December 31,
          1985, as amended, File No. 0-12042, and incorporated herein by
          reference.

     (c)  Previously filed with the Commission as an exhibit to the Registrant's
          Annual Report on Form 10-K for the fiscal year ended December 31,
          1988, File No. 0-12042, and incorporated herein by reference.

                                       27

   28

     (d)  Previously filed with the Commission as an exhibit to the Registrant's
          Registration Statement on Form 8-A, File No. 0-12042, filed May 26,
          1989, and incorporated herein by reference.

     (e)  Previously filed with the Commission as an exhibit to the Registrant's
          Annual Report on Form 10-K for the fiscal year ended December 31,
          1991, File No. 0-12042, and incorporated herein by reference.

     (f)  Previously filed with the Commission as an exhibit to the Registrant's
          Annual Report on Form 10-K for the fiscal year ended December 31,
          1992, File No. 0-12042, and incorporated herein by reference.

     (g)  Previously filed with the Commission as an exhibit to the Registrant's
          Quarterly Report on Form 10-Q for the quarter ended June 30, 1993,
          File No. 0-12042, and incorporated herein by reference.

     (h)  Previously filed with the Commission as an exhibit to the Registrant's
          Registration Statement on Form S-3, File No. 33-51639 filed December
          21, 1993, and incorporated herein by reference.

     (i)  Previously filed with the Commission as an exhibit to the Registrant's
          Annual Report on Form 10-K for the fiscal year ended December 31,
          1993, File No. 0-12042, and incorporated herein by reference.

     (j)  Previously filed with the Commission as an exhibit to the Registrant's
          Quarterly Report on Form 10-Q for the quarter ended March 31, 1994,
          File No. 0-12042, and incorporated herein by reference.

     (k)  Previously filed with the Commission as an exhibit to the Registrant's
          Annual Report on Form 10-K for the fiscal year ended December 31,
          1994, File No. 0-12042, and incorporated herein by reference.

     (l)  Previously filed with the Commission as an exhibit to the Registrant's
          Annual Report on Form 10-K for the fiscal year ended December 31,
          1995, File No. 0-12042, and incorporated herein by reference.

     (m)  Previously filed with the Commission as an exhibit to the Registrant's
          Annual Report on Form 10-K for the fiscal year ended December 31,
          1996, File No. 0-12042, and incorporated herein by reference.

     (n)  Previously filed with the Commission as an exhibit to an amendment to
          the Registrant's Annual Report on Form 10-K/A for the fiscal year
          ended December 31, 1996, File No. 0-12042, and incorporated herein by
          reference.

     (o)  Previously filed with the Commission as an exhibit to the Registrant's
          Annual Report on Form 10-K for the fiscal year ended December 31,
          1997, File No. 0-12042, and incorporated herein by reference.


                                       28
   29


     (p)  Previously filed with the Commission as an exhibit to the Registrant's
          Quarterly Report on Form 10-Q for the quarter ended June 30, 1998,
          File No. 0-12042, and incorporated herein by reference.

     (q)  Previously filed with the Commission as an exhibit to the Registrant's
          Annual Report on Form 10-K for the fiscal year ended December 31,
          1998, File No. 0-12042, and incorporated herein by reference.

     (r)  Previously filed with the Commission as an exhibit to the Registrant's
          Annual Report on Form 10-k for the fiscal year ended December 31,
          1999, File No. 0-12042, and incorporated herein by reference

     *  Filed herewith

     ** Management contract or compensatory plan or arrangement

(b)  Reports on Form 8-K

     The Company did not file any reports on Form 8-K during the fourth quarter
of 2000.



                                       29
   30

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) 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.

By:       /s/ James C. Mullen
    ------------------------------------
      James C. Mullen, President and
      Chief Executive Officer

Dated March 30, 2001

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.




SIGNATURES                     TITLE                                       DATE
- ----------                     -----                                       ----
                                                                     
/s/ James C. Mullen            President, Chief Executive                  March 30, 2001
- ---------------------------    Officer and Director
James C. Mullen                (principal executive officer)


/s/ James L. Vincent           Chairman of the Board of                    March 30, 2001
- ---------------------------    Directors
James L. Vincent


/s/ Peter N. Kellogg           Vice President - Finance and Chief          March 30, 2001
- ---------------------------    Financial Officer (principal
Peter N. Kellogg               financial and accounting officer)


/s/ Alan Belzer                Director                                    March 30, 2001
- ---------------------------
Alan Belzer

/s/ Harold W. Buirkle          Director                                    March 30, 2001
- ---------------------------
Harold W. Buirkle

/s/ Mary L. Good               Director                                    March 30, 2001
- ---------------------------
Mary L. Good

/s/ Thomas F. Keller           Director                                    March 30, 2001
- ---------------------------
Thomas F. Keller

/s/ Roger H. Morley            Director                                    March 30, 2001
- ---------------------------
Roger H. Morley

/s/ Kenneth Murray             Director                                    March 30, 2001
- ---------------------------
Kenneth Murray





   31

                                                                     
/s/ Phillip A. Sharp           Director                                    March 30, 2001
- ---------------------------
Phillip A. Sharp

/s/ Alan K. Simpson            Director                                    March 30, 2001
- ---------------------------
Alan K. Simpson

/s/ James W. Stevens           Director                                    March 30, 2001
- ---------------------------
James W. Stevens


   32


                                  EXHIBIT INDEX


Exhibit No.       Description
- -----------       -----------


(13)           Incorporated portions of the Registrant's Financial Statements
               from its 1999 Annual Report to Shareholders

(21)           Subsidiaries of the Registrant

(23)           Consent of PricewaterhouseCoopers LLP

(10.50)        Letter agreement amending employment arrangement between the
               Registrant and James L. Vincent dated March 10, 2000

(10.56)        Letter regarding employment of Thomas J. Bucknum, dated June 11,
               1999

(10.57)        Letter agreement regarding employment arrangement between the
               Registrant and Cornelis Been, dated July 19, 1999

(10.58)        Letter amending employment arrangement between the Registrant
               and James C. Mullen, dated May 3, 2000

EX-10.50

   1
                                                                   Exhibit 10.50

                                  March 10, 2000

Mr. James L. Vincent
7 Audubon Road
Weston, MA 02193


Dear Jim:

         This letter will serve as notice that Biogen, Inc. would like to extend
your chairmanship of the Board of Directors for an additional three years under
the terms of the letter agreement dated November 21, 1996 (the "Letter
Agreement") amending your Employment Agreement dated as of September 23, 1985
(the "Employment Agreement") such that your chairmanship will continue after the
end of the Initial Chairmanship Term, as defined in the Letter Agreement, on
February 14, 2001 until February 14, 2004 (the "Extended Term") unless earlier
terminated by your resignation or earlier removal.

         During the Extended Term, after appointment of a successor Chief
Executive Officer, your duties as Chairman will once again consist of those
activities specified under Section 1 of the Letter Agreement.

         All other terms of the Letter Agreement and the Employment Agreement,
as amended by the Letter Agreement and this letter, shall apply during the
Extended Term.

         If you agree with extension of your chairmanship on the above terms,
please execute this letter and the enclosed copy in the space provided below.

                                      Sincerely,

                                      Biogen, Inc.


                                         By:      /s/ Roger H. Morley
                                                  Chairman, Compensation and
                                                  Management Resources Committee

                                         By:      /s/ Harold W. Buirkle
                                                  Member, Compensation and
                                                  Management Resources Committee
                                         By:      /s/ Phillip A. Sharp
                                                  Member, Compensation and
                                                  Management Resources Committee



   2

                                         By:      /s/ Mary L. Good
                                                  Member, Compensation and
                                                  Management Resources Committee



Acknowledged and agreed

/s/ James L. Vincent

EX-10.56

   1

                                                                   Exhibit 10.56


                                                       PERSONAL AND CONFIDENTIAL



                                  June 11, 1999



Mr. Thomas J. Bucknum
381 Beacon Street
Boston, MA 02116

Dear Tom:

This confirms your discussion with Jim Vincent and me related to your new role
in the organization. Effective June 10, 1999, your new title is Vice President
and General Counsel with a base salary of $225,000 and a target bonus of 30%.
Additionally, you have been granted 25,000 stock options as of June 10, 1999
with a grant value of $2,710,938 (25,000 shares at $108.4375). As an officer of
the company, you will be required to participate in our program for executive
stock ownership. We believe it is very important that our key leaders have
personal stock ownership. I will outline the program to you.

Additionally, in your new role you are now eligible for the following:

1.   VACATION - You are entitled to four (4) weeks vacation.

2.   SUPPLEMENTAL SAVINGS PLAN: You are entitled to participate in the
     Voluntary Executive Supplemental Savings Plan. This plan allows you to
     defer from your current  taxation up to 50% of your base salary and 100%
     of your 1999 bonus, if there is one. Rick Fisher can outline the details
     of the program if you are interested in participating.

3.   LIFE INSURANCE: You will be provided Biogen's Executive Term Life
     Insurance coverage for a total of $1,000,000. This coverage is based on
     your successfully meeting the medical standards as stated in the Executive
     Term insurance policy.

4.   TAX REVIEW/PREPARATION: You are entitled to the preparation and/or review,
     including review of estimated taxes of your annual Federal and State tax
     returns, which is currently administered through PricewaterhouseCoopers.
     The cost of this service is covered by Biogen.

5.   INVOLUNTARY TERMINATION: If you are involuntarily terminated from
     employment with Biogen (other than for cause), Biogen will protect you by
     paying you a supplementary amount (the


   2


Mr. Thomas J. Bucknum
June 11, 1999
Page 2


     "Supplementary Amount") equal to your then present base salary for a period
     (the "Extra Period") ending on the earlier of (i) the date twelve months
     from your termination and (ii) the date you start another job. During such
     period, Biogen will also pay to continue your health benefits (i.e., health
     and dental plan coverage), provided such benefits are accorded employees
     generally and Biogen can obtain the relevant coverage. If you need
     continued coverage to prevent a gap in health coverage between your Biogen
     coverage and that at your new job, Biogen will extend such coverage for up
     to 30 days (to the extent that the Extra Period is less than twelve months)
     after you start your new job. The Supplementary Amount will be paid on the
     same schedule as your salary would have been paid. You will not be an
     employee of Biogen during the time of such payments and will not accrue any
     benefits or other rights (such as, but not limited to, pension plan vesting
     or accrual, stock option vesting, vacation pay, etc.) during such period
     except health benefits as described above. You agree to notify us when you
     accept a new job.

                                                 Sincerely,


                                                 /s/ Frank A. Burke Jr.

                                                 Frank A. Burke, Jr.
                                                 Vice President, Human Resources
FAB:bk

EX-10.57

   1


                                                                   Exhibit 10.57
July 19, 1999





Mr. Kees Been
121 Whitebridge Meadows Lane
St. Louis, MO 63141

Dear Kees:

This letter supersedes my previous letter to you dated July 9, 1999 and
represents Jim Vincent's amended offer to you on behalf of Biogen. You are
offered the position of Vice President, Business Development at an annual salary
of $250,000. You will report directly to Jim Vincent. Consistent with Biogen's
compensation policy, you will be eligible for a pro-rated merit salary review at
year-end 1999 and annually thereafter. You will be eligible to participate in
Biogen's annual incentive compensation plan with a 30% target bonus beginning in
the year ending December 31, 2000.

Upon employment you will receive $200,000 as a one-time special cash bonus,
which will be treated as a forgivable loan. The bonus will be forgiven over a
thirty-six month, straight-line schedule. In the event you voluntarily terminate
your employment or your employment is terminated for performance prior to the
thirty-six months from the date of the loan, the unforgiven portion of the loan
would be payable to Biogen within six months of your termination date.

Upon employment you will be granted an option to purchase up to 100,000 shares
of the common stock of Biogen, Inc. This option grant is subject to the approval
of the Stock and Option Plan Administration Committee of the Board of Directors,
which we expect to be forthcoming. The exercise price per share will be the
average of the high and low sale prices as reported in the National Association
of Securities Dealers Automated Quotation System ("NASDAQ") on the date you
commence employment. The option will have a ten-year term and vest over a
five-year period at the rate of 20% per year starting on the anniversary of the
date you commence employment.

You will be able to choose from a menu of benefit options through our flexible
benefits program, BioChoice. These include health care, life, dependent life,
and disability insurance as well as two flexible spending accounts, Med-Flex and
D-Flex, for eligible medical or dependent care expenses. At the beginning of the
calendar quarter following your date of hire you will be eligible to participate
in Biogen's pension and 401(k) savings plans. You are also entitled to twenty
vacation days per year accrued on a monthly pro-rated basis. Biogen also offers
a variety of additional benefits including tuition reimbursement, childcare and
elder care referral service, educational matching gifts, credit union, and group
homeowners and automobile insurance. You will receive more detailed information
regarding your benefits on your first day at work.

   2


Mr. Kees Been
Page 2
July 19, 1999



Biogen will provide relocation benefits to facilitate your move from St. Louis,
MO. A relocation counselor will contact you to discuss the relocation program,
and will send you a package detailing the relocation policy to you. Please read
the policy carefully as it will outline the parameters of these benefits and
detail the reimbursement process. These benefits will include the reimbursement
of many of the costs associated with both the sale of your current house and the
purchase of a new house in the Boston area; home-finding; and movement of your
household goods.

As an additional provision of your relocation benefits, Biogen will pay you a
lump sum of $40,000 on employment to be used for your temporary living in Boston
and to also allow you round trip flights to St. Louis pending your family's
eventual relocation to the Boston area. In the event your family relocates to
the Boston area prior to your fully expending the $40,000, any unused amount of
this lump sum payment will be yours to retain with no repayment obligation to
Biogen.

In the event you voluntarily terminate your employment or your employment is
terminated for performance within two years from the date that you start your
new job, you will be required to repay to Biogen some or all of the relocation
expenses that you have incurred.

As an officer of the company, you will be required to participate in our program
for executive stock ownership. We believe it is very important that our key
leaders have personal stock ownership. I will outline the program to you.

Additionally, in your new role you will be eligible for the following:

- -    SUPPLEMENTAL SAVINGS PLAN: You are entitled to participate in the Voluntary
     Executive Supplemental Savings Plan. This plan allows you to defer from
     your current taxation up to 50% of your base salary and 100% of your bonus,
     if there is one. I can outline the details of the program if you are
     interested in participating.

- -    LIFE INSURANCE: You will be provided Biogen's Executive Term Life Insurance
     coverage for a total of $1,000,000. This coverage is based on your
     successfully meeting the medical standards as stated in the Executive Term
     insurance policy.

- -    TAX REVIEW/PREPARATION: You are entitled to the preparation and/or review,
     including review of estimated taxes of your annual Federal and State tax
     returns, which is currently administered through PricewaterhouseCoopers.
     The cost of this service is covered by Biogen. In the event you choose to
     continue the services provided by your current tax advisor, Biogen will
     reimburse you the cost of these services up to but not exceeding the amount
     incurred by Biogen through PricewaterhouseCoopers.


   3



Mr. Kees Been
Page 3
July 19, 1999



- -    INVOLUNTARY TERMINATION: If you are involuntarily terminated from
     employment with Biogen (other than for cause), Biogen will protect you by
     paying you a supplementary amount (the "Supplementary Amount") equal to
     your then present BASE salary for a period (the "Extra Period") ending on
     the earlier of (i) the date twelve months from your termination and (ii)
     the date you start another job. During such period, Biogen will also pay to
     continue your health benefits (i.e., health and dental plan coverage),
     provided such benefits are accorded employees generally and Biogen can
     obtain the relevant coverage. If you need continued coverage to prevent a
     gap in health coverage between your Biogen coverage and that at your new
     job, Biogen will extend such coverage for up to 30 days (to the extent that
     the Extra Period is less than twelve months) after you start your new job.
     The Supplementary Amount will be paid on the same schedule as your salary
     would have been paid. You will not be an employee of Biogen during the time
     of such payments and will not accrue any benefits or other rights (such as,
     but not limited to, pension plan vesting or accrual, stock option vesting,
     vacation pay, etc.) during such period except health benefits as described
     above. You agree to notify us when you accept a new job.

