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

The following discussion should be read in conjunction with our consolidated financial statements and the accompanying notes beginning on page F-1 of this report.

For our discussion of the year ended December 31, 2022, compared to the year ended December 31, 2021, please read Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations located in our Annual Report on Form 10-K for the year ended December 31, 2022.

EXECUTIVE SUMMARY

INTRODUCTION

Biogen is a global biopharmaceutical company focused on discovering, developing and delivering innovative therapies for people living with serious and complex diseases worldwide. We have a broad portfolio of medicines to treat MS, have introduced the first approved treatment for SMA, co-developed treatments to address a defining pathology of Alzheimer’s disease and launched the first approved treatment to target a genetic cause of ALS. Through our 2023 acquisition of Reata we market the first and only drug approved in the U.S. and the E.U. for the treatment of Friedreich's Ataxia in adults and adolescents aged 16 years and older. We are focused on advancing our pipeline in neurology, specialized immunology and rare diseases. We support our drug discovery and development efforts through internal research and development programs and external collaborations.

Our marketed products include TECFIDERA, VUMERITY, AVONEX, PLEGRIDY, TYSABRI and FAMPYRA for the treatment of MS; SPINRAZA for the treatment of SMA; SKYCLARYS for the treatment of Friedreich's Ataxia; QALSODY for the treatment of ALS; and FUMADERM for the treatment of severe plaque psoriasis.

We also have collaborations with Eisai on the commercialization of LEQEMBI for the treatment of Alzheimer's disease and Sage on the commercialization of ZURZUVAE for the treatment of PPD and we have certain business and financial rights with respect to RITUXAN for the treatment of non-Hodgkin's lymphoma, CLL and other conditions; RITUXAN HYCELA for the treatment of non-Hodgkin's lymphoma and CLL; GAZYVA for the treatment of CLL and follicular lymphoma; OCREVUS for the treatment of PPMS and RMS; LUNSUMIO for the treatment of relapsed or refractory follicular lymphoma; COLUMVI, a bispecific antibody for the treatment of non-Hodgkin's lymphoma; and have the option to add other potential anti-CD20 therapies, pursuant to our collaboration arrangements with Genentech, a wholly-owned member of the Roche Group.

We commercialize a portfolio of biosimilars of advanced biologics including BENEPALI, an etanercept biosimilar referencing ENBREL, IMRALDI, an adalimumab biosimilar referencing HUMIRA, and FLIXABI, an infliximab biosimilar referencing REMICADE, in certain countries in Europe, as well as BYOOVIZ, a ranibizumab biosimilar referencing LUCENTIS, in the U.S. and certain international markets. We also have exclusive rights to commercialize TOFIDENCE, a tocilizumab biosimilar referencing ACTEMRA. We continue to develop potential biosimilar product SB15, a proposed aflibercept biosimilar referencing EYLEA. In February 2023 we announced that we are exploring strategic options for our biosimilars business.

For additional information on our collaboration arrangements, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in this report.

We seek to ensure an uninterrupted supply of medicines to patients around the world. To that end, we continually review our manufacturing capacity, capabilities, processes and facilities. In order to support our future growth and drug development pipeline, we expanded our large molecule production capacity and built a large-scale biologics manufacturing facility in Solothurn, Switzerland. In the second quarter of 2021 a portion of the facility (the first manufacturing suite) received a GMP multi-product license from the SWISSMEDIC and was placed into service. The second manufacturing suite became operational in January 2024. Solothurn has been approved for the manufacture of ADUHELM and LEQEMBI by the FDA. We believe that the Solothurn facility will support our anticipated near to mid-term needs for the manufacturing of biologic assets, including the commercial launch of LEQEMBI. The plant represents a significant increase in our overall manufacturing capacity and is not yet being fully utilized, resulting in our recording of excess capacity charges. If we are unable to fully utilize our manufacturing facilities, we will incur additional excess capacity charges which would have a negative effect on our financial condition and results of operations.

In the longer term, our revenue growth will depend upon the successful clinical development, regulatory approval and launch of new commercial products as well as additional indications for our existing products, our ability to obtain

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and maintain patents and other rights related to our marketed products, assets originating from our research and development efforts and/or successful execution of external business development opportunities.

BUSINESS ENVIRONMENT

For a detailed discussion on our business environment, please read Item 1. Business, included in this report. For additional information on our competition and pricing risks that could negatively impact our product sales, please read Item 1A. Risk Factors, included in this report.

TECFIDERA

Multiple TECFIDERA generic entrants are now in North America, Brazil and certain E.U. countries and have deeply discounted prices compared to TECFIDERA. The generic competition for TECFIDERA has significantly reduced our TECFIDERA revenue and we expect that TECFIDERA revenue will continue to decline in the future.

Following a favorable March 2023 decision of the CJEU affirming TECFIDERA's right to regulatory data and marketing protection and the EC determination in May 2023 that TECFIDERA is entitled to an additional year of market protection for its pediatric indication, we believe that TECFIDERA is entitled to regulatory marketing protection in the E.U. until at least February 2, 2025, and are seeking to enforce this protection. In December 2023, the EC revoked all centralized marketing authorizations for generic versions of TECFIDERA. As of December 31, 2023, some of the TECFIDERA generics have not yet fully exited some E.U. markets and we expect removal of all generics from the market will take additional time. We are closely monitoring this situation and working to enforce our legal right to market protection. In addition, we will continue to enforce our EP 2 653 873 patent related to TECFIDERA, which expires in 2028.

For additional information, please read Note 21, Litigation, to our consolidated financial statements included in this report.

BUSINESS UPDATE REGARDING MACROECONOMIC CONDITIONS AND OTHER DISRUPTIONS

Significant portions of our business are conducted in Europe, Asia and other international geographies. Factors such as global health outbreaks, adverse weather events, geopolitical events, inflation, labor or raw material shortages and other supply chain disruptions could result in product shortages or other difficulties and delays or increased costs in manufacturing our products. Additionally, global disputes and interruptions in international relationships, including tariffs, trade protection measures, import or export licensing requirements and the imposition of trade sanctions or similar restrictions by the U.S. or other governments, affect our ability to do business. For example, tensions between the U.S. and China have led to a series of tariffs and sanctions being imposed by the U.S. on imports from China mainland, as well as other business restrictions.

CURRENT ECONOMIC CONDITIONS

Economic conditions remain vulnerable as markets continue to be impacted in part by elevated inflation, rising interest rates, global supply chain constraints and recent bank failures.

During 2023 concerns arose with respect to the financial condition of certain banking institutions in the U.S., in particular those with exposure to certain types of depositors and large portfolios of investment securities. In March 2023 two such banks were closed and taken over by the FDIC, which created significant market disruption. While we did not have any direct exposure to these institutions, we do maintain our cash at financial institutions, often in balances that exceed the current FDIC insurance limits, and will continue to monitor our cash, cash equivalents and investments and take steps to identify any potential impact and minimize any disruptions on our business.

If other banks and financial institutions enter receivership or become insolvent in the future due to financial conditions affecting the banking system and financial markets, our ability to access our cash, cash equivalents and investments, including transferring funds, making payments or receiving funds, may be threatened and could have a material adverse effect on our business and financial condition.

GEOPOLITICAL TENSIONS

The ongoing geopolitical tensions related to Russia's invasion of Ukraine and the recent military conflict in the Middle East have resulted in global business disruptions and economic volatility.

For example, sanctions and other restrictions have been levied on the government and businesses in Russia. Although we do not have affiliates or employees, in either Russia or Ukraine, we do provide various therapies to patients in Russia through a distributor. In addition, new government sanctions on the export of certain

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manufacturing materials to Russia may delay or limit our ability to get new products approved. The impact of the conflict on our operations and financial performance remains uncertain and will depend on future developments, including the severity and duration of the conflict between Russia and Ukraine, its impact on regional and global economic conditions and whether the conflict spreads or has effects on countries outside Ukraine and Russia.

We will continue to monitor the ongoing conflict between Russia and Ukraine as well as the military conflict in the Middle East and assess any potential impacts on our business, supply chain, partners or customers, as well as any factors that could have an adverse effect on our results of operations. Revenue generated from sales in Russia and Ukraine represent less than 2.0% of total revenue for the years ended December 31, 2023, 2022 and 2021. Revenue generated from sales in the broader Middle East region represents less than 2.0% of total revenue for the years ended December 31, 2023, 2022 and 2021.

INFLATION REDUCTION ACT OF 2022

In August 2022 the IRA was signed into law in the U.S. The IRA introduced new tax provisions, including a 15.0% corporate alternative minimum tax and a 1.0% excise tax on stock repurchases. The provisions of the IRA are effective for periods after December 31, 2022. The IRA did not result in any material adjustments to our income tax provision or other income tax balances as of December 31, 2023 and 2022. Preliminary guidance has been issued by the IRS and we expect additional guidance and regulations to be issued in future periods. We will continue to assess its potential impact on our business and results of operations as further information becomes available.

The IRA also contains substantial drug pricing reforms that may have a significant impact on the pharmaceutical industry in the U.S. This includes allowing CMS to negotiate a maximum fair price for certain high-priced single source Medicare drugs, as well as redesigning Medicare Part D to reduce out-of-pocket prescription drug costs for beneficiaries, potentially resulting in higher contributions from plans and manufacturers. The IRA also establishes drug inflationary rebate requirements to penalize manufacturers from raising the prices of Medicare covered single-source drugs and biologics beyond the inflation-adjusted rate. Further, to incentivize biosimilar development, the IRA provides an 8.0% Medicare Part B add-on payment for qualifying biosimilar products for a five-year period.

The IRA's drug pricing controls and Medicare redesign may have an adverse impact on our sales (particularly for our products that are more substantially reliant on Medicare reimbursement), our business and our results of operations. However, the degree of impact from this legislation on our business depends on a number of implementation decisions. We will continue to assess as further information becomes available.

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FINANCIAL HIGHLIGHTS

As described below under Results of Operations, our net income and diluted earnings per share attributable to Biogen Inc. for the year ended December 31, 2023, compared to the year ended December 31, 2022, reflects the following:

TOTAL REVENUE

Decreased

$337.8 million or 3.3%

DILUTED EARNINGS PER SHARE

Decreased

$12.90 or 61.8%

PRODUCT REVENUE

Decreased

$741.1 million or 9.3%

•MS revenue decreased $768.3 million, or 14.1%

•Rare disease revenue increased $9.5 million, or 0.5%

•Biosimilars revenue increased $18.9 million, or 2.5%

•The decrease in MS product revenue was primarily due to a decrease in TECFIDERA demand as a result of multiple TECFIDERA generic entrants in North America, Brazil and certain E.U. countries, a decrease in Interferon demand due to competition as patients transition to higher efficacy therapies and a decrease in U.S. TYSABRI revenue primarily driven by increased competition and pricing pressure.

•The increase in rare disease revenue was primarily due to revenue from SKYCLARYS, which we began recognizing in the fourth quarter of 2023 as a result of our acquisition of Reata in September 2023. The increase was partially offset by a decrease in rest of world SPINRAZA revenue primarily due to the unfavorable impact of foreign currency exchange, increased competition, a decrease in pricing and the timing of shipments.

