Alexion Pharmaceuticals Annual Report 2015

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FY2015 Annual Report · Alexion Pharmaceuticals

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what we see

2015 Annual Report

in the rare, the

devastating, and unseen

is an opportunity

to transform lives.

We expected
only weeks and
months.
Now, we
dream of years
and years.

When Evie was born with fragile bones and suffered life-threatening seizures, her
parents didn’t know how long they would have with their baby girl. Today, she’s an
energetic six-year-old forging a path they never thought would be possible. Families like
Evie’s give Alexion the courage to take on devastating diseases like hypophosphatasia
(HPP). They give us a sense of urgency to generate idea after idea, to overcome obsta-
cles, and to settle for nothing short of transformational innovation. We cannot and will
not turn away from the most daunting of scientific challenges—families like Evie’s are
counting on us.

o u r va l u e s

Find answers

We hold ourselves accountable for finding the most elusive answers to
transform patients’ lives. We have the courage to ask daunting questions and the
stamina to overcome failure. We champion our patients and each other, providing
solutions when others cannot. Together, we can achieve the impossible.

Change the world

We deliver nothing less than transformation so that, together with our patients,
we change the world. We engineer our own path because the scientific challenges
we choose to tackle require it. We generate novel ideas and dare to turn no into
yes. We power innovation to such a degree that we redefine the future.

Create a legacy

Our pursuit to help the families affected by rare and devastating diseases pushes
the boundaries of what science can offer. Transformation is enduring, so we go
beyond the incremental and persevere to create lasting impact. Our legacy will
be measured in the families we serve today and the generations that follow,
leaving no one behind.

TO OUR SHAREHOLDERS:

It is a privilege to report on a transformative year in

Alexion’s history. In 2015, we grew our complement

franchise, built a premier metabolic franchise with global

approvals of two new therapies, and advanced the most

robust rare disease pipeline in biotech to accelerate

our growth. Amidst great transformation, one thing has

remained unchanged—our singular focus on serving

patients with rare and devastating diseases.

I am often asked what sets Alexion apart from others

in our industry. The answer—as clear to me today as

when I joined the company 10 years ago—is that Alexion

sees what others do not. More than two decades ago,

we saw the untapped potential of complement inhibition

to address the needs of patients suffering from

devastating, ultra-rare complement-mediated disorders.

Today, Alexion is the global leader in complement biology

with Soliris® (eculizumab) at the foundation of a growing

complement franchise. In 2015, we continued to serve

an increasing number of patients with paroxysmal

nocturnal hemoglobinuria (PNH) and atypical hemolytic

uremic syndrome (aHUS) with Soliris across our

50-country operating platform.

We also strengthened our global leadership in rare

diseases with the acquisition of Synageva BioPharma

Corp., expanding our pipeline and further establishing

our metabolic franchise. Our two highly innovative

enzyme replacement therapies both received regulatory

approval in 2015—Strensiq® (asfotase alfa) for patients

with HPP and Kanuma™ (sebelipase alfa) for patients

with lysosomal acid lipase deficiency (LAL-D). Both HPP

and LAL-D are devastating ultra-rare disorders in which

the youngest patients face early mortality, often before

their first birthday. In both diseases, we saw an

opportunity to overcome myths and misperceptions

and to reach more patients through targeted,

scientifically-based disease awareness programs and

diagnostic pathways. We are now in the early stages of

launching Strensiq and Kanuma in initial countries, and

are working with urgency to serve patients with these

two devastating diseases.

As Alexion expanded its commercial portfolio in 2015,

we advanced the most robust rare disease pipeline

in biotech, with 10 programs in clinical development

across our complement and metabolic portfolios, and

and ultra-rare complement-mediated disorders, and

presented initial patient data for three highly innovative

molecules—ALXN1210, ALXN1007, and SBC-103.

Lastly, 2015 was a year of strong financial

performance. Total revenues were $2.604 billion,

representing 21 percent revenue growth and reflecting

29 percent volume growth compared to 2014. Looking

ahead, we continue to see the majority of opportunity

to serve patients with PNH and aHUS ahead of us, with

Strensiq and Kanuma further supporting our growth.

I am proud of what we achieved in 2015, but our work is

far from done. We are at the strongest point in Alexion’s

history, with an unprecedented opportunity to serve

patients. As we undertake this work, we are delighted to

have returned to New Haven, where Alexion was founded

in 1992. I’d like to recognize our principal founder and

current Chairman of the Board, Dr. Lenny Bell, and thank

him for 23 years of exceptional leadership as our CEO

to build Alexion into the company we are today.

Thank you, too, to the patients and families whom

we proudly serve, the researchers and physicians who

share our singular drive to transform patients’ lives,

and the shareholders who support our mission. I would

especially like to recognize our employees—3,000

strong today—for having the courage to find answers,

change the world, and create a legacy.

Sincerely,

30 preclinical programs. Notably, we progressed three

David Hallal, chief executive officer

ongoing registration programs for eculizumab in severe

Alexion Today

Drugs approved for
patients with devastating,
rare diseases

Serving patients with

4ultra-rare diseases with

breakthrough innovations

APPROVED AS TREATMENTS

FOR PATIENTS WITH
HPP

FOR PATIENTS WITH
LAL-D

OPERATIONS IN

COUNTRIES

PROGRAMS
IN OUR
PRECLINICAL
RARE
DISEASE
PIPELINE

GROWING
OUR COMPLEMENT
FRANCHISE

BUILDING A LEADING
METABOLIC FRANCHISE

2015
TOP EMPLOYER

No. 5

TOP
EMPLOYER
by Science
Magazine

3,000

TALENTED
COLLEAGUES

6POTENTIAL NEW PRODUCT

OR INDICATION APPROVALS
THROUGH 2018

Global
headquarters
in New Haven,
Connecticut

Expanding our
manufacturing network
with bulk biologics
manufacturing facility
under development in
College Park, Ireland

FDA RARE
PEDIATRIC
DISEASE
PRIORITY
REVIEW
VOUCHERS

No.3

Most innovative
company in the
world by Forbes

PROGRAMS
IN
CLINICAL
DEVELOPMENT

Ruthie endured several misdiagnoses
before learning she had PNH in 1997 at age 26.
Now on Soliris treatment for nearly a decade,
Ruthie is a mom of three who doesn’t think
of herself as sick.

Ethan was eight years old when he was
diagnosed with aHUS after a terrifying two-week
hospital stay for acute kidney failure. Today,
the studious 11-year-old receives Soliris and is
focused on becoming an award-winning scientist.

On February 29, 2016, Ruthie and Ethan recognized global Rare Disease Day
with Alexion by making their mark on our Life & Legacy Wall—an interactive art
installation that celebrates the lives of the patients and families we serve, and the
commitment of Alexion employees who dedicate themselves every day to transform
lives and open up new worlds of possibility for generations to come.

Global Leaders in Complement Biology

MORE THAN

YEARS OF
EXPERIENCE IN
COMPLEMENT
RESEARCH AND
DISCOVERY

DISCOVERED
AND DEVELOPED

THE ONLY
APPROVED
COMPLEMENT
INHIBITOR

NOVEL
COMPLEMENT
INHIBITORS
IN CLINICAL
AND
PRECLINICAL
DEVELOPMENT

PNH—Consistent and Steady Growth of New Patients

Identifying a consistent number of
newly diagnosed patients with PNH

Continuing to see majority of
patients newly starting on Soliris
are also newly diagnosed

Driving steady growth through
success of our PNH diagnostic
initiatives

Annual Newly Identified Patients in Core Markets†

09 10* 11

†Core markets of U.S., Europe and Japan; *Launch of Soliris in Japan

aHUS—Opportunity to Serve More Patients

U.S. Patients Actively Treated on Soliris
17 Quarters from FDA Approval*

Assessing an increasing number

of patients with thrombotic

microangiopathy (TMA) for aHUS

Serving more diagnosed patients

with Soliris as first-line therapy

Educating physicians about the

genetic, lifelong nature of aHUS

*PNH: March 16, 2007 through Q2 2011; aHUS: September 23, 2011 through Q4 2015

PNH

aHUS

E C U L I Z U M A B R E G I S T R A T I O N P R O G R A M S

ENROLLMENT IS
COMPLETE IN THE
REGAIN STUDY

a single, multinational,
placebo-controlled,
registration trial of
eculizumab in refractory
generalized myasthenia
gravis (gMG)

WE EXPECT TO COMPLETE
ENROLLMENT IN THE
PREVENT STUDY

ENROLLMENT IS
COMPLETE IN THE
PROTECT STUDY

a single, multinational,
placebo-controlled, regis-
tration trial of eculizumab
in relapsing neuromyelitis
optica spectrum disorder
(NMOSD), in 2016

a single, multinational
registration trial of
eculizumab in the
prevention of delayed
graft function (DGF)

ALXN1210

ALXN1007

Alexion has completed enrollment in a
Phase 1/2 clinical study of ALXN1210, a
highly innovative C5 antibody, in patients
with PNH and is enrolling patients
in a Phase 2 PNH study. Preliminary
data showed a rapid reduction of LDH
in initial patients with PNH receiving
ALXN1210.

Interim data from a Phase 2 study of
ALXN1007, a complement inhibitor that
targets C5a, showed an overall 28-day
response rate of 80 percent in patients
with acute graft-versus-host disease
involving the lower gastrointestinal
tract (GI-GVHD).

Alexion is the global leader in complement biology,

Throughout 2015, Alexion served a consistent

with more than 20 years of research experience in

number of new patients with both PNH and aHUS

the role of complement, a component of the

with Soliris across our 50-country operating

immune system, in devastating and ultra-rare

platform. In 2016 we will continue to execute our

diseases. Our complement franchise is anchored

disease awareness and diagnostic initiatives with

by Soliris, the only approved treatment for patients

urgency to reach more patients.

with PNH and aHUS. In both diseases, Alexion saw

an opportunity to serve an overlooked patient

population facing severe outcomes: For PNH,

35 percent of patients died within five years of

diagnosis, and for aHUS, more than 50 percent

of patients died, progressed to end-stage renal

disease, or had permanent renal damage within one

year. Today, Soliris has dramatically improved the

outlook for patients with each of these diseases.

As we continue to serve an increasing number

of patients with PNH and aHUS around the world,

we are also strengthening our global leadership in

complement with eight complement inhibitors in

clinical and preclinical development.

Eighteen-year-old Julia, right, pictured with her
sister, was diagnosed with aHUS at age 15 and
continues to receive treatment with Soliris.

At diagnosis,
we were terrified
of the future.
Today, we know
he’s part of it.

Tristan was five years old when his parents, Holly and Steve, learned that their
son’s chronic gastrointestinal issues could be a sign of something more severe.
Over a period of nearly a year, Tristan endured multiple doctors’ visits and tests
that eventually led to a diagnosis of LAL-D. Holly and Steve were devastated
to learn their little boy had a rare and life-threatening disease and was already
suffering from liver damage, but were relieved to learn about a clinical trial for
Kanuma. Now 9, Tristan continues to receive Kanuma and doesn’t let his disease
hold him back.

Building a Premier Metabolic Franchise

PROPRIETARY
PROTEIN
EXPRESSION
PLATFORM

PRECLINICAL
PROGRAMS

PIVOTAL
PHASE 3 DATA
ON KANUMA
IN CHILDREN
AND ADULTS
WITH LAL-D
PUBLISHED
IN THE
NEW ENGLAND
JOURNAL OF
MEDICINE

PROGRAMS IN
CLINICAL
DEVELOPMENT:
SBC-103
ALXN1101

T W O P R O D U C T A P P R O V A L S F O R
T W O U LT R A - R A R E D I S E A S E S

Strensiq was approved by the FDA
under Breakthrough Therapy Des-
ignation and Priority Review for the
treatment of patients with perinatal-,
infantile- and juvenile-onset HPP in
October of 2015. Strensiq was also
approved in the European Union,
Japan, and Canada in 2015.

Kanuma was approved by the
FDA under Breakthrough Therapy
Designation and Priority Review
for the treatment of patients with a
diagnosis of LAL-D in December of
2015. Kanuma was also approved
in the European Union in 2015.

Transforming the Lives of Patients with HPP and LAL-D

DEVASTATING DISEASES

TRANSFORMATIONAL INNOVATION

HPP

42%

OF INFANTS
SURVIVE AT ONE YEAR
WITHOUT TREATMENT

Systemic complications such as
profound muscle weakness, seizures,
pain, and respiratory failure leading
to premature death in infants

S T R E N S I Q

97%

OVERALL
SURVIVAL FOR
INFANTS AT
ONE YEAR

100%

OF JUVENILE-ONSET
HPP PATIENTS HAD
SUBSTANTIAL BONE
HEALING

LAL-D

3.7 MONTHS

MEDIAN AGE OF INFANT DEATH
In an observational study, approximately
50 percent of children and adults with
LAL-D progressed to fibrosis, cirrhosis, or
liver transplant in three years

K A N U M A

67%

OVERALL
SURVIVAL FOR
INFANTS AT
ONE YEAR

SIGNIFICANT
IMPROVEMENTS IN
MULTIPLE DISEASE
MANIFESTATIONS,
including markers of
liver injury and liver
fat content

SBC-103

Alexion is enrolling patients in a Phase 1/2 trial of
SBC-103, a recombinant form of the NAGLU enzyme
produced with our proprietary protein expression
platform, for patients with mucopolysaccharidosis IIIB,
or MPS IIIB. Interim data showed a reduction in heparan
sulfate levels in cerebrospinal fluid in patients at 24 weeks
at the highest dose studied, suggesting that the NAGLU
enzyme, delivered intravenously, crossed the blood-
brain barrier.

ALXN1101

Alexion has initiated a
pivotal study to evaluate
ALXN1101 in neonates
with Molybdenum
Cofactor Deficiency
(MoCD) Type A.

In 2015, Alexion established its leadership in
rare and devastating metabolic disorders with the
approval of Strensiq for the treatment of patients
with HPP and the approval of Kanuma for the
treatment of patients with LAL-D. Although HPP
and LAL-D are two different diseases, we saw in
them a similar opportunity: To overcome myths and
misperceptions through physician education…
to help patients obtain an accurate diagnosis…
and to transform lives by treating the underlying
cause of disease.

Importantly, our metabolic launches are supported
by strong labels that reflect the breakthrough
medical innovation that these therapies provide.
In patients with HPP, Strensiq replaces the vital
enzyme of tissue non-specific alkaline phosphatase,
enabling infants to have a 97 percent survival rate
at one year, compared to 42 percent survival for
historical control patients. With Strensiq treatment,
patients with juvenile-onset HPP had substantial
bone healing, improvement in weight and short
stature, and were able to perform a 6-minute walk
test comparable to matched healthy peers.

Similarly, Kanuma replaces the vital enzyme of
lysosomal acid lipase—enabling infants to have
a 67 percent survival rate beyond 12 months of
age, compared to 0 percent of historical control
patients, all of whom died by 8 months of age.
Patients also had improvements in multiple liver
and lipid parameters, including a reduction in
liver fat content.

With the U.S. approvals, Alexion became the first
company to receive two Rare Pediatric Disease
Priority Review Vouchers, reflecting our dedication
to transforming the lives of children with
devastating ultra-rare diseases.

As Alexion begins serving patients with HPP and
LAL-D in initial countries, we are leveraging our
50-country operating platform and our unique
ultra-rare disease expertise by focusing on disease
awareness, diagnostic initiatives, and patient
support. At the same time, the Company is
advancing its metabolic pipeline candidates that
have the potential to transform the lives of patients
with other severe metabolic diseases.

Baby Adelyn was diagnosed with HPP at
just two days old and began treatment with
Strensiq 10 days later.

Advancing the Most Robust
Rare Disease Pipeline in Biotech

Complement Inhibitor Portfolio

PRECLINICAL

EARLY CLINICAL
DEVELOPMENT

ADVANCED
CLINICAL
DEVELOPMENT

REGISTRATION
FILINGS

MARKET

Soliris
for PNH

Soliris
for aHUS

Eculizumab
for Refractory gMG

Eculizumab
for Relapsing NMOSD

Eculizumab
for DGF

Eculizumab
for Antibody Mediated Rejection (AMR)

ALXN1007
for GI-GVHD

ALXN1007
for Antiphospholipid Syndrome (APS)

ALXN1210
for PNH

ALXN5500

Metabolic Portfolio

Strensiq
for HPP

Kanuma
for LAL-D

SBC-103
for MPS IIIB

ALXN1101 (cPMP Replacement Therapy)
for MoCD Type A

Preclinical Candidates

Asfotase alfa for Neurofibromatosis Type 1 (NF1)

ENPP-1 for Generalized Arterial Calcification of Infancy (GACI)

ALXN1540 for Crigler-Najjar Syndrome (CN-1)

Other Complement Inhibitors

Other mRNA Therapies

Other Preclinical Candidates

PRECLINICAL
PROGRAMS
TO ENTER
THE CLINIC
IN 2016

ADDITIONAL
PRODUCT OR
INDICATION
APPROVALS
THROUGH
2018

Key Milestones Met in 2015

STRENSIQ
HPP
APPROVAL
EU | U.S. | Japan
Canada

KANUMA
LAL-D
APPROVAL
EU | U.S.

SBC-103
MPS IIIB
Interim Phase
1/2 data

ALXN1007
GI-GVHD
Interim Phase
2 data

ALXN1101
MoCD TYPE A
Completed
enrollment in
switch study

ALXN1210
MULTIPLE
INDICATIONS
Completed
Phase 1 study

PNH
Started
Phase 2
study

ECULIZUMAB
REFRACTORY
gMG

Completed
enrollment
in Phase 3
registration
study

RELAPSING
NMOSD
Progressed
enrollment in
registration
study

DGF
Completed
enrollment
in Phase 3
registration
study

AMR
PREVENTION
Deceased-
donor Phase 2
data

METABOLIC

COMPLEMENT

CLINICAL
PROGRAMS

PRECLINICAL

PROGRAMS

ACROSS A

RANGE OF

THERAPEUTIC

MODALITIES

Driving Our Global Growth

Alexion has expanded its operations around the

Additionally, Alexion moved its global supply chain

world and opened several new facilities to support

headquarters to a state-of-the-art campus in

our global growth and enable a high-performance

College Park, Dublin, and announced plans to

culture committed to integrity.

further expand the site with the development

In late 2015, the Company opened the doors of a

new regional headquarters for Europe, Middle East

and Africa (EMEA) in Zürich, one of the most

dynamic life sciences clusters in Europe and home

to a strong base of biopharmaceutical talent. And in

early 2016, we returned to New Haven, Connecticut,

where our company was founded in 1992, with

the inauguration of our new global headquarters.

Both our global and EMEA headquarters are

proudly dedicated to patients with rare diseases

and their families.

of a bulk biologics manufacturing facility—the

Company’s first manufacturing facility outside

of the United States. We also began a series of

enhancements and expansions at Alexion’s

manufacturing facility in Smithfield, Rhode Island,

which will be completed over the next several years.

And in June 2015, Alexion opened a new R&D

center in Paris focused on discovery research

activities in the fields of cell and molecular biology,

genomics, and immunogenicity.

our executive committee: From left to right, Heidi Wagner, Edward Miller, Vikas Sinha, John Moriarty, CEO David Hallal, Martin Mackay,
Clare Carmichael, Julie O’Neill, Carsten Thiel

Our state-of-the-art global headquarters in New Haven was designed to facilitate the sharing of ideas among our employees
and to enable us to interact seamlessly across our 50-country footprint. The facility has been constructed to platinum-level
LEED certification, the highest LEED standards.

Financial Highlights

Shareholder Information

3000

2500

2000

1500

1000

500

1100

1000

900

800

700

600

500

400

300

200

100

6.00

5.00

4.00

3.00

2.00

1.00

2000

1500

1000

500

2015

2014*

2013

2015

2014

2013

2015

2014

2013

2015

2014

2013

NET PRODUCT SALES
($ IN MILLIONS)

NET INCOME
($ IN MILLIONS)

EARNINGS PER
SHARE-DILUTED

UNITED STATES

EUROPE

ASIA PACIFIC

OTHER

NON-GAAP

GAAP

NON-GAAP

GAAP

CASH, CASH EQUIVALENTS
AND MARKETABLE
SECURITIES
($ IN MILLIONS)

CASH AND CASH EQUIVALENTS

MARKETABLE SECURITIES

* Included in Europe revenues for 2014 is a reimbursement of $87.83 million for shipments made prior to 2014 as a result of an agreement with the French government.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
IN THOUSANDS EXCEPT PER SHARE AMOUNTS

GAAP net income

Share-based compensation expense

Fair value adjustment of inventory acquired

Amortization of purchased intangible assets

Change in fair value of contingent consideration

Acquisition-related costs

Restructuring expenses

Impairment of intangible assets

2015

2014

2013

$144,385

$656,912

$252,895

227,133

114,461

76,203

116,584

64,257

39,210

42,169

–

20,295

–

15,365

11,514

–

417

4,006

1,023

–

33,521

14,500

9,181

Upfront and milestone payments related to license and collaboration agreements

129,750

109,925

Change in contingent liability from intellectual property settlements

–

Non-cash taxes

Non-GAAP net income

GAAP earnings per share - diluted

Non-GAAP earnings per share - diluted

324,978

137,449

232,460

$1,088,557

$1,065,921

$624,206

$0.67

$4.99

$3.26

$5.21

$1.27

$3.08

DIRECTORS

Leonard Bell, MD
Chairman of the Board,
Principal Founder and Former
Chief Executive Officer

R. Douglas Norby1,2,3
Lead Independent Director
Former Senior Vice President,
Chief Financial Officer,
Tessera Technologies, Inc.

Felix J. Baker, PhD4,5
Co-Managing Member, Baker
Brothers Advisors LP

David R. Brennan4,5
Former Chief Executive Officer,
AstraZeneca PLC

M. Michele Burns2,3,5
Former Chief Executive Officer,
Retirement Policy Center,
Marsh & McLennan
Companies, Inc.

Christopher J. Coughlin1,4
Former Executive Vice
President and Chief Financial
Officer, Tyco

EXECUTIVE MANAGEMENT

David Hallal
Chief Executive Officer

John T. Mollen1,2,3
Former Executive Vice
President, Human Resources,
EMC Corporation

Alvin S. Parven1,2,3
Former Vice President,
Aetna Health Plans

Vikas Sinha, MBA, CA, CPA
Executive Vice President,
Chief Financial Officer

Martin Mackay, PhD
Executive Vice President,
Global Head of Research &
Development

ANNUAL
SHAREHOLDERS
MEETING

To be held on

May 11, 2016

5:30 p.m.

The Study at Yale

1157 Chapel Street

New Haven, CT 06511

tel 203.503.3900

Andreas Rummelt, PhD4,5
CEO, InterPharmaLink AG
Former Group Head,
Quality Assurance and Technical
Operations, Novartis

Ann M. Veneman, JD3,4,5
Former Executive Director
of UNICEF
Former Secretary of
U.S. Department of Agriculture

Clare Carmichael
Executive Vice President,
Chief Human Resources Officer

OTHER
INFORMATION

John B. Moriarty, Jr., JD
Executive Vice President,
General Counsel

Julie O’Neill
Executive Vice President,
Global Operations

Carsten Thiel, PhD
Executive Vice President,
Chief Commercial Officer

Edward Miller, JD
Senior Vice President,
Global Chief Compliance Officer

Heidi L. Wagner, JD
Senior Vice President,
Global Government Affairs

CORPORATE HEADQUARTERS

Alexion Pharmaceuticals, Inc.

100 College Street

New Haven, CT 06510

tel 203.272.2596

fax 203.271.8190

TRANSFER AGENT AND

REGISTRAR

Computershare Trust Company, N.A.

250 Royall Street

Canton, MA 02021

INVESTOR RELATIONS

Alexion Pharmaceuticals, Inc.

100 College Street

New Haven, CT 06510

tel 203.699.7457

fax 203.271.8198

email InvestorRelations@alxn.com

LEGAL COUNSEL

Ropes & Gray LLP

Boston, MA

INDEPENDENT AUDITORS

PricewaterhouseCoopers LLP

Hartford, CT

TRADING SYMBOL

Listing for Alexion Pharmaceuticals, Inc.
is found on the NASDAQ stock market

under the symbol ALXN.

alexion.com

1 Member of the Audit and

Finance Committee

2 Member of the Leadership and

Compensation Committee

3 Member of the Nominating and

Corporate Governance Committee

4 Member of the Quality Compliance

Committee

5 Member of the Strategy and

Risk Committee

top row, left to right: John T. Mollen; Andreas Rummelt; David R. Brennan; M. Michele Burns;
Alvin S. Parven; Ann M. Veneman; Christopher J. Coughlin
bottom row, left to right: Felix J. Baker; CEO David Hallal; Chairman of the Board Leonard Bell;
R. Douglas Norby

ALEXION, KANUMA, SOLIRIS, STRENSIQ,
and the Alexion logo are trademarks of Alexion
Pharmaceuticals, Inc., registered in the United
States and in other countries worldwide.

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

FORM 10-K





Annual report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2015

Transition report pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

For the transition period from to

Commission file number: 0-27756

ALEXION PHARMACEUTICALS, INC.
(Exact Name of Registrant as Specified in Its Charter)

Delaware
(State or Other Jurisdiction of Incorporation or Organization)

13-3648318
(I.R.S. Employer Identification No.)

100 College Street, New Haven, Connecticut 06510
(Address of Principal Executive Offices) (Zip Code)
203-272-2596
(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Common Stock, par value $0.0001

Name of each exchange on which registered: The NASDAQ Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  No 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the

Act. Yes  No 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange

Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes  No 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). Yes  No 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting

company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Check One:

Large accelerated filer  Accelerated filer  Non-accelerated filer  (Do not check if a smaller reporting company)
Smaller reporting company 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes  No 
The aggregate market value of the Common Stock held by non-affiliates of the registrant, based upon the last sale price of the Common

Stock reported on The NASDAQ Stock Market LLC on June 30, 2015, was $39,491,560,848. (1)
The number of shares of Common Stock outstanding as of February 3, 2016 was 225,291,331.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s Definitive Proxy Statement to be used in connection with its Annual Meeting of Stockholders to be held on

May 11, 2016, are incorporated by reference into Part III of this report.

(1) Excludes 7,551,963 shares of common stock held by directors and executive officers at June 30, 2015. Exclusion of shares held by any

person should not be construed to indicate that such person possesses the power, directly or indirectly, to direct or cause the direction of the
management or policies of the registrant, or that such person is controlled by or under common control with the registrant.

Alexion Pharmaceuticals, Inc.
Table of Contents

PART I

Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.

Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures

PART II
Item 5.
Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Selected Financial Data
Item 6.
Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 7.
Quantitative and Qualitative Disclosures About Market Risk
Item 7.A
Financial Statements and Supplementary Data
Item 8.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9.
Item 9A.
Controls and Procedures
Item 9A(T). Controls and Procedures
Item 9B.

Other Information

PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.

PART IV
Item 15.

Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principle Accounting Fees and Services

Exhibits and Financial Statement Schedules

SIGNATURES

Page

4
27
44
45
45
45

46
49
50
74
75
76
76
76
76

77
77
77
77
77

Unless the context requires otherwise, references in this report to "Alexion", the “Company”, "we", "our" or "us" refer to

PART I

Alexion Pharmaceuticals, Inc. and its subsidiaries.

Note Regarding Forward-Looking Statements

This Annual Report on Form 10-K contains forward-looking statements that have been made pursuant to the provisions of the
Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current expectations, estimates and
projections about our industry, management's beliefs, and certain assumptions made by our management, and may include, but are not
limited to, statements regarding the potential benefits and commercial potential of Soliris®, Strensiq® and Kanuma TM for approved
indications and any expanded uses, timing and effect of sales of our products in various markets worldwide, pricing for our products,
level of insurance coverage and reimbursement for our products, level of future product sales and collections, timing regarding
development and regulatory approvals for our products in additional indications or in additional territories, the medical and
commercial potential of additional indications for Soliris, failure to satisfactorily address the issues raised by the U.S. Food and Drug
Administration (FDA) in the March 2013 Warning Letter and Form 483s issued by the FDA, costs, expenses and capital requirements,
cash outflows, cash from operations, status of reimbursement, price approval and funding processes in various countries worldwide,
progress in developing commercial infrastructure and interest about our products and our product candidates in the patient, physician
and payer communities, the safety and efficacy of our products and our product candidates, estimates of the potential markets and
estimated commercialization dates for our products and our product candidates around the world, sales and marketing plans, any
changes in the current or anticipated market demand or medical need for our products or our product candidates, status of our ongoing
clinical trials for our product candidates, commencement dates for new clinical trials, clinical trial results, evaluation of our clinical
trial results by regulatory agencies, the adequacy of our pharmacovigilance and drug safety reporting processes, prospects for
regulatory approval of our product candidates, need for additional research and testing, the uncertainties involved in the drug
development process and manufacturing, performance and reliance on third party service providers, our future research and
development activities, plans for acquired programs, our ability to develop and commercialize products with our collaborators,
assessment of competitors and potential competitors, the outcome of challenges and opposition proceedings to our intellectual
property, assertion or potential assertion by third parties that the manufacture, use or sale of our products infringes their intellectual
property, estimates of the capacity of manufacturing and other service facilities to support our products and our product candidates,
potential costs resulting from product liability or other third party claims, the sufficiency of our existing capital resources and
projected cash needs, the possibility that expected tax benefits will not be realized, assessment of impact of recent accounting
pronouncements, declines in sovereign credit ratings or sovereign defaults in countries where we sell our products, delay of collection
or reduction in reimbursement due to adverse economic conditions or changes in government and private insurer regulations and
approaches to reimbursement, uncertainties surrounding government investigations, including our Securities and Exchange
Commission (SEC) and U.S. Department of Justice (DOJ) investigations, the short and long term effects of other government
healthcare measures, the effect of interest rate increases, and the effect of shifting foreign exchange rates. Words such as “anticipates,”
“expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” variations of such words and similar expressions are intended to
identify such forward-looking statements, although not all forward-looking statements contain these identifying words. These
statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to
predict; therefore, actual results may differ materially from those expressed or forecasted in any such forward-looking statements.
Such risks and uncertainties include, but are not limited to, those discussed later in this report under the section entitled “Risk
Factors”. Unless required by law, we undertake no obligation to update publicly any forward-looking statements, whether because of
new information, future events or otherwise. However, readers should carefully review the risk factors set forth in this and other
reports or documents we file from time to time with the SEC.

Item 1.

Overview

BUSINESS.
(dollars and shares in thousands)

We are a biopharmaceutical company focused on serving patients with devastating and ultra-rare disorders through the

innovation, development and commercialization of life-transforming therapeutic products.

In our complement franchise, Soliris is the first and only therapeutic approved for patients with either paroxysmal nocturnal
hemoglobinuria (PNH), a life-threatening and ultra-rare genetic blood disorder, or atypical hemolytic uremic syndrome (aHUS), a
life-threatening and ultra-rare genetic disease. PNH and aHUS are two severe and ultra-rare disorders resulting from chronic
uncontrolled activation of the complement component of the immune system.

In our metabolic franchise, we market Strensiq for the treatment of patients with Hypophosphatasia (HPP) and Kanuma for the
treatment of patients with Lysosomal Acid Lipase Deficiency (LAL-D). HPP is a genetic ultra-rare disease characterized by defective
bone mineralization that can lead to deformity of bones and other skeletal abnormalities. LAL-D is a serious, life threatening ultra-rare
disease in which genetic mutations result in decreased activity of the Lysosomal Acid Lipase (LAL) enzyme leading to marked
accumulation of lipids in vital organs, blood vessels and other tissues.

We are also evaluating additional potential indications for eculizumab in other severe and devastating diseases in which
uncontrolled complement activation is the underlying mechanism, and we are progressing in various stages of development with
additional product candidates as potential treatments for patients with severe and life-threatening rare disorders.

We were incorporated in 1992. In June 2015, we acquired all of the outstanding shares of common stock of Synageva
BioPharma Corp. (Synageva), a publicly-held clinical-stage biotechnology company. The acquisition furthered our objective to
develop and commercialize life-transforming therapies for an increasing number of patients with devastating and rare diseases.

Products and Development Programs

We focus our product development programs on life-transforming therapeutics for devasting and ultra-rare diseases for which

current treatments are either non-existent or inadequate.

Marketed Products
Our marketed products include the following:

Product
Soliris (eculizumab)

Development Area

Hematology

Hematology/Nephrology

Strensiq (asfotase alfa)

Metabolic Disorders

Kanuma (sebelipase alfa)

Metabolic Disorders

Soliris (eculizumab)

Indication
Paroxysmal Nocturnal
Hemoglobinuria (PNH)

PNH Registry

Atypical Hemolytic Uremic
Syndrome (aHUS)

aHUS Registry
Hypophosphatasia (HPP)
HPP Registry

Lysosomal Acid Lipase Deficiency
(LAL-D)

LAL-D Registry

Development Stage

Commercial

Phase IV

Commercial

Phase IV
Commercial
Phase IV

Commercial

Phase IV

Soliris is designed to inhibit a specific aspect of the complement component of the immune system and thereby treat

inflammation associated with chronic disorders in several therapeutic areas, including hematology, nephrology, transplant rejection
and neurology. Soliris is a humanized monoclonal antibody that effectively blocks terminal complement activity at the doses currently
prescribed. The initial indication for which we received approval for Soliris is PNH.

Paroxysmal Nocturnal Hemoglobinuria (PNH)

PNH is a debilitating and life-threatening, ultra-rare genetic blood disorder defined by chronic uncontrolled complement
activation leading to the destruction of red blood cells (hemolysis). The chronic hemolysis in patients with PNH may be associated
with life-threatening thromboses, recurrent pain, kidney disease, disabling fatigue, impaired quality of life, severe anemia, pulmonary
hypertension, shortness of breath and intermittent episodes of dark-colored urine (hemoglobinuria). We continue to work with
researchers to expand the base of knowledge in PNH and the utility of Soliris to treat patients with PNH. Soliris is approved for the
treatment of PNH in the United States, Europe, Japan and in several other territories. We are sponsoring a multinational registry to
gather information regarding the natural history of patients with PNH and the longer term outcomes during Soliris treatment. In April
2015, the European Commission (EC) approved an update to the European Union (EU) label that supports Soliris treatment for
patients with PNH regardless of history of transfusion and additional updates to inform physicians to make treatment decisions based
on elevated hemolysis and the presence of common symptoms associated with PNH. Additionally, Soliris has been granted orphan
drug designation for the treatment of PNH in the United States, Europe, Japan and several other territories.

Atypical Hemolytic Uremic Syndrome (aHUS)

aHUS is a severe and life-threatening genetic ultra-rare disease characterized by chronic uncontrolled complement activation and

thrombotic microangiopathy (TMA), the formation of blood clots in small blood vessels throughout the body, causing a reduction in
platelet count (thrombocytopenia) and life-threatening damage to the kidney, brain, heart and other vital organs. Soliris is approved for
the treatment of pediatric and adult patients with aHUS in the United States, Europe and Japan. In April 2015, the EC approved an
update to the EU label for Soliris treatment for patients with aHUS that included new efficacy data which specifies that longer-term
treatment with Soliris is associated with a greater proportion of patients achieving clinically significant benefits, including complete
TMA response and hematologic normalization, as well as the importance of sustained Soliris therapy. In addition, the FDA and EC
have granted Soliris orphan drug designation for the treatment of patients with aHUS.

Strensiq (asfotase alfa)
Hypophosphatasia (HPP)

HPP is an ultra-rare genetic and progressive metabolic disease in which patients experience devastating effects on multiple
systems of the body, leading to debilitating or life-threatening complications. HPP is characterized by defective bone mineralization
that can lead to deformity of bones and other skeletal abnormalities, as well as systemic complications such as profound muscle
weakness, seizures, pain, and respiratory failure leading to premature death in infants.

Strensiq, a targeted enzyme replacement therapy, is the first and only approved therapy for patients with HPP, and is designed to

directly address underlying causes of HPP by aiming to restore the genetically defective metabolic process, thereby preventing or
reversing the severe and potentially life-threatening complications in patients with HPP. In July 2015, Japan’s Ministry of Health.
Labour and Welfare (MHLW) approved Strensiq for the treatment of patients with HPP. On September 1, 2015, we announced that
the EC granted marketing authorization for Strensiq for the treatment of patients with pediatric-onset HPP. On October 23, 2015, we
announced that the FDA approved Strensiq for patients with perinatal-, infantile- and juvenile-onset HPP.

Kanuma (sebelipase alfa)
Lysosomal Acid Lipase Deficiency (LAL Deficiency or LAL-D)

LAL-D is a serious, life-threatening ultra-rare disease associated with premature mortality and significant morbidity. LAL-D is a
chronic disease in which genetic mutations result in decreased activity of the LAL enzyme that leads to marked accumulation of lipids
in vital organs, blood vessels, and other tissues, resulting in progressive and systemic organ damage including hepatic fibrosis,
cirrhosis, liver failure, accelerated atherosclerosis, cardiovascular disease, and other devastating consequences.

Kanuma, a recombinant form of the human LAL enzyme, is the only enzyme-replacement therapy that is approved for the
treatment for patients with LAL-D. On September 1, 2015, Alexion announced that the EC granted marketing authorization of
Kanuma for long-term enzyme replacement therapy in patients of all ages with LAL-D. On December 8, 2015, we announced that the
FDA approved Kanuma for the treatment of patients with LAL-D. In addition, a New Drug Application (NDA) for Kanuma has been
submitted to Japan’s MHLW.

Clinical Development Program

Our programs, including investigator sponsored clinical programs, include the following:

Product

Development Area

Soliris (eculizumab)

Neurology

Indication
Myasthenia Gravis (MG)

Transplant

cPMP (ALXN 1101)

Metabolic Disorders

Neuromyelitis Optica Spectrum
Disorder (NMOSD)
Delayed Kidney Transplant Graft
Function (DGF)
Antibody Mediated Rejection (AMR)
Presensitized Renal Transplant - Living
Donor
Antibody Mediated Rejection (AMR)
Presensitized Renal Transplant -
Deceased Donor
Treatment of Antibody Mediated
Rejection (AMR) Following Renal
Transplantation*
MoCD Type A

Inflammatory Disorders

Metabolic Disorders

GI Graft versus Host Disease
Anti-phospholipid Syndrome
Mucopolysaccharidoses IIIB
(MPS IIIB)

Next Generation
Complement Inhibitor
Next Generation
Complement Inhibitor

Paroxysmal Nocturnal
Hemoglobinuria (PNH)

ALXN 1007

SBC-103

ALXN 1210

ALXN 5500

* Investigator Initiated Trial

Soliris (eculizumab)

Neurology
Myasthenia Gravis (MG)

Development Stage

Phase III
Phase III

Phase III

Phase II

Phase II / III

Phase II
Phase II

Phase I / II

Phase I

MG is an ultra-rare autoimmune syndrome characterized by complement activation leading to the failure of neuromuscular

transmission. We have completed enrollment of patients in a Phase III multinational, placebo-controlled registration trial of
eculizumab in patients with refractory generalized MG, and dosing continues. The FDA, EC and MHLW have granted orphan drug
designation for eculizumab as a treatment for patients with MG.
Neuromyelitis Optica Spectrum Disorder (NMOSD)

NMOSD is a severe and ultra-rare autoimmune disease of the central nervous system (CNS) that primarily affects the optic
nerves and spinal cord. Enrollment and dosing are ongoing in a global, randomized, double-blind, placebo-controlled to evaluate
eculizumab as a treatment for patients with relapsing NMOSD. The FDA, EC, and MHLW have each granted orphan designation for
eculizumab as a treatment for patients with NMOSD.

Transplant
Delayed Kidney Transplant Graft Function (DGF)

DGF is the term used to describe the failure of a kidney or other organs to function immediately after transplantation due to

ischemia-reperfusion and immunological injury. Enrollment is complete in a single, multinational, placebo-controlled DGF
registration trial and patient follow-up is ongoing. Eculizumab has been granted orphan drug designation for DGF by the FDA and the
EC granted orphan drug designation to eculizumab for prevention of DGF after solid organ transplantation.

Antibody Mediated Rejection (AMR) in Presensitized Kidney Transplant Patients

AMR is the term used to describe a type of transplant rejection that occurs when the recipient has antibodies to the donor
organ. Enrollment in a multi-national, multi-center controlled clinical trial of eculizumab in presensitized kidney transplant patients at
elevated risk for AMR who received kidneys from deceased organ donors was completed in March 2013 and patient follow-up in the
trial is continuing. In September 2013, researchers presented positive preliminary data from the eculizumab deceased-donor AMR
kidney transplant study. In May 2015, new data from the Phase II single-arm deceased-donor transplant trial of eculizumab in
prevention of acute AMR was presented and was consistent with previous positive reports.

In January 2015, we reported results from a randomized, open-label, multicenter Phase II clinical trial of eculizumab

presensitized kidney transplant patients at an elevated risk of AMR who received kidneys from living donors. The primary composite
endpoint of the trial did not reach statistical significance. Patient follow-up and data analyses are ongoing and based on discussions
with regulators, we are developing plans for next steps for eculizumab in AMR.

The EC granted orphan drug designation to eculizumab for the prevention of graft rejection following solid organ

transplantation.

cPMP (ALXN 1101)
Molybdenum Cofactor Deficiency (MoCD) Disease Type A (MoCD Type A)

MoCD Type A is an ultra-rare metabolic disorder characterized by severe and rapidly progressive neurologic damage and death
in newborns. MoCD Type A results from a genetic deficiency in cyclic Pyranopterin Monophosphate (cPMP), a molecule that enables
the function of certain enzymes and the absence of which allows neurotoxic sulfite to accumulate in the brain. To date, there is no
approved therapy available for MoCD Type A. There has been some early clinical experience with the recombinant cPMP
replacement therapy in a small number of children with MoCD Type A, and we have completed enrollment in a natural history study
in patients with MoCD Type A. In October 2013, cPMP received Breakthrough Therapy Designation from the FDA for the treatment
of patients with MoCD Type A. Evaluation of our synthetic form of cPMP replacement therapy in a Phase I healthy volunteer study is
complete. In addition, we completed enrollment in a multi-center, multinational open-label clinical trial of synthetic cPMP in patients
with MoCD Type A switched from treatment with recombinant cPMP. Activities have commenced for the Phase II/III pivotal
open-label, single-arm trial of ALXN1101 for treatment-naïve neonates with MoCD Type A.

ALXN 1007

ALXN 1007 is a novel humanized antibody designed to target rare and severe inflammatory disorders and is a product of our

proprietary antibody discovery technologies. We have completed enrollment in both a Phase I single-dose, dose escalating safety and
pharmacology study in healthy volunteers, as well as in a multi-dose, dose escalating safety and pharmacology study in healthy
volunteers. A proof-of-concept study in patients with an ultra-rare disorder, gastrointestinal graft versus host disease (GI-GVHD), is
ongoing. Acute GI-GVHD is an immune-mediated disease and a complication of stem cell transplantation occurring in 10-12 percent
of allogenic hematopoietic stem cell transplants. Patients with severe acute GI-GVHD have a 30-40 percent mortality rate within the
first six months post-transplant. The study is evaluating patients with GI-GVHD following bone marrow or hematopoietic stem cell
transplant experience engrafted hematopoietic cells that attack host gastrointestinal tissues in the first 100 days post-transplant causing
damage to the GI tract, liver and skin. In December 2015, we announced that interim data from a Phase II study showed an overall 28
day acute GI-GVHD response rate of 80 percent, which supports the continued advancement of ALXN 1007 in GI-GVHD.

In addition, enrollment in a Phase II proof-of-concept study in patients with non-criteria manifestations of anti-phospholipid
syndrome (APS) was discontinued early due to recruitment difficulties. The study is ongoing for initially enrolled patients. APS is an
ultra-rare autoimmune, hypercoagulable state caused by antiphospholipid antibodies.

SBC-103
Mucopolysaccharidosis IIIB (MPS IIIB)

MPS IIIB is a rare, devastating and life-threatening disease which typically presents in children during the first few years
of life. Genetic mutations result in decreased activity of the alpha-N-acetyl-glucosaminidase (NAGLU) enzyme, which leads to
a buildup of abnormal amounts of heparan sulfate (HS) in the brain and throughout the body. Over time, this unrelenting
systemic accumulation of HS causes progressive and severe cognitive decline, behavioral problems, speech loss, increasing loss

of mobility, and premature death. Current treatments are palliative for the behavioral problems, sleep disturbances, seizures, and other
complications, and these treatments do not address the root cause of MPS IIIB or stop disease progression.

SBC-103, a recombinant form of natural human NAGLU is designed to replace the missing (or deficient) NAGLU enzyme.
SBC-103 was granted orphan drug designation by the FDA in April 2013 and by the European Medicines Agency (EMA) in June
2013. It received Fast Track designation by the FDA in January 2015. In June 2015, the first-in-human trial of patients with MPS IIIB
reached its targeted enrollment of nine patients, and the trial is ongoing. In December 2015, we announced interim data in the Phase
I/II trial showing a dose-dependent reduction of heparin sulfate in cerebrospinal fluid across three dosing cohorts. Escalated dosing of
SBC-103 will commence in the first half of 2016.

ALXN 1210

ALXN 1210 is a next-generation complement inhibitor in development for PNH and other indications. Phase I data from the
first-in-human single-ascending dose study of ALXN 1210 was published in the journal Blood in December 2015. Results showed that
ALXN 1210 was well-tolerated in healthy volunteers and the mean terminal half-life was extended to 32 days, compared to Soliris,
which has a terminal half-life of 9 days. Based upon longer terminal half-life and healthy volunteer studies, ALXN 1210 is suitable for
longer dosing intervals than Soliris. A multiple-ascending dose study of ALXN 1210 is ongoing to further evaluate the safety and
efficacy of ALXN 1210.

In addition, we have two ongoing clinical studies of ALXN 1210 in patients with PNH. Preliminary data in a Phase I/II

dose-escalating study showed a rapid reduction of lactate dehydrogenase (LDH) following the initial dose. Alexion also has initiated
an open-label, multi-dose Phase II study of ALXN 1210 in patients with PNH that is designed to measure change in LDH levels and
safety in several dosing cohorts and intervals.

Manufacturing

We currently rely on internal manufacturing facilities and third party contract manufacturers, including Lonza Group AG and its

affiliates (Lonza) to supply clinical and commercial quantities of our commercial products and product candidates. Our internal
manufacturing facilities include our Rhode Island manufacturing facility (ARIMF), and facilities in Massachusetts and Georgia. We
also utilize third party contract manufacturers for other manufacturing services including purification, product filling, finishing,
packaging, and labeling.

We have various agreements with Lonza through 2028, with remaining total non-cancellable commitments of approximately
$1,156,980. If we terminate certain supply agreements with Lonza without cause, we will be required to pay for product scheduled for
manufacture under our arrangements. Under an existing arrangement with Lonza, we also pay Lonza a royalty on sales of Soliris
manufactured at ARIMF and a payment with respect to sales of Soliris manufactured at Lonza facilities. During 2015, we entered into
a new supply agreement with Lonza whereby Lonza will construct a new manufacturing facility dedicated to Alexion manufacturing
at its existing Portsmouth, New Hampshire facility.

In addition to Lonza, we have non-cancellable commitments of approximately $36,400 through 2019 with other third party

manufacturers.

In March 2013, we received a Warning Letter (Warning Letter) from the FDA regarding compliance with current Good
Manufacturing Practices (cGMP) at ARIMF. The Warning Letter followed receipt of a Form 483 Inspectional Observations by the
FDA in connection with an FDA inspection that concluded in August 2012. The observations relate to commercial and clinical
manufacture of Soliris at ARIMF. We responded to the Warning Letter in a letter to the FDA dated in April 2013. As previously
announced, the FDA issued Form 483s in August 2014 and August 2015 relating to observations at ARIMF. The inspectional
observations from the August 2015 letter have since been closed out by the FDA. The observations are inspectional and do not
represent a final FDA determination of compliance. We continue to manufacture products, including Soliris, in this facility. While the
resolution of the issues raised in the Warning Letter is difficult to predict, we do not currently believe a loss related to this matter is
probable or that the potential magnitude of such loss or range of loss, if any, can be reasonably estimated.

In April 2014, we purchased a fill/finish facility in Athlone, Ireland. Following refurbishment of the facility, and after

successful completion of the appropriate validation processes and regulatory approvals, the facility will become our first
company-owned fill/finish facility for our commercial and clinical products. In November 2015, the construction of office, laboratory
and packaging facilities in Dublin, Ireland was completed. In May 2015, we announced plans to construct a new biologics
manufacturing facility on our existing property in Dublin, Ireland, which is expected to be completed by 2020.

Sales and Marketing

We have established a commercial organization to support current and future sales of our products in the United States, Europe,

Japan, Asia Pacific countries, and other territories. Our sales force is small compared to that of other drugs with similar revenues;
however, we believe that a relatively smaller sales force is appropriate to effectively market our products due to the incidence and
prevalence of rare diseases. If we receive regulatory approval in new territories or for new products or indications, we may expand our
own commercial organizations in such territories and market and sell our products through our own sales force in these territories.
However, we evaluate each jurisdiction on a country-by-country basis, and, in certain territories, we promote our products in
collaboration with marketing partners or rely on relationships with one or more companies with established distribution systems and
direct sales forces in certain countries.

Customers

Our customers are primarily comprised of distributors, pharmacies, hospitals, hospital buying groups, and other health care

providers. In some cases, we may also sell our products to governments and government agencies.
During 2015 and 2014, sales to our largest customer accounted for 18% of net product sales.
Because of factors such as the pricing of our products, the limited number of patients, the short period from product sale to

patient use and the lack of contractual return rights, customers often carry limited inventory. We also monitor inventory within our
sales channels to determine whether deferrals are appropriate based on factors such as inventory levels compared to demand,
contractual terms and financial strength of distributors.

Please also see "Management’s Discussion and Analysis – Net Product Sales," and Note 18 of the Consolidated Financial

Statements included in this Annual Report on Form 10-K, for financial information about geographic areas.

Intellectual Property Rights and Market Exclusivity

Patents and other intellectual property rights are important to our business. We own or license a number of patents in the U.S.

and foreign countries that cover our products and investigational compounds; also we file and prosecute patent applications covering
new technologies and inventions that are meaningful to our business. In addition to patents, we rely on trade secrets, know-how,
trademarks, regulatory exclusivity and other forms of intellectual property. Our intellectual property rights have material value and we
act to protect them.

In the biopharmaceutical industry, two forms of intellectual property generally determine the period of a product’s market
exclusivity: patent rights and regulatory forms of exclusivity. During the period of market exclusivity an innovative product generally
realizes most of its commercial value.