Employment with Biogen is contingent on the satisfactory completion of a
pre-employment drug screening test at least five business days prior to your
start date. We require all new employees to sign an Intellectual
Property/Confidentiality Agreement on the first day of employment. You will also
be required to complete a medical history review with our occupational health
department, which is scheduled after your first day of employment.

It is Biogen's policy to comply with federal, state and local guidelines
applicable to its facilities and to take all reasonable steps to ensure the
health and safety of Biogen employees. Consistent with this policy, your normal
duties may require you from time to time to attend meetings or perform functions
in any or all of Biogen's facilities.

The Federal Government requires you to provide proper identification verifying
your eligibility to work in the United States. Please bring the appropriate
identification with you on your first day of employment.

On behalf of Jim Vincent, we very much look forward to your positive response
and to your joining us as early as practical. We are confident that you will
make a significant contribution to Biogen's future success.


   4


Mr. Kees Been
Page 4
July 19, 1999




Please confirm your acceptance by signing this offer letter and noting your
preferred start date. Also, please sign the enclosed drug screen authorization
form and then return both signed documents to me in the enclosed self addressed,
stamped envelope. The other original offer letter is for your records.

                                               Sincerely,

                                               /s/ Frank A. Burke, Jr.

                                               Frank A. Burke, Jr.


FAB:bk
cc:    Mr. James L. Vincent


 I am pleased to accept the offer of employment described above.


ACCEPTED:

/s/ Kees Been
- ------------------------------------------------------------------------
Kees Been                                           Preferred Start Date

EX-10.58

   1


                                                                   Exhibit 10.58

                                                       PERSONAL AND CONFIDENTIAL


                                   May 3, 2000



Mr. James C. Mullen
138 Richardson Drive
Needham, MA 02492

Dear Jim:

As a follow-up to our conversation last Friday, I am pleased to confirm that the
Board of Directors has approved your appointment as President and Chief
Executive Officer of Biogen, Inc., effective June 16, 2000.

Concurrent with the effective date of your appointment, the Board of Directors
has also approved an adjustment in your annual base salary to $700,000, and has
established a target of 90% of your base salary for your cash bonus in 2000. In
addition, you will be granted an option to purchase 250,000 shares of Biogen
Common Stock, effective June 16, 2000, with a seven-year, straight-line vesting
schedule.

Jim, on behalf of the other members of the Board, I wish you the best of success
as you take over the leadership of Biogen next month.

In the interim, please let me know how I can assist you in the transition to
your new role.

                                            Sincerely,


                                            /s/ James L. Vincent
                                            James L. Vincent
                                            Chairman and Chief Executive Officer
JLV:bk

EX-13

   1

                                                                      Exhibit 13

Financials

Biogen, Inc. and Subsidiaries






  20    Selected Financial Data
  21    Management's Discussion and Analysis of Financial Condition and
        Results of Operations
  33    Consolidated Statements of Income
  34    Consolidated Balance Sheets
  35    Consolidated Statements of Cash Flows
  36    Consolidated Statements of Shareholders' Equity
  37    Notes to Consolidated Financial Statements
  54    Report of Independent Accountants
  55    Senior Executives and Board Members
  56    Shareholder Information


   2

Selected Financial Data

Biogen, Inc. and Subsidiaries

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)



YEARS ENDED DECEMBER 31,                  2000         1999          1998          1997           1996
- -------------------------------------------------------------------------------------------------------------
                                                                               
Product revenue                       $  761,079    $  620,636    $  394,863    $  239,988    $   78,202
Royalty revenue                          165,373       173,799       162,724       171,921       181,502
Total revenues                           926,452       794,435       557,587       411,909       259,704
Total costs and expenses                 598,096       478,184       366,948       285,787       234,541
Income before income taxes               487,105       329,016       210,193       148,968        40,829
Net income                               333,577       220,450       138,697        89,167        40,530
Diluted earnings per share                  2.16          1.40          0.90          0.58          0.28
Cash, cash equivalents and short-
   term marketable securities            682,412       654,539       516,914       440,088       321,381
Total assets                           1,431,856     1,277,973       924,715       813,825       634,572
Long-term debt, less current
   portion                                47,185        52,073        56,960        61,846        62,254
Shareholders' equity                   1,106,402       979,530       718,613       536,293       484,370
Shares used in calculating diluted
   earnings per share                    154,602       157,788       154,270       152,999       146,442



                                       20

   3

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS


OVERVIEW

Biogen, Inc. (the "Company" or "Biogen") is a biopharmaceutical company
principally engaged in the business of developing, manufacturing and marketing
drugs for human health care. The Company currently derives revenues from sales
of its AVONEX(R) (Interferon beta-1a) product for the treatment of relapsing
forms of multiple sclerosis ("MS"). The Company also derives revenue from
royalties on worldwide sales by the Company's licensees of a number of products
covered under patents controlled by the Company, including alpha interferon and
hepatitis B vaccines and diagnostic products.

RESULTS OF OPERATIONS 2000 AS COMPARED TO 1999

REVENUES

Total revenues in 2000 were $926.5 million, as compared to $794.4 million in
1999, an increase of $132.1 million or approximately 17%.

Product sales in 2000 were $761.1 million as compared to $620.6 million in 1999,
an increase of $140.5 million or approximately 23%. Product sales from AVONEX(R)
represent approximately 82% of the Company's total revenues in 2000 as compared
to 78% in 1999. The growth in 2000 was primarily attributable to an increase in
the sales volume of AVONEX(R) in the United States and in the fifteen member
countries of the European Union ("EU"). AVONEX(R) sales outside of the United
States were approximately $208.5 million in 2000 as compared to $178.4 million
in 1999.

Revenues from royalties in 2000 were $165.4 million, a decrease of $8.4 million
or approximately 5% as compared to $173.8 million of royalty revenue in 1999.
Revenues from royalties represented approximately 18% of total revenues in 2000
as compared to 22% in 1999. The decrease in royalty revenues in 2000 over the
comparable period in 1999 is primarily the result of reductions attributable to
patent expirations and lower licensee sales. See "Outlook - Royalty Revenue" and
"Outlook - Patents and Other Proprietary Rights".

In the near and long term, the Company expects to experience declining royalty
revenues as a result of patent expirations, other patent-related events and a
potential decrease in sales by licensees of licensed products. In the near term,
Biogen's royalty revenues may also be significantly affected as a result of a
dispute with Schering-Plough Corporation ("Schering-Plough") over twelve to
eighteen months of royalties payable by Schering-Plough on U.S. sales of its
alpha interferon products, including INTRON(R) A. See "Outlook - Royalty
Revenue." In addition, sales levels of products sold by the Company'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. For a
discussion of some of the factors that may affect royalty revenues in the
future, see "Outlook - Royalty Revenue" and "Outlook - Patents and Other
Proprietary Rights". The Company expects product sales as a percentage of total
revenues to continue to increase in the near and long term as the Company
continues to market AVONEX(R) worldwide, and as royalty revenues continue to
decline, the Company also expects sales from AVONEX(R) outside the United States
to continue to increase as a percentage of total product sales. The Company,
however, expects to face increasing competition in the MS marketplace in and
outside the United States from existing and new MS treatments that may impact
sales of AVONEX(R). See "Outlook - Competition".

COSTS AND EXPENSES

Total costs and expenses in 2000 were $598.1 million as compared to $478.2
million in 1999, an increase of approximately 25%.


                                       21

   4

Cost of revenues in 2000 totaled $125.2 million, an increase of $14.2 million or
13% as compared to 1999. The increase in cost of revenues was attributable to
the higher sales volume of AVONEX(R). Included in cost of revenues in 2000 and
1999 is $112.9 million and $96.9 million, respectively, from product sales and
$12.3 million and $14.1 million, respectively, relating to royalty revenue.
Gross margins on product sales increased to approximately 85% for the period
ended December 31, 2000 compared to 84% for the same period in 1999. Gross
margins on royalty revenue increased to approximately 93% for the period ended
December 31, 2000 compared to 92% for the same period in 1999. The Company
expects that gross margins on royalty revenue will fluctuate in the future based
on changes in sales volumes for specific products.

Research and development expenses in 2000 were $302.8 million, an increase of
$81.6 million or 37% as compared to $221.2 million in 1999. The increase was
primarily due to an increase in clinical trial costs of $35.9 million, the costs
associated with an increase in the Company's other development efforts related
to its ongoing research and development programs of $14 million and the funding
of collaboration agreements of $12.4 million. The Company expects that, in the
near and long-term, research and development expenses will increase as the
Company continues to expand its development efforts with respect to new
products, conducts clinical trials of these products and continues work on new
formulations and delivery methods for AVONEX(R).

Selling, general and administrative expenses in 2000 were $170.1 million, an
increase of $24.1 million or 17% as compared to 1999. This increase was
primarily due to an increase in selling and marketing expenses related to the
sale of AVONEX(R). The Company expects that selling, general and administrative
expenses will continue to increase in the near term as the Company continues to
expand its sales and marketing organizations necessary to sell AVONEX(R)
worldwide and as the Company expands in anticipation of additional products.

OTHER INCOME, NET

Other income, net consists of interest income, partially offset by interest
expenses and other non-operating income and expenses. Other income, net in 2000
was $158.7 million as compared to $12.8 million in 1999, an increase of $145.9
million. Interest income in 2000 was $43 million compared $35.4 million in 1999,
an increase of $7.6 million or 21% due to higher average yields and an increase
in funds invested. The Company expects interest income to vary based on changes
in the amount of funds invested and fluctuations in interest rates. Interest
expense decreased $0.3 million or 7% in 2000 from 1999. Other income (expense)
increased by $138.1 million in 2000 from 1999. Other income (expense) for the
period ended December 31, 2000 included gains on the sale of certain non-current
marketable securities totaling approximately $101.1 million. Additionally, the
Company realized gains of approximately $24.1 million upon the acquisition of
two of its investees by third parties. Other income (expense) for the period
ended December 31, 1999 included a $15 million write-down of certain non-current
marketable securities.

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

                                    December 31,
                             -------------------------
                                2000           1999
                             ---------       --------
Interest income              $ 42,965       $ 35,407
Interest expense               (4,310)        (4,639)
Other income (expense)        120,094        (18,003)
                             --------       --------

Total other income, net      $158,749       $ 12,765
                             ========       ========


                                       22

   5


INCOME TAXES

The Company's effective tax rate in 2000 was 31.5%. Income tax expense for 2000
varied from the amount computed at the U.S. federal statutory rates primarily
due to higher sales in European jurisdictions with lower tax rates and to the
utilization of research and development tax credits. The Company's effective tax
rate outside the U.S. is lower than the U.S. tax rate, and the Company expects
that the U.S. tax rate will decline as a percentage of its total tax rate as
international sales increase.

RESULTS OF OPERATIONS 1999 AS COMPARED TO 1998

REVENUES

Total revenues in 1999 were $794.4 million, as compared to $557.6 million in
1998, an increase of $236.8 million or approximately 42%.

Product sales in 1999 were $620.6 million as compared to $394.9 million in 1998,
an increase of $225.7 million or approximately 57%. Product sales from AVONEX(R)
represent approximately 78% of the Company's total revenues in 1999 as compared
to 71% in 1998. The growth in 1999 was primarily attributable to an increase in
the sales volume of AVONEX(R) in the United States and in the fifteen member
countries of the European Union ("EU"). AVONEX(R) sales outside of the United
States were approximately $178.4 million in 1999 as compared to $92 million in
1998.

Revenues from royalties in 1999 were $173.8 million, an increase of $11.1
million or approximately 7% as compared to $162.7 million of royalty revenue in
1998. Revenues from royalties represented approximately 22% of total revenues in
1999 as compared to 29% in 1998. The increase in royalty revenues in 1999 over
the comparable period in 1998 is primarily the result of royalties received on
increased sales of alpha interferon.

COSTS AND EXPENSES

Total costs and expenses in 1999 were $478.2 million as compared to $366.9
million in 1998, an increase of approximately 30%.

Cost of revenues in 1999 totaled $111 million, an increase of $36.5 million or
49% as compared to 1998. The increase in cost of revenues was attributable to
the higher sales volume of AVONEX(R). Included in cost of revenues in 1999 and
1998 is $96.9 million and $62.1 million, respectively, from product sales and
$14.1 million and $12.4 million, respectively, relating to royalty revenue.
Gross margins on product sales remained constant at approximately 84% for the
period ended December 31, 1999 compared to the same period in 1998. Gross
margins on royalty revenue remained constant at approximately 92% for the period
ended December 31, 1999 compared to the same period in 1998.

Research and development expenses in 1999 were $221.2 million, an increase of
$44 million or 25% as compared to $177.2 million in 1998. The increase was
primarily due to an increase in clinical trial costs, the costs associated with
an increase in the Company's other development efforts related to its ongoing
research and development programs and the funding of collaboration agreements.

Selling, general and administrative expenses in 1999 were $146 million, an
increase of $30.8 million or 27% as compared to 1998. This increase was
primarily due to an increase in selling and marketing expenses related to the
sale of AVONEX(R).


                                       23
   6

OTHER INCOME, NET

Other income, net consists primarily of interest income, partially offset by
interest expenses and other non-operating income and expenses. Other income, net
in 1999 was $12.8 million as compared to $19.6 million in 1998, a decrease of
$6.8 million or approximately 35%. Interest income in 1999 was $35.4 million
compared to $28.3 million in 1998, an increase of $7.1 million or 25% due to an
increase in funds invested. Interest expense decreased $1.3 million or 22% in
1999 from 1998. Other expense increased by $15.2 million in 1999 from 1998, due
primarily to a $15 million write-down related to certain non-current marketable
securities in the second quarter of 1999.

As part of its strategic product development efforts, the Company invests in
equity securities of certain biotechnology companies with which it has
collaborative agreements. In December of 1996, Biogen purchased approximately
1.5 million shares of Creative BioMolecules, Inc. common stock for $18 million.
In March of 1997, Biogen purchased approximately 670,000 shares of CV
Therapeutics, Inc. common stock for $7 million. In March of 1998, the Company
purchased approximately 435,000 shares of CuraGen common stock for $5 million
and converted 100,000 shares of CuraGen Series E Preferred Stock valued at $1
million to CuraGen common stock. Each of these small emerging companies is
principally engaged in researching, developing or manufacturing drugs for human
health care.

As a matter of policy, Biogen determines on a quarterly basis whether a decline
in the fair value of a marketable security is other than temporary. Unrealized
gains and losses on marketable securities are included in other comprehensive
income in shareholders' equity, net of related tax effects. If a decline in the
fair value of a marketable security below the Company's cost basis is determined
to be other than temporary, such marketable security is written down to its
estimated fair value with a charge to current earnings.

Up through and including the assessment at June 30, 1999, the Company concluded
that substantial evidence existed suggesting that the value of the investments
described above would recover to at least the Company's purchase price. Such
evidence included the prospects for favorable clinical trial results, new
product initiatives and new collaborative agreements. However, given the lack of
any substantial price recovery during the quarter ended June 30, 1999, and the
amount of time elapsed since the decline in value began, the Company concluded
that it had become unclear over what period such price recovery would take
place. As a result, it was determined that the positive evidence suggesting that
the investments would recover to at least the Company's purchase price was not
sufficient to overcome the presumption that the current market price of the
investments was the best indicator of value at June 30, 1999. Accordingly, the
related unrealized losses of approximately $15 million were recognized as other
expense in the second quarter of 1999.

INCOME TAXES

The Company's effective tax rate in 1999 was 33%. Income tax expense for 1999
varied from the amount computed at the U.S. federal statutory rates primarily
due to increased European sales and to the utilization of research and
development tax credits. The Company's effective tax rate outside the U.S. is
lower than the U.S. tax rate.

FINANCIAL CONDITION

At December 31, 2000, cash, cash equivalents and short-term marketable
securities were $682.4 million compared with $654.5 million at December 31,
1999, an increase of $27.9 million. Working capital decreased $12.7 million to
$707.3 million. Net cash from operating activities for the year ended December
31, 2000 was $365.9 million compared with $363.6 million in 1999. Cash outflows
from investing activities during 2000 included investments in property and
equipment and patents of $199.1 million and investments in collaborative
partners of $5 million. Net cash inflows from investing activities related to


                                       24

   7

marketable securities was $99.1 million. Significant cash outflows from
financing activities included $300.2 million for purchases of the Company's
common stock under its stock repurchase program and $4.9 million for repayments
on loan agreements with banks. Cash inflows from financing activities included
$36 million from common stock option exercises and employee stock purchase plan
activity.

