Biogen Idec Acquisition Thesis November 30, 2007

1. Biogen Idec Acquisition ThesisNovember 30, 2007 Umesh Baheti (MBA) Jason Chen (MD) Akshay Dhiman (MBA) Huaping Tang (PhD)

2. Market Trends • Pharma sector under rough weather • Lack of blockbuster drugs through internal R&D • Concerns surrounding drug safety and patents • Increased scrutiny by the FDA on new and existing products • FDA approvals to R&D dollars spent has declined • ($64Bn,13 approved compared to $27Bn, 24 approved in 1998)1 • Increased competition from generics • Possibility of control on drug prices by new Administration could further erode industry profits • Pharma seeking new growth avenues • Increasing focus on niche areas • Alliances offer enhanced discovery capability through beefing up the pipeline and filling strategic gaps • Biotech valuation multiples higher than Pharma due to higher growth potential • Pressure on management to improve shareholder returns • Increased shareholder activism 1 Source: Economist Oct -2007 Yale Pharmaceutical Case Competition, 2007

3. Source: Capital IQ as of 11/28/07 Source: Pfizer Pfizer under pressure! • Pfizer’s lackluster financial performance • Pfizer’s stock has been the worst performer in its peer group1 over the last 5 years • Pfizer stock trading at a substantial discount to peer group1 – P/E of 10.8x (median P/E of 19.3x) • High potential Exubera taken off market in 3Q ’07; write-off of $2.8Bn • Lipitor under competitive pressure from generics (Lipitor 3Q ’07 revenues 5% lower than ’06) • 80% decline in YTD ‘07 Zoloft revenue compared to ’06 • ~ $12Bn of revenue loss due to 5 patent expiration • Low ROI from R&D • Increasing R&D costs (>$8Bn) • Limited business development success across therapeutic categories and development stages • No major blockbuster expected 1 Peer group includes Astra Zeneca, Merck, Novartis, Wyeth, El Lilly, Glaxo Smithkline, Abott Laboratories

4. Pfizer’s rationale for acquisition Strategic • Diversify portfolio of therapeutic areas • Improve presence in biologics • Shore up product pipeline • Access to biotech R&D capability • Industry undergoing shift Financial • Biogen is up for sale • Opportunity to deploy surplus cash • Sizeable market potential (350-500K patients annually) • Biogen’s pipeline complement’s Pfizer’s strategic priority to enhance revenue both in the short and the long term Yale Pharmaceutical Case Competition, 2007

5. Benefits Access to Biogen’s pipeline Product Diversification Access to Avonex and BG-12 Access to Biogen’s R&D resources Knowledge diffusion into Pfizer’s existing R&D Access to niche and profitable MS market Financial Higher valuation multiples due to biotech slant Higher gross margins on biotech Synergies Technology Leverage Pfizer’s global sales and distribution capability Risks Organizational Divert attention from internal rationalization Different R&D cultures and priorities; R&D diseconomies of scale Limited cost synergies: Geographically diverse locations Transaction Uncertainty Complications due to CoC provisions Rituxan may not end up with Pfizer Risk of overpay due to higher valuation Liability Efficacy and safety of Tysabri Revenue Erosion Flagship product Avonex under threat from generic substitution and competition Timeline may not match Acquisition Evaluation Yale Pharmaceutical Case Competition, 2007

6. MS mechanism and treatments Source: Kieseier BC et al. CNS drugs, 2007;21(6):483-502 Yale Pharmaceutical Case Competition, 2007

7. Comparison of existing MS drugs Yale Pharmaceutical Case Competition, 2007 Source: www.uptodateonline.com

8. Comparison of MS drugs in Phase III Legend: Biogen drugs / Competitors’ drugs Yale Pharmaceutical Case Competition, 2007

9. Valuation Assumptions Sum of the parts analysis: • 3.0-4.0x multiple on ’10 expected revenues to value each drug (based on precedent biotech acquisitions) • Pipeline valuation: Values Ph III drugs @ $100M; Ph II/III @ $50M; Ph II @ $25M; Ph I @ $15M and Pre-clinical @ $5M • Facilities Valuation: Values production facility in NC and Denmark @ $400M (based on precedent transactions) Discounted Cash Flow (DCF) analysis: • Enterprise value calculated for Biogen’s worldwide operations • 13% WACC (given) • Terminal value calculated using 5-8% perpetuity growth rate Trading Multiples: • TEV/EBITDA and TEV/Sales multiples used • Peer group comprises of Abott Laboratories, Astra Zeneca, Glaxo SmithKline plc, Merck & Co. Inc., Novartis AG, Eli Lilly & Co., Sanofi-Aventis AG and Wyeth Yale Pharmaceutical Case Competition, 2007

10. Implied Enterprise value ($ Bn) 20.3 – 30.2 14.7 – 28.3 9.4 – 34.9 18.8 – 27.8 Valuation Summary 1 1 Source: HSBC Equity research Accretion – Dilution analysis • Offer price of $78/share (30% premium to pre Biogen seeking buyout) • All cash offer likely to have adverse impact of Pfizer’s credit ratings • Considering most likely scenario (50-50 case), merger becomes accretive in ’10 • Assumed $300MM annual synergies Yale Pharmaceutical Case Competition, 2007

11. Strategic alternatives & key considerations • Recommendation in rank order • Acquisition makes strategic sense if price between $72 -$85 • Build expertise in biotech through partnerships • Seek other acquisitions in the biotech space Yale Pharmaceutical Case Competition, 2007

12. Appendix