TOTAL COST AND EXPENSE

Increased

$1,957.2 million or 29.7%

•Cost of sales increased $255.1 million, or 11.2%

•R&D expense increased $230.9 million, or 10.3%

•SG&A expense increased $146.1 million, or 6.1%

•Restructuring expense increased $87.7 million, or 66.9%

•Other income decreased $423.7 million, net

•The increase in cost of sales was primarily due to unfavorable product mix from increased contract manufacturing revenue, MS product mix and higher idle capacity charges, partially offset by a decrease in excess and obsolescence inventory charges in 2023.

•The increase in research and development expense was primarily due to clinical trial close out costs incurred in 2023 of approximately $125.4 million and the recognition of $197.0 million in equity-based compensation expense related to our acquisition of Reata.

•The increase in selling, general and administrative expense was primarily due to the recognition of $196.4 million in equity-based compensation expense related to our acquisition of Reata.

•The increase in restructuring expense was primarily due to higher severance benefits associated with the 2023 cost savings initiatives as compared to 2022.

•The decrease in other income, net was primarily due to the pre-tax gain of $1.5 billion recorded in 2022 related to the sale of our equity interest in Samsung Bioepis, partially offset by a pre-tax charge of $900.0 million, plus settlement fees and expenses, related to a litigation settlement agreement

•Additionally, total cost and expense in 2022 was reduced by a pre-tax gain of approximately $503.7 million related to a sale of a building.

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FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

•We generated $1,547.2 million of net cash flow from operations for the years ended December 31, 2023. Net cash flow from operations includes $393.4 million of equity-based compensation expense related to our acquisition of Reata in September 2023.

•Cash, cash equivalents and marketable securities totaled approximately $1.0 billion as of December 31, 2023, compared to approximately $5.6 billion as of December 31, 2022. The decrease was primarily due to consideration paid for our acquisition of Reata in September 2023.

•There were no share repurchases of our common stock during 2023 under our 2020 Share Repurchase Program. Approximately $2.1 billion remained available under our 2020 Share Repurchase Program as of December 31, 2023.

RECENT DEVELOPMENTS

DEVELOPMENTS IN KEY COLLABORATIVE RELATIONSHIPS

LEQEMBI (lecanemab)

United States

In July 2023 the FDA granted traditional approval of LEQEMBI, an anti-amyloid antibody for the treatment of Alzheimer's disease, which was previously granted accelerated approval by the FDA in January 2023. Following the FDA's traditional approval of LEQEMBI, CMS confirmed broader coverage of LEQEMBI.

Additionally, in March 2023 Eisai announced that the U.S. Veteran's Health Administration will be providing coverage of LEQEMBI to veterans living with early stages of Alzheimer's disease.

Rest of World

Key developments related to LEQEMBI (lecanemab) in rest of world markets during 2023 consisted of the following:

•In January 2024 we and Eisai announced that the SAG will convene at the request of the CHMP to discuss the MAA of lecanemab that is currently under review by the EMA. The meeting of the SAG is expected to take place during the first quarter of 2024 and the EC decision for the MAA of lecanemab is expected during the first half of 2024.

•In January 2024 the NMPA approved LEQEMBI in China, with an expected launch date in 2024.

•In December 2023 we and Eisai announced that LEQEMBI intravenous infusion was launched in Japan.

•In September 2023 the Japanese Ministry of Health, Labor and Welfare approved LEQEMBI in Japan.

•In January 2023 the EMA accepted for review the MAA for lecanemab.

•In February 2023 the BLA for lecanemab was granted Priority Review by the NMPA of China.

•In May 2023 we and Eisai announced the submission of a MAA for lecanemab to the U.K. MHRA in Great Britain, which has been designated by the MHRA for the Innovative Licensing and Access Pathway. Additionally, in May 2023 Health Canada accepted for review the NDS for lecanemab.

•In June 2023 we and Eisai announced the submission of a MAA for lecanemab to the Ministry of Food and Drug Safety in South Korea.

ZURZUVAE (zuranolone)

In August 2023 the FDA approved ZURZUVAE for adults with PPD, pending DEA scheduling, which was completed in October 2023. Upon approval, ZURZUVAE for PPD became the first and only oral, once-daily, 14-day treatment that can provide rapid improvements in depressive symptoms by day 15 for women with PPD. ZURZUVAE for PPD became commercially available in the U.S. during the fourth quarter of 2023. Additionally, the FDA issued a CRL for the NDA for zuranolone in the treatment of adults with MDD. The CRL stated that the application did not provide substantial evidence of effectiveness to support the approval of zuranolone for the treatment of MDD and that an additional study or studies would be needed. We and Sage are continuing to seek feedback from the FDA and evaluating next steps.

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BUSINESS COMBINATIONS

REATA ACQUISITION

On September 26, 2023, we completed the acquisition of all of the issued and outstanding shares of Reata, a biopharmaceutical company focused on developing therapeutics that regulate cellular metabolism and inflammation in serious neurologic diseases. As a result of this transaction we acquired SKYCLARYS (omaveloxolone), the first and only drug approved in the U.S. and the E.U. for the treatment of Friedreich's Ataxia in adults and adolescents aged 16 years and older, as well as other clinical and preclinical pipeline programs.

Under the terms of this acquisition, we paid Reata shareholders $172.50 in cash for each issued and outstanding Reata share, which totaled approximately $6.6 billion. In addition, we agreed to pay approximately $983.9 million in cash for Reata's outstanding equity awards, inclusive of employer taxes, of which approximately $590.5 million was attributable to pre-acquisition services and is therefore reflected as a component of total purchase price paid. Of the $983.9 million paid to Reata's equity award holders, we recognized approximately $393.4 million as compensation attributable to the post-acquisition service period, of which $196.4 million was recognized as a charge to selling, general and administrative expense with the remaining $197.0 million as a charge to research and development expense within our consolidated statements of income for the year ended December 31, 2023. These amounts were associated with the accelerated vesting of stock options and RSUs previously granted to Reata employees that required no future services to vest.

For additional information on our acquisition of Reata, please read Note 2, Acquisitions, to our consolidated financial statements included in this report.

OTHER KEY DEVELOPMENTS

SKYCLARYS (omaveloxolone)

In February 2024 the EC approved SKYCLARYS in the E.U. for the treatment of FA in adults and adolescents aged 16 years and older. SKYCLARYS is the first treatment approved within the E.U. for this rare, genetic, progressive neurodegenerative disease.

QALSODY (tofersen)

In April 2023 the FDA approved QALSODY for the treatment of ALS in adults who have a mutation in the SOD1 gene. This indication is approved under accelerated approval based on reduction in plasma neurofilament light chain observed in patients treated with QALSODY. Continued approval for this indication may be contingent upon verification of clinical benefit in confirmatory trial(s).

TECFIDERA

CORPORATE MATTERS

FIT FOR GROWTH

In 2023 we initiated additional cost saving measures as part of our Fit for Growth program to reduce operating costs, while improving operating efficiency and effectiveness. The Fit for Growth program is expected to generate approximately $1.0 billion in gross operating expense savings and $800.0 million in net operating expense savings by 2025, some of which will be reinvested in various initiatives. The Fit for Growth program is currently estimated to include net headcount reductions of approximately 1,000 employees and we expect to incur restructuring charges ranging from approximately $260.0 million to $280.0 million.

For additional information on our Fit for Growth program, please read Note 4, Restructuring, to our consolidated financial statements included in this report.

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DISCONTINUED PROGRAMS AND STUDIES

ENVISION STUDY

In November 2023 we notified Neurimmune of our decision to terminate our collaboration and license agreement with Neurimmune, to discontinue the development and commercialization of ADUHELM and to terminate the ENVISION clinical study. In connection with this termination, we recorded close-out costs of approximately $60.0 million in research and development expense within our consolidated statements of income for the year ended December 31, 2023.

EMBARK STUDY

In September 2023 we discontinued our EMBARK study for aducanumab. In connection with this discontinuation we recorded termination costs of approximately $43.0 million in research and development expense within our consolidated statements of income for the year ended December 31, 2023.

ACORDA COLLABORATION

In January 2024 we notified Acorda of our decision to terminate our collaboration and license agreement, effective January 1, 2025. As a result of this termination, Acorda will regain global commercialization rights to FAMPYRA.

BIIB122

In June 2023 we and Denali announced plans to terminate the Phase 3 LIGHTHOUSE study for BIIB122, a small molecule inhibitor of LRRK2 in Parkinson's disease. The protocol for the Phase 2b LUMA study for BIIB122 in patients with early-stage Parkinson’s disease was amended to now include eligible patients with a LRRK2 genetic mutation in addition to continuing to enroll eligible patients with early-stage idiopathic Parkinson’s disease.

BIIB093

In April 2023 we announced that we would terminate the development of BIIB093 (glibenclamide IV), currently in a Phase 3 study for LHI and a Phase 2 study for brain contusion, due to operational challenges and other strategic considerations. In connection with this termination, we recorded close-out costs of approximately $13.2 million in research and development expense within our consolidated statements of income for the year ended December 31, 2023.

BIIB131

In April 2023 we announced that we will be pausing the initiation of a Phase 2b study for BIIB131 (TMS-007) for acute ischemic stroke and will continue to assess whether to initiate this study. We sold the rights to BIIB131 to a third-party biopharmaceutical company in exchange for an upfront with potential milestones and future royalties on global sales.

BIIB132

In April 2023 we announced that we would discontinue further development of BIIB132 in spinocerebellar ataxia type 3, as part of our ongoing research and development prioritization initiative.

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RESULTS OF OPERATIONS

REVENUE

The following revenue discussion should be read in conjunction with Note 5, Revenue, to our consolidated financial statements included in this report.

Revenue is summarized as follows:

For the Years Ended December 31, % Change $ Change

Product revenue, net:

PRODUCT REVENUE

Product revenue is summarized as follows:

For the Years Ended December 31, % Change $ Change

(1) Other includes FUMADERM, ADUHELM and ZURZUVAE, which became commercially available in the U.S. during the fourth quarter of 2023.

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MULTIPLE SCLEROSIS

•Global TECFIDERA revenue decreased $431.4 million, from $1,443.9 million in 2022 to $1,012.5 million in 2023, or 29.9%, driven by a decrease in demand as a result of multiple TECFIDERA generic entrants in North America, Brazil and certain E.U. countries.

•Global Interferon revenue decreased $199.7 million, from $1,305.4 million in 2022 to $1,105.7 million in 2023, or 15.3%, driven by a decrease in sales volumes as patients transition to higher efficacy therapies.

•Global VUMERITY revenue increased $22.9 million, from $553.4 million in 2022 to $576.3 million in 2023, or 4.1%, primarily due to an increase in global demand, partially offset by higher discounts and allowances in the U.S. driven by a favorable Medicaid-related sales adjustment in the first quarter of 2022.

•Global TYSABRI revenue decreased $154.0 million, from $2,030.9 million in 2022 to $1,876.9 million in 2023, or 7.6%, primarily due to a decrease in U.S. TYSABRI revenue driven by a decrease in demand, higher discounts and unfavorable channel dynamics.

MS revenue includes sales from TECFIDERA, VUMERITY, AVONEX, PLEGRIDY, TYSABRI and FAMPYRA.