In August 1995, the Company entered into a loan agreement with a bank for
financing the construction of its biological manufacturing facility in North
Carolina (the "Construction Loan"). During 1997, the Company completed
construction of the facility and the funds advanced under the Construction Loan
were converted to a floating rate ten-year term loan with principal and interest
payable quarterly. As of December 31, 2000, the Company had $36.2 million
outstanding under the Construction Loan. The Construction Loan is secured by the
underlying building. The Company also entered into an interest rate swap
agreement with the same bank, fixing its interest rate on the Construction Loan
at 7.75% during the remaining term of the loan with interest payable quarterly.
In addition, as of December 31, 2000, the Company had $15.8 million outstanding
under a floating rate loan with a bank (the "Term Loan"). The Term Loan is
secured by the Company's laboratory and office building in Cambridge,
Massachusetts. The Company has fixed its interest rate on the Term Loan at 7.5%
under the terms of an interest rate swap agreement. Terms of the Company's loan
agreements include various covenants, including financial covenants which
require the Company to maintain minimum net worth, cash flow and various
financial ratios.

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 will provide the Company with treasury shares for
general corporate purposes, such as stock to be issued under employee stock
option and stock purchase plans. Stock purchases are expected to occur from time
to time through 2001. The stock repurchase program may be discontinued at any
time. In November of 2000, the Company completed a previous stock repurchase
program. During 2000, the Company repurchased approximately 4.6 million shares
of its common stock under this program at a cost of $300.2 million.

On October 4, 1999, the Company began construction of its new research and
development center in Cambridge, Massachusetts. The new 224,000 square foot
building is expected to be completed in the spring of 2001 at a total cost of
approximately $95 million, of which $81.4 million had been committed at December
31, 2000. Additionally, the Company is completing plans to build a large scale
manufacturing plant in Raleigh, North Carolina. The Company expects that
construction will be completed at the end of 2001 at a total cost of
approximately $175 million of which $141.9 million had been committed at
December 31, 2000.

In September 2000, the Company signed a research and development agreement (the
"Eos Agreement") with Eos Biotechnology, Inc. ("Eos"), under which the Company
and Eos will collaborate in the research and development of novel targets for
antibody and protein therapeutics in the area of breast cancer. Under the Eos
Agreement, the Company purchased 1.9 million shares of preferred stock of Eos
for $5 million. In addition, the Company paid a one-time non-refundable license
fee of $6 million, which was charged to research and development expense and
acquired certain exclusive, worldwide rights related to breast cancer-specific
molecules for the use in the development of new antibody and secreted protein
therapeutics. The Company accounts for its investment in Eos, which is included
in other assets, using the cost method of accounting. The Company provided Eos
with research and development funding of $250,000 in 2000. The Company expects
to fund research activities of Eos related to the collaboration of up to $1.5
million in 2001.

In August 2000, the Company signed a development and marketing collaboration
agreement (the "Antegren Agreement") with Elan Corporation, plc ("Elan") under
which the Company and Elan collaborate in the development, manufacture and
commercialization of Antegren(R), a humanized monoclonal antibody and alpha 4
integrin inhibitor. Under the terms of the Antegren Agreement, Biogen and Elan
will share costs for on-going development activities. The Company paid a
one-time non-refundable license fee of $15 million, which was charged to
research and development expense.


                                       25
   8


In October 1997, the Company signed a research and option agreement (the
"CuraGen Agreement") with CuraGen Corporation ("CuraGen") under which the
Company and CuraGen collaborate in the discovery of novel genes using CuraGen's
functional genomics technologies. The Company provided CuraGen with research and
development funding of $1.5 million, $1.1 million and $1.9 million in 2000, 1999
and 1998, respectively. The Curagen Agreement was terminated in September 2000
and all investments in CuraGen common stock were sold during 2000.

In March 1997, the Company signed a research collaboration and license agreement
(the "CVT Agreement") with CV Therapeutics, Inc. ("CVT") under which Biogen
obtained rights under CVT's patents and know-how to develop and market molecules
that act as highly selective antagonists of the adenosine A1 receptor, for the
treatment of congestive heart failure. Under the terms of the CVT Agreement, the
Company purchased approximately 670,000 shares of CVT common stock at the then
fair value for $7 million and paid a one-time license fee of $5 million, which
was charged to research and development expense. The investment in CVT is
classified as available-for-sale and is included in long-term marketable
securities. At December 31, 2000 the Company retained approximately 670,000
shares of CVT common stock.

In December 1996, the Company signed a research collaboration and license
agreement (the "CBM Agreement") with Creative BioMolecules, Inc. ("CBM") under
which Biogen obtained rights to develop and market CBM's morphogenic protein,
OP-1, for the treatment of renal disorders. Under the CBM Agreement, the Company
purchased 1.5 million shares of CBM common stock for $18 million. The payment
for the common stock included a $1.2 million premium over the fair value of the
common stock which was charged to research and development expense. The Company
provided $10 million in research and development funding, which was charged to
expense as provided in 1998. The CBM Agreement terminated at the end of 1999 and
all investments in CBM common stock were sold during 2000.

In July 1996, the Company signed a collaborative research and commercialization
agreement (the "Ontogeny Agreement") with Ontogeny, Inc. ("Ontogeny"), a private
biotechnology company, for the development and commercialization of three
specific hedgehog cell proteins, a class of novel human proteins, that are
responsible for reducing the formation or regeneration of tissue. Under the
Ontogeny Agreement, the Company purchased 400,000 shares of preferred stock of
Ontogeny for $1 million and acquired certain exclusive, worldwide rights related
to products based on the hedgehog proteins for most disease areas. In November
1998, the Company extended and expanded its collaboration with Ontogeny and
provided to Ontogeny a $4 million convertible loan. In June 1999, the loan was
converted into 800,000 shares of Ontogeny Convertible Preferred Stock. The
Ontogeny Agreement was terminated in July 2000. In August 2000, Ontogeny merged
with two other biotechnology companies to form Curis Inc. ("Curis"). As a
shareholder in Ontogeny, Biogen received Curis common stock in exchange for the
Company's shares in Ontogeny. The Company provided $1 million, $2.8 million and
$3.6 million of research funding to Ontogeny in 2000, 1999 and 1998,
respectively. Additionally, the Company provided $1.5 million upon conclusion of
the Ontogeny Agreement, which was charged to research and development expense.
At December 31, 2000 the investment in Curis is classified as available-for-sale
and is included in long-term marketable securities. At December 31, 2000 the
Company retained approximately 308,000 shares of Curis common stock.

In August 1995, the Company signed a collaborative research agreement (the
"Genovo Agreement") for the development of human gene therapy treatments with
Genovo, Inc. ("Genovo"), a gene therapy research company. Under the Genovo
Agreement, the Company acquired 380,000 shares of Genovo Series A Preferred
stock for $4.5 million and acquired certain licensing rights. The Company
accounted for this investment, which was included in other assets, using the
equity method of accounting. The Company recorded its proportion of Genovo's net
losses as research and development expense in the amounts of $3.9 million, $7.6
million, and $9 million in 2000, 1999, and 1998, respectively. In August 2000,
Genovo entered into a merger agreement ("Targeted Merger Agreement") with
Targeted Genetics Corporation ("Targeted"). As a shareholder in Genovo, Biogen
received Targeted common stock in exchange for the Company's shares in Genovo.
Additionally, concurrently with the Targeted Merger Agreement, the Company
entered into a development and marketing agreement and a funding agreement (the
"Targeted

                                       26

   9

Agreements") for gene therapy research and development in oncology. The Targeted
Agreements provide for a $10 million credit facility. Targeted also has an
option to sell to the Company an additional $10 million of Targeted common stock
at fair value. As of December 31, 2000, there were no borrowings outstanding
under the credit facility and the Company provided $250,000 in research funding
to Targeted in 2000.

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.

LEGAL MATTERS

On July 3, 1996, Berlex Laboratories, Inc. ("Berlex") filed suit against Biogen
in the United States District Court for the District of New Jersey alleging
infringement by Biogen of Berlex's "McCormick" patent (U.S. Patent No.
5,376,567) in the United States in the production of Biogen's AVONEX(R)
(Interferon beta-1a) product. In November 1996, Berlex's New Jersey action was
transferred to the United States District Court in Massachusetts and
consolidated for pre-trial purposes with a related declaratory judgment action
previously filed by Biogen. On August 18, 1998, Berlex filed a second suit
against Biogen alleging infringement by Biogen of a patent which was issued to
Berlex in August 1998 and which is related to the McCormick patent (U.S. Patent
No. 5,795,779). On September 23, 1998, the cases were consolidated for pre-trial
and trial purposes. Berlex sought a judgment granting it damages, a trebling of
any damages awarded and a permanent injunction restraining Biogen from the
alleged infringement. A hearing on the parties' summary judgment motions in the
case was completed in March 2000. In September 2000, the District Court rendered
final judgment in favor of Biogen and against Berlex determining that Biogen's
production of AVONEX(R) did not infringe any of the claims of the Berlex
patents. Berlex has appealed this decision with the Court of Appeals for the
Federal Circuit and the parties are in the process of briefing the appeal for
oral argument. An unfavorable ruling on appeal would result in the case being
remanded to the District Court for trial. If Berlex were to be successful in its
appeal and the case were remanded, an unfavorable ruling in the remanded case
could have a material adverse effect on the Company's results of operations and
financial position. The Company believes that the decision of the District Court
that Biogen does not infringe the Berlex patents is sound, but the ultimate
outcome of the appeal is not currently determinable. As a result, an estimate of
any potential loss or range of loss cannot be made at this time.

In 1995, the Company filed an opposition with the Opposition Division of the
European Patent Office to oppose a European patent (the "Rentschler I Patent")
issued to Dr. Rentschler Biotechnologie GmbH ("Rentschler") relating to
compositions of matter of beta interferon. In 1997, the European Patent Office
issued a decision to revoke the Rentschler I Patent. Rentschler appealed that
decision and an oral hearing on the appeal took place in December 2000. At the
oral hearing in order to gain reinstatement of the patent, Rentschler narrowed
the patent claims so as to claim only a specific cell line. Biogen does not use
the specific cell line now claimed. On October 13, 1998, the Company filed
another opposition with the Opposition Division of the European Patent Office to
oppose a second European patent issued to Rentschler (the "Rentschler II
Patent") with certain claims regarding compositions of matter of beta interferon
with specific regard to the structure of the glycosylated molecule. A hearing on
the Company's opposition previously scheduled for October 2000 has been
postponed, and will likely be held in 2001. While Biogen believes that the
Rentschler II Patent will be revoked and that the revocation of the Rentschler I
Patent will be upheld on appeal, if either the Rentschler I Patent or the
Rentschler II Patent were to be upheld and if Rentschler were to obtain, through
legal proceedings, a determination that the Company's sale of AVONEX(R) in
Europe infringes a valid Rentschler patent, such result could have a material
adverse effect on the Company's results of operation and financial position.

NEW ACCOUNTING PRONOUNCEMENT

In December 1999, the United States Securities and Exchange Commission issued
Staff Accounting Bulletin 101, "Revenue Recognition in Financial Statements"
("SAB 101"). SAB 101 provides the staff's views in applying generally accepted
accounting principles to selected revenue recognition issues, as well


                                       27
   10

as examples of how the staff applies revenue recognition guidance to specific
circumstances. The Company adopted SAB 101 in 2000. Adoption of SAB 101 did not
have a material effect on the Company's financial position and results of
operations.

OUTLOOK

SAFE HARBOR STATEMENT UNDER PRIVATE SECURITIES LITIGATION REFORM ACT OF 1996

In addition to historical information, this annual 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 anticipated level of future product sales, royalty revenues,
expenses and profits, statements regarding the timing of clinical trials,
statements regarding the potential outcome of clinical programs, the marketing
of additional products and predictions as to the anticipated outcome of pending
or anticipated litigation, arbitration and patent-related proceedings and the
Company's expectations as to the value of its investments in certain marketable
securities. These and all other forward-looking statements are made based on the
Company's current belief as to the outcome and timing of such future events.
Factors which could cause actual results to differ from the Company's
expectations and which could negatively impact the Company's financial condition
and results of operations are discussed below.

DEPENDENCE ON AVONEX(R) SALES

The Company's ability to sustain increases in revenues and profitability for the
next several years will be primarily dependent on the level of revenues and
profitability from AVONEX(R) sales. The Company's ability to sustain
profitability from sales of AVONEX(R) will depend on a number of factors,
including: continued market acceptance of AVONEX(R) worldwide; the Company's
ability to maintain a high level of patient satisfaction with AVONEX(R); the
nature of regulatory and pricing decisions related to AVONEX(R) worldwide; the
extent to which AVONEX(R) continues to receive reimbursement coverage; the
impact of competitive products; and the impact of adverse decisions in
patent-related proceedings. The extent of the profitability from AVONEX(R) sales
is also dependent on the successful resolution of the Berlex suit, which is
described above under "Legal Matters".

COMPETITION

The Company faces increasing competition from other products for the treatment
of relapsing forms of MS. As a treatment for multiple sclerosis, AVONEX(R)
competes with interferon beta-1b which is sold in the United States under the
brand name Betaseron(R) by Berlex Laboratories, a United States affiliate of
Schering AG, and is sold in Europe under the brand name Betaferon(R) by Schering
AG. AVONEX(R) also faces competition from Copaxone(R) glatiramer acetate (also
known as copolymer-1). In the United States, Copaxone(R) is marketed by a
partnership between Teva Pharmaceutical Industries, Ltd. and Hoechst Marion
Roussel, Inc. In most countries outside of the United States, AVONEX(R) also
competes with Rebif(R), a recombinant interferon beta-1a product sold by Serono.
In response to an application from Serono for approval of Rebif(R) in the United
States for relapsing multiple sclerosis, the FDA, in March 1999, upheld its
earlier ruling that, based on the data from existing clinical trials, Serono
cannot market Rebif(R) in the United States for relapsing multiple sclerosis
while the orphan drug status afforded to AVONEX(R) and Betaseron(R) for that
indication is still in effect. AVONEX(R)'s orphan drug status for relapsing
forms of the disease expires in 2003. The ruling by the FDA prompted Serono in
2000 to initiate a 12-month head-to-head study of Rebif(R) and AVONEX(R) to
determine if Serono can show whether Rebif(R) is clinically superior to
AVONEX(R). If positive, Serono will most likely use the results of this study in
its attempts to overcome the orphan drug status of AVONEX(R) and to get Rebif(R)
approved before expiration of AVONEX's orphan drug status. Biogen expects Serono
to release the results of the study in the third quarter of 2001. AVONEX(R) also
competes in the United States with Novantrone(R) (mitoxantrone for injection)
which is produced and marketed by Immunex Corporation, a majority-owned
subsidiary of American Home Products Corporation. Novantrone(R) is approved for
use in patients with clinically worsening forms of relapsing-remitting and
secondary progressive multiple sclerosis.

                                       28

   11

A number of other companies are working to develop products to treat multiple
sclerosis which may in the future compete with AVONEX(R), the worldwide market
leader among multiple sclerosis therapies. AVONEX(R) may also in the future face
competition from off-label uses of drugs approved for other indications. Biogen
believes that competition among treatments for multiple sclerosis will be based
on product performance, service and price.