Patents provide the owner with a right to exclude others from practicing an invention. In our business, patents may cover the

active ingredients, uses, formulations, doses, administrations, delivery mechanisms, manufacturing processes and other aspects of a
product. The period of patent protection for any given product may depend on the expiration date of various patents and may differ
from country to country according to the type of patents, the scope of coverage and the remedies for infringement available in a
country.

Most of our products and investigational compounds are protected by patents with varying terms that depend on the type of

patent and its filing date. However, a significant portion of a product's patent life can elapse during the time it takes to develop and
obtain regulatory approval of the product. As compensation for such delay certain countries will extend a patent’s term, subject to a
number of factors and caps.

Regulatory forms of exclusivity are another source of valuable rights that can contribute toward market exclusivity for an

innovative biopharmaceutical product. Many developed countries provide such non-patent incentives to develop medicines. In the
U.S., Europe and Japan, for instance, regulatory intellectual property rights provide incentives to develop medicines for rare diseases,
or orphan drugs, and medicines for pediatric patients. Those countries and others also provide data protection for a period of time after
the approval of a new drug, during which regulatory agencies may not rely on the innovator’s data to approve a biosimilar or generic
copy. Regulatory forms of exclusivity can work in conjunction with patents to strengthen market exclusivity, and in countries where
patent protection has expired or does not exist, regulatory forms of exclusivity can extend a product’s market exclusivity period.

Soliris Exclusivity

With respect to Soliris, we own an issued U.S. patent that covers the eculizumab composition of matter and will expire

in 2021, taking into account patent term extension. Soliris is also protected in the U.S. by regulatory data exclusivity until 2019

and by orphan drug exclusivity for treating aHUS until 2018. In Europe we have supplementary protection certificates that extend
rights associated with a composition of matter patent until 2020 in certain countries. Soliris is also protected in Europe by orphan drug
exclusivity until 2019 for PNH and until 2023 for aHUS. In addition to the foregoing patent and regulatory protections, we own
pending patent applications that are directed to various aspects of using and making eculizumab and which may provide additional
protection for Soliris.
Strensiq Exclusivity

With respect to Strensiq, we own an issued U.S. patent that covers the asfotase alfa composition of matter and will expire in
2026. We are applying for an extension of the U.S. patent term. Strensiq is also protected in the U.S. by orphan drug exclusivity until
2022 and by regulatory data exclusivity until 2027. In Europe, we own two issued patents that cover the asfotase alfa composition of
matter and will expire in 2025 and 2028. We are applying for supplementary protection certificates in the European countries. Strensiq
is also protected in Europe by orphan drug exclusivity and regulatory data exclusivity until 2025. In other countries we own
corresponding patents that will expire between 2025 and 2028, not including possible extensions.
Kanuma Exclusivity

With respect to Kanuma, we own issued patents in the U.S., Europe adn other countries that cover methods of using the product

to treat LAL-D and will expire in 2031. The European patent is under challenge in an administrative opposition proceeding. An
exclusively licensed composition of matter patent also protects Kanuma in certain European countries until it expires in 2021, though
we are also applying for supplementary protection certificates in those countries. In the U.S. Kanuma also is protected by orphan drug
exclusivity until 2022 and by regulatory data exclusivity until 2027. In Europe it is protected by orphan drug exclusivity and
regulatory data exclusivity until 2025.
Soliris, Strensiq, and Kanuma Regulatory Protection

As noted above, for each of Soliris, Strensiq and Kanuma we rely on regulatory forms of exclusivity such as data protection and
orphan drug protection to support the product’s market exclusivity. Specific aspects of the laws governing regulatory exclusivity vary
by country, but most forms of regulatory exclusivity do not prevent competitive products from gaining regulatory approval on the
basis of the competitor’s own safety and efficacy data, even when the competitive product is a biosimilar or generic copy. In certain
countries, however, orphan drugs can obtain a period of exclusivity during which no competitive product containing the same drug
may be approved for the same orphan indication.

We also own U.S. and foreign patents and patent applications that protect our investigational compounds and product candidates.
At present, it is not known whether any such investigational compound or product candidate will be approved for human use and sale.

License and Collaboration Agreements

In March 2015, we entered into an agreement with a third party that allowed us to exercise an option with another third party for

exclusive, worldwide, perpetual license rights to a specialized technology and other intellectual property, and we simultaneously
exercised the option. Due to the early stage of these assets, we recorded expense for the payments of $47,000 during the first quarter
2015.

In March 2015, we entered into a collaboration agreement with a third party that allows us to identify and optimize drug
candidates. Alexion will have the exclusive worldwide rights to develop and commercialize products arising from the collaboration.
Due to the early stage of the assets we are licensing in connection with the collaboration, we recorded expense for the upfront payment
of $15,000 during the first quarter 2015. In addition, we could be required to pay up to an additional $250,750 if certain development,
regulatory, and commercial milestones are met over time, as well as royalties on commercial sales.

In January 2015, we entered into a license agreement with a third party to obtain an exclusive research, development and

commercial license for specific therapeutic molecules. Due to the early stage of these assets, we recorded expense for the upfront
payment of $50,000 during the first quarter 2015. In addition, we could be required to pay up to an additional $822,000 if certain
development, regulatory, and commercial milestones are met over time, as well as royalties on commercial sales.

In December 2014, we entered into an agreement with X-Chem Pharmaceuticals (X-Chem) that allows us to identify
novel drug candidates from X-Chem's proprietary drug discovery engine. Alexion will have the exclusive worldwide rights to
develop and commercialize up to three targets arising from the collaboration. Due to the early stage of these assets, we recorded
expense for an upfront payment of $8,000. In addition, for each drug target, to a maximum of three targets, we could be

required to make additional payments upon the achievement of specified research, development and regulatory milestones up to
$75,000, as well as royalties on commercial sales.

In January 2014, we entered into an agreement with Moderna Therapeutics, Inc. (Moderna) that provides the option to purchase

drug products for clinical development and commercialization of Moderna's messenger RNA (mRNA) therapeutics to treat rare
diseases. Due to the early stage of these assets, we recorded expense for an upfront payment of $100,000 in 2014. We will also be
responsible for funding research activities under the program. In addition, for each drug target, up to a maximum of ten targets,
would could be required to make an option exercise payment of $15,000 and to pay up to an additional $120,000 with respect to a rare
disease product and $400,000 with respect to a non-rare disease product in development and sales milestones if the specific milestones
are met over time as well as royalties on commercial sales.

In July 2013, we entered into a license and collaboration agreement with Ensemble Therapeutics Corporation for the

identification, development and commercialization of therapeutic candidates based on specific drug targets. Due to the early stage of
these assets, we recorded expense for an upfront payment of $11,500 during the third quarter of 2013. We will also be responsible for
funding research activities under the program. In addition, for each drug target, up to a maximum of four targets, we could be
required to pay up to an additional $90,750 in development milestones as the specific milestones are met over time. The agreement
also provides for royalty payments on commercial sales of each product developed under the agreement.

In January 2013, we entered into a license agreement for a technology, which provides an exclusive research license and an
option for an exclusive commercial license for specific targets and products to be developed. Due to the early stage of this asset, we
recorded expense for an upfront payment of $3,000 during the first quarter of 2013. We will also be required to pay annual
maintenance fees during the term of the arrangement. In addition, for each target, up to a maximum of six targets we develop, we
could be required to pay up to an additional $70,500 in license fees, development and sales milestones as the specific milestones are
met over time.

Government Regulation
Drug Development and Approval in the U.S.

The preclinical studies and clinical testing, manufacture, labeling, storage, record keeping, advertising, promotion, export, and
marketing, among other things, of our products and product candidates, including Soliris®, Strensiq® and Kanuma™, are subject to
extensive regulation by governmental authorities in the United States, the European Union and other territories. In the United States,
pharmaceutical products are regulated by the FDA under the Federal Food, Drug, and Cosmetic Act and other laws, including, in the
case of biologics, the Public Health Service Act. Our three approved products are regulated by the FDA as biologics. Biologics require
the submission of a Biologics License Application (BLA) and approval by the FDA prior to being marketed in the United States. In
the case of Kanuma, which is derived from egg whites from select hens, we also submitted a New Animal Drug Application (NADA)
for approval by the FDA. Manufacturers of biologics and drugs derived from animal origin may also be subject to state regulation.
Failure to comply with FDA requirements, both before and after product approval, may subject us and/or our partners, contract
manufacturers, and suppliers to administrative or judicial sanctions, including FDA refusal to approve applications, warning letters,
product recalls, product seizures, total or partial suspension of production or distribution, fines and/or criminal prosecution.
The process for obtaining regulatory approval to market a biologic is expensive, often takes many years, and can vary

substantially based on the type, complexity, and novelty of the product candidates involved. The steps required before a biologic may
be approved for marketing of an indication in the United States generally include:

(1) preclinical laboratory tests and animal tests;
(2) submission to the FDA of an investigational new drug (IND) application for human clinical testing, which must
become effective before human clinical trials may commence;
(3) adequate and well-controlled human clinical trials to establish the safety and efficacy of the product for its intended
use;
(4) submission to the FDA of a BLA or supplemental BLA;
(5) FDA pre-approval inspection of the manufacturing sites identified in the BLA; and
(6) FDA review and approval of the BLA or supplemental BLA.

Preclinical studies include laboratory evaluation of product chemistry and formulation, as well as toxicological and
pharmacological animal studies to assess the potential safety and efficacy of the product candidate. Preclinical safety tests

intended for submission to FDA must be conducted in compliance with FDA’s Good Laboratory Practice (GLP) regulations and the
United States Department of Agriculture’s Animal Welfare Act. The results of the preclinical tests, together with manufacturing
information and analytical data, are submitted to the FDA as part of an IND application which must become effective before human
clinical trials may be commenced. The IND will automatically become effective 30 days after receipt by the FDA, unless the FDA
before that time raises concerns about the drug candidate or the conduct of the trials as outlined in the IND. The IND sponsor and the
FDA must resolve any outstanding concerns before clinical trials can proceed. We cannot assure you that submission of an IND will
result in FDA authorization to commence clinical trials or that once commenced, other concerns will not arise. FDA may stop the
clinical trials by placing them on “clinical hold” because of concerns about the safety of the product being tested, or for other reasons.
Clinical trials involve the administration of the investigational product to healthy volunteers or to patients, under the supervision

of qualified principal investigators. The conduct of clinical trials is subject to extensive regulation, including compliance with the
FDA’s bioresearch monitoring regulations and Good Clinical Practice (GCP) requirements, which establish standards for conducting,
recording data from, and reporting the results of clinical trials, and are intended to assure that the data and reported results are credible
and accurate, and that the rights, safety, and well-being of study participants are protected. Clinical trials must be conducted in
accordance with protocols that detail the objectives of the study, the criteria for determining subject eligibility, the dosing plan, patient
monitoring requirements, timely reporting of adverse events, and other elements necessary to ensure patient safety, and any efficacy
criteria to be evaluated. Each protocol must be submitted to FDA as part of the IND; further, each clinical study at each clinical site
must be reviewed and approved by an independent institutional review board, prior to the recruitment of subjects. The institutional
review board’s role is to protect the rights and welfare of human subjects involved in clinical studies by evaluating, among other
things, the potential risks and benefits to subjects, processes for obtaining informed consent, monitoring of data to ensure subject
safety, and provisions to protect the subjects’ privacy. Foreign studies conducted under an IND application must meet the same
requirements that apply to studies being conducted in the United States. Data from a foreign study not conducted under an IND may
be submitted in support of a BLA if the study was conducted in accordance with GCP and FDA is able to validate the data.

Clinical trials are typically conducted in three sequential phases, but the phases may overlap and different trials may be initiated
with the same drug candidate within the same phase of development in similar or differing patient populations. Phase I studies may be
conducted in a limited number of patients, but are usually conducted in healthy volunteer subjects. The drug is usually tested for safety
and, as appropriate, for absorption, metabolism, distribution, excretion, pharmaco-dynamics and pharmaco-kinetics. Phase II usually
involves studies in a larger, but still limited patient population to evaluate preliminarily the efficacy of the drug candidate for specific,
targeted indications; to determine dosage tolerance and optimal dosage; and to identify possible short-term adverse effects and safety
risks.

Phase III trials are undertaken to gather additional information to evaluate the product’s overall risk-benefit profile, and to
provide a basis for physician labeling. Phase III trials evaluate clinical efficacy of a specific endpoint and test further for safety within
an expanded patient population at geographically dispersed clinical study sites. Phase I, Phase II or Phase III testing might not be
completed successfully within any specific time period, if at all, with respect to any of our product candidates. Results from one trial
are not necessarily predictive of results from later trials. Furthermore, the FDA, sponsor or institutional review board may suspend
clinical trials at any time on various grounds, including a finding that the subjects or patients are being exposed to an unacceptable
health risk.

We must register each controlled clinical trial, other than Phase I trials, on a website administered by National Institutes of

Health (NIH) (http://clinicaltrials.gov). Registration must occur not later than 21 days after the first patient is enrolled, and the
submission must include descriptive information (e.g., a summary in lay terms of the study design, type and desired outcome),
recruitment information (e.g., target number of participants and whether healthy volunteers are accepted), location and contact
information, and other administrative data (e.g., FDA identification numbers). Within one year of a trial’s completion, information
about the trial including characteristics of the patient sample, primary and secondary outcomes, trial results written in lay and
technical terms, and the full trial protocol must be submitted to the FDA. The results information is posted to the website unless the
drug has not yet been approved, in which case the FDA posts the information shortly after approval. A BLA, BLA supplement, and
certain other submissions to the FDA require certification of compliance with these clinical trials database requirements. There are
proposals to expand these registration requirements to additional studies.

The results of the preclinical studies and clinical trials, together with other detailed information, including information

on the manufacture and composition of the product and proposed labeling for the product, are submitted to the FDA as part of
a BLA requesting approval to market the product candidate for a proposed indication. Under the Prescription Drug User Fee
Act, as amended, the fees payable to the FDA for reviewing a BLA, as well as annual fees for commercial manufacturing
establishments and for approved products, can be substantial. The BLA review fee alone can exceed $2,000 subject to certain

limited deferrals, waivers and reductions that may be available. Each BLA submitted to the FDA for approval is typically reviewed for
administrative completeness and reviewability within 60 days following submission of the application. If the FDA finds the BLA
sufficiently complete, the FDA will “file” the BLA, thus triggering a full review of the application. The FDA may refuse to file any
BLA that it deems incomplete or not properly reviewable at the time of submission. FDA performance goals provide for action on an
application within 12 months of submission. The FDA, however, may not approve a drug within these established goals and its review
goals are subject to change from time to time because the review process is often significantly extended by FDA requests for
additional information or clarification. As part of its review, the FDA may refer the BLA to an advisory committee composed of
outside experts for evaluation and a recommendation as to whether the application should be approved. Although the FDA is not
bound by the recommendation of an advisory committee, the agency usually has followed such recommendations.

Further, the outcome of the review, even if generally favorable, may not be an actual approval but instead a “complete response
letter” communicating the FDA's decision not to approve the application, outlining the deficiencies in the BLA, and identifying what
information and/or data (including additional pre-clinical or clinical data) is required before the application can be approved. Even if
such additional information and data are submitted, the FDA may decide that the BLA still does not meet the standards for approval.
Data from clinical trials are not always conclusive and the FDA may interpret data differently than we do.

Before approving a BLA, the FDA typically will inspect the facilities at which the product is manufactured and will not approve

the product unless the facilities comply with the FDA’s cGMP requirements. The FDA may deny approval of a BLA if applicable
statutory or regulatory criteria are not satisfied, or may require additional testing or information, which can delay the approval process.
FDA approval of any application may include many delays or never be granted. If a product is approved, the approval will impose
limitations on the indicated uses for which the product may be marketed, may require that warning statements be included in the
product labeling, and may require that additional studies be conducted following approval as a condition of the approval. FDA also
may impose restrictions and conditions on product distribution, prescribing or dispensing in the form of a Risk Evaluation Mitigation
Strategies (REMS), or otherwise limit the scope of any approval. A REMS may include various elements, ranging from a medication
guide to limitations on who may prescribe or dispense the drug, depending on what the FDA considers necessary for the safe use of
the drug. To market a product for other indicated uses, or to make certain manufacturing or other changes, requires FDA review and
approval of a BLA Supplement or new BLA and the payment of applicable review fees. Further post-marketing testing and
surveillance to monitor the safety or efficacy of a product may be required. In addition, new government requirements may be
established that could delay or prevent regulatory approval of our product candidates under development.

In 2010, the Biologics Price Competition and Innovation Act (BPCI) was enacted, creating a statutory pathway for licensure, or
approval, of biological products that are biosimilar to, and possibly interchangeable with, reference biological products licensed under
the Public Health Service Act. The objectives of the BPCI are conceptually similar to those of the Drug Price Competition and Patent
Term Restoration Act of 1984, commonly referred to as the "Hatch-Waxman Act", which established abbreviated pathways for the
approval of small molecule drug products. Under the BPCI, innovator manufacturers of original reference biological products are
granted 12 years of exclusive use before biosimilar versions of such products can be licensed for marketing in the United States. This
means that the FDA may not approve an application for a biosimilar version of a reference biological product until 12 years after the
date of approval of the reference biological product (with a potential six-month extension of exclusivity if certain pediatric studies are
conducted and the results reported to FDA), although a biosimilar application may be submitted four years after the date of licensure
of the reference biological product. Additionally, the BPCI establishes procedures by which the biosimilar applicant must provide
information about its application and product to the reference product sponsor, and by which information about potentially relevant
patents is shared and litigation over patents may proceed in advance of approval. The BPCI also provides a period of exclusivity for
the first biosimilar to be determined by the FDA to be interchangeable with the reference product.

FDA has released guidance documents interpreting the BPCI in each of the last four years. These guidance documents, among
other things, elaborate on the definition of a biosimilar as a biological product that is highly similar to an already approved biological
product, notwithstanding minor differences in clinically inactive components, and for which there are no clinically meaningful
differences between the biosimilar and the approved biological product in terms of the safety, purity, and potency. More recently,
FDA has released guidance on the assignment of nonproprietary, clearly distinguishable product names for both biologic and
biosimilar products.

The FDA approved the first biosimilar product under the BPCI in 2015, and the agency continues to refine the procedures
and standards it will apply in implementing this approval pathway. We anticipate that contours of the BPCI will continue to be
defined as the statute is implemented over a period of years. This likely will be accomplished by a variety of means, including

FDA issuance of guidance documents, proposed regulations, and decisions in the course of considering specific applications. The
approval of a biologic product biosimilar to one of our products could have a material impact on our business because it may be
significantly less costly to bring to market and may be priced significantly lower than our products.

Both before and after the FDA approves a product, the manufacturer and the holder or holders of the BLA, and in the case of
Kanuma, the NADA, for the product are subject to comprehensive regulatory oversight. If ongoing regulatory requirements are not
satisfied or if safety problems occur after the product reaches the market, the FDA may at any time withdraw its approval or take
actions that would suspend marketing. For example, quality control and manufacturing procedures must conform, on an ongoing basis,
to cGMP requirements, and the FDA periodically subjects manufacturing facilities to unannounced inspections to assess compliance
with cGMP. Failure to comply with applicable cGMP requirements and other conditions of product approval may lead the FDA to
take regulatory action, including fines, recalls, civil penalties, injunctions, suspension of manufacturing operations, operating
restrictions, withdrawal of FDA approval, seizure or recall of products, and criminal prosecution. Accordingly, manufacturers must
continue to spend time, money, and effort to maintain cGMP compliance.

The FDA and other federal regulatory agencies also closely regulate the promotion of drugs and biologics through, among other
things, standards and regulations for direct-to-consumer advertising, communications regarding unapproved uses, industry-sponsored
scientific and educational activities, and promotional activities involving the Internet and social media. A product cannot be
commercially promoted before it is approved. After approval, product promotion can include only those claims relating to safety and
effectiveness that are consistent with the labeling approved by the FDA. Healthcare providers are permitted to prescribe drugs and
biologics for “off-label” uses - that is, uses not approved by the FDA and therefore not described in the product's labeling - because
the FDA does not regulate the practice of medicine. However, FDA regulations impose stringent restrictions on manufacturers'
communications regarding off-label uses. Broadly speaking, a manufacturer may not promote a drug or biologic for off-label use, but
may engage in non-promotional, balanced communication regarding off-label use under certain conditions. Failure to comply with
applicable FDA requirements and restrictions in this area may subject a company to adverse publicity and enforcement action by the
FDA, the Department of Justice, or the Office of the Inspector General of the Department of Health and Human Services, as well as
state authorities. Noncompliance could subject a company to a range of penalties that could have a significant commercial impact,
including civil and criminal fines and agreements that materially restrict the manner in which a company promotes or distributes drug
or biologic products.

Orphan Drug Designation in the United States, the European Union and Other Foreign Jurisdictions

Under the Orphan Drug Act, the FDA may grant orphan drug designation to drugs and biological products intended to treat a

“rare disease or condition,” which generally is a disease or condition that affects fewer than 200,000 individuals in the United States.
Orphan drug designation must be requested before submitting a BLA or supplemental BLA. After the FDA grants orphan drug
designation, the generic identity of the therapeutic agent and its potential orphan use are publicly disclosed by the FDA. Orphan drug
designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process. If a product
which has an orphan drug designation subsequently receives the first FDA approval for that drug or biologic for the indication for
which it has such designation, the product is entitled to an orphan exclusivity period, in which the FDA may not approve any other
applications to market the same drug or biologic for the same indication for seven years, except in limited circumstances, such as
where the sponsor of a different version of the product is able to demonstrate that its product is clinically superior to the approved
orphan drug product. This exclusivity does not prevent a competitor from obtaining approval to market a different product that treats
the same disease or condition or the same product to treat a different disease or condition. The FDA can revoke a product’s orphan
drug exclusivity under certain circumstances, including when the holder of the approved orphan drug application is unable to assure
the availability of sufficient quantities of the drug to meet patient needs. A sponsor of a product application that has received an
orphan drug designation is also granted tax incentives for clinical research undertaken to support the application. In addition, the FDA
will typically coordinate with the sponsor on research study design for an orphan drug and may exercise its discretion to grant
marketing approval on the basis of more limited product safety and efficacy data than would ordinarily be required.

Medicinal products: (a) that are used to treat or prevent life-threatening or chronically debilitating conditions that affect no

more than five in 10,000 people in the European Union; or (b) that are used to treat or prevent life-threatening or chronically
debilitating conditions and that, for economic reasons, would be unlikely to be developed without incentives; and (c) where no
satisfactory method of diagnosis, prevention or treatment of the condition concerned exists, or, if such a method exists, the
medicinal product would be of significant benefit to those affected by the condition, may be granted an orphan designation in the
European Union. The application for orphan designation must be submitted to the EMA and approved before an application is
made for marketing authorization for the product. Once authorized, orphan medicinal products are entitled to ten years of
market exclusivity. During this ten year period, with a limited number of exceptions, neither the competent authorities of the

European Union member states, the EMA, or the European Commission are permitted to accept applications or grant marketing
authorization for other similar medicinal products with the same therapeutic indication. However, marketing authorization may be
granted to a similar medicinal product with the same orphan indication during the ten year period with the consent of the marketing
authorization holder for the original orphan medicinal product or if the manufacturer of the original orphan medicinal product is
unable to supply sufficient quantities. Marketing authorization may also be granted to a similar medicinal product with the same
orphan indication if this latter product is safer, more effective or otherwise clinically superior to the original orphan medicinal product.
The period of market exclusivity may, in addition, be reduced to six years if it can be demonstrated on the basis of available evidence
that the original orphan medicinal product is sufficiently profitable not to justify maintenance of market exclusivity.

Soliris has received orphan drug designation for (a) the treatment of PNH and aHUS in the United States, the European Union,

and in several other territories; (b) the prevention of delayed graft function in renal transplant patients in the United States; (c) the
treatment of patients with myasthenia gravis in the United States, Japan, and the European Union; and (d) the prevention of graft
rejection and delayed graft rejection following solid organ transplantation in the European Union. In 2008, Strensiq received orphan
drug designation for the treatment of patients with HPP in the United States and the European Union, and in Japan in November 2014.
Furthermore, in 2010, Kanuma received orphan drug designation for the treatment of LAL-D in the United States and the European
Union. Orphan drug designation provides certain regulatory and filing fee advantages, including market exclusivity, except in limited
circumstances, for several years after approval.

Breakthrough Designation in the United States

With the passage of the Food and Drug Administration Safety Act (FDASIA) of 2012, Congress created the Breakthrough
Therapy designation program. FDA may grant Breakthrough Therapy status to a drug intended for the treatment of a serious condition
when preliminary clinical evidence indicates that the drug may demonstrate substantial improvement on a clinically significant
endpoint over existing therapies. The Breakthrough Therapy designation, which may be requested by a sponsor when filing or
amending an IND, is intended to facilitate and expedite the development and FDA review of a product candidate. Specifically, the
Breakthrough Therapy designation may entitle the sponsor to more frequent meetings with FDA during drug development, intensive
guidance on clinical trial design, and expedited FDA review by a cross-disciplinary team comprised of senior managers. The
designation does not guarantee a faster development or review time as compared to other drugs, however, nor does it assure that the
drug will obtain ultimate marketing approval by the FDA. Once granted, the FDA may withdraw this designation at any time. We
have received Breakthrough Therapy designations for Strensiq for HPP in perinatal-, infant-, and juvenile-onset patients; for Kanuma
in the treatment of LAL-D presenting in infants; and for cyclic Pyranopterin Monophosphate, intended to treat Molybdenum Cofactor
Deficiency Type A. Because the Breakthrough Therapy designation program is relatively new, it is difficult for us to predict the
impact that these designations will have on the development and FDA review of our products.

Foreign Regulation of Drug Development and Approval

In addition to regulations in the United States, we are subject to a variety of foreign regulatory requirements including governing

human clinical trials, marketing approval, and post-marketing regulation for drugs. The foreign regulatory approval process includes
all of the risks associated with FDA approval set forth above, as well as additional country-specific regulations. Whether or not we
obtain FDA approval for a product, we must obtain approval of a product by the comparable regulatory authorities of foreign countries
before we can commence clinical trials or marketing of the product in those countries. Approval by one regulatory authority does not
ensure approval by regulatory authorities in other jurisdictions. The approval process varies from country to country, can involve
additional testing beyond that required by FDA, and may be longer or shorter than that required for FDA approval. The requirements
governing the conduct of clinical trials, product licensing, pricing, and reimbursement vary greatly from country to country.
Under the European Union regulatory system, we may submit applications for marketing authorizations either under a

centralized, decentralized, or mutual recognition marketing authorization procedure. The centralized procedure provides
for the grant of a single marketing authorization for a medicinal product by the European Commission on the basis of a positive
opinion by the EMA. A centralized marketing authorization is valid for all European Union member states and three of the four
EFTA States (Iceland, Liechtenstein and Norway). The decentralized procedure and the mutual recognition procedure apply between
European Union member states. The decentralized marketing authorization procedure involves the submission of an application for
marketing authorization to the competent authority of all European Union member states in which the product is to be marketed.
One national competent authority, selected by the applicant, assesses the application for marketing authorization. The competent
authorities of the other European Union member states are subsequently required to grant marketing authorization for
their territory on the basis of this assessment, except where grounds of potential serious risk to

public health require this authorization to be refused. The mutual recognition procedure provides for mutual recognition of marketing
authorizations delivered by the national competent authorities of European Union member states by the competent authorities of other
European Union member states. The holder of a national marketing authorization may submit an application to the competent
authority of a European Union member state requesting that this authority recognize the marketing authorization delivered by the
competent authority of another European Union member state for the same medicinal product.

Similarly to the U.S., both marketing authorization holders and manufacturers of medicinal products are subject to

comprehensive regulatory oversight by the EMA and the competent authorities of the individual European Union member states both
before and after grant of the manufacturing and marketing authorizations. This includes control of compliance by the entities with
European Union cGMP rules, which govern quality control of the manufacturing process and require documentation policies and
procedures. We and our third party manufacturers are required to ensure that all of our processes, methods, and equipment are
compliant with cGMP.

Failure by us or by any of our third party partners, including suppliers, manufacturers, and distributors to comply with European

Union laws and the related national laws of individual European Union member states governing the conduct of clinical trials,
manufacturing approval, marketing authorization of medicinal products, both before and after grant of marketing authorization, and
marketing of such products following grant of authorization may result in administrative, civil, or criminal penalties. These penalties
could include delays in or refusal to authorize the conduct of clinical trials or to grant marketing authorization, product withdrawals
and recalls, product seizures, suspension, or variation of the marketing authorization, total or partial suspension of production,
distribution, manufacturing, or clinical trials, operating restrictions, injunctions, suspension of licenses, fines, and criminal penalties.
The European Union has had an established regulatory pathway for biosimilars since 2005 and has approved several biosimilar

products. The approval of a biosimilar of one of our products marketed in the European Union could have a material impact on our
business. The biosimilar may be less costly to bring to market, may be priced significantly lower than our products, and result in a
reduction in the pricing and reimbursement of our products.

Pharmaceutical Pricing and Reimbursement

Sales of pharmaceutical products depend in significant part on the extent of coverage and reimbursement from government
programs, including Medicare and Medicaid in the United States, and other third party payers. Third party payers are sensitive to the
cost of drugs and are increasingly seeking to implement cost containment measures to control, restrict access to, or influence the
purchase of drugs, biologicals, and other health care products and services. Governments may regulate reimbursement, pricing, and
coverage of products in order to control costs or to affect levels of use of certain products. Private health insurance plans may restrict
coverage of some products, such as by using payer formularies under which only selected drugs are covered, variable co-payments
that make drugs that are not preferred by the payer more expensive for patients, and by employing utilization management controls,
such as requirements for prior authorization or prior failure on another type of treatment. Payers may especially impose these obstacles
to coverage for higher-priced drugs such as those we sell. Consequently, all our products may be subject to payer-driven restrictions,
rendering patients responsible for a higher percentage of the total cost of drugs in the outpatient setting. This can lower the demand for
our products if the increased patient cost-sharing obligations are more than they can afford.

Medicare is a U.S. federal government insurance program that covers individuals aged 65 years or older, as well as individuals of

any age with certain disabilities, and individuals with End-Stage Renal Disease. The primary Medicare programs that may affect
reimbursement for Soliris are Medicare Part B, which covers physician services and outpatient care, and Medicare Part D, which
provides a voluntary outpatient prescription drug benefit. Medicare Part B provides limited coverage of certain outpatient drugs and
biologicals that are reasonable and necessary for diagnosis or treatment of an illness or injury. Under Part B, reimbursement for most
drugs is based on a fixed percentage above the applicable product’s average sales price (ASP). Manufacturers calculate ASP based on
a statutory formula and must report ASP information to the Centers for Medicare and Medicaid Services (CMS), the federal agency
that administers Medicare and the Medicaid Drug Rebate Program, on a quarterly basis. The current reimbursement rate for drugs and
biologicals in both the hospital outpatient department setting and the physician office setting is ASP + 6%.The rate for the physician
clinic setting is set by statute, but CMS has the authority to adjust the rate for the hospital outpatient setting on an annual basis. This
reimbursement rate may decrease in the future. In both settings, the amount of reimbursement is updated quarterly based on the
manufacturer’s submission of new ASP information.

Medicare Part D is a prescription drug benefit available to all Medicare beneficiaries. It is a voluntary benefit that is

implemented through private plans under contractual arrangements with the federal government. Similar to pharmaceutical
coverage through private health insurance, Part D plans negotiate discounts from drug manufacturers. Medicare Part D coverage
is available through private plans, and the list of prescription drugs covered by Part D plans varies by plan. However,

individual plans are required by statute to cover certain therapeutic categories and classes of drugs or biologicals and to have at least
two drugs in each unique therapeutic category or class, with certain exceptions.

Medicare Part A covers inpatient hospital benefits. Hospitals typically receive a single payment for an inpatient stay depending

on the Medicare Severity Diagnosis Related Group (MS-DRG) to which the inpatient stay is assigned. The MS-DRG for a hospital
inpatient stay varies based on the patient’s condition. Hospitals generally do not receive separate payment for drugs and biologicals
administered to patients during an inpatient hospital stay. As a result, hospitals may not have a financial incentive to utilize our
products for inpatients.

Beginning April 1, 2013, the Budget Control Act of 2011, Pub. L. No. 112-25, as amended by the American Taxpayer Relief Act

of 2012, Pub. L. 112-240, required Medicare payments for all items and services, including drugs and biologicals, to be reduced by
2% under sequestration (i.e., automatic spending reductions). Subsequent legislation extended the 2% reduction, on average, to 2025.
This 2% reduction in Medicare payments affects all Parts of the Medicare program and could impact sales of our products.

Medicaid is a government health insurance program for low-income children, families, pregnant women, and people with

disabilities. It is jointly funded by the federal and state governments, and it is administered by individual states within parameters
established by the federal government. Coverage and reimbursement for drugs and biologics thus varies by state. Drugs and biologics
may be covered under the medical or pharmacy benefit. State Medicaid programs may impose utilization management controls, such
as prior authorization, step therapy, or quantity limits on drugs and biologics. Medicaid also includes the Drug Rebate Program, under
which we are required to pay a rebate to each state Medicaid program for quantities of our products that are dispensed to Medicaid
beneficiaries and paid for by a state Medicaid program as a condition of having federal funds being made available to the states for our
products under Medicaid and Medicare Part B. Those rebates are based on pricing data reported by us on a monthly and quarterly
basis to CMS. These data include the average manufacturer price and the best price for each product we sell. As further described
below under “U.S. Healthcare Reform and Other U.S. Healthcare Laws,” the Patient Protection and Affordable Care Act, as amended
by the Health Care and Education Reconciliation Act of 2010 (collectively, the PPACA), made significant changes to the Medicaid
Drug Rebate Program that could negatively impact our results of operations.

Federal law requires that any company that participates in the Medicaid Drug Rebate Program also participate in the Public

Health Service’s 340B drug pricing program in order for federal funds to be available for the manufacturer’s drugs under Medicaid
and Medicare Part B. The 340B pricing program requires participating manufacturers to agree to charge statutorily-defined covered
entities no more than the 340B “ceiling price” for the manufacturer’s covered outpatient drugs. These 340B covered entities include a
variety of community health clinics and other entities that receive health services grants from the Public Health Service, as well as
hospitals that serve a disproportionate share of low-income patients. The 340B ceiling price is calculated using a statutory formula,
which is based on the average manufacturer price and rebate amount for the covered outpatient drug as calculated under the Medicaid
Drug Rebate Program. Changes to the definition of average manufacturer price and the Medicaid rebate amount under PPACA and
CMS’s issuance of final regulations implementing those changes also could affect our 340B ceiling price calculation for our products
and could negatively impact our results of operations. As described below under “U.S. Healthcare Reform and Other U.S. Healthcare
Laws,” PPACA expanded the 340B program to include additional types of covered entities but exempts “orphan drugs”-those
designated under section 526 of the FDCA, such as Soliris from the ceiling price requirements for these newly-eligible entities.

In order to be eligible to have our products paid for with federal funds under the Medicaid and Medicare Part B programs and

purchased by certain federal agencies, we participate in the Department of Veterans Affairs Federal Supply Schedule, or FSS, pricing
program, established by Section 603 of the Veterans Health Care Act of 1992. Under this program, we are obligated to make our
product available for procurement on an FSS contract and charge a price to four federal agencies, Department of Veterans Affairs,
Department of Defense, Public Health Service and Coast Guard that is no higher than the statutory Federal Ceiling Price, or FCP. The
FCP is based on the non-federal average manufacturer price, or Non-FAMP, which we calculate and report to the Department of
Veterans Affairs on a quarterly and annual basis. We also participate in the Tricare Retail Pharmacy program, established by Section
703 of the National Defense Authorization Act for FY 2008 and related regulations, under which we pay quarterly rebates on
utilization of innovator products that are dispensed through the Tricare Retail Pharmacy network to Tricare beneficiaries. The rebates
are calculated as the difference between Annual Non-FAMP and FCP.

Payers also are increasingly considering new metrics as the basis for reimbursement rates, such as ASP, average

manufacturer price, and actual acquisition cost. The existing data for reimbursement based on these metrics is relatively limited,
although certain states have begun to survey acquisition cost data for the purpose of setting Medicaid reimbursement rates. CMS
surveys and publishes retail community pharmacy acquisition cost information in the form of National Average Drug

Acquisition Cost, or NADAC, files to provide state Medicaid agencies with a basis of comparison for their own reimbursement and
pricing methodologies and rates. It may be difficult to project the impact of these evolving reimbursement mechanics on the
willingness of payers to cover our products.

Federal law requires that for a company to be eligible to have its products paid for with federal funds under the Medicaid
program as well as to be purchased by certain federal agencies and grantees, it also must participate in the Department of Veterans
Affairs (VA) Federal Supply Schedule (FSS) pricing program. To participate, we are required to enter into an FSS contract with the
VA, under which we must make our innovator "covered drugs" available to the "Big Four" federal agencies - the VA, the Department
of Defense (DoD) the Public Health Service, and the Coast Guard - at pricing that is capped pursuant to a statutory federal ceiling
price, or FCP, formula set forth in Section 603 of the Veterans Health Care Act of 1992 (VHCA). The FCP is based on a weighted
average non-federal average manufacturer price (Non-FAMP) which manufacturers are required to report on a quarterly and annual
basis to the VA. If a company misstates Non-FAMPs or FCPs it must restate these figures. Pursuant to the VHCA, knowing provision
of false information in connection with a Non-FAMP filing can subject a manufacturer to penalties of $100 for each item of false
information.

FSS contracts are federal procurement contracts that include standard government terms and conditions, separate pricing for each

product, and extensive disclosure and certification requirements. All items on FSS contracts are subject to a standard FSS contract
clause that requires FSS contract price reductions under certain circumstances where pricing is reduced to an agreed "tracking
customer." Further, in addition to the "Big Four" agencies, all other federal agencies and some non-federal entities are authorized to
access FSS contracts. FSS contractors are permitted to charge FSS purchasers other than the Big Four agencies "negotiated pricing"
for covered drugs that is not capped by the FCP; instead, such pricing is negotiated based on a mandatory disclosure of the
contractor’s commercial "most favored customer" pricing. We offer dual pricing on our FSS contract.

In addition, pursuant to regulations issued by the DoD TRICARE Management Activity, now the Defense Health Agency, to

implement Section 703 of the National Defense Authorization Act for Fiscal Year 2008, each of our covered drugs is listed on a
Section 703 Agreement under which we have agreed to pay rebates on covered drug prescriptions dispensed to TRICARE
beneficiaries by TRICARE network retail pharmacies. Companies are required to list their innovator products on Section 703
Agreements in order for those products to be eligible for DoD formulary inclusion. The formula for determining the rebate is
established in the regulations and our Section 703 Agreement and is based on the difference between the annual Non-FAMP and the
FCP (as described above, these price points are required to be calculated by us under the VHCA).

In addition, in some foreign countries, the proposed pricing for a drug must be approved before it may be lawfully marketed.
Moreover, the requirements governing drug pricing and reimbursement vary widely from country to country. For example, in the
European Union the sole legal instrument at the European Union level governing the pricing and reimbursement of medicinal products
is Council Directive 89/105/EEC (the Price Transparency Directive). The aim of the Price Transparency Directive is to ensure that
pricing and reimbursement mechanisms established in European Union member states are transparent and objective, do not hinder the
free movement and trade of medicinal products in the European Union and do not hinder, prevent or distort competition on the market.
The Price Transparency Directive does not, however, provide any guidance concerning the specific criteria on the basis of which
pricing and reimbursement decisions are to be made in individual European Union member states. Neither does it have any direct
consequence for pricing or levels of reimbursement in individual European Union member states. The national authorities of the
individual European Union member states are free to restrict the range of medicinal products for which their national health insurance
systems provide reimbursement and to control the prices and/or reimbursement of medicinal products for human use. Some individual
European Union member states adopt policies according to which a specific price or level of reimbursement is approved for the
medicinal product. Other European Union member states adopt a system of reference pricing, basing the price or reimbursement level
in their territory either, on the pricing and reimbursement levels in other countries, or on the pricing and reimbursement levels of
medicinal products intended for the same therapeutic indication. Furthermore, some European Union member states impose direct or
indirect controls on the profitability of the company placing the medicinal product on the market.

Health Technology Assessment (HTA) of medicinal products is becoming an increasingly common part of the pricing and
reimbursement procedures in some European Union member states. These countries include the United Kingdom, France, Germany
and Sweden. The HTA process in the European Union member states is governed by the national laws of these countries. HTA is the
procedure according to which the assessment of the public health impact, therapeutic impact and the economic and societal impact of
the use of a given medicinal product in the national healthcare systems of the individual country is conducted. HTA generally focuses
on the clinical efficacy and effectiveness, safety, cost, and cost-effectiveness of individual medicinal products as well as their potential
implications for the national healthcare system. Those elements of medicinal products are compared with other treatment options
available on the market.

The outcome of HTA may influence the pricing and reimbursement status for specific medicinal products within individual

European Union member states. The extent to which pricing and reimbursement decisions are influenced by the HTA of a specific
medicinal product vary between the European Union member states.

In 2011, Directive 2011/24/EU was adopted at the European Union level. This Directive concerns the application of patients'

rights in cross-border healthcare. The Directive is intended to establish rules for facilitating access to safe and high-quality
cross-border healthcare in the European Union. It also provides for the establishment of a voluntary network of national authorities or
bodies responsible for HTA in the individual European Union member states. The purpose of the network is to facilitate and support
the exchange of scientific information concerning HTAs. This could lead to harmonization of the criteria taken into account in the
conduct of HTA between European Union member states in pricing and reimbursement decisions and negatively impact price in at
least some European Union member states.

On a continuous basis, we engage with appropriate authorities in individual countries on the operational, reimbursement, price

approval and funding processes that are separately required in each country.

Fraud and Abuse

Pharmaceutical companies participating in federal healthcare programs like Medicare or Medicaid are subject to various U.S.
federal and state laws pertaining to healthcare “fraud and abuse,” including anti-kickback and false claims laws. Violations of U.S.
federal and state fraud and abuse laws may be punishable by criminal, civil and administrative sanctions, including fines, damages,
civil monetary penalties and exclusion from federal healthcare programs (including Medicare and Medicaid). Applicable U.S. statutes,
include, but are not limited to, the following:

•

The federal Anti-Kickback Statute prohibits, among other things, knowingly and willfully soliciting, offering, receiving, or
paying any remuneration, directly or indirectly, in cash or in kind, to induce or reward purchasing, ordering or arranging for
or recommending the purchase or order of any item or service for which payment may be made, in whole or in part, under a
federal healthcare program such as Medicare and Medicaid. Liability may be established without a person or entity having
actual knowledge of the federal Anti-Kickback Statute or specific intent to violate it. This statute has been interpreted to
apply broadly to arrangements between pharmaceutical manufacturers on the one hand and prescribers, patients, purchasers
and formulary managers on the other. In addition, PPACA amended the Social Security Act to provide that the government
may assert that a claim including items or services resulting from a violation of the federal anti-kickback statute constitutes a
false or fraudulent claim for purposes of the federal civil False Claims Act. A conviction for violation of the Anti-kickback
Statute requires mandatory exclusion from participation in federal health care programs. Although there are a number of
statutory exemptions and regulatory safe harbors protecting certain common activities from prosecution, the exemptions and
safe harbors are drawn narrowly, and those activities may be subject to scrutiny or penalty if they do not qualify for an
exemption or safe harbor.

The federal civil False Claims Act (FCA) prohibits, among other things, knowingly presenting, or causing to be presented
claims for payment of government funds that are false or fraudulent, or knowingly making, using or causing to be made or
used a false record or statement material to such a false or fraudulent claim, or knowingly concealing or knowingly and
improperly avoiding, decreasing, or concealing an obligation to pay money to the federal government. This statute also
permits a private individual acting as a “whistleblower” to bring actions on behalf of the federal government alleging
violations of the FCA and to share in any monetary recovery. Government enforcement agencies and private whistleblowers
have investigated pharmaceutical companies for or asserted liability under the FCA for a variety of alleged promotional and
marketing activities, such as providing free product to customers with the expectation that the customers would bill federal
programs for the product; providing consulting fees and other benefits to physicians to induce them to prescribe products;
engaging in promotion for “off-label” uses; and submitting inflated best price information to the Medicaid Rebate Program.

The federal False Statements Statute prohibits knowingly and willfully falsifying, concealing, or covering up a material fact
or making any materially false, fictitious or fraudulent statement or representation, or making or using any false writing or
document knowing the same to contain any materially false, fictitious or fraudulent statement or entry, in connection with the
delivery of or payment for healthcare benefits, items, or services.

The federal Civil Monetary Penalties Law authorizes the imposition of substantial civil monetary penalties against an
entity, such as a pharmaceutical manufacturer, that engages in activities including, among others (1) knowingly

presenting, or causing to be presented, a claim for services not provided as claimed or that is otherwise false or fraudulent
in any way; (2) arranging for or contracting with an individual or entity that is excluded from participation in federal health
care programs to provide items or services reimbursable by a federal health care program; (3) violations of the federal
Anti-Kickback Statute; or (4) failing to report and return a known overpayment.

•

The majority of states also have statutes similar to the federal anti-kickback law and false claims laws that apply to items and
services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payer.

The federal Open Payments program requires manufacturers of products for which payment is available under Medicare,
Medicaid or the State Children’s Health Insurance Program, to track and report annually to the federal government (for
disclosure to the public) certain payments and other transfers of value made to physicians and teaching hospitals. In addition,
several U.S. states and localities have enacted legislation requiring pharmaceutical companies to establish marketing
compliance programs, file periodic reports with the state, and/or make periodic public disclosures on sales, marketing,
pricing, clinical trials, and other activities. Other state laws prohibit certain marketing-related activities including the
provision of gifts, meals or other items to certain health care providers. Many of these laws and regulations contain
ambiguous requirements that government officials have not yet clarified. Given the lack of clarity in the laws and their
implementation, our reporting actions could be subject to the penalty provisions of the pertinent federal and state laws and
regulations.

Sanctions under federal and state fraud and abuse laws may include civil monetary penalties, exclusion of a manufacturer's

products from reimbursement under government programs, monetary damages, criminal fines, and imprisonment.

Federal and state authorities are continuing to devote significant attention and resources to enforcement of fraud and abuse laws

within the pharmaceutical industry, and private individuals have been active in alleging violations of the law and bringing suits on
behalf of the government under the FCA. For example, federal enforcement agencies recently have investigated certain
pharmaceutical companies’ product and patient assistance programs, including manufacturer reimbursement support services and
relationships with specialty pharmacies. Some of these investigations have resulted in significant civil and criminal settlements.
Moreover, the Office of Inspector General for the U.S. Department of Health and Human Services has refined its guidance with
respect to manufacturer grants to independent charitable foundations that provide financial support to financially needy patients, and
has issued new or revised advisory opinions containing updated guidance on the government’s view of such programs. Efforts to
ensure that our business arrangements continue to comply with applicable healthcare laws and regulations could be costly.

U.S. Healthcare Reform and Other U.S. Healthcare Laws

PPACA was adopted in the United States in March 2010. This law substantially changes the way healthcare is financed by both

governmental and private insurers in the U.S., and significantly impacts the pharmaceutical industry. PPACA contains a number of
provisions that are expected to impact our business and operations. Changes that may affect our business include those governing
enrollment in federal healthcare programs, reimbursement changes, rules regarding prescription drug benefits under the health
insurance exchanges, expansion of the 340B program, expansion of state Medicaid programs, and fraud and abuse and enforcement.
These changes will impact existing government healthcare programs and will result in the development of new programs, including
Medicare payment for performance initiatives and improvements to the physician quality reporting system and feedback program.

PPACA contains several provisions that have or could potentially impact our business. PPACA made significant changes to the

Medicaid Drug Rebate Program. Effective March 23, 2010, rebate liability expanded from fee-for-service Medicaid utilization to
include the utilization of Medicaid managed care organizations as well. With regard to the amount of the rebates owed, PPACA
increased the minimum Medicaid rebate from 15.1% to 23.1% of the average manufacturer price for most innovator products; changed
the calculation of the rebate for certain innovator products that qualify as line extensions of existing drugs; and capped the total rebate
amount for innovator drugs at 100% of the average manufacturer price. In addition, PPACA and subsequent legislation changed the
definition of average manufacturer price. On January 21, 2016, CMS issued final regulations to implement the changes to the
Medicaid Drug Rebate Program under PPACA. These regulations become effective on April 1, 2016. We are evaluating the impact
of these regulations on our business and operations. Finally, PPACA requires pharmaceutical manufacturers of branded
prescription drugs to pay a branded prescription drug fee to the federal government. Each individual pharmaceutical manufacturer
pays a prorated share of the branded prescription drug fee of $3.0 billion in 2016 (and set to increase in ensuing years), based
on the dollar value of its branded prescription drug sales to certain

federal programs identified in the law. Sales of “orphan drugs” are excluded from this fee. “Orphan drugs” are specifically defined for
purposes of the fee. For each indication approved by the FDA for the drug, such indication must have been designated as orphan by
the FDA under section 526 of the FDCA, an orphan drug tax credit under section 45C of the Internal Revenue Code must have been
claimed with respect to such indication, and such tax credit must not have been disallowed by the Internal Revenue Service. Finally,
the FDA must not have approved the drug for any indication other than an orphan indication for which a section 45C orphan drug tax
credit was claimed (and not disallowed).

Additional provisions of PPACA may negatively affect manufacturer's revenues in the future. For example, as part of PPACA’s

provisions closing a coverage gap that currently exists in the Medicare Part D prescription drug program (commonly known as the
“donut hole”), manufacturers of branded prescription drugs are required to provide a 50% discount on branded prescription drugs
dispensed to beneficiaries within this donut hole.

PPACA also expanded the Public Health Service’s 340B drug pricing discount program. The 340B pricing program requires

participating manufacturers to agree to charge statutorily-defined covered entities no more than the 340B “ceiling price” for the
manufacturer’s covered outpatient drugs. PPACA expanded the 340B program to include additional types of covered entities: certain
free-standing cancer hospitals, critical access hospitals, rural referral centers and sole community hospitals, each as defined by
PPACA. PPACA exempts “orphan drugs”-those designated under section 526 of the FDCA, such as our products-from the ceiling
price requirements for these newly-eligible entities.

Finally, numerous federal and state laws, including state security breach notification laws, state health information privacy laws,

and federal and state consumer protection laws govern the collection, use, and disclosure of personal information. In addition, most
healthcare providers who prescribe and dispense our products and research institutions with whom we collaborate for our sponsored
clinical trials are subject to privacy and security requirements under the Health Insurance Portability and Accountability Act of 1996
(“HIPAA”), as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”), and its
implementing regulations. Although we are neither a “covered entity” nor a “business associate” under HIPAA, and these privacy and
security requirements do not apply to us, the regulations may affect our interactions with health care providers, health plans, and
research institutions from whom we obtain patient health information. Further, we could be subject to criminal penalties if we
knowingly obtain individually identifiable health information from a HIPAA covered entity in a manner that is not authorized or
permitted by HIPAA or for aiding and abetting the violation of HIPAA.