In 2024 we expect total MS revenue will continue to decline as a result of increasing competition for many of our MS products in both the U.S. and rest of world markets. We are also aware of a biosimilar entrant of TYSABRI that was approved in the U.S. in August 2023 and the E.U. in September 2023. We believe that future sales of TYSABRI may be adversely affected by the entrance of this biosimilar.

We believe that we have resolved previously reported manufacturing issues at our VUMERITY contract manufacturer. In addition, we are in the process of securing regulatory approval for a secondary source of supply. We do not anticipate a supply shortage in 2024 and are currently focused on rebuilding adequate inventory.

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RARE DISEASE

•U.S. SPINRAZA revenue increased $10.3 million, from $600.2 million in 2022 to $610.5 million in 2023, or 1.7%, primarily due to an increase in pricing, partially offset by higher discounts and allowances.

•Rest of world SPINRAZA revenue decreased $62.6 million, from $1,193.3 million in 2022 to $1,130.7 million in 2023, or 5.2%, primarily due to the unfavorable impact of foreign currency exchange, a decrease in demand in certain European markets driven by increased competition, a decrease in pricing and the timing of shipments in certain Asian markets.

•U.S. SKYCLARYS revenue was $55.9 million in 2023, which we began recognizing during the fourth quarter of 2023, subsequent to our acquisition of Reata.

Rare disease revenue includes sales from SPINRAZA, QALSODY, which became commercially available in the U.S. during the second quarter of 2023, and SKYCLARYS (omaveloxolone), which was obtained as part of our acquisition of Reata in September 2023.

SKYCLARYS became commercially available in the U.S. during the second quarter of 2023 and we began recognizing revenue from SKYCLARYS in the U.S. during the fourth quarter of 2023, subsequent to our acquisition of Reata. In February 2024 the EC approved SKYCLARYS in the E.U. for the treatment of FA in adults and adolescents aged 16 years and older.

In 2024 we expect growth in rare disease revenue as we continue to launch SKYCLARYS in the U.S. Despite competition from a gene therapy product and an oral product, we anticipate SPINRAZA revenue to be relatively flat in 2024. We expect moderate growth in SPINRAZA in the U.S. as well as continued access expansion in emerging markets to offset increased competition and the impact of loading dose dynamics.

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BIOSIMILARS

•For 2023 compared to 2022, the increase in biosimilar revenue was primarily due to an increase in sales volumes related to the continued launch of BYOOVIZ in the U.S. and rest of world, partially offset by unfavorable BYOOVIZ pricing and the unfavorable impact of foreign currency exchange.

Biosimilars revenue includes sales from BENEPALI, IMRALDI, FLIXABI and BYOOVIZ. BYOOVIZ launched in the U.S. in June 2022 and became commercially available in July 2022 through major distributors in the U.S. In 2023 BYOOVIZ became commercially available in certain international markets. During the third quarter of 2023 the FDA approved TOFIDENCE, a tocilizumab biosimilar referencing ACTEMRA, which we expect to become commercially available during 2024.

In 2024 we anticipate modest growth in revenue from our biosimilars business driven by the continued launch of BYOOVIZ in the U.S. and rest of world, offset in part by lower pricing in certain markets.

We continue to work with our third-party contract manufacturers for IMRALDI and BENEPALI to address supply constraints. If not resolved these supply constraints could have an adverse impact on 2024 sales. In addition, one of our contract manufacturers for IMRALDI and BENEPALI entered into a proposed acquisition by a third party, which is expected to close at the end of 2024. We are currently evaluating the impact this will have on our biosimilars business.

In February 2023 we announced that we are exploring strategic options for our biosimilars business.

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REVENUE FROM ANTI-CD20 THERAPEUTIC PROGRAMS

Our share of RITUXAN, including RITUXAN HYCELA, GAZYVA and LUNSUMIO collaboration operating profits in the U.S., royalty revenue on sales of OCREVUS and other revenue from anti-CD20 therapeutic programs are summarized in the table below. For purposes of this discussion, we refer to RITUXAN and RITUXAN HYCELA collectively as RITUXAN.

For the Years Ended December 31,

Other revenue from anti-CD20 therapeutic programs 14.0 17.2 19.1

(1) LUNSUMIO became commercially available in the U.S. during the first quarter of 2023.

ROYALTY REVENUE ON SALES OF OCREVUS

For 2023 compared to 2022, the increase in royalty revenue on sales of OCREVUS was primarily due to sales growth of OCREVUS in the U.S.

OCREVUS royalty revenue is based on our estimates from third party and market research data of OCREVUS sales occurring during the corresponding period. Differences between actual and estimated royalty revenue will be adjusted for in the period in which they become known, which is generally expected to be the following quarter.

BIOGEN'S SHARE OF PRE-TAX PROFITS IN THE US. FOR RITUXAN, GAZYVA AND LUNSUMIO

The following table provides a summary of amounts comprising our share of pre-tax profits in the U.S. for RITUXAN, GAZYVA and LUNSUMIO:

For the Years Ended December 31,

For 2023 compared to 2022, the decrease in U.S. product revenue, net was primarily due to a decrease in sales volumes of RITUXAN in the U.S. of 15.2%, resulting from competition from multiple biosimilar products, partially offset by an increase in sales volumes of GAZYVA of 17.9%.

For 2023 compared to 2022, the increase in collaboration costs and expense was primarily due to higher expense related to LUNSUMIO, which became commercially available in the first quarter of 2023.

In April 2023 our pre-tax profit share for RITUXAN, GAZYVA and LUNSUMIO decreased from 37.5% to 35.0%.

Prior to regulatory approval, we record our share of the expense incurred by the collaboration for the development of anti-CD20 products in research and development expense and pre-commercialization costs within selling, general and administrative expense in our consolidated statements of income. After an anti-CD20 product is approved, we record our share of the development and sales and marketing expense related to that product as a reduction of our share of pre-tax profits in revenue from anti-CD20 therapeutic programs.

We are aware of several other anti-CD20 molecules, including biosimilar products, that have been approved and are competing with RITUXAN and GAZYVA in the oncology and other markets. Biosimilar products referencing RITUXAN have launched in the U.S and are being offered at lower prices. This competition has had a significant adverse impact on the pre-tax profits of our collaboration arrangements with Genentech, as the sales of RITUXAN have decreased substantially compared to prior periods. We expect that biosimilar competition will continue to increase as these products capture additional market share and that this will have a significant adverse impact on our co-promotion profits in the U.S. in future years.

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OTHER REVENUE FROM ANTI-CD20 THERAPEUTIC PROGRAMS

Other revenue from anti-CD20 therapeutic programs consists of our share of pre-tax co-promotion profits from RITUXAN in Canada, royalty revenue on sales of LUNSUMIO outside the U.S. and royalty revenue on net sales of COLUMVI in the U.S, which became commercially available during the second quarter of 2023.

For additional information on our collaboration arrangements with Genentech, including information regarding the pre-tax profit-sharing formula and its impact on future revenue from anti-CD20 therapeutic programs, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in this report.

CONTRACT MANUFACTURING, ROYALTY AND OTHER REVENUE

Contract manufacturing, royalty and other revenue is summarized as follows:

For the Years Ended December 31,

Total contract manufacturing, royalty and other revenue $ 899.3 $ 485.1 $ 476.3

CONTRACT MANUFACTURING REVENUE

We record contract manufacturing revenue primarily from amounts earned under contract manufacturing agreements with our strategic customers.

For 2023 compared to 2022, the increase in contract manufacturing revenue was primarily driven by higher volumes due to the timing of batch production, which includes batches related to LEQEMBI that we began recognizing in the first quarter of 2023 upon the accelerated approval of LEQEMBI in the U.S.

As part of the 2020 sale of our Hillerød, Denmark manufacturing operations to FUJIFILM, we provided FUJIFILM with certain minimum batch production commitment guarantees, including batches related to our contract manufacturing arrangements. As of December 31, 2023, these batch commitments have been satisfied and we expect that our contract manufacturing revenue will be lower in 2024, compared to 2023, as we are no longer supplying contract manufacturing customers in this manner.

For additional information on our collaboration arrangements with Eisai, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in this report.

ROYALTY AND OTHER REVENUE

Royalty and other revenue primarily reflects the royalties we receive from net sales on products related to patents that we have out-licensed, as well as royalty revenue on biosimilar products from our license arrangements with Samsung Bioepis and our 50.0% share of LEQEMBI product revenue, net and cost of sales, including royalties, as we are not the principal.

For additional information on our collaborative arrangements with Samsung Bioepis, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in this report.

RESERVES FOR DISCOUNTS AND ALLOWANCES

Revenue from product sales is recorded net of reserves established for applicable discounts and allowances, including those associated with the implementation of pricing actions in certain international markets where we operate.

These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is payable to our customer) or a liability (if the amount is payable to a party other than our customer). These estimates reflect our historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. Actual amounts may ultimately differ from our estimates. If actual results vary, we adjust these estimates, which could have an effect on earnings in the period of adjustment.

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Reserves for discounts, contractual adjustments and returns that reduced gross product revenue are summarized as follows:

For the Years Ended December 31,

For the years ended December 31, 2023, 2022 and 2021, reserves for discounts and allowances as a percentage of gross product revenue were 32.0%, 30.1% and 28.6%, respectively.

CONTRACTUAL ADJUSTMENTS

Contractual adjustments primarily relate to Medicaid and managed care rebates in the U.S., pharmacy rebates, co-payment (copay) assistance, VA, 340B discounts, specialty pharmacy program fees and other government rebates or applicable allowances.

For 2023 compared to 2022, the decrease in contractual adjustments was primarily due to lower government rebates in the U.S. as a result of a contract pharmacy change made during the first quarter of 2023 related to our Interferons, partially offset by higher managed care and Medicaid rebates in the U.S. and higher government rebates in rest of world.

DISCOUNTS

Discounts include trade term discounts and wholesaler incentives.

For 2023 compared to 2022, the increase in discounts was primarily driven by higher purchase and volume discounts for biosimilars.

RETURNS

Product return reserves are established for returns made by wholesalers. In accordance with contractual terms, wholesalers are permitted to return product for reasons such as damaged or expired product. The majority of wholesaler returns are due to product expiration. Provisions for estimated product returns are recognized in the period the related revenue is recognized, resulting in a reduction to product sales.

For 2023 compared to 2022, the increase in returns was primarily driven by higher return rates in the U.S.

For additional information on our revenue reserves, please read Note 5, Revenue, to our consolidated financial statements included in this report.

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COST AND EXPENSE

A summary of total cost and expense is as follows:

For the Years Ended December 31, % Change $ Change

Acquired in-process research and development — — 18.0 — nm — (18.0)

nm Not meaningful

COST OF SALES, EXCLUDING AMORTIZATION AND IMPAIRMENT OF ACQUIRED INTANGIBLE ASSETS

For the Years Ended December 31,

Cost of sales, as a percentage of total revenue, were 25.8%, 22.4% and 19.2% for the years ended December 31, 2023, 2022 and 2021, respectively.