ROYALTY REVENUE

The Company receives royalty revenues which contribute to its overall
profitability. The Company expects to continue to experience a decline in
royalty revenues as a result of patent expirations and other patent-related
events in the range of up to approximately $10 million per quarter for 2001 (not
including amounts that are subject to a dispute with Schering-Plough as
discussed below). See "Outlook - Patents and Other Proprietary Rights." The
Company expects the most significant decline to be in the amount of royalties
received from Schering-Plough on sales of INTRON(R) A as the result of patent
expirations in the EU and Japan. The extent of the decline in royalties related
to United States sales of INTRON(R) A will depend on the outcome of a dispute
with Schering-Plough related to its royalty obligations. Schering-Plough has
taken the position that a Court of Appeal's decision affirming a District
Court's ruling which narrowed the scope of the claims of Biogen's United States
alpha interferon patent has caused the patent to no longer cover
Schering-Plough's alpha interferon products, and, that, as a result,
Schering-Plough no longer has an obligation to pay royalties under that patent.
Until expiration of Biogen's EU (Irish) patent in January 2001, Schering-Plough
continued to pay royalties on sales of product in the United States based on
manufacture of the product in Ireland. Biogen is currently in discussions with
Schering-Plough to work to resolve the royalty issue and to resolve claims by
Biogen related to underpayment of royalties by Schering-Plough. In any event,
commencing in July 2002, Schering-Plough is obligated to pay royalties on sales
of its alpha interferon products in the U.S., including INTRON(R)A, during the
term of a certain Roche/Genentech U.S. alpha interferon patent right under an
agreement between Biogen and Schering-Plough in connection with settlement of a
lawsuit with Roche/Genentech related to the Roche/Genentech patent right. Biogen
intends to vigorously oppose any attempt by Schering-Plough to discontinue
payment of royalties. If the dispute with Schering-Plough results in arbitration
and Schering-Plough were to prevail in the arbitration, the resulting decline in
royalties on United States sales of alpha interferon products could range up to
approximately an additional $10 million per quarter in the eighteen month
period.

There are a number of other factors which could also cause the actual level of
royalty revenue to differ from the Company's expectations. For example, pricing
reforms, health care reform initiatives, other legal and regulatory developments
and the introduction of competitive products may have an impact on product sales
by the Company's licensees. In addition, sales levels of products sold by the
Company'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 the Company is not involved in the development or sale of
products by its licensees, the Company can not be certain of the timing or
potential impact of factors which may affect sales by the Company's licensees.
In the long term, the Company expects its royalty revenue to be affected most
significantly by patent expirations and a potential decrease in sales by
licensees of licensed products. See "Outlook - Patents and Other Proprietary
Rights."

PATENTS AND OTHER PROPRIETARY RIGHTS

The Company has numerous issued patents and patent applications pending on a
number of its processes and products. The Company has also obtained rights to
certain patents under licenses with third parties which provide for the payment
of royalties. There can be no assurances that Biogen's existing patents or
others, if obtained, will be of substantial protection or commercial benefit to
Biogen. In addition, it is not known to what extent Biogen's pending patent
applications or patent applications licensed from third parties will be granted
or whether any of the Company's patents will prevail if they are challenged in
litigation. There is also no assurance that third parties have not or will not
be granted patents claiming subject matter necessary to Biogen's business.

                                       29

   12

Biogen has granted an exclusive worldwide license to Schering-Plough under
Biogen's alpha interferon patents. Schering-Plough's royalty obligation to
Biogen on sales of Schering-Plough's INTRON(R) A brand of alpha interferon in
Japan and Europe terminated upon expiration of Biogen's alpha interferon patent
in such territories in January 2001, except in France and Italy where Biogen has
obtained supplemental protection certificates extending the coverage in France
until 2003 and in Italy until 2007. In 2000, a Court of Appeals decision
affirmed a District Court's decision narrowing the scope of Biogen's United
States alpha interferon patents. For a discussion of a dispute with
Schering-Plough over the implications of the decision on the amount of royalties
owed to Biogen on sales of alpha interferon products in the United States, see
"Outlook - Royalty Revenue". In consideration of assignment to Schering-Plough
by Biogen of a Biogen patent application claiming recombinant mature human alpha
interferon, Schering-Plough has agreed to pay to Biogen certain sums on sales by
Schering-Plough of alpha interferon products in the United States from the date
when Biogen's existing United States alpha interferon patent expires (i.e. July
2002) until expiration of an alpha interferon patent expected to be issued to
Hoffman-LaRoche Inc. ("Roche") and Genentech, Inc. ("Genentech"). The
Roche/Genentech patent was the subject of a lawsuit brought by Biogen which was
ultimately settled. Schering-Plough entered into an agreement with Roche as part
of the settlement.

Biogen has licensed its recombinant hepatitis B antigen patent rights to
manufacturers and marketers of hepatitis B vaccines and diagnostic test kits,
and receives royalties on sales of the vaccines and test kits by its licensees.
The obligation of GlaxoSmithKline plc and Merck & Co., Inc. to pay royalties on
sales of hepatitis B vaccines and the obligation of Biogen's other licensees
under its hepatitis B patents to pay royalties on sales of diagnostic products
will terminate upon expiration of Biogen's existing hepatitis B patents.
Biogen's existing United States hepatitis B patents will expire in 2004.
Biogen's European hepatitis B patents expired at the end of 1999, except in
those countries in which Biogen has or is able to obtain supplementary
protection certificates. To date, Biogen has received supplementary protection
certificates in Austria, Belgium, France, Great Britain, Ireland, Italy,
Luxembourg, The Netherlands, Sweden, and Switzerland, and has a number of
granted or pending registrations of the Great Britain supplementary protection
certificates in various British Territories. The additional coverage afforded by
the supplementary protection certificates, or related registrations, ranges from
two to eight years. There can be no assurance as to the extent of coverage
available under the supplementary protection certificates, or that protection
will be available in additional countries.

In 1994, Biogen granted Eli Lilly and Company ("Lilly") a non-exclusive license
under certain patents for gene expression. Under the license, Biogen has
received royalties from Lilly since 1994 on products which use the patented
vectors and methods. Based on a District Court's claims construction decision in
an infringement action brought by Biogen against Amgen, Inc. involving the same
patents as are licensed to Lilly, Lilly recently notified Biogen that Lilly
believes that it no longer owes royalties to Biogen under the agreement on any
of its products.

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 also "Legal Matters".

PRODUCTS

AVONEX(R) is currently the only product sold by the Company. The Company's
long-term viability and growth will depend on the successful development and
commercialization of other products from its research activities and
collaborations. The Company 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. Success in
preclinical and early clinical trials does not ensure that later stage or large
scale clinical trials will be successful. Many important factors affect the
Company's ability to successfully develop and commercialize drugs, 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

                                       30

   13

standards and 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.
There can be no assurance that the Company will be successful in its efforts to
develop and commercialize new products.

MARKET RISK

The Company has exposure to financial risk in several areas including changes in
foreign exchange rates and interest rates. The Company attempts to minimize its
exposures by using certain financial instruments, for purposes other than
trading, in accordance with the Company's overall risk management guidelines.
Further information regarding the Company's accounting policies for financial
instruments and disclosures of financial instruments can be found in Notes 1, 2
and 3 to the Company's Consolidated Financial Statements.

FOREIGN EXCHANGE

The Company has operations in several European countries in connection with the
sale of its product AVONEX(R). The Company also receives royalty revenues based
on worldwide product sales by its licensees. As a result, the Company's
financial position, results of operations and cash flows can be affected by
fluctuations in foreign currency exchange rates (primarily the Euro, British
pound, Japanese yen and Canadian dollar).

The Company uses foreign currency forward contracts to manage foreign currency
risk and does not engage in currency speculation. The Company uses these forward
contracts to hedge certain forecasted transactions denominated in foreign
currencies. A hypothetical adverse 10% movement in foreign exchange rates
compared to the U.S. dollar across all maturities would result in a hypothetical
loss in fair value of approximately $11 million. The Company's use of this
methodology to quantify the market risk of such instruments should not be
construed as an endorsement of its accuracy or the accuracy of the related
assumptions. The quantitative information about market risk is necessarily
limited because it does not take into account operating transactions.

INTEREST RATES

The Company is exposed to risk of interest rate fluctuations in connection with
its variable rate long-term debt. The Term Loan requires annual principal
payments of $1.7 million through 2004, with the balance due in 2005. The
Construction Loan requires annual principal payments of $3.2 million through
2006, with the balance due in 2007. At December 31, 2000, the carrying values of
the Term Loan and the Construction Loan approximated fair value.

The Company has fixed its interest rates on the Term Loan and Construction Loan
by entering interest rate swap agreements under which the Company exchanges the
difference between 7.5% and 7.75%, respectively, and a floating rate. The
notional principal balances on the interest rate swap agreements are exactly
equal to the principal on the underlying debt agreements. All other relevant
terms of the interest rate swap agreements (including the index rate, reset
period, etc.) exactly match the underlying loan agreements. The fair value of
the interest rate swap agreements at December 31, 2000, representing the cash
requirements of the Company to settle the agreements, was approximately $1.7
million. Terms of the Company's loan agreements include various covenants,
including financial covenants which require the Company to maintain minimum net
worth, cash flow and various financial ratios.

The fair value of the Company's cash, cash equivalents, marketable securities,
long-term debt and interest rate swap agreements are subject to change as a
result of potential changes in market interest rates. The potential change in
fair value for interest rate sensitive instruments has been assessed on a
hypothetical 100 basis point adverse movement across all maturities. The Company
estimates that such hypothetical adverse 100 basis point movement would not have
materially impacted net income or materially affected the fair value of interest
rate sensitive instruments.


                                       31

   14

STOCK PRICE

The stock prices of biotechnology companies are subject to significant
fluctuations. The stock price may be affected by a number of factors including,
but not limited to clinical trial results and other product development events,
the outcome of litigation, the financial impact of changes in the value of
investments, including investments in other biotechnology companies, the
decisions relating to intellectual property rights and the entrance of
competitive products into the market, changes in reimbursement policies or other
practices related to the pharmaceutical industry or other industry and market
changes or trends. In addition, if revenues or earnings in any quarter fail to
meet the investment community's expectations, there could be an immediate
adverse impact on the Company's stock price.


                                       32
   15


CONSOLIDATED STATEMENTS OF INCOME
- --------------------------------------------------------------------------------
Biogen, Inc. and Subsidiaries



- --------------------------------------------------------------------------------------------------

(in thousands, except per share amounts)
- --------------------------------------------------------------------------------------------------
For the years ended December 31,                               2000          1999         1998
- --------------------------------------------------------------------------------------------------
                                                                                
Revenues:

Product                                                      $761,079      $620,636      $394,863
Royalties                                                     165,373       173,799       162,724
- --------------------------------------------------------------------------------------------------
Total revenues                                                926,452       794,435       557,587
- --------------------------------------------------------------------------------------------------

Costs and expenses:

Cost of revenues                                              125,198       111,005        74,509
Research and development                                      302,840       221,153       177,228
Selling, general & administrative                             170,058       146,026       115,211
- --------------------------------------------------------------------------------------------------
Total costs and expenses                                      598,096       478,184       366,948
- --------------------------------------------------------------------------------------------------

Income from operations                                        328,356       316,251       190,639
Other income, net                                             158,749        12,765        19,554
- --------------------------------------------------------------------------------------------------
Income before income taxes                                    487,105       329,016       210,193
Income taxes                                                  153,528       108,566        71,496
- --------------------------------------------------------------------------------------------------
Net Income                                                   $333,577      $220,450      $138,697
- --------------------------------------------------------------------------------------------------

Basic earnings per share                                     $   2.24      $   1.47      $   0.94
- --------------------------------------------------------------------------------------------------
Diluted earnings per share                                   $   2.16      $   1.40      $   0.90
- --------------------------------------------------------------------------------------------------

Shares used in calculating:
     Basic earnings per share                                 148,743       149,921       147,537
- --------------------------------------------------------------------------------------------------
     Diluted earnings per share                               154,602       157,788       154,270
- --------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------






See accompanying notes to consolidated financial statements.


                                       33

   16

CONSOLIDATED BALANCE SHEETS
Biogen, Inc. and Subsidiaries




(in thousands, except share amounts)

As of December 31,                                                    2000             1999
- ---------------------------------------------------------------------------------------------------
                                                                              
Assets
Current assets
        Cash and cash equivalents                                 $    48,737       $    56,920
        Marketable securities                                         633,675           597,619
        Accounts receivable, less allowances of
        $2,436 and $1,642, respectively                               143,178           137,363
        Deferred tax assets                                            40,047            50,565
        Other current assets                                           62,634            67,759
- ---------------------------------------------------------------------------------------------------
        Total current assets                                          928,271           910,226
- ---------------------------------------------------------------------------------------------------

        Property and equipment, net                                   400,429           239,777
        Patents                                                        13,510            13,871
        Marketable securities                                          71,982            98,017
        Other assets                                                   17,664            16,082
- ---------------------------------------------------------------------------------------------------
                                                                  $ 1,431,856       $ 1,277,973
===================================================================================================

Liabilities and Shareholders' Equity
Current liabilities
        Accounts payable                                          $    37,869       $    30,125
        Current portion of long-term debt                               4,888             4,888
        Accrued expenses and other                                    178,264           155,257
- ---------------------------------------------------------------------------------------------------
        Total current liabilities                                     221,021           190,270
- ---------------------------------------------------------------------------------------------------

Long-term debt, less current portion                                   47,185            52,073
Other long-term liabilities                                            57,248            56,100
Commitments and contingencies                                              --                --

Shareholders' equity
        Common stock, par value $0.01 per share (375,000,000
            shares authorized; 151,705,636 and 150,684,586
            shares issued in 2000 and 1999, respectively)               1,517             1,507
        Additional paid-in capital                                    772,172           676,673
        Retained earnings                                             543,913           352,016
        Accumulated other comprehensive income                         22,376            45,618
        Treasury stock, at cost, 3,882,979 and 669,651
            shares in 2000 and 1999, respectively                    (233,576)          (96,284)
- ---------------------------------------------------------------------------------------------------
        Total shareholders' equity                                  1,106,402           979,530
- ---------------------------------------------------------------------------------------------------
                                                                  $ 1,431,856       $ 1,277,973
===================================================================================================



See accompanying notes to consolidated financial statements.


                                       34

   17


CONSOLIDATED STATEMENTS OF CASH FLOWS

Biogen, Inc. and Subsidiaries




(IN THOUSANDS)

 For the years ended December 31,                                        2000             1999              1998
                                                                   ----------------------------------------------------
                                                                                                
CASH FLOWS FROM OPERATING ACTIVITIES
       Net Income                                                    $   333,577       $   220,450       $   138,697
       Adjustments to reconcile net income to net
              cash provided from operating activities
       Depreciation and amortization                                      38,824            31,099            24,590
       Other                                                                (569)            5,162              (888)
       Deferred income taxes                                              25,203           (23,981)            7,486
       Gain on sale of non-current marketable securities                (101,129)               --                --
       Tax benefit of stock options                                       81,023            91,295            19,595
       Write-down of non-current marketable securities                        --            15,287                --
       Changes in:
          Accounts receivable                                             (5,815)          (36,082)          (14,479)
          Other current and other assets                                 (35,329)          (41,372)          (25,638)
          Accounts payable, accrued expenses and
          other current and long-term liabilities                         30,154           101,725            38,077
                                                                   ----------------------------------------------------
       Net cash flows from operating activities                          365,939           363,583           187,440
                                                                   ----------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
       Purchases of marketable securities                               (627,168)       (1,120,218)         (574,021)
       Proceeds from sales and maturities of
               marketable securities                                     606,087         1,006,465           453,952
       Proceeds from sales of non-current marketable securities          120,199                --                --
       Investment in collaborative partners                               (5,000)          (10,000)           (5,000)
       Acquisitions of property and equipment                           (194,402)          (82,528)          (29,049)
       Additions to patents                                               (4,713)           (3,799)           (4,562)
                                                                   ----------------------------------------------------
       Net cash flows from investing activities                         (104,997)         (210,080)         (158,680)
                                                                   ----------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
       Repayments on note payable                                             --                --           (24,817)
       Repayments on long-term debt                                       (4,888)           (4,887)           (4,886)
       Purchases of treasury stock                                      (300,192)         (197,717)          (65,550)
       Proceeds from put warrants                                             --            22,086                --
       Issuance of common stock and option exercises                      35,955            58,490            21,580
                                                                   ----------------------------------------------------
       Net cash flows from financing activities                         (269,125)         (122,028)          (73,673)
                                                                   ----------------------------------------------------
Net increase (decrease) in cash and cash equivalents                      (8,183)           31,475           (44,913)
Cash and cash equivalents, beginning of the year                          56,920            25,445            70,358
                                                                   ----------------------------------------------------
Cash and cash equivalents, end of the year                           $    48,737       $    56,920            25,445
                                                                   ====================================================

SUPPLEMENTAL CASH FLOW DATA
       Cash paid during the year for:
       Interest                                                      $     4,314       $     4,598       $     5,909
       Income taxes                                                  $    42,683       $     4,787       $    35,828



See accompanying notes to consolidated financial statements.