Other Regulations

We are also subject to the United States Foreign Corrupt Practices Act (FCPA), the U.K. Bribery Act (U.K. Bribery Act), and

other anti-corruption laws and regulations pertaining to our financial relationships with foreign government officials. The FCPA
prohibits U.S. companies and their representatives from paying, offering to pay, promising, or authorizing the payment of anything of
value to any foreign government official, government staff member, political party, or political candidate to obtain or retain business
or to otherwise seek favorable treatment. In many countries in which we operate or sell our products, the health care professionals
with whom we interact may be deemed to be foreign government officials for purposes of the FCPA. The U.K. Bribery Act, which
applies to any company incorporated or doing business in the UK, prohibits giving, offering, or promising bribes in the public and
private sectors, bribing a foreign public official or private person, and failing to have adequate procedures to prevent bribery amongst
employees and other agents. Penalties under the Bribery Act include potentially unlimited fines for companies and criminal sanctions
for corporate officers under certain circumstances. Liability in relation to breaches of the Bribery Act is strict. This means that it is not
necessary to demonstrate elements of a corrupt state of mind. However, a defense of having in place adequate procedures designed to
prevent bribery is available.

Recent years have seen a substantial increase in anti-bribery law enforcement activity by U.S. regulators, with more frequent and

aggressive investigations and enforcement proceedings by both the DOJ and the SEC, increased enforcement activity by non-U.S.
regulators, and increases in criminal and civil proceedings brought against companies and individuals. Increasing regulatory scrutiny
of the promotional activities of pharmaceutical companies also has been observed in a number of EU member states.

Similar strict restrictions are imposed on the promotion and marketing of drug products in the EU, where a large portion of our

non-U.S. business is conducted, and other territories. Laws in the EU, including in the individual EU member states, require
promotional materials and advertising for drug products to comply with the product's Summary of Product Characteristics (SmPC),
which is approved by the competent authorities. Promotion of a medicinal product which does not comply with the SmPC is
considered to constitute off-label promotion. The off-label promotion of medicinal products is prohibited in the EU and in other
territories. The promotion of medicinal products that are not subject to a marketing authorization is also prohibited in the EU.
Laws in the EU, including in the individual EU member states, also prohibit the

direct-to-consumer advertising of prescription-only medicinal products. Violations of the rules governing the promotion of medicinal
products in the EU and in other territories could be penalized by administrative measures, fines and imprisonment.

Interactions between pharmaceutical companies and physicians are also governed by strict laws, regulations, industry

self-regulation codes of conduct and physicians' codes of professional conduct in the individual European Union member states. The
provision of any inducements to physicians to prescribe, recommend, endorse, order, purchase, supply, use or administer a medicinal
product is prohibited. A number of European Union member states have introduced additional rules requiring pharmaceutical
companies to publicly disclose their interactions with physicians and to obtain approval from employers, professional organizations
and/or competent authorities before entering into agreements with physicians. These rules have been supplemented by provisions of
related industry codes, including the EFPIA Disclosure Code on Disclosure of Transfers of Value from Pharmaceutical Companies to
Healthcare Professionals and Healthcare Organisations and related codes developed at national level in individual European Union
member states. Additional countries may consider or implement similar laws and regulations. Violations of these rules could lead to
reputational risk, public reprimands, and/or the imposition of fines or imprisonment.

Our present and future business has been and will continue to be subject to various other laws and regulations. Laws, regulations

and recommendations relating to safe working conditions, laboratory practices, the experimental use of animals, and the purchase,
storage, movement, import and export and use and disposal of hazardous or potentially hazardous substances, including radioactive
compounds, used in connection with our research work are or may be applicable to our activities. We cannot predict the impact of
government regulation, which may result from future legislation or administrative action, on our business.

Competition

Soliris is currently the only approved therapy for the treatment of PNH and aHUS. We are in advanced clinical studies of Soliris

for the treatment of other indications, and there are currently no competitors for the patient segments we target. Strensiq is currently
the only product approved for the treatment of HPP and Kanuma is the only product approved for the treatment of LAL-D. Many
pharmaceutical and biotech companies have publicly announced intention to establish or develop rare disease programs that may be
competitive with ours. We also experience competition in drug development from universities and other research institutions, and
pharmaceutical companies compete with us to attract universities and academic research institutions as drug development partners,
including for licensing their proprietary technology. Some of these entities may have:

greater financial and other resources;
larger research and development staffs;
lower labor costs; and/or

•
•
•
• more extensive marketing and manufacturing organizations.

Many of these companies and organizations have significant experience in preclinical testing, human clinical trials, product
manufacturing, marketing, sales and distribution and other regulatory approval and commercial procedures. They may also have a
greater number of significant patents and greater legal resources to seek remedies for cases of alleged infringement of their patents by
us to block, delay or compromise our own drug development process.

We compete with large pharmaceutical companies that produce and market synthetic compounds and with specialized

biotechnology firms in the United States, Europe and in other countries and regions, as well as a growing number of large
pharmaceutical companies that are developing biotechnology products. A number of biotechnology and pharmaceutical companies are
developing new products for the treatment of the same diseases being targeted by us. Other companies have initiated clinical studies
for the treatment of PNH, aHUS, AMR, DGF, MG and NMOSD, and we are aware of companies that are planning to initiate studies
for diseases we are also targeting. In the future, our products may also compete with biosimilars.

Several biotechnology and pharmaceutical companies have programs to develop complement inhibitor therapies or have
publicly announced their intentions to develop drugs which target the inflammatory effects of complement in the immune system or
have had programs to develop complement inhibitor therapies. Soliris is the only therapy that has demonstrated to be safe and
effective in two clinical indications by regulators in many jurisdictions around the world.

Employees

As of December 31, 2015, we had 2,924 full-time, world-wide employees, of which 1,200 were engaged in research, product

development, manufacturing, and clinical development, 1,131 in sales and marketing, and 593 in administration, human

resources, information technology and finance. Our U.S. employees are not represented by any collective bargaining unit, and we
regard the relationships with all our employees as satisfactory.

The executive officers of the Company and their respective ages and positions as of February 3, 2016 are as follows:

EXECUTIVE OFFICERS OF THE COMPANY

Name
David L. Hallal
Clare Carmichael
Saqib Islam
Martin Mackay
John B. Moriarty, J.D.
Julie O'Neill
Vikas Sinha, M.B.A., C.A., C.P.A.
Carsten Thiel, Ph.D.
Edward Miller
Heidi L. Wagner, J.D.

Position with Alexion

Age
49 Chief Executive Officer
56 Executive Vice President and Chief Human Resources Officer
46 Executive Vice President and Chief Strategy and Portfolio Officer
59 Executive Vice President and Global Head of Research and Development
48 Executive Vice President and General Counsel
49 Executive Vice President of Global Operations
52 Executive Vice President and Chief Financial Officer
52 Executive Vice President and Chief Commercial Officer
51 Senior Vice President and Global Chief Compliance Officer
51 Senior Vice President, Global Governmental Affairs

David L. Hallal has been with Alexion since June 2006 and has served as Chief Executive Officer (CEO) since April 2015. Mr.

Hallal has also been a member of the Board of Directors since September 2014. Since joining Alexion, Mr. Hallal served as Chief
Operating Office from September 2014 to April 2015 and in senior commercial positions, including Senior Vice President, US
Commercial Operations from June 2006 until November 2008, Senior Vice President, Commercial Operations Americas from
November 2008 to May 2010, Senior Vice President, Global Commercial Operations from May 2010 until October 2012 and then
Executive Vice President and Chief Commercial Officer from October 2012 to September 2014. Prior to joining Alexion, Mr. Hallal
served as Vice President, Sales at OSI Eyetech from April 2004 until June 2006, where he led the U.S. launch of a first-in-class
anti-VEGF therapy for age-related macular degeneration. Prior to OSI Eyetech, from 1992 until 2004, Mr. Hallal held various sales
and marketing leadership positions at Amgen and Biogen Idec, where he was involved in multiple product launches in the areas of
hematology, oncology, nephrology and immunology. Mr. Hallal received a B.A. in Psychology from the University of New
Hampshire.

Clare Carmichael has been with Alexion since August 2011 and has served as Executive Vice President and Chief Human
Resources Officer since September 2014. From August 2011 to September 2014, Ms. Carmichael served as Senior Vice President and
Chief Human Resources Officer. From August 2008 to March 2011, Ms. Carmichael served as Senior Vice President, Global Human
Resources at Watson Pharmaceuticals, Inc., where she established and executed global HR strategies. From December 2005 to August
2008, Ms. Carmichael held various human resources positions of increasing responsibility at Schering-Plough Corporation, including
Vice President of Global Human Resources at the Schering-Plough Research Institute. From December 2003 to December 2005, Ms.
Carmichael was Vice President of Human Resources at Eyetech Pharmaceuticals, Inc. Prior to Eyetech, she held various positions of
increasing responsibility in human resources at Pharmacia Corporation. Ms. Carmichael received a B.A. in Psychology from Rider
University.

Saqib Islam h as been at Alexion since April 2013 and has served as Executive Vice President, Chief Strategy and Portfolio

Officer since February 2015. From April 2013 to February 2015 Mr. Islam served as Senior Vice President, Chief Strategy and
Portfolio Officer. Prior to joining Alexion, Mr. Islam worked for 18 years in international business management with a focus on
business development, strategic decision-making and planning, and capital markets, and most recently as Managing Director, Head of
Healthcare and Diversified Industrials Capital Markets at Credit Suisse Securities from November 2009 until April 2013. Prior to
Credit Suisse, Mr. Islam held various positions of increasing responsibility in the investment banking divisions of Merrill Lynch and
Morgan Stanley and provided strategic analysis and advice to client firms across diverse industry segments for The Boston Consulting
Group. Mr. Islam received a Bachelor of Commerce from McGill University, where he was a Faculty and University Scholar, and a
J.D. from Columbia Law School, where he was a Harlan Fiske Stone Scholar.

Martin Mackay has been Executive Vice President, Global Head of Research & Development since joining Alexion in May

2013. Prior to joining Alexion, Dr. Mackay served as President, Research and Development at AstraZeneca from June 2010 to
February 2012, where he led all R&D functions worldwide, including discovery research, clinical development, regulatory affairs

and key related R&D functions. From April 1995 to May 2010, he held various positions of increasing responsibility at Pfizer,
including President, Head of Pfizer Pharmatherapeutics, R&D, where he oversaw all aspects of small molecule discovery and
development across multiple therapeutic areas. Dr. Mackay has also worked in the CIBA organization, now Novartis, and held
positions within academia. Dr. Mackay received a Microbiology First Class Honors Degree from Heriot-Watt University, Scotland,
and a Ph.D. in Molecular Genetics from the University of Edinburgh, Scotland.

John B. Moriarty, J.D. has been with Alexion since December 2012 and has served as Executive Vice President and General
Counsel since September 2014. From December 2012 to September 2014, Mr. Moriarty served as Senior Vice President and General
Counsel. From December 2010 to December 2012, Mr. Moriarty served as General Counsel and Chief Legal Officer at Elan
Corporation plc, an Irish public limited company traded on the New York and Irish Stock Exchanges, and also served as a member of
Elan's Executive Management team. Prior to assuming the role of General Counsel, Mr. Moriarty served as Senior Vice President of
Law, Litigation and Commercial Operations at Elan from December 2008 to December 2010. From 2002 to 2008, Mr. Moriarty held
various positions with Amgen, Inc., including Executive Director and Associate General Counsel, Global Commercial Operations -
Amgen Oncology and Senior Counsel, Complex Litigation, Products Liability and Government Investigations. Between 1994 and
2002, Mr. Moriarty served in various capacities in private practice focused on healthcare and as a healthcare fraud prosecutor in the
U.S. Attorney's Office and the Virginia Attorney General's Office. Mr. Moriarty received his J.D., cum laude, from the University of
Georgia School of Law and his B.A., with distinction, from the University of Virginia

Julie O'Neill has been with Alexion since February 2014 and has served as Executive Vice President of Global Operations since

January 2015. From January 2014 to January 2015, Ms. O'Neill was Senior Vice President Global Manufacturing Operations and
General Manager of Alexion Pharma International Trading. Prior to joining Alexion, Ms. O'Neill served in various leadership
positions at Gilead Sciences from February 1997 to February 2014 including Vice President of Operations and General Manager of
Ireland from 2011 to 2014. Prior to Gilead Sciences, Ms. O'Neill held leadership positions at Burnil Pharmacies and Helsinn Birex
Pharmaceuticals. She is the Chairperson for the National Standards Authority of Ireland and is a member of the Boards of the National
Institute for Bioprocessing Research & Training and the American Chamber of Commerce, Ireland. Ms. O'Neill received a Bachelor's
of Science in Pharmacy from University of Dublin, Trinity College and a Masters of Business Administration from University College
Dublin (Smurfit School of Business).

Vikas Sinha, M.B.A., C.A., C.P.A. has been with Alexion since September 2005 and has served as Alexion's Executive Vice

President and Chief Financial Officer since October 2012. From September 2005 to October 2012, Mr. Sinha was Senior Vice
President and Chief Financial Officer. Prior to joining Alexion, Mr. Sinha held various positions with Bayer AG in the United States,
Japan, Germany, and Canada, including Vice President and Chief Financial Officer of Bayer Pharmaceuticals Corporation, USA, Vice
President and Chief Financial Officer of Bayer Yakuhin Ltd., in Japan, and Manager, Mergers and Acquisitions with Bayer AG in
Germany. He also was a member of the Pharmaceutical Management Committee for North America. Prior to Bayer, Mr. Sinha held
several positions of increasing responsibilities with ANZ Bank and Citibank in South Asia. Mr. Sinha holds a Masters of Business
Administration from the Asian Institute of Management which included an exchange program with the University of Western Ontario
(Richard Ivey School of Business). He is also a qualified Chartered Accountant from the Institute of Chartered Accountants of India
and a Certified Public Accountant in the United States.

Carsten Thiel, Ph.D. has been with Alexion since September 2014 and has served as Chief Commercial Officer since
September 2015. From January 2015 to September 2015, Mr. Thiel served as Executive Vice President EMEA and Asia Pacific and
from September 2014 to January 2015, Mr. Thiel was Senior Vice President EMEA and Australasia-Canada. Prior to joining Alexion,
Mr. Thiel served in various senior leadership positions at Amgen from 2002 to 2014, including Vice President, Head of Europe,
General Manager, Germany, General Manager, CEE and Head of the Oncology Franchise in Europe. Prior to Amgen, Mr. Thiel held
several sales and marketing leadership roles across Europe at Roche. Mr. Thiel has a Ph.D. in Molecular Biology and Biochemistry
from the Max Planck Institute, Germany, and a Master’s Degree in Biochemistry from the University of Marburg, Germany.

Edward Miller has been Senior Vice President and Global Chief Compliance Officer since joining Alexion in September 2014.
Prior to joining Alexion, Mr. Miller served in various compliance and legal leadership positions at Boehringer Ingelheim from 2000 to
August 2014, including Vice President, Associate General Counsel, Global Head of Litigation and Government Investigations; Vice
President and Acting Global Compliance Officer and Vice President, Chief Compliance Officer and Head of Litigation. Prior to
Boehringer Ingelheim, Mr. Miller was a Senior Trial Attorney at the U. S. Department of Justice in Washington, D.C. Mr. Miller
received a Bachelor's Degree from Princeton University and his J.D. from Rutgers University School of Law.

Heidi L. Wagner, J.D., has been with Alexion since September 2009 and has served as Senior Vice President, Global
Governmental Affairs since September 2012. From September 2009 to September 2012, Ms. Wagner served as Vice President,
Global Government Affairs. Prior to joining Alexion, Ms. Wagner was the Sr. Director of Governmental Affairs for Genentech,

and also consulted for a variety of health plans, biopharmaceutical and other health care-related companies. Ms. Wagner received a
Bachelor of Science degree in Journalism and Mass Communication from the University of Colorado in Boulder, and a law degree
from the George Mason University School of Law in Virginia.

Available Information

Our internet website address is http://www.alexion.com. Through our website, we make available, free of charge, our Annual
Reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, any amendments to those reports, proxy and
registration statements, and all of our insider Section 16 reports, as soon as reasonably practicable after such material is electronically
filed with, or furnished to, the Securities and Exchange Commission (SEC). These SEC reports can be accessed through the
“Investors” section of our website. The information found on our website is not part of this or any other report we file with, or furnish
to, the SEC. Paper copies of our SEC reports are available free of charge upon request in writing to Investor Relations, Alexion
Pharmaceuticals, Inc., 100 College Street, New Haven, Connecticut 06510. In addition, any document we file may be inspected,
without charge, at the SEC’s public reference room at 100 F Street NE, Washington, DC 20549, or at the SEC’s internet address at
http://www.sec.gov. (This website address is not intended to function as a hyperlink, and the information contained in the SEC’s
website is not intended to be a part of this filing). Information related to the operation of the SEC’s public reference room may be
obtained by calling the SEC at 800-SEC-0330 (800-732-0330).

Item 1A.

Risk Factors.
(amounts in thousands, except percentages)

You should carefully consider the following risk factors before you decide to invest in Alexion and our business because these

risk factors may have a significant impact on our business, operating results, financial condition, and cash flows. The risks and
uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we
currently deem immaterial may also impair our business operations. If any of the following risks actually occurs, our business,
financial condition and results of operations could be materially and adversely affected.

Risks Related to Our Products

We depend heavily on the success of our lead product, Soliris. If we are unable to increase sales of Soliris, or sales of Soliris are
adversely affected, our business may be materially harmed.

Currently, our ability to generate revenues depends primarily on the commercial success of Soliris and whether physicians,
patients and health care payers view Soliris as therapeutically effective and safe relative to cost. Since we launched Soliris in the
United States in 2007, essentially all of our revenue has been attributed to sales of Soliris. In 2015, we received marketing approval in
the United States, the European Union and Japan, of our second marketed product, Strensiq, for the treatment of HPP. We also
received marketing approval in 2015 in the United States and the European Union for our third product, Kanuma, for the treatment of
LAL-D. However, we anticipate that Soliris product sales will continue to contribute a significant percentage of our total revenue over
the next several years.

The commercial success of Soliris and our ability to generate and increase revenues depends on several factors, as discussed in

greater detail below, including safety and efficacy of Soliris, coverage or reimbursement by government or third-party payers, pricing,
manufacturing and uninterrupted supply, the introduction of and success of competing products, the size of patient populations and the
number of patients diagnosed who may be treated with Soliris, adverse legal, administrative, regulatory or legislative developments,
and our ability to develop, register and commercialize Soliris for new indications.

If we are not able to increase revenues from sales of Soliris, or our revenues do not grow as anticipated, our results of operations

and stock price could be adversely affected.
Our future commercial success depends on gaining regulatory approval for new products and obtaining approvals for existing
products for new indications.

Our long-term success and revenue growth will depend upon the successful development of new products and technologies from
our research and development activities, including those licensed or acquired from third parties and approval of additional indications
for our existing products. Product development is very expensive and involves a high degree of risk. Only a small number of research
and development programs result in the commercialization of a product. The process for obtaining regulatory approval to market a
biologic is expensive, often takes many years, and can vary substantially based on the type, complexity, and novelty of the product
candidates involved. Our ability to grow revenues would be adversely affected if we are delayed or unable to successfully develop the
products in our pipeline, including Soliris for additional indications, obtain marketing approval for Strensiq and Kanuma in additional
territories or acquire or license products and technologies from third parties.

We dedicate significant resources to the worldwide development, manufacture and commercialization of our products. We
cannot guarantee that any marketing application for our product candidates will be approved or maintained in any country where we
seek marketing authorization. If we do not obtain regulatory approval of new products or additional indications for existing products,
or are significantly delayed or limited in doing so, our revenue growth will be adversely affected, we may experience surplus
inventory, our business may be materially harmed and we may need to significantly curtail operations.
Sales of our products depend on reimbursement government health administration authorities, private health insurers and other
organizations. If we are unable to obtain, or maintain at anticipated levels, reimbursement for our products, or coverage is
reduced, our pricing may be affected or our product sales, results of operations or financial condition could be harmed.

We may not be able to sell our products on a profitable basis or our profitability may be reduced if we are required to sell

our products at lower than anticipated prices or reimbursement is unavailable or limited in scope or amount. Our products are
significantly more expensive than traditional drug treatments and almost all patients require some form of third party coverage

to afford its cost. We depend, to a significant extent, on governmental payers, such as Medicare and Medicaid in the United States or
country specific governmental organizations in foreign countries, and private third-party payers to defray the cost of our products to
patients. These entities may refuse to provide coverage and reimbursement, determine to provide a lower level of coverage and
reimbursement than anticipated, or reduce previously approved levels of coverage and reimbursement, including in the form of higher
mandatory rebates or modified pricing terms.

In certain countries where we sell or are seeking or may seek to commercialize our products, pricing, coverage and level of

reimbursement of prescription drugs are subject to governmental control. We may be unable to timely or successfully negotiate
coverage, pricing, and reimbursement on terms that are favorable to us, or such coverage, pricing, and reimbursement may differ in
separate regions in the same country. In some foreign countries, the proposed pricing for a drug must be approved before it may be
lawfully marketed. As discussed above in the subsection entitled “Pharmaceutical Pricing and Reimbursement,” the requirements
governing drug pricing vary widely from country to country, which may include a combination of distinct potential payers, including
private insurance and governmental payers and a HTA assessment of medicinal products for pricing and reimbursement
methodologies. Therefore, we may not successfully conclude the necessary processes and commercialize our products in every, or
even most countries in which we seek to sell our products.

A significant reduction in the amount of reimbursement or pricing for our products in one or more countries may reduce our

profitability and adversely affect our financial condition. Certain countries establish pricing and reimbursement amounts by reference
to the price of the same or similar products in other countries. If coverage or the level of reimbursement is limited in one or more
countries, we may be unable to obtain or maintain anticipated pricing or reimbursement in current or new territories. In the United
States, the European Union member states, and elsewhere, there have been, and we expect there will continue to be, efforts to control
and reduce health care costs. In the U.S. for example, the price of drugs has come under intense scrutiny by the U.S. Congress. Third
party payers decide which drugs they will pay for and establish reimbursement and co-payment levels. Government and other
third-party payers are increasingly challenging the prices charged for health care products, examining the cost effectiveness of drugs
in addition to their safety and efficacy, and limiting or attempting to limit both coverage and the level of reimbursement for
prescription drugs. See additional discussion below under the headings "Changes in healthcare law and implementing regulations,
including those based on recently enacted legislation, as well as changes in healthcare policy and government initiatives that affect
coverage and reimbursement of drug products may impact our business in ways that we cannot currently predict and these changes
could adversely affect our business and financial condition" and "The credit and financial market conditions may aggravate certain
risks affecting our business."

The potential increase in the number of patients receiving Soliris may cause third-party payers to modify or limit coverage or

reimbursement for Soliris for the treatment of PNH, aHUS, or both indications. To the extent we are successful in developing Soliris
for indications other than PNH and aHUS, the potential increase in the number of patients receiving Soliris may cause third-party
payers to refuse coverage or reimbursement for Soliris for the treatment of PNH, aHUS or for any other approved indication, or
provide a lower level of coverage or reimbursement than anticipated or currently in effect.

As discussed above in the subsection entitled "pharmaceutical Pricing and Reimbursement," health insurance programs may
restrict coverage of some products by using payer formularies under which only selected drugs are covered, variable co-payments that
make drugs that are not preferred by the payer more expensive for patients, and by using utilization management controls, such as
requirements for prior authorization or failure on another type of treatment. Payers may especially impose these obstacles to coverage
for higher-priced drugs, and consequently our products may be subject to payer-driven restrictions. Additionally, U.S. payers are
increasingly considering new metrics as the basis for reimbursement rates.

In countries where patients have access to insurance, their insurance co-payment amounts or other benefit limits may represent a

barrier to obtaining or continuing Soliris. We have financially supported non-profit organizations that assist patients in accessing
treatment for PNH and aHUS, including Soliris. Such organizations assist patients whose insurance coverage imposes prohibitive
co-payment amounts or other expensive financial obligations. Such organizations' ability to provide assistance to patients is dependent
on funding from external sources, and we cannot guarantee that such funding will be provided at adequate levels, if at all. We have
also provided our products without charge to patients who have no insurance coverage for drugs through related charitable purposes.
We are not able to predict the financial impact of the support we may provide for these and other charitable purposes; however,
substantial support could have a material adverse effect on our profitability in the future.

Our commercial success depends on obtaining and maintaining reimbursement at anticipated levels reimbursement for our
products. It may be difficult to project the impact of evolving reimbursement mechanics on the willingness of payers to cover our
products. If we are unable to obtain or maintain coverage, or coverage is reduced in one or more countries, our pricing may be affected
or our product sales, results of operations or financial condition could be harmed.

We may not be able to maintain market acceptance of our products among the medical community or patients, or gain market
acceptance of our products in the future, which could prevent us from maintaining profitability or growth.

We cannot be certain that our products will maintain market acceptance in a particular country among physicians, patients,
health care payers, and others. Although we have received regulatory approval of our products in certain territories, such approvals do
not guarantee future revenue. We cannot predict whether physicians, other health care providers, government agencies or private
insurers will determine or continue to accept that our products are safe and therapeutically effective relative to its cost. Physicians'
willingness to prescribe, and patients' willingness to accept, our products, depends on many factors, including prevalence and severity
of adverse side effects in both clinical trials and commercial use, the timing of the market introduction of competitive drugs, lower
demonstrated clinical safety and efficacy compared to other drugs, perceived lack of cost-effectiveness, pricing and lack of availability
of reimbursement from third-party payers, convenience and ease of administration, effectiveness of our marketing strategy, publicity
concerning the product, our other product candidates and availability of alternative treatments, including bone marrow transplant as an
alternative treatment for PNH. The likelihood of physicians to prescribe Soliris for patients with aHUS may also depend on how
quickly Soliris can be delivered to the hospital or clinic and our distribution methods may not be sufficient to satisfy this need. In
addition, we are aware that medical doctors have determined not to continue Soliris treatment for some patients with aHUS.

If our products fail to achieve or maintain market acceptance among the medical community or patients in a particular country,

we may not be able to market and sell it successfully in such country, which would limit our ability to generate revenue and could
harm our overall business.
Manufacturing issues at our facilities or the facilities of our third party service providers could cause product shortages, stop or
delay commercialization of our products, disrupt, delay our clinical trials or regulatory approvals, and adversely affect our
business.

The manufacture of our products and our product candidates is highly regulated, complex and difficult, requiring a multi-step

controlled process and even minor problems or deviations could result in defects or failures. We have limited experience
manufacturing commercial quantities of Strensiq and Kanuma. Only a small number of companies have the ability and capacity to
manufacture our products for our development and commercialization needs. Due to the highly technical requirements of
manufacturing our products and the strict quality and control specifications, we and our third party providers may be unable to
manufacture or supply our products despite our and their efforts. Failure to produce sufficient quantities of our products and product
candidates could result in lost revenue, diminish our profitability, delay the development of our product candidates, or result in supply
shortages for our patients, which may lead to lawsuits or could accelerate introduction of competing products to the market.

The manufacture of our products and product candidates is at high risk of product loss due to contamination, equipment
malfunctions, human error, or raw material shortages. Deviations from established manufacturing processes could result in reduced
production yields, product defects and other supply disruptions. If microbial, viral or other contaminations are discovered in our
products or manufacturing facilities, we may need to close our manufacturing facilities for an extended period of time to investigate
and remediate the contaminant. The occurrence of any such event could adversely affect our ability to satisfy demand for any of our
products, which could materially and adversely affect our operating results.

Many additional factors could cause production interruptions at our facilities or at the facilities of our third party providers,
including natural disasters, labor disputes, acts of terrorism or war. The occurrence of any such event could adversely affect our ability
to satisfy demand for Soliris, which could materially and adversely affect our operating results.

We expect that the demand for Soliris will increase. We may underestimate demand for Soliris or any of our products, or

experience product interruptions at Alexion's internal manufacturing facilities or a facility of a third party provider, including as a
result of risks and uncertainties described in this report.

We and our third party providers are required to maintain compliance with cGMP and other stringent requirements and are
subject to inspections by the FDA and comparable agencies in other jurisdictions to confirm such compliance. Any delay, interruption
or other issues that arise in the manufacture, fill-finish, packaging, or storage of our products as a result of a failure of our facilities or
the facilities or operations of third parties to pass any regulatory agency inspection could significantly impair our ability to supply our
products and product candidates. Significant noncompliance could also result in the imposition of monetary penalties or other civil or
criminal sanctions and damage our reputation.

We rely on one to two facilities to manufacture each of our products. We are authorized to sell Soliris that is manufactured
by Lonza and at ARIMF in the United States, the European Union, Japan and certain other territories. However, manufacturing
Soliris for commercial sale in certain other territories may only be performed at a single facility until such time as we have
received the required regulatory approval for an additional facility, if ever. We will continue to depend entirely on one
facility to manufacture Soliris for commercial sale in such other territories until that time. We also depend entirely on one
facility to manufacture Strensiq and on one facility for the purification of Kanuma for commercial sale. Regarding Kanuma,

we rely on two animal facilities to produce the starting material, and a single manufacturing facility to manufacture the drug
product.

We depend on a very limited number of third party providers for supply chain services with respect to our clinical and

commercial product requirements, including product filling, finishing, packaging, and labeling. Our third party providers operate as
independent entities and we do not have control over any third party provider's compliance with our internal or external specifications
or the rules and regulations of regulatory agencies, including the FDA, competent authorities or any other applicable regulations or
standards.

Any difficulties or delays in our third party manufacturing, or any failure of our third party providers to comply with our internal

and external specifications or any applicable rules, regulations and standards could increase our costs, constrain our ability to satisfy
demand for our products from customers, cause us to lose revenue or incur penalties for failure to deliver product, make us postpone
or cancel clinical trials, or cause our products to be recalled or withdrawn, such as the voluntary recalls that we initiated in 2013 and
2014 due to the presence of visible particles in a limited number of vials in specific lots. Even if we are able to find alternatives they
may ultimately be insufficient for our needs. No guarantee can be made that regulators will approve additional third party providers
in a timely manner or at all, or that any third party providers will be able to perform services for sufficient product volumes for any
country or territory. Further, due to the nature of the current market for third-party commercial manufacturing, many arrangements
require substantial penalty payments by the customer for failure to use the manufacturing capacity for which it contracted. Penalty
payments under these agreements typically decrease over the life of the agreement, and may be substantial initially and de minimis
or non-existent in the final period. The payment of a substantial penalty could harm our financial condition.

It can take longer than five years to build and validate a new manufacturing facility and it can take longer than three years to

qualify and validate a new contract manufacturer. We are currently completing the build-out of a fill-finish facility in Ireland to
support global distribution of Soliris and Alexion's other clinical and commercial products. To date, we have relied entirely on third
party fill-finish providers and have never operated our own fill-finish facility. We also completed construction of a new facility in
Dublin, Ireland in the fourth quarter of 2015, which is comprised of laboratories, packaging and warehousing operations and we intend
to make significant further investment in this facility for the manufacture our products. We cannot guarantee that we will be able to
successfully and timely complete the appropriate validation processes or obtain the necessary regulatory approvals, or that we will be
able to perform the intended supply chain services at either of these facilities for commercial or clinical use.

Certain of the raw materials required in the manufacture and the formulation of our products are derived from biological sources.
Such raw materials are difficult to procure and may be subject to contamination or recall. Access to and supply of sufficient quantities
of raw materials which meet the technical specifications for the production process is challenging, and often limited to single-source
suppliers. Finding an alternative supplier could take a significant amount of time and involve significant expense due to the nature of
the products and the need to obtain regulatory approvals. The failure of these single-source suppliers to supply adequate quantities of
raw materials for the production process in a timely manner may impact our ability to produce sufficient quantities of our products for
clinical or commercial requirements. A material shortage, contamination, recall, or restriction on the use of certain biologically
derived substances or any raw material used in the manufacture of our products could adversely impact or disrupt manufacturing.

In addition, Kanuma is a transgenic product. It is produced in the egg whites of genetically modified chickens who receive copies

of the human lysosomal acid lipase gene to produce recombinant human lysosomal acid lipase. The facilities on which we rely to
produce raw material for recombinant lyosomal acid lipase are the only animal facilities in the world that produces the necessary egg
whites from transgenic chickens. Natural disasters, disease, such as exotic Newcastle disease or avian influenza, or other catastrophic
events could have a significant impact on the supply of unpurified Kanuma, or destroy Alexion’s animal operations altogether. If our
animal operations are disrupted or destroyed, it will be extremely difficult to set up another animal facility to supply the unpurified
Kanuma. This would adversely affect our ability to satisfy demand for Kanuma, which could materially and adversely affect our
operating results.

Any adverse developments affecting our manufacturing operations or the operations of our third-party providers could result in
a product shortage of clinical or commercial requirements, withdrawal of our product candidates or any approved products, shipment
delays, lot failures, or product withdrawals or recalls. We may also have to write-off inventory and incur other charges and expenses
for products that fail to meet specifications, undertake costly remediation efforts or seek more costly manufacturing alternatives. Such
manufacturing issues could increase our cost of goods, cause us to lose revenue, reduce our profitability or damage our reputation.

We operate in a highly regulated industry and if we or our third party providers fail to comply with United States and foreign
regulations, we or our third party providers could lose our approvals to market our products or our product candidates, and our
business would be seriously harmed.

We and our current and future partners, contract manufacturers and suppliers are subject to rigorous and extensive regulation by

governmental authorities around the world, including the FDA, EMA, the competent authorities of the European Union member
states, and MHLW. If we or a regulatory agency discover previously unknown problems with a product, such as adverse events of
unanticipated severity or frequency, or problems with the facility where the product is manufactured, or in the case of Kanuma,
problems with animal operations, a regulatory agency may impose restrictions on that product, the manufacturing facility or us. For
example, in March 2013, we received a Warning Letter from the FDA relating to compliance with FDA’s cGMP requirements at
ARIMF. We are working with the FDA to resolve the issues identified in the Warning Letter. Failure to address the FDA’s concerns
may lead the FDA or other regulatory authorities to take regulatory action, including fines, civil penalties, recalls, seizure of product,
suspension of manufacturing operations, operating restrictions, injunctions, withdrawal of FDA approval, and/or criminal prosecution.

If we do not resolve outstanding concerns expressed by the FDA in the Warning Letter and the Form 483s to the satisfaction of

the FDA, EMA or any other regulatory agency, or we or our third-party providers, including our product fill-finish providers,
packagers and labelers, fail to comply fully with applicable regulations, then we may be required to initiate a recall or withdrawal of
our products. Like our contract manufacturers’ manufacturing operations, our animal operations will also be subject to FDA
inspection to evaluate whether our animal husbandry, containment, personnel, and record keeping practices are sufficient to ensure
safety and security of our transgenic chickens and animal products (e.g., eggs, waste, etc.). Our animal operations may also be subject
to inspection by the United States Department of Agriculture, Animal and Plant Health Inspection Service (USDA APHIS), the
agency responsible for administering the Animal Welfare Act. Any failure to ensure safety and security of our transgenic chickens
and/or animal products could result in regulatory action by the FDA or another regulatory body, including USDA APHIS.

The safety profile of any product continues to be closely monitored by the FDA and other foreign regulatory authorities after
approval. Regulations continue to apply after product approval, and cover, among other things, testing, manufacturing, quality control,
finishing, filling, labeling, advertising, promotion, risk mitigation, adverse event reporting requirements, and export of biologics. For
example, the risk management program established in 2007 upon the FDA's approval of Soliris for the treatment of PNH was replaced
with a Risk Evaluation and Mitigation Strategy (REMS) program, approved by the FDA in 2010, and further revised in December
2015 concerning presecribing information regarding the level of fever needed to seek medical attention and reporting adverse events.
Future changes to the Soliris REMS could be costly and burdensome to implement.

We are required to report any serious and unexpected adverse experiences and certain quality problems with our products to the

FDA, the EMA, and other health agencies. We or any health agency may have to notify health care providers of any such
developments. Non-compliance with safety reporting requirements could result in regulatory action that may include civil action or
criminal penalties. Regulatory agencies inspect our pharmacovigilance processes, including our adverse event reporting. If regulatory
agencies determine that we or other parties, including clinical trial investigators, have not complied with the applicable reporting or
other pharmacovigilance requirements, we may become subject to additional inspections, warning letters or other enforcement actions,
including monetary fines, marketing authorization withdrawal and other penalties.

As a condition of approval for marketing our products, governmental authorities may require us to conduct additional studies. In

connection with the approval of Soliris in the United States, EU and Japan, for the treatment of PNH, we agreed to establish a PNH
Registry, monitor immunogenicity, monitor compliance with vaccination requirements, and determine the effects of anticoagulant
withdrawal among PNH patients receiving eculizumab, and, specifically in Japan, we agreed to conduct a trial in a limited number of
Japanese PNH patients to evaluate the safety of a meningococcal vaccine. In connection with the approval of Soliris in the United
States for the treatment of aHUS, we agreed to establish an aHUS Registry and complete additional human clinical studies in adult and
pediatric patients. Furthermore, in connection with the approval of Strensiq in the United States, we agreed to conduct a prospective
observational study in treated patients to assess the long-term safety of Strensiq therapy and to develop complementary assays.
Similarly, in connection with the approval of Kanuma in the United States, we have agreed to conduct a long-term observational study
of treated patients, either as a standalone study or as a component of the existing LAL Registry. In the EU, in connection with the
grant of authorization for Strensiq, we agreed to conduct a multicenter, randomized, open-label, Phase 2a study of Strensiq in patients
with HPP and to extend the studies ENB-008-10 and ENB-009-10 to provide efficacy data in patients 13 to 18 year-old of age. We
also agreed to set up an observational, longitudinal, prospective, long-term registry of patients with HPP to collect information on the
epidemiology of the disease, including clinical outcomes and quality of life, and to evaluate safety and effectiveness data in patients
treated with Strensiq. In the United States, the FDA can also propose to withdraw approval for a product if it determines that such
additional studies are inadequate or if new clinical data or information shows that a product is not safe for use in an approved
indication.

Failure to comply with the laws and requirements, including statutes and regulations, administered by the FDA, the EC, the

competent authorities of the European Union member states, the MHLW or other agencies, including without limitation, failures or
delays in resolving the concerns raised by the FDA in the Warning Letter, could result in:

significant administrative and judicial sanctions, including, warning letters or untitled letters;
significant fines and other civil penalties;
suspension, variation or withdrawal of a previously granted approval for Soliris;
interruption of production;

• a product recall;
• a product withdrawal;
•
•
•
•
• operating restrictions, such as a shutdown of production facilities or production lines, or new manufacturing requirements;
•
• delays in approving or refusal to approve our products including pending BLAs or BLA supplements for our products or a

suspension of ongoing clinical trials;

•
•

facility that manufactures our products;
seizing or detaining product;
requiring us or our partners to enter into a consent decree, which can include imposition of various fines, reimbursements for
inspection costs, required due dates for specific actions and penalties for noncompliance;
•
injunctions; and/or
• criminal prosecution.

If the use of our products harms people, or is perceived to harm patients even when such harm is unrelated to our products, our
regulatory approvals could be revoked or otherwise negatively impacted and we could be subject to costly and damaging product
liability claims.

The testing, manufacturing, marketing and sale of drugs for use in humans exposes us to product liability risks. Side effects and

other problems from using our products could (1) lessen the frequency with which physicians decide to prescribe our products,
(2) encourage physicians to stop prescribing our products to their patients who previously had been prescribed our products, (3) cause
serious adverse events and give rise to product liability claims against us, and (4) result in our need to withdraw or recall our products
from the marketplace. Some of these risks are unknown at this time.

Our products and our product candidates treat patients with ultra-rare diseases. We generally test our products in only a small

number of patients. For example, the FDA marketing approval for the treatment of patients with aHUS was based on two prospective
studies in a total of 37 adult and adolescent patients, together with a retrospective study that included 19 pediatric patients. As more
patients use our products, including more children and adolescents, new risks and side effects may be discovered, the rate of known
risks or side effects may increase, and risks previously viewed as less significant could be determined to be significant. Previously
unknown risks and adverse effects may also be discovered in connection with unapproved uses of our products, which may include
administration of our products under acute emergency conditions, such as the Enterohemorrhagic E. coli health crisis in Europe,
primarily Germany, that began in May 2011. We do not promote, or in any way support or encourage the promotion of our products
for unapproved uses in violation of applicable law, but physicians are permitted to use products for unapproved purposes and we are
aware of such uses of Soliris. In addition, we are studying and expect to continue to study Soliris in diseases other than PNH and
aHUS in controlled clinical settings, and independent investigators are doing so as well. In the event of any new risks or adverse
effects discovered as new patients are treated for approved indications, or as our products are studied in or used by patients for other
indications, regulatory authorities may delay or revoke their approvals, we may be required to conduct additional clinical trials and
safety studies, make changes in labeling, reformulate our products or make changes and obtain new approvals for our and our
suppliers' manufacturing facilities. We may also experience a significant drop in potential sales, experience harm to our reputation and
the reputation of our products in the marketplace or become subject to lawsuits, including class actions. Any of these results could
decrease or prevent any sales or substantially increase the costs and expenses of commercializing and marketing our products.

We may be sued by people who use our products, whether as a prescribed therapy, during a clinical trial, during an investigator

initiated study, or otherwise. Many patients who use our products are already very ill. Any informed consents or waivers obtained
from people who enroll in our trials or use our products may not protect us from liability or litigation. Our product liability insurance
may not cover all potential types of liabilities or may not cover certain liabilities completely. Moreover, we may not be able to
maintain our insurance on acceptable terms. In addition, negative publicity relating to the use of our products or a product candidate,
or to a product liability claim, may make it more difficult, or impossible, for us to market and sell. As a result of these factors, a
product liability claim, even if successfully defended, could have a material adverse effect on our business, financial condition or
results of operations.

Patients who use our products already often have severe and advanced stages of disease and known as well as unknown

significant pre-existing and potentially life-threatening health risks. During the course of treatment, patients may suffer adverse
events, including death, for reasons that may or may not be related to our products. Some patients treated with our products,

including patients who have participated in our clinical trials, have died or suffered potentially life-threatening diseases either during
or after ending their treatments. Patients who delay or miss a dose or discontinue treatment may also experience complications,
including death. Such events could subject us to costly litigation, require us to pay substantial amounts of money to injured patients,
delay, negatively impact or end our opportunity to receive or maintain regulatory approval to market our products, or require us to
suspend or abandon our commercialization efforts. Even in a circumstance in which we do not believe that an adverse event is related
to our products, the investigation into the circumstance may be time consuming or inconclusive. These investigations may interrupt
our sales efforts, delay our regulatory approval process in other countries, or impact and limit the type of regulatory approvals that our
products receive or maintain.

For example, use of C5 Inhibitors, such as Soliris, is associated with an increased risk for certain types of infection, including
meningococcal infection. Under controlled settings, patients in our eculizumab trials all receive vaccination against meningococcal
infection prior to first administration of Soliris and patients who are prescribed Soliris in most countries are required by prescribing
guidelines to be vaccinated prior to receiving their first dose. A physician may not have the opportunity to timely vaccinate a patient in
the event of an acute emergency episode, such as in a patient presenting with aHUS or during the health crisis that began in May 2011
in Europe, principally in Germany, due to the epidemic of infections from Enterohemorrhagic E. coli. Vaccination does not, however,
eliminate all risk of meningococcal infection. Additionally, in some countries there may not be any vaccine approved for general use
or approved for use in infants and children. Some patients treated with Soliris who had been vaccinated have nonetheless experienced
meningococcal infection, including patients who have suffered serious illness or death. Each such incident is required to be reported to
appropriate regulatory agencies in accordance with relevant regulations.

Clinical evaluations of outcomes in the post-marketing setting are required to be reported to appropriate regulatory agencies in
accordance with relevant regulations. Determination of significant complications associated with the delay or discontinuation of our
products could have a material adverse effect on our ability to sell our products.
If we are unable to establish and maintain effective sales, marketing and distribution capabilities, or to enter into agreements with
third parties to do so, we will be unable to successfully commercialize our products.

We are marketing and selling our products ourselves in the United States, Europe, Japan and several other territories. Strensiq

and Kanuma were approved in 2015, are in the early stages of commercial launch and are the second and third new product launches
in Alexion's history. If we are unable to establish and/or expand our capabilities to sell, market and distribute our products, either
through our own capabilities or by entering into agreements with others, or to maintain such capabilities in countries where we have
already commenced commercial sales, we will not be able to successfully sell our products. In that event, we will not be able to
generate significant revenues. We cannot guarantee that we will be able to establish and maintain our own capabilities or enter into
and maintain any marketing or distribution agreements with third-party providers on acceptable terms, if at all. Even if we hire the
qualified sales and marketing personnel we need to support our objectives, or enter into marketing and distribution agreements with
third parties on acceptable terms, we may not do so in an efficient manner or on a timely basis. We may not be able to correctly judge
the size and experience of the sales and marketing force and the scale of distribution capabilities necessary to successfully market and
sell our products. Establishing and maintaining sales, marketing and distribution capabilities are competitive, expensive and
time-consuming. Our expenses associated with building up and maintaining the sales force and distribution capabilities around the
world may be disproportionate compared to the revenues we may be able to generate on sales. Our competitors may also develop,
manufacture and market products that are more effective or less expensive than ours, or reach the market first. We cannot guarantee
that we will be successful in commercializing any of our products.

If we fail to comply with laws or regulations, we may be subject to investigations and civil or criminal penalties and our business
could be adversely affected.

In addition to FDA and related regulatory requirements, we are subject to health care "fraud and abuse" laws, such as the
federal False Claims Act (FCA), the anti-kickback provisions of the federal Social Security Act, and other related federal laws
and regulations. As discussed above in the subsection entitled “Fraud and Abuse,” the federal Anti-Kickback Statute prohibits,
among other things, knowingly and willfully offering, paying, soliciting or receiving any remuneration, directly or indirectly, in
cash or in kind to induce, or reward the purchasing, leasing, ordering or arranging for or recommending the purchase, lease or
order of any health care item or service reimbursable under Medicare, Medicaid, or other federal health care programs. Liability
may be established without a person or entity having actual knowledge of the federal Anti-Kickback Statute or specific intent to
violate it. A conviction for violation of the Anti-kickback Statute requires mandatory exclusion from participation in federal
health care programs. The majority of states also have statutes similar to the federal Anti-Kickback Statute and false claims laws
that apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless
of the payer. We seek to comply with the anti-kickback laws and with the available statutory exemptions and safe harbors.
However, our practices may not in all cases fit within the safe harbors, and our practices may therefore be subject to scrutiny
on a case-by-case basis. As discussed above in subsection entitled “Fraud and Abuse,” the FCA prohibits any person from
knowingly presenting, or causing to be presented, a false or fraudulent claim for payment of government funds, or knowingly

making, using or causing to be made or used, a false record or statement material to a false or fraudulent claim. Pharmaceutical
companies have been investigated and have reached substantial financial settlements with the Federal government under the FCA for a
variety of alleged promotional and marketing activities, such as allegedly providing free product to customers with the expectation
that the customers would bill federal programs for the product; providing consulting fees and other benefits to physicians to induce
them to prescribe products; engaging in promotion for uses that the FDA has not approved, or “off-label” uses; and submitting inflated
best price information to the Medicaid Rebate Program. We seek to comply with the FCA laws, but we cannot assure that our
compliance program, policies and procedures will always protect Alexion from acts committed by its employees or third-party
distributors or service providers. Violations of U.S. federal and state fraud and abuse laws may result in criminal, civil and
administrative sanctions, including fines, damages, civil monetary penalties and exclusion from federal healthcare programs
(including Medicare and Medicaid).

Although physicians in the United States are permitted to, based on their medical judgment, prescribe products for indications

other than those cleared or approved by the FDA, manufacturers are prohibited from promoting their products for such off-label uses.
In the United States, we market our products for their approved uses. Although we believe our marketing materials and training
programs for physicians do not constitute off-label promotion, the FDA, the U.S. Justice Department, or other federal or state
government agencies may disagree. If the FDA or other government agencies determine that our promotional materials, training or
other activities constitute off-label promotion of any of our products, it could request that we modify our training or promotional
materials or other activities or subject us to regulatory enforcement actions, including the issuance of a warning letter, injunction,
seizure, civil fine and criminal penalties. It is also possible that other federal or state enforcement authorities might take action if they
believe that the alleged improper promotion led to the submission and payment of claims for an unapproved use, which could result in
significant fines or penalties under other statutory authorities, such as laws prohibiting false or fraudulent claims for payment of
government funds.

As discussed above in subsection entitled “Other Regulations,” the EU imposes similar strict restrictions on the promotion and

marketing of drug products. The off-label promotion of medicinal products is prohibited in the EU and in other territories. The
promotion of medicinal products that are not subject to a marketing authorization is also prohibited in the EU. Violations of the rules
governing the promotion of medicinal products in the EU and in other territories could be penalized by administrative measures, fines
and imprisonment.

As discussed above in the subsection entitled “Other Regulations,” we are subject to FCPA, the U.K. Bribery Act, and other

anti-corruption laws and regulations that generally prohibit companies and their intermediaries from making improper payments to
government officials and/or other persons for the purpose of obtaining or retaining business and we operate in countries that are
recognized as having a greater potential for governmental and commercial corruption. We cannot assure that our compliance program,
policies and procedures will always protect Alexion from acts committed by its employees or third-party distributors or service
providers.

In May 2015, we received a subpoena in connection with an investigation by the Enforcement Division of the SEC requesting

information related to our grant-making activities and compliance with the FCPA in various countries. The SEC also seeks
information related to Alexion’s recalls of specific lots of Soliris and related securities disclosures. In addition, in October 2015,
Alexion received a request from the U.S. Department of Justice (DOJ) for the voluntary production of documents and other
information pertaining to Alexion's compliance with the FCPA. Alexion is cooperating with these investigations. At this time, Alexion
is unable to predict the duration, scope or outcome of these investigations.

Any determination that our operations or activities are not, or were not, in compliance with existing United States or foreign
laws or regulations, including by the SEC or DOJ pursuant to its investigation of our compliance with the FCPA and other matters,
could result in the imposition of a broad range of civil and criminal sanctions against Alexion and certain of our directors, officers
and/or employees, including injunctive relief, disgorgement, substantial fines or penalties, imprisonment, and other legal or equitable
sanctions. Additionally, we could experience interruptions of business, harm to our reputation, debarment from government contracts,
loss of supplier, vendor or other third-party relationships, and necessary licenses and permits could be terminated. Other internal or
government investigations or legal or regulatory proceedings, including lawsuits brought by private litigants, may also follow as a
consequence. Cooperating with and responding to the SEC and the DOJ in connection with its investigation of our FCPA practices
and other matters, as well as responding to any future U.S. or foreign governmental investigation or whistleblower lawsuit, could
result in substantial expenses, and could divert management’s attention from other business concerns and could have a material
adverse effect on our business and financial condition and growth prospects.
Completion of preclinical studies or clinical trials does not guarantee advancement to the next phase of development.