PRODUCT COST OF SALES

For 2023 compared to 2022, the increase in product cost of sales was primarily due to unfavorable product mix from increased contract manufacturing revenue, MS product mix and higher idle capacity charges, partially offset by a decrease in excess and obsolescence inventory charges in 2023. Contract manufacturing revenue includes LEQEMBI inventory produced for Eisai, beginning in the first quarter of 2023 upon the accelerated approval of LEQEMBI in the U.S. Cost of sales as a percentage of revenue was adversely affected by LEQEMBI batches due to minimal margins. The increase was partially offset by a decrease in excess and obsolescence inventory charges as 2022 included a write-off of approximately $275.0 million during the first quarter of 2022 of excess inventory and contractual commitments related to ADUHELM.

As a result of our acquisition of Reata in September 2023 we recorded a fair value step-up adjustment related to the acquired inventory of SKYCLARYS of approximately $1.3 billion. This fair value step-up adjustment will be amortized to cost of sales within our consolidated statements of income when the inventory is sold, which is expected to be within approximately 3 years from the acquisition date. For the year ended December 31, 2023, amortization from the fair value step-up adjustment as a result of inventory sold during the fourth quarter was approximately $31.5 million. For additional information on our acquisition of Reata, please read Note 2, Acquisitions, to our consolidated financial statements included in this report.

Write Downs and Other Charges

Inventory amounts written down as a result of excess, obsolescence or unmarketability totaled $124.4 million, $336.2 million and $167.6 million for the years ended December 31, 2023, 2022 and 2021, respectively.

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For the year ended December 31, 2022, we recorded approximately $286.0 million of charges associated with the write-off of ADUHELM inventory and contractual commitments in excess of forecasted demand. We also recognized approximately $197.0 million related to Eisai's 45.0% share of inventory, idle capacity charges and contractual commitments in collaboration profit sharing/(loss reimbursement) within our consolidated statements of income for the year ended December 31, 2022.

For the years ended December 31, 2023 and 2022, we recorded approximately $165.2 million and $119.0 million, respectively, of aggregate gross idle capacity charges.

For additional information on our collaboration arrangements with Eisai, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in this report.

ROYALTY COST OF SALES

For 2023 compared to 2022, the decrease in royalty cost of sales was primarily due to lower royalties payable on lower sales of TYSABRI, partially offset by an increase in royalty cost of sales due to higher royalties payable on higher sales of VUMERITY and SKYCLARYS, which we began recognizing in the fourth quarter of 2023, subsequent to our acquisition of Reata.

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RESEARCH AND DEVELOPMENT

Research and development expense, as a percentage of total revenue, was 25.0%, 21.9% and 22.8% for the years ended December 31, 2023, 2022 and 2021, respectively.

For 2023 compared to 2022, the increase in research and development was primarily due to approximately $197.0 million of equity-based compensation expense incurred as a result of our acquisition of Reata in 2023, an increase in spending for the development of LEQEMBI for the treatment of Alzheimer's disease, litifilimab for the treatment of CLE and SLE, and TOFIDENCE, a tocilizumab biosimilar referencing ACTEMRA, as well as clinical trial close out costs incurred in 2023 of approximately $125.4 million.

EARLY STAGE PROGRAMS

2023 vs. 2022

The increase in early stage programs was driven by an increase in costs associated with:

•development of BIIB121 for the treatment of Angelman syndrome;

•development of litifilimab for the treatment of CLE;

•development of BIIB115 for the treatment of SMA;

•development of BIIB091 for the treatment of MS; and

•development of BIIB080 for the treatment of Alzheimer's disease.

The increase was partially offset by a decrease in costs associated with:

•discontinuation of BIIB104 for the treatment of cognitive impairment associated with schizophrenia; and

•discontinuation of BIIB078 for the treatment of Alzheimer's disease.

LATE STAGE PROGRAMS

2023 vs. 2022

The decrease in late stage programs was driven by a decrease in costs associated with:

•advancement of LEQEMBI from late stage to marketed upon the accelerated approval of LEQEMBI in the U.S.;

•advancement of ZURZUVAE from late stage to marketed upon the approval of ZURZUVAE for PPD in the U.S.;

•advancement of QALSODY from late stage to marketed upon the accelerated approval of QALSODY in the U.S.; and

•advancement of LUNSUMIO from late stage to marketed upon the accelerated approval of LUNSUMIO in the U.S.

The decrease was partially offset by an increase in costs associated with:

•development of litifilimab for the treatment of SLE into late stage; and

•development of TOFIDENCE, a tocilizumab biosimilar referencing ACTEMRA.

MARKETED PROGRAMS

2023 vs. 2022

The increase in marketed programs was driven by an increase in costs associated with:

•advancement of LEQEMBI from late stage to marketed upon the accelerated approval of LEQEMBI in the U.S.;

•increased spend in ADUHELM primarily due to the change in our cost sharing arrangement with Eisai and clinical trial close out costs of approximately $103.0 million from the termination of our EMBARK and ENVISION studies;

•advancement of ZURZUVAE from late stage to marketed upon the approval of ZURZUVAE for PPD in the U.S.;

•increased spend in SKYCLARYS as a result of our acquisition of Reata in September 2023; and

•advancement of QALSODY from late stage to marketed upon the accelerated approval of QALSODY in the U.S.

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MILESTONE AND UPFRONT EXPENSE

Research and development expense for 2023 includes:

•$7.5 million charge to research and development expense in connection with a milestone payment to Ionis; and

•$5.0 million charge to research and development expense in connection with exercising our option with Denali to license the ATV-enabled anti-amyloid beta program.

Research and development expense for 2022 includes:

•$37.0 million in charges to research and development expense in connection with milestone payments to Ionis;

•$15.0 million charge to research and development expense in connection with the upfront payment associated with entering into our collaboration with Alectos Therapeutics Inc. in the second quarter of 2022; and

•$10.0 million charge to research and development expense in connection with the upfront payment associated with entering into our collaboration with Alcyone Therapeutics in the fourth quarter of 2022.

Research and development expense is reported above based on the following classifications. The development stage reported is based upon the program status when incurred. Therefore, the same program could be reflected in different development stages in the same year.

•Research and discovery: represents costs incurred to support our discovery research and translational science efforts.

•Early stage programs: are programs in Phase 1 or Phase 2 development.

•Late stage programs: are programs in Phase 3 development or in registration stage.

•Marketed products: includes costs associated with product lifecycle management activities including, if applicable, costs associated with the development of new indications for existing products.

•Other research and development costs: A significant amount of our research and development costs consist of indirect costs incurred in support of overall research and development activities and non-specific programs, including activities that benefit multiple programs, such as management costs, as well as depreciation, information technology and facility-based expenses. These costs are considered other research and development costs in the table above and are not allocated to a specific program or stage. For several of our programs, the research and development activities are part of our collaborative and other relationships. Our costs reflect our share of the total costs incurred. For the year ended December 31, 2023, other research and development costs also includes approximately $197.0 million of equity-based compensation expense incurred as a result of our acquisition of Reata in September 2023.

Excluding any milestone and upfront payments, we expect our core research and development expense to decrease in 2024, while continuing to invest in our pipeline. This is primarily due to the continued realization of our cost savings initiatives and the one-time costs incurred from our acquisition of Reata in September 2023 of approximately $197.0 million. We intend to continue committing significant resources to targeted research and development opportunities where there is a significant unmet need and where a drug candidate has the potential to be highly differentiated.

For additional information on our acquisition of Reata, please read Note 2, Acquisitions, to our consolidated financial statements included in this report.

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SELLING, GENERAL AND ADMINISTRATIVE

For 2023 compared to 2022, selling, general and administrative expense increased by approximately 6.1% primarily due to the recognition of approximately $196.4 million in equity-based compensation expense related to our acquisition of Reata in September 2023. Additionally, we incurred transaction and integration-related expense of approximately $34.6 million related to this acquisition. The increase in selling, general and administrative expense was also due to a $31.0 million obligation to Eisai related to the termination of the co-promotion agreement for our MS products in Japan during 2023 and approximately $11.5 million of accelerated depreciation, associated with exiting a leased property, recognized during the second quarter of 2023. The increases were partially offset by the impact of cost-reduction measures realized during 2023.

We expect selling, general and administrative costs to continue to decline in 2024 due to the continued realization of our cost savings initiatives and the one-time costs incurred from our acquisition of Reata in 2023 of approximately $196.4 million.

For additional information on our acquisition of Reata, please read Note 2, Acquisitions, to our consolidated financial statements included in this report. For additional information on our collaboration arrangements with Eisai, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in this report.

AMORTIZATION AND IMPAIRMENT OF ACQUIRED INTANGIBLE ASSETS

Our amortization expense is based on the economic consumption and impairment of intangible assets. Our most significant amortizable intangible assets are related to TYSABRI, AVONEX, SPINRAZA, VUMERITY and SKYCLARYS, which was obtained as part of our acquisition of Reata in September 2023. For additional information on our acquisition of Reata, please read Note 2, Acquisitions, to our consolidated financial statements included in this report.

For 2023 compared to 2022, the decrease in amortization and impairment of acquired intangible assets was primarily due to higher impairment charges in 2022 of approximately $119.6 million, compared to no impairment charges in 2023.

For the year ended December 31, 2022, amortization and impairment of acquired intangible assets reflects the impact of a $119.6 million impairment charge related to vixotrigine (BIIB074) for the potential treatment of DPN.

Amortization of acquired intangible assets, excluding impairment charges, totaled $240.6 million, $246.3 million and $252.0 million for the years ended December 31, 2023, 2022 and 2021, respectively. The decrease in amortization of acquired intangible assets, excluding impairment charges, over the three years was primarily due to a lower rate of amortization for acquired intangible assets.

For additional information on the amortization and impairment of our acquired intangible assets, please read Note 7, Intangible Assets and Goodwill, to our consolidated financial statements included in this report.

COLLABORATION PROFIT SHARING/(LOSS REIMBURSEMENT)

Collaboration profit sharing/(loss reimbursement) primarily includes Samsung Bioepis' 50.0% share of the profit or loss related to our biosimilars 2013 commercial agreement with Samsung Bioepis. In the third quarter of 2023 we began recognizing collaboration profit sharing/(loss reimbursement) related to Sage's 50.0% share of income and expense in the U.S. related to ZURZUVAE for PPD. During 2022 we recognized Eisai's 45.0% share of income and expense in the U.S. related to the ADUHELM Collaboration Agreement. Beginning January 1, 2023, Eisai receives only a tiered royalty based on net sales of ADUHELM, and will no longer share global profits and losses.

For the years ended December 31, 2023 and 2022, we recognized net profit-sharing expense of $223.5 million and $217.4 million, respectively, to reflect Samsung Bioepis' 50.0% sharing of the net collaboration profits.

For the year ended December 31, 2023, we recognized net reductions to our operating expense of approximately $4.7 million to reflect Sage's 50.0% share of net collaboration losses in the U.S.

For the year ended December 31, 2022, we recognized net reductions to our operating expense of approximately $224.7 million to reflect Eisai's 45.0% share of net collaboration losses in the U.S. for ADUHELM.

For additional information on our collaboration and license arrangements with Samsung Bioepis, Sage and Eisai, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in this report.

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(GAIN) LOSS ON FAIR VALUE REMEASUREMENT OF CONTINGENT CONSIDERATION

For the year ended December 31, 2022, the changes in fair value of our contingent consideration obligations were primarily due to the discontinuation of further development efforts related to vixotrigine for the potential treatment of TGN and DPN, resulting in a reduction of our contingent consideration obligations of approximately$195.4 million, reducing the remaining fair value of vixotrigine to zero, as well as changes in the interest rates used to revalue our contingent consideration liabilities.