                                       35

   18


CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Biogen, Inc. and Subsidiaries
(in thousands)



                                                                                                        ACCUMULATED
                                                                 ADDITIONAL                                 OTHER         TOTAL
                                                       COMMON     PAID-IN      TREASURY      RETAINED   COMPREHENSIVE  SHAREHOLDERS'
                                                        STOCK     CAPITAL       STOCK        EARNINGS       INCOME        EQUITY
- ------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      
Balance, December 31, 1997                             $1,483     $516,138   $  (4,385)     $  25,327      $ (2,270)    $  536,293
                                                      ------------------------------------------------------------------------------

Net income                                                                                    138,697                      138,697
Unrealized gains/losses on marketable securities,
net of  tax of $ 4,476                                                                                       (7,072)        (7,072)
Unrealized gains/losses on interest rate swaps, net of
   transition adjustment (see Note 1)                                                                        (4,132)        (4,132)
Translation adjustment                                                                                          309            309
                                                                                                                        ----------
     Total comprehensive income                                                                                            127,802
                                                                                                                        ----------

Exercise of options and related tax benefits                        19,745      48,618        (27,188)                      41,175
Reclassification of put option obligation                                                      76,671                       76,671
Treasury stock purchased                                                       (65,550)                                    (65,550)
Compensation expense related to stock options                        2,222                                                   2,222
                                                      ------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1998                             $1,483     $538,105   $ (21,317)     $ 213,507      $(13,165)    $  718,613
                                                      ------------------------------------------------------------------------------

Net income                                                                                    220,450                      220,450
Unrealized gains/losses on marketable securities,
net of tax of $25,013                                                                                        48,555         48,555
Unrealized gains/losses on foreign currency
forward contracts, net of tax of $2,490                                                                       6,654          6,654
Unrealized gains/losses on interest rate swaps,
net of tax of $137                                                                                            4,501          4,501
Translation adjustment                                                                                         (927)          (927)
                                                                                                                        ----------
     Total comprehensive income                                                                                            279,233
                                                                                                                        ----------
Exercise of options and related tax benefits               24      108,952     122,750        (81,941)                     149,785
Proceeds from sale of put warrants                                  22,086                                                  22,086
Treasury stock purchased                                                      (197,717)                                   (197,717)
Compensation expense related to stock options                        7,530                                                   7,530

                                                      ------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1999                             $1,507     $676,673    $(96,284)      $352,016       $45,618     $  979,530
                                                      ------------------------------------------------------------------------------

NET INCOME                                                                                    333,577                      333,577
UNREALIZED GAINS/LOSSES ON MARKETABLE SECURITIES,
NET OF TAX OF $6,791                                                                                        (16,152)       (16,152)
UNREALIZED GAINS/LOSSES ON FOREIGN CURRENCY
FORWARD CONTRACTS, NET OF TAX OF $1,686                                                                      (5,311)        (5,311)
UNREALIZED GAINS/LOSSES ON INTEREST RATE SWAPS,
NET OF TAX OF $789                                                                                           (1,458)        (1,458)
TRANSLATION ADJUSTMENT                                                                                         (321)          (321)
                                                                                                                        ----------
     TOTAL COMPREHENSIVE INCOME                                                                                            310,335
                                                                                                                        ----------

EXERCISE OF OPTIONS AND RELATED TAX BENEFITS              10        95,748     162,900       (141,680)                     116,978
TREASURY STOCK PURCHASED                                                      (300,192)                                   (300,192)
COMPENSATION EXPENSE RELATED TO STOCK OPTIONS                         (249)                                                   (249)

                                                      ------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 2000                             $1,517     $772,172   $(233,576)     $ 543,913      $ 22,376     $1,106,402
                                                      ==============================================================================



See accompanying notes to consolidated financial statements.


                                       36

   19

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Biogen, Inc. and Subsidiaries


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS

Biogen, Inc. ("Biogen" or the "Company") is a biopharmaceutical company
principally engaged in the business of developing, manufacturing and marketing
drugs for human health care. The Company currently derives revenues from sales
of its AVONEX(R) (Interferon beta-la) product for the treatment of relapsing
forms of multiple sclerosis and from royalties on worldwide sales by the
Company's licensees of a number of products covered under patents controlled by
the Company, including alpha interferon and hepatitis B vaccines and diagnostic
products.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries. All material intercompany balances and
transactions have been eliminated. Certain items in prior years' financial
statements have been reclassified to conform with the current year's
presentation.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and use assumptions
that affect certain reported amounts and disclosures; actual amounts may differ.

TRANSLATION OF FOREIGN CURRENCIES

The functional currency for most of the Company's foreign subsidiaries is the
local currency. Assets and liabilities are translated at current rates of
exchange. Income and expense items are translated at the average exchange rates
for the year. Adjustments resulting from the translation of the financial
statements of the Company's foreign operations into U.S. dollars are excluded
from the determination of net income and are accumulated in a separate component
of shareholders' equity. The U.S. dollar is the functional currency for certain
foreign subsidiaries. The Company's subsidiaries which have the U.S. dollar as
the functional currency are remeasured into U.S. dollars using current rates of
exchange for monetary assets and liabilities and historical rates of exchange
for nonmonetary assets. Foreign exchange transaction gains and losses are
included in the results of operations in other income, net. Foreign exchange
gains totaled $2.8 million, $2.5 million and $2.5 million in 2000, 1999, and
1998, respectively.

CASH AND CASH EQUIVALENTS

The Company considers only those investments which are highly liquid, readily
convertible to cash and which mature within three months from date of purchase
to be cash equivalents.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts reflected in the consolidated balance sheets for cash and
cash equivalents, accounts receivable, other current assets, accounts payable,
and accrued expenses and other approximate fair value due to the short-term
maturities of these instruments. Marketable securities are carried at fair value
based on quoted market prices, consistent with the requirements of Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities". The fair values of trading securities, interest
rate swaps, foreign currency forward contracts and options on non-marketable
instruments are based on quoted market prices or pricing models using current
market rates. The Company's long-term debt approximates fair value based on
dealer quotes.

                                       37

   20

INVENTORIES

Inventories are stated at the lower of cost or market with cost determined under
the first-in/first-out ("FIFO") method and are included in other current assets.
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 for the periods ending December 31, are
as follows:

(in thousands)         2000        1999
                     -------      -------

Raw materials        $ 7,775      $ 5,679
Work in process       17,582       15,110
Finished goods        14,172       19,242
                     -------      -------
                     $39,529      $40,031
                     =======      =======

MARKETABLE SECURITIES

The Company invests its excess cash balances in short-term marketable
securities, principally corporate notes and government securities. At December
31, 2000, substantially all of the Company's securities were classified as
"available-for-sale". All available-for-sale securities are recorded at fair
market value and unrealized gains and losses are included in accumulated other
comprehensive income in shareholders' equity, net of related tax effects.
Realized gains and losses and declines in value, if any, judged to be other than
temporary on available-for-sale securities are reported in other income or
expense.

As part of its strategic product development efforts, the Company also invests
in equity securities of certain biotechnology companies with which it has
collaborative agreements. Such investments, which are included in long-term
marketable securities and other assets, are classified as available-for-sale if
a readily determinable market value exists. These investments are accounted for
under the cost or equity method, depending on the facts and circumstances of the
investment, and are reviewed regularly for impairment.

On a quarterly basis, as of the end of the quarter, the Company determines
whether a decline in fair value of a marketable security is other than
temporary. Unrealized gains and losses on marketable securities are included in
other comprehensive income in shareholders' equity, net of related tax effects.
If a decline in the fair value of a marketable security below the Company's cost
basis is determined to be other than temporary, such marketable security is
written down to its estimated fair value with a charge to current earnings. The
Company has concluded that all unrealized losses on marketable securities at
December 31, 2000 are temporary in nature. The Company expects that the market
value of such investments will recover to at least the Company's cost basis
within a reasonable period of time. Should any portion of these unrealized
losses subsequently be determined to be other than temporary, the Company would
be required to record the related amount as a charge to current earnings.

PROPERTY AND EQUIPMENT

Property and equipment is carried at cost, subject to review of impairment for
significant assets whenever events or changes in circumstances indicate that the
carrying amount of the asset may not be recoverable. Depreciation is calculated
on the straight-line basis over the estimated useful lives of the assets.
Leasehold improvements are amortized over the lesser of the useful life or the
term of the respective lease. Maintenance of computer systems, including
maintenance to make software Year 2000 compliant, is expensed as incurred.
Buildings and equipment are depreciated over estimated useful lives ranging from
30 to 40 and 3 to 10 years, respectively. The Company capitalizes certain
incremental costs associated with the validation effort required for licensing
by the FDA of manufacturing equipment for the production of a commercially
approved drug. These costs include primarily direct labor and material and are
incurred in preparing the equipment for its intended use. Net capitalized
validation costs were $4.3 million and $4.7 million at December 31, 2000 and
1999, respectively. The validation costs are amortized over the life of the
related equipment.

                                       38

   21



PATENTS

The costs associated with successful patent defenses and patent applications are
capitalized and amortized on a straight-line basis over estimated useful lives
up to 15 years. Accumulated amortization of patent costs was $25.2 million and
$20.1 million as of December 31, 2000 and 1999, respectively. The carrying value
of patents is regularly reviewed by the Company and impairments are recognized
when the expected future operating cash flows derived from the patent are less
than their carrying value.

DERIVATIVES AND HEDGING ACTIVITIES

On June 15, 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities", ("SFAS 133"). The Company elected to adopt SFAS 133 in
the fourth quarter of 1998. All derivatives are 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 cash flow hedge is no
longer probable of occurring, the Company discontinues hedge accounting for the
affected portion of the forecasted transaction, and any unrealized gain or loss
on the contract is recognized in current earnings.

COMPREHENSIVE INCOME

Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income", ("SFAS 130") requires the display of comprehensive income and its
components as part of the Company's full set of financial statements.
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 and certain derivative
instruments, net of tax. The Consolidated Statements of Shareholders' Equity
reflect comprehensive income for years ended December 31, 2000, 1999 and 1998
which were $310.3 million, $279.2 million and $127.8 million, respectively.

Upon adoption of SFAS 133, on October 1, 1998, the Company recorded an
adjustment to other comprehensive income to recognize at fair value all
derivatives that were designated as cash flow hedging instruments, which
comprised unrealized losses related to the Company's interest rate swaps of $5.4
million. This unrealized loss decreased by $1.3 million during the fourth
quarter of 1998 and as of December 31, 1998, the cumulative unrealized losses on
the Company's interest rate swaps were $4.1 million. During 1999, the Company
recorded $4.5 million of unrealized gains to other comprehensive income
reflecting the increase in the fair value of the interest rate swaps and at
December 31, 1999 had a cumulative unrealized gain of $366,000. During 2000, the
Company recorded $1.5 million of unrealized losses to other comprehensive income
reflecting the decrease in the fair value of the interest rate swaps and at
December 31, 2000 had a cumulative unrealized loss of $1.1 million.

The Company entered into foreign currency forward contracts in October 1998. At
December 31, 1998, these contracts had unrealized gains of $3,000, which were
aggregated with the unrealized losses associated with the Company's interest
rate swaps in comprehensive income. During 1999, the fair value of the Company's
foreign currency forward contracts increased by $6.7 million in unrealized
gains. At December 31, 1999, the Company had cumulative unrealized gains of $6.7
million on its foreign currency forward contracts. During 2000, the fair value
of the Company's foreign currency forward contracts decreased by $5.3 million.
At December 31, 2000, the Company had cumulative unrealized gains of $1.4
million on its foreign currency forward contracts.

SEGMENT INFORMATION

Statement of Financial Accounting Standards No. 131, "Disclosures about Segments
of an Enterprise and Related Information", ("SFAS 131") establishes standards
for reporting information on operating segments in interim and annual financial
statements. The Company's chief operating decision makers review the


                                       39

   22


profit and loss of the Company on an aggregate basis and manage the operations
of the Company as a single operating segment. Accordingly, the Company operates
in one segment, which is the business of developing, manufacturing and marketing
drugs for human health care.

REVENUES

Revenues from product sales are recognized when product is shipped and title and
risk of loss has passed. 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.

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 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.

RESEARCH AND DEVELOPMENT EXPENSES

Research and development costs, including amounts funded in research
collaborations, are expensed as incurred.

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.

Dilutive securities include outstanding options under the Company's stock option
plans. Options to purchase 2.7 million shares were outstanding at December 31,
2000 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. The put warrants sold in connection with the Company's stock
repurchase program in 1999 did not have a significant additional dilutive
effect. Shares used in calculating basic and diluted earnings per share for the
periods ending December 31, are as follows:

(in thousands)                                   2000        1999       1998
                                               --------    --------   --------

Weighted average number of shares
      of common stock outstanding              148,743     149,921    147,537
Dilutive stock options                           5,859       7,867      6,733
                                               --------    --------   --------
Shares used in calculating diluted
     earnings per share                        154,602     157,788    154,270
                                               ========    ========   ========

On June 11, 1999, the Board of Directors declared a two-for-one stock split to
be effected in the form of a stock dividend of one share of common stock for
each share outstanding. The stock dividend was payable on June 25, 1999 to
shareholders of record at the close of business on June 11, 1999. All references
to


                                       40

   23


number of shares and per share amounts in the financial statements have been
restated to give effect to the stock split for all periods presented.

2.   FINANCIAL INSTRUMENTS

Financial instruments that potentially subject the Company to concentrations of
credit risk are accounts receivable and marketable securities. Wholesale
distributors and large pharmaceutical companies account for the majority of the
accounts receivable and collateral is generally not required. To mitigate the
risk, the Company monitors the financial performance and credit worthiness of
its customers. The Company invests its excess cash balances in marketable debt
securities, primarily U.S. government securities and corporate bonds and notes,
with strong credit ratings. The Company limits the amount of investment exposure
as to institution, maturity and investment type.

The average maturity of the Company's marketable securities as of December 31,
2000 and 1999 was 30 months and 24 months, respectively. Proceeds from
maturities and other sales of marketable securities, which were primarily
reinvested, for the years ended December 31, 2000, 1999 and 1998 were
approximately $606 million, $1,006 million and $454 million, respectively. The
cost of securities sold is determined based on the specific identification
method. Realized gains and (losses) on these sales for the years ended December
31, 2000, 1999 and 1998 were $(1,846,000), $(1,442,000) and $645,000,
respectively.

The following is a summary of marketable securities:



                                                    Unrealized
                                              ----------------------     Amortized
(in thousands)                 Fair Value      Gains         Losses         Cost
                               ----------     --------      --------     ---------
                                                              
December 31, 2000:

U.S. Government securities      $288,214      $  5,284      $     --      $282,930
Corporate debt securities        345,461         2,444            --       343,017
                               ----------------------------------------------------
                                $633,675      $  7,728      $     --      $625,947
                               ====================================================
Marketable securities,
noncurrent                      $ 71,982      $ 28,174      $     --      $ 43,808
                               ====================================================

December 31, 1999:

U.S. Government securities      $295,046      $     --      $  4,656      $299,702
Corporate debt securities        302,573            --         3,717       306,290
                               ----------------------------------------------------
                                $597,619      $     --      $  8,373      $605,992
                               ====================================================
Marketable securities,
noncurrent                      $ 98,017      $ 75,263      $     --      $ 22,754
                               ====================================================


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
at December 31, 2000, representing the cash requirements of the Company to
settle the agreements, approximated $1.7 million. The fair value of the interest
rate swap agreements at December 31, 1999, representing the cash the Company
would receive to settle the agreements, was approximately $366,000. 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 2000 and 1999, 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 expense. The Company
expects approximately $619,000 in losses related to its interest rate swaps to
affect earnings in 2001.