Completion of preclinical studies or clinical trials does not guarantee that we will initiate additional studies or trials for our

product candidates, that if further studies or trials are initiated what the scope and phase of the trial will be or that they will be
completed, or that if these further studies or trials are completed, that the design or results will provide a sufficient basis to
apply for or receive regulatory approvals or to commercialize products. Results of clinical trials could be inconclusive,
requiring additional or repeat trials. Data obtained from preclinical studies and clinical trials are subject to varying

interpretations that could delay, limit or prevent regulatory approval. If the design or results achieved in our clinical trials are
insufficient to proceed to further trials or to regulatory approval of our product candidates, our company could be materially adversely
affected. Failure of a clinical trial to achieve its pre-specified primary endpoint, such as the Phase II Soliris trial for AMR that we
announced in January 2015, generally increases the likelihood that additional studies or trials will be required if we determine to
continue development of the product candidate, reduces the likelihood of timely development of and regulatory approval to market the
product candidate, and may decrease the chances for successfully achieving the primary endpoint in scientifically similar indications.
Our clinical studies may be costly and lengthy, and there are many reasons why drug testing could be delayed or terminated.

For human trials, patients must be recruited and each product candidate must be tested at various doses and formulations for each
clinical indication. In addition, to ensure safety and effectiveness, the effect of drugs often must be studied over a long period of time,
especially for the chronic diseases that we are studying. Many of our programs focus on diseases with small patient populations
making patient enrollment difficult. Insufficient patient enrollment in our clinical trials could delay or cause us to abandon a product
development program. We may decide to abandon development of a product candidate or a study at any time due to unfavorable
results or other reasons, or we may have to spend considerable resources repeating clinical trials or conducting additional trials, either
of which would increase costs and delay any revenue from those product candidates, if any. We may open clinical sites and enroll
patients in countries where we have little experience. We rely on a small number of clinical research organizations to carry out our
clinical trial related activities, and one CRO is responsible for many of our studies. We rely on such parties to accurately report their
results. Our reliance on CROs may impact our ability to control the timing, conduct, expense and quality of our clinical trials.

Additional factors that can cause delay, impairment or termination of our clinical trials or our product development efforts

include:

a clinical trial at each site;

• delay or failure in obtaining institutional review board (IRB), approval or the approval of other reviewing entities to conduct

• delay or failure in reaching agreement on acceptable terms with prospective contract research organizations(CROs), and
clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different
CROs and trial sites;

• withdrawal of clinical trial sites from our clinical trials as a result of changing standards of care or the ineligibility of a site to

participate in our clinical trials;

• clinical sites and investigators deviating from trial protocol, failing to conduct the trial in accordance with regulatory

requirements, or dropping out of a trial;
slow patient enrollment, including, for example, due to the rarity of the disease being studied;

long treatment time required to demonstrate effectiveness;
lack of sufficient supplies of the product candidate;

•
• delay or failure in having patients complete a trial or return for post-treatment follow-up;
•
•
• disruption of operations at the clinical trial sites;
• adverse medical events or side effects in treated patients, and the threat of legal claims and litigation alleging injuries;
•
•
•
•
•

failure of patients taking the placebo to continue to participate in our clinical trials;
insufficient clinical trial data to support effectiveness of the product candidates;
lack of effectiveness or safety of the product candidate being tested;
lack of sufficient funds;
inability to meet required specifications or to manufacture sufficient quantities of the product candidate for development or
commercialization activities in a timely and cost-efficient manner;

• decisions by regulatory authorities, the IRB, ethics committee, or us, or recommendation by a data safety monitoring board,

to suspend or terminate clinical trials at any time for safety issues or for any other reason;
failure to obtain the necessary regulatory approvals for the product candidate or the approvals for the facilities in which such
product candidate is manufactured; and

•

• decisions by competent authorities, IRBs or ethics committees to demand variations in protocols or conduct of clinical trials.

Risks Related to Intellectual Property
If we cannot obtain new patents, maintain our existing patents and protect the confidentiality and proprietary nature of our trade
secrets and other intellectual property, our business and competitive position will be harmed.

Our success will depend in part on our ability to obtain and maintain patent and regulatory protections for our products

and investigational compounds, to preserve our trade secrets and other proprietary rights, to operate without infringing the
proprietary rights of third parties, and to prevent third parties from circumventing our rights. Due to the time and expense of

bringing new products through development and regulatory approval to the marketplace, there is particular importance in obtaining
patent and trade secret protection for significant new technologies, products and processes.

We have and may in the future obtain patents or the right to practice patents through ownership or license. Our patent

applications may not result in the issue of patents in the United States or other countries. Our patents may not afford adequate
protection for our products. Third parties may challenge our patents, and have challenged our patents in the past. If any of our patents
are narrowed, invalidated or become unenforceable, competitors may develop and market products similar to ours that do not conflict
with or infringe our patents rights, which could have a material adverse effect on our financial condition. We may also finance and
collaborate in research conducted by government organizations, hospitals, universities or other educational or research institutions.
Such research partners may be unwilling to grant us exclusive rights to technology or products developed through such collaborations.
There is also a risk that disputes may arise as to the rights to technology or products developed in collaboration with other parties. Our
products and product candidates are expensive and time-consuming to test and develop. Even if we obtain and maintain patents, our
business may be significantly harmed if the patents are not broad enough to protect our products from copycat products.

Significant legal questions exist concerning the extent and scope of patent protection for biopharmaceutical products and
processes in the United States and elsewhere. Accordingly, there is no certainty that patent applications owned or licensed by us will
issue as patents, or that our issued patents will afford meaningful protection against competitors. Once issued, patents are subject to
challenge through both administrative and judicial proceedings in the U.S. and other countries. Such proceedings include
re-examinations, inter partes reviews, post-grant reviews and interference proceedings before the U.S. Patent and Trademark Office,
as well as opposition proceedings before the European Patent Office. Litigation may be required to enforce, defend or obtain our
patent and other intellectual property rights. Any administrative proceeding or litigation could require a significant commitment of our
resources and, depending on outcome, could adversely affect the scope, validity or enforceability of certain of our patent or other
proprietary rights.

In addition, our business requires using sensitive technology, techniques and proprietary compounds that we protect as trade
secrets. However, we may also rely heavily on collaboration with, or discuss the potential for collaboration with, suppliers, outside
scientists and other biopharmaceutical companies. Collaboration and discussion of potential collaboration present a strong risk of
exposing our trade secrets. If our trade secrets were exposed, it would help our competitors and adversely affect our business
prospects.
If we are found to be infringing on patents owned by others, we may be forced to pay damages to the patent owner and/or obtain a
license to continue the manufacture, sale or development of our products. If we cannot obtain a license, we may be prevented from
the manufacture, sale or development of our products, which would adversely affect our business.

Parts of our technology, techniques, proprietary compounds and potential product candidates, including those which are or may
be in-licensed, may be found to infringe patents owned by or granted to others. We previously reported that certain third parties filed
civil lawsuits against us claiming infringement of their intellectual property rights. Each of those matters was resolved. However,
additional third parties may claim that the manufacture, use or sale of our products or product candidates infringes patents owned or
granted to such third parties. We have in the past received, and may in the future receive, notices from third parties claiming that their
patents may be infringed by the development, manufacture or sale of our products or product candidates. We are aware of patents
owned by third parties that might be claimed by such third parties to be infringed by the development and commercialization of our
products or investigational compounds. In respect to some of these patents, we have obtained licenses, or expect to obtain licenses.
However, with regard to other patents, we have determined in our judgment that:
▪ our products and investigational compounds do not infringe the patents;
▪
▪ we have identified and are testing various alternatives that should not infringe the patents and which should permit continued

the patents are not valid or enforceable; and/or

development and commercialization of our products and investigational compounds.

Any holder of these patents or other patents covering similar technology could sue us for damages and seek to prevent us from

manufacturing, selling or developing our products. Legal disputes can be costly and time consuming to defend. If we cannot
successfully defend against any future actions or conflicts, if they arise, we may incur substantial legal costs and may be liable for
damages, be required to obtain costly licenses or need to stop manufacturing, using or selling our products, which would adversely
affect our business. We may seek to obtain a license prior to or during legal actions in order to reduce further costs and the risk of a
court determination that our product infringes the third party's patents. A required license may be costly or may not be available on
acceptable terms, if at all. A costly license, or inability to obtain a necessary license, could have a material adverse effect on our
business.

There can be no assurance that we would prevail in a patent infringement action or that we would be able to obtain a license to

any third-party patent on commercially reasonable terms or any terms at all; successfully develop non-infringing alternatives on a
timely basis; or license alternative non-infringing technology, if any exists, on commercially reasonable terms.

Any impediment to our ability to manufacture, use or sell approved forms of our products or our product candidates could have a
material adverse effect on our business and prospects.
It is possible that we could lose market exclusivity for a product earlier than expected, which would harm our competitive position.
In our industry, much of an innovative product’s commercial value is realized while it has market exclusivity. When market
exclusivity expires and biosimilar or generic versions of the product are approved and marketed, there can be substantial decline in the
innovative product’s sales.

Market exclusivity for our products is based upon patent rights and certain regulatory forms of exclusivity. The scope of our
product patent rights vary from country to country and are dependent on the availability of meaningful legal remedies in each country.
The failure to obtain patent and other intellectual property rights, or limitations on the use, or loss of such rights, could be material to
our business. In some countries, patent protections for our products may not exist because certain countries did not historically offer
the right to obtain specific types of patents or we did not file patents in those markets. Also, the patent environment is unpredictable
and the validity and enforceability of patents cannot be predicted with certainty. Absent relevant patent protection for a product, once
regulatory exclusivity periods expire, biosimilar or generic versions of the product can be approved and marketed. Even prior to the
expiration of regulatory exclusivity, a competitor could seek to obtain marketing approval by submitting its own clinical trial data.

The market exclusivity of our products may be impacted by competitive products that are either innovative or biosimilar or
generic copies. In our industry, the potential for biosimilar challenges has been an increasing risk to product market exclusivity. U.S.
law includes an approval pathway for biosimilar versions of innovative biological products. Under the pathway, the FDA may approve
products that are similar to (but not generic copies of) innovative biologics on the basis of less extensive data than is required for a full
biologic license application. After an innovator has marketed its product for four years, other manufacturers may apply for approval of
a biosimilar version of the innovator product. However, qualified innovative biological products will receive 12 years of regulatory
exclusivity, meaning that the FDA may not actually approve a biosimilar version until 12 years after the innovative product received
its approval. The law also provides a mechanism for innovators to enforce their patents that protect their products and for biosimilar
applicants to challenge the patents. Such litigation may begin as early as four years after the innovative biological product is first
approved by the FDA. Pathways for biosimilar products also exist in many other markets, including Europe and Japan.

Risks Related to Our Operations

We may not accurately forecast demand for our products, including our new products, which may cause our operating results to
fluctuate, and we cannot guarantee that we will achieve our financial goals, including our ability to maintain profitability on a
quarterly or annual basis in the future.

We have maintained profitability on a quarterly basis since the quarter ended June 30, 2008 and on an annual basis beginning
with the year ended December 31, 2008. Our quarterly revenues, expenses and net income (loss) may fluctuate, even significantly, due
to the risks described in these “Risk Factors” as well as the timing of charges and expenses that we may take. We believe that we
formulate our annual operating budgets with reasonable assumptions and targets, however we may not generate sufficient revenues or
control expenses to achieve our financial goals, including continued profitability. We may not be able to sustain or increase
profitability on a quarterly or annual basis. You should not consider our financial performance, including our revenue growth, in
recent periods as indicative of our future performance. We may not accurately forecast demand for our products, especially Strensiq
and Kanuma. Strensiq and Kanuma are in the early stages of commercial launch having each received marketing approval in 2015,
and both products treat rare diseases for which there was no existing therapy in a new therapeutic area for us. Product demand is
dependent on a number of factors. Our investors may have widely varying expectations that may be materially higher or lower than
actual revenues and if our revenues are different from these expectations, our stock price may experience significant volatility. Our
revenues are also subject to foreign exchange rate fluctuations due to the global nature of our operations and our results of operations
could be adversely affected due to unfavorable foreign exchange rates. Although we use derivative instruments to manage foreign
currency risk, our efforts to reduce currency exchange losses may not be successful.

We have significant debt service obligations as a result of the debt we incurred to finance the acquisition of Synageva. Changes

in interest rates related to this debt could significantly increase our annual interest expense. As we advance our most robust pipeline in
our history and launch our second and third products worldwide, we will have substantial expenses as we continue our research and
development efforts, continue to conduct clinical trials and continue to develop manufacturing, sales, marketing and distribution
capabilities worldwide, some of which could be delayed, scaled-back or eliminated to achieve our financial objectives.

We have also recorded, or may be required to record, charges that include inventory write-downs for failed quality
specifications or recalls, impairments with respect to investments, fixed assets and long-lived assets, outcomes of litigation and

other legal or administrative proceedings, regulatory matters and tax matters, and payments in connection with acquisitions and other
business development activities, such as milestone payments.
Each of our products is currently the only approved drug for the disease(s) the product treats. If a competitive product is approved
for sale, including a biosimilar or generic product, our market share and our revenues could decline, particularly if the competitive
product is perceived to be more effective or is less expensive than our product.

We operate in a highly competitive environment. Soliris is currently the only approved therapy for the treatment of PNH and
aHUS. We are in advanced clinical studies of Soliris for the treatment of other diseases, and there are currently no approved drugs for
any of these other diseases. Strensiq is currently the only product approved to treat HPP and Kanuma is the only product approved to
treat LAL-D. In the future, Soliris may compete with new drugs currently in development, and Strensiq and Kanuma may also
experience competition. Other companies have initiated clinical studies for the treatment of PNH and NMO, and we are aware of
companies that are planning to initiate studies for diseases that we are also targeting.

Pharmaceutical companies have publicly announced intentions to establish or develop rare disease programs and these
companies may introduce products that are competitive with ours. These and other companies, many of which have significantly
greater financial, technical and marketing resources than us, may commercialize products that are cheaper, more effective, safer, or
easier to administer than our products. In the future, our products may also compete with biosimilars or generics. We experience
competition in drug development from universities and other research institutions, and pharmaceutical companies compete with us to
attract universities and academic research institutions as drug development partners, including for licensing their proprietary
technology. If our competitors successfully enter into such arrangements with academic institutions, we will be precluded from
pursuing those unique opportunities and may not be able to find equivalent opportunities elsewhere.

If a company announces successful clinical trial results for a product that may be competitive with one of our products or

product candidates, receives marketing approval of a competitive product, or gets to the market before we do with a competitive
product, our business may be harmed or our stock price may decline.
If we fail to attract and retain highly qualified personnel, we may not be able to successfully develop, manufacture or
commercialize our products or products candidates.

The success of our business is dependent in large part on our continued ability to attract and retain our senior management, and
other highly qualified personnel in our scientific, clinical, manufacturing and commercial organizations. There is intense competition
in the biopharmaceutical industry for these types of personnel. Our business is specialized and global and we must attract and retain
highly qualified individuals across many geographies. We may not be able to continue to attract and retain the highly qualified
personnel necessary for developing, manufacturing and commercializing our products and product candidates. If we are unsuccessful
in our recruitment and retention efforts, our business may be harmed.
If we fail to satisfy our debt service obligations or obtain the capital necessary to fund our operations, we may be unable to
commercialize our products or continue or complete our product development.

In June 2015, we acquired Synageva and used a substantial portion of our cash on hand and incurred significant debt under the

terms of a senior secured credit facility to finance the acquisition. In addition, we have substantial contingent liabilities, including
milestone and royalty obligations under earlier acquisitions and strategic transactions. Our increased indebtedness, including increased
interest expense, together with our significant contingent liabilities, could, among other things:

• make us more vulnerable to economic or industry downturns and competitive pressures;
• make it difficult for us to make payments on the credit facilities and require us to use cash flow from operations to satisfy

our debt obligations, which would reduce the availability of our cash flow for other purposes, including business
development efforts, research and development and mergers and acquisitions;
limit our ability to incur additional debt or access the capital markets; and
limit our flexibility in planning for, or reacting to changes in, our business.

•
•
The Credit Agreement requires us to comply with certain financial covenants on a quarterly basis and includes negative
covenants, subject to exceptions, restricting or limiting our ability and the ability of our subsidiaries to, among other things, incur
additional indebtedness, grant liens, and engage in certain investment, acquisition and disposition transactions. If an event of default
occurs, the interest rate would increase and the administrative agent would be entitled to take various actions, including the
acceleration of amounts due under the loan.

Our ability to satisfy our obligations under the Credit Agreement and meet our debt service obligations will depend upon our

future performance, which will be subject to financial, business and other factors affecting our operations, many of which are beyond
our control.
We may not be able to access the capital and credit markets on terms that are favorable to us.

We may need to raise additional capital to supplement our existing funds and cash generated from operations for working capital,
capital expenditure and debt service requirements, and other business activities. Funding needs may shift and the amount of capital we
may need depends on many factors, including, the cost of any acquisition or any new collaborative, licensing or other commercial
relationships that we may establish, the time and cost necessary to build our manufacturing facilities or enhance our manufacturing
operations, the cost of obtaining and maintaining the necessary regulatory approvals for our manufacturing facilities, and the progress,
timing and scope of our preclinical studies and clinical trials. The capital and credit markets have experienced extreme volatility and
disruption. We may not receive additional funding when we need it or funding may only be available on unfavorable terms. If we
cannot raise adequate funds to satisfy our capital requirements, we may have to delay, scale-back or eliminate certain research,
development, manufacturing or commercial activities.
Our business involves environmental risks and potential exposure to environmental liabilities.

As a biopharmaceutical company, our business involves the use of certain hazardous materials in our research, development,
manufacturing, and other activities. We and our third party providers are subject to various federal, state and local environmental laws
and regulations concerning the handling and disposal of non-hazardous and hazardous wastes, such as medical and biological wastes,
and emissions and discharges into the environment, such as air, soils and water sources. We also are subject to laws and regulations
that impose liability and clean-up responsibility for releases of hazardous substances into the environment and a current or previous
owner or operator of property may be liable for the costs of remediating its property or locations, without regard to whether the owner
or operator knew of or caused the contamination. If an accident or environmental discharge occurs, or if we discover contamination
caused by prior owners and operators of properties we acquire, we could be liable for remediation obligations, damages and fines that
could exceed our insurance coverage and financial resources. Such obligations and liabilities, which to date have not been material,
could have a material impact on our business and financial condition. Additionally, the cost of compliance with environmental and
safety laws and regulations may increase in the future, and we may be required dedicate more resources to comply with such
developments or purchase supplemental insurance coverage.
We are seeking to expand our business through strategic initiatives. Our efforts to identify opportunities or complete transactions
that satisfy our strategic criteria may not be successful, and we not realize the anticipated benefits of any completed acquisition or
other strategic transaction.

Our business strategy includes expanding our products and capabilities. We regularly evaluate potential merger, acquisition,

partnering and in-license opportunities that we expect will expand our pipeline or product offerings, and enhance our research
platforms. Acquisitions of new businesses or products and in-licensing of new products may involve numerous risks, including:

substantial cash expenditures;

•
• potentially dilutive issuance of equity securities;
•

incurrence of debt and contingent liabilities, some of which may be difficult or impossible to identify at the time of
acquisition;

• difficulties in assimilating the operations of the acquired companies;
•

failure of any acquired businesses or products or in-licensed products to achieve the scientific, medical, commercial or other
results anticipated;

• diverting our management's attention away from other business concerns;
•
•
A substantial portion of our strategic efforts are focused on opportunities for rare disorders and life-saving therapies and the

the potential loss of our key employees or key employees of the acquired companies; and
risks of entering markets in which we have limited or no direct experience.

availability of such opportunities is limited. We may not be able to identify opportunities that satisfy our strategic criteria or are
acceptable to us or our stockholders. Several companies have publicly announced intentions to establish or develop rare disease
programs and we may compete with these companies for the same opportunities. For these and other reasons, we may not be able to
acquire the rights to additional product candidates or approved products on terms that we or our stockholders find acceptable, or at all.
Even if we are able to successfully identify and complete acquisitions and other strategic transactions, we may not be able to

integrate them or take full advantage of them. An acquisition or other strategic transaction may not result in short-term or long-term
benefits to us. We may also incorrectly judge the value or worth of an acquired company or business or an acquired or in-licensed
product.

To effectively manage our current and future potential growth, we must continue to effectively enhance and develop our

global employee base, and our operational and financial processes. Supporting our growth strategy will require significant
capital expenditures and management resources, including investments in research, development, sales and marketing,
manufacturing and other areas of our operations. The development or expansion of our business, any acquired business or any

acquired or in-licensed products may require a substantial capital investment by us. We may not have these necessary funds or they
might not be available to us on acceptable terms or at all. We may also seek to raise funds by selling shares of our capital stock, which
could dilute current stockholders' ownership interest in our company, or securities convertible into our capital stock, which could
dilute current stockholders' ownership interest in our company upon conversion.
We may be required to recognize impairment charges for our goodwill and other intangible assets.

As of December 31, 2015, the net carrying value of our goodwill and other intangible assets totaled $9,755,799. As required by

generally accepted accounting principles, we periodically assess these assets to determine if they are impaired. Impairment of
intangible assets may be triggered by developments both within and outside our control. Deteriorating economic conditions,
technological changes, disruptions to our business, inability to effectively integrate acquired businesses, unexpected significant
changes or planned changes in use of the assets, intensified competition, divestitures, market capitalization declines and other factors
may impair our goodwill and other intangible assets. Any charges relating to such impairments could adversely affect our results of
operations in the periods an impairment is recognized.
Our business could be affected by litigation, government investigations and enforcement actions.

We operate in many jurisdictions in a highly regulated industry and we could be subject to litigation, government investigation

and enforcement actions on a variety of matters in the United States or foreign jurisdictions, including, without limitation, intellectual
property, regulatory, product liability, environmental, whistleblower, Qui Tam, false claims, privacy, anti-kickback, anti-bribery,
securities, commercial, employment, and other claims and legal proceedings which may arise from conducting our business. As
previously disclosed, in May 2015, we received a subpoena in connection with an investigation by the Enforcement Division of the
SEC requesting information related to our grant-making activities and compliance with the FCPA in various countries. The SEC also
seeks information related to Alexion’s recalls of specific lots of Soliris and related securities disclosures. In addition, in October 2015,
Alexion received a request from the DOJ for the voluntary production of documents and other information pertaining to Alexion's
compliance with the FCPA. Legal proceedings, government investigations, including the SEC and DOJ investigations, and
enforcement actions can be expensive and time consuming. An adverse outcome could result in significant damages awards, fines,
penalties, exclusion from the federal healthcare programs, healthcare debarment, injunctive relief, product recalls, reputational damage
and modifications of our business practices, which could have a material adverse effect on our business and results of operations.
The intended efficiency of our corporate structure depends on the application of the tax laws and regulations in the countries
where we operate and we may have exposure to additional tax liabilities or our effective tax rate could change, which could have a
material impact on our results of operations and financial position.

As a company with international operations, we are subject to income taxes, as well as non-income based taxes, in both the

United States and various foreign jurisdictions. Significant judgment is required in determining our worldwide tax
liabilities. Although we believe our estimates are reasonable, the ultimate outcome with respect to the taxes we owe may differ from
the amounts recorded in our financial statements. If the Internal Revenue Service, or other taxing authority, disagrees with the
positions we take, we could have additional tax liability, and this could have a material impact on our results of operations and
financial position. Our effective tax rate could be adversely affected by changes in the mix of earnings in countries with different
statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes in tax laws and regulations, changes in
interpretations of tax laws, including pending tax law changes, changes in our manufacturing activities and changes in our future
levels of research and development spending.

We have designed our corporate structure, the manner in which we develop and use our intellectual property, and our
intercompany transactions between our affiliates in a way that is intended to enhance our operational and financial efficiency and
increase our overall profitability. We are also integrating the Synageva corporate structure into our own in a manner that is also
intended to achieve similar efficiencies. The application of the tax laws and regulations of various countries in which we operate and
to our global operations is subject to interpretation. We also must operate our business in a manner consistent with our corporate
structure to realize such efficiencies. The tax authorities of the countries in which we operate may challenge our methodologies for
valuing developed technology or for transfer pricing. If tax authorities determine that the manner in which we operate results in our
business not achieving the intended tax consequences, our effective tax rate could increase and harm our financial position and results
of operations.

In addition, the United States government and other governments are considering and may adopt tax reform measures that
significantly increase our worldwide tax liabilities. The U.S. Congress, the Organization for Economic Co-operation and Development
and other government agencies in countries where we and our affiliates operate have focused on issues related to the taxation of
multinational corporation, including, for example, in the area of “base erosion and profit shifting,” where payments are made between
affiliates from a jurisdiction with high tax rates to a jurisdiction with lower tax rates. We established operations in Ireland in 2013 and
Ireland tax authorities announced changes to the treatment of non-resident Irish entities. The changes are not expected to impact
existing non-resident Irish entities, such as ours, until after December 31, 2020.

These changes and other prospective changes in the United States and other countries in which we and our affiliates operate could
increase our effective tax rate, and harm our financial position and results of operations.
Our sales and operations are subject to a variety of risks relating to the conduct and expansion of our international business.

We continue to increase our international presence, including in emerging markets. Our operations in foreign countries subject us

to a variety of risks, including:

• difficulties or the inability to obtain necessary foreign regulatory or reimbursement approvals of our products in a timely

manner;

• political or economic determinations that adversely impact pricing or reimbursement policies;
• economic problems or political instability;
•
fluctuations in currency exchange rates;
• difficulties or inability to obtain financing in markets;
• unexpected changes in tariffs, trade barriers and regulatory requirements;
• difficulties enforcing contractual and intellectual property rights;
• compliance with complex import and export control laws;
•
• compliance with tax, employment and labor laws;
• costs and difficulties in recruiting and retaining qualified managers and employees to manage and operate the business in

trade restrictions and restrictions on direct investments by foreign entities;

local jurisdictions;

longer payment cycles.

• costs and difficulties in managing and monitoring international operations; and
•
Additionally, our business and marketing methods are subject to the laws and regulations of the countries in which we operate,
which may differ significantly from country to country and may conflict with U.S. laws and regulations. The FCPA and anti-bribery
laws and regulations are extensive and far-reaching, and we must maintain accurate records and control over the activities of our
distributors and third party service providers in countries where we operate. We have policies and procedures designed to help ensure
that we and our representatives, including our employees, comply with such laws, however we cannot guarantee that these policies
and procedures will protect us against liability under the FCPA or other anti-bribery laws for actions taken by our representatives.
Although we conducted due diligence of Synageva's operations prior to the acquisition, we may discover or identify deficiencies or
non-compliance with such laws as we complete the integration of the Synageva business and conduct operations. Failure to comply
with the laws and regulations of the countries in which we operate could materially harm our business.
Currency fluctuations and changes in exchange rates could adversely affect our revenue growth, increase our costs and negatively
affect our profitability.

We conduct a substantial portion of our business in currencies other than the U.S. dollar. We are exposed to fluctuations in
foreign currency exchange rates and fluctuations in foreign currency exchange rates affect our operating results. The exposures result
from portions of our revenues, as well as the related receivables, and expenses that are denominated in currencies other than the U.S.
dollar, including the Euro, Japanese Yen, British Pound, Swiss Franc, and Russian Ruble. As the U.S. dollar strengthens against these
foreign currencies, the relative value of sales made in the respective foreign currency decreases. When the U.S. dollar weakens against
these currencies, the relative value of such sales increases. We manage our foreign currency transaction risk within specified
guidelines through the use of derivatives. All of our derivative instruments are utilized for risk management purposes, and we do not
use derivatives for speculative trading purposes. We enter into foreign exchange forward contracts to hedge exposures resulting from
portions of our forecasted revenues, including intercompany revenues, that are denominated in currencies other than the U.S.
dollar. The purpose of the hedges of revenue is to reduce the volatility of exchange rate fluctuations on our operating results and to
increase the visibility of the foreign exchange impact on forecasted revenues. Further, we enter into foreign exchange forward
contracts, with durations of approximately 30 days, designed to limit the balance sheet exposure of monetary assets and liabilities. We
enter into these hedges to reduce the impact of fluctuating exchange rates on our operating results. Gains and losses on these hedge
transactions are designed to offset gains and losses on underlying balance sheet exposures. While we attempt to hedge certain currency
risks, currency fluctuations between the U.S. dollar and the currencies in which we do business have, in the past, caused foreign
currency transaction gains and losses and have also impacted the amounts of revenues and expenses calculated in U.S. dollars and will
do so in the future. Likewise, past currency fluctuations have at times resulted in foreign currency transaction gains, and there can be
no assurance that these gains can be reproduced. Any significant foreign currency exchange rate fluctuations could adversely affect
our financial condition and results of operations.
Changes in healthcare laws and policy may affect coverage and reimbursement of our products in ways that we cannot currently
predict and these changes could adversely affect our business and financial condition.

In the U.S., there have been a number of legislative and regulatory initiatives focused on containing the cost of health care. The
Patient Protection and Affordable Care Act (PPACA) was enacted in the United States in March 2010. This law substantially changes
the way healthcare is financed by both governmental and private insurers in the U.S., and significantly impacts the pharmaceutical
industry. PPACA contains a number of provisions that are expected to impact our business and operations, in some cases in ways we
cannot currently predict. Changes that may affect our business include those governing enrollment in federal healthcare programs,
reimbursement changes, rules regarding prescription drug benefits under health insurance exchanges, expansion of the 340B program,
expansion of state Medicaid programs, fraud and abuse enforcement and rules governing the approval of biosimilar products. These
changes will impact existing government healthcare programs and will result in the development of new programs, including
Medicare payment for performance initiatives and improvements to the physician quality reporting system and feedback program. On
January 21, 2016, CMS issued final regulations to implement the changes to the Medicaid Drug Rebate Program under
PPACA. These regulations become effective on April 1, 2016. We are evaluating the impact of these regulations on our business
and operations. Moreover, in the future, Congress could enact legislation that further increases Medicaid drug rebates or other costs
and charges associated with participating in the Medicaid Drug Rebate Program. The issuance of regulations and coverage expansion
by various governmental agencies relating to the Medicaid Drug Rebate Program has and will continue to increase our costs and the
complexity of compliance, has been and will be time-consuming, and could have a material adverse effect on our results of operations.
Governments in countries where we operate have adopted or have shown significant interest in pursuing legislative initiatives to
reduce costs of health care. We expect that the implementation of current laws and policies, the amendment of those laws and policies
in the future, as well as the adoption of new laws and policies, could have a material adverse effect on our industry generally and on
our ability to maintain or increase our product sales or successfully commercialize our product candidates, or could limit or eliminate
our future spending on development projects. In many cases, these government initiatives, even if enacted into law, are subject to
future rulemaking by regulatory agencies. Although we have evaluated these government initiatives and the impact on our business,
we cannot know with certainty whether any such law, rule or regulation will adversely affect coverage and reimbursement of our
products, or to what extent, until such laws, rules and regulations are promulgated, implemented and enforced, which could sometimes
take many years. The announcement or adoption of regulatory or legislative proposals could delay or prevent our entry into new
markets, affect our reimbursement or sales in the markets where we are already selling our products and materially harm our business,
financial condition and results of operations.
If we fail to comply with our reporting and payment obligations under the Medicaid Drug Rebate Program, Medicare, or other
governmental pricing programs, we could be subject to additional reimbursement requirements, penalties, sanctions and fines
which could have a material adverse effect on our business, financial condition, results of operations and growth prospects.
Pricing and rebate calculations vary among products and programs. The calculations are complex and are often subject to
interpretation by us, governmental or regulatory agencies and the courts. We cannot assure you that our submissions will not be found
by CMS to be incomplete or incorrect. Governmental agencies may also make changes in program interpretations, requirements or
conditions of participation, some of which may have implications for amounts previously estimated or paid. The Medicaid rebate
amount is computed each quarter based on our submission to CMS of our current average manufacturer price and best price for the
quarter. If we become aware that our reporting for a prior quarter was incorrect, or has changed as a result of recalculation of the
pricing data, we are obligated to resubmit the corrected data for a period not to exceed twelve quarters from the quarter in which the
data originally were due, and CMS may request or require restatements for earlier periods as well. Such restatements and
recalculations increase our costs for complying with the laws and regulations governing the Medicaid Drug Rebate Program. Any
corrections to our rebate calculations could result in an overage or underage in our rebate liability for past quarters, depending on the
nature of the correction. Price recalculations also may affect the ceiling price at which we are required to offer our products to certain
covered entities, such as safety-net providers, under the 340B drug discount program.

We are liable for errors associated with our submission of pricing data. In addition to retroactive rebates and the potential for
340B program refunds, if we are found to have knowingly submitted false average manufacturer price, ASP, or best price information
to the government, we may be liable for civil monetary penalties in the amount of $100 per item of false information. If we are found
to have made a misrepresentation in the reporting of our ASP, the Medicare statute provides for civil monetary penalties of up to $10
for each misrepresentation for each day in which the misrepresentation was applied. Our failure to submit monthly/quarterly average
manufacturer price, ASP, and best price data on a timely basis could result in a civil monetary penalty of $10 per day for each day the
information is late beyond the due date. Such failure also could be grounds for CMS to terminate our Medicaid drug rebate agreement,
pursuant to which we participate in the Medicaid program. In the event that CMS terminates our rebate agreement, federal payments
may not be available under Medicaid or Medicare Part B for our covered outpatient drugs.

As discussed above in the subsection entitled “Pharmaceutical Pricing and Reimbursement,” federal law requires that a company

must participate in the FSS pricing program to be eligible to have its products paid for with federal funds. If we overcharge the
government in connection with our FSS contract or Section 703 Agreement, whether due to a misstated FCP or otherwise, we are
required to refund the difference to the government. Failure to make necessary disclosures and/or to identify contract overcharges can
result in allegations against us under the FCA and other laws and regulations. Unexpected refunds to the government, and responding
to a government investigation or enforcement action, would be expensive and time-consuming, and could have a material adverse
effect on our business, financial condition, results of operations and growth prospects.
We may be subject to numerous and varying privacy and security laws, and our failure to comply could result in penalties and
reputational damage.

We are subject to laws and regulations covering data privacy and the protection of personal information including health

information. The legislative and regulatory landscape for privacy and data protection continues to evolve, and there has been an
increasing focus on privacy and data protection issues which may affect our business. In the U.S., we may be subject to state security
breach notification laws, state health information privacy laws and federal and state consumer protections laws which impose
requirements for the collection, use, disclosure and transmission of personal information. Each of these laws are subject to varying
interpretations by courts and government agencies, creating complex compliance issues for us. If we fail to comply with applicable
laws and regulations we could be subject to penalties or sanctions, including criminal penalties if we knowingly obtain individually
identifiable health information from a covered entity in a manner that is not authorized or permitted by the federal Health Insurance
Portability and Accountability Act of 1996, as amended (HIPAA) or for aiding and abetting the violation of HIPAA.

Numerous other countries have, or are developing, laws governing the collection, use and transmission of personal information

as well. European Union member states and other jurisdictions have adopted data protection laws and regulations, which impose
significant compliance obligations. For example, the European Commission adopted the EU Data Protection Directive, as
implemented into national laws by the EU member states, which imposed strict obligations and restrictions on the ability to collect,
analyze, and transfer personal data, including health data from clinical trials and adverse event reporting. Data protection authorities
from different EU member states have interpreted the privacy laws differently, which adds to the complexity of processing personal
data in the EU, and guidance on implementation and compliance practices are often updated or otherwise revised. Any failure to
comply with the rules arising from the EU Data Protection Directive and related national laws of European Union member states could
lead to government enforcement actions and significant penalties against us, and adversely impact our operating results.

In December 2015, a proposal for an EU Data Protection Regulation, intended to replace the current EU Data Protection
Directive, was agreed between the European Parliament, the Council of the European Union and the European Commission. The EU
Data Protection Regulation, which will be officially adopted in early 2016, will introduce new data protection requirements in the EU
and substantial fines for breaches of the data protection rules. The EU Data Protection Regulation, which will be applicable two years
after the date of its publication in the Official Journal for the European Union, will increase our responsibility and liability in relation
to personal data that we process and we may be required to put in place additional mechanisms ensuring compliance with the new EU
data protection rules.
Security breaches, cyber-attacks, or other disruptions could expose us to liability and affect our business and reputation.

We are increasingly dependent on our information technology systems and infrastructure for our business. We collect, store, and
transmit sensitive information including intellectual property, proprietary business information and personal information in connection
with business operations. The secure maintenance of this information is critical to our operations and business strategy. Some of this
information could be an attractive target of criminal attack by third parties with a wide range of motives and expertise, including
organized criminal groups, “hactivists,” patient groups, disgruntled current or former employees, and others. Cyber-attacks are of
ever-increasing levels of sophistication, and despite our security measures, our information technology and infrastructure may be
vulnerable to such attacks or may be breached, including due to employee error or malfeasance. We have implemented information
security measures to protect patients’ personal information against the risk of inappropriate and unauthorized external use and
disclosure. However, despite these measures, and due to the ever changing information cyber-threat landscape, we may be subject to
data breaches through cyber-attacks. Any such breach could compromise our networks and the information stored there could be
accessed, publicly disclosed, lost or stolen. If our systems become compromised, we may not promptly discover the intrusion. Like
other companies in our industry, we have experienced attacks to our data and systems, including malware and computer viruses. If our
systems failed or were breached or disrupted, we could lose product sales, and suffer reputational damage and loss of customer
confidence. Such incidents would result in notification obligations to affected individuals and government agencies, legal claims or
proceedings, and liability under federal and state laws that protect the privacy and security of personal information. Any one of these
events could cause our business to be materially harmed and our results of operations would be adversely impacted.

Negative public opinion and increased regulatory scrutiny of recombinant and transgenic products, genetically modified products,
and genetically modified animals generally may damage public perception of our current and future products or adversely affect
our ability to conduct our business and obtain regulatory approvals we may seek.

Kanuma is a transgenic product produced in the egg whites of genetically modified chickens who receive copies of the human

lysosomal acid lipase gene to produce recombinant human lysosomal acid lipase. The success of Kanuma will depend in part on
public attitudes of the use of genetic engineering. Public attitudes may be influenced by claims and perceptions that these types of
activities or products are unsafe, and our products may not gain sufficient acceptance by, or fall out of favor with, the public or the
medical community. Negative public attitudes to genetic engineering activities in general could result in more restrictive legislation or
regulations and could impede our ability to conduct our business, delay preclinical or clinical studies, or otherwise prevent us from
commercializing our product.

Risks Related to Our Common Stock

Our stock price is extremely volatile.

The trading price of our common stock has been extremely volatile and may continue to be volatile in the future. Many factors

could have an impact on our stock price, including fluctuations in our or our competitors' operating results, clinical trial results or
adverse events associated with our products, product development by us or our competitors, changes in laws, including healthcare, tax
or intellectual property laws, intellectual property developments, changes in reimbursement or drug pricing, the existence or outcome
of litigation or government proceedings, including the SEC/DOJ investigation, failure to resolve, delays in resolving or other
developments with respect to the issues raised in the Warning Letter, acquisitions or other strategic transactions, and the perceptions
of our investors that we are not performing or meeting expectations. The trading price of the common stock of many
biopharmaceutical companies, including ours, has experienced extreme price and volume fluctuations, which have at times been
unrelated to the operating performance of the companies whose stocks were affected.
Anti-takeover provisions in our charter and bylaws could make a third-party acquisition of us difficult and may frustrate any
attempt to remove or replace our current management.

Our corporate charter and by-law provisions may discourage certain types of transactions involving an actual or potential change

of control that might be beneficial to us or our stockholders. Our bylaws provide that special meetings of our stockholders may be
called only by the Chairman of the Board, the President, the Secretary, or a majority of the Board of Directors, or upon the written
request of stockholders who together own of record 25% of the outstanding stock of all classes entitled to vote at such meeting. Our
bylaws also specify that the authorized number of directors may be changed only by resolution of the board of directors. Our charter
does not include a provision for cumulative voting for directors, which may have enabled a minority stockholder holding a sufficient
percentage of a class of shares to elect one or more directors. Under our charter, our board of directors has the authority, without
further action by stockholders, to designate up to 5,000 shares of preferred stock in one or more series. The rights of the holders of
common stock will be subject to, and may be adversely affected by, the rights of the holders of any class or series of preferred stock
that may be issued in the future.

Because we are a Delaware corporation, the anti-takeover provisions of Delaware law could make it more difficult for a third

party to acquire control of us, even if the change in control would be beneficial to stockholders. We are subject to the provisions of
Section 203 of the Delaware General Laws, which prohibits a person who owns in excess of 15% of our outstanding voting stock from
merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of
15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.

Item 1B.

None.

UNRESOLVED STAFF COMMENTS.

Item 2.

PROPERTIES.

We conduct our primary operations at the owned and leased facilities described below.

Location

New Haven, Connecticut

Dublin, Ireland
Lexington, Massachusetts
Bogart, Georgia
Smithfield, Rhode Island
Zurich, Switzerland

Operations Conducted

Corporate headquarters and executive, sales, research and
development offices

Global supply chain, distribution, and administration offices
Research and development offices
Commercial, research and development manufacturing
Commercial, research and development manufacturing
Regional executive and sales offices

Approximate
Square Feet
514,000

215,000
81,000
70,000
67,000
69,000

Lease
Expiration
Dates

2030

Owned

2019
2024
Owned
2025

We believe that our administrative office space is adequate to meet our needs for the foreseeable future. We also believe that our
research and development facilities and our manufacturing facility, together with third party manufacturing facilities, will be adequate
for our on-going activities. In addition to the locations above, we also lease space in other U.S. locations and in foreign countries to
support our operations as a global organization.

As of December 31, 2015, we also leased approximately 254,000 square feet in Cheshire, Connecticut, which was the previous
location of our corporate headquarters and executive, sales, research and development offices. In December 2015, we entered into an
early termination of this lease and will occupy this space through May 2016.

In April 2014, we purchased a fill/finish facility in Athlone, Ireland. Following refurbishment of the facility, and after

successful completion of the appropriate validation processes and regulatory approvals, the facility will become our first
company-owned fill/finish and packaging facility for our commercial and clinical products. In May 2015, we announced plans to
construct a new biologics manufacturing facility on our existing property in Dublin Ireland, which is expected to be completed
by 2020.

Item 3.

LEGAL PROCEEDINGS.

In May 2015, we received a subpoena in connection with an investigation by the Enforcement Division of the SEC requesting

information related to our grant-making activities and compliance with the FCPA in various countries. The SEC also seeks
information related to Alexion’s recalls of specific lots of Soliris and related securities disclosures. In addition, in October 2015,
Alexion received a request from the DOJ for the voluntary production of documents and other information pertaining to Alexion's
compliance with the FCPA. Alexion is cooperating with these investigations. At this time, Alexion is unable to predict the duration,
scope or outcome of these investigations. Given the ongoing nature of these investigations, management does not currently believe
a loss related to these matters is probable or that the potential magnitude of such loss or range of loss, if any, can be reasonably
estimated.

Item 4.

MINE SAFETY DISCLOSURES.

Not applicable.

PART II

Item 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES.

Our common stock is quoted on The NASDAQ Stock Market, LLC under the symbol “ALXN.” The following table sets forth

the range of high and low sales prices for our common stock on The NASDAQ Stock Market, LLC for the periods indicated since
January 1, 2014.

Fiscal 2014
First Quarter
(January 1, 2014 to March 31, 2014)
Second Quarter
(April 1, 2014 to June 30, 2014)
Third Quarter
(July 1, 2014 to September 30, 2014)
Fourth Quarter
(October 1, 2014 to December 31, 2014)
Fiscal 2015
First Quarter
(January 1, 2015 to March 31, 2015)
Second Quarter
(April 1, 2015 to June 30, 2015)
Third Quarter
(July 1, 2015 to September 30, 2015)
Fourth Quarter
(October 1, 2015 to December 31, 2015)

High

Low

185.43 $

172.50 $

173.70 $

203.30 $

193.27 $

191.00 $

208.88 $

193.45 $

126.76

136.37

154.38

155.01

171.08

150.06

142.02

150.69

As of January 28, 2016, we had approximately 108 stockholders of record of our common stock and an estimated 144,340

beneficial owners. The closing sale price of our common stock on January 28, 2016 was $145.61 per share.

DIVIDEND POLICY

We have never paid cash dividends. We do not expect to declare or pay any cash dividends on our common stock in the near

future. We intend to retain all earnings, if any, to invest in our operations. The payment of future dividends is within the discretion of
our board of directors and will depend upon our future earnings, if any, our capital requirements, financial condition and other relevant
factors.

ISSUER PURCHASES OF EQUITY SECURITIES (amounts in thousands except per share amounts)

The following table summarizes our common stock repurchase activity during the fourth quarter of 2015:

Period
October 1-31, 2015
November 1-30, 2015
December 1-31, 2015

Total

Total Number of Shares
Purchased

Average Price Paid
per Share

Total Number of Shares
Purchased as Part of
Publicly Announced
Programs

Maximum Dollar
Value of Shares that
May Yet Be
Purchased Under the
Programs

766
105
70
941

158.69
175.79
175.59
161.86

766
105
70
941

786,625
768,226
755,864

In November 2012, our Board of Directors authorized a share repurchase program. The repurchase program does not have an

expiration date and we are not obligated to acquire a particular number of shares. In May 2015, our Board of Directors increased the
authorization of shares up to $1,000,000 for future purchases under the repurchase program, which superseded all prior repurchase
programs.

EQUITY COMPENSATION PLAN INFORMATION (amounts in thousands except per share amounts)

Plan Category
Equity compensation plans approved
by stockholders
Equity compensation plans not
approved by stockholders

Number of shares
of common stock
to be issued upon
exercise of
outstanding
options (1)

Weighted-
average
exercise price
of
outstanding
options

6,221

—

110.15

—

Weighted-
average
term to
expiration of
options
outstanding

6.96

—

Number of shares
of common stock
remaining available
for future issuance
under equity
compensation plans (2)

10,005

—

(1) Reflects number of shares of common stock to be issued upon exercise of outstanding options under all our equity

compensation plans, including our Amended and Restated 2004 Incentive Plan. Does not include 2,040 restricted shares
outstanding that were issued under the Amended and Restated 2004 Incentive Plan.

(2) Of these shares, 9,040 remain available for future issuance under the Amended and Restated 2004 Incentive Plan and 965

remain available under the 2015 Employee Stock Purchase Plan.

The outstanding options and restricted shares are not transferable for consideration and do not have dividend equivalent rights

attached.

THE COMPANY’S STOCK PERFORMANCE

The following graph compares cumulative total return of the Company’s Common Stock with the cumulative total return of
(i) the NASDAQ Stock Market-United States, and (ii) the NASDAQ Biotechnology Index. The graph assumes (a) $100 was invested
on December 31, 2010 in each of the Company’s Common Stock, the stocks comprising the NASDAQ Stock Market-United States
and the stocks comprising the NASDAQ Biotechnology Index, and (b) the reinvestment of dividends. The comparisons shown in the
graph are based on historical data and the stock price performance shown in the graph is not necessarily indicative of, or intended to
forecast, future performance of our stock.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Alexion Pharmaceuticals, Inc., the NASDAQ Composite Index
and the NASDAQ Biotechnology Index

$500

$450

$400

$350

$300

$250

$200

$150

$100

$50

12/10

12/11

12/12

12/13

12/14

12/15

Alexion Pharmaceuticals, Inc.

NASDAQ Composite

NASDAQ Biotechnology

*$100 invested on 12/31/10 in stock or index, including reinvestment of dividends.
Fiscal year ending December 31.

CUMULATIVE TOTAL RETURN

Alexion Pharmaceuticals, Inc.
NASDAQ Composite
NASDAQ Biotechnology

12/10
100.00
100.00
100.00

12/11
177.53
100.53
113.92

12/12
232.75
116.92
153.97

12/13
329.94
166.19
263.29

12/14
459.42
188.78
348.49

12/15
473.62
199.95
369.06

Item 6.

SELECTED FINANCIAL DATA.

The following selected financial data is derived from, and should be read in conjunction with, the financial statements, including
the notes thereto, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere
in this Annual Report on Form 10-K.

(amounts in thousands, except per share amounts)

Consolidated Statements of Operations Data:

Net product sales (1)
Other revenue
Total revenues
Cost of sales:

2015
2,602,532
1,515
2,604,047

Year Ended December 31,

2014
2,233,733 $

—
2,233,733

2013
1,551,346
—
1,551,346

Cost of sales
Change in contingent liability from
intellectual property settlements

Total cost of sales
Operating expenses:

Research and development
Selling, general and administrative
Amortization of purchased
intangible assets (2)
Change in fair value of contingent
consideration
Acquisition-related costs
Restructuring expenses
Impairment of intangible assets

Total operating expenses
Operating income
Other income (expense)
Income before income taxes
Income tax provision (3) (4)
Net income
Earnings per common share

Basic
Diluted

Shares used in computing earnings per
common share
Basic
Diluted

$
$

2012
1,134,114
—
1,134,114

126,214

(53,377)
72,837

222,732
384,678

417

6,550
16,262
—
26,300
656,939
404,338

233,089

—
233,089

709,472
862,595

116,584

173,862

—
173,862

513,782
630,209

168,375

9,181
177,556

317,093
489,720

—

417

4,006
1,023
—
33,521
845,780
528,010

64,257
39,210
42,169
—
1,834,287
536,671
(38,529)
498,142
353,757
144,385

20,295
—
15,365
11,514
1,191,165
868,706
3,401
872,107
215,195
656,912 $

(1,741)

(6,772)

526,269
273,374
252,895

397,566
142,744
254,822

0.68
0.67

3.32 $

3.26 $

1.29
1.27

$
$

1.34
1.28

2011
783,431
—
783,431

93,140

—
93,140

137,421
308,176

382

1,400
12,086
—
—
459,465
230,826
(1,158)
229,668
54,353
175,315

0.96
0.91

213,431
215,933

198,103

201,623

195,532
199,712

190,461
198,501

183,220
191,806

Consolidated Balance Sheet Data:

Cash, cash equivalents and marketable
securities
Total assets (5)
Long-term debt and convertible notes
(current and noncurrent) (6)
Contingent consideration (current and
noncurrent)
Facility lease obligation
Total stockholders’ equity (7)

2015

As of December 31,

2014

2013

2012

2011

1,385,015 $
13,133,230

1,961,566 $
4,201,962

1,514,851 $
3,317,696

989,501 $

2,613,560

540,865
1,394,751

3,456,250

57,500

113,000

177,228
151,307
8,258,616

162,971
107,099
3,302,018

142,676
32,230
2,382,079

149,000

141,670
—
1,970,850

—

18,120
—
1,134,492

In addition to the following notes, see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of

Operations" and the Consolidated Financial Statements and accompanying notes and previously filed Annual Reports on Form 10-K
for further information regarding our consolidated results of operations and financial position for periods reported therein.

