United states securities and exchange commission

Table of Contents
BIOGEN INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
F- 19
Royalty Cost of Sales
We make royalty payments to a number of third parties under license or purchase agreements associated with 
our acquisition of intellectual property. These royalty payments are typically calculated as a percentage (royalty rate) 
of the sales of our products in a particular year. That royalty rate may remain constant, increase or decrease within 
each year based on the total amount of sales during the annual period. Each quarterly period, we estimate our total 
royalty obligation for the full year and recognize the proportional amount as cost of sales based on actual quarterly 
sales as a percentage of full year estimated sales. For example, if the level of net sales in any calendar year 
increases the royalty rate within the year, we will record our cost of sales at an even rate over the year, based on the 
estimated blended royalty rate. 
Accounting for Share-Based Compensation
Our share-based compensation programs grant awards that have included stock options, restricted stock units 
that vest based on stock performance known as market stock units (MSUs), performance-vested restricted stock 
units that settle in cash (CSPUs), time-vested restricted stock units (RSUs), performance-vested restricted stock 
units that can be settled in cash or shares of our common stock (PUs) at the sole discretion of the Compensation 
and Management Development Committee of the Board of Directors and shares issued under our employee stock 
purchase plan (ESPP). We charge the estimated fair value of awards against income over the requisite service period, 
which is generally the vesting period. Where awards are made with non-substantive vesting periods (for instance, 
where a portion of the award vests upon retirement eligibility), we estimate and recognize expense based on the 
period from the grant date to the date the employee becomes retirement eligible.
The fair values of our stock option grants are estimated as of the date of grant using a Black-Scholes option 
valuation model. The estimated fair values of the stock options are then expensed over the options’ vesting periods.
The fair values of our MSUs are estimated using a lattice model with a Monte Carlo simulation. We apply an 
accelerated attribution method to recognize share-based compensation expense over the applicable service period, 
net of estimated forfeitures when accounting for our MSUs. The probability of actual shares expected to be earned is 
considered in the grant date valuation, therefore the expense is not adjusted to reflect the actual units earned.
The fair values of our RSUs are based on the market value of our stock on the date of grant. Compensation 
expense, net of forfeitures, for RSUs is recognized straight-line over the applicable service period.
We apply an accelerated attribution method to recognize share-based compensation expense when accounting 
for our CSPUs and PUs and the fair value of the liability is remeasured at the end of each reporting period through 
expected settlement. Compensation expense associated with CSPUs and PUs are based upon the stock price and 
the number of units expected to be earned after assessing the probability that certain performance criteria will be 
met and the associated targeted payout level that is forecasted will be achieved, net of estimated forfeitures. 
Cumulative adjustments are recorded each quarter to reflect changes in the stock price and estimated outcome of 
the performance-related conditions until the date results are determined and settled.
The purchase price of common stock under our ESPP is equal to 85% of the lesser of (i) the fair market value 
per share of the common stock on the first business day of an offering period and (ii) the fair market value per share 
of the common stock on the purchase date. The fair value of the discounted purchases made under our ESPP is 
calculated using the Black-Scholes model. The fair value of the look-back provision plus the 15% discount is 
recognized as compensation expense over the 90-day purchase period. 
Research and Development Expenses
Research and development expenses consist of upfront fees and milestones paid to collaborators and 
expenses incurred in performing research and development activities, which include compensation and benefits, 
facilities and overhead expenses, clinical trial expenses and fees paid to contract research organizations (CROs), 
clinical supply and manufacturing expenses, write-offs of inventory that was previously capitalized in anticipation of 
product launch and determined to no longer be realizable and other outside expenses. Research and development 
expenses are expensed as incurred. Payments we make for research and development services prior to the services 
being rendered are recorded as prepaid assets in our consolidated balance sheets and are expensed as the 
services are provided. We also accrue the costs of ongoing clinical trials associated with programs that have been 
terminated or discontinued for which there is no future economic benefit at the time the decision is made to 
terminate or discontinue the program.

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Table of Contents
BIOGEN INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
F- 20
From time to time, we enter into development agreements in which we share expenses with a collaborative 
partner. We record payments received from our collaborative partners for their share of the development costs as a 
reduction of research and development expense, except as discussed in Note 20, Collaborative and Other 
Relationships, to these consolidated financial statements. Because an initial indication has been approved for both 
RITUXAN and GAZYVA, expenses incurred by Genentech in the ongoing development of RITUXAN and GAZYVA are not 
recorded as research and development expense, but rather reduce our share of profits recorded as a component of 
revenues from anti-CD20 therapeutic programs.
For collaborations with commercialized products, if we are the principal, we record revenues and the 
corresponding operating costs in their respective line items in our consolidated statements of income. If we are not 
the principal, we record operating costs as a reduction of revenue.
Selling, General and Administrative Expenses
Selling, general and administrative expenses are primarily comprised of compensation and benefits associated 
with sales and marketing, finance, human resources, legal, information technology and other administrative 
personnel, outside marketing, advertising and legal expenses and other general and administrative costs.
Advertising costs are expensed as incurred. For the years ended December 31, 2017, 2016 and 2015, 
advertising costs totaled $75.2 million, $106.3 million and $108.6 million, respectively.
Income Taxes
The provision for income taxes includes federal, state, local and foreign taxes. Income taxes are accounted for 
under the liability method. Deferred tax assets and liabilities are recognized for the estimated future tax 
consequences of temporary differences between the financial statement carrying amounts and their respective tax 
bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income 
in the year in which the temporary differences are expected to be recovered or settled. We evaluate the realizability 
of our deferred tax assets and establish a valuation allowance when it is more likely than not that all or a portion of 
deferred tax assets will not be realized.
All tax effects associated with intercompany transfers of assets within our consolidated group, both current and 
deferred, are recorded as a prepaid tax or deferred charge and recognized through our consolidated statements of 
income when the asset transferred is sold to a third party or otherwise recovered through amortization of the asset's 
remaining economic life. If the asset transferred becomes impaired, for example through the obsolescence of 
inventory or discontinuation of a research program, we will expense any remaining deferred charge or prepaid tax.
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 also accrue for potential interest and 
penalties related to unrecognized tax benefits in income tax expense.
Contingencies
We are currently involved in various claims and legal proceedings. Loss contingency provisions are recorded if 
the potential loss from any claim, asserted or unasserted, or legal proceeding is considered probable and the 
amount can be reasonably estimated or a range of loss can be determined. These accruals represent management’s 
best estimate of probable loss. Disclosure also is provided when it is reasonably possible that a loss will be incurred 
or when it is reasonably possible that the amount of a loss will exceed the recorded provision. On a quarterly basis, 
we review the status of each significant matter and assess its potential financial exposure. Significant judgment is 
required in both the determination of probability and the determination as to whether an exposure is reasonably 
estimable. Because of uncertainties related to these matters, accruals are based only on the best information 
available at the time. As additional information becomes available, we reassess the potential liability related to 
pending claims and litigation and may change our estimates. These changes in the estimates of the potential 
liabilities could have a material impact on our consolidated results of operations and financial position.
Earnings per Share
Basic earnings per share is computed by dividing undistributed net income attributable to Biogen Inc. by the 
weighted-average number of common shares outstanding during the period. 

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