The Company has foreign currency forward contracts to hedge specific
transactions denominated in foreign currencies. All foreign currency forward
contracts have durations of ninety days to 12 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
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 cash flow hedge is no longer
probable of occurring, the Company discontinues hedge accounting for the
affected

                                       41

   24

portion of the forecasted transaction and any unrealized gain or loss on the
contract is recognized in current earnings. The notional settlement amount of
the foreign currency forward contracts outstanding at December 31, 2000 was
approximately $111.7 million. These contracts had a fair value of approximately
$2.2 million, representing an unrealized gain, and were included in other
current assets at December 31, 2000.

In 2000, there were no significant amounts recognized in earnings due to hedge
ineffectiveness. During 2000, the Company recognized $977,000 in other income as
a result of the discontinuance of cash flow hedges upon determining that it was
no longer probable that the original forecasted transaction would occur. The
Company recognized $12.7 million of gains in product revenue and $3.7 million of
gains in royalty revenue for the settlement of certain effective cash flow hedge
instruments during the year ended December 31, 2000. These settlements were
recorded in the same period as the related forecasted transactions affecting
earnings. The Company expects approximately $2.2 million of unrealized gains at
December 31, 2000 to affect earnings in 2001 related to its foreign currency
forward contracts.

In 1999, there were no significant amounts recognized in earnings due to hedge
ineffectiveness or as a result of the discontinuance of cash flow hedge
accounting because it was probable that the original transaction would not
occur. The Company recognized $7.4 million of gains in product revenue and $2.7
million of gains in royalty revenue for the settlement of certain effective cash
flow hedge instruments during the year ended December 31, 1999. These
settlements were recorded in the same period as the related forecasted
transactions affecting earnings.

During 1998, the Company recognized $686,000 in other expense as a result of the
discontinuance of cash flow hedges upon determining that it was no longer
probable that the original forecasted transaction would occur. The Company also
recognized a $322,000 gain in product revenue and a $485,000 loss in royalty
revenue for the settlement of certain cash flow hedge instruments during the
period. These settlements were recorded in the same period as the related
forecasted transactions affecting earnings.

3.   BORROWINGS

As of December 31, 2000, the Company had $15.8 million outstanding under a
floating rate loan with a bank (the "Term Loan"). The Term Loan is secured by
the Company's laboratory and office building in Cambridge, Massachusetts. The
Term Loan provides for annual principal payments of $1.7 million in each of the
years 1996 through 2004 with the balance due May 8, 2005. The Company also
entered into an interest rate swap agreement, with the same bank, fixing its
interest rate at 7.5% during the remaining term of the loan, payable
semi-annually.

As of December 31, 2000, the Company had $36.2 million outstanding under a
floating rate loan agreement with a bank for financing the construction of its
biological manufacturing facility in North Carolina (the "Construction Loan").
The Construction Loan is secured by the facility. Payments of $805,000 are due
quarterly through 2006 with the balance due in 2007. The Company also entered
into an interest rate swap agreement, with the same bank, fixing its interest
rate at 7.75% during the remaining term of the loan, payable quarterly.

The Term Loan and Construction Loan agreements include various covenants,
including financial covenants, which require the Company to maintain minimum net
worth, cash flow and various financial ratios. The Company's long-term debt
obligations are carried at face value, which approximates fair market value.

Long-term debt at December 31, consists of the following:


(in thousands)                    2000           1999
- --------------------------      --------       --------

Term Loan due 2005              $ 15,836       $ 17,501
Construction Loan due 2007        36,237         39,460
                                --------       --------
                                  52,073         56,961
Current portion
                                  (4,888)        (4,888)
                                --------       --------
                                $ 47,185       $ 52,073
                                ========       ========


                                       42
   25


4.   CONSOLIDATED BALANCE SHEETS DETAILS

Property and equipment:
December 31 (in thousands)           2000          1999
- -----------------------------      --------      --------


Land                               $ 12,349      $ 12,349
Buildings                            84,119        92,462
Leasehold improvements               63,845        54,946
Equipment                           185,404       191,809
Construction in Progress            191,355            --
                                   --------      --------
Total cost                          537,072       351,566
Less accumulated depreciation       136,643       111,789
                                   --------      --------
                                   $400,429      $239,777
                                   ========      ========

Depreciation expense was $27.8 million, $25.9 million and $21.4 million for
2000, 1999 and 1998, respectively.

Accrued expenses and other:

December 31 (in thousands)          2000          1999
- ------------------------------    --------      --------

Royalties and licensing fees      $ 32,188      $ 34,914
Income taxes                        69,494        64,545
Clinical trial costs                24,694        15,746
Other                               51,888        40,052
                                  --------      --------
                                  $178,264      $155,257
                                  ========      ========

5.   PENSIONS

The Company has a defined benefit pension plan which provides benefits to
substantially all of its employees. The Company also has a supplemental
retirement benefit plan which covers certain employees. The pension plans are
noncontributory with benefit formulas based on employee earnings and credited
years of service. The Company's funding policy for its pension plans is to
contribute amounts deductible for federal income tax purposes. Funds contributed
to the plans are invested in fixed income and equity securities.

The components of net periodic pension cost for each of the three years ended
December 31 are summarized below:

(in thousands)                            2000          1999         1998
                                        -------       -------       -------

Service cost                            $ 3,314       $ 2,923       $ 2,225
Interest cost                             1,799         1,307         1,041
Expected return on plan assets           (1,258)         (994)         (722)
Amortization of transition asset             --            --           (21)
Amortization of prior service cost           43            43            43
Amortization of net actuarial loss           86            22            --
                                        -------       -------       -------
Net pension cost                        $ 3,984       $ 3,301       $ 2,566
                                        =======       =======       =======


                                       43
   26


Reconciliations of projected benefit obligations, fair value of plan assets and
the funded status of the plans as of December 31, are presented below:




Change in projected benefit obligation  (in thousands)               2000           1999
- -------------------------------------------------------------      --------       --------
                                                                            
Net projected benefit obligation at the beginning of the year      $(19,377)      $(16,003)
Service cost                                                         (3,314)        (2,923)
Interest cost                                                        (1,799)        (1,307)
Actuarial gain (loss)                                                  (935)           697
Gross benefits paid                                                     991            159
                                                                   --------       --------
Net projected benefit obligation at the end of the year             (24,434)       (19,377)
                                                                   --------       --------

Change in plan assets                   (in thousands)
- -------------------------------------------------------------

Fair value of plan assets at the beginning of the year               15,061         11,773
Actual return on plan assets                                           (934)         2,021
Employer contributions                                                2,000          1,500
Gross benefits paid                                                    (752)           (43)
Administrative expenses                                                (119)          (190)
                                                                   --------       --------
Fair value of plan assets at the end of the year                     15,256         15,061
                                                                   --------       --------

Funded status at the end of the year    (in thousands)
- -------------------------------------------------------------

Funded status at the end of the year                                 (9,178)        (4,316)
Unrecognized net actuarial (gain) loss                                1,224         (1,833)
Unrecognized prior service cost                                         271            315
Unrecognized net transition asset                                         0              0
                                                                   --------       --------
Net amount recognized at the end of the year                       $ (7,683)      $ (5,834)
                                                                   ========       ========

Weighted average assumptions at the end of the year
- -------------------------------------------------------------

Discount rate                                                         7.50%          7.50%
Expected return on plan assets                                        8.00%          8.00%
Rates of compensation increase                                        5.00%          5.00%


The Company has an unfunded supplemental retirement plan. As of December 31,
2000 the projected benefit and the accumulated benefit obligations were $5.7
million and $3.7 million, respectively. As of December 31, 1999 the projected
benefit and the accumulated benefit obligations were $3.8 million and $2.8
million, respectively.

6.   OTHER INCOME, NET

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

                                             December 31,
                             -----------------------------------------
                                2000           1999            1998
                             ---------       ---------       ---------

Interest income              $  42,965       $  35,407       $  28,339
Interest expense                (4,310)         (4,639)         (5,944)
Other income (expense)         120,094         (18,003)         (2,841)
                             ---------       ---------       ---------

Total other income, net      $ 158,749       $  12,765       $  19,554
                             =========       =========       =========

Other income (expense) for the period ended December 31, 2000 included gains on
the sale of certain non-current marketable securities totaling approximately
$101.1 million. Additionally, the Company realized gains of approximately $24.1
million upon the acquisition of two of its investees by third parties. Other
income (expense) for the period ended December 31, 1999 included a $15 million
write-down of certain non-current marketable securities.


                                       44

   27


As part of its strategic product development efforts, the Company invests in
equity securities of certain biotechnology companies with which it has
collaborative agreements. In December of 1996, Biogen purchased approximately
1.5 million shares of Creative BioMolecules, Inc. common stock for $18 million.
In March of 1997, Biogen purchased approximately 670,000 shares of CV
Therapeutics, Inc. common stock for $7 million. In March of 1998, the Company
purchased approximately 435,000 shares of CuraGen common stock for $5 million
and converted 100,000 shares of CuraGen Series E Preferred Stock valued at $1
million into CuraGen common stock. Each of these small emerging companies was
principally engaged in researching, developing or manufacturing drugs for human
health care.

As a matter of policy, Biogen determines on a quarterly basis whether a decline
in the fair value of a marketable security is other than temporary. Unrealized
gains and losses on marketable securities are included in other comprehensive
income in shareholders' equity, net of related tax effects. If a decline in the
fair value of a marketable security below the Company's cost basis is determined
to be other than temporary, such marketable security is written down to its
estimated fair value with a charge to current earnings.

Up through and including the assessment at June 30, 1999, the Company concluded
that substantial evidence existed suggesting that the value of the investments
described above would recover to at least the Company's purchase price. Such
evidence included the prospects for favorable clinical trial results, new
product initiatives and new collaborative agreements. However, given the lack of
any substantial price recovery during the quarter ended June 30, 1999 and the
amount of time elapsed since the decline in value began, the Company concluded
that it had become unclear over what period such price recovery would take
place. As a result, it was determined that the positive evidence suggesting that
the investments would recover to at least the Company's purchase price was not
sufficient to overcome the presumption that the current market price of the
investments was the best indicator of value at June 30, 1999. Accordingly, the
related unrealized losses of approximately $15 million were recognized as other
expense in the second quarter of 1999.

7.   INCOME TAXES

The components of income before income taxes and of income tax expense (benefit)
for each of the three years ended December 31, are as follows:




(in thousands)                     2000             1999           1998
                                 ---------       ---------       ---------
                                                        
Income before income taxes:
Domestic                         $ 379,489       $ 253,303       $ 200,181
Foreign                            107,616          75,713          10,012
                                 ---------       ---------       ---------
                                 $ 487,105       $ 329,016       $ 210,193
                                 =========       =========       =========
Income tax expense:
Current
    Federal                      $ 115,696       $ 112,499       $  58,152
    State                           11,969          15,587           3,937
    Foreign                          1,098           4,206             887
                                 ---------       ---------       ---------
                                 $ 128,763       $ 132,292       $  62,976
                                 ---------       ---------       ---------
Deferred
    Federal                      $  25,344       $ (20,863)      $   8,314
    State                             (579)         (2,863)            206
                                 ---------       ---------       ---------
                                    24,765         (23,726)          8,520
                                 ---------       ---------       ---------
Total income tax expense         $ 153,528       $ 108,566       $  71,496
                                 =========       =========       =========



                                       45

   28


Deferred tax assets (liabilities) are comprised of the following at December 31:

(in thousands)                              2000           1999
                                          --------       --------


Tax credits                               $ 28,135       $ 35,089
Inventory and other reserves                11,532         14,927
Other                                          379            549
                                          --------       --------
Deferred tax asset                          40,046         50,565
                                          --------       --------

Depreciation, amortization and other       (24,189)        (9,943)
Unrealized gain on investments             (12,956)       (27,640)
                                          --------       --------
Deferred tax liabilities                   (37,145)       (37,583)
                                          --------       --------
                                          $  2,901       $ 12,982
                                          ========       ========

A reconciliation of the U.S. federal statutory tax rate to the effective tax
rate for the periods ending December 31 is as follows:

                                                  2000        1999       1998
                                                  ----        ----       ----

Statutory rate                                    35.0%       35.0%      35.0%
State taxes                                        3.2         3.3        3.0
Foreign taxes                                     (2.6)       (2.6)        --
Credits and net operating loss utilization        (3.3)       (2.6)      (4.2)
Other                                             (0.8)       (0.1)       0.2
                                                  ----        ----       ----
Effective tax rate                                31.5%       33.0%      34.0%
                                                  ====        ====       ====

At December 31, 2000, the Company had tax credits of $28.1 million, most of
which expire at various dates through 2015.

As of December 31, 2000, undistributed foreign earnings of non-U.S. subsidiaries
included in consolidated retained earnings aggregated $117 million, exclusive of
earnings that would result in little or no tax under current U.S. tax law. The
Company intends to reinvest these earnings indefinitely in operations outside
the United States. It is not practicable to estimate the amount of additional
tax that might be payable if such earnings were remitted to the United States.

8.   RESEARCH COLLABORATIONS

In September 2000, the Company signed a research and development agreement (the
"Eos Agreement") with Eos Biotechnology, Inc. ("Eos"), under which the Company
and Eos will collaborate in the research and development of novel targets for
antibody and protein therapeutics in the area of breast cancer. Under the Eos
Agreement, the Company purchased 1.9 million shares of preferred stock of Eos
for $5 million. In addition, the Company paid a one-time non-refundable license
fee of $6 million, which was charged to research and development expense and
acquired certain exclusive, worldwide rights related to breast cancer-specific
molecules for the use in the development of new antibody and secreted protein
therapeutics. The Company accounts for its investment in Eos, which is included
in other assets, using the cost method of accounting. The Company provided Eos
with research and development funding of $250,000 in 2000. The Company expects
to fund research activities of Eos related to the collaboration of up to $1.5
million in 2001.

In August 2000, the Company signed a development and marketing collaboration
agreement (the "Antegren Agreement") with Elan Corporation, plc ("Elan") under
which the Company and Elan collaborate in the development, manufacture and
commercialization of Antegren(R), a humanized monoclonal antibody and alpha 4
integrin inhibitor. Under the terms of the Antegren Agreement, Biogen and Elan
will share costs for on-going development activities. The Company paid a
one-time non-refundable license fee of $15 million, which was charged to
research and development expense.

In October 1997, the Company signed a research and option agreement (the
"CuraGen Agreement") with CuraGen Corporation ("CuraGen") under which the
Company and CuraGen collaborate in the discovery of novel genes using CuraGen's
functional genomics technologies. The Company provided CuraGen with research and
development funding of $1.5 million, $1.1 million and $1.9 million in 2000, 1999
and 1998,


                                       46
   29


respectively. The Curagen Agreement was terminated in September 2000 and all
investments in CuraGen common stock were sold during 2000.

In March 1997, the Company signed a research collaboration and license agreement
(the "CVT Agreement") with CV Therapeutics, Inc. ("CVT") under which Biogen
obtained rights under CVT's patents and know-how to develop and market molecules
that act as highly selective antagonists of the adenosine A1 receptor, for the
treatment of congestive heart failure. Under the terms of the CVT Agreement, the
Company purchased approximately 670,000 shares of CVT common stock at the then
fair value for $7 million and paid a one-time license fee of $5 million, which
was charged to research and development expense. The investment in CVT is
classified as available-for-sale and is included in long-term marketable
securities. At December 31, 2000 the Company retained approximately 670,000
shares of CVT common stock.

In December 1996, the Company signed a research collaboration and license
agreement (the "CBM Agreement") with Creative BioMolecules, Inc. ("CBM") under
which Biogen obtained rights to develop and market CBM's morphogenic protein,
OP-1, for the treatment of renal disorders. Under the CBM Agreement, the Company
purchased 1.5 million shares of CBM common stock for $18 million. The payment
for the common stock included a $1.2 million premium over the fair value of the
common stock which was charged to research and development expense. The Company
provided $10 million in research and development funding, which was charged to
expense as provided in 1998. The CBM Agreement terminated at the end of 1999 and
all investments in CBM common stock were sold during 2000.