(1) In March 2014, we entered into an agreement with the French government which positively impacted prospective reimbursement of
Soliris and also provided for reimbursement for shipments made in years prior to January 1, 2014. As a result of the agreement, in
2014 we recognized $87,830 of net product sales from Soliris in France relating to years prior to January 1, 2014.
(2) In the third quarter 2015, we received regulatory approval for Strensiq and Kanuma. As a result, we began amortizing intangible
assets associated with Strensiq and Kanuma.
(3) In connection with the integration of the Synageva business with and into the Alexion business, we incurred a one-time tax expense
of $315,569 in the third quarter 2015. This tax expense is attributable to the change in our deferred tax liability for the outside basis
difference resulting from the movement of assets into our captive foreign partnership.
(4) In 2013, we recognized tax expense of approximately $95,800 resulting from the centralization of our global supply chain and
technical operations in Ireland.
(5) In connection with the acquisition of Synageva, we acquired $4,236,000 of intangible assets and $4,793,812 of goodwill.
(6) In connection with the acquisition of Synageva, we borrowed $3,500,000 under our term loan under a new credit facility.
(7) In connection with the acquisition of Synageva, we issued $4,917,810 of common stock to former Synageva stockholders.

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

(amounts in thousands, except percentages and per share data)

In addition to historical information, this report contains forward-looking statements that involve risks and uncertainties which

may cause our actual results to differ materially from plans and results discussed in forward-looking statements. We encourage you to
review the risks and uncertainties, discussed in the section entitled item 1A “Risk Factors”, and the “Note Regarding
Forward-Looking Statements”, included at the beginning of this Annual Report on Form 10-K. The risks and uncertainties can cause
actual results to differ significantly from those forecast in forward-looking statements or implied in historical results and trends.

The following discussion should be read in conjunction with our consolidated financial statements and related notes appearing

elsewhere in this Annual Report on Form 10-K.

Overview

We are a biopharmaceutical company focused on serving patients with devastating and ultra-rare disorders through the

innovation, development and commercialization of life-transforming therapeutic products.

In our complement franchise, Soliris is the first and only therapeutic approved for patients with either PNH, a life-threatening

and ultra-rare genetic blood disorder defined by chronic uncontrolled complement activation leading to destruction of red blood cells,
and aHUS, a life-threatening and ultra-rare genetic disease characterized by chronic, uncontrolled complement activation and
thrombotic microangiopathy. PNH and aHUS are two severe and ultra-rare disorders resulting from chronic uncontrolled activation of
the complement component of the immune system.

In our metabolic franchise, we market Strensiq for the treatment of patients with HPP and Kanuma for the treatment of

patients with LAL-D. HPP is a genetic ultra-rare disease characterized by defective bone mineralization that can lead to
deformity of bones and other skeletal abnormalities. LAL-D is a serious, life threatening ultra-rare disease in which genetic

mutations result in decreased activity of the LAL enzyme leading to marked accumulation of lipids in vital organs, blood vessels and
other tissues.

Business Highlights

In June 2015, we acquired all of the outstanding shares of common stock of Synageva BioPharma Corp. (Synageva), a
publicly-held clinical-stage biotechnology company, in a transaction accounted for under the acquisition method of accounting for
business combinations. The merger consideration consisted of shares of our common stock and cash, which we financed with existing
cash and proceeds from a new credit facility.

In 2015, the FDA approved Strensiq for patients with perinatal-, infantile- and juvenile-onset HPP, the EC granted marketing

authorization for Strensiq for the treatment of patients with pediatric-onset HPP and Japan’s MHLW approved Strensiq for the
treatment of patients with HPP.

In 2015, the FDA approved Kanuma for the treatment of patients of all ages with LAL-D and EC granted marketing

authorization of Kanuma for long-term enzyme replacement therapy in patients of all ages with LAL-D.

Critical Accounting Policies and the Use of Estimates

The significant accounting policies and basis of preparation of our consolidated financial statements are described in Note 1,

“Business Overview and Summary of Significant Accounting Policies” of the Consolidated Financial Statements included in this
Annual Report on Form 10-K. Under accounting principles generally accepted in the United States, we are required to make estimates
and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses and disclosure of contingent assets and
liabilities in our financial statements. Actual results could differ from those estimates.

We believe the judgments, estimates and assumptions associated with the following critical accounting policies have the greatest

potential impact on our consolidated financial statements:

Inventories;

• Revenue recognition;
• Contingent liabilities;
•
• Share-based compensation;
• Valuation of goodwill, acquired intangible assets and in-process research and development (IPR&D);
• Valuation of contingent consideration; and
•

Income taxes.

Revenue Recognition
Net Product Sales

Our principal source of revenue is product sales. We recognize revenue from product sales when persuasive evidence of an
arrangement exists, title to product and associated risk of loss has passed to the customer, the price is fixed or determinable, collection
from the customer is reasonably assured, and we have no further performance obligations. Depending on these criteria, revenue is
usually recorded upon receipt of the product by the end customer, which is typically a hospital, physician’s office, private or
government pharmacy or other health care facility. On a regular basis, we review revenue arrangements, such as distributor
relationships, to determine whether changes in these criteria have an impact on revenue recognition. Amounts collected from
customers and remitted to governmental authorities, such as value-added taxes (VAT) in foreign jurisdictions, are presented on a net
basis in our consolidated statements of operations and do not impact net product sales.

Our customers are primarily comprised of distributors, pharmacies, hospitals, hospital buying groups, and other health care

providers. In some cases, we may also sell product to governments and government agencies.

Because of factors such as the price of our products, the limited number of patients, the short period from product sale to

patient infusion and the lack of contractual return rights, customers often carry limited inventory. We also monitor inventory
within our sales channels to determine whether deferrals are appropriate based on factors such as inventory levels compared to

demand, contractual terms and financial strength of distributors. In certain countries, exact quantities of inventory in the channel are
not precisely known, requiring us to estimate these amounts. If actual amounts of inventory differ from these estimates, these
adjustments could have an impact in the period in which these estimates change.

In addition to sales in countries where product is commercially available, we have also recorded revenue on sales for patients

receiving treatment through named-patient programs. The relevant authorities or institutions in those countries have agreed to
reimburse for product sold on a named-patient basis where product has not received final approval for commercial sale.

We record estimated rebates payable under governmental programs, including Medicaid in the United States and other programs
outside the United States, as a reduction of revenue at the time of product sale. Our calculations related to these rebate accruals require
analysis of historical claim patterns and estimates of customer mix to determine which sales will be subject to rebates and the amount
of such rebates. We update our estimates and assumptions each period and record any necessary adjustments, which may have an
impact on revenue in the period in which the adjustment is made. Generally, the length of time between product sale and the
processing and reporting of the rebates is three to six months.

We have entered into volume-based arrangements with governments in certain countries in which reimbursement is limited to a

contractual amount. Under this type of arrangement, amounts billed in excess of the contractual limitation are repaid to these
governments as a rebate. We estimate incremental discounts resulting from these contractual limitations, based on estimated sales
during the limitation period, and we apply the discount percentage to product shipments as a reduction of revenue. Our calculations
related to these arrangements require estimation of sales during the limitation period, and adjustments in these estimates may have an
impact in the period in which these estimates change.

We have provided balances and activity in the rebates payable account for the years ended December 31, 2015, 2014 and 2013

as follows:

Balance at December 31, 2012
Current provisions relating to sales in current year
Adjustments relating to prior years
Payments/credits relating to sales in current year
Payments/credits relating to sales in prior years
Balance at December 31, 2013
Current provisions relating to sales in current year
Adjustments relating to prior years
Payments/credits relating to sales in current year
Payments/credits relating to sales in prior years
Balance at December 31, 2014
Current provisions relating to sales in current year
Adjustments relating to prior years
Payments/credits relating to sales in current year
Payments/credits relating to sales in prior years
Balance at December 31, 2015

Rebates
Payable

62,334
149,247
(2,180)
(29,574)
(55,530)
124,297
62,478
(87,004)
(33,922)
(29,022)
36,827
89,329
(1,821)
(42,839)
(25,893)
55,603

In 2015 compared to 2014, current provisions relating to sales in the current year increased by $26,851 primarily due to

increased unit volumes in the United States and Europe which were subject to rebates.

In March 2014, we entered into an agreement with the French government which positively impacts prospective reimbursement

of Soliris and also provides for reimbursement for shipments in years prior to January 1, 2014. As a result of this agreement, in the
first quarter 2014, we reduced the rebate payable and recognized $87,830 of net product sales from Soliris in France relating to years
prior to January 1, 2014. In addition, our current provisions relating to sales in the current year decreased by $86,769 during 2014
primarily due to this agreement.

We record distribution and other fees paid to our customers as a reduction of revenue, unless we receive an identifiable

and separate benefit for the consideration and we can reasonably estimate the fair value of the benefit received. If both

conditions are met, we record the consideration paid to the customer as an operating expense. These costs are typically known at the
time of sale, resulting in minimal adjustments subsequent to the period of sale.

We enter into foreign exchange forward contracts to hedge exposures resulting from portions of our forecasted revenues,
including intercompany revenues, that are denominated in currencies other than the U.S. dollar. These hedges are designated as cash
flow hedges upon inception. We record the effective portion of these cash flow hedges to revenue in the period in which the sale is
made to an unrelated third party and the derivative contract is settled.

We evaluate the creditworthiness of customers on a regular basis. In certain European countries, sales by us are subject to

payment terms that are statutorily determined. This is primarily the case in countries where the payer is government-owned or
government-funded, which we consider to be creditworthy. The length of time from sale to receipt of payment in certain countries
exceeds our credit terms. In countries in which collections from customers extend beyond normal payment terms, we seek to collect
interest. We record interest on customer receivables as interest income when collected. For non-interest bearing receivables with an
estimated payment beyond one year, we discount the accounts receivable to present value at the date of sale, with a corresponding
adjustment to revenue. Subsequent adjustments for further declines in credit rating are recorded as bad debt expense as a component
of selling, general and administrative expense. We also use judgments as to our ability to collect outstanding receivables and provide
allowances for the portion of receivables if and when collection becomes doubtful, and we also assess on an ongoing basis whether
collectibility is reasonably assured at the time of sale.

We continue to monitor economic conditions, including volatility associated with international economies and the associated
impacts on the financial markets and our business. For additional information related to our concentration of credit risk associated
with certain international accounts receivable balances, refer to the "Financial Condition, Liquidity and Capital Resources" section
below.

Contingent liabilities

We are currently involved in various claims and legal proceedings. On a quarterly basis, we review the status of each significant

matter and assess its potential financial exposure. If the potential loss from any claim, asserted or unasserted, or legal proceeding is
considered probable and the amount can be reasonably estimated, we accrue a liability for the estimated loss. Because of uncertainties
related to claims and litigation, accruals are based on our best estimates based on available information. On a periodic basis, as
additional information becomes available, or based on specific events such as the outcome of litigation or settlement of claims, we
may reassess the potential liability related to these matters and may revise these estimates, which could result in a material adjustment
to our operating results and liquidity.

Inventories

Inventories are stated at the lower of cost or estimated realizable value. We determine the cost of inventory using the

weighted-average cost method.

We capitalize inventory produced for commercial sale, which may include costs incurred for certain products awaiting

regulatory approval. We capitalize inventory produced in preparation of product launches sufficient to support estimated initial market
demand. Capitalization of such inventory begins when we have (i) obtained positive results in clinical trials that we believe are
necessary to support regulatory approval, (ii) concluded that uncertainties regarding regulatory approval have been sufficiently
reduced, and (iii) determined that the inventory has probable future economic benefit. In evaluating whether these conditions have
been met, we consider clinical trial results for the underlying product candidate, results from meetings with regulatory authorities, and
the compilation of the regulatory application. If we are aware of any material risks or contingencies outside of the standard regulatory
review and approval process, or if there are any specific negative issues identified relating to the safety, efficacy, manufacturing,
marketing or labeling of the product that would have a significant negative impact on its future economic benefits, the related
inventory would not be capitalized.

Products that have been approved by the FDA or other regulatory authorities, are also used in clinical programs to assess the

safety and efficacy of the products for usage in diseases that have not been approved by the FDA or other regulatory authorities. The
form of product utilized for both commercial and clinical programs is identical and, as a result, the inventory has an "alternative future
use" as defined in authoritative guidance. Raw materials and purchased drug product associated with clinical development programs
are included in inventory and charged to research and development expense when the product enters the research and development
process and no longer can be used for commercial purposes and, therefore, does not have an "alternative future use".

For products which are under development and have not yet been approved by regulatory authorities, purchased drug
product is charged to research and development expense when the inventory passes quality inspection and ownership transfers

to us. Nonrefundable advance payments for research and development activities, including production of purchased drug product, are
deferred and capitalized until the goods are delivered. We also recognize expense for raw materials purchased when the raw materials
pass quality inspection, and we have an obligation to pay for the materials.

We analyze our inventory levels to identify inventory that may expire prior to sale, inventory that has a cost basis in excess of its

estimated realizable value, or inventory in excess of expected sales requirements. Although the manufacturing of our product is
subject to strict quality control, certain batches or units of product may no longer meet quality specifications or may expire, which
would require adjustments to our inventory values. We also apply judgment related to the results of quality tests that we perform
throughout the production process, as well as our understanding of regulatory guidelines, to determine if it is probable that inventory
will be saleable. These quality tests are performed throughout the pre- and post-production process, and we continually gather
information regarding product quality for periods after the manufacturing date. Our products currently have a maximum estimated life
range of 36 to 48 months and, based on our sales forecasts, we expect to realize the carrying value of the product inventory. In the
future, reduced demand, quality issues or excess supply beyond those anticipated by management may result in a material adjustment
to inventory levels, which would be recorded as an increase to cost of sales.

The determination of whether or not inventory costs will be realizable requires estimates by our management. A critical input in
this determination is future expected inventory requirements based on internal sales forecasts. We then compare these requirements to
the expiry dates of inventory on hand. For inventories that are capitalized in preparation of product launch, we also consider the
expected approval date in assessing realizability. To the extent that inventory is expected to expire prior to being sold, we will write
down the value of inventory. If actual results differ from those estimates, additional inventory write-offs may be required.

Share-Based Compensation

We have two share-based compensation plans pursuant to which awards are currently being made: (i) the Amended and Restated

2004 Incentive Plan (2004 Plan) and (ii) the 2015 Employee Stock Purchase Plan (ESPP). Under the 2004 Plan, restricted stock,
restricted stock units, stock options and other stock-related awards may be granted to our directors, officers, employees and
consultants or advisors of the Company or any subsidiary. Under the ESPP, eligible employees can purchase shares of common stock
at a discount semi-annually through payroll deductions. To date, share-based compensation issued under the plans consists of
incentive and non-qualified stock options, restricted stock and restricted stock units, including restricted stock units with market and
non-market performance conditions, and shares issued under our ESPP. Stock-related awards are also outstanding under other
share-based compensation plans, but we have not granted awards under these plans since 2004.

Compensation expense for our share-based awards is recognized based on the estimated fair value of the awards on the grant

date. Compensation expense reflects an estimate of the number of awards expected to vest and is primarily recognized on a
straight-line basis over the requisite service period of the individual grants, which typically equals the vesting period. Compensation
expense for awards with performance conditions is recognized using the graded-vesting method.

Our estimates of employee stock option values rely on estimates of factors we input into the Black-Scholes model. The key
factors involve an estimate of future uncertain events. Significant assumptions include the use of historical volatility to determine the
expected stock price volatility. We also estimate expected term until exercise and the reduction in the expense from expected
forfeitures. We currently use historical exercise and cancellation patterns as our best estimate of future estimated life. Actual volatility
and lives of options may be significantly different from our estimates.

For our non-market performance-based awards, we estimate the anticipated achievement of the performance targets, including
forecasting the achievement of future financial targets. These estimates are revised periodically based on the probability of achieving
the performance targets and adjustments are made throughout the performance period as necessary. We use payout simulation models
to estimate the grant date fair value of market performance-based awards. The payout simulation models assume volatility of our
common stock and the common stock of a comparator group of companies, as well as correlations of returns of the price of our
common stock and the common stock prices of the comparator group.

The purchase price of common stock under our ESPP is equal to 85% of the lower of (i) the market value per share of the
common stock on the first business day of an offering period or (ii) the 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 6 month purchase period.

If factors change or we employ different assumptions to value our stock-based awards, the share-based compensation expense

that we record in future periods may differ materially from our prior recorded amounts.

Valuation of Goodwill, Acquired Intangible Assets and In-Process Research and Development (IPR&D)

We have recorded goodwill, acquired intangible assets and IPR&D related to our business combinations. When identifiable
intangible assets, including IPR&D, are acquired, we determine the fair values of the assets as of the acquisition date. Discounted cash
flow models are typically used in these valuations if quoted market prices are not available, and the models require the use of
significant estimates and assumptions including but not limited to:

•
•
•
•

timing and costs to complete the in-process projects;
timing and probability of success of clinical events or regulatory approvals;
estimated future cash flows from product sales resulting from completed products and in-process projects; and
discount rates.

We may also utilize a cost approach, which estimates the costs that would be incurred to replace the assets being purchased.
Significant inputs into the cost approach include estimated rates of return on historical costs that a market participant would expect to
pay for these assets.

Intangible assets with definite useful lives are amortized to their estimated residual values over their estimated useful lives and

reviewed for impairment if certain events occur.

Intangible assets related to IPR&D projects are considered to be indefinite-lived until the completion or abandonment of the

associated research and development efforts. During the period the assets are considered indefinite-lived, they will not be amortized
but will be tested for impairment. Impairment testing is performed at least annually or when a triggering event occurs that could
indicate a potential impairment. If and when development is complete, which generally occurs when regulatory approval to market a
product is obtained, the associated assets are deemed finite-lived and are amortized over a period that best reflects the economic
benefits provided by these assets.

If projects are not successfully developed, our sales and profitability may be adversely affected in future periods. Additionally,
the value of the acquired intangible assets, including IPR&D, may become impaired if the underlying projects do not progress as we
initially estimated. We believe that the assumptions used in developing our estimates of intangible asset values were reasonable at the
time of the respective acquisitions. However, the underlying assumptions used to estimate expected project sales, development costs,
profitability, or the events associated with such projects, such as clinical results, may not occur as we estimated at the acquisition date.
Goodwill represents the excess of purchase price over fair value of net assets acquired in a business combination and is not
amortized. Goodwill is subject to impairment testing at least annually or when a triggering event occurs that could indicate a potential
impairment. We are organized and operate as a single reporting unit and therefore the goodwill impairment test is performed using our
overall market value, as determined by our traded share price, compared to our book value of net assets.

Valuation of Contingent Consideration

We record contingent consideration resulting from a business combination at its fair value on the acquisition date. We determine

the fair value of the contingent consideration based primarily on the following factors:

•
•

timing and probability of success of clinical events or regulatory approvals;
timing and probability of success of meeting commercial milestones, such as estimated future sales levels of a specific
compound; and
• discount rates.
Our contingent consideration liabilities arose in connection with our business combinations. On a quarterly basis, we revalue
these obligations and record increases or decreases in their fair value as an adjustment to operating earnings. Changes to contingent
consideration obligations can result from adjustments to discount rates, accretion of the discount rates due to the passage of time,
changes in our estimates of the likelihood or timing of achieving development or commercial milestones, changes in the probability of
certain clinical events or changes in the assumed probability associated with regulatory approval.

The assumptions related to determining the value of contingent consideration include a significant amount of judgment, and any
changes in the underlying estimates could have a material impact on the amount of contingent consideration expense recorded in any
given period.

Income Taxes

We utilize the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities
are determined based on the difference between the financial statement carrying amounts and tax basis of assets and liabilities using
enacted tax rates in effect for years in which the temporary differences are expected to reverse. We provide a valuation allowance
when it is more likely than not that deferred tax assets will not be realized. We recognize the benefit of an uncertain tax position that
has been taken or we expect to take on income tax returns if such tax position is more likely than not to be sustained.

We follow the authoritative guidance regarding accounting for uncertainty in income taxes, which prescribes a recognition
threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be
taken in a tax return. These unrecognized tax benefits relate primarily to issues common among multinational corporations in our
industry. We apply a variety of methodologies in making these estimates which include studies performed by independent economists,
advice from industry and subject experts, evaluation of public actions taken by the Internal Revenue Service and other taxing
authorities, as well as our own industry experience. We provide estimates for unrecognized tax benefits which may be subject to
material adjustments until matters are resolved with taxing authorities or statutes expire. If our estimates are not representative of
actual outcomes, our results of operations could be materially impacted.

We continue to maintain a valuation allowance against certain deferred tax assets where realization is not certain. We

periodically evaluate the likelihood of the realization of deferred tax assets and reduce the carrying amount of these deferred tax assets
by a valuation allowance to the extent we believe a portion will not be realized. We consider many factors when assessing the
likelihood of future realization of deferred tax assets, including our recent cumulative earnings experience by taxing jurisdiction,
expectations of future taxable income, carryforward periods available to us for tax reporting purposes, various income tax strategies
and other relevant factors. Significant judgment is required in making this assessment and, to the extent future expectations change,
we would assess the recoverability of our deferred tax assets at that time. If we determine that the deferred tax assets are not realizable
in a future period, we would record material adjustments to income tax expense in that period.

New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (FASB) issued a comprehensive new standard which amends revenue
recognition principles and provides a single set of criteria for revenue recognition among all industries. The new standard provides a
five step framework whereby revenue is recognized when promised goods or services are transferred to a customer at an amount that
reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard also requires
enhanced disclosures pertaining to revenue recognition in both interim and annual periods. The standard is effective for interim and
annual periods beginning after December 15, 2017 and allows for adoption using a full retrospective method, or a modified
retrospective method. Entities may elect to early adopt the standard for annual periods beginning after December 15, 2016. We are
currently assessing the method of adoption and the expected impact the new standard has on our financial position and results of
operations.

In April 2015, the FASB issued a new standard simplifying the presentation of debt issuance costs. The new standard aligns the
treatment of debt issuance costs with debt discounts and premiums and requires debt issuance costs be presented as a direct deduction
from the carrying amount of the related debt. The standard is effective for interim and annual periods beginning after December 15,
2015, with early adoption permitted, and requires a retrospective method of adoption. We will adopt the provisions of the new
standard for the balance sheet disclosures of debt issuance costs beginning in the first quarter 2016.

In September 2015, the FASB issued a new standard simplifying the accounting for measurement-period adjustments. The new

standard eliminates the requirement to restate prior period financial statements for measurement period adjustments. The new standard
requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the
reporting period in which the adjustment is identified. The standard is effective for interim and annual periods beginning after
December 15, 2015 and is not expected to have a material impact on our financial condition or results of operations.

In November 2015, the FASB issued a new standard simplifying the classification of deferred tax assets and liabilities. The new
standard requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on
the balance sheet. The standard is effective for interim and annual periods beginning after December 15, 2016 and allows for early
adoption using a full retrospective method or a prospective method. We have elected to early adopt the provisions of this new standard
using a prospective method. As a result, all deferred taxes as of December 31, 2015 are classified as noncurrent in our consolidated
balance sheet, while prior periods remain as previously reported.

Results of Operations

The following table sets forth consolidated statements of operations data for the periods indicated. This information has been

derived from the consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

Year Ended December 31,
2014
2,233,733 $

2015
2,602,532
1,515
2,604,047

233,089

—
233,089

709,472
862,595
116,584
64,257
39,210
42,169
—
1,834,287
536,671
(38,529)
498,142
353,757
144,385

—
2,233,733

173,862

—
173,862

513,782
630,209
—
20,295
—
15,365
11,514
1,191,165
868,706
3,401
872,107
215,195
656,912 $

0.68
0.67

3.32 $
3.26 $

2013
1,551,346
—
1,551,346

168,375

9,181
177,556

317,093
489,720
417
4,006
1,023
—
33,521
845,780
528,010
(1,741)
526,269
273,374
252,895

1.29
1.27

Net product sales
Other revenue

Total revenues

Cost of sales:

Cost of sales
Change in contingent liability from intellectual property
settlements

Total cost of sales

Operating expenses:

Research and development
Selling, general and administrative
Amortization of purchased intangible assets
Change in fair value of contingent consideration
Acquisition-related costs
Restructuring expenses
Impairment of intangible assets
Total operating expenses
Operating income

Other (expense) income

Income before income taxes

Income tax provision
Net income
Earnings per common share:
Basic
Diluted

Comparison of the Year Ended December 31, 2015 to the Year Ended December 31, 2014
Net Product Sales

Net product sales by significant geographic region are as follows:

Net product sales:
United States
Europe (1)
Asia Pacific
Other

Net product sales by product are as follows:

Net product sales:
Soliris (1)
Strensiq
Kanuma

2015

Year Ended December 31,
2014

% Change

951,307 $
840,465
276,350
534,410
2,602,532 $

730,089
836,134
244,059
423,451
2,233,733

30%
1%
13%
26%
17%

2015

Year Ended December 31,
2014

% Change

2,590,197
11,969
366

2,602,532 $

2,233,733
—
—
2,233,733

16%
N/A
N/A
17%

(1) In March 2014, we entered into an agreement with the French government which positively impacts prospective reimbursement
of Soliris and also provides for reimbursement for shipments made in years prior to January 1, 2014. As a result of the agreement,
in the first quarter of 2014, we recognized $87,830 of net product sales from Soliris in France relating to years prior to January 1,
2014. Exclusive of the $87,830, net product sales in Europe increased 12% for the year ended December 31, 2015 compared to the
year ended December 31, 2014.

The components of the increase in net product sales for the year ended December 31, 2015, exclusive of the $87,830 recognized

in 2014 related to prior years, are as follows:

Components of change:
Price
Volume
Foreign exchange
Total change in net product sales

Year Ended December 31,
2015

— %
29 %
(8)%
21 %

The increase in net product sales for fiscal year 2015 as compared to the same period in 2014, was primarily due to an increase

in unit volumes of 29% due to increased demand globally for Soliris therapy for patients with PNH or aHUS during the respective
periods.

The positive impact of volume on net product sales was offset by the negative impact on foreign exchange of 8%, for the year

ended December 31, 2015, as compared to the same period in 2014. The negative impact on foreign exchange of $165,280, or 8%,
was due to changes in foreign currency exchange rates (inclusive of hedging activity) versus the U.S. dollar for the year ended
December 31, 2014. The negative impact was primarily due to the weakening of the Euro, Japanese Yen and Russian Ruble. We
recorded a gain in revenue of $117,915 and $18,873 related to our foreign currency cash flow hedging program, for the years ended
December 31, 2015 and 2014, respectively. We expect the strong dollar compared to other currencies to continue to have a negative
impact on revenue into 2016.

Cost of Sales

Cost of sales includes manufacturing costs as well as actual and estimated royalty expenses associated with sales of Soliris.
The following table summarizes cost of sales for the year ended December 31, 2015 and 2014:

Cost of sales
Cost of sales as a percentage of net product sales

2015
233,089

Year Ended December 31,
2014
173,862

8 %

% Change

59,227
1%

We recorded an expense of $24,352 in the first quarter of 2015 associated with a portion of a single manufacturing campaign at
a third party manufacturer for Strensiq. The costs are comprised of raw materials, internal overhead and external production costs. We
do not expect this expense will impact the clinical supply of inventory or the commercial launch of Strensiq, and we do not expect
further material financial impact related to this campaign.

Exclusive of the item mentioned above, cost of sales as a percentage of net product sales was 8% for the years ended December

31, 2015 and 2014.

Research and Development Expense

Our research and development expense includes personnel, facility and external costs associated with the research and

development of our product candidates, as well as product development costs. We group our research and development expenses into
two major categories: external direct expenses and all other research and development (R&D) expenses.

External direct expenses are comprised of costs paid to outside parties for clinical development, product development and

discovery research, as well as costs associated with strategic licensing agreements we have entered into with third parties. Clinical
development costs are comprised of costs to conduct and manage clinical trials related to eculizumab and other product candidates.
Product development costs are those incurred in performing duties related to manufacturing development and regulatory functions,
including manufacturing of material for clinical and research activities. Discovery research costs are incurred in conducting laboratory
studies and performing preclinical research for other uses of our products and other product candidates. Licensing agreement costs
include upfront and milestone payments made in connection with strategic licensing arrangements we have entered into with third
parties. Clinical development costs have been accumulated and allocated to each of our programs, while product development and
discovery research costs have not been allocated.

All other R&D expenses consist of costs to compensate personnel, to maintain our facility, equipment and overhead and similar

costs of our research and development efforts. These costs relate to efforts on our clinical and preclinical products, our product
development and our discovery research efforts. These costs have not been allocated directly to each program.

The following table provides information regarding research and development expenses:

Clinical development
Product development
Licensing agreements
Discovery research
Total external direct expenses
Payroll and benefits
Facilities and other costs
Total other R&D expenses
Research and development expense

Year Ended
December 31, 2015
$

Year Ended
December 31, 2014

$
Change

%
Change

155,162 $
120,316
129,750
44,478
449,706
218,919
40,847
259,766
709,472 $

116,314 $
58,356
109,925
13,403
297,998
190,669
25,115
215,784
513,782 $

38,848
61,960
19,825
31,075
151,708
28,250
15,732
43,982
195,690

33%
106%
18%
232%
51%
15%
63%
20%
38%

During the year ended December 31, 2015, we incurred research and development expenses of $709,472, an increase of
$195,690, or 38%, versus the $513,782 incurred during the year ended December 31, 2014. The increase was primarily related to the
following:

•

•
•

•

Increase of $38,848 in external clinical development expenses related primarily to an expansion of studies for eculizumab,
ALXN 1007, ALXN 1210, and other programs (see table below).
Increase of $61,960 in external product development expenses related primarily to an increase in costs associated with the
manufacturing of material for increased clinical research activities and clinical studies.
Increase of $19,825 in licensing agreement expenses related to the achievement of additional license milestones.
Increase of $31,075 in discovery research expenses primarily related to increases in external research expenses associated
with our Moderna agreement and other external research expenses.
Increase of $28,250 R&D payroll and benefit expense related to the additional headcount acquired as part of the Synageva
acquisition in the second quarter 2015 and the continued global expansion of staff supporting our increasing number of
clinical and development programs.
Increase s of $15,732 in R&D facilities and other costs related to the additional R&D facilities as part of the Synageva
acquisition in the second quarter 2015 and the additional costs associated with the continued expansion of global supply
chain facilities and support services.

The following table summarizes external direct expenses related to our clinical development programs. Please refer to Item 1,

"Business", for a description of each of these programs:

External direct expenses
Eculizumab
Asfotase alfa
cPMP
ALXN 1007
Sebelipase alfa
ALXN 1210
Other programs
Unallocated

Year Ended
December 31, 2015

Year Ended
December 31, 2014

Accumulated
Expenditures

77,859 $
21,845
7,886
14,243
4,774
8,091
13,657
6,807
155,162 $

67,744
26,893 $
7,961
3,172
—
1,135
2,995
6,414
116,314 $

(a)

67,153
24,382
21,276
4,774
9,308
27,074

(b)
153,967

(a) From 1992 through 2006, substantially all research and development expenses were related to two products, eculizumab and
pexelizumab. We obtained approval in the U.S. for eculizumab for PNH in 2007 and for aHUS in 2010, and we ceased
development of pexelizumab in 2006.
(b) External costs shared across various development programs.

The successful development of our drug candidates is uncertain and subject to a number of risks. We cannot guarantee that
results of clinical trials will be favorable or sufficient to support regulatory approvals for our other programs. We could decide to
abandon development or be required to spend considerable resources not otherwise contemplated. For additional discussion regarding
the risks and uncertainties regarding our development programs, please refer to Item 1A "Risk Factors" in this Annual Report on
Form 10-K.

We expect our research and development expenses to increase in 2016 due to clinical development and manufacturing costs

related to our expanding development programs. For additional information on these programs, please refer to “Product and
Development Programs” in Item I "Business" of this Annual Report on Form 10-K.

Selling, General and Administrative Expense

Our selling, general and administrative expense includes commercial and administrative personnel, corporate facility and
external costs required to support the marketing and sales of our commercialized products. These selling, general and administrative
costs include: corporate facility operating expenses and depreciation; marketing and sales operations in support of Soliris; human
resources; finance, legal, information technology and support personnel expenses; and other corporate costs such as
telecommunications, insurance, audit, government affairs and our global corporate compliance program.
The table below provides information regarding selling, general and administrative expense:

Salary, benefits and other labor expense
External selling, general and administrative expense
Total selling, general and administrative expense

Year Ended
December 31, 2015
$

549,944 $
312,651
862,595 $

Year Ended
December 31, 2014

$
Change

388,738 $
241,471
630,209 $

161,206
71,180
232,386

During the year ended December 31, 2015, we incurred selling, general and administrative expenses of $862,595, an increase of

$232,386, or 37%, versus the $630,209 incurred during the year ended December 31, 2014. The increase was primarily related to the
following:
•

Increase in salary, benefits and other labor expenses of $161,206. The increase was a result of increased staff costs related to
commercial development activities and increases in payroll and benefits within our general and administrative functions to
support our infrastructure growth as a global commercial entity. The increase was also attributable to additional global
commercial staff costs due to our acquisition of Synageva in the second quarter 2015 and additional stock-based
compensation expense of $29,634 related to the acceleration of Alexion stock awards for former Synageva employees.
Increase in external selling, general and administrative expenses of $71,180. The increase was primarily due to an increase in
external marketing costs to support the global launches of Strensiq and Kanuma and professional services to support the
continuing growth of the company.

•

We expect our selling, general and administrative expenses to increase, at a lower rate than our revenue, in 2016, reflecting our

continued growth as a commercial organization throughout the world.

Amortization of Purchase Intangible Assets

In the third quarter 2015, we received regulatory approval for Strensiq and Kanuma. As a result, for the year ended December

31, 2015, we recorded amortization expense of $116,584 associated with intangible assets related to Strensiq and Kanuma.

Acquisition-related Costs

For the years ended December 31, 2015 and 2014, acquisition-related costs associated with our business combinations included

the following:

Transaction costs (1)
Integration costs

Year Ended
December 31, 2015
$

26,955 $
12,255
39,210 $

Year Ended December
31, 2014

—
—
—

(1) Transaction costs include investment advisory, legal, and accounting fees
The increase in acquisition related costs was due to the Synageva acquisition that occurred during 2015.

Change in Fair Value of Contingent Consideration

For the years ended December 31, 2015 and 2014, the change in fair value of contingent consideration expense associated

with our prior business combinations was $64,257 and $20,295, respectively. The increase in the fair value of contingent

consideration for the year ended December 31, 2015 as compared the prior year was primarily due to increases in the likelihood of
payments for contingent consideration and a net decrease in discount rates.

Restructuring Expenses

In connection with the relocation of our corporate headquarters to New Haven, Connecticut, we entered into a lease termination

agreement in December 2015 for the previous corporate headquarters located in Cheshire, Connecticut. We recorded contract
termination fees of $11,236 in restructuring expense in the fourth quarter of 2015.

In conjunction with the acquisition and integration of Synageva we recorded restructuring expense of $13,335 primarily related

to employee costs during 2015. We expect to pay all remaining accrued amounts related to this restructuring activity by the end of
2016.

In the fourth quarter of 2014 we announced plans to move the European headquarters from Lausanne, Switzerland to Zurich,

Switzerland resulting in restructuring expenses of $15,365. The relocation of the European headquarters supports our growing
operational needs based on current business forecasts. During the year ended December 31, 2015, we incurred additional restructuring
costs of $17,598. We expect to pay all remaining accrued amounts related to this restructuring activity by the end of 2016.

Impairment of Intangible Asset

During the fourth quarter 2014, we reviewed for impairment the value of the early stage, Phase II indefinite-lived intangible

asset related to the Orphatec acquisition. We initiated such review as part of our annual impairment testing and increased costs
associated with clinical trial studies. Although we will continue to develop this asset, the estimated fair value that can be obtained
from a market participant in an arm's length transaction was determined to be de minimis as of December 31, 2014. As a result, in the
fourth quarter 2014, we recognized an impairment charge of $8,050 to write-down these assets to fair value.

Other Income and Expense
The following table provides information regarding other income and expense:

Investment income
Interest expense
Foreign currency gain (loss)
Total other income (expense)

Year Ended
December 31, 2015
$

8,519
(47,744)
696
(38,529) $

Year Ended
December 31, 2014

$
Change

8,373
(2,982 )
(1,990 )
3,401

146
(44,762)
2,686
(41,930)

The increase in interest expense for the year ended December 31, 2015 as compared to the prior year was due to us borrowing

$3,500,000 under a term loan facility in conjunction with the acquisition of Synageva.

Income Taxes

During the year ended December 31, 2015, we recorded an income tax provision of $353,757 and an effective tax rate of
71.0%, compared to an income tax provision of $215,195 and an effective tax rate of 24.7% for the year ended December 31, 2014.
The increase in the effective tax rate is primarily attributable to the integration of Synageva assets into our captive foreign partnership.
This one-time charge increased our effective tax rate in 2015 by approximately 63.0%. Exclusive of such one-time charges, we expect
to continue to benefit from a reduced tax ratecompared to periods prior to January 1, 2014 as a result of centralizing our global supply
chain and technical operations in Ireland in the fourth quarter 2013.

The income tax provision for 2015 is attributable to the U.S. federal, state and foreign income taxes on our profitable operations,

as well as the tax impact associated with integration of the Synageva business with and into the Alexion business.

In the third quarter 2015, we contributed certain supply chain assets, commercial operation rights and intellectual property
acquired in the Synageva acquisition to our captive foreign partnership. This contribution resulted in a revaluation of our captive
foreign partnership, an increase to the outside basis difference our U.S. parent company has in the captive foreign partnership, and a
corresponding one-time deferred tax expense of $315,569. There was no cash tax payment associated with this deferred expense.

The income tax provision for 2014 is attributable to the U.S. federal, state and foreign income taxes on our profitable operations.

Additionally, included for the year ended December 31, 2014 is $2,128 of tax attributable to our agreement with the French
government that provided reimbursement for shipments of Soliris made prior to January 1, 2014.

We continue to maintain a valuation allowance against certain other deferred tax assets where realization is not certain. We
periodically evaluate the likelihood of the realization of deferred tax assets and reduce the carrying amount of these deferred tax assets
by a valuation allowance to the extent we believe a portion will not be realized.

Comparison of the Year Ended December 31, 2014 to the Year Ended December 31, 2013
Net Product Sales

Net product sales by significant geographic region are as follows:

Net product sales:
United States
Europe (1)
Asia Pacific
Other

2014

Year Ended December 31,
2013

% Change

730,089 $
836,134
244,059
423,451
2,233,733 $

561,405
514,987
203,538
271,416
1,551,346

30%
62%
20%
56%
44%

The components of the increase in net product sales for the year ended December 31, 2014, exclusive of the $87,830 recognized

related to prior years, are as follows:

Components of change:
Price
Volume
Foreign exchange
Total change in net product sales

Year Ended December 31,

2014

6 %
34 %
(2)%
38 %

The increase in net product sales for fiscal year 2014 as compared to the same period in 2013, was primarily due to an increase

in unit volumes of 34% due to increased physician demand globally for Soliris therapy for patients with PNH or aHUS during the
respective periods.

Price had a positive impact on net product sales of 6% for the year ended December 31, 2014, as compared to the same period in

2013. The positive price impact was primarily due to the agreement with the French government and a reduction in estimated rebates
in Germany.

The positive impacts of volume and price on net product sales were offset by the negative impact on foreign exchange of 2% for
the year ended December 31, 2014, as compared to the same period in 2013. The negative impact on foreign exchange of $27,993, or
2%, was due to changes in foreign currency exchange rates (inclusive of hedging activity) versus the U.S. dollar for the year ended
December 31, 2013. The negative impact was primarily due to the weakening of the Japanese Yen, Russian Ruble and the Canadian
Dollar, partly offset by the positive impacts of the British Pound during the same respective period. We recorded a gain in revenue of
$18,873 and $20,569 related to our foreign currency cash flow hedging program, for the years ended December 31, 2014 and 2013,
respectively. We expect the strong dollar compared to other currencies, especially the Euro, Japanese Yen and Russian Ruble, to
continue to have a negative impact on revenue in 2015 compared to 2014.

Cost of Sales

Cost of sales
Cost of sales as a percentage of net product sales

2014
173,862

Year Ended December 31,
2013
168,375

11 %

% Change

5,487

(3)%

The decrease in cost of sales as a percentage of net product sales for the year ended December 31, 2014 was partially due to a

$14,277 of voluntary recall expense recognized in 2013. Additionally, in the first quarter of 2014, we entered into a settlement
agreement with a third party related to the calculation of royalties payable to such third party under a pre-existing license agreement.
Based on this settlement agreement, the Company recorded a reversal of accrued royalties of $5,124 as a reduction of cost of sales.
In the first quarter of 2014, we also recorded an incremental impact in cost of sales of $2,055 for additional royalties related to

the $87,830 of net product sales from prior year shipments.

The remaining decrease in cost of sales for the years ended December 31, 2014 as a percentage of net product sales resulted

from a decrease in royalties paid on sales of Soliris.

In October 2013, we entered into a settlement agreement and dismissal with Novartis Vaccines and Diagnostics, Inc. pursuant to

which Alexion was granted a nonexclusive, fully paid license and the case was dismissed with prejudice. As a result, we recorded
expense of $9,181 in cost of sales in the third quarter 2013 related to our change in contingent liabilities resulting from this litigation
settlement agreement.

Research and Development Expense

Our research and development expense includes personnel, facility and external costs associated with the research and

External direct expenses are comprised of costs paid to outside parties for clinical development, product development and

discovery research, as well as costs associated with strategic licensing agreements we have entered into with third parties. Clinical
development costs are comprised of costs to conduct and manage clinical trials related to eculizumab and other product candidates.
Product development costs are those incurred in performing duties related to manufacturing development and regulatory functions,
including manufacturing of material for clinical and research activities. Discovery research costs are incurred in conducting laboratory
studies and performing preclinical research for other uses of eculizumab and other product candidates. Licensing agreement costs
include upfront and milestone payments made in connection with strategic licensing arrangements we have entered into with third
parties. Clinical development costs have been accumulated and allocated to each of our programs, while product development and
discovery research costs have not been allocated.

All other R&D expenses consist of costs to compensate personnel, to maintain our facility, equipment and overhead and similar

The following table provides information regarding research and development expenses:

Clinical development
Product development
Licensing agreements
Discovery research
Total external direct expenses
Payroll and benefits
Operating and occupancy
Depreciation and amortization
Total other R&D expenses
Research and development expense

Year Ended
December 31, 2014
$

Year Ended
December 31, 2013

$
Change

%
Change

116,314 $
58,356
109,925
13,403
297,998
190,669
11,050
14,065
215,784
513,782 $

74,595 $
60,518
14,500
5,546
155,159
144,034
7,765
10,135
161,934
317,093 $

41,719
(2,162 )
95,425
7,857
142,839
46,635
3,285
3,930
53,850
196,689

56 %
(4)%
658 %
142 %
92 %
32 %
42 %
39 %
33 %
62 %

During the year ended December 31, 2014, we incurred research and development expenses of $513,782, an increase of
$196,689, or 62%, versus the $317,093 incurred during the year ended December 31, 2013. The increase was primarily related to the
following:
•

Increase of $41,719 in external clinical development expenses related primarily to an expansion of studies for eculizumab
and asfotase alfa (see table below).
Increase of $95,425 in licensing agreement costs primarily due to the upfront payment of $100,000 on the option agreement
entered into with Moderna Therapeutics, Inc. in the first quarter of 2014.
Increase of $7,857 in discovery research expenses primarily related to increases in external research expenses associated
with our Moderna agreement and other external research expenses.
Increase of $46,635 in R&D payroll and benefit expense related primarily to the continued global expansion of staff
supporting our increasing number of clinical and development programs.
Increases of $3,285 and $3,930 in R&D operating and occupancy and depreciation and amortization expenses. respectively,
related primarily to the continued expansion of global supply chain facilities and support services.

•

The following table summarizes external direct expenses related to our clinical development programs. Please refer to Item 1,

"Business", for a description of each of these programs:

External direct expenses
Eculizumab
Asfotase alfa
cPMP
Other programs
Unallocated

Year Ended
December 31, 2014

Year Ended
December 31, 2013

67,744 $
26,893
7,961
7,302
6,414
116,314 $

44,725
13,615
6,391
6,739
3,125
74,595

We expect our research and development expenses to increase in 2015 due to clinical development and manufacturing costs

Selling, General and Administrative Expense

Salary, benefits and other labor expense
External selling, general and administrative expense
Total selling, general and administrative expense

Year Ended
December 31, 2014
$

388,738 $
241,471
630,209 $

Year Ended
December 31, 2013

$
Change

292,881 $
196,839
489,720 $

95,857
44,632
140,489

During the year ended December 31, 2014, we incurred selling, general and administrative expenses of $630,209, an increase of

$140,489, or 29%, versus the $489,720 incurred during the year ended December 31, 2013. The increase was primarily related to the
following:
•

Increase in salary, benefits and other labor expenses of $95,857. The increase was a result of increased headcount related to
commercial development activities, including increases in payroll and benefits costs of $49,023 related to our global
commercial staff to support global expansion. This increase was also due to increases in payroll and benefits of $46,835
within our general and administrative functions to support our infrastructure growth as a global commercial entity.
Increase in external selling, general and administrative expenses of $44,632. This increase was primarily due to an increase
in marketing costs to support the continued growth in global sales of Soliris, as well as an increase in other administrative
costs to support our infrastructure growth.

•

We expect our selling, general and administrative expenses to increase, at a lower rate than our revenue, in 2015, reflecting our

continued growth as a commercial organization throughout the world.

Contingent Consideration

For the years ended December 31, 2014 and 2013 the change in fair value of contingent consideration associated with our prior

business combinations was $20,295 and $4,006, respectively. The change in the fair value of contingent consideration for the year
ended December 31, 2014 as compared the prior year was primarily due to increases in the likelihood of payments for contingent
consideration and a decrease in discount rates.

Restructuring Expenses

In the fourth quarter of 2014 we announced plans to move the European headquarters from Lausanne, Switzerland to Zurich,
Switzerland resulting in restructuring expenses of $15,365. The relocation of the European headquarters will support our growing
operational needs based on current business forecasts.

Impairment of Intangible Asset

During the fourth quarter of 2014, we reviewed for impairment the value of the early stage, Phase II indefinite-lived intangible

During the first quarter of 2014 and the fourth quarter of 2013, we reviewed for impairment the value of an early stage, Phase I

indefinite-lived intangible asset related to our acquisition of Taligen Therapeutics, Inc. We initiated such review based on a
reassessment of scientific findings associated with this acquired asset. In the fourth quarter 2013, we also reviewed for impairment the
value of purchased technology associated with the Taligen acquisition. As a result, we recognized impairment charges of $3,464 and
$33,521 for the years ended December 31, 2014 and 2013 to adjust these assets to fair value, which was determined to be de minimis.

Other Income and Expense
The following table provides information regarding other income and expense:

Investment income
Interest expense
Foreign currency loss
Total other income (expense)

Income Taxes

Year Ended
December 31, 2014
$

8,373
(2,982)
(1,990)
3,401

Year Ended
December 31, 2013

$
Change

3,346
(4,112 )
(975 )
(1,741 ) $

5,027
1,130
(1,015)
5,142

During the year ended December 31, 2014, we recorded an income tax provision of $215,195 and an effective tax rate of 24.7%,

compared to an income tax provision of $273,374 and an effective tax rate of 51.9% for the year ended December 31, 2013. The
reduction in the effective tax rate is primarily attributable to the centralization of our global supply chain and technical operations in
Ireland.

The income tax provision for 2014 is attributable to the U.S. federal, state and foreign income taxes on our profitable operations.

The income tax provision for 2013 is attributable to the U.S. federal, state and foreign income taxes on our profitable operations,

as well as the tax expense of resulting from the centralization of our global supply chain and technical operations in Ireland
undertaken in the fourth quarter of 2013 in the amount of approximately $95,800. We were also impacted by a tax benefit of $2,719
attributable to the 2012 U.S. Federal tax credit for research and experimentation due to retroactive extension of this credit signed into
law in January 2013.

We were granted an incentive tax holiday in the Canton of Vaud in Switzerland effective January 1, 2010. This tax holiday had

exempted us from most local corporate income taxes in Switzerland through the end of 2014 and was renewable for an additional 5
years with final expiration in 2019. During 2013, we undertook a restructuring which significantly changed our business model in
Switzerland and we converted from a principal company to a distribution and service company. As a result of the significant change to
our business activities in Switzerland, the Canton of Vaud in Switzerland provided final notification to us in December 2014 that our
structure no longer complied with the conditions of the incentive tax holiday. In the fourth quarter of 2014, we made a payment of
$22,817 in satisfaction of the clawback of previously exempted cantonal income taxes for tax years 2010 through 2013. This amount
was fully accrued on our balance sheet as of December 31, 2013. Prospectively, our federal and cantonal tax will be based on the
current enacted tax rates in Switzerland.

The U.S. Federal tax credit for research and experimentation expenses expired December 31, 2013. In connection with this
expiration, our 2014 tax expense for the first three quarters of the year did not include any benefit from the U.S. Federal tax credit for
research and experimentation. In December 2014, the Tax Increase Prevention Act of 2014, which retroactively extended the tax
credit for research and experimentation back to January 1, 2014 through the end of 2014, was signed into law. The effects
of a change in tax law is recognized in the period that includes the date of enactment and, therefore, our tax benefit

attributable to the 2014 U.S. Federal tax credit of $3,222 for research and experimentation was recorded in the fourth quarter
of 2014.

We continue to maintain a valuation allowance against certain other deferred tax assets where the realization is not certain.

We periodically evaluate the likelihood of the realization of deferred tax assets and reduce the carrying amount of these deferred tax
assets by a valuation allowance to the extent we believe a portion will not be realized.