For additional information on our IPR&D intangible assets, please read Note 7, Intangible Assets and Goodwill, to our consolidated financial statements included in this report.

RESTRUCTURING CHARGES

2023 FIT FOR GROWTH RESTRUCTURING PROGRAM

Total charges incurred from our 2023 cost saving initiatives are summarized as follows:

For the Years Ended December 31,

(In millions) SeveranceCosts Accelerated Depreciation and Other Costs Total

Selling, general and administrative $ — $ 23.3 $ 23.3

Research and development — 1.2 1.2

Other Costs: includes costs associated with items such as asset abandonment and write-offs, facility closure costs, pretax gains and losses resulting from the termination of certain leases, employee non-severance expense, consulting fees and other costs.

REATA INTEGRATION

Following the close of our Reata acquisition, we implemented an integration plan designed to realize operating synergies through cost savings and avoidance. These amounts are primarily related to severance and are expected to be paid by the end of 2024. For the year ended December 31, 2023, we recognized approximately $30.4 million of net pre-tax restructuring charges related to employee severance costs.

2022 COST SAVING INITIATIVES

In December 2021 and May 2022 we announced our plans to implement a series of cost-reduction measures during 2022. These savings are being achieved through a number of initiatives, including reductions to our workforce, the substantial elimination of our commercial ADUHELM infrastructure, deprioritization of certain research and development programs, the consolidation of certain real estate locations and operating efficiencies across our selling, general and administrative and research and development functions. Charges related to our 2022 cost saving initiatives were substantially incurred during 2022 with remaining payments expected to be made through 2026.

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Total charges incurred from our 2022 cost saving initiatives are summarized as follows:

For the Years Ended December 31,

(1) Amounts reflect a gain recorded during the third quarter of 2022 of approximately $5.3 million related to the partial termination of a portion of our lease located at 300 Binney Street. For additional information on our 300 Binney Street lease modification, please read Note 12, Leases, to these consolidated financial statements.

For additional information on our cost saving initiatives, please read Note 4, Restructuring, to our consolidated financial statements included in this report.

GAIN ON SALE OF BUILDING

In September 2022 we completed the sale of our building and land parcel located at 125 Broadway for an aggregate sales price of approximately $603.0 million, which is inclusive of a $10.8 million tenant allowance. This sale resulted in a pre-tax gain on sale of approximately $503.7 million, net of transaction costs, which is reflected within gain on sale of building in our consolidated statements of income for the year ended December 31, 2022. Simultaneously, with the close of this transaction we leased back the building for a term of approximately 5.5 years, which resulted in the recognition of approximately $168.2 million in a new lease liability and right-of-use asset recorded within our consolidated balance sheets as of December 31, 2022. The sale and immediate leaseback of this building qualified for sale and leaseback treatment and is classified as an operating lease.

For additional information on our 125 Broadway sale and leaseback transaction, please read Note 11, Property, Plant and Equipment and Note 12, Leases, to our consolidated financial statements included in this report.

OTHER (INCOME) EXPENSE, NET

For 2023 compared to 2022, the change in other (income) expense, net primarily reflects a pre-tax gain recorded during 2022 of approximately $1.5 billion related to the sale of our 49.9% equity interest in Samsung Bioepis, partially offset by a pre-tax charge recorded during 2022 of approximately $900.0 million, plus settlement fees and expenses, related to a litigation settlement agreement to resolve a qui tam litigation relating to conduct prior to 2015. Additionally, other (income) expense, net for 2023 reflects higher interest income driven by higher interest rates in 2023.

NET (GAINS) LOSSES IN EQUITY SECURITIES

For the year ended December 31, 2023, net unrealized and realized losses on our holdings in equity securities were approximately $270.0 million and $5.2 million, respectively, compared to net unrealized losses and realized (gains) losses of approximately $264.7 million and zero, respectively, in 2022.

•The net unrealized losses recognized during the year ended December 31, 2023, primarily reflect a decrease in the aggregate fair value of our investments in Sage, Denali, Sangamo and Ionis common stock of approximately $248.5 million.

•The net unrealized losses recognized during the year ended December 31, 2022, primarily reflect a decrease in the aggregate fair value of our investments in Denali and Sangamo common stock of approximately $278.0 million, partially offset by an increase in the fair value of Ionis and Sage common stock of approximately $27.3 million.

INTEREST INCOME AND EXPENSE

For the year ended December 31, 2023, net interest income was $29.6 million, compared to net interest expense of $157.3 million in 2022. The increase was primarily due to higher interest rates leading to greater interest income earned on our investments in 2023, compared to 2022.

For 2024 compared to 2023, we anticipate an increase in net interest expense as a result of lower cash balances leading to lower interest income due to the funding of our acquisition of Reata.

For additional information on the sale of our equity interest in Samsung Bioepis, please read Note 3, Dispositions, to our consolidated financial statements included in this report.

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For additional information on the litigation settlement agreement, please read Note 18, Other Consolidated Financial Statement Detail, to our consolidated financial statements included in this report.

INCOME TAX PROVISION

For the Years Ended December 31,

Our effective tax rate fluctuates from year to year due to the global nature of our operations. The factors that most significantly impact our effective tax rate include changes in tax laws, variability in the allocation of our taxable earnings among multiple jurisdictions, the amount and characterization of our research and development expense, the levels of certain deductions and credits, acquisitions and licensing transactions.

For 2023 compared to 2022, the decrease in our effective tax rate was driven by the impact of the non-cash changes in the value of our equity investments, the impact of Fit for Growth related expenses and Reata acquisition-related expenses, as well as the combined net unfavorable tax rate impacts in 2022 related to a litigation settlement agreement, the sale of our equity interest in Samsung Bioepis, the impact of a Neurimmune valuation allowance and an international reorganization to align with global tax developments. The change also benefits from the resolution of an uncertain tax matter during the first quarter of 2023 related to tax credits.

For additional information on our acquisition of Reata, please read Note 2, Acquisitions, to our consolidated financial statements included in this report.

For additional information on our income taxes, uncertain tax positions and income tax rate reconciliation, please read Note 17, Income Taxes, to our consolidated financial statements included in this report.

EQUITY IN (INCOME) LOSS OF INVESTEE, NET OF TAX

In February 2012 we entered into a joint venture agreement with Samsung BioLogics establishing an entity, Samsung Bioepis, to develop, manufacture and market biosimilar products.

In April 2022 we completed the sale of our 49.9% equity interest in Samsung Bioepis to Samsung BioLogics. Following the sale of Samsung Bioepis we no longer recognize gains or losses associated with Samsung Bioepis' results of operations and amortization related to basis differences.

Prior to this sale, we recognized our share of the results of operations related to our investment in Samsung Bioepis under the equity method of accounting one quarter in arrears when the results of the entity became available, which was reflected as equity in (income) loss of investee, net of tax in our consolidated statements of income. We also recognized amortization on certain basis differences resulting from our November 2018 investment.

For the year ended December 31, 2022, we recognized net income on our investment of $2.6 million, reflecting our share of Samsung Bioepis' operating profits, net of tax, totaling $17.0 million offset by amortization of basis differences totaling $14.4 million. This amount reflects our share of results prior to the sale of Samsung Bioepis as the results are recognized one quarter in arrears.

For additional information on the sale of our equity interest in Samsung Bioepis, please read Note 3, Dispositions, to our consolidated financial statements included in this report.

For additional information on our collaboration arrangements with Samsung Bioepis, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in this report.

NONCONTROLLING INTERESTS, NET OF TAX

Our consolidated financial statements include the financial results of a variable interest entity, Neurimmune, as we determined that we were the primary beneficiary.

In November 2023 we notified Neurimmune of our decision to terminate the Neurimmune Agreement. Subsequent to the termination, we reconsidered our relationship with Neurimmune and determined that we were no longer the primary beneficiary of the variable interest entity. As a result, we recorded a net gain on the deconsolidation of

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Neurimmune of approximately $3.0 million, which was recorded in other (income) expense, net within our consolidated statements of income for the year ended December 31, 2023.

For 2023 compared to 2022, the change in net income (loss) attributable to noncontrolling interests, net of tax, was primarily due to an increase in a valuation allowance of approximately $85.0 million recorded in the first quarter of 2022.

For additional information on the valuation allowance, deconsolidation and our collaboration agreement with Neurimmune, please read Note 20, Investments in Variable Interest Entities, to our consolidated financial statements included in this report.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Our financial condition is summarized as follows:

As of December 31,

(In millions, except percentages) 2023 2022 % Change $ Change

Financial assets:

Marketable securities — current — 1,473.5 nm (1,473.5)

Marketable securities — non-current — 705.7 nm (705.7)

Borrowings:

Current portion of term loan $ 150.0 $ — nm $ 150.0

Working Capital:

nm Not meaningful

OVERVIEW

We have historically financed and expect to continue to fund our operating and capital expenditures primarily through cash flow earned through our operations, as well as our existing cash resources. We believe that generic and biosimilar competition for many of our key products, the continued overall decline of our MS business and our investments in the launch of key new products and the development of our pipeline will have a significant adverse impact on our future cash flow from operations.

We believe that our existing funds, when combined with cash generated from operations and our access to additional financing resources, if needed, are sufficient to satisfy our operating, working capital, strategic alliance, milestone payment, capital expenditure and debt service requirements for the foreseeable future. In addition, we may choose to opportunistically return cash to shareholders and pursue other business initiatives, including acquisition and licensing activities. We may also seek additional funding through a combination of new collaborative agreements, strategic alliances and additional equity and debt financings or from other sources should we identify a significant new opportunity.

On September 26, 2023, we completed the acquisition of all of the issued and outstanding shares of Reata for $6.6 billion and $983.9 million for outstanding equity awards. This transaction was funded with cash on hand and the issuance of a $1.0 billion term loan. Additionally, we paid approximately $459.9 million to settle outstanding debt obligations acquired as part of our acquisition of Reata. For additional information on our acquisition of Reata, please read Note 2, Acquisitions, to our consolidated financial statements included in this report.

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For additional information on certain risks that could negatively impact our financial position or future results of operations, please read Item 1A.Risk Factors and Item 7A. Quantitative and Qualitative Disclosures About Market Risk included in this report.

LIQUIDITY

WORKING CAPITAL

Working capital is defined as current assets less current liabilities. Our working capital was $3.4 billion as of December 31, 2023, compared to $6.5 billion as of December 31, 2022. The change in working capital reflects a decrease in total current assets of approximately $2,931.9 million and an increase in total current liabilities of approximately $161.5 million. The changes in total current assets and total current liabilities were primarily driven by the following:

CURRENT ASSETS

•$3,842.9 million decrease in cash, cash equivalents and current marketable securities primarily due to consideration paid forour acquisition of Reata as well as the early repayment of $350.0 million in outstanding debt obligations associated with our Reata acquisition;

•$235.6 million decrease in other current assets primarily due to the receipt of$812.5 million from Samsung BioLogics related to the sale of Samsung Bioepis, partially offset by the final deferred payment of $437.5 million now due within one year; and

•$1,183.0 million increase in inventory primarily due to the fair value step-up adjustment for acquired inventory from our acquisition of Reata.