In July 1996, the Company signed a collaborative research and commercialization
agreement (the "Ontogeny Agreement") with Ontogeny, Inc. ("Ontogeny"), a private
biotechnology company, for the development and commercialization of three
specific hedgehog cell proteins, a class of novel human proteins, that are
responsible for reducing the formation or regeneration of tissue. Under the
Ontogeny Agreement, the Company purchased 400,000 shares of preferred stock of
Ontogeny for $1 million and acquired certain exclusive, worldwide rights related
to products based on the hedgehog proteins for most disease areas. In November
1998, the Company extended and expanded its collaboration with Ontogeny and
provided to Ontogeny a $4 million convertible loan. In June 1999, the loan was
converted into 800,000 shares of Ontogeny Convertible Preferred Stock. The
Ontogeny Agreement was terminated in July 2000. In August 2000, Ontogeny merged
with two other biotechnology companies to form Curis Inc. ("Curis"). As a
shareholder in Ontogeny, Biogen received Curis common stock in exchange for the
Company's shares in Ontogeny. The Company provided $1 million, $2.8 million and
$3.6 million of research funding to Ontogeny in 2000, 1999 and 1998,
respectively. Additionally, the Company provided $1.5 million upon conclusion of
the Ontogeny Agreement, which was charged to research and development expense.
At December 31, 2000 the investment in Curis is classified as available-for-sale
and is included in long-term marketable securities. At December 31, 2000 the
Company retained approximately 308,000 shares of Curis common stock.

In August 1995, the Company signed a collaborative research agreement (the
"Genovo Agreement") for the development of human gene therapy treatments with
Genovo, Inc. ("Genovo"), a gene therapy research company. Under the Genovo
Agreement, the Company acquired 380,000 shares of Genovo Series A Preferred
stock for $4.5 million and acquired certain licensing rights. The Company
accounted for this investment, which was included in other assets, using the
equity method of accounting. The Company recorded its proportion of Genovo's net
losses as research and development expense in the amounts of $3.9 million, $7.6
million, and $9 million in 2000, 1999, and 1998, respectively. In August 2000,
Genovo entered into a merger agreement ("Targeted Merger Agreement") with
Targeted Genetics Corporation ("Targeted"). As a shareholder in Genovo, Biogen
received Targeted common stock in exchange for the Company's shares in Genovo.
Additionally, concurrently with the Targeted Merger Agreement, the Company
entered into a development and marketing agreement and a funding agreement (the
"Targeted Agreements") for gene therapy research and development in oncology.
The Targeted Agreements provide for a $10 million credit facility. Targeted also
has an option to sell to the Company an additional $10 million of Targeted
common stock at fair value. As of December 31, 2000, there were no borrowings
outstanding under the credit facility and the Company provided $250,000 in
research funding to Targeted in 2000.


                                       47

   30


9.   COMMITMENTS AND CONTINGENCIES

The Company rents laboratory and office space and certain equipment under
noncancellable operating leases. The rental expense under these leases, which
terminate at various dates through 2015, amounted to $14.9 million in 2000,
$11.9 million in 1999 and $9.4 million in 1998. The lease agreements contain
various clauses for renewal at the option of the Company and, in certain cases,
escalation clauses linked generally to rates of inflation.

At December 31, 2000, minimum annual rental commitments under noncancellable
leases were as follows:

     Year                                             (in thousands)
     --------------------------------------------------------------
     2001                                              $   17,365
     2002                                                  15,123
     2003                                                  13,338
     2004                                                  12,261
     2005                                                  11,993
     Thereafter                                            60,220
                                                       -----------
     Total minimum lease payments                      $  130,300
                                                       ===========

On October 4, 1999 the Company began construction of its new research and
development center in Cambridge, Massachusetts. The new 224,000 square foot
building is expected to be completed in the spring of 2001. At December 31,
2000, $81.4 million had been committed for construction costs. Additionally, the
Company is completing plans to build a large scale manufacturing plant in
Raleigh, North Carolina. The Company expects that construction will be completed
at the end of 2001. At December 31, 2000, $141.9 million had been committed for
construction costs.

On July 3, 1996, Berlex Laboratories, Inc. ("Berlex") filed suit against Biogen
in the United States District Court for the District of New Jersey alleging
infringement by Biogen of Berlex's "McCormick" patent (U.S. Patent No.
5,376,567) in the United States in the production of Biogen's AVONEX(R)
(Interferon beta-1a) product. In November 1996, Berlex's New Jersey action was
transferred to the United States District Court in Massachusetts and
consolidated for pre-trial purposes with a related declaratory judgment action
previously filed by Biogen. On August 18, 1998, Berlex filed a second suit
against Biogen alleging infringement by Biogen of a patent which was issued to
Berlex in August 1998 and which is related to the McCormick patent (U.S. Patent
No. 5,795,779). On September 23, 1998, the cases were consolidated for pre-trial
and trial purposes. Berlex sought a judgment granting it damages, a trebling of
any damages awarded and a permanent injunction restraining Biogen from the
alleged infringement. A hearing on the parties' summary judgment motions in the
case was completed in March 2000. In September 2000, the District Court rendered
final judgment in favor of Biogen and against Berlex determining that Biogen's
production of AVONEX(R) did not infringe any of the claims of the Berlex
patents. Berlex has appealed this decision with the Court of Appeals for the
Federal Circuit and the parties are in the process of briefing the appeal for
oral argument. An unfavorable ruling on appeal would result in the case being
remanded to the District Court for trial. If Berlex were to be successful in its
appeal and the case were remanded, an unfavorable ruling in the remanded case
could have a material adverse effect on the Company's results of operations and
financial position. The Company believes that the decision of the District Court
that Biogen does not infringe the Berlex patents is sound, but the ultimate
outcome of the appeal is not currently determinable. As a result, an estimate of
any potential loss or range of loss cannot be made at this time.

In 1995, the Company filed an opposition with the Opposition Division of the
European Patent Office to oppose a European patent (the "Rentschler I Patent")
issued to Dr. Rentschler Biotechnologie GmbH ("Rentschler") relating to
compositions of matter of beta interferon. In 1997, the European Patent Office
issued a decision to revoke the Rentschler I Patent. Rentschler appealed that
decision and an oral hearing on the appeal took place in December 2000. At the
oral hearing in order to gain reinstatement of the patent, Rentschler narrowed
the patent claims so as to claim only a specific cell line. Biogen does not use
the specific cell line now claimed. On October 13, 1998, the Company filed
another opposition with the Opposition Division of the European Patent Office to
oppose a second European patent issued to Rentschler (the "Rentschler II
Patent") with certain claims regarding compositions of matter of beta interferon
with specific regard to the structure of the glycosylated molecule. A hearing on
the Company's opposition previously scheduled for October 2000 has been
postponed, and will likely be held in 2001. While Biogen believes that the
Rentschler II Patent will be revoked and that the revocation of the Rentschler I
Patent will be upheld on appeal, if either the Rentschler I Patent or the
Rentschler II Patent


                                       48

   31


were to be upheld and if Rentschler were to obtain, through legal proceedings, a
determination that the Company's sale of AVONEX(R) in Europe infringes a valid
Rentschler patent, such result could have a material adverse effect on the
Company's results of operation and financial position.

10.  SHAREHOLDERS' EQUITY

CONVERTIBLE EXCHANGEABLE PREFERRED STOCK

The Company has authority to issue 20,000,000 shares of $.01 par value preferred
stock.

SHAREHOLDER RIGHTS PLAN

In 1989, the Company's Board of Directors declared a dividend to holders of the
Company's common stock of rights (the "Old Rights") to purchase shares of Series
A Junior Participating Preferred Stock (the "Old Preferred Stock"). Each Old
Right entitled the registered holder to purchase from the Company one
one-hundredth of a share of Old Preferred Stock upon the terms and subject to
the conditions set forth in a Rights Agreement, dated as of May 8, 1989, between
the Company and The First National Bank of Boston (the "Old Plan"). The Old Plan
and the Old Rights expired on May 8, 1999. Consequently, on April 16, 1999, the
Board of Directors declared a dividend to holders of the Company's common stock
of one new preferred share purchase right (a "New Right") for each outstanding
share of common stock. The New Rights were granted on May 8, 1999 pursuant to a
new Rights Agreement, dated May 8, 1999, between the Company and State Street
Bank and Trust Company, as Rights Agent (the "New Plan"). Each New Right
entitles the registered holder to purchase from the Company one one-thousandth
of a share of Series A-1 Junior Participating Preferred Stock, par value $.01
per share ("New Preferred Stock"), at a price of $850 per one one-thousandth of
a share of New Preferred Stock, subject to adjustment. Each one one-thousandth
of a share of New Preferred Stock has rights, privileges and preferences which
make its value approximately equal to the value of one share of the Company's
common stock. The New Rights are exercisable only if a person or group acquires
20% or more of the outstanding common stock of the Company or commences a tender
or exchange offer, the consummation of which would result in the ownership of
20% or more of the outstanding common stock of the Company. Once the New Rights
become exercisable, and in some circumstances if additional conditions are met,
each New Right will entitle the Company's shareholders (other than the acquiror)
to, among other things, purchase common stock at a substantial discount. Unless
earlier redeemed or exchanged by the Company, the New Rights expire on May 8,
2009. The Company is entitled to redeem the New Rights at a price of $.001 per
New Right.

The Old Preferred Stock has been eliminated and replaced with the New Preferred
Stock. At December 31, 2000, the Company had 250,000 shares of New Preferred
Stock authorized for use in connection with the New Plan.

SHARE OPTION AND PURCHASE PLANS

The Company has several stock-based compensation plans. The Company applies APB
Opinion No. 25 "Accounting for Stock Issued to Employees" in accounting for 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. Included in compensation expense for the periods ending
December 31, 2000, 1999 and 1998 were approximately $(249,000), $7.5 million,
and $2.2 million, respectively, related to stock based compensation plans.

The Company has several plans and arrangements under which it may grant options
to employees, Directors and Scientific Board members to purchase common stock.
Under the terms of the Company's stock-based compensation plans, approximately
47 million options may be granted. Option grants are typically made under the
1985 Non-Qualified Stock Option Plan and the 1987 Scientific Board Stock Option
Plan (the "Plans"). Options under the Plans are granted at no less than 100% of
the fair market value on the date of grant. Options generally become exercisable
over various periods, typically 5 to 7 years for employees and 3 years for
Directors and Scientific Board members, and have a maximum term of 10 years.


                                       49
   32


Activity under these plans for the periods ending December 31, is as follows
(shares are in thousands):



                                          2000                     1999                          1998
                                -------------------------------------------------------------------------------------
                                             Weighted                     Weighted                          Weighted
                                              Average                      Average                           Average
                                             Exercise                     Exercise                          Exercise
                                Shares         Price        Shares         Price            Shares           Price
                                ------      ---------      --------      ---------         --------        ----------
                                                                                            
Outstanding, Jan. 1             17,938       $24.53         22,376         $15.97           22,304            $11.98
Granted                          2,731        55.34          3,099          60.24            3,618             33.88
Exercised                       (3,250)       11.61         (5,435)         10.45           (2,612)             7.65
Canceled                          (502)       34.17         (2,102)         22.41             (934)            13.33
                                ------       ------         ------         ------           ------            ------
Outstanding, Dec. 31            16,917       $31.70         17,938         $24.53           22,376            $15.97
                                ======       ======         ======         ======           ======            ======

Options exercisable              9,093                       9,384                          10,998
Available for grant              1,578                       3,807                           4,804
Weighted average fair
    value of options
     granted                                 $24.34                        $26.23                             $14.63



The table below summarizes options outstanding and exercisable at December 31,
2000 (shares are in thousands):



                                               Options Outstanding                            Options Exercisable
                               -----------------------------------------------------  ---------------------------------
                                                     Weighted
                                                     Average            Weighted                            Weighted
                                                    Remaining            Average                             Average
Range of                           Number          Contractual          Exercise          Number            Exercise
Exercise Price                  Outstanding            Life               Price         Exercisable          Price
- ---------------------------    ---------------    ---------------     --------------  --------------    ---------------
                                                                                         
$0.00-$10.00                       2,086               2.78            $  8.10             2,030            $  8.07
$10.01-$20.00                      6,711               5.25              15.69             4,622              15.24
$20.01-$30.00                        784               7.00              22.81               312              22.70
$30.01-$40.00                        232               7.76              33.23               115              33.28
$40.01-$50.00                      2,555               7.98              41.26             1,269              41.14
$50.01-$60.00                      2,626               9.31              54.69               173              53.11
$60.01-$70.00                        281               9.35              65.00                13              68.70
$70.01-$80.00                      1,453               8.93              72.34               521              71.98
Over $80.00                          189               8.80              85.85                38              85.89
                               ----------                             ---------           --------
Total                             16,917                               $ 31.70             9,093
                               ==========                             =========           ========


The Company also has two employee stock purchase plans covering substantially
all of its employees. The plans allow employees to purchase common stock at 85%
of the lower of the fair market value at either the date of the beginning of the
plan period or the purchase date. Purchases under the plans are subject to
certain limitations and may not exceed an aggregate of 1,120,000 shares during
the term of the plans; no shares may be issued after December 31, 2007. Through
December 31, 2000, 409,102 shares have been issued under the stock purchase
plans.

If compensation cost for the Company's 2000, 1999 and 1998 grants under the
stock-based compensation plans had been determined based on SFAS 123, the
Company's pro forma net income, and pro forma diluted earnings per share for the
years ending December 31, would have been as follows (in thousands except per
share data):



                                                       2000           1999          1998
                                                     --------       --------      --------
                                                                         
Pro forma net income                                 $294,412       $196,965      $122,342
Pro forma diluted earnings per share                 $   1.90       $   1.25      $   0.79


                                       50

   33


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

                                      2000        1999        1998
                                      ----        ----        ----

Expected dividend yield                 0%           0%          0%
Expected stock price volatility        45%          36%         36%
Risk-free interest rate               6.9%         5.5%        5.5%
Expected option term in years         5.5          5.6         5.6

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, and
additional awards in future years are anticipated.

STOCK 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 will provide the Company with treasury shares for
general corporate purposes, such as stock to be issued under employee stock
option and stock purchase plans. Stock purchases are expected to occur from time
to time through 2001. The stock repurchase program may be discontinued at any
time.

On February 22, 1999, the Company announced that its Board of Directors had
authorized the repurchase of up to 8 million shares of the Company's common
stock. The repurchased stock provided the Company with treasury shares for
general corporate purposes, such as stock to be issued under employee stock
option and stock purchase plans. During 1999, the Company repurchased
approximately 3.4 million shares of its common stock at a cost of $197.7
million. During 2000, the Company repurchased approximately 4.6 million shares
of its common stock at a cost of $300.2 million, completing this program.

To enhance the 1999 stock repurchase program, the Company sold put warrants to
and purchased call options from independent third parties for a total of 4
million shares of which 2.2 million shares were outstanding at December 31,
1999, at a strike price of $49.47. None of the put warrants and call options
were outstanding at December 31, 2000. Additionally, during 1999 in a separate
put warrant program to facilitate its purchase of common stock, the Company sold
put warrants for total proceeds of $22.1 million. The Company had put warrants
to purchase 1.6 million shares outstanding at December 31, 1999, at an average
strike price of $68.99 relating to this put warrant program. None of the put
warrants were outstanding at December 31, 2000. The outstanding put warrants
permitted a net-share settlement at the Company's option and, therefore, did not
result in a put obligation liability on the Company's Consolidated Balance
Sheets. The put warrants sold in connection with the Company's stock repurchase
program did not have a significant additional dilutive effect.

11.  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 from sales of its AVONEX(R)
(Interferon beta-1a) product for the treatment of relapsing forms of multiple
sclerosis. The Company also derives revenue from royalties on worldwide sales by
the Company's licensees of a number of products covered under patents controlled
by the Company, including alpha interferon and hepatitis B vaccines and
diagnostic products. Revenues are primarily attributed from external customers
to individual countries where earned based on location of the customer or
licensee. At December 31, 2000, product and royalty revenues from external
customers in The Netherlands were approximately 10% of total revenues. As of
December 31, 1999, and 1998, respectively, no material amounts of product or
royalty revenue could be attributable to an individual foreign country.