Financial Condition, Liquidity and Capital Resources

The following table summarizes the components of our financial condition as of December 31, 2015 and 2014:

Cash and cash equivalents
Marketable securities
Long-term debt (includes current portion)

Current assets
Current liabilities

Working capital

December 31, 2015
$

1,010,111 $
374,904
3,456,250

2,425,349 $
718,250
1,707,099 $

December 31, 2014

943,999 $

1,017,567
57,500

2,796,029 $
606,740
2,189,289 $

$
Change

66,112
(642,663)
3,398,750

(370,680)
111,510
(482,190)

The increase in cash and cash equivalents was primarily attributable to cash generated from operations, proceeds from the
maturity or sale of available-for-sale securities, and net proceeds from the exercise of stock options. Offsetting these increases in cash
were purchases of marketable securities, payments on our outstanding term loan, purchases of property, plant and equipment, and the
repurchase of common stock. The decrease in marketable securities was primarily attributable to sales of marketable securities used to
partially fund our acquisition of Synageva in 2015. The increase in long-term debt was attributable to the borrowing of $3,500,000 in
connection with the acquisition of Synageva in 2015.

We expect continued growth in our expenditures, particularly those related to research and product development, clinical trials,

regulatory approvals, international expansion, commercialization of products and capital investment. However, we anticipate that cash
generated from operations and our existing available cash, cash equivalents and marketable securities should provide us adequate
resources to fund our operations as currently planned.

We have financed our operations and capital expenditures primarily through positive cash flows from operations. We expect to

continue to be able to fund our operations, including principal and interest payments on our credit facility and contingent payments
from our acquisitions principally through our cash flows from operations. We may, from time to time, also seek additional funding
through a combination of equity or debt financings or from other sources, if necessary for future acquisitions or other strategic
purposes.
Financial Instruments

Until required for use in the business, we may invest our cash reserves in money market funds, bank deposits, and high-quality
marketable securities in accordance with our investment policy. The stated objectives of our investment policy is to preserve capital,
provide liquidity consistent with forecasted cash flow requirements, maintain appropriate diversification and generate returns relative
to these investment objectives and prevailing market conditions.

Financial instruments that potentially expose us to concentrations of credit risk are cash equivalents, marketable securities,
accounts receivable and our foreign exchange derivative contracts. At December 31, 2015, three customers accounted for 51% of the
accounts receivable balance, with these individual customers accounting for 14% to 22% of the accounts receivable balance. At
December 31, 2014, four customers accounted for 58% of the accounts receivable balance, with individual customers accounting for
10% to 23% of the accounts receivable balance. For the year ended December 31, 2015, 3 customers accounted for 38% of our
product sales, with these individual customers ranging from 10% to 18% of product sales. For the year ended December 31, 2014,
one customer accounted for 18% of our product sales.

We continue to monitor economic conditions, including volatility associated with international economies and the associated
impacts on the financial markets and our business. A substantial portion of our accounts receivable due from these countries are due
from or backed by sovereign or local governments, and the amount of non-sovereign accounts receivable is not material. Although
collection of our accounts receivables from certain countries may extend beyond our credit terms, we do not expect any such delays to
have a material impact on our financial condition or results of operations.

We manage our foreign currency transaction risk within specified guidelines through the use of derivatives. All of our derivative

instruments are utilized for risk management purposes, and we do not use derivatives for speculative trading purposes. As of
December 31, 2015, we have foreign exchange forward contracts with notional amounts totaling $2,535,490. These outstanding
foreign exchange forward contracts had a net fair value of $147,633, of which an unrealized gain of $158,054 is included in other
assets, offset by an unrealized loss of $10,421 included in other liabilities. The counterparties to these foreign exchange forward
contracts are large domestic and multinational commercial banks, and we believe the risk of nonperformance is not material.

At December 31, 2015, our financial assets and liabilities were recorded at fair value. We have classified our financial assets and

liabilities as Level 1, 2 or 3 within the fair value hierarchy. Level 1 inputs are quoted prices (unadjusted) in active markets for
identical assets or liabilities. Our Level 1 assets consist of mutual fund investments. Level 2 inputs are quoted prices for similar assets
and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market
corroboration, but substantially the full term of the financial instrument. Our Level 2 assets consist primarily of institutional money
market funds, commercial paper, municipal bonds, U.S. and foreign government-related debt, corporate debt securities, certificates of
deposit and foreign exchange forward contracts. Our Level 2 liabilities consist also of foreign exchange forward contracts. Level 3
inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. Our Level 3 liabilities
consist of contingent consideration related to acquisitions.

Business Combinations and Contingent Consideration Obligations

The purchase agreements for our business combinations include contingent payments totaling up to $826,000 that will become

payable if and when certain development and commercial milestones are achieved. Of these milestone amounts, $511,000 and
$315,000 of the contingent payments relate to development and commercial milestones, respectively. We do not expect these amounts
to have an impact on our liquidity in the near-term, and, during the next 12 months, we expect to make milestone payments of
approximately $60,000 associated with our prior business combinations. As additional future payments become probable, we will
evaluate methods of funding payments, which could be made from available cash and marketable securities, cash generated from
operations or proceeds from other financing.

Financing Lease Obligations

In November 2012, we entered into a lease agreement for office and laboratory space to be constructed in New Haven,
Connecticut. Although we will not legally own the premises, we are deemed to be the owner of the building during the construction
period based on applicable accounting guidance for build-to-suit leases due to our involvement during the construction period.
Accordingly, the landlord's costs of constructing the facility are required to be capitalized, as a non-cash transaction, offset by a
corresponding facility lease obligation in our consolidated balance sheet. As of December 31, 2015, we recorded a
construction-in-process asset of $226,696, inclusive of the landlord's costs as well as costs incurred by Alexion, and an offsetting
facility lease obligation of $132,866, associated with the new facility.

During the third quarter 2015, we entered into a new agreement with Lonza Group AG and its affiliates (Lonza) whereby Lonza
will construct a new manufacturing facility dedicated to Alexion at its existing Portsmouth, New Hampshire facility. As a result of our
contractual right to full capacity of the new manufacturing facility, a portion of the payments under the agreement are considered to be
lease payments and a portion as payment for the supply of inventory. Although we will not legally own the premises, we are deemed
to be the owner of the manufacturing facility during the construction period based on applicable accounting guidance for build-to-suit
leases due to our involvement during the construction period. As of December 31, 2015, we recorded a construction-in-process asset
$19,259 associated with the manufacturing facility and an offsetting facility lease obligation of $15,229.

License Agreements

In January 2015, we entered into a license agreement with a third party to obtain an exclusive research, development and

commercial license for specific therapeutic molecules. Due to the early stage of these assets, we recorded expense for the

upfront payment of $50,000 during the first quarter 2015. In addition, we could be required to pay up to an additional $822,000 if
certain development, regulatory, and commercial milestones are met over time, as well as royalties on commercial sales.

In December 2014, we entered into an agreement with X-Chem Pharmaceuticals (X-Chem) that allows us to identify novel drug

candidates from X-Chem's proprietary drug discovery engine. Alexion will have the exclusive worldwide rights to develop and
commercialize products arising from the collaboration in up to three program targets. Due to the early stage of these assets, we
recorded expense for an upfront payment of $8,000. In addition, for each program target, for a maximum of three targets, we could be
required to make additional payments upon the achievement of specified research, development and regulatory milestones up to
$75,000, as well as royalties on commercial sales.

In January 2014, we entered into an agreement with Moderna Therapeutics, Inc. (Moderna) that allows us to purchase ten

product options to develop and commercialize treatments for rare diseases with Moderna's messenger RNA (mRNA) therapeutics
platform. Alexion will lead the discovery, development and commercialization of the treatments produced through this broad,
long-term strategic agreement, while Moderna will retain responsibility for the design and manufacture of the messenger RNA against
selected targets. Due to the early stage of these assets, we recorded expense for an upfront payment of $100,000. We will also be
responsible for funding research activities under the program. In addition, for each drug target, up to a maximum of ten targets, we
could be required to make an option exercise payment of $15,000 and to pay up to an additional $120,000 with respect to a rare
disease product and $400,000 with respect to a non-rare disease product in development and sales milestones if the specific milestones
are met over time as well as royalties on commercial sales.

In addition, we have entered into other license agreements under which we would be required to pay up to an additional

$785,500 if certain development, regulatory and commercial milestones are met.

Our license agreements include contingent payments that will become payable if and when certain development, regulatory and
commercial milestones are achieved. We do not expect the payments associated with these milestones to have a significant impact on
our liquidity in the near-term. During the next 12 months, we expect to make milestone payments related to our license agreements of
approximately $26,400.

Long-term Debt

On June 22, 2015, Alexion entered into a credit agreement (the Credit Agreement) with a syndicate of banks, which provides for

a $3,500,000 term loan facility and a $500,000 revolving facility. Borrowings under the term loan facility are payable in quarterly
installments equal to 1.25% of the original loan amount, beginning December 31, 2015. Final repayment of the term loan and any
draw down of revolving credit loans are due on June 22, 2020. In addition to borrowings in which prior notice is required, the
revolving credit facility includes a sublimit of $100,000 in the form of letters of credit and borrowings on same-day notice, referred to
as swingline loans, of up to $25,000. Borrowings can be used for working capital requirements, acquisitions and other general
corporate purposes.

In connection with the acquisition of Synageva in June 2015, we borrowed $3,500,000 under the term loan facility and $200,000

under the revolving facility, and we used our available cash for the remaining cash consideration. In June 2015, we repaid the
revolving facility in full. As of December 31, 2015, we had $3,456,250 outstanding on the term loan. As of December 31, 2015, we
had open letters of credit of $13,784, and our borrowing availability under the revolving facility was $486,216.

Manufacturing Obligations

We have supply agreements with Lonza through 2028 relating to the manufacture of eculizumab and asfotase alfa, which
requires payments to Lonza at the inception of contract and upon the initiation and completion of product manufactured. On an
ongoing basis, we evaluate our plans for future levels of manufacturing by Lonza, which depends upon our commercial requirements,
the progress of our clinical development programs and the production levels of ARIMF.

We have various agreements with Lonza, with remaining total non-cancellable commitments of approximately $1,156,980

through 2028. Certain commitments may be canceled only in limited circumstances. If we terminate certain supply agreements with
Lonza without cause, we will be required to pay for product scheduled for manufacture under our arrangement. Under an existing
arrangement with Lonza, we also pay Lonza a royalty on sales of Soliris manufactured at ARIMF and a payment with respect to sales
of Soliris manufactured at Lonza facilities.

In addition to Lonza, we have non-cancellable commitments of approximately $36,400 through 2019 with other third party

manufacturers.

Taxes

We do not record U.S. tax expense on the undistributed earnings of our controlled foreign corporation (CFC) subsidiaries. These
earnings relate to ongoing operations and were approximately $1,012,000 at December 31, 2015. We intend to reinvest these earnings
permanently outside the U.S. or repatriate the earnings only when it is tax efficient to do so. Accordingly, we believe that U.S. tax on
any earnings that might be repatriated would be substantially offset by realizing the benefit of tax attributes, such as U.S. Foreign tax
credits or by utilizing deficits in the foreign earnings and profits account.

During the fourth quarter of 2013, in connection with the centralization of our global supply chain and technical operations in

Ireland, our U.S. parent company became a direct partner in a foreign partnership subsidiary. To the extent that our U.S. parent
company receives its allocation of partnership taxable income, the amounts will be taxable in the U.S., and therefore the permanent
reinvestment assertion will no longer apply.

We do not have any present or anticipated future need for cash held by our CFCs, as cash generated in the U.S., as well

as borrowings, are expected to be sufficient to meet U.S. liquidity needs for the foreseeable future. At December 31, 2015,
approximately $758,000 of our cash and cash equivalents was held by foreign subsidiaries, a significant portion of which is required
for liquidity needs of our foreign subsidiaries. These subsidiaries will settle any outstanding intercompany trade payables prior to
having excess cash available which could be repatriated to our entities in the United States. While we intend to reinvest CFC earnings
permanently outside the U.S. or repatriate the earnings only when it is tax efficient to do so, certain unforeseen future events could
impact our permanent reinvestment assertion. Such events include acquisitions, corporate restructurings or tax law changes not
currently contemplated.

Common Stock Repurchase Program

In November 2012, our Board of Directors authorized a share repurchase program. In May 2015, our Board of Directors
increased the authorization of shares up to $1,000,000 for future purchases under the repurchase program, which superseded all prior
repurchase programs. The repurchase program does not have an expiration date, and we are not obligated to acquire a particular
number of shares. The repurchase program may be discontinued at any time at the Company's discretion. We expect that cash
generated from operations and our existing available cash and cash equivalents will be sufficient to fund any share repurchases.

Under the program, we repurchased 1,963 and 1,903 shares of our common stock at a cost of $327,699 and $302,599 during the

years ended December 31, 2015 and 2014, respectively. The Company did not repurchase any shares during the pendency of the
Synageva acquisition, and the Company began repurchasing shares again in the third quarter 2015.

Subsequent to December 31, 2015, we repurchased 648 shares of our common stock under our repurchase program at a cost of

$98,206. As of February 8, 2016, there is a total of $657,658 remaining for repurchases under the repurchase program.

Cash Flows

The following summarizes our net change in cash and cash equivalents:

Year Ended December 31,

Net cash provided by operating activities
Net cash used in investing activities
Net cash provided by financing activities
Effect of exchange rate changes on cash

Net change in cash and cash equivalents

Operating Activities

2015

675,199
(3,585,173)
2,985,077

(8,991)
66,112

2014
640,075
(222,869 )
7,126
(10,190 )
414,142

$
Change

35,124
(3,362,304)
2,977,951
1,199
(348,030)

Cash flows provided by operations in 2015 was $675,199 compared to $640,075 in 2014. The increase was primarily due to the

following:
•

Increase in gross margin on product sales of $309,572 resulting primarily from an increase
in global demand for Soliris.
Partially offset by the following:

• Additional cash needs associated with the Synageva acquisition, including approximately $98,314 of additional operating
expenses, $39,210 of acquisition costs and $13,335 of restructuring costs, as well as an increase in interest expense of
$42,968 on our new credit facility.
Increase in cash outflows related to our licensing arrangements, which totaled $129,750 and $109,925 for the
years ended December 31, 2015 and 2014, respectively.

•

In 2016, we expect increases in cash flow from operations which will be highly dependent on sales levels, and the related cash
collections from sales of our products. We also expect cash outflows of approximately $26,400 related to milestone payments on our
license agreements.

Investing Activities

Cash used for investing activities in 2015 was $3,585,173 compared to $222,869 in 2014. The increase was primarily due to the

following:

• Payment of $3,939,307 during 2015 related to the Synageva acquisition.
• Purchases of property, plant and equipment of $286,335 during the year ended December 31, 2015, compared to

$136,650 for the year ended December 31, 2014 due to increased capital spending associated with the construction of our
New Haven headquarters and our two facilities in Ireland.

Partially offset by the following:
• Purchases of available-for-sale marketable securities of $519,723 for the year ended December 31, 2015, compared to

$664,228 for the year ended December 31, 2014.

• Proceeds from the maturity or sale of available-for-sale marketable securities of $1,159,459 for the year ended December
31, 2015, which were used to fund the acquisition of Synageva. Proceeds from the maturity or sale of available-for-sale
marketable securities were $619,447 for the year ended December 31, 2014.

We expect to continue to have significant spending on property, plant and equipment in 2016 related to the construction of our

new biologics manufacturing facility in Ireland.

Financing Activities

Cash flows provided by financing activities in 2015 was $2,985,077 compared to $7,126 in 2014. The increase was primarily

due to the following:

• Proceeds from our new term loan facility of $3,500,000 during the year ended December 31, 2015.
• Proceeds from the issuance of stock for share-based compensation arrangements of $81,982 for the year ended

December 31, 2015, compared to and $114,350 in 2014.

Partially offset by the following:
• Change in excess tax benefits from stock options attributable to the utilization of the excess tax benefit portion of federal
and state net operating losses and tax credits of $(89,655) for the year ended December 31, 2015, compared to $251,136
in 2014, due to our election to deduct, rather than capitalize research and development expenses pursuant to Internal
Revenue Code section 59(e) on our 2014 federal income tax return, and higher 2014 excess tax benefit deductions from
stock option exercises and restricted stock vestings.

• Milestone payments of $50,000 during the year ended December 31, 2015 associated with business combinations

completed in prior years.

• Payments of debt issuance costs of $45,492 during the year ended December 31, 2015 in connection with our new debt

facility.

• Principal payments of $43,750 related to our new credit facility.

Contractual Obligations

The following table summarizes our contractual obligations at December 31, 2015 and the effect such obligations and
commercial commitments are expected to have on our liquidity and cash flow in future fiscal years. These do not include potential
milestone payments and assume non-termination of agreements.

These obligations, commitments and supporting arrangements represent payments based on current operating forecasts, which

are subject to change:

Contractual obligations:
Long-term debt
Interest expense (1)
Pension obligations
Facility lease obligation (2)
Operating leases

Total contractual
obligations

Commercial commitments:
Clinical and manufacturing
development (3)

Total commercial
commitments

Total

Less than
1 Year

1-3 Years

3-5 Years

More than 5
Years

3,456,250 $
274,818
14,639
239,120
89,635

175,000 $
67,134
1,521
14,391
25,223

350,000 $
123,874
3,214
30,038
31,986

2,931,250 $
83,810
3,028
31,162
15,002

—
—
6,876
163,529
17,424

4,074,462 $

283,269 $

539,112 $

3,064,252 $

187,829

1,193,380 $

160,820 $

360,370 $

224,190 $

448,000

1,193,380 $

160,820 $

360,370 $

224,190 $

448,000

(1) Interest on variable rate debt calculated based on interest rates at December 31, 2015.
(2) Facility lease obligation includes the lease agreement signed in November 2012, for office and laboratory space to be
constructed in New Haven, Connecticut. Although we will not legally own the premises, we are deemed to be the owner of the
building during the construction period based on applicable accounting guidance for build-to-suit leases due to our involvement
during the construction period. Accordingly, the landlord's costs of constructing the facility are required to be capitalized, as a
non-cash transaction, offset by a corresponding facility lease obligation in our consolidated balance sheet.
(3) Clinical and manufacturing development commitments include only non-cancellable commitments, including all Lonza
agreements, at December 31, 2015.

The contractual obligations table above does not include contingent royalties and other contingent contractual payments we may
owe to third parties in the future because such payments are contingent on future sales of our products and the existence and scope of
third party intellectual property rights and other factors described in Item 1A "Risk Factors" and Note 9 "Commitments and
Contingencies" of the Consolidated Financial Statements included in the Annual Report on Form 10-K.

The table above also does not include a liability for unrecognized tax benefits related to various federal, state and foreign
income tax matters of $113,945 at December 31, 2015. The timing of the settlement of these amounts was not reasonably estimable at
December 31, 2015. We do not expect payment of amounts related to the unrecognized tax benefits within the next twelve months.

We also did not include contingent payments related to business acquisitions completed in prior years or license agreements, as

the timing of payment for these amounts was not reasonably estimable at December 31, 2015. Contingent payments associated with
these business combinations total up to $826,000 which will become payable if and when certain development and commercial
milestones are achieved. During the next 12 months, we expect to make milestone payments of approximately $60,000 associated with
our prior business combinations. License commitments include contingent payments that will become payable if and when certain
development, regulatory and commercial milestones are achieved under which we would be required to pay additional amounts if
certain development, regulatory and commercial milestones are met. During the next 12 months, we expect to make milestone
payments related to our license agreements of approximately $26,400.

Credit Facilities

On June 22, 2015, Alexion entered into a credit agreement (Credit Agreement) with a syndicate of banks, which provides

for a $3,500,000 term loan facility and a $500,000 revolving credit facility maturing in five years. Borrowings under the term
loan are payable in quarterly installments equal to 1.25% of the original loan amount, beginning December 31, 2015. Final
repayment of the term loan and revolving credit loans are due on June 22, 2020. In addition to borrowings in which prior notice is
required, the revolving credit facility includes a sublimit of $100,000 in the form of letters of credit and borrowings on same-

day notice, referred to as swingline loans, of up to $25,000. Borrowings can be used for working capital requirements, acquisitions
and other general corporate purposes. With the consent of the lenders and the administrative agent, and subject to satisfaction of
certain conditions, we may increase the term loan facility and/or the revolving credit facility in an amount that does not cause our
consolidated net leverage ratio to exceed the maximum allowable amount.

Our obligations under the credit facilities are guaranteed by certain of Alexion's foreign and domestic subsidiaries and secured

by liens on certain of Alexion's and its subsidiaries' equity interests, subject to certain exceptions.

The Credit Agreement requires us to comply with certain financial covenants on a quarterly basis. Further, the Credit Agreement
includes negative covenants, subject to exceptions, restricting or limiting our ability and the ability of our subsidiaries to, among other
things, incur additional indebtedness, grant liens, and engage in certain investment, acquisition and disposition transactions. The
Credit Agreement also contains customary representations and warranties, affirmative covenants and events of default, including
payment defaults, breach of representations and warranties, covenant defaults and cross defaults. If an event of default occurs, the
interest rate would increase and the administrative agent would be entitled to take various actions, including the acceleration of
amounts due under the loan.

Operating Leases

Our operating leases are principally for facilities and equipment. We currently lease office and laboratory space at our previous

headquarters and research and development facility in Cheshire, Connecticut, as well as office space at our regional executive and
sales offices in Zurich, Switzerland. In addition to the locations above, we also lease space in other U.S. states and foreign countries to
support our operations as a global organization.

Commercial Commitments

Our commercial commitments consist of research and development, license, operational, clinical development, and
manufacturing cost commitments, along with anticipated supporting arrangements, subject to certain limitations and cancellation
clauses. The timing and level of our commercial scale manufacturing costs, which may or may not be realized, are contingent upon the
progress of our clinical development programs and our commercialization plans. Our commercial commitments are represented
principally by our supply agreement with Lonza described above. Our commitments with Lonza do not include amounts for estimated
CPI adjustments.

Item 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
(amounts in thousands, except percentages)

Interest Rate Risk

As of December 31, 2015, we invested our cash in a variety of financial instruments, principally money market funds, corporate

bonds, municipal bonds, commercial paper and government-related obligations. Most of our interest-bearing securities are subject to
interest rate risk and could decline in value if interest rates fluctuate. Our investment portfolio is comprised of marketable securities of
highly rated financial institutions and investment-grade debt instruments, and we have guidelines to limit the term-to-maturity of our
investments. Based on the type of securities we hold, we do not believe a change in interest rates would have a material impact on our
financial statements. If interest rates were to increase or decrease by 1%, the fair value of our investment portfolio would (decrease)
increase by approximately $(4,805) and $4,593, respectively.

In June 2015, we entered into the Credit Agreement with interest at a rate per annum equal to either a base rate or a
Eurodollar rate plus, in each case, an applicable margin. The applicable margins on base rate loans range from 0.25% to 1.00%
and the applicable margins on Eurodollar loans range from 1.25% to 2.00%, in each case depending upon our consolidated
net leverage ratio (as calculated in accordance with the Credit Agreement). Changes in interest rates related to the Credit
Agreement could have a material effect on our financial statements. As of December 31, 2015, we had approximately

$3,456,250 of variable rate debt outstanding. If interest rates were to increase or decrease by 1% for the year, annual interest expense
would increase or decrease by approximately $34,563.

Foreign Exchange Market Risk

Our operations include activities in many countries outside the United States, including countries in Europe, Latin America and

Asia Pacific. As a result, our financial results are impacted by factors such as changes in foreign currency exchange rates or weak
economic conditions in the foreign markets where we operate. We have exposure to movements in foreign currency exchange rates,
the most significant of which are the Euro and Japanese Yen, against the U.S. dollar. We are a net receiver of many foreign
currencies, and our consolidated financial results benefit from a weaker U.S. Dollar and are adversely impacted by a stronger U.S.
Dollar relative to foreign currencies in which we sell our product.

Our monetary exposures on our balance sheet arise primarily from cash, accounts receivable, intercompany receivables and
payables denominated in foreign currencies. Approximately 52.4% of our product sales were denominated in foreign currencies
during 2015, and our revenues are also exposed to fluctuations in the foreign currency exchange rates over time. In certain foreign
countries, we may sell in U.S. Dollar, but our customers may be impacted adversely in fluctuations in foreign currency exchange rates
which may also impact the timing and amount of our revenue.

Both positive and negative impacts to our international product sales from movements in foreign currency exchange rates are

only partially mitigated by the natural, opposite impact that foreign currency exchange rates have on our international operating
expenses. Additionally, we have operations based in Switzerland and Ireland, and accordingly, our expenses are impacted by
fluctuations in the value of the Swiss Franc and Euro against the U.S. dollar.

We currently have a derivative program in place to achieve the following: 1) limit the foreign currency exposure of our monetary

assets and liabilities on our balance sheet, using contracts with durations of up to 30 days and 2) hedge a portion of our forecasted
product sales (in some currencies), including intercompany sales, using contracts with durations of up to 60 months. The objectives of
this program are to reduce the volatility of our operating results due to fluctuation of foreign exchange and to increase the visibility of
the foreign exchange impact on forecasted revenues. This program utilizes foreign exchange forward contracts intended to reduce, not
eliminate, the volatility of operating results due to fluctuations in foreign exchange rates.

As of December 31, 2015 and 2014, we held foreign exchange forward contracts with notional amounts totaling $2,535,490 and

$1,748,931, respectively. The increase in outstanding foreign exchange forward contracts resulted primarily from increases in
forecasted revenues and, for certain currencies, extended duration of hedges. As of December 31, 2015 and 2014, our outstanding
foreign exchange forward contracts had a net fair value of $147,633 and $135,166, respectively. The increase in the net fair value of
outstanding foreign exchange forward contracts is primarily due to the strengthening of the U.S. dollar in 2014.

We do not use derivative financial instruments for speculative trading purposes. The counterparties to these foreign exchange

forward contracts are large domestic and multinational commercial banks. We believe the risk of counterparty nonperformance is not
material.

Based on our foreign currency exchange rate exposures at December 31, 2015, a hypothetical 10% adverse fluctuation in

exchange rates would decrease the fair value of our foreign exchange forward contracts that are designated as cash flow hedges by
approximately $183,713 at December 31, 2015. The resulting loss on these forward contracts would be offset by the gain on the
underlying transactions and therefore would have minimal impact on future anticipated earnings and cash flows. Similarly, adverse
fluctuations in exchange rates that would decrease the fair value of our foreign exchange forward contracts that are not designated as
hedge instruments would be offset by a positive impact of the underlying monetary assets and liabilities.

Credit Risk

As a result of our foreign operations, we are exposed to changes in the general economic conditions in the countries in which we

conduct business. A substantial portion of our accounts receivable due from these countries are due from or backed by sovereign or
local governments, and the amount of non-sovereign accounts receivable is not material. We continue to monitor economic conditions,
including volatility associated with international economies and the associated impacts on the financial markets and our business.
Although collection of our accounts receivables from certain countries may extend beyond our credit terms, we do not expect any such
delays to have a material impact on our financial condition or results of operations.

Item 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The consolidated financial statements and supplementary data of the Company required in this item are set forth beginning on

page F-1.

Item 9.

None.

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

Item 9A.

CONTROLS AND PROCEDURES.

Disclosure Controls and Procedures.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness
of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended, or the Exchange Act,) as of December 31, 2015. Based on this evaluation, our Chief Executive Officer and Chief Financial
Officer concluded that, as of December 31, 2015, our disclosure controls and procedures were effective to provide reasonable
assurance that information is accumulated and communicated to our management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate to allow timely decisions regarding required disclosure, and ensure that information required to be
disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the SEC's rules and forms.

Management's Report on Internal Control over Financial Reporting.

Management of Alexion Pharmaceuticals, Inc. is responsible for establishing and maintaining adequate internal control over

financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting
is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations,
internal control over financial reporting may not prevent or detect misstatements. Also, 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.

Management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31,

2015 based on the framework in Internal Control-Integrated Framework (2013 issued by the Committee of Sponsoring Organizations
of the Treadway Commission. The scope of such assessment did not include the Synageva BioPharma Corp. (Synageva) business,
which was acquired on June 22, 2015 and accounted for under the acquisition method of accounting for business combinations. Total
assets and revenue of the Synageva business represented approximately 1% and less than 1%, respectively, of the accompanying
consolidated financial statement amounts as of an for the year ended December 31, 2015. Based on the evaluation, management
concluded that our internal control over financial reporting was effective as of December 31, 2015.

The effectiveness of our internal control over financial reporting as of December 31, 2015 has been audited by

PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which is included herein.

Changes in Internal Control over Financial Reporting.

There has been no change in our internal control over financial reporting that occurred during the quarter ended December 31,

2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9A(T).

CONTROLS AND PROCEDURES.

Not applicable

Item 9B.

OTHER INFORMATION.

None.

PART III

Item 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The information required by this item with respect to our executive officers is provided under the caption entitled “Executive

Officers of the Company” in Part I of this Annual Report on Form 10-K and is incorporated by reference herein. The information
required by this item with respect to our directors and our audit committee and audit committee financial expert will be set forth in our
definitive Proxy Statement under the captions “General Information About the Board of Directors” and “Election of Directors”, to be
filed within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K, and is incorporated herein by
reference to our Proxy Statement.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

The information regarding compliance with Section 16(a) of the Securities Exchange Act of 1934 required by this Item will be
set forth in our definitive Proxy Statement under the caption “Section 16(a) Beneficial Ownership Reporting Compliance”, to be filed
within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K, and is incorporated herein by reference
to our Proxy Statement.

CODE OF ETHICS

We have adopted the Alexion Pharmaceuticals, Inc. Code of Conduct, or code of ethics, that applies to directors, officers and

employees of Alexion and its subsidiaries and complies with the requirements of Item 406 of Regulation S-K and the listing standards
of the NASDAQ Global Select Market. Our code of ethics is located on our website (http://ir.alexionpharm.com/governance.cfm). We
amended the code of ethics in September 2015 and any future amendments or waivers to our code of ethics will be promptly disclosed
on our website and as required by applicable laws, rules and regulations of the SEC and NASDAQ.

Item 11.

EXECUTIVE COMPENSATION.

The information required by this Item will be set forth in our definitive Proxy Statement, to be filed within 120 days after the
end of the fiscal year covered by this Annual Report on Form 10-K, and is incorporated herein by reference to our Proxy Statement.

Item 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS.

Item 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.

Item 14.

PRINCIPAL ACCOUNTING FEES AND SERVICES.

The information required by this Item will be set forth in our definitive Proxy Statement under the caption “Independent

Registered Public Accounting Firm”, to be filed within 120 days after the end of the fiscal year covered by this Annual Report on
Form 10-K, and is incorporated herein by reference to our Proxy Statement.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

PART IV

Item 15.

Item 15(a)

(1) Financial Statements
The financial statements required by this item are submitted in a separate section beginning on page F-1 of this report.

(2) Financial Statement Schedules
Schedules have been omitted because of the absence of conditions under which they are required or because the required

information is included in the financial statements or notes thereto beginning on page F-1 of this report.

(3) Exhibits:

2.1

2.2

2.3

2.4

Agreement and Plan of Merger by and among Alexion, TPCA Corporation, Taligen Therapeutics, Inc., each stockholder
of Taligen that signed the Agreement as a seller of Series Bl Call Rights, and, only for the limited purposes described
therein as Stockholders’ Representatives (and not in their individual capacities), Nick Galakatos, Ed Hurwitz and Timothy
Mills, dated as of January 28, 2011.(1)+
Agreement and Plan of Merger by and among Alexion, EMRD Corporation, Enobia Pharma Corp., and the Stockholder
Representatives named therein, dated as of December 28, 2011.(2)+

Amendment No. 1 to the Agreement and Plan of Merger, dated December 28, 2011, by and among Alexion, EMRD
Corporation, Enobia Pharma Corp., and the Stockholder Representatives named therein, dated February 1, 2012.(3)

Agreement and Plan of Reorganization, dated May 5, 2015, among Alexion Pharmaceuticals, Inc., Pulsar Merger Sub
Inc., Galaxy Merger Sub LLC and Synageva BioPharma Corp. (4)

3.1 Certificate of Incorporation, as amended.(5)

3.2 Certificate of Amendment of the Certificate of Incorporation.(6)

3.3 Bylaws, as amended.(7)

4.1 Specimen Common Stock Certificate.(8)

10.1 Consulting Agreement, by and between Alexion Pharmaceuticals, Inc. and Dr. Leonard Bell, dated April 1, 2015.(9)

10.2 Letter Agreement, by and between Alexion Pharmaceuticals, Inc. and Dr. Leonard Bell, dated April 1, 2015.(9)

10.5 Employment Agreement, dated as of February 14, 2006, between Alexion and Vikas Sinha.(10)**

10.6

Amendment No. 1 to the Employment Agreement, dated as of December 23, 2009, between Alexion and Vikas
Sinha.(11)**

10.7 Form of Employment Agreement (Senior Vice Presidents).(10)**

10.8 Form of Amendment No. 1 to Employment Agreements (Senior Vice Presidents). (11)**

10.9 Form of Indemnification Agreement for Officers and Directors. (12)

10.10 Agreement of Lease, dated May 9, 2000, between Alexion and WE Knotter L.L.C.(13)+

10.11 Lease, dated November 15, 2012, between Alexion and WE Route 34, LLC.(14)

10.12 Alexion’s 2000 Stock Option Plan, as amended.(15)**

10.13 Alexion’s 1992 Outside Directors Stock Option Plan, as amended.(16)**

10.14 Alexion’s Amended and Restated 2004 Incentive Plan.(17)**

10.15 License Agreement dated March 27, 1996 between Alexion and Medical Research Council.(18)+

10.16

Master Manufacturing and Supply Agreement, dated December 16, 2014 between Alexion Pharma International Trading,
Alexion Pharmaceuticals, Inc, Lonza Group AG, Lonza Biologics Tuas PTE LTD and Lonza Sales AG. (24)*

10.17 Form of Stock Option Agreement for Directors.(20)**

10.18 Form of Stock Option Agreement for Executive Officers (Form A).(21)**
10.19 Form of Stock Option Agreement for Executive Officers (Form B).(21)**
10.20 Form of Restricted Stock Award Agreement for Executive Officers (Form A).(22)**

10.21 Form of Stock Option Agreement (Incentive Stock Options).(19)

10.22 Form of Stock Option Agreement (Nonqualified Stock Options).(19)

10.23 Form of Restricted Stock Award Agreement.(19)

10.24 Form of Restricted Stock Unit Award Agreement.(23)

10.25 Form of Stock Option Agreement for Participants in France.(19)**

10.26 Form of Restricted Stock Unit Agreement for Participants in France.(19)**

10.27 Credit Agreement, dated as of June 22, 2015, by and among Alexion Pharmaceuticals, Inc, as administrative borrower, the

guarantors referred to therein, the lenders referred to therein and Bank of America, N.A., as administrative agent. (25)

21.1 Subsidiaries of Alexion Pharmaceuticals, Inc.

23.1 Consent of PricewaterhouseCoopers LLP, an Independent Registered Public Accounting Firm

31.1 Certificate of Chief Executive Officer pursuant to Exchange Act Rules 13a-14 and 15d-14, as adopted pursuant to Section

302 Sarbanes Oxley Act of 2002.

31.2 Certificate of Chief Financial Officer pursuant to Exchange Act Rules 13a-14 and 15d-14, as adopted pursuant to Section

302 of Sarbanes Oxley Act of 2002.

32.1 Certificate of Chief Executive Officer pursuant to Section 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of

the Sarbanes Oxley Act.

32.2 Certificate of Chief Financial Officer pursuant to Section 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of

the Sarbanes Oxley Act.

101 The following materials from the Alexion Pharmaceuticals, Inc. Annual Report on Form 10-K for the year ended

December 31, 2015 formatted in eXtensible Business Reporting Language (XBRL): (i) the Consolidated Statements of
Operations, (ii) the Consolidated Statements of Comprehensive Income, (iii) the Consolidated Balance Sheets, (iv) the
Consolidated Statements of Changes in Stockholders' Equity, (v) the Consolidated Statements of Cash Flows and (vi)
related notes, tagged as blocks of text.

_____________________

(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
(13)
(14)
(15)
(16)
(17)
(18)
(19)
(20)
(21)

Incorporated by reference to our Report on Form 8-K, filed on February 3, 2011.
Incorporated by reference to our Report on Form 8-K, filed on January 4, 2012.
Incorporated by reference to our Report on Form 8-K, filed on February 7, 2012.
Incorporated by reference to our Report on Form 8-K, filed on May 6, 2015
Incorporated by reference to our Registration Statement on Form S-3 (Reg. No. 333-128085), filed on September 2, 2005.
Incorporated by reference to our Annual Report on Form 10-K for the fiscal year ended December 31, 2011.
Incorporated by reference to our Report on Form 8-K, filed on January 8, 2016.
Incorporated by reference to our Registration Statement on Form S-1 (Reg. No. 333-00202).
Incorporated by reference to our Report on Form 8-K, filed April 7, 2015.
Incorporated by reference to our Report on Form 8-K filed on February 16, 2006.
Incorporated by reference to our Annual Report on Form 10-K for the fiscal year ended December 31, 2009.
Incorporated by reference to our Report on Form 8-K, filed on September 17, 2010.
Incorporated by reference to our Registration Statement on Form S-3 (Reg. No. 333-36738) filed on May 10, 2000.
Incorporated by reference to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2013.
Incorporated by reference to our quarterly report on Form 10-Q for the quarter ended January 31, 2004.
Incorporated by reference to our Registration Statement on Form S-8 (Reg. No. 333-71879) filed on February 5, 1999.
Incorporated by reference to our Annual Report on Form 10-K for the fiscal year ended December 31, 2013.
Incorporated by reference to our Annual Report on Form 10-K/A for the fiscal year ended July 31, 1996.
Incorporated by reference to our Annual Report on Form 10-K for the fiscal year ended December 31, 2008.
Incorporated by reference to our report on Form 8-K, filed on December 16, 2004.
Incorporated by reference to our Quarterly Report on Form 10-Q for the quarter ended January 31, 2005.

(22)
(23)
(24)
(25)

Incorporated by reference to our report on Form 8-K, filed on March 14, 2005.
Incorporated by reference to our Annual Report on Form 10-K for the fiscal year ended December 31, 2010.
Incorporated by reference to our Report on Form 10-K for the fiscal year ended December 31, 2014.
Incorporated by reference to our report on Form 8-K, filed on June 23, 2015.

Confidential treatment was granted for portions of such exhibit.

Confidential treatment requested under 17 C.F.R. §§200.80(b)(4) and 24b-2. The confidential portions of this exhibit have
been omitted and are marked accordingly. The confidential portions have been filed separately with the SEC pursuant to the
confidential treatment request.

** Indicates a management contract or compensatory plan or arrangement required to be filed pursuant to Item 15(b) of Form 10-K.

Item 15(b) Exhibits

See (a) (3) above.

Item 15(c) Financial Statement Schedules

See (a) (2) above.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly

caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

ALEXION PHARMACEUTICALS, INC.

By:

/s/ David Hallal
David Hallal
Chief Executive Officer (principal executive officer)
Dated: February 8, 2016

/s/ Vikas Sinha
Vikas Sinha, M.B.A., C.A. Executive Vice President and Chief Financial Officer
(principal financial officer)
Dated: February 8, 2016

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following

persons on behalf of the registrant and in the capacities and on the dates indicated.

Chief Executive Officer and Director (principal executive officer)

February 8, 2016

Executive Vice President and Chief Financial Officer (principal financial
officer)

February 8, 2016

Senior Vice President and Chief Accounting Officer (principal
accounting officer)

February 8, 2016

/s/ David Hallal
David Hallal

/s/ Vikas Sinha
Vikas Sinha, M.B.A., C.A., C.P.A.

/s/ Daniel A. Bazarko
Daniel A. Bazarko, C.P.A.

/s/ Leonard Bell
Leonard Bell, M.D.

/s/ Felix J. Baker
Felix J. Baker, Ph.D.

/s/ David R. Brennan
David R. Brennan

/s/ M. Michele Burns
M. Michele Burns

Chairman

Director

/s/ Christopher J. Coughlin
Christopher J. Coughlin

Director

/s/ John T. Mollen
John T. Mollen

/s/ R. Douglas Norby
R. Douglas Norby

/s/ Alvin S. Parven
Alvin S. Parven

/s/ Andreas Rummelt
Andreas Rummelt, Ph.D.

/s/ Ann M. Veneman
Ann M. Veneman

Director

February 8, 2016

Alexion Pharmaceuticals, Inc.
Contents
For the Years Ended December 31, 2015, 2014 and 2013

Report of Independent Registered Public Accounting Firm
Consolidated Financial Statements
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Stockholders’ Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements

Page(s)

F-2

F-3
F-4
F-5
F-6

F-7 to F-8
F-9 to F-46

F-1

Report of Independent Registered Public Accounting Firm

To Board of Directors and Stockholders
of Alexion Pharmaceuticals, Inc.:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations,

comprehensive income, changes in stockholders' equity and cash flows present fairly, in all material respects, the financial position of
Alexion Pharmaceuticals, Inc. and its subsidiaries at December 31, 2015 and December 31, 2014, and the results of their operations
and their cash flows for each of the three years in the period ended December 31, 2015 in conformity with accounting principles
generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2015, based on criteria established in Internal Control - Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company's
management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control over
Financial Reporting. Our responsibility is to express opinions on these financial statements and on the Company's internal control over
financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material misstatement and whether effective internal control over
financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over
financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits
provide a reasonable basis for our opinions.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that
(i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being
made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a
material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
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.

As described in Management's Report on Internal Control over Financial Reporting, management has excluded Synageva
BioPharma Corp. from its assessment of internal control over financial reporting as of December 31, 2015 because it was acquired by
the Company in a purchase business combination during 2015. We have also excluded Synageva BioPharma Corp. from our audit of
internal control over financial reporting. Synageva BioPharma Corp. is a wholly-owned subsidiary whose total assets and total
revenues represent 1% and less than 1%, respectively, of the related consolidated financial statement amounts as of and for the year
ended December 31, 2015.

/s/ PricewaterhouseCoopers LLP

Hartford, Connecticut
February 8, 2016

F-2

Alexion Pharmaceuticals, Inc.
Consolidated Balance Sheets
(amounts in thousands, except per share amounts)

Assets
Current Assets:

Cash and cash equivalents
Marketable securities
Trade accounts receivable, net
Inventories
Prepaid expenses and other current assets

Total current assets

Property, plant and equipment, net
Intangible assets, net
Goodwill
Other assets

Total assets

Liabilities and Stockholders' Equity
Current Liabilities:

Accounts payable
Accrued expenses
Deferred revenue
Current portion of long-term debt
Other current liabilities

Total current liabilities

Long-term debt, less current portion
Contingent consideration
Facility lease obligation
Deferred tax liabilities
Other liabilities

Total liabilities

Commitments and contingencies (Note 10)
Stockholders' Equity:

Preferred stock, $.0001 par value; 5,000 shares authorized, no shares issued or
outstanding
Common stock, $.0001 par value; 290,000 shares authorized; 230,498 and 201,944
shares issued at December 31, 2015 and 2014, respectively
Additional paid-in capital
Treasury stock, at cost, 4,851 and 2,888 shares at December 31, 2015 and 2014,
respectively
Accumulated other comprehensive income
Retained earnings

Total stockholders' equity
Total liabilities and stockholders' equity

December 31,

2015

2014

1,010,111
374,904
532,832
289,874
217,628
2,425,349
697,025
4,707,914
5,047,885
255,057
13,133,230

57,360
403,348
20,504
175,000
62,038
718,250
3,281,250
121,424
151,307
528,990
73,393
4,874,614

—

23
7,726,560

(710,663 )
62,301
1,180,395
8,258,616
13,133,230

943,999
1,017,567
432,888
176,441
225,134
2,796,029
392,248
587,046
254,073
172,566
4,201,962

44,016
395,232
58,837
48,000
60,655
606,740
9,500
116,425
107,099
7,046
53,134
899,944

—

20
2,592,167

(382,964)
56,785
1,036,010
3,302,018
4,201,962

The accompanying notes are an integral part of these consolidated financial statements

F-3

Alexion Pharmaceuticals, Inc.
Consolidated Statements of Operations
(amounts in thousands, except per share amounts)

Net product sales
Other revenue

Total revenues

Cost of sales:

Cost of sales
Change in contingent liability from intellectual property
settlements

Total cost of sales

Operating expenses:

Research and development
Selling, general and administrative

Amortization of purchased intangible assets
Change in fair value of contingent consideration
Acquisition-related costs
Restructuring expenses
Impairment of intangible assets

Total operating expenses
Operating income
Other income and expense:
Investment income
Interest expense
Foreign currency gain (loss)

Income before income taxes

Income tax provision
Net income
Earnings per common share
Basic
Diluted
Shares used in computing earnings per common share
Basic
Diluted

2015
2,602,532
1,515
2,604,047

233,089

—
233,089

709,472
862,595
116,584
64,257
39,210
42,169
—
1,834,287
536,671

Year Ended December 31,
2014
2,233,733
—
2,233,733

173,862

—
173,862

513,782
630,209
—
20,295
—
15,365
11,514
1,191,165
868,706

8,519
(47,744)
696
498,142
353,757
144,385

0.68
0.67

213,431
215,933

8,373
(2,982 )
(1,990 )

872,107
215,195
656,912

3.32
3.26

$
$

198,103
201,623

2013
1,551,346
—
1,551,346

168,375

9,181
177,556

317,093
489,720
417
4,006
1,023
—
33,521
845,780
528,010

3,346
(4,112)
(975)
526,269
273,374
252,895

1.29
1.27

195,532
199,712

The accompanying notes are an integral part of these consolidated financial statements

F-4

Alexion Pharmaceuticals, Inc.
Consolidated Statements of Comprehensive Income
(amounts in thousands)

Net income
Other comprehensive income (loss), net of tax:

Foreign currency translation
Unrealized losses on marketable securities
Unrealized gains (losses) on pension obligation
Unrealized gains (losses) on hedging activities, net of tax of
$5,643, $45,448 and $(871), respectively

Other comprehensive income (loss), net of tax

Comprehensive income

2015

Year Ended December 31,
2014

2013

144,385

656,912

252,895

(6,276)
(551)
6,981

5,362
5,516
149,901

(6,337 )
(88 )
(5,068 )

91,135
79,642
736,554

(4,573)
(146)
(5,790)

(18,983)
(29,492)
223,403

The accompanying notes are an integral part of these consolidated financial statements

F-5

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F

Alexion Pharmaceuticals, Inc.
Consolidated Statements of Cash Flows
(amounts in thousands)

Cash flows from operating activities:

Net income
Adjustments to reconcile net income to net cash flows from operating activities:

Depreciation and amortization
Impairment of intangible assets
Change in fair value of contingent consideration
Share-based compensation expense
Premium amortization of available-for-sale securities
Deferred taxes
Change in excess tax benefit from stock options
Other

Changes in operating assets and liabilities, excluding the effect of acquisitions:

Accounts receivable
Inventories
Prepaid expenses and other assets
Accounts payable, accrued expenses and other liabilities
Deferred revenue

Net cash provided by operating activities

Cash flows from investing activities:

Purchases of available-for-sale securities
Proceeds from maturity or sale of available-for-sale securities
Purchases of trading securities
Proceeds from sale of trading securities
Purchases of property, plant and equipment
Purchases of other investments
Payments for acquisitions of businesses, net of cash acquired
Other

Net cash used in investing activities

Cash flows from financing activities:

Debt issuance costs
Proceeds from revolving credit facility
Payments on revolving credit facility
Proceeds from term loan
Payments on term loan
Equity issuance costs for shares issued in connection with acquisition of
business
Change in excess tax benefit from stock options
Repurchase of common stock
Net proceeds from issuance of stock under share-based compensation
arrangements
Payment of contingent consideration
Proceeds from development-related grants
Other

Net cash provided by financing activities

Effect of exchange rate changes on cash
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

2015

Year Ended December 31,
2014

2013

144,385

656,912

252,895

166,621

—

64,257
227,133
6,782
395,495
89,655
(3,958)

(115,812)
(88,375)
(57,168)
(115,938)
(37,878)
675,199

(519,723)
1,159,459
(14,980)
10,239
(286,335)

—

(3,939,307)
5,474
(3,585,173)

(45,492)
200,000
(200,000)
3,500,000
(101,250)

(4,053)
(89,655)
(327,699)

81,982
(50,000)
26,000
(4,756)
2,985,077
(8,991)
66,112
943,999
1,010,111

46,939
11,514
20,295
114,461
15,519
(153,905 )
(251,136 )
22,046

(28,137 )
(66,812 )
(18,392 )
264,572
6,199
640,075

(664,228 )
619,447
(3,431 )
186
(136,650 )
(37,500 )
—
(693 )
(222,869 )

—
—
—
—
(55,500 )

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251,136
(302,599 )

114,350
—
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(261 )
7,126
(10,190 )
414,142
529,857
943,999

28,693
33,521
4,006
76,203
3,235
92,831
(105,714)
2,040

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126
(39,879)
242,355
23,476
497,349

(1,048,429)
60,917
(985)
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—
—
(9,315)
(1,027,141)

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—
—
—
(36,000)

—
105,714
(66,136)

71,281
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—
(220)
71,639
(1,491)
(459,644)
989,501
529,857

The accompanying notes are an integral part of these consolidated financial statements

F-7

Alexion Pharmaceuticals, Inc.
Consolidated Statements of Cash Flows
(amounts in thousands)

Supplemental cash flow disclosures:

Cash paid for interest (net of amounts capitalized)
Cash paid for income taxes

$
Supplemental cash flow disclosures from investing and financing activities:
$

Common stock issued in acquisition of business
Construction in process related to facility lease obligations

Accrued expenses for purchases of property, plant and equipment

2015

Year Ended December 31,
2014

2013

41,357 $
123,171 $

4,917,810 $
40,996 $
30,067 $

1,910 $
91,195 $

— $
74,869 $
17,092 $

2,831
76,165

—
32,230
—

The accompanying notes are an integral part of these consolidated financial statements

F-8

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

Business Overview and Summary of Significant Accounting Policies

Business

Alexion Pharmaceuticals, Inc. (Alexion, the Company, we, our or us) is a biopharmaceutical company focused on serving

patients with devastating and ultra-rare disorders through the innovation, development and commercialization of life-transforming
therapeutic products.

In our complement franchise, Soliris® is the first and only therapeutic approved for patients with either paroxysmal nocturnal

hemoglobinuria (PNH), a life-threatening and ultra-rare genetic blood disorder, or atypical hemolytic uremic syndrome (aHUS), a
life-threatening and ultra-rare genetic disease. PNH and aHUS are two severe and ultra-rare disorders resulting from chronic
uncontrolled activation of the complement component of the immune system.