CURRENT LIABILITIES

•$88.2 million decrease in accounts payable primarily due to timing of payments;

•$102.2 million increase in accrued expense and other primarily reflecting accrued costs related to our acquisition of Reata; and

•$150.0 million increase in current portion of debt due to the short-term portion of our outstanding 2023 Term Loan related to our acquisition of Reata.

For additional information on our acquisition of Reata, please read Note 2, Acquisitions, to our consolidated financial statements included in this report.

For additional information on our 2023 Term Loan, please read Note 13, Indebtedness, to our consolidated financial statements included in this report.

For additional information on the sale of our equity interest in Samsung Bioepis, please read Note 3, Dispositions, to our consolidated financial statements included in this report.

CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES

As of December 31, 2023, we had cash, cash equivalents and marketable securities totaling approximately $1.0 billion compared to approximately $5.6 billion as of December 31, 2022. The decrease in the balance was primarily due to the use of cash, cash equivalents and marketable securities to fund our acquisition of Reata. In connection with our acquisition of Reata we paid approximately $6.6 billion forthe issued and outstanding shares of Reata and $983.9 million related to Reata's outstanding equity awards, inclusive of employer taxes. Additionally, we assumed a payable to Blackstone of approximately $300.0 million related to a one-time contract termination fee to eliminate potential future royalty obligations related to SKYCLARYS, which was triggered as part of the change in control provision under Reata's funding agreement with Blackstone.For additional information on our acquisition of Reata, please read Note 2, Acquisitions, to these consolidated financial statements included in this report.

Until required for another use in our business, we typically invest our cash reserves in bank deposits, certificates of deposit, commercial paper, corporate notes, U.S. and foreign government instruments, overnight reverse repurchase agreements and other interest-bearing marketable debt instruments in accordance with our investment policy. It is our policy to mitigate credit risk in our cash reserves and marketable securities by maintaining a well-diversified portfolio that limits the amount of exposure as to institution, maturity and investment type. We have experienced no significant limitations in our liquidity resulting from uncertainties in the banking sector.

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The following table summarizes the fair value of our significant common stock investments in our strategic investment portfolio:

As of December 31,

(1) During 2023 we sold a portion of our Sangamo and Denali common stock.

(2) During 2023 we sold our remaining shares of Ionis common stock.

Our ability to liquidate our investments in Denali, Sage and Sangamo may be limited by the size of our interest, the volume of market related activity, our concentrated level of ownership and potential restrictions resulting from our status as a collaborator. Therefore, we may realize significantly less than the current value of such investments.

For additional information on our collaboration arrangements, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in this report.

CASH FLOW

The following table summarizes our cash flow activity:

% Change

OPERATING ACTIVITIES

Operating cash flow is derived by adjusting our net income for:

•non-cash operating items such as depreciation and amortization, impairment charges, unrealized (gain) loss on strategic investments and share-based compensation;

•changes in operating assets and liabilities, which reflect timing differences between the receipt and payment of cash associated with transactions and when they are recognized in results of operations; and

•(gains) losses on the disposal of assets, deferred income taxes, changes in the fair value of contingent payments associated with our acquisitions of businesses and acquired IPR&D.

For 2023 compared to 2022, the change in net cash flow provided by operating activities was driven by changes in operating assets and liabilities primarily related to a lower inventory build in 2023 as compared to 2022, the favorable timing of customer payment receipts in 2023 and the unfavorable timing of U.S. federal tax payments in 2023. Operating cash flow in 2023 was also negatively impacted by the $393.4 million in equity-based compensation payments associated with the Reata acquisition. Operating cash flow in 2022 was also negatively impacted by the payment of of approximately $900.0 million, plus settlement fees and expenses, related to a litigation settlement agreement to resolve a qui tam litigation relating to conduct prior to 2015.

INVESTING ACTIVITIES

For 2023 compared to 2022, the change in net cash flow provided by (used in) investing activities was primarily due to a $6.9 billion payment made in 2023 for our acquisition of Reata, net of cash acquired, partially offset by higher net proceeds from the sales of marketable securities in the current period. Additionally, we received $582.6 million in 2022 related to the sale of one of our buildings.

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FINANCING ACTIVITIES

For 2023 compared to 2022, the change in net cash flow provided by (used in) financing activities was primarily due to the issuance of our 2023 Term Loans totaling $1.0 billion under our $1.5 billion term loan credit agreement which were used to partially fund our acquisition of Reata, partially offset by repayments of borrowings and debt premiums paid totaling $809.9 million. We had debt repayments of approximately $1.0 billion and share repurchases of $750.0 million during the same period in 2022.

For additional information on our acquisition of Reata, please read Note 2, Acquisitions, to our consolidated financial statements included in this report.

CAPITAL RESOURCES

DEBT AND CREDIT FACILITIES

LONG-TERM DEBT AND TERM LOAN CREDIT AGREEMENTS

Our long-term obligations primarily consist of long-term debt related to our Senior Notes with final maturity dates ranging between 2025 and 2051. As of December 31, 2023, our outstanding balance related to long-term debt was $6,788.2 million.

In connection with our acquisition of Reata in September 2023 we entered into a $1.5 billion term loan credit agreement. On the closing date of the Reata acquisition we drew $1.0 billion from the 2023 Term Loan, comprised of a $500.0 million floating rate 364-day tranche and a $500.0 million floating rate three-year tranche. The remaining unused commitment of $500.0 million was terminated. During the fourth quarter of 2023 we repaid $350.0 million of the 364-day tranche. As of December 31, 2023, we had $650.0 million outstanding under the 2023 Term Loan, of which $150.0 million was outstanding under the 364-day tranche and $500.0 million was outstanding under the three-year tranche.

2020 REVOLVING CREDIT FACILITY

In January 2020 we entered into a $1.0 billion, five-year senior unsecured revolving credit facility under which we are permitted to draw funds for working capital and general corporate purposes. The terms of the revolving credit facility include a financial covenant that requires us not to exceed a maximum consolidated leverage ratio. As of December 31, 2023, we had no outstanding borrowings and were in compliance with all covenants under this facility.

For a summary of the fair values of our outstanding borrowings as of December 31, 2023 and 2022, please read Note 8, Fair Value Measurements, to our consolidated financial statements included in this report.

For additional information on our Senior Notes, 2023 Term Loan and credit facility please read, Note 13, Indebtedness, to our consolidated financial statements included in this report.

SHARE REPURCHASE PROGRAMS

In October 2020 our Board of Directors authorized our 2020 Share Repurchase Program, which is a program to repurchase up to $5.0 billion of our common stock. Our 2020 Share Repurchase Program does not have an expiration date. All share repurchases under our 2020 Share Repurchase Program will be retired. Under our 2020 Share Repurchase Program, we repurchased and retired approximately 3.6 million and 6.0 million shares of our common stock at a cost of approximately $750.0 million and $1.8 billion during the years ended December 31, 2022 and 2021, respectively. There were no share repurchases of our common stock during the year ended December 31, 2023. Approximately $2.1 billion remained available under our 2020 Share Repurchase Program as of December 31, 2023.

CAPITAL EXPENDITURES

In the fourth quarter of 2021 we began construction of a new gene therapy manufacturing facility in RTP, North Carolina to support our gene therapy pipeline across multiple therapeutic areas. The new manufacturing facility will be approximately 197,000 square feet with an estimated total investment of approximately $195.0 million. As we continue to advance our research and development prioritization efforts, which includes refocusing our investment in gene therapy, we are evaluating several alternative uses for this facility.

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CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS

CONTRACTUAL OBLIGATIONS

The following table summarizes our contractual obligations as of December 31, 2023, excluding amounts related to uncertain tax positions, funding commitments, contingent development, regulatory and commercial milestone payments, contingent payments and contingent consideration related to our business combinations, as described below.

Payments Due by Period

(In millions) Total Less than1 Year 1 to 3Years 3 to 5Years After5 Years

Defined benefit obligation 98.0 — — — 98.0

(1) We lease properties and equipment for use in our operations. Amounts reflected within the table above detail future minimum rental commitments under non-cancelable operating leases as of December 31 for each of the periods presented. In addition to the minimum rental commitments, these leases may require us to pay additional amounts for taxes, insurance, maintenance and other operating expenses.

(2) Obligations are presented net of sublease income expected to be received for our vacated portions of our Weston, Massachusetts facility and other facilities throughout the world.

(3) In connection with our acquisition of Reata in September 2023 we assumed operating lease commitments, including the responsibility for a single-tenant, built-to-suit building with a total net present value of rental expense of approximately $154.4 million over the next 15 years. For additional information on our acquisition of Reata, please read Note 2, Acquisitions, to our consolidated financial statements included in this report.

(4) Long-term debt obligations are related to our 2015 Senior Notes, our 2020 Senior Notes and our 2021 Exchange Offer Senior Notes, including principal and interest payments, and our 2023 Term Loan. For additional information on our long-term debt obligations, please read Note 13, Indebtedness, to our consolidated financial statements included in this report.

(5) Purchase and other obligations include $419.5 million related to the remaining payments on the Transition Toll Tax and $31.6 million related to the fair value of net liabilities on derivative contracts.

ROYALTY PAYMENTS

TYSABRI

We are obligated to make contingent payments of 18.0% on annual worldwide net sales of TYSABRI up to $2.0 billion and 25.0% on annual worldwide net sales of TYSABRI that exceed $2.0 billion. Royalty payments are recognized as cost of sales in our consolidated statements of income.

SPINRAZA

We make royalty payments to Ionis on annual worldwide net sales of SPINRAZA using a tiered royalty rate between 11.0% and 15.0%, which are recognized as cost of sales in our consolidated statements of income.

For additional information on our collaboration arrangements with Ionis, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in this report.

QALSODY

We make royalty payments to Ionis on annual worldwide net sales of QALSODY using a tiered royalty rate between 11.0% and 15.0%, which are recognized as cost of sales in our consolidated statements of income.

For additional information on our collaboration arrangements with Ionis, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in this report.

VUMERITY

We make royalty payments to Alkermes on worldwide net sales of VUMERITY using a royalty rate of 15.0%, which are recognized as cost of sales in our consolidated statements of income. Royalties payable on net sales of VUMERITY are subject, under certain circumstances, to tiered minimum annual payment requirements for a period of five years following FDA approval.

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In October 2019 we entered into a new supply agreement and amended our license and collaboration agreement with Alkermes for VUMERITY. We have elected to initiate a technology transfer and, following a transition period, to manufacture VUMERITY or have VUMERITY manufactured by a third party we have engaged in exchange for paying an increased royalty rate to Alkermes on any portion of future worldwide net commercial sales of VUMERITY that is manufactured by us or our designee.

For additional information on our collaboration arrangement with Alkermes, please read Note 19, Collaborative and Other Relationships, to our consolidated financial statements included in this report.

SKYCLARYS

In connection with our acquisition of Reata in September 2023 we assumed additional contractual obligations related to royalty payments. Reata entered into agreements to pay royalties on future sales of SKYCLARYS, which will cumulatively range in the low- to mid-single digits.