                                       51

   34


The Company's geographic information is as follows (in thousands):




December 31, 2000:                    US           EUROPE         ASIA        OTHER         TOTAL
- --------------------------------   --------      ---------      --------     --------      --------
                                                                            
Product revenue from external
    customers                      $552,591      $199,714       $    --      $  8,774      $761,079
Royalty revenue from external
    customers                       120,578        26,414        16,479         1,902       165,373
Long-lived assets                   497,347         6,125            --           113       503,585



December 31, 1999:                    US           EUROPE         ASIA        OTHER         TOTAL
- --------------------------------   --------      ---------      --------     --------      --------

Product revenue from external
    customers                      $442,278      $173,640       $    --      $  4,718      $620,636
Royalty revenue from external
    customers                       117,182        38,391        15,871         2,355       173,799
Long-lived assets                   346,706        20,910            --           131       367,747



December 31, 1998:                    US           EUROPE         ASIA        OTHER         TOTAL
- --------------------------------   --------      ---------      --------     --------      --------

Product revenue from external
    customers                      $303,591      $ 91,237       $    --      $     35      $394,863
Royalty revenue from external
    customers                       108,177        37,573        13,940         3,034       162,724
Long-lived assets                   214,554        15,912            --           105       230,571


The Company received revenue from five unrelated parties in 2000 accounting for
a total of 18%, 13%, 12%, 11% and 10% of total product and royalty revenue. The
Company received revenue from five unrelated parties in 1999 accounting for a
total of 15%, 13%, 13%, 11% and 11% of total product and royalty revenue. The
Company received revenue from five unrelated parties in 1998 accounting for a
total of 16%, 13%, 11%, 11% and 10% of total product and royalty revenue.

12.  QUARTERLY FINANCIAL DATA (UNAUDITED)

(in thousands, except per share amounts)



                                        First          Second            Third        Fourth         Total
                                       Quarter         Quarter          Quarter       Quarter         Year
                                                                                     
2000
Total revenues                         $216,848        $230,514        $233,754      $245,336       $926,452
Product revenue                         174,596         190,009         193,242       203,232        761,079
Royalties revenue                        42,252          40,505          40,512        42,104        165,373
Total expenses and taxes                194,506         175,191         198,577       183,350        751,624
Other income, net                        99,024          16,737          33,204         9,784        158,749
Net income                              121,366          72,060          68,381        71,770        333,577
Basic earnings per share                   0.81            0.48            0.46          0.49           2.24
Diluted earnings per share                 0.77            0.47            0.44          0.47           2.16

1999
Total revenues                         $171,720        $188,929        $208,431      $225,355       $794,435
Product revenue                         131,320         145,852         163,448       180,016        620,636
Royalties revenue                        40,400          43,077          44,983        45,339        173,799
Total expenses and taxes                132,220         136,271         154,494       163,765        586,750
Other income, net                         6,184         (9,270)           8,092         7,759         12,765
Net income                               45,684          43,388          62,029        69,349        220,450
Basic earnings per share                   0.31            0.29            0.41          0.46           1.47
Diluted earnings per share                 0.29            0.28            0.39          0.44           1.40


13.  NEW ACCOUNTING PRONOUNCEMENT

In December 1999, the United States Securities and Exchange Commission issued
Staff Accounting Bulletin 101, "Revenue Recognition in Financial Statements"
("SAB 101"). SAB 101 provides the staff's views in applying generally accepted
accounting principles to selected revenue recognition issues, as well as
examples of how the staff applies revenue recognition guidance to specific
circumstances. The Company

                                       52

   35

adopted SAB 101 in 2000. Adoption of SAB 101 did not have a material effect on
the Company's financial position and results of operations.


                                       53

   36

                        REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and
Shareholders of Biogen, Inc.

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, of cash flows and of shareholders' equity
present fairly, in all material respects, the financial position of Biogen, Inc.
and its subsidiaries at December 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2000 in conformity with accounting principles generally accepted in
the United States of America. These financial statements are the responsibility
of the Company's management; our responsibility is to express an opinion on
these financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.



/s/ PricewaterhouseCoopers LLP

Boston, Massachusetts
January 11, 2001


                                       54

   37

SENIOR EXECUTIVES AND BOARD MEMBERS
Biogen, Inc. and Subsidiaries


                                                                                      
Senior Biogen Executives                  Board of Directors                                Scientific Board

James L. Vincent                          James L. Vincent (2)(3)(5)                        Phillip A. Sharp, Ph.D.
Chairman of the Board                     Chairman of the Board and                         Chairman of the Scientific Board
                                          Chief Executive Officer                           Institute Professor and Director of the
James C. Mullen                           Biogen, Inc.                                      McGovern Institute for Brain Research,
President and                                                                               Massachusetts Institute of Technology;
Chief Executive Officer                   Alan Belzer (1)(5)                                Nobel Laureate
                                          President, Chief Operating Officer and Director,
Burt A. Adelman, M.D.                     Allied-Signal, Inc. (retired)                     Sir Kenneth Murray, Ph.D.
Vice-President - Medical Research                                                           Vice Chairman of the Scientific Board
                                          Harold W. Buirkle (1)(2)(4)                       Biogen Professor of Molecular Biology,
Cornelis "Kees" Been                      Managing Director,                                Emeritus
Vice President - Business and             The Henley Group, Inc. (retired)                  University of Edinburgh;
Market Development                                                                          Fellow of The Royal Society
                                          Mary L. Good, Ph.D. (2)
Thomas J. Bucknum, Esq.                   Former Undersecretary for Technology,             Alexander G. Bearn, M.D.
Vice President - General Counsel,         U.S. Department of Commerce                       Executive Officer, American
Secretary and Clerk                       Management Member,                                Philosophical Society
                                          Venture Capital Investors, LLC,                   Adjunct Professor, The Rockefeller
Frank A. Burke, Jr.                       Donaghey University Professor at                  University
Vice President - Human Resources          University of Arkansas                            Professor Emeritus,
                                          at Little Rock                                    Cornell University Medical College
Nadine D. Cohen, Ph.D.
Vice President - Regulatory Affairs       Thomas F. Keller, Ph.D. (1)                       Max D. Cooper, M.D.
                                          R. J. Reynolds Professor and Dean,                Investigator,
Michael Gilman, Ph.D.                     Fuqua School of Business Europe,                  Howard Hughes Medical Institute;
Vice President - Research                 Duke University                                   Professor of Medicine, Pediatrics,
                                                                                            Microbiology and Pathology,
Sylvie L. Gregoire, Pharm. D.             Roger H. Morley (2)(4)                            University of Alabama at Birmingham
Vice President - Manufacturing            Vice President, Schiller International
                                          University                                        Joseph M. Davie, M.D., Ph.D.
Robert A. Hamm                            Co-Managing Director, R&R Inventions Ltd.;        Senior Vice President - Research,
Vice President - Sales and Marketing      Former President, American Express Co.            Biogen, Inc.

Peter N. Kellogg                          James C. Mullen                                   Richard A. Flavell, Ph.D.
Vice President - Finance and              President and Chief Operating Officer,            Professor and Chairman,
Chief Financial Officer                   Biogen, Inc.                                      Immunoiology Section,
                                                                                            Howard Hughes Medical Institute,
Mark W. Leuchtenberger                    Sir Kenneth Murray, Ph.D. (3)(5)
Vice President - International            Biogen Professor of Molecular Biology,            Yale University School of Medicine;
                                          Emeritus University of Edinburgh;                 Fellow of The Royal Society
Toshio Nakata                             Fellow of The Royal Society
President - Biogen Japan, Ltd. and                                                          Daniel H. Rich, Ph.D.
Vice President - Japan, Asia and          Phillip A. Sharp, Ph.D. (2)(3)                    Professor of Medicinal Chemistry
Oceana                                    Institute Professor and Director of the           and Organic Chemistry,
                                          McGovern Institute for Brain Research,            University of Wisconsin - Madison
John W. Palmer                            Massachusetts Institute of Technology; Nobel
Vice President - Program Management       Laureate                                          Kai L. Simons, M.D., Ph.D.
                                                                                            Professor of Cell Biology
David D. Pendergast, Ph.D.                Alan K. Simpson 5                                 European Molecular Biology Lab,
Vice President - Product Development      Director of the Institute of Politics             Heidelberg, Germany
                                          and Visiting Lecturer,
Patrick J. Purcell                        John F. Kennedy School of Government              Thomas P. Stossel, M.D.
Vice President - Information Systems      Harvard University; Former U.S. Senator           Co-Director,
and Chief Information Officer                                                               Division of Hematology,
                                          James W. Stevens 1, 5                             Brigham and Women's Hospital
                                          Former Chairman, Prudential Asset
(1) Member of the Finance and Audit       Management Group                                  Daniel I.C. Wang, Ph.D.
    Committee                                                                               Institute Professor of Chemical
(2) Member of the Compensation and                                                          Engineering
    Management Resources Committee                                                          Massachusetts Institute of Technology
(3) Member of the Project Share
    Committee
(4) Member of the Stock and Option Plan
    Administration Committee
(5) Member of the Nominating Committee


                                       55
   38
SHAREHOLDER INFORMATION
Biogen, Inc. and Subsidiaries

                                                         
Corporate Headquarters:                                     SEC Form 10-K
Biogen, Inc.                                                A copy of the Company's annual report to the
14 Cambridge Center                                         Securities and Exchange Commission on
Cambridge, MA 02142                                         Form 10-K is available upon written request to the:
Telephone: (617) 679-2000                                   Corporate Communications Department
Fax:       (617) 679-2617                                   Biogen, Inc.
                                                            14 Cambridge Center
Annual Meeting                                              Cambridge, MA 02142.
Friday, June 15, 2001 at 10:00 a.m.
at the Company's offices at 12 Cambridge Center             Transfer Agent
All shareholders are welcome.                               For shareholder questions regarding lost certificates,
                                                            address changes and changes of ownership or name
Market for Securities                                       in which the shares are held, direct inquiries to:
Biogen's securities are quoted on the                       State Street Bank and Trust Company
NASDAQ National Market System.                              P.O. Box 8200
Common stock symbol: BGEN.                                  Boston, MA 02266-8200
                                                            Telephone: (800) 426-5523
As of March 7, 2001 there were approximately
2,654 holders of record of the Company's Common             Independent Accountants
Stock. The Company has not paid any cash dividends          PricewaterhouseCoopers LLP
on its Common Stock since its inception, and does not       160 Federal Street
intend to pay any dividends in the foreseeable future.      Boston, MA 02110
On June 25, 1999 the Company effected a two-for-one
stock split of its Common Stock. The quarterly high         U.S. Legal Counsel
and low closing prices (adjusted to reflect the stock       Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
split) of the Company's Common Stock on the                 One Financial Center
NASDAQ National Market System for 2000 and 1999             Boston, MA 02111
are as follows:
                                                            News Releases
                       High               Low               As a service to our shareholders and prospective
Fiscal 2000                                                 investors, copies of Biogen news releases issued in the
- ---------------------                                       last 12 months are now available almost immediately
First Quarter         119 1/2            69 7/8             24 hours a day, seven days a week, on the Internet's
Second Quarter         72 3/4            49 3/4             World Wide Web at http://www.prnewswire.com and
Third Quarter          74 3/4            53                 via automated fax by calling "Company News On Call"
Quarter                64 1/4            51 1/2             at 1-800-758-5804, ext. 101550. Biogen news
                                                            releases are usually posted on both systems within one
Fiscal 1999                                                 hour of being issued are available at no cost.
- ---------------------
First Quarter         58 19/32           39 19/32
Second Quarter        64 5/16            46 3/16
Third Quarter         89 3/16            63 1/16
Fourth Quarter        88 1/16            64 3/8             The Biogen logo and AVONEX(R)are registered
                                                            Trademarks of Biogen, Inc. AMEVIVE(TM) and ANTOVA(TM)
                                                            Are trademarks of Biogen, Inc. Intron(R)A, REBETOL(R), and
                                                            REBETRON(R) are registered trademarks of Schering-Plough
                                                            Corporation. Betaseron(R)is a registered trademark of Berlex
                                                            Laboratories, Inc. Betaferon(R)is a registered trademark of
                                                            Schering AG, Germany. Copaxone(R)is a registered trademark
                                                            of Teva Pharmaceutical Industries, Ltd. Infergen(R)is a
                                                            registered trademark of Amgen.




                                       56


   39
                                  BIOGEN, INC.
                                   Schedule II
                 Valuation and Qualifying Accounts and Reserves
                  Years Ended December 31, 2000, 1999 and 1998
                                 (in thousands)





                                                   ADDITIONAL
                                      BALANCE AT   CHARGED TO
                                     BEGINNING OF   COSTS AND               BALANCE AT END
         DESCRIPTION                    PERIOD      EXPENSES    DEDUCTIONS    OF PERIOD

                                                                  
Allowance for Doubtful Accounts

Year Ended December 31, 2000             1,642      $   794      $    --      $ 2,436
                                       -------      -------      -------      -------
Year Ended December 31, 1999           $ 1,642      $    --      $    --      $ 1,642
                                       -------      -------      -------      -------
Year Ended December 31, 1998           $ 1,645      $    --      $     3      $ 1,642
                                       -------      -------      -------      -------


Sales Returns & Allowances,
Discounts and Rebates

Year Ended December 31, 2000             8,654      $58,666      $58,280      $ 9,040
                                       -------      -------      -------      -------
Year Ended December 31, 1999           $ 5,592      $42,090      $39,028      $ 8,654
                                       -------      -------      -------      -------
Year Ended December 31, 1998           $ 3,789      $26,172      $24,369      $ 5,592
                                       -------      -------      -------      -------




                                      S-1
   40
                    Report of Independent Accountants on
                        Financial Statement Schedule


To the Board of Directors and
Shareholders of Biogen, Inc.:

Our audits of the consolidated financial statements referred to in our report
dated January 11, 2001 appearing in the 2000 Annual Report to Shareholders of
Biogen, Inc. (which report and consolidated financial statements are
incorporated by reference in this Annual Report on Form 10-K) also included an
audit of the financial statement schedule listed in Item 14(a)(2) of this Form
10-K. In our opinion, this financial statement schedule presents fairly, in
all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.


/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
January 11, 2001



                                      S-2

EX-21

   1
                                                                      Exhibit 21

                         Subsidiaries of the Registrant


Biogen Canada, Inc.                             Delaware
Bio Holding I, Inc.                             Delaware
Bio Holding II, Inc.                            Delaware
Biogen Realty Corporation                       Massachusetts
Biogen Realty Limited Partnership               Massachusetts
Biogen Technologies, Inc.                       Delaware
Biogen Australi Pty Ltd                         Australia
Biogen Belgium S.A./NV                          Belgium
Biogen B.V.                                     The Netherlands
Biogen France S.A.                              France
Biogen GmbH                                     Austria
Biogen GmbH                                     Germany
Biogen International B.V.                       The Netherlands
Biogen Investments, Ltd.                        Bermuda
Biogen Japan Ltd.                               Japan
Biogen Limited                                  United Kingdom
Biotech Manufacturing CV                        The Netherlands
Biotech Manufacturing Limited                   Channel Islands
Biogen Norway AS                                Norway
Biogen Sweden AB                                Sweden
Biogen (Denmark) A/S                            Denmark
Biogen Finland Oy                               Finland
Biogen Foreign Sales Company, Ltd               Barbados

EX-23

   1
                                                                      Exhibit 23

                       CONSENT OF INDEPENDENT ACCOUNTANTS



We hereby consent to the incorporation by reference in the Registration
Statements on Form S-3 (Nos. 333-71695) and in the Registration Statements on
Form S-8 (Nos. 33-37312, 33-69174, 33-63015, 333-42887, 333-70701, and
333-53598) of Biogen, Inc. of our report dated January 11, 2001 relating to the
financial statements, which appear in the Annual Report to Shareholders, which
is incorporated in this Annual Report on Form 10-K. We also consent to the
incorporation by reference of our report dated January 11, 2001 relating to the
financial statement schedule, which appears in this Form 10-K.



/s/ PricewaterhouseCoopers LLP

Boston, Massachusetts
March 30, 2001