In our metabolic franchise, we market Strensiq® for the treatment of patients with hypophasphatasia (HPP) and Kanuma™ for

the treatment of patients with lysosomal acid lipase deficiency (LAL-D). HPP is a genetic ultra-rare disease characterized by defective
bone mineralization that can lead to deformity of bones and other skeletal abnormalities. LAL-D is a serious, life threatening ultra-rare
disease in which genetic mutations result in decreased activity of the LAL enzyme leading to marked accumulation of lipids in vital
organs, blood vessels and other tissues. We initiated sales of these products in the third quarter 2015.

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Alexion and its wholly-owned subsidiaries. All
intercompany balances and transactions have been eliminated in consolidation. For each of our business combinations, all of the assets
acquired and liabilities assumed were recorded at their respective fair values as of the date of acquisition, and their results of
operations are included in the consolidated financial statements from the date of acquisition.

Dividend Policy

We have never paid a cash dividend on shares of our stock. We currently intend to retain our earnings to finance future

operations and do not anticipate paying any cash dividends on our stock in the foreseeable future.

Critical Accounting Estimates

The preparation of our consolidated financial statements, which have been prepared in accordance with accounting principles

generally accepted in the United States, requires us to make estimates, judgments and assumptions that may affect the reported
amounts of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities in our financial statements.
We believe the most complex judgments result primarily from the need to make estimates about the effects of matters that are
inherently uncertain and are significant to our consolidated financial statements. 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 and liabilities. We evaluate our estimates, judgments and assumptions on an ongoing basis. Actual results
may differ from these estimates under different assumptions or conditions.

The most significant areas involving estimates, judgments and assumptions used in the preparation of our consolidated financial

statements are as follows:

• Revenue recognition;

• Contingent liabilities;

•

Inventories;

Share-based compensation;

• Valuation of goodwill, acquired intangible assets and in-process research and development (IPR&D);

• Valuation of contingent consideration; and

•

Income taxes.

F-9

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

Foreign Currency Translation

The financial statements of our subsidiaries with functional currencies other than the U.S. dollar are translated into U.S. dollars

using period-end exchange rates for assets and liabilities, historical exchange rates for stockholders’ equity and weighted average
exchange rates for operating results. Translation gains and losses are included in accumulated other comprehensive income (loss), net
of tax, in stockholders’ equity. Foreign currency transaction gains and losses are included in the results of operations in other income
and expense.

Cash and Cash Equivalents

Cash and cash equivalents are stated at cost plus accrued interest, which approximates fair value, and include short-term highly

liquid investments with original maturities of three months or less.

Fair Value of Financial Instruments

The carrying amounts reflected in the consolidated balance sheets for cash and cash equivalents, accounts receivable, other

assets, accounts payable, accrued expenses and other liabilities approximate fair value due to their short-term maturities. Our
marketable securities are valued based upon pricing of securities with similar investment characteristics and holdings. Our derivative
financial instruments are measured at fair value using observable market inputs such as forward rates, interest rates, our own credit
risk and our counterparties’ credit risks. Our debt obligations are carried at historical cost, which approximates fair value. Our
contingent consideration liabilities related to our acquisitions are valued based on various estimates, including probability of success,
estimated revenues, discount rates and amount of time until the conditions of the milestone payments are met.

Marketable Securities

We invest our excess cash balances in marketable securities of highly rated financial institutions and investment-grade debt

instruments. We seek to diversify our investments and limit the amount of investment concentrations for individual institutions,
maturities and investment types. We classify these marketable securities as available-for-sale and, accordingly, record such securities
at fair value. We classify these marketable securities as current assets as these investments are intended to be available to the
Company for use in funding current operations.

Unrealized gains and losses that are deemed temporary are included in accumulated other comprehensive income (loss) as a
separate component of stockholders' equity. If any adjustment to fair value reflects a significant decline in the value of the security, we
evaluate the extent to which the decline is determined to be other-than-temporary and would mark the security to market through a
charge to our consolidated statement of operations. Credit losses are identified when we do not expect to receive cash flows sufficient
to recover the amortized cost basis of a security. In the event of a credit loss, only the amount associated with the credit loss is
recognized in operating results, with the amount of loss relating to other factors recorded in accumulated other comprehensive income
(loss).

We sponsor a nonqualified deferred compensation plan which allows certain highly-compensated employees to elect to defer
income to future periods. Participants in the plan earn a return on their deferrals based on several investments options, which mirror
returns on underlying mutual fund investments. We choose to invest in the underlying mutual fund investments to offset the liability
associated with our nonqualified deferred compensation plan. These securities are classified as trading securities and are carried at fair
value with gains and losses included in investment income. The changes in the underlying liability to the employee are recorded in
operating expenses.

Accounts Receivable

Our standard credit terms vary based on the country of sale and range from 30 to 120 days. Our consolidated average days’

sales outstanding ranges from 60 to 80 days. We evaluate the creditworthiness of customers on a regular basis. In certain
European countries, sales by us are subject to payment terms that are statutorily determined. This is primarily the case in countries
where the payer is government-owned or government-funded, which we consider to be creditworthy. The length of time from sale
to receipt of payment in certain countries exceeds our credit terms. In countries in which collections from customers extend
beyond normal payment terms, we seek to collect interest. We record interest on customer receivables as interest income
when collected. For non-interest bearing receivables with an estimated payment beyond one year, we discount the accounts
receivable to present value at the date of sale, with a corresponding adjustment to revenue. Subsequent adjustments for further
declines in credit rating are recorded as bad debt expense as a component of selling, general and administrative expense.
We also use judgments as to our ability to collect outstanding receivables and provide allowances for

F-10

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

the portion of receivables if and when collection becomes doubtful, and we also assess on an ongoing basis whether collectibility is
reasonably assured at the time of sale.

Concentration of Credit Risk

Financial instruments that potentially expose the Company to concentrations of credit risk are limited to cash equivalents,
marketable securities, accounts receivable and our foreign exchange derivative contracts. We invest our cash reserves in money
market funds or high-quality marketable securities in accordance with our investment policy. The stated objectives of our investment
policy is to preserve capital, provide liquidity consistent with forecasted cash flow requirements, maintain appropriate diversification
and generate returns relative to these investment objectives and prevailing market conditions.

At December 31, 2015, three customers accounted for 51% of the accounts receivable balance, with these individual customers

ranging from 14% to 22% of the accounts receivable balance. At December 31, 2014, four customers accounted for 58% of the
accounts receivable balance, with individual customers accounting for 10% and 23%. For the year ended December 31, 2015, three
customers accounted for 38% of our product sales, with these individual customers ranging from 10% to 18% of our product sales. For
the year ended December 31, 2014, one customer accounted for 18% of our product sales. No other customers accounted for more
than 10% of net product sales or accounts receivable.

As a result of our foreign operations, we are exposed to changes in the general economic conditions in the countries in which we

conduct business. Substantially all of our accounts receivable due from these countries are due from or backed by sovereign or local
governments, and the amount of non-sovereign accounts receivable is not material. We continue to monitor economic conditions,
including volatility associated with international economies and the associated impacts on the financial markets and our business.
Although collection of our accounts receivables due from certain countries may extend beyond our standard credit terms, we do not
expect any such delays to have a material impact on our financial condition or results of operations.

Inventories

Inventories are stated at the lower of cost or estimated realizable value. We determine the cost of inventory using the

weighted-average cost method.

The components of inventory are as follows:

Raw materials
Work-in-process
Finished goods

December 31,

2015

17,924 $
180,324
91,626
289,874 $

2014

14,570
107,170
54,701
176,441

Capitalization of Inventory Costs

We capitalize inventory produced for commercial sale, which may include costs incurred for certain products awaiting

Products that have been approved by the U.S. Food and Drug Administration (FDA) or other regulatory authorities are
also used in clinical programs to assess the safety and efficacy of the products for usage in diseases that have not been approved
by the FDA or other regulatory authorities. The form of the products utilized for both commercial and clinical programs is

F-11

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

identical and, as a result, the inventory has an "alternative future use" as defined in authoritative guidance. Raw materials and
purchased drug product associated with clinical development programs are included in inventory and charged to research and
development expense when the product enters the research and development process and no longer can be used for commercial
purposes and, therefore, does not have an "alternative future use".

For products which are under development and have not yet been approved by regulatory authorities, purchased drug product is

charged to research and development expense upon delivery. Delivery occurs when the inventory passes quality inspection and
ownership transfers to us. Nonrefundable advance payments for research and development activities, including production of
purchased drug product, are deferred and capitalized until the goods are delivered. We also recognize expense for raw materials
purchased for developmental purposes when the raw materials pass quality inspection and we have an obligation to pay for the
materials.

Inventory Write-Offs

We analyze our inventory levels to identify inventory that may expire prior to sale, inventory that has a cost basis in excess of its

estimated realizable value, or inventory in excess of expected sales requirements. Although the manufacturing of our product is
subject to strict quality control, certain batches or units of product may no longer meet quality specifications or may expire, which
requires adjustments to our inventory values. We also apply judgment related to the results of quality tests that we perform throughout
the production process, as well as our understanding of regulatory guidelines, to determine if it is probable that inventory will be
saleable. These quality tests are performed throughout the pre-and post-production process, and we continually gather additional
information regarding product quality for periods after the manufacture date. Our products currently have a maximum estimated life
ranging from 36 to 48 months and, based on our sales forecasts, we expect to realize the carrying value of our inventory. In the future,
reduced demand, quality issues or excess supply beyond those anticipated by management may result in a material adjustment to
inventory levels, which would be recorded as an increase to cost of sales.

Derivative Instruments

We record the fair value of derivative instruments as either assets or liabilities on the balance sheet. The accounting for gains

and losses resulting from changes in fair value is dependent on the use of the derivative and whether it is designated and qualifies for
hedge accounting.

All qualifying hedging activities are documented at the inception of the hedge and must meet the definition of highly effective in

offsetting changes to future cash. The effectiveness of the qualifying hedge contract is assessed quarterly. We record the fair value of
the qualifying hedges in other current assets, other assets, other current liabilities and other liabilities. Gains or losses resulting from
changes in the fair value of qualifying hedges are recorded in other comprehensive income (loss) until the forecasted transaction
occurs. When the forecasted transaction occurs, this amount is reclassified into revenue. Any non-qualifying portion of the gains or
losses resulting from changes in fair value, if any, is reported in other income and expense.

Property, Plant and Equipment

Property, plant and equipment are stated at cost and are depreciated on a straight-line basis over the estimated useful lives of the

assets. We estimate economic lives as follows:

• Building and improvements—fifteen to thirty five years
• Machinery and laboratory equipment—five to fifteen years
• Computer hardware and software—three to seven years
•
Furniture and office equipment— five to ten years

Leasehold improvements and assets under capital lease arrangements are amortized over the lesser of the asset's estimated useful

life or the term of the respective lease. Maintenance costs are expensed as incurred.

Construction-in-progress reflects amounts incurred for property, plant, or equipment construction or improvements that have not

been placed in service.

F-12

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

Manufacturing Facilities

We capitalize costs incurred for the construction of facilities which support commercial manufacturing. We also capitalize costs

related to validation activities which are directly attributable to preparing the facility for its intended use, including engineering runs
and inventory production necessary to obtain approval of the facility from government regulators for the production of a commercially
approved drug. When the facility is substantially complete and ready for its intended use and regulatory approval for commercial
production has been received, we will place the asset in service.

The production of inventory for preparing the facility for its intended use requires two types of production: engineering runs
which are used for testing purposes only and do not result in saleable inventory, and validation runs which are used for validating
equipment and may result in saleable inventory. The costs associated with inventory produced during engineering runs and normal
production losses during validation runs are capitalized to fixed assets and depreciated over the asset's useful life. Saleable inventory
produced during the validation process is initially treated as a fixed asset; however, upon regulatory approval, this inventory is
reclassified to inventory and expensed in cost of goods sold as product is sold, or in research and development expenses as product is
utilized in R&D activities. Abnormal production costs incurred during the validation process are expensed as incurred.

Acquisitions

Business combinations are accounted for using the acquisition method of accounting. Under the acquisition method of
accounting, the tangible and intangible assets acquired and the liabilities assumed are recorded as of the acquisition date at their
respective fair values. We evaluate a business as an integrated set of activities and assets that is capable of being managed for the
purpose of providing a return in the form of dividends, lower costs or other economic benefits and consists of inputs and processes
that provide or have the ability to provide outputs. In an acquisition of a business, the excess of the fair value of the consideration
transferred over the fair value of the net assets acquired is recorded as goodwill. In an acquisition of net assets that does not constitute
a business, no goodwill is recognized.

Our consolidated financial statements include the results of operations of an acquired business after the completion of the

acquisition.

Intangible Assets

Our intangible assets consist of licenses, patents, purchased technology and acquired in-process research and development

(IPR&D). Intangible assets with definite lives are amortized based on their pattern of economic benefit over their estimated useful
lives and reviewed periodically for impairment.

Intangible assets related to IPR&D projects are considered to be indefinite-lived until the completion or abandonment of the

associated research and development efforts. During the period the assets are considered indefinite-lived, they will not be amortized
but will be tested for impairment. If and when development is complete, which generally occurs when regulatory approval to market a
product is obtained, the associated assets are deemed finite-lived and are amortized over a period that best reflects the economic
benefits provided by these assets.

Goodwill

Goodwill represents the excess of purchase price over fair value of net assets acquired in a business combination and is not
amortized. Goodwill is subject to impairment testing at least annually or when a triggering event occurs that could indicate a potential
impairment. We are organized and operate as a single reporting unit and therefore the goodwill impairment test is performed using our
overall market value, as determined by our traded share price, compared to our book value of net assets.

Impairment of Long-Lived Assets

Our long-lived assets are primarily comprised of intangible assets and property, plant and equipment. We evaluate our

finite-lived intangible assets and property, plant and equipment, for impairment whenever events or changes in circumstances indicate
the carrying value of an asset or group of assets is not recoverable. If these circumstances exist, recoverability of assets to be held and
used is measured by a comparison of the carrying amount of an asset group to future undiscounted net cash flows expected to be
generated by the asset group. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount
by which the carrying amount of the assets exceeds the fair value of the assets.

F-13

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

In addition, indefinite-lived intangible assets, comprised of IPR&D, are reviewed for impairment annually and whenever events
or changes in circumstances indicate that it is more likely than not that the asset is impaired by comparing the fair value to the carrying
value of the asset.

Contingent Consideration

We record contingent consideration resulting from a business combination at its fair value on the acquisition date. On a
quarterly basis, we revalue these obligations and record increases or decreases in their fair value as an adjustment to operating
earnings. Changes to contingent consideration obligations can result from adjustments to discount rates, accretion of the liability due
to the passage of time, changes in our estimates of the likelihood or timing of achieving development or commercial milestones,
changes in the probability of certain clinical events or changes in the assumed probability associated with regulatory approval.

Contingent Liabilities

We are currently involved in various claims and legal proceedings. On a quarterly basis, we review the status of each significant

Treasury Stock

Treasury stock is accounted for using the cost method, with the purchase price of the common stock recorded separately as a

deduction from stockholders' equity.

Revenue Recognition

Our customers are primarily comprised of distributors, pharmacies, hospitals, hospital buying groups, and other health care

providers. In some cases, we may also sell to governments and government agencies.

Because of factors such as the price of our products, the limited number of patients, the short period from product sale to patient

infusion and the lack of contractual return rights, our customers often carry limited inventory. We also monitor inventory within our
sales channels to determine whether deferrals are appropriate based on factors such as inventory levels compared to demand,
contractual terms and financial strength of distributors. In some cases, exact quantities of inventory in the channel are not precisely
known, requiring us to estimate these amounts. If actual amounts of inventory differ from these estimates, these adjustments could
have an impact in the period in which these estimates change.

In addition to sales in countries where our products are commercially available, we have also recorded revenue on sales for

patients receiving treatment through named-patient programs. The relevant authorities or institutions in those countries have
agreed to reimburse for product sold on a named-patient basis where our products have not received final approval for commercial
sale.

We record estimated rebates payable under governmental programs, including Medicaid in the United States and other

programs outside the United States, as a reduction of revenue at the time of product sale. Our calculations related to these
rebate accruals require analysis of historical claim patterns and estimates of customer mix to determine which sales will be
subject to rebates and the amount of such rebates. We update our estimates and assumptions each period and record any

F-14

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

necessary adjustments, which may have an impact on revenue in the period in which the adjustment is made. Generally, the length of
time between product sale and the processing and reporting of the rebates is three to six months.

We have entered into volume-based arrangements with governments in certain countries in which reimbursement is limited to a

contractual amount. Under this type of arrangement, amounts billed in excess of the contractual limitation are repaid to these
governments as a rebate. We estimate incremental discounts resulting from these contractual limitations, based on estimated sales
during the limitation period, and we apply the discount percentage to product shipments as a reduction of revenue. Our calculations
related to these arrangements require estimation of sales during the limitation period, and adjustments in these estimates may have a
material impact in the period in which these estimates change.

We record distribution and other fees paid to our customers as a reduction of revenue, unless we receive an identifiable and
separate benefit for the consideration and we can reasonably estimate the fair value of the benefit received. If both conditions are met,
we record the consideration paid to the customer as an operating expense. These costs are typically known at the time of sale, resulting
in minimal adjustments subsequent to the period of sale.

Research and Development Expenses

Research and development expenses are comprised of costs incurred in performing research and development activities
including payroll and benefits, pre-clinical, clinical trial and related clinical manufacturing costs, manufacturing development and
scale-up costs, product development and regulatory costs, contract services and other outside contractor costs, research license fees,
depreciation and amortization of lab facilities, and lab supplies. These costs are expensed as incurred. We accrue costs for clinical trial
activities based upon estimates of the services received and related expenses incurred that have yet to be invoiced by the contract
research organizations, clinical study sites, laboratories, consultants, or other clinical trial vendors that perform the activities.

Share-Based Compensation

We have two share-based compensation plans pursuant to which awards are currently being made: (i) the Amended and Restated

Compensation expense for our share-based awards is recognized based on the estimated fair value of the awards on the grant

The purchase price of common stock under our ESPP is equal to 85% of the lower of (i) the market value per share of the

common stock on the first business day of an offering period or (ii) the market value per share of the common stock on the

F-15

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

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 6 month purchase period.

Earnings Per Common Share

Basic earnings per common share (EPS) are computed by dividing net income by the weighted-average number of shares of
common stock outstanding. For purposes of calculating diluted EPS, the denominator reflects the potential dilution that could occur if
stock options, unvested restricted stock, unvested restricted stock units or other contracts to issue common stock were exercised or
converted into common stock, using the treasury stock method.

The following table summarizes the calculation of basic and diluted EPS for years ended December 31, 2015, 2014 and 2013:

Net income used for basic and diluted calculation
Shares used in computing earnings per common share—basic
Weighted-average effect of dilutive securities:

Stock awards

Shares used in computing earnings per common share—diluted
Earnings per common share:

Basic
Diluted

2015

Year Ended December 31,
2014

144,385 $
213,431

656,912 $
198,103

2,502
215,933

3,520
201,623

0.68 $
0.67 $

3.32 $
3.26 $

$
$

2013

252,895
195,532

4,180
199,712

1.29
1.27

We exclude from EPS the weighted-average number of securities whose effect is anti-dilutive. Excluded from the calculation of

EPS for the years ended December 31, 2015, 2014 and 2013 were 2,450, 1,099, and 2,243 shares of common stock, respectively,
because their effect is anti-dilutive.

Income Taxes

We utilize the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities
are determined based on the difference between the financial statement carrying amounts and tax basis of assets and liabilities using
enacted tax rates in effect for years in which the temporary differences are expected to reverse. We periodically evaluate the likelihood
of the realization of deferred tax assets and reduce the carrying amount of these deferred tax assets by a valuation allowance when it is
more likely than not that deferred tax assets will not be realized.

We recognize the benefit of an uncertain tax position that has been taken or we expect to take on income tax returns if such tax

position is more likely than not to be sustained. The tax benefit recognized in the financial statements for a particular tax position is
based on the largest benefit that is more likely than not to be realized. The amount of unrecognized tax benefits is adjusted, as
appropriate, for changes in facts and circumstances, such as significant amendments to existing tax law, new regulations or
interpretations by the taxing authorities, or new information obtained during a tax examination or resolution of an examination.
We also accrued for potential interest and penalties related to unrecognized tax benefits as a component of tax expense.

Comprehensive Income

Comprehensive income is comprised of net income and other comprehensive income (loss). Other comprehensive income (loss)

includes changes in equity that are excluded from net income, such as changes in pension liabilities, unrealized gains and losses on
marketable securities, unrealized gains and losses on hedge contracts and foreign currency translation adjustments. Certain of these
changes in equity are reflected net of tax.

F-16

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

Other Investments

We invest in companies with securities that are not publicly traded and where fair value is not readily available. Other

investments include an investment in the preferred stock of the non-public entity Moderna LLC. During 2014, we purchased $37,500
of preferred equity of Moderna LLC. We recorded our investment at cost within other assets in our condensed consolidated balance
sheets. We regularly monitor these investments to evaluate whether there has been an other-than-temporary decline in its fair value,
based on the implied value of recent company financings, public market prices of comparable companies, and general market
conditions. The carrying value of these investments was not impaired as of December 31, 2015.

Reclassifications and Adjustments

Certain items in the prior year's consolidated financial statements have been reclassified to conform to the current presentation.

New Accounting Pronouncements

In September 2015, the FASB issued a new standard simplifying the accounting for measurement-period adjustments. The new

Acquisitions

On May 6, 2015, we announced that we entered into a definitive agreement to acquire Synageva BioPharma Corp.

(Synageva), a publicly-held clinical-stage biotechnology company based in Lexington, Massachusetts for per share consideration
of $115 in cash and 0.6581 shares of Alexion stock. At this date, the announced purchase consideration was estimated at
approximately $8,400,000, net of Synageva cash, based on the closing price of Alexion stock on May 5, 2015 of $168.55.

On June 22, 2015, we completed the acquisition of Synageva, in a transaction accounted for under the acquisition method of

accounting for business combinations. Under the acquisition method of accounting, the assets acquired and liabilities assumed
from Synageva were recorded as of the acquisition date at their respective fair values. Synageva's results of operations are
included in the consolidated financial statements from the date of acquisition. The acquisition furthers our objective to

F-17

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

develop and commercialize life-transforming therapies to an increasing number of patients with devastating and rare diseases.
Synageva's lead product candidate, Kanuma, is an enzyme replacement therapy for patients suffering with LAL-D, a life-threatening,
ultra-rare disease for which there are no approved treatments.

We acquired all of the outstanding shares of common stock of Synageva for $4,565,524 in cash and 26,125 shares of common

stock. At closing of the business combination on June 22, 2015, the purchase consideration was approximately $8,860,000, net of
Synageva cash, based on Alexion's closing share price on the date of acquisition of 188.24. We financed the cash consideration with
existing cash and proceeds from our new credit facility described further in Note 8.

The aggregate consideration to acquire Synageva consisted of:

Stock consideration
Cash consideration
Total purchase price

The following table summarizes the estimated fair values of assets acquired and liabilities assumed:

Cash
Inventory
In-process research and development (IPR&D)
Deferred tax liabilities, net
Other assets and liabilities
Net assets acquired

Goodwill
Total purchase price

4,917,810
4,565,524
9,483,334

626,217
23,880
4,236,000
(171,638)
(24,937)
4,689,522
4,793,812
9,483,334

Our accounting for this acquisition is preliminary. The fair value estimates for the assets acquired and liabilities assumed were

based upon preliminary calculations, and our estimates and assumptions are subject to change as we obtain additional information for
our estimates during the measurement period (up to one year from the acquisition date). The areas of these preliminary estimates that
are not yet finalized relate primarily to tax-related items. During 2015, we recorded approximately $40,744 of adjustments to the
amounts initially recorded for the assets acquired and liabilities assumed as of the acquisition date. These adjustments related
primarily to the valuation of acquired inventory and the assessment of inventory-related items.

We acquired $23,880 of Kanuma inventory. The estimated fair value of work-in-process and finished goods inventory was
determined utilizing the comparative sales method, based on the expected selling price of the inventory, adjusted for incremental costs
to complete the manufacturing process and for direct selling efforts, as well as for a reasonable profit allowance. The estimated fair
value of raw material inventory was valued at replacement cost, which is equal to the value a market participant would pay to acquire
the inventory.

Intangible assets associated with IPR&D projects primarily relate to Synageva's lead product candidate, Kanuma. The estimated

fair value of IPR&D assets of $4,236,000 was determined using the multi-period excess earnings method, a variation of the income
approach. The multi-period excess earnings method estimates the value of an intangible asset equal to the present value of the
incremental after-tax cash flows attributable to that intangible asset. The fair value using the multi-period excess earnings method was
dependent on an estimated weighted average cost of capital for Synageva of 10.0%, which represents a rate of return that a market
participant would expect for these assets.

The excess of purchase price over the fair value amounts of the assets acquired and liabilities assumed represents the goodwill
amount resulting from the acquisition. The goodwill, which is not tax-deductible, has been recorded as a noncurrent asset and is not
amortized, but is subject to an annual review for impairment. The goodwill represents future economic benefits arising from other
assets acquired that could not be individually identified and separately recognized and expected synergies that are specific to our
business and not available to market participants, including our unique ability to commercialize therapies for rare diseases, our
existing relationships with specialty physicians who can identify patients with LAL-D, a global distribution network to facilitate drug
delivery and other benefits that we believe will result from combining the operations of Synageva within our operations.

We recorded a net deferred tax liability of $171,638. This amount was primarily comprised of $594,226 and $8,661, of

deferred tax liabilities related to the IPR&D and inventory acquired, respectively, offset by $231,585, $177,128, and $22,536 of

F-18

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

deferred tax assets related to net operating loss carryforwards (NOLs), tax credits, and other temporary differences, respectively,
which we expect to utilize.

For the year ended December 31, 2015, we recorded $96,433 of pre-tax operating losses associated with the continuing

operations of Synageva in our consolidated statements of operations.

Pro forma financial information (unaudited)

The following unaudited pro forma information presents the combined results of Alexion and Synageva as if the acquisition of
Synageva had been completed on January 1, 2014, with adjustments to give effect to pro forma events that are directly attributable to
the acquisition, including the impact of acquisition financing and the related tax effects. The unaudited pro forma results do not reflect
operating efficiencies or potential cost savings which may result from the consolidation of operations. Accordingly, the unaudited pro
forma financial information is not necessarily indicative of the results of operations that we would have recognized had we completed
the transaction on January 1, 2014.

Revenues
Net income
Earnings per common share

Basic
Diluted

Year Ended December 31,

2015

2,606,255 $
21,104

2014

2,240,225
260,665

0.09 $
0.09 $

1.16
1.14

$
$

The unaudited pro forma consolidated results include the following pro forma adjustments related to non-recurring activity:
• Alexion and Synageva expenses of $33,150 and $127,290, respectively, associated with the accelerated vesting of stock
based compensation as a result of the acquisition were excluded from net income for the year ended December 31, 2015.
These expenses were included in net income for the year ended December 31, 2014;

• Alexion and Synageva acquisition-related and restructuring costs of $52,545 and $62,071, respectively, were excluded
from income for the year ended December 31, 2015. These expenses were included in net income for the year ended
December 31, 2014.

Acquisition-Related Costs

Acquisition-related costs associated with our business combinations for the years ended December 31, 2015, 2014 and 2013

include the following:

Transaction costs (1)
Integration costs

Year Ended December 31,
2014

2015
26,955 $
12,255
39,210 $

— $
—
— $

2013

—
1,023
1,023

(1) Transaction costs include investment advisory, legal, and accounting fees

The acquisition of Synageva also resulted in $13,335 of restructuring related charges for the year ended December 31, 2015. See

Note 17 for additional details.

F-19

Property, Plant and Equipment, Net

A summary of property, plant and equipment is as follows:

Land
Buildings and improvements
Machinery and laboratory equipment
Computer hardware and software
Furniture and office equipment
Construction-in-progress

Less: Accumulated depreciation and amortization

December 31, 2015
9,130
252,467
91,958
83,997
15,570
420,034
873,156
(176,131 )
697,025

December 31, 2014
9,130
170,355
65,079
59,927
11,371
214,041
529,903
(137,655)
392,248

Included in construction-in-progress at December 31, 2015 and 2014 was $226,696 and $126,566, respectively, of costs
associated with the construction of a new facility in New Haven, Connecticut and $19,259 at December 31, 2015 associated with the
construction of a new manufacturing facility. Although we will not legally own these premises, we are deemed to be the owner of the
buildings during the construction period based on applicable accounting guidance for build-to-suit leases, see Note 9, "Facility Lease
Obligations" for additional information.

In connection with the construction of facilities in New Haven, Connecticut, we entered into an agreement with the State of
Connecticut Department of Economic and Community Development which provides for a forgivable loan and grants totaling $26,000
and tax credits of up to $25,000. The program requires that we meet certain criteria in order to prevent forfeiture or repayment of the
loan, grants and credits, which include (i) maintaining corporate headquarters in Connecticut for 10 years; (ii) satisfying minimum
employment obligations; and (iii) minimum capital spending requirements. In the third quarter 2015, we received $26,000 for the
forgivable loan and grants. The proceeds reduce the costs of our construction-in-process asset associated with the project. As of
December 31, 2015, we have not received any tax credits associated with our agreement with the State of Connecticut.

Depreciation and amortization of property, plant and equipment was approximately $43,618, $34,901 and $19,084 for the years

ended December 31, 2015, 2014 and 2013, respectively.

At December 31, 2015 and 2014, computer software costs included in property, plant and equipment were $19,530 and

$16,292, respectively. Depreciation and amortization expense for capitalized computer software costs was $10,037, $7,016 and
$4,503 for the years ended December 31, 2015, 2014 and 2013, respectively.

Intangible Assets and Goodwill

Intangible assets and goodwill, net of accumulated amortization, are as follows:

Licenses
Patents
Purchased
technology
Acquired IPR&D
Total
Goodwill

Estimated
Life (years)
6-8
7

Cost
28,507 $
10,517

December 31, 2015
Accumulated
Amortization

Net

(28,504) $
(10,517)

3 $
—

December 31, 2014
Accumulated
Amortization

Cost
28,507 $
10,517

(28,461) $
(10,517)

Net

46
—

6-16
Indefinite

4,708,495
116,000

$ 4,863,519 $
Indefinite $ 5,050,786 $

(116,584)
—

4,591,911
116,000

(155,605) $ 4,707,914 $

(2,901) $ 5,047,885 $

—
587,000
626,024 $
256,974 $

—
—
(38,978) $

—
587,000
587,046

(2,901) $

254,073

F-20

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

In the third quarter 2015 we received regulatory approval for Strensiq and Kanuma. As a result, $587,000 and $4,120,000 of
acquired IPR&D assets associated with Strensiq and Kanuma, respectively, were reclassified from acquired IPR&D to purchased
technology.

Amortization expense was $116,627, $11,159 and $8,257 for the years ended December 31, 2015, 2014 and 2013, respectively.

Assuming no changes in the gross cost basis of intangible assets, the total estimated amortization expense for finite-lived intangible
assets is $320,223 for the year ending December 31, 2016 and $320,142 for each of the years ending December 31, 2017 through
December 31, 2020.

During the fourth quarter 2014, we reviewed for impairment the value of the early stage, Phase II indefinite-lived intangible

asset related to the Orphatec acquisition. We initiated such review as part of our annual impairment testing and increased costs
associated with clinical trial studies. The estimated value that can be obtained from a market participant in an arm's length transaction
was determined to be de minimis as of December 31, 2014. As a result, in the fourth quarter 2014, we recognized an impairment
charge of $8,050 to write-down these assets to fair value. In addition, during the first quarter of 2014, we reviewed for impairment the
value of an early stage, Phase I indefinite-lived intangible asset related to our acquisition of Taligen Therapeutics, Inc. We initiated
such review based on a reassessment of scientific findings associated with this acquired asset. As a result, we recognized an
impairment of $3,464 for the year ended December 31, 2014 to adjust this asset to fair value, which was determined to be de minimis.
During 2013, we reviewed for impairment the value of an early stage, Phase I indefinite-lived intangible asset related to the

Taligen acquisition. We initiated such review as part of our annual impairment testing and based our evaluation on preliminary
scientific findings of a Phase I clinical trial which led us to reassess the development of this acquired asset. The fair value of this
IPR&D asset was determined using the income approach, which used significant unobservable (Level 3) inputs. These unobservable
inputs included, among other things, risk-adjusted forecast future cash flows to be generated by this asset, contributory asset charges
for other assets employed in this IPR&D project and the determination of an appropriate discount rate based on a weighted average
cost of capital of 21.5% to be applied in calculating the present value of future cash flows. Based on these factors, the estimated value
that can be obtained from a market participant in an arm's length transaction of $3,464 was lower than the carrying amount. We also
reviewed for impairment the value of purchased technology associated with the Taligen acquisition and determined the estimated
value to be de minimis. As a result, we recognized an impairment charge of $33,521 to write-down these assets to fair value, which
was recorded in operating expenses in our consolidated statement of operations for the year ended December 31, 2013.

The following table summarizes the changes in the carrying amount of goodwill:

Balance at December 31, 2013 and 2014

Goodwill resulting from the Synageva acquisition

Balance at December 31, 2015

254,073
4,793,812
5,047,885

F-21

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

Marketable Securities

The amortized cost, gross unrealized holding gains, gross unrealized holding losses and estimated fair value of available-for-sale

investments by type of security at December 31, 2015 and December 31, 2014 were as follows:

December 31, 2015

Amortized Cost

Gross Unrealized
Holding Gains

Commercial paper
Corporate bonds
Municipal bonds
Other government related obligations:

U.S.
Foreign

Bank certificates of deposit

Commercial paper
Corporate bonds
Municipal bonds
Other government related obligations:

U.S.
Foreign

Bank certificates of deposit

254,396 $
133,062
87,173

25,244
163,403
27,000
690,278 $

Amortized Cost Basis
$

142,495 $
494,032
174,759

99,668
193,439
77,000
1,181,393 $

Gross Unrealized
Holding Losses
—
(336 )
(63 )

Estimated Fair Value
$
254,396
132,749
87,111

(94 )
(504 )
—
(997 )

25,150
162,899
27,000
689,305

—
23
1

—
—
—
24

December 31, 2014

Gross Unrealized
Holding Gains

—
415
132

14
100
—
661

Gross Unrealized
Holding Losses
—
(581 )
(46 )

Aggregate Fair Value
142,495
$
493,866
174,845

(71 )
(174 )
—
(872 )

99,611
193,365
77,000
1,181,182

The aggregate fair value of available-for-sale securities in an unrealized loss position as of December 31, 2015 and
December 31, 2014 was $293,947 and $472,241. Investments that have been in a continuous unrealized loss position for more
than 12 months were not material. As of December 31, 2015 we believe that the cost basis of our available-for-sale investments is
recoverable.

The fair values of available-for-sale securities by classification in the consolidated balance sheet were as follows:

Cash and cash equivalents
Marketable securities

December 31, 2015

323,218 $
366,087
689,305 $

December 31, 2014
167,892
1,013,290
1,181,182

The fair values of available-for-sale debt securities at December 31, 2015, by contractual maturity, are summarized as follows:

Due in one year or less
Due after one year through three years
Due after three years through five years

December 31, 2015

493,043
196,262
—
689,305

As of December 31, 2015 and December 31, 2014, the fair value of our trading securities was $8,817 and $4,277.

F-22

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

We utilize the specific identification method in computing realized gains and losses. Realized gains and losses on our

available-for-sale and trading securities were not material for the year ended December 31, 2015 and 2014.

Derivative Instruments and Hedging Activities

We operate internationally and, in the normal course of business, are exposed to fluctuations in foreign currency exchange

rates. The exposures result from portions of our revenues, as well as the related receivables, and expenses that are denominated in
currencies other than the U.S. dollar, primarily the Euro and Japanese Yen. We manage our foreign currency transaction risk within
specified guidelines through the use of derivatives. All of our derivative instruments are utilized for risk management purposes, and
we do not use derivatives for speculative trading purposes.

We enter into foreign exchange forward contracts, with durations of up to 60 months, to hedge exposures resulting from portions

of our forecasted revenues, including intercompany revenues, that are denominated in currencies other than the U.S. dollar. The
purpose of the hedges of revenue is to reduce the volatility of exchange rate fluctuations on our operating results and to increase the
visibility of the foreign exchange impact on forecasted revenues. These hedges are designated as cash flow hedges upon contract
inception. At December 31, 2015, we had open contracts with notional amounts totaling $1,978,737 that qualified for hedge
accounting.

The impact on accumulated other comprehensive income (AOCI) and earnings from foreign exchange contracts that qualified as

cash flow hedges, for the years ended December 31, 2015 and 2014 were as follows:

Gain recognized in AOCI, net of tax
Gain reclassified from AOCI to net product sales (effective portion), net of tax
Gain reclassified from AOCI to other income and expense (ineffective portion), net
of tax

$
$

Year Ended December 31,

2015

110,455 $
103,175 $

2014

110,088
16,514

1,918 $

2,439

Assuming no change in foreign exchange rates from market rates at December 31, 2015, $82,223 of gains recognized in AOCI

will be reclassified to revenue over the next 12 months.

We enter into foreign exchange forward contracts, with durations of approximately 30 days, designed to limit the balance sheet

exposure of monetary assets and liabilities. We enter into these hedges to reduce the impact of fluctuating exchange rates on our
operating results. Hedge accounting is not applied to these derivative instruments as gains and losses on these hedge transactions are
designed to offset gains and losses on underlying balance sheet exposures. As of December 31, 2015, the notional amount of foreign
exchange contracts where hedge accounting is not applied was $556,753.

We recognized a gain of $5,226, $26,295 and $8,306, in other income and expense, for the years ended December 31, 2015,
2014 and 2013, respectively, associated with the foreign exchange contracts not designated as hedging instruments. These amounts
were largely offset by gains or losses in monetary assets and liabilities.

F-23

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

The following tables summarize the fair value of outstanding derivatives at December 31, 2015 and 2014:

December 31, 2015

Asset Derivatives

Liability Derivatives

Balance Sheet
Location

Fair
Value

Balance Sheet
Location

Fair
Value

Derivatives designated as hedging
instruments:
Foreign exchange forward contracts Other current assets

Foreign exchange forward contracts Other non-current assets
Derivatives not designated as
hedging instruments:
Foreign exchange forward contracts Other current assets
Total fair value of derivative
instruments

85,058 Other current liabilities

66,309

Other non-current
liabilities

6,687 Other current liabilities

1,491

4,773

4,157

158,054

10,421

December 31, 2014

Asset Derivatives

Liability Derivatives

Balance Sheet
Location

Fair
Value

Balance Sheet
Location

Fair
Value

Derivatives designated as hedging
instruments:

Foreign exchange forward
contracts
Foreign exchange forward
contracts

Total fair value of derivative
instruments

Other current assets

Other non-current assets

77,348

58,698

136,046

Other current liabilities
Other non-current
liabilities

794

880

The fair value of our foreign exchange forward contracts that are not designated as hedging instruments was zero as of

December 31, 2014.

Although we do not offset derivative assets and liabilities within our condensed consolidated balance sheets, our International

Swap and Derivatives Association (ISDA) agreements provide for net settlement of transactions that are due to or from the same
counterparty upon early termination of the agreement due to an event of default or other termination event. The following tables
summarize the potential effect on our consolidated balance sheets of offsetting our foreign exchange forward contracts subject to such
provisions:

December 31, 2015

Gross Amounts Not Offset in the
Consolidated Balance Sheet

Description

Derivative assets $
Derivative
liabilities

Gross Amounts of
Recognized
Assets/Liabilities
158,054

Gross Amounts
Offset in the
Consolidated
Balance Sheet
—

Net Amounts of
Assets/Liabilities
Presented in the
Consolidated Balance
Sheet
158,054

Derivative
Financial
Instruments

(10,421 ) $

Cash Collateral
Received
(Pledged)
—

Net Amount
147,633

(10,421 )

—

(10,421)

10,421

—

F-24

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

December 31, 2014

Gross Amounts Not Offset in the
Consolidated Balance Sheet

Gross Amounts of
Recognized
Assets/Liabilities
136,046

Gross Amounts
Offset in the
Consolidated
Balance Sheet

— $

Net Amounts of
Assets/Liabilities
Presented in the
Consolidated Balance
Sheet
136,046

Derivative
Financial
Instruments
(880 )

Cash Collateral
Received
(Pledged)
$ — $

Net Amount

135,166

(880 )

—

(880)

880

—

Description

Derivative assets $
Derivative
liabilities

7.
Accrued expenses consist of the following:

Accrued Expenses

Royalties
Payroll and employee benefits
Taxes payable
Rebates payable
Clinical
Manufacturing
Other

Debt

December 31, 2015

29,803 $
115,193
12,087
55,603
56,933
19,268
114,461
403,348 $

December 31, 2014
25,863
88,467
94,823
36,827
30,123
42,631
76,498
395,232

On June 22, 2015, Alexion entered into a credit agreement (Credit Agreement) with a syndicate of banks, which provides for a
$3,500,000 term loan facility and a $500,000 revolving credit facility maturing in five years. Borrowings under the term loan facility
are payable in quarterly installments equal to 1.25% of the original loan amount, beginning December 31, 2015. Final repayment of
the term loan and any draw down of revolving credit loans are due on June 22, 2020. In addition to borrowings in which prior notice is
required, the revolving credit facility includes a sublimit of $100,000 in the form of letters of credit and borrowings on same-day
notice, referred to as swingline loans, of up to $25,000. Borrowings can be used for working capital requirements, acquisitions and
other general corporate purposes. With the consent of the lenders and the administrative agent, and subject to satisfaction of certain
conditions, we may increase the term loan facility and/or the revolving credit facility in an amount that does not cause our
consolidated net leverage ratio to exceed the maximum allowable amount.

Under the Credit Agreement we may elect that the loans under the Credit Agreement bear interest at a rate per annum equal to
either a base rate or a Eurodollar rate plus, in each case, an applicable margin. The applicable margins on base rate loans range from
0.25% to 1.00% and the applicable margins on Eurodollar loans range from 1.25% to 2.00%, in each case depending upon our
consolidated net leverage ratio (as calculated in accordance with the Credit Agreement). At December 31, 2015 the interest rate on our
outstanding loans under the Credit Agreement was 1.98%.Our obligations under the credit facilities are guaranteed by certain of
Alexion's foreign and domestic subsidiaries and secured by liens on certain of Alexion's and its subsidiaries' equity interests, subject to
certain exceptions.

In connection with entering into the Credit Agreement, we paid $45,492 in financing costs which are being amortized as interest
expense over the life of the debt. Amortization expense associated with deferred financing costs for the year ended December 31, 2015
was $6,376. Amortization expense associated with deferred financing costs for years ended December 31, 2014 and 2013 was not
material.

F-25

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

In connection with the acquisition of Synageva in June 2015, we borrowed $3,500,000 under the term loan facility and $200,000

under the revolving facility, and we used our available cash for the remaining cash consideration. At December 31, 2015, we had
$3,456,250 outstanding on the term loan and zero outstanding on the revolving facility. At December 31, 2015, we had open letters of
credit of $13,784, and our borrowing availability under the revolving facility was $486,216.

The fair value of our long term debt, which is measured using Level 2 inputs, approximates book value.
On June 22, 2015, in connection with, and simultaneously with, the execution of the Credit Agreement described above, the
2012 Credit Agreement (Prior Credit Agreement) dated February 7, 2012 was terminated, and outstanding borrowings of $33,500
were repaid.

The contractual maturities of our long-term debt obligations due subsequent to December 31, 2015 are as follows:

Year
2016
2017
2018
2019
2020

Facility Lease Obligations

New Haven Facility Lease Obligation

175,000
175,000
175,000
175,000
2,756,250

In November 2012, we entered into a new lease agreement for office and laboratory space to be constructed in New Haven,
Connecticut. The term of the new lease commenced in 2015 and will expire in 2030, with a renewal option of 10 years. Although we
will not legally own the premises, we are deemed to be the owner of the building during the construction period based on applicable
accounting guidance for build-to-suit leases because of the substantial amount of tenant improvements we directly funded during the
construction period. Due to the substantial tenant improvements directly funded during construction, we will continue to be deemed
the owner of the building once construction is complete. Accordingly, the landlord's costs of constructing the facility during
construction are required to be capitalized, as a non-cash transaction, offset by a corresponding facility lease obligation in our
consolidated balance sheet.

Construction of the new facility began in June 2013 and was completed in January 2016. Monthly lease payments began in
2015. The imputed interest rate on this facility lease obligation is approximately 9%. For the year ended December 31, 2015, we
recognized $4,862 of interest expense. As of December 31, 2015 and 2014, our facility lease obligation was $132,866 and $107,099,
respectively.

Aggregate future minimum non-cancellable commitments under the New Haven facility lease obligation, as of December 31,

2015 are as follows:

Year
2016
2017
2018
2019
2020
Thereafter

14,391
14,907
15,131
15,581
15,581
163,529

Lonza Facility Lease Obligation

During the third quarter 2015, we entered into a new agreement with Lonza Group AG and its affiliates (Lonza) whereby
Lonza will construct a new manufacturing facility dedicated to Alexion at its existing Portsmouth, New Hampshire facility. The
agreement requires us to make certain payments during the construction of the new manufacturing facility and annual payments
for ten years thereafter. As a result of our contractual right to full capacity of the new manufacturing facility, a portion of the
payments under the agreement are considered to be lease payments and a portion as payment for the supply of inventory.
Although we will not legally own the premises, we are deemed to be the owner of the manufacturing facility during the
construction period based on applicable accounting guidance for build-to-suit leases due to our involvement during the

F-26

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

construction period. As of December 31, 2015, we recorded a construction-in-process asset of $19,259 and an offsetting facility lease
obligation of $15,229 associated with the manufacturing facility.

Payments made to Lonza under the agreement are allocated to the purchases of inventory and the repayment of the facility lease
obligation on a relative fair value basis. In 2015, we made $31,000 of payments to Lonza under this agreement, of which $4,030 was
applied against the outstanding facility lease obligation and $26,970 was recognized as a prepayment of inventory. See Note 10 for
minimum fixed payments due under Lonza agreements.

Commitments and Contingencies

10.
Commitments

License Agreements

We have entered into a number of license agreements since our inception in order to advance and obtain technologies and
services related to our business. License agreements generally provide for us to pay an initial fee followed by milestone and royalty
payments if certain conditions are met. Certain agreements call for future payments upon the attainment of agreed upon development
and/or commercial milestones. These agreements may also require minimum royalty payments based on sales of products developed
from the applicable technologies, if any.

In March 2015, we entered into an agreement with a third party that allowed us to exercise an option with another third party
for exclusive, worldwide, perpetual license rights to a specialized technology and other intellectual property, and we simultaneously
exercised the option. Due to the early stage of these assets, we recorded expense for the payments of $47,000 during the first
quarter 2015.

In January 2015, we entered into a license agreement with a third party to obtain an exclusive research, development and

In December 2014, we entered into an agreement with X-Chem Pharmaceuticals (X-Chem) that allows us to identify novel drug

In January 2014, we entered into an agreement with Moderna Therapeutics, Inc. (Moderna) that allows us to purchase ten
product options to develop and commercialize treatments for rare diseases with Moderna's messenger RNA (mRNA) therapeutics
platform. Alexion will lead the discovery, development and commercialization of the treatments produced through this broad,
long-term strategic agreement, while Moderna will retain responsibility for the design and manufacture of the messenger RNA against
selected targets. Due to the early stage of these assets, we recorded expense for an upfront payment of $100,000. We will also be
responsible for funding research activities under the program. In addition, for each drug target, up to a maximum of ten targets, we
could be required to make an option exercise payment of $15,000 and to pay up to an additional $120,000 with respect to a rare
disease product and $400,000 with respect to a non-rare disease product in development and sales milestones if the specific milestones
are met over time as well as royalties on commercial sales.

In July 2013, we entered into a license and collaboration agreement with Ensemble Therapeutics Corporation for the
identification, development and commercialization of therapeutic candidates based on specific drug targets. Due to the early stage of
these assets, we recorded expense for an upfront payment of $11,500 during the third quarter of 2013. We will also be responsible for
funding research activities under the program. In addition, for each drug target, up to a maximum of four targets, we could be
required to pay up to an additional $90,750 in development milestones as the specific milestones are met over time. The agreement
also provides for royalty payments on commercial sales of each product developed under the agreement.

F-27

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

In January 2013, we entered into a license agreement for a technology, which provides an exclusive research license and an

option for an exclusive commercial license for specific targets and products to be developed. Due to the early stage of this asset, we
recorded expense for an upfront payment of $3,000 during the first quarter of 2013. We will also be required to pay annual
maintenance fees during the term of the arrangement. In addition, for each target up to a maximum of six targets we develop, we
could be required to pay up to an additional $70,500 in license fees, development and sales milestones as the specific milestones are
met over time.

Manufacturing Agreements

Manufacturing development agreements provide for us to fund manufacturing development to support our clinical and

commercial product needs.

We rely on Lonza, a third party manufacturer, to produce a portion of commercial and clinical quantities of Soliris and Strensiq.

We have various agreements with Lonza with remaining total non-cancellable future commitments of approximately $1,156,980. If
we terminate certain supply agreements with Lonza without cause, we will be required to pay for product scheduled for manufacture
under our arrangement. Under an existing arrangement with Lonza, we also pay Lonza a royalty on sales of Soliris manufactured at
Alexion Rhode Island Manufacturing Facility (ARIMF) and a payment with respect to sales of Soliris manufactured at Lonza
facilities.

In addition to Lonza, we have non-cancellable commitments of $36,400 with other third party manufacturers.

Contingent Liabilities

We are currently involved in various claims, lawsuits and legal proceedings. On a quarterly basis, we review the status of each

significant matter and assess its potential financial exposure. If the potential loss from any claim, asserted or unasserted, or legal
proceeding is considered probable and the amount can be reasonably estimated, we accrue a liability for the estimated loss. Because
of uncertainties related to claims and litigation, accruals are based on our best estimates based on available information. On a periodic
basis, as additional information becomes available, or based on specific events such as the outcome of litigation or settlement of
claims, we may reassess the potential liability related to these matters and may revise these estimates, which could result in a material
adverse adjustment to our operating results.

We have in the past received, and may in the future receive, notices from third parties claiming that their patents may be
infringed by the development, manufacture or sale of Soliris. Under the guidance of ASC 450, Contingencies, we record a royalty
accrual based on our best estimate of the fair value percent of net sales of Soliris that we could be required to pay the owners of
patents for technology used in the manufacture and sale of Soliris. A costly license, or inability to obtain a necessary license, could
have a material adverse effect on our financial results.