For additional information on our acquisition of Reata, please read Note 2, Acquisitions, to our consolidated financial statements included in this report.

CONTINGENT DEVELOPMENT, REGULATORY AND COMMERCIAL MILESTONE PAYMENTS

Based on our development plans as of December 31, 2023, we could trigger potential future milestone payments to third parties of up to approximately $5.1 billion, including approximately $0.9 billion in development milestones, approximately $0.4 billion in regulatory milestones and approximately $3.8 billion in commercial milestones, as part of our various collaborations, including licensing and development programs. Payments under these agreements generally become due and payable upon achievement of certain development, regulatory or commercial milestones. Because the achievement of these milestones was not considered probable as of December 31, 2023, such contingencies have not been recorded in our financial statements. Amounts related to contingent milestone payments are not considered contractual obligations as they are contingent on the successful achievement of certain development, regulatory or commercial milestones.

During the fourth quarter of 2023 we accrued a milestone payment due to Sage of $75.0 million upon the first commercial sale of ZURZUVAE for PPD in the U.S., which was recorded within intangible assets, net in our consolidated balance sheets, and subsequently paid in January 2024. If certain clinical and commercial milestones are met, we may pay up to approximately $109.0 million in milestones in 2024 under our current agreements.

OTHER FUNDING COMMITMENTS

As of December 31, 2023, we have several ongoing clinical studies in various clinical trial stages. Our most significant clinical trial expenditures are to CROs. The contracts with CROs are generally cancellable, with notice, at our option. We recorded accrued expense of approximately $47.2 million in our consolidated balance sheets for expenditures incurred by CROs as of December 31, 2023. We have approximately $669.0 million in cancellable future commitments based on existing CRO contracts as of December 31, 2023.

TAX RELATED OBLIGATIONS

We exclude liabilities pertaining to uncertain tax positions from our summary of contractual obligations as we cannot make a reliable estimate of the period of cash settlement with the respective taxing authorities. As of December 31, 2023, we have approximately $172.0 million of liabilities associated with uncertain tax positions.

As of December 31, 2023 and 2022, we have accrued income tax liabilities of approximately $419.5 million and $558.0 million, respectively, under the Transition Toll Tax. Of the amounts accrued as of December 31, 2023, approximately $185.4 million is expected to be paid within one year. The Transition Toll Tax is being paid in installments over an eight--year period, which started in 2018, and will not accrue interest.

OTHER OFF-BALANCE SHEET ARRANGEMENTS

We do not have any relationships with entities often referred to as structured finance or special purpose entities that were established for the purpose of facilitating off-balance sheet arrangements. As such, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships. We consolidate variable interest entities if we are the primary beneficiary.

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NEW ACCOUNTING STANDARDS

For a discussion of new accounting standards please read Note 1, Summary of Significant Accounting Policies, to our consolidated financial statements included in this report.

LEGAL MATTERS

For a discussion of legal matters as of December 31, 2023, please read Note 21, Litigation, to our consolidated financial statements included in this report.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of our consolidated financial statements, which have been prepared in accordance with U.S. GAAP, requires us to make estimates, judgments and assumptions that may affect the reported amounts of assets, liabilities, equity, revenue and expense and related disclosure of contingent assets and liabilities. On an ongoing basis we evaluate our estimates, judgments and assumptions. We base our estimates on historical experience and on various other assumptions that we believe are reasonable, the results of which form the basis for making judgments about the carrying values of assets, liabilities and equity and the amount of revenue and expense. Actual results may differ from these estimates. Other significant accounting policies are outlined in Note 1, Summary of Significant Accounting Policies, to our consolidated financial statements included in this report.

REVENUE RECOGNITION

We recognize revenue when our customer obtains control of promised goods or services, in an amount that reflects the consideration which we expect to receive in exchange for those goods or services. We recognize revenue following the five-step model prescribed under FASB ASC 606, Revenue from Contracts with Customers: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) we satisfy the performance obligations.

PRODUCT REVENUE

In the U.S., we sell our products primarily to wholesale and specialty distributors and specialty pharmacies. In other countries, we sell our products primarily to wholesale distributors, hospitals, pharmacies and other third-party distribution partners. These customers subsequently resell our products to health care providers and patients. In addition, we enter into arrangements with health care providers and payors that provide for government-mandated or privately-negotiated discounts and allowances related to our products.

Product revenue is recognized when the customer obtains control of our product, which occurs at a point in time, typically upon delivery to the customer. We expense incremental costs of obtaining a contract as and when incurred if the expected amortization period of the asset that we would have recognized is one year or less or the amount is immaterial.

RESERVES FOR DISCOUNTS AND ALLOWANCES

Product revenue is recorded net of reserves established for applicable discounts and allowances that are offered within contracts with our customers, health care providers or payors, including those associated with the implementation of pricing actions in certain of the international markets in which we operate. Our process for estimating reserves established for these variable consideration components do not differ materially from our historical practices.

Product revenue reserves, which are classified as a reduction in product revenue, are generally characterized in the following categories: discounts, contractual adjustments and returns.

These reserves are based on estimates of the amounts earned or to be claimed on the related sales and are classified as reductions of accounts receivable (if the amount is payable to our customer) or a liability (if the amount is payable to a party other than our customer). Our estimates of reserves established for variable consideration are calculated based upon a consistent application of our methodology utilizing the expected value method. These estimates reflect our historical experience, current contractual and statutory requirements, specific known market events and trends, industry data and forecasted customer buying and payment patterns. The transaction price, which includes variable consideration reflecting the impact of discounts and allowances, may be subject to constraint and is included in the net sales price only to the extent that it is probable that a significant reversal of the amount of the

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cumulative revenue recognized will not occur in a future period. Actual amounts may ultimately differ from our estimates. If actual results vary, we adjust these estimates, which could have an effect on earnings in the period of adjustment.

As of December 31, 2023 and 2022, a 10.0% change in our discounts, contractual adjustments and reserves would have resulted in a decrease of our pre-tax earnings by approximately $345.5 million and $338.6 million, respectively.

In addition to discounts, rebates and product returns, we also maintain certain customer service contracts with distributors and other customers in the distribution channel that provide us with inventory management, data and distribution services, which are generally reflected as a reduction of revenue. To the extent we can demonstrate a separable benefit and fair value for these services we classify these payments in selling, general and administrative expense in our consolidated statements of income.

For additional information on our revenue, please read Note 5, Revenue, to our consolidated financial statements included in this report.

ACQUIRED INTANGIBLE ASSETS, INCLUDING IPR&D

When we purchase a business, the acquired IPR&D is measured at fair value, capitalized as an intangible asset and tested for impairment at least annually, as of October 31, until commercialization, after which time the IPR&D is amortized over its estimated useful life. If we acquire an asset or group of assets that do not meet the definition of a business under applicable accounting standards, the acquired IPR&D is expensed on its acquisition date. Future costs to develop these assets are recorded to research and development expense as they are incurred.

We have acquired, and expect to continue to acquire, intangible assets through the acquisition of biotechnology companies or through the consolidation of variable interest entities. These intangible assets primarily consist of technology associated with human therapeutic products, IPR&D product candidates and priority review vouchers. When significant identifiable intangible assets are acquired, we generally engage an independent third-party valuation firm to assist in determining the fair values of these assets as of the acquisition date. Management will determine the fair value of less significant identifiable intangible assets acquired. Discounted cash flow models are typically used in these valuations, and these models require the use of significant estimates and assumptions including but not limited to:

•estimating the timing of and expected costs to complete the in-process projects;

•projecting regulatory approvals;

•estimating future cash flow from product sales resulting from completed products and in process projects; and

•developing appropriate discount rates and probability rates by project.

We believe the fair values assigned to the intangible assets acquired are based upon reasonable estimates and assumptions given available facts and circumstances as of the acquisition dates.

If these projects are not successfully developed, the sales and profitability of the company may be adversely affected in future periods. Additionally, the value of the acquired intangible assets may become impaired. No assurance can be given that the underlying assumptions used to estimate expected project sales, development costs or profitability, or the events associated with such projects, will transpire as estimated.

INVENTORY

At each reporting period we review our inventories for excess or obsolescence and write-down obsolete or otherwise unmarketable inventory to its estimated net realizable value. The determination of obsolete or excess inventory requires management to make estimates based on assumptions about the future demand of our products, product expiration dates, estimated future sales and our general future plans. If customer demand subsequently differs from our forecasts, we may be required to record additional charges for excess inventory.

Although we believe that the assumptions we use in estimating inventory write-downs are reasonable, no assurance can be given that significant future changes in these assumptions or changes in future events and market conditions could result in different estimates.

During 2022 and 2021 we wrote-off excess inventory of $275.0 million and $120.0 million, respectively, related to ADUHELM.

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IMPAIRMENT AND AMORTIZATION OF LONG-LIVED ASSETS

Long-lived assets to be held and used include property, plant and equipment as well as intangible assets, including IPR&D and trademarks. Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. We review our intangible assets with indefinite lives for impairment annually, as of October 31, and whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

When performing our impairment assessment, we calculate the fair value using the same methodology as described above under Acquired Intangible Assets, including IPR&D. If the carrying value of our acquired IPR&D exceeds its fair value, then the intangible asset is written down to its fair value. Changes in estimates and assumptions used in determining the fair value of our acquired IPR&D could result in an impairment. Impairments are recorded within amortization and impairment of acquired intangible assets in our consolidated statements of income.

Based on our most recent impairment assessment we incurred impairment charges of approximately $119.6 million for the year ended December 31, 2022, mainly related to the discontinuation of IPR&D programs. For the year ended December 31, 2023, we had no impairment charges. For additional information on our impairments, please read Note 7, Intangible Assets and Goodwill, to our consolidated financial statements included in this report.

Our most significant intangible assets are our acquired and in-licensed rights and patents. Acquired and in-licensed rights and patents primarily relate to our acquisition of all remaining rights to TYSABRI. We amortize the intangible assets related to our marketed products using the economic consumption method based on revenue generated from the products underlying the related intangible assets. An analysis of the anticipated lifetime revenue of our marketed products is performed annually during our long-range planning cycle and whenever events or changes in circumstances would significantly affect anticipated lifetime revenue of the relevant products.

For additional information on the impairment charges related to our long-lived assets during 2023, 2022 and 2021, please read Note 7, Intangible Assets and Goodwill, to our consolidated financial statements included in this report.

INCOME TAXES

We prepare and file income tax returns based on our interpretation of each jurisdiction’s tax laws and regulations. In preparing our consolidated financial statements, we estimate our income tax liability in each of the jurisdictions in which we operate by estimating our actual current tax expense together with assessing temporary differences resulting from differing treatment of items for tax and financial reporting purposes. These differences result in deferred tax assets and liabilities, which are included in our consolidated balance sheets. Upon our election in the fourth quarter of 2018 to record deferred taxes for GILTI, we have included amounts related to GILTI taxes within temporary difference.

Significant management judgment is required in assessing the realizability of our deferred tax assets. In performing this assessment, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. In making this determination, under the applicable financial accounting standards, we are allowed to consider the scheduled reversal of deferred tax liabilities, projected future taxable income and the effects of tax planning strategies. In the event that actual results differ from our estimates, we adjust our estimates in future periods and we may need to establish a valuation allowance, which could materially impact our consolidated financial position and results of operations.