In May 2015, we received a subpoena in connection with an investigation by the Enforcement Division of the U.S. Securities

and Exchange Commission (SEC) requesting information related to our grant-making activities and compliance with the Foreign
Corrupt Practices Act (FCPA) in various countries. The SEC also seeks information related to Alexion’s recalls of specific lots of
Soliris and related securities disclosures. In addition, in October 2015, Alexion received a request from the U.S. Department of Justice
for the voluntary production of documents and other information pertaining to Alexion's compliance with the FCPA. Alexion is
cooperating with these investigations. At this time, Alexion is unable to predict the duration, scope or outcome of these investigations.
Given the ongoing nature of these investigations, management does not currently believe a loss related to these matters is probable or
that the potential magnitude of such loss or range of loss, if any, can be reasonably estimated.

In March 2013, we received a Warning Letter (Warning Letter) from the U.S. Food and Drug Administration (FDA) regarding

compliance with current Good Manufacturing Practices (cGMP) at ARIMF. The Warning Letter followed receipt of a Form 483
Inspectional Observations by the FDA in connection with an FDA inspection that concluded in August 2012. The observations relate
to commercial and clinical manufacture of Soliris at ARIMF. We responded to the Warning Letter in a letter to the FDA dated in
April 2013. As previously announced, the FDA issued Form 483s in August 2014 and August 2015 relating to observations at
ARIMF. The inspectional observations from the August 2015 letter have since been closed out by the FDA. The observations are
inspectional and do not represent a final FDA determination of compliance. We continue to manufacture products, including Soliris,
in this facility. While the resolution of the issues raised in the Warning Letter is difficult to predict, we do not currently believe a loss
related to this matter is probable or that the potential magnitude of such loss or range of loss, if any, can be reasonably estimated.
Unrelated to the Warning Letter, we initiated voluntary recalls and replacements of certain lots of Soliris in 2013 and 2014

due to the presence of visible particles detected in a limited number of vials in these lots. These recalls did not interrupt the

F-28

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

supply of Soliris to patients. Following investigation, we believe that we have identified the filling process step at our third party
fill/finish provider that resulted in the presence of the visible particles, and we have implemented the changes necessary to modify the
process step. During the fourth quarter of 2013, we recorded expense of $14,277 in cost of sales resulting from the expected disposal
of inventory in 2014. Expenses associated with recalls were not material in 2014.

Operating Leases

As of December 31, 2015, we have operating leases for office and laboratory space in Cheshire, Connecticut, regional executive

and sales offices in Zurich, Switzerland, as well as offices in other U.S.and foreign locations to support our operations as a global
organization.

Aggregate lease expense was $27,839, $22,738 and $19,094 for the years ended December 31, 2015, 2014 and 2013,

respectively. Lease expense is being recorded on a straight-line basis over the applicable lease terms.

Aggregate future minimum annual rental payments, for the next five years and thereafter under non-cancellable operating leases

(including facilities and equipment) as of December 31, 2015 are:

Year
2016
2017
2018
2019
2020

Thereafter

25,223
18,024
13,962
9,834
5,168
17,424

11.

Income Taxes

The income tax provision is based on income before income taxes as follows:

U.S.
Non-U.S.

2015

Year Ended December 31,
2014

(125,435) $
623,577
498,142

222,088 $
650,019
872,107 $

2013

376,067
150,202
526,269

During the fourth quarter of 2013, in connection with the centralization of our global supply chain and technical operations in

Ireland, our U.S. parent company became a direct partner in a captive foreign partnership. The partnership income, which is derived in
foreign jurisdictions, is classified as “non-U.S. income” for purposes of financial reporting. Substantially all non-U.S. income for the
years ended December 31, 2015 and 2014 relates to income from our captive foreign partnership.

F-29

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

The components of the income tax provision are as follows:

Domestic

Current
Deferred

Foreign

Total

2015

Year Ended December 31,
2014

2013

(87,605) $
388,878
301,273

285,624
(111,890 )
173,734

49,087
3,397
52,484

81,810
(40,349 )
41,461

(38,518)
392,275
353,757

367,434
(152,239 )
215,195

141,051
92,040
233,091

34,975
5,308
40,283

176,026
97,348
273,374

We continue to maintain a valuation allowance against certain deferred tax assets where realization is not certain.
We continue to pay cash taxes in U.S. Federal, various U.S. state, and foreign jurisdictions where we have operations and have

utilized all of our net operating losses.

At December 31, 2015, we have federal and state net operating loss carryforwards of $423,665 and $13,571, respectively. Our

NOL’s expire between 2018 and 2035. We also have federal and state income tax credit carryforwards of $463,796 and $13,380,
respectively. These income tax credits expire between 2016 and 2035. Of these U.S. federal and state income tax credit carryforwards,
$262,216 and $3,501, respectively, are attributable to excess tax benefits from the exercise of non-qualified stock options and vestings
of restricted stock.

Certain stock option exercises and restricted stock vestings resulted in tax deductions in excess of previously recorded benefits
based on the value at the time of grant. Although these additional tax benefits or “windfalls” are reflected in U.S. state net operating
loss carryforwards and U.S. federal and state income tax credit carryforwards, pursuant to authoritative guidance, the additional tax
benefit associated with the windfall is not recognized until the deduction reduces taxes payable. Accordingly, since the tax benefit
does not reduce our current taxes payable due to net operating loss carryforwards and credit carryforwards, these “windfall” tax
benefits are not reflected in our net operating losses and credit carryforwards in deferred tax assets for all periods presented.

We were granted an incentive tax holiday in the Canton of Vaud in Switzerland effective January 1, 2010. This tax holiday had

exempted us from most local corporate income taxes in Switzerland through the end of 2014 and was renewable for an additional
5 years with final expiration in 2019. During 2013, we undertook a restructuring which significantly changed our business model in
Switzerland and we converted from a principal company to a distribution and service company. As a result of the significant change to
our business activities in Switzerland, the Canton of Vaud in Switzerland provided final notification to us in December 2014 that our
structure no longer complied with the conditions of the incentive tax holiday. In the fourth quarter of 2014, we made a payment of
$22,817 in satisfaction of the clawback of previously exempted cantonal income taxes for tax years 2010 through 2013. This amount
was fully accrued on our balance sheet as of December 31, 2013. Prospectively, our federal and cantonal tax will be based on the
current enacted tax rates in Switzerland.

The Tax Reform Act of 1986 contains certain provisions that can limit a taxpayer's ability to utilize net operating loss and tax
credit carryforwards in any given year resulting from cumulative changes in ownership interests in excess of 50% over a three-year
period. We have determined that these limiting provisions were triggered during a prior year. In connection with our acquisition of
Synageva, the change in ownership triggered a new limitation. We are currently in the process of determining the impact of this
limitation to Synageva tax attributes, including net operating losses. We do not expect any reduction to the amounts recorded for these
attributes as of the date of acquisition. It is reasonably possible, however, based on our ongoing assessment, that the amounts recorded
for these attributes will increase in the foreseeable future.

The provision (benefit) for income taxes differs from the U.S. federal statutory tax rate. The reconciliation of the statutory U.S.

federal income tax rate to our effective income tax rate is as follows:

F-30

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

U.S. federal statutory tax rate
State and local income taxes
Foreign income tax rate differential
Tax credits, net of nondeductible expenses
Foreign income tax credits
Foreign income subject to U.S. taxation
U.S. deferred taxes on foreign earnings
Other permanent differences
Effective income tax rate

2015

Year Ended December 31,
2014

2013

35.0 %
(0.8)%
(34.8)%
(7.6)%
(7.6)%
24.3 %
60.1 %
2.4 %
71.0 %

35.0 %
0.9 %
(19.7)%
(2.5)%
(4.8)%
15.8 %
— %
— %
24.7 %

35.0 %
3.3 %
(14.1)%
(2.7)%
(20.5)%
10.2 %
27.2 %
13.5 %
51.9 %

During the fourth quarter of 2013, in connection with the centralization of our global supply chain and technical operations in
Ireland, our U.S. parent company became a direct partner in a captive foreign partnership. Starting in 2014, a significant portion of the
non-U.S. income flows through the partnership and the portion of the partnership income that is attributable to our U.S. parent
company’s ownership percentage is taxed in the U.S. The remainder of the non-U.S. income is taxed based on the tax rate enacted in
the local foreign jurisdictions in which the income is earned.

We have operations in many foreign tax jurisdictions, which impose income taxes at different rates than the United States. The

impact of these rate differences is included in the foreign income tax rate differential that we disclose in our reconciliation of the
U.S. statutory income tax rate to our effective tax rate. Additionally, included in the foreign income tax rate differential line item is
the impact of ASC 740-10-25-3(e) attributable to intercompany transactions in the amount of approximately $24,000 and $23,000 of
tax expense for 2015 and 2014, respectively and $45,000 tax benefit for 2013.

As a U.S.-based multinational corporation, we benefit from U.S. income tax credits for taxes assessed in foreign jurisdictions.

Our foreign income tax credit for 2013 included approximately $157,000 of credits generated from the repatriation of the majority of
earnings and profits of our non-U.S. subsidiaries via a one-time dividend.

Our 2013 other non-deductible and permanent differences includes expense relating to an intercompany transaction of

approximately $46,500. The 2014 rate reconciliation does not include a similar transaction.

F-31

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

Provisions have been made for deferred taxes based on the differences between the basis of the assets and liabilities for financial
statement purposes and the basis of the assets and liabilities for tax purposes using currently enacted tax rates and regulations that will
be in effect when the differences are expected to be recovered or settled. The components of the deferred tax assets and liabilities,
which exclude "windfall" tax benefits, are as follows:

Deferred tax assets:

Net operating losses
Income tax credits
Stock compensation
Accruals and allowances
Research and development expenses
Accrued royalties

Valuation allowance
Total deferred tax assets

Deferred tax liabilities:
Depreciable assets
Unrealized gains
Investment in foreign partnership
Intangible assets
Total deferred tax liabilities
Net deferred tax (liability) asset

December 31,
2015

December 31,

2014

168,097
209,015
73,915
85,575
19,077
15,911
571,590

(4,946 )

566,644

(82,889 )
(47,246 )
(409,336 )
(542,631 )
(1,082,102 )

(515,458 ) $

3,401
1,706
49,090
29,072
129,995
41,201
254,465
(1,117)
253,348

(40,648)
(45,191)
(116,359)
—
(202,198)
51,150

The decrease in our research and development deferred tax assets is primarily attributable to our election to deduct, rather than

capitalize research and development expenses pursuant to Internal Revenue Code section 59(e) on our 2014 federal income tax return.
The increase in our investment in foreign partnership deferred tax liability is due to the contribution of certain assets acquired in the
Synageva acquisition into our captive foreign partnership. The increase in our depreciable assets deferred tax liability is primarily
attributable to the construction of our corporate headquarters in New Haven, Connecticut. This increase is substantially offset by the
increase in our accruals and allowances deferred tax asset, which is primarily attributable to the lease liability for our corporate
headquarters in New Haven, Connecticut. The increase in our net operating losses and income tax credit deferred tax assets is
primarily attributed to the acquisition of Synageva. The decrease in our accrued royalties deferred tax asset is primarily attributable to
realization of tax deductions by our technical operations center in Ireland for previously accrued but unpaid royalties. The increase to
our intangible assets deferred tax liability is attributable to intellectual property acquired in the Synageva acquisition.

We follow authoritative guidance regarding accounting for uncertainty in income taxes, which prescribes a recognition threshold
and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a
tax return. The interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim
periods, disclosures, and transition.

F-32

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

The beginning and ending amounts of unrecognized tax benefits reconciles as follows:

Beginning of period balance
Increases for tax positions taken during a prior period
Decreases for tax positions taken during a prior period
Increases for tax positions taken during the current period
Decreases for tax positions related to settlements
Decreases for tax positions related to lapse of statute

2015

28,675

1,937
(91)
85,256
(980)
(852)

113,945

2014

2013

46,389
899
(2,468 )
9,063
(24,812 )
(396 )

28,675

12,393
2,571
(812)
33,056
(419)
(400)
46,389

The total amount of accrued interest and penalties was not significant as of December 31, 2015. The total amount of tax benefit

recorded during 2015 which related to unrecognized tax benefits was $82,717. Expense recognized during 2014 and 2013 was
$17,012 and $7,897, respectively. Unless related to excess tax benefits from stock options, all of our unrecognized tax benefits, if
recognized, would have a favorable impact on the effective tax rate.

We expect none of our total unrecognized tax benefits to reverse within the next twelve months. We file federal and state

income tax returns in the U.S. and in numerous foreign jurisdictions. The U.S. and foreign jurisdictions have statute of limitations
ranging from 3 to 5 years. However, the limitation period could be extended due to our NOL carryforward position in a number of our
jurisdictions. The tax authorities generally have the ability to review income tax returns for periods where the limitation period has
previously expired and can subsequently adjust the NOL carryforward or tax credit amounts. Accordingly, we do not expect to reverse
any significant portion of the unrecognized tax benefits.

The Internal Revenue Service (IRS) commenced an examination of our U.S. income tax return for 2013 during the third quarter
of 2015 that is anticipated to be completed within the next twelve months. As a result of this audit, it is possible that the amount of the
liability for unrecognized tax benefits could change over the next twelve months. The impact to our unrecognized benefits is difficult
to determine based on the preliminary stage of the audit. As of December 31, 2015, we have not been notified of any significant
proposed adjustments by the IRS.

We do not record U.S. tax expense on the undistributed earnings of our controlled foreign corporation (CFC) subsidiaries. We

intend to reinvest these earnings permanently outside the U.S. or repatriate the earnings only when it is tax efficient to do so.
Accordingly, we believe that U.S. tax on any earnings that might be repatriated would be substantially offset by other tax attributes. At
December 31, 2015, the cumulative amount of these earnings was approximately $1,012,000.

During the fourth quarter of 2013, in connection with the centralization of our global supply chain and technical operations in

Ireland, our U.S. parent company became a direct partner in a captive foreign partnership. To the extent that our U.S. parent company
receives its allocation of partnership income, the amounts will be taxable in the U.S. each year and therefore the permanent
reinvestment assertion will no longer apply to such earnings. The recognition of deferred tax liabilities associated with the
aforementioned partnership resulted in tax expense of approximately $95,800 during the fourth quarter of 2013. We also distributed
the majority of earnings and profits of our non U.S. subsidiaries via a dividend in the amount of $152,000 during the fourth quarter
of 2013. This dividend did not give rise to any U.S. cash tax liability. This resulted in repatriation of a significant portion of our
remitted earnings at December 31, 2013.

We do not have any present or anticipated future need for cash held by our CFCs, as cash generated in the U.S., as well as

borrowings, are expected to be sufficient to meet U.S. liquidity needs for the foreseeable future.

It is not practicable to estimate the amount of additional taxes which might be payable on our CFCs’ undistributed earnings due

to a variety of factors, including the timing, extent and nature of any repatriation. While our expectation is that all foreign
undistributed earnings, other than our U.S. parent company's share of the foreign partnership profits, are permanently invested, there
could be certain unforeseen future events that could impact our permanent reinvestment assertion. Such events include acquisitions,
corporate restructuring or tax law changes not currently contemplated.

Share-based Compensation
12.
Amended and Restated 2004 Incentive Plan

The 2004 Plan was approved by our stockholders in May 2013 and is a broad based plan that provides for the grant of
equity awards including restricted stock and restricted stock units (collectively referred to as Restricted Stock), incentive and
non-qualified stock options, and other stock-related awards to our directors, officers, key employees and consultants, for up to a

F-33

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

maximum of 47,874 shares. Stock options granted under the 2004 Plan have a maximum contractual term of ten years from the date of
grant, have an exercise price not less than the fair value of the stock on the grant date and generally vest over four years. Restricted
stock awards also generally vest over four years, with performance-based restricted stock units having a three -year vesting period.

Stock Options

A summary of the status of our stock option plans at December 31, 2015, and changes during the year then ended is presented in

the table and narrative below:

Outstanding at December 31, 2014
Granted
Exercised
Forfeited and canceled
Outstanding at December 31, 2015
Vested and unvested expected to vest at December 31,
2015
Exercisable at December 31, 2015

Number of
shares

Weighted
Average Exercise
Price

6,420
1,461
(1,328)
(332)
6,221

6,129
3,570

$
$

85.65
177.54
57.59
143.22
110.15

109.30
74.89

Weighted
Average
Remaining
Contractual
Term (in years)

Aggregate Intrinsic
Value

6.96 $

501,630

6.93 $
5.79 $

499,399
413,637

Total intrinsic value of stock options exercised during the years ended December 31, 2015, 2014 and 2013 was $168,287,
$459,940 and $204,470, respectively. We primarily utilize newly issued shares to satisfy the exercise of stock options. The total fair
value of options vested during the years ended December 31, 2015, 2014 and 2013 was $50,964, $35,859 and $32,249, respectively.
The fair value of options at the date of grant was estimated using the Black-Scholes model with the following ranges of

weighted average assumptions:

Expected life in years
Interest rate
Volatility
Dividend yield

December 31,

2015
3.57 - 9.00

0.84% - 2.17%
33.35% - 38.13%

—

December 31,
2014
3.64 - 5.30
0.97% - 1.74%
32.15% - 34.87%
—

December 31,

2013
3.30 - 5.37
0.30% - 1.21%
29.81% - 36.93%
—

The expected stock price volatility rates are based on historical volatilities of our common stock. The risk-free interest rates are

based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option. The
average expected life represents the weighted average period of time that options granted are expected to be outstanding. We have
evaluated three distinct employee groups in determining the expected life assumptions, and we estimate the expected life of stock
options based on historical experience of exercises, cancellations and forfeitures of our stock options.

The weighted average fair value at the date of grant for options granted during the years ended December 31, 2015, 2014 and

2013 was $53.03, $51.22 and $23.99 per option, respectively.

F-34

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

Restricted Stock

A summary of the status of our nonvested Restricted Stock and changes during the period then ended is as follows:

Number of Shares

Weighted Average
Grant Date Fair
Value

Nonvested Restricted Stock at December 31, 2014
Shares granted
Shares forfeited
Shares vested
Nonvested Restricted Stock at December 31, 2015

1,808
1,540
(245 )
(1,063 )
2,040

127.08
184.09
150.80
127.23
167.21

Restricted stock awards granted in 2015 include 460 restricted stock units granted to senior management, which have both
non-market performance-based and service-based vesting conditions. The weighted average grant date fair value of these awards
granted in 2015 was $191.01. The number of non-market performance-based restricted stock units granted represents the number of
shares earned during the performance period, which ended on December 31, 2015, based on specific pre-established performance
goals. These awards will vest over a three year period, subject to the employees' continued employment with the Company.

The fair value of restricted stock at the date of grant is based on the fair market value of the shares of common stock underlying

the awards on the date of grant. The weighted average fair value at the date of grant for restricted stock awards granted during the
years ended December 31, 2015, 2014 and 2013, including restricted stock units with non-market performance conditions, was
$184.09, $174.22 and $95.06 per share, respectively. The total weighted average grant date fair value of restricted stock vested during
the years ended December 31, 2015, 2014 and 2013 was $135,337, $41,304 and $26,679, respectively.

During 2015 and 2014, we granted market-based performance awards to senior management which provides the recipient the
right to receive restricted stock at the end of a three year performance period, based on pre-established market-based performance
goals. We used payout simulation models to estimate the grant date fair value of the awards and recognized expense of $526 and $301
during the years ended December 31, 2015 and 2014, respectively.

Employee Stock Purchase Plan

During 2015, the Company adopted the ESPP under which employees can purchase shares of our common stock based on a
percentage of their compensation subject to certain limits. The purchase price per share is equal to the lower of 85% of the fair market
value of our common stock on the offering date or the purchase date with a six month look-back feature. Under the ESPP, up to 1,000
shares of common stock may be issued to eligible employees who elect to participate in the purchase plan. Shares issued and
compensation expense under the ESPP for the year ended December 31, 2015 were not material.

Share-Based Compensation Expense

The following table summarizes the share-based compensation expense in the consolidated statements of operations:

Cost of sales
Research and development
Selling, general and administrative

Total share-based compensation expense

Income tax effect

Total share-based compensation expense, net of tax

6,630
64,235
156,268
227,133
(83,721)
143,412

4,174
36,203
74,084
114,461
(42,082 )
72,379

2015

Year Ended December 31,
2014

2013

3,214
23,905
49,084
76,203
(28,652)
47,551

Share-based compensation expense capitalized to inventory during the years ended December 31, 2015, 2014 and 2013 was

$7,809, $10,211, and $3,978, respectively.

F-35

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

As of December 31, 2015, there was $343,301 of total unrecognized share-based compensation expense related to non-vested

share-based compensation arrangements granted under the 2004 Plan. The expense is expected to be recognized over a
weighted-average period of 2.45 years.

Stockholders' Equity

13.
Preferred Stock

In February 1997, our Board of Directors declared a dividend of one preferred stock purchase right for each outstanding share of

common stock (including all future issuances of common stock). Under certain conditions, each right could be exercised to purchase
one hundredth of a share of a new series of preferred stock, subject to adjustment.The rights, which did not have voting rights, expired
on March 23, 2015.

Common Stock

In June 2015, in connection with our acquisition of Synageva, we issued 26,125 shares of common stock to former Synageva

stockholders and employees. The fair value of the stock was $4,913,754, and we incurred $4,053 of issuance costs.

Share Repurchases

In November 2012, our Board of Directors authorized a share repurchase program. The repurchase program does not have an
expiration date, and we are not obligated to acquire a particular number of shares. The repurchase program may be discontinued at any
time at the Company's discretion. In May 2015, our Board of Directors increased the authorization of shares up to $1,000,000 for
future purchases under the repurchase program, which superseded all prior repurchase programs. Under the program, we repurchased
1,963 and 1,903 shares of our common stock at a cost of $327,699 and $302,599 during the years ended December 31, 2015 and
2014, respectively. The Company did not repurchase any shares during the pendency of the Synageva acquisition in the second
quarter of 2015 and the Company began repurchasing shares again in the third quarter 2015. Subsequent to December 31, 2015, we
repurchased 648 shares of our common stock under our repurchase program at a cost of $98,206. As of February 8, 2016, there is a
total of $657,658 remaining for repurchases under the repurchase program.

F-36

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

14.

Other Comprehensive Income and Accumulated Other Comprehensive Income

The following table summarizes the changes in AOCI, by component, for the years ended December 31, 2015, 2014 and 2013:

Balances, December 31, 2012

(5,712 ) $

—

15,156

(2,809 ) $

Defined Benefit
Pension Plans

Unrealized Gains
(Losses) from
Marketable
Securities

Unrealized Gains
(Losses) from
Hedging Activities

Foreign Currency
Translation
Adjustment

Total Accumulated
Other
Comprehensive
Income (Loss)
6,635

(11,945)

(17,547)

(29,492)
(22,857)
97,956

(18,314)

79,642
56,785
102,053

(96,537)

5,516
62,301

(1,000)

(4,573 )

(17,983)

—

(18,983)
(3,827) $
110,088

(18,953)

(4,573 )
(7,382 ) $

(6,337 )

—

(6,337 )

(6,276 )

—

(6,276 )

(13,719 ) $

(19,995 ) $

91,135
87,308
110,455

(105,093)

5,362
92,670

Other comprehensive income
before reclassifications
Amounts reclassified from other
comprehensive income
Net other comprehensive income
(loss)

Balances, December 31, 2013

Other comprehensive income
before reclassifications
Amounts reclassified from other
comprehensive income
Net other comprehensive income
(loss)

(6,175)

385

(5,790)
(11,502 ) $

(5,732)

664

(5,068)

(197)

(146)
(146)

(63)

(25)

(88)

Balances, December 31, 2014

(16,570 ) $

(234)

Other comprehensive income
before reclassifications
Amounts reclassified from other
comprehensive income
Net other comprehensive income
(loss)

Balances, December 31, 2015

(1,610)

8,591

6,981
(9,589 ) $

(516)

(35)

(551)

(785)

F-37

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

The table below provides details regarding significant reclassifications from AOCI during the years ended December 31, 2015,

2014 and 2013:

Details about Accumulated Other Comprehensive Income
Components

Unrealized Gains (Losses) on Hedging Activity

Effective portion of foreign exchange contracts
Ineffective portion of foreign exchange contracts

Unrealized Gains (Losses) from Marketable
Securities

Realized gains (losses) on sale of securities

Defined Benefit Pension Items

Amortization of prior service costs and
actuarial losses
Curtailment

Amount Reclassified From Accumulated Other
Comprehensive Income during the year ended
December 31,

2015

2014

2013

Affected Line Item in the
Consolidated Statements of
Operations

117,915 $
2,191
120,106
(15,013)
105,093 $

18,874 $
2,787
21,661
(2,708)
18,953 $

20,569

Net product sales
(915 ) Foreign currency loss

19,654
(1,671 ) Income tax provision
17,983

55 $
55
(20)
35 $

(1,263) $
(10,108)
(11,371)
2,780
(8,591) $

40 $
40
(15)
25 $

(865) $
—
(865)
201
(664) $

(81 ) Investment income
(81 )
30
(51 )

Income tax provision

(421 ) (a)
(a)

—

(421 )

Income tax provision

(385 )

(a) This AOCI component is included in the computation of net periodic pension benefit cost (see Note 16 for additional details).

15.

Fair Value Measurement

Authoritative guidance establishes a valuation hierarchy for disclosure of the inputs to the valuation used to measure fair value.
This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets
for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are
observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the
financial instrument. Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at
fair value.

F-38

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

The following tables present information about our assets and liabilities that are measured at fair value on a recurring basis as of

December 31, 2015 and 2014, and indicate the fair value hierarchy of the valuation techniques we utilized to determine such fair
value.

Balance Sheet Classification Type of Instrument
Cash equivalents

Cash equivalents
Cash equivalents
Cash equivalents
Cash equivalents

Cash equivalents
Marketable securities
Marketable securities
Marketable securities
Marketable securities
Marketable securities

Other current assets

Other assets

Other liabilities

Institutional money market
funds
Commercial paper
Corporate bonds
Municipal bonds
Other government-related
obligations
Bank certificates of deposit
Mutual funds
Commercial paper
Corporate bonds
Municipal bonds
Other government-related
obligations
Foreign exchange forward
contracts
Foreign exchange forward
contracts

contracts
Foreign exchange forward
contracts

Other current liabilities Foreign exchange forward

Other current liabilities Acquisition-related contingent

Contingent consideration Acquisition-related contingent

consideration

$
$
$
$

$
$
$
$
$
$

Fair Value Measurement at
December 31, 2015

Total

Level 1

Level 2

Level 3

179,898 $
192,418 $
12,250 $
60,001 $

31,549 $
27,000 $
8,817 $
61,978 $
120,499 $
27,110 $

— $
— $
— $
— $

— $
— $
8,817 $
— $
— $
— $

179,898 $
192,418 $
12,250 $
60,001 $

31,549 $
27,000 $
— $
61,978 $
120,499 $
27,110 $

156,500 $

— $

156,500 $

91,745 $

— $

91,745 $

66,309 $

— $

66,309 $

—
—
—
—

—
—
—
—
—
—

—

— $

5,648 $

— $

4,773 $

— $

55,804

— $

121,424

5,648 $

4,773 $

55,804 $

121,424 $

F-39

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

Balance Sheet Classification Type of Instrument
Cash equivalents

Cash equivalents
Cash equivalents
Cash equivalents
Cash equivalents
Cash equivalents

Marketable securities
Marketable securities
Marketable securities
Marketable securities
Marketable securities

Marketable securities
Other current assets

Other assets

Institutional money market
funds
Commercial paper
Corporate bonds
Municipal bonds
Bank certificates of deposit
Other government-related
obligations
Mutual funds
Commercial paper
Corporate bonds
Municipal bonds
Other government-related
obligations
Bank certificates of deposit
Foreign exchange forward
contracts
Foreign exchange forward
contracts

Fair Value Measurement at
December 31, 2014

Total

Level 1

Level 2

Level 3

176,331 $
117,529 $
9,315 $
12,050 $
5,000 $

23,998 $
4,277 $
24,966 $
484,551 $
162,795 $

268,978 $
72,000 $

— $
— $
— $
— $
— $

— $
4,277 $
— $
— $
— $

176,331 $
117,529 $
9,315 $
12,050 $
5,000 $

23,998 $
— $
24,966 $
484,551 $
162,795 $

— $
— $

268,978 $
72,000 $

77,348 $

— $

77,348 $

58,698 $

— $

58,698 $

—
—
—
—
—

—
—

—

$
$
$
$
$

$
$

Other current liabilities Foreign exchange forward

Other liabilities

contracts
Foreign exchange forward
contracts

Other current liabilities Acquisition-related contingent

Contingent consideration Acquisition-related contingent

consideration

794 $

86 $

46,546 $

116,425 $

— $

794 $

86 $

— $

46,546

— $

116,425

There were no securities transferred between Level 1, 2 and 3 for the year ended December 31, 2015.

Valuation Techniques

We classify mutual fund investments, which are valued based on quoted market prices in active markets with no valuation

adjustment, as Level 1 assets within the fair value hierarchy.

Cash equivalents and marketable securities classified as Level 2 within the valuation hierarchy consist of institutional

money market funds, commercial paper, municipal bonds, U.S. and foreign government-related debt, corporate debt securities
and certificates of deposit. We estimate the fair values of these marketable securities by taking into consideration valuations
obtained from third-party pricing sources. These pricing sources utilize industry standard valuation models, including both income
and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value.
These inputs include market pricing based on real-time trade data for the same or similar securities, issuer credit spreads,
benchmark yields, and other observable inputs. We validate the prices provided by our third-party pricing sources by

F-40

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

understanding the models used, obtaining market values from other pricing sources and analyzing pricing data in certain
instances.

Our derivative assets and liabilities include foreign exchange derivatives that are measured at fair value using observable
market inputs such as forward rates, interest rates, our own credit risk as well as an evaluation of our counterparties’ credit risks.
Based on these inputs, the derivative assets and liabilities are classified within Level 2 of the valuation hierarchy.

Contingent consideration liabilities related to acquisitions are classified as Level 3 within the valuation hierarchy and are valued

based on various estimates, including probability of success, discount rates and amount of time until the conditions of the milestone
payments are met.

As of December 31, 2015, there has not been any impact to the fair value of our derivative liabilities due to our own credit risk.

Similarly, there has not been any significant adverse impact to our derivative assets based on our evaluation of our counterparties’
credit risks.

Contingent Consideration

In connection with prior acquisitions, we may be required to pay future consideration that is contingent upon the achievement of

specified development, regulatory approval or sales-based milestone events. We determine the fair value of these obligations on the
acquisition date using various estimates that are not observable in the market and represent a Level 3 measurement within the fair
value hierarchy. The resulting probability-weighted cash flows were discounted using a cost of debt ranging from 4.8% to 5.5% for
developmental milestones and a weighted average cost of capital ranging from 10% to 21% for sales-based milestones.

Each reporting period, we adjust the contingent consideration to fair value with changes in fair value recognized in operating

earnings. Changes in fair values reflect new information about the probability and timing of meeting the conditions of the milestone
payments. In the absence of new information, changes in fair value will only reflect the interest component of contingent
consideration related to the passage of time as development work progresses towards the achievement of the milestones.

Estimated future contingent milestone payments related to prior business combinations range from zero if no milestone events
are achieved, to a maximum of $826,000 if all development, regulatory and sales-based milestones are reached. As of December 31,
2015, the fair value of acquisition-related contingent consideration was $177,228. The following table represents a roll-forward of our
acquisition-related contingent consideration:

Balance at beginning of period
Milestone payments
Change in fair value
Balance at end of period

16.

Employee Benefit Plans

Deferred Compensation Plan

December 31, 2015

(162,971)
50,000
(64,257)
(177,228)

We have a nonqualified deferred compensation plan which allows certain highly-compensated employees to make voluntary
deferrals of up to 80% of their base salary and incentive bonuses. The plan is designed to work in conjunction with the 401(k) plan
and provides for a total combined employer match of up to 6% of an employee's eligible earnings, up to the IRS annual 401(k)
contribution limitations. Deferred compensation amounts under this plan as of December 31, 2015 and 2014 were $8,817 and $4,277,
respectively, and are included in other liabilities within the consolidated balance sheets. Employer matching contributions under the
plan for the years ended December 31, 2015, 2014 and 2013 were not material.

Defined Contribution Plan

We have one qualified 401(k) plan covering all eligible employees. Under the plan, employees may contribute up to the
statutory allowable amount for any calendar year. We make matching contributions equal to $1.00 for each dollar contributed up to
the first 6% of an individual's base salary and incentive cash bonus up to the annual IRS maximum. For the years ended December 31,
2015, 2014 and 2013, we recorded matching contributions of approximately $11,478, $8,782, and $6,360 respectively.

F-41

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

Defined Benefit Plans

We maintain defined benefit plans for employees in certain countries outside the United States, including retirement benefit
plans required by applicable local law. The plans are valued by independent actuaries using the projected unit credit method. The
liabilities correspond to the projected benefit obligations of which the discounted net present value is calculated based on years of
employment, expected salary increases, and pension adjustments.

In 2015 we recorded the impacts of a curtailment related to our Swiss plan as a result of a reduction of employees due to the

relocation of our European headquarters as discussed in Note 17, "Restructuring".

The following table sets forth the funded status and the amounts recognized for defined benefit plans, including the impacts of

the 2015 curtailment:

December 31,

2015

2014

Change in benefit obligation:
Projected benefit obligation, beginning of year

Prior service cost
Service cost
Interest cost
Change in assumptions
Recognized actuarial net loss
Curtailment
Foreign currency exchange rate changes
Net transfers to (from) plan

Projected benefit obligation, end of year
Accumulated benefit obligation, end of year

Change in plan assets:
Fair value of plan assets, beginning of year

Return on plan assets
Employer contributions
Plan participants' contributions
Curtailment
Foreign currency exchange rate changes
Net transfers to (from) plan
Fair value of plan assets, end of year
Funded status at end of year

$
$

50,701
—
9,675
753
2,475
3,886
(24,938 )
562
1,929
45,043
42,044

$
$

38,166
—
8,136
780
5,571
1,350
—
(3,055)
(247)
50,701
43,141

December 31,

2015

2014

26,776
439
3,747
1,701
(12,836 )
(186 )
1,929
21,570
$
(23,473 ) $

23,327
393
4,417
1,741
—
(2,855)
(247)
26,776
(23,925)

The Company measures the fair value of plan assets based on the prices that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants at the measurement date. The following table presents total plan assets
by investment category as of December 31, 2015 and the classification of each investment category within the fair value hierarchy
with respect to the inputs used to measure fair value:

F-42

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

December 31, 2015

Fair Value
(Level 2)

as % of total
plan assets

December 31, 2014

Fair Value
(Level 2)

Cash and cash equivalents
Equity security funds
Debt security funds
Real estate funds

244
1,905
16,888
2,533
21,570

1%
9%
78%
12%
100% $

1,794
10,791
11,246
2,945
26,776

as % of total
plan assets

7%
40%
42%
11%
100%

All plan asset investments are classified as Level 2 within the fair value hierarchy and are valued utilizing observable prices for
similar instruments and quoted prices for identical or similar instruments in markets that are not active. Plan assets are managed by an
independent investment fiduciary and are primarily invested in debt and equity securities and real estate funds in order to maximize
the overall return from investment income considering asset allocation limits as determined by pension law.

At December 31, 2015, we have recorded a liability of $23,473 in other non-current liabilities and a charge to accumulated other

comprehensive income, net of tax, of $9,589 related to an additional minimum liability.

The following table provides the weighted average assumptions used to calculate net periodic benefit cost and the actuarial

present value of projected benefit obligations:

Weighted average assumptions - Net Periodic Benefit Cost:

Discount rate
Long term rate of return on assets
Rate of compensation increase

Weighted average assumptions - Projected Benefit Obligation:

Discount Rate
Rate of compensation increase

December 31,

2015

2014

1.4%
3.5%
1.5%

0.6%
1.4%

2.0%
4.0%
1.6%

1.4%
1.6%

The discount rates used to determine the net periodic benefit cost and projected benefit obligation represent the yield on high

quality AA-rated corporate bonds for periods that match the duration of the benefit obligations.

The expected long-term rate of return on plan assets represents a weighted average of expected returns per asset category. The

rate of return considers historical and estimated future risk free rates of return as well as risk premiums for the relevant investment
categories.

The components of net periodic benefit cost are as follows:

2015

Year Ended December 31,
2014

2013

Service cost
Interest cost
Expected return on plan assets
Employee contributions
Amortization of prior service costs
Curtailment
Amortization and deferral of actuarial gain

Total net periodic benefit cost

F-43

9,675
753
(1,014)
(1,701)
9
(1,994)
1,254
6,982

8,136
780
(900 )
(1,741 )
9
—
846
7,130

5,413
504
(633)
(1,523)
9
—
410
4,180

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

Other changes in plan assets and benefit obligations recognized in AOCI are as follows:

Amount included in AOCI - December 31, 2013
Prior service cost
Net loss arising during the period
Change in assumptions
Amortization of net gain
Plan assets losses
Taxes
Amount included in AOCI - December 31, 2014
Prior service cost
Net loss arising during the period
Change in assumptions
Amortization of net gain
Plan assets losses
Curtailment
Foreign currency exchange rate changes
Taxes
Amount included in AOCI - December 31, 2015

(11,502)
9
(1,354)
(5,640)
856
(513)
1,574
(16,570)
9
(3,886)
(2,437)
1,254
(575)
10,108
19
2,489
(9,589)

The amount in accumulated other comprehensive income as of December 31, 2015 that is expected to be recognized as a

component of the net periodic pension costs in 2016 is $853.

We estimate that we will pay employer contributions of approximately $3,102 in 2016. The expected future cash flows to be

paid in respect of the pension plans as of December 31, 2015 were as follows:

Year
2016
2017
2018
2019
2020
2021 to 2025

17.

Restructuring

1,521
1,692
1,522
1,579
1,449
6,876

In connection with the completion of our new corporate headquarters located in New Haven, Connecticut, we entered into a

lease termination agreement for the previous corporate headquarters located in Cheshire, Connecticut during December 2015. As a
result of this action, we recorded restructuring expense of $11,236 for contract termination costs in the fourth quarter of 2015.

In conjunction with the acquisition and integration of Synageva in 2015, we recorded restructuring expense of $13,335 primarily
related to employee costs during 2015. We expect to pay all remaining accrued amounts related to this restructuring activity by the end
of 2016.

In the fourth quarter 2014, we announced plans to move the European headquarters from Lausanne to Zurich, Switzerland. The

relocation of the European headquarters supports our operational needs based on growth in the European region. As a result of this
action, we recorded restructuring expenses of $15,365 related to employee costs in the fourth quarter of 2014. During the year ended
December 31, 2015, we incurred additional restructuring costs of $17,598. We expect to pay all remaining accrued amounts related to
this restructuring activity by the end of 2016.

F-44

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

The following table presents a reconciliation of the restructuring reserve recorded within accrued expenses on the Company's

condensed consolidated balance sheet for the year ended December 31, 2015 and December 31, 2014, respectively:

Employee
Separation
Costs

December 31, 2015
Contract
Termination
Costs

Other Costs

December 31, 2014

Employee
Separation
Costs

Contract
Termination
Costs

Total

Other
Costs

Total

Liability, beginning of
period
Restructuring expenses
Cash settlements
Adjustments to
previous estimates
Liability, end of period $

$ 15,365
21,524
(34,843 )

—
12,419
(11,772 )

4,344
6,390

35
682

— $ 15,365
37,790
(50,293)

3,847
(3,678)

—
169

4,379
7,241

— $

15,365
—

—
15,365

—
—
—

—
—

$ — $
—
—

—
15,365
—

—
—
$ — $ 15,365

18.

Segment Information

We operate as one business segment, which is the innovation, development and commercialization of life-transforming

therapeutic products. Therefore, results of our operations are reported on a consolidated basis for purposes of segment reporting,
consistent with our management reporting. Disclosures about net product sales and long-lived assets by geographic area are presented
below.

Net product sales

Net product sales by product are as follows:

Net product sales:
Soliris (1)
Strensiq
Kanuma

Geographical information

Net product sales:
United States
Europe (1)
Asia Pacific
Other

2015

2,590,197
11,969
366
2,602,532

Year Ended December 31,
2014

2,233,733 $

—
—

2,233,733 $

2015

951,307
840,465
276,350
534,410
2,602,532

Year Ended December 31,
2014

730,089 $
836,134
244,059
423,451
2,233,733 $

2013

1,551,346
—
—
1,551,346

2013

561,405
514,987
203,538
271,416
1,551,346

(1) As described in Note 19, "Quarterly Financial Information (unaudited)", included within the Soliris and Europe revenues for
2014 is a reimbursement of $87,830 for shipments made in years prior to January 1, 2014 as a result of an agreement with the
French government.

Long-lived assets (2):
United States
Europe
Other

(2) Long-lived assets consist of property, plant and equipment.

F-45

December 31,

2015

2014

444,282 $
247,474
5,269
697,025 $

298,122
88,543
5,583
392,248

Alexion Pharmaceuticals, Inc.
Notes to Consolidated Financial Statements
For the Years ended December 31, 2015, 2014 and 2013
(amounts in thousands except per share amounts)

19.

Quarterly Financial Information (unaudited)

The following condensed quarterly financial information is for the years ended December 31, 2015 and 2014:

2015:

Revenues
Cost of sales
Operating expenses
Operating income
Net income (loss)
Earnings (loss) per common share

Basic
Diluted

2014:

Revenues
Cost of sales
Operating expenses
Operating income
Net income
Earnings per common share

Basic
Diluted

March 31

June 30

September 30

December 31

$
$

600,333
69,399 (1)
427,227
103,707
91,323

0.46
0.45

March 31

566,616 (5)
32,939 (5)
324,174
209,503
159,354

0.81
0.79

$
$

636,210
52,007
403,121 (2)
181,082
170,215

0.84
0.83

June 30

512,495
39,626
254,020
218,849
166,495

0.84
0.83

$
$

666,637
54,057
458,012
154,568
(183,757 ) (4)

(3)

(0.81 )
(0.81 )

September 30

555,146
51,858
266,629
236,659
177,731

0.90
0.88

$
$

700,867
57,626
545,927 (3)
97,314
66,604

0.30
0.29

December 31

599,476
49,439
346,342 (6)
203,695
153,332

0.77
0.76

(1) Included within cost of sales for the first quarter 2015 are costs $24,352 associated with the write off a portion of a single
manufacturing campaign at a third party manufacturer for Strensiq.

(2) Included within operating expenses for the second quarter 2015 are acquisition costs of $29,777 associated with the acquisition
of Synageva.

(3) Included within operating expenses for the third and fourth quarter 2015 is $36,608 and $79,976, respectively,of amortization of
purchased intangible assets associated with the approval of Strensiq and Kanuma.

(4) Included within net income for the third quarter of 2015 is a one-time tax expense of $ 315,569 resulting from our integration of
the Synageva business with and into the Alexion business. This tax expense is attributable to the change in our deferred tax liability
for the outside basis difference resulting from the movement of assets into our captive foreign partnership.

(5) Included within revenues for the first quarter of 2014 is a reimbursement for shipments made in years prior to January 1, 2014 as
a result of an agreement with the French government which positively impacted reimbursement for Soliris. As a result of the
agreement, in the first quarter of 2014, we recognized $87,830 of net product sales from Soliris in France relating to years prior to
January 1, 2014. Also, included within cost of sales for the first quarter of 2014 is the incremental impact in cost of sales of $2,055 for
additional royalties related to the $87,830 of net product sales from prior year shipments.

(6) Included within operating expenses for the fourth quarter of 2014 is $15,365 for restructuring expenses recognized in connection
with the relocation of the European headquarters.

F-46

SUBSIDIARIES OF ALEXION PHARMACEUTICALS, INC.

Exhibit 21.1

Alexion Delaware Holding LLC is organized in the State of Delaware

Alexion Services Latin America, Inc. is organized in the state of Delaware

Alexion Pharma Argentina SRL is organized in Argentina

Alexion Pharmaceuticals Australasia PTY LTD is organized in Australia

Alexion Pharma Belgium Sprl is organized in Belgium

Alexion Services Europe Sprl is organized in Belgium

Alexion Bermuda L.P. is organized in Bermuda

Alexion Bermuda II L.P. is organized in Bermuda

Alexion Bermuda Holding ULC is organized in Bermuda

Alexion Farmacêutica Brasil Importação e Distribuição de Produtos e Serviços de Administração de Vendas Ltda. (doing business as
Alexion Brasil) is organized in Brazil

Alexion Farmacêutica América Latina Serviços de Administração de Vendas Ltda. (doing business as Alexion Latina America) is
organized in Brazil

Alexion Pharma Canada Corp. is organized in Canada

Alexion (Shanghai) Company Limited is organized in Shanghai

Alexion Pharma Colombia SAS is organized in Colombia

Alexion Pharma Czech s.r.o is organized in the Czech Republic

Alexion Pharma Middle East FZ-LL is organized in Dubai

Alexion Europe SAS is organized in France

Alexion Pharma France is organized in France

Alexion R&D France SAS is organized in France

Alexion Pharma Germany GmbH is organized in Germany

Alexion Business Services Private Limited is organized in India

Alexion Pharma International Trading is organized in Ireland

Alexion Pharma Holding is organized in Ireland

Alexion Pharma Israel Ltd. is organized in Israel

Alexion Pharma Italy Sarl is organized in Italy

Alexion Pharma GK is organized in Japan

Alexion Pharma Mexico, S. de R.L. de C.V. is organized in Mexico

Alexion Holding B.V. is organized in the Netherlands

Alexion Pharma Netherlands B.V. is organized in the Netherlands

Alexion Pharma LLC is organized in Delaware

Alexion Holding LLC is organized in Delaware

Alexion Bermuda Limited is organized in Bermuda

Synageva BioPharma SAS is organized in France

Synageva BioPharma B.V. is organized in the Netherlands

Synageva BioPharma Limited is organized in the United Kingdom

Savoy Therapeutics Corp. is organized Delaware

Synageva BioPharma GmbH is organized in Switzerland

Synageva BioPharma S.L. is organized in Spain

Synageva BioPharma Luxembourg S.a.r.l. is organized in Luxembourg

Synageva BioPharma Mexico S. de R.L. de C.V. is organized in Mexico

Alexion Pharma OOO is organized in Russia

Alexion Pharma Spain S.L. is organized in Spain

Alexion Pharma Nordics AB is organized in Sweden

Alexion Pharma GmbH is organized in Switzerland

Alexion Ilaç Ticaret Limited Þirketi is organized in Turkey

Alexion Pharma UK is organized in the United Kingdom

Alexion Pharma Austria GmbH is organized in Austria

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Exhibit 23.1

We hereby consent to the incorporation by reference in the Registration Statement on Form S‑ 3 (No. 333-206345) and Form S-8
(No. 333,205379, 333-204426, 333-146319, 333-139600, 333-123212 and 333-153612) of Alexion Pharmaceuticals, Inc. of our report
dated February 8, 2016 relating to the financial statements and the effectiveness of internal control over financial reporting, which
appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP
Hartford, Connecticut
February 8, 2016

Exhibit 31.1

I, David Hallal, certify that:

I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2015 of
Alexion Pharmaceuticals, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present
in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the
periods presented in this report;

The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to
be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted
accounting principles;

(c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during
the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial
reporting; and

The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons
performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial

reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and
report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in

the registrant's internal control over financial reporting.

Dated:

February 8, 2016

/s/ David Hallal
Chief Executive Officer

Exhibit 31.2

I, Vikas Sinha, certify that:

I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2015 of
Alexion Pharmaceuticals, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;

(c)

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial

reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and
report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in

the registrant's internal control over financial reporting.

Dated:

February 8, 2016

/s/ VIKAS SINHA
Executive Vice President and Chief Financial Officer

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Exhibit 32.1

In connection with the Annual Report on Form 10-K of Alexion Pharmaceuticals, Inc. (the “Company”) for the year ended
December 31, 2015 as filed with the Securities and Exchange Commission (the “Report”), I, David Hallal, Chief Executive Officer of
the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

(2)

the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and

the information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.

Dated:

February 8, 2016

/s/ David Hallal
Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by

the Company and furnished to the Securities and Exchange Commission or its staff upon request.

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Exhibit 32.2

In connection with the Annual Report on Form 10-K of Alexion Pharmaceuticals, Inc. (the “Company”) for the year ended

December 31, 2015 as filed with the Securities and Exchange Commission (the “Report”), I, Vikas Sinha, Executive Vice President
and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the
Sarbanes-Oxley Act of 2002, that:

(1)

(2)

the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and
the information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.

Dated:

February 8, 2016

/s/ VIKAS SINHA
Executive Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by

the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Financial Highlights

Shareholder Information

3000

2500

2000

1500

1000

500

1100

1000

900

800

700

600

500

400

300

200

100

6.00

5.00

4.00

3.00

2.00

1.00

2000

1500

1000

500

2015

2014*

2013

2015

2014

2013

2015

2014

2013

2015

2014

2013

NET PRODUCT SALES
($ IN MILLIONS)

NET INCOME
($ IN MILLIONS)

EARNINGS PER
SHARE-DILUTED

UNITED STATES

EUROPE

ASIA PACIFIC

OTHER

NON-GAAP

GAAP

NON-GAAP

GAAP

CASH, CASH EQUIVALENTS
AND MARKETABLE
SECURITIES
($ IN MILLIONS)

CASH AND CASH EQUIVALENTS

MARKETABLE SECURITIES

* Included in Europe revenues for 2014 is a reimbursement of $87.83 million for shipments made prior to 2014 as a result of an agreement with the French government.

RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
IN THOUSANDS EXCEPT PER SHARE AMOUNTS

GAAP net income

Share-based compensation expense

Fair value adjustment of inventory acquired

Amortization of purchased intangible assets

Change in fair value of contingent consideration

Acquisition-related costs

Restructuring expenses

Impairment of intangible assets

2015

2014

2013

$144,385

$656,912

$252,895

227,133

114,461

76,203

116,584

64,257

39,210

42,169

–

20,295

–

15,365

11,514

–

417

4,006

1,023

–

33,521

14,500

9,181

Upfront and milestone payments related to license and collaboration agreements

129,750

109,925

Change in contingent liability from intellectual property settlements

–

Non-cash taxes

Non-GAAP net income

GAAP earnings per share - diluted

Non-GAAP earnings per share - diluted

324,978

137,449

232,460

$1,088,557

$1,065,921

$624,206

$0.67

$4.99

$3.26

$5.21

$1.27

$3.08

DIRECTORS

Leonard Bell, MD
Chairman of the Board,
Principal Founder and Former
Chief Executive Officer

R. Douglas Norby1,2,3
Lead Independent Director
Former Senior Vice President,
Chief Financial Officer,
Tessera Technologies, Inc.

Felix J. Baker, PhD4,5
Co-Managing Member, Baker
Brothers Advisors LP

David R. Brennan4,5
Former Chief Executive Officer,
AstraZeneca PLC

M. Michele Burns2,3,5
Former Chief