We account for uncertain tax positions using a “more likely than not” threshold for recognizing and resolving uncertain tax positions. We evaluate uncertain tax positions on a quarterly basis and consider various factors including, but not limited to, changes in tax law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, information obtained during in process audit activities and changes in facts or circumstances related to a tax position. We adjust the level of the liability to reflect any subsequent changes in the relevant facts surrounding the uncertain positions. Our liabilities for uncertain tax positions can be relieved only if the contingency becomes legally extinguished, through either payment to the taxing authority or the expiration of the statute of limitations, the recognition of the benefits associated with the position meet the “more likely than not” threshold or the liability becomes effectively settled through the examination process. We consider matters to be effectively settled once the taxing authority has completed all of its required or expected examination procedures, including all appeals and administrative reviews, we have no plans to appeal or litigate any aspect of the tax position and we believe that it is highly unlikely that the taxing authority would examine

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or re-examine the related tax position. We also accrue for potential interest and penalties related to unrecognized tax benefits in income tax expense.

BUSINESS COMBINATIONS

Business combinations are recorded using the acquisition method of accounting. The results of operations of the acquired company are included in our results of operations beginning on the acquisition date, and assets acquired and liabilities assumed are recognized on the acquisition date at their respective fair values. Any excess of consideration transferred over the net carrying value of the assets acquired and liabilities assumed as of the acquisition date is recognized as goodwill.

We use the multi-period excess earnings method, which is a form of the income approach, utilizing post-tax cash flow and discount rates in estimating the fair value of identifiable intangible assets acquired when allocating the purchase consideration paid for the acquisition. The estimates of the fair value of identifiable intangible assets involve significant judgment by management and include assumptions with measurement uncertainty, such as the amount and timing of projected cash flow, long-term sales forecasts, discount rates and additionally for IPR&D intangible assets, the timing and probability of regulatory and commercial success.

We use the net realizable value method in estimating the fair value of acquired finished goods and work-in-process inventory. Raw materials acquired are valued using the replacement cost method.

Transaction and restructuring costs related to business combinations are expensed as incurred. The fair value of assets acquired and liabilities assumed in certain cases may be subject to revision based on the final determination of fair value during a period of time not to exceed 12 months from the acquisition date. If we determine the assets acquired do not meet the definition of a business, the transaction will be accounted for as an asset acquisition rather than a business combination.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to certain risks that may affect our results of operations, cash flow and fair values of assets and liabilities, including volatility in foreign currency exchange rates, interest rate movements and equity price exposure as well as changes in economic conditions in the markets in which we operate as a result of the conflict between Russia and Ukraine and the military conflict in the Middle East. We manage the impact of foreign currency exchange rates and interest rates through various financial instruments, including derivative instruments such as foreign currency forward contracts, foreign currency options, interest rate lock contracts and interest rate swap contracts. We do not enter into financial instruments for trading or speculative purposes. The counterparties to these contracts are major financial institutions, and there is no significant concentration of exposure with any one counterparty.

FOREIGN CURRENCY EXCHANGE RISK

Our results of operations are subject to foreign currency exchange rate fluctuations due to the global nature of our operations. As a result, our consolidated financial position, results of operations and cash flow can be affected by market fluctuations in foreign currency exchange rates, primarily with respect to the Euro, British pound sterling, Canadian dollar and Swiss franc.

While the financial results of our global activities are reported in U.S. dollars, the functional currency for most of our foreign subsidiaries is their respective local currency. Fluctuations in the foreign currency exchange rates of the countries in which we do business will affect our operating results, often in ways that are difficult to predict. In particular, as the U.S. dollar strengthens versus other currencies, the value of the non-U.S. revenue will decline when reported in U.S. dollars. The impact to net income as a result of a strengthening U.S. dollar will be partially mitigated by the value of non-U.S. expense, which will also decline when reported in U.S. dollars. As the U.S. dollar weakens versus other currencies, the value of the non-U.S. revenue and expense will increase when reported in U.S. dollars.

We have established revenue and operating expense hedging and balance sheet risk management programs to protect against volatility of future foreign currency cash flow and changes in fair value caused by volatility in foreign currency exchange rates.

During the second quarter of 2018 the International Practices Task Force of the Center for Audit Quality categorized Argentina as a country with a projected three-year cumulative inflation rate greater than 100.0%, which indicated that Argentina’s economy is highly inflationary. This categorization did not have a material impact on our results of operations or financial position as of December 31, 2023, and is not expected to have a material impact on our results of operations or financial position in the future. In December 2023 the Argentinian Peso experienced a substantial devaluation following a presidential election. The devaluation resulted in a $16.0 million charge recorded

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during the fourth quarter of 2023 in other (income) expense, net within our consolidated statements of income for the year ended December 31, 2023.

REVENUE AND OPERATING EXPENSE HEDGING PROGRAM

Our foreign currency hedging program is designed to mitigate, over time, a portion of the impact resulting from volatility in exchange rate changes on revenue and operating expense. We use foreign currency forward contracts and foreign currency options to manage foreign currency risk, with the majority of our forward contracts and options used to hedge certain forecasted revenue and operating expense transactions denominated in foreign currencies in the next 12 months. We do not engage in currency speculation. For a more detailed disclosure of our revenue and operating expense hedging program, please read Note 10, Derivative Instruments, to our consolidated financial statements included in this report.

Our ability to mitigate the impact of foreign currency exchange rate changes on revenue and net income diminishes as significant foreign currency exchange rate fluctuations are sustained over extended periods of time. In particular, devaluation or significant deterioration of foreign currency exchange rates are difficult to mitigate and likely to negatively impact earnings. The cash flow from these contracts are reported as operating activities in our consolidated statements of cash flow.

BALANCE SHEET RISK MANAGEMENT HEDGING PROGRAM

We also use forward contracts to mitigate the foreign currency exposure related to certain balance sheet items. The primary objective of our balance sheet risk management program is to mitigate the exposure of foreign currency denominated net monetary assets and liabilities of foreign affiliates. In these instances, we principally utilize currency forward contracts. We have not elected hedge accounting for the balance sheet related items. The cash flow from these contracts are reported as operating activities in our consolidated statements of cash flow.

The following quantitative information includes the impact of currency movements on forward contracts used in our revenue, operating expense and balance sheet hedging programs. As of December 31, 2023 and 2022, a hypothetical adverse 10.0% movement in foreign currency exchange rates compared to the U.S. dollar across all maturities would result in a hypothetical decrease in the fair value of forward contracts of approximately $249.4 million and $293.7 million, respectively. The estimated fair value change was determined by measuring the impact of the hypothetical exchange rate movement on outstanding forward contracts. Our use of this methodology to quantify the market risk of such instruments is subject to assumptions and actual impact could be significantly different. The quantitative information about market risk is limited because it does not take into account all foreign currency operating transactions.

INTEREST RATE RISK

Our investment portfolio includes cash equivalents and short-term investments. The fair value of our marketable securities is 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. As of December 31, 2022, we estimate that such hypothetical 100 basis point adverse movement would result in a hypothetical loss in fair value of approximately $11.7 million to our interest rate sensitive instruments. The fair values of our investments were determined using third-party pricing services or other market observable data.

We partially funded our Reata acquisition through available cash, cash equivalents and marketable securities. As of December 31, 2023, we have sold all of our marketable debt securities. For additional information on our acquisition of Reata, please read Note 2, Acquisitions, to our consolidated financial statements included in this report.

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CREDIT RISK

Financial instruments that potentially subject us to concentrations of credit risk include cash and cash equivalents, investments, derivatives and accounts receivable. We attempt to minimize the risks related to cash and cash equivalents and investments by investing in a broad and diverse range of financial instruments. We have established guidelines related to credit ratings and maturities intended to safeguard principal balances and maintain liquidity. Our investment portfolio is maintained in accordance with our investment policy, which defines allowable investments, specifies credit quality standards and limits the credit exposure of any single issuer. We minimize credit risk resulting from derivative instruments by choosing only highly rated financial institutions as counterparties.

We operate in certain countries where weakness in economic conditions, including the effects of the conflict between Russia and Ukraine and the military conflict in the Middle East, can result in extended collection periods. We continue to monitor these conditions, including the volatility associated with international economies and the relevant financial markets, and assess their possible impact on our business. To date, we have not experienced any significant losses with respect to the collection of our accounts receivable.

We believe that our allowance for doubtful accounts was adequate as of December 31, 2023 and 2022.

EQUITY PRICE RISK

Our strategic investment portfolio includes investments in equity securities of certain biotechnology companies. While we are holding such securities, we are subject to equity price risk, and this may increase the volatility of our income in future periods due to changes in the fair value of equity investments. We may sell such equity securities based on our business considerations, which may include limiting our price risk.

Changes in the fair value of these equity securities are impacted by the volatility of the stock market and changes in general economic conditions, among other factors. The potential change in fair value for equity price sensitive instruments has been assessed on a hypothetical 10.0% adverse movement. As of December 31, 2023 and 2022, a hypothetical adverse 10.0% movement would result in a hypothetical decrease in fair value of approximately $41.7 million and $79.1 million, respectively.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The information required by this Item 8 is contained on pages F-1 through F-85 of this report and is incorporated herein by reference.

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

None.

ITEM 9A. CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROL OVER FINANCIAL REPORTING

CONTROLS AND PROCEDURES

We have carried out an evaluation, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934, as amended), as of December 31, 2023. Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective in ensuring that:

(a) the information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission's rules and forms; and

(b) such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

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In designing and evaluating our disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There were no changes in our internal control over financial reporting during the quarter ended December 31, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Our management is responsible for establishing and maintaining adequate internal control over our financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act as a process designed by, or under the supervision of, a company’s principal executive and principal financial officers and effected by a company’s board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Our internal control over financial reporting includes those policies and procedures that:

•pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and dispositions of our assets;

•provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. GAAP, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

•provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2023. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in its 2013 Internal Control — Integrated Framework.

Based on our assessment, our management has concluded that, as of December 31, 2023, our internal control over financial reporting is effective based on those criteria.

We excluded Reata from our assessment of internal control over financial reporting as of December 31, 2023, as Reata was acquired by our Company in a business combination during 2023. The total assets and total revenue of Reata represents 1.0% and 0.6%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2023.

The effectiveness of our internal control over financial reporting as of December 31, 2023, has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their attestation report, which is included herein.

ITEM 9B. OTHER INFORMATION

RULE 10b5-1 TRADING ARRANGEMENTS

From time to time, our officers (as defined in Rule 16a-1(f)) and directors may enter into Rule 10b5-1 or non-Rule 10b5-1 trading arrangements (as each such term is defined in Item 408 of Regulation S-K). During the fourth quarter of 2023 our officers and directors took the following actions with respect to 10b5-1 trading arrangements:

BIIB US Equity

BIIB · 10-K · period ended 2023-12-31

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

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

ITEM 9A. CONTROLS AND PROCEDURES

ITEM 9B. OTHER INFORMATION

BIIB US Equity☆

BIIB · 10-K · period ended 2023-12-31

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

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

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

ITEM 9A. CONTROLS AND PROCEDURES

ITEM 9B. OTHER INFORMATION

BIIB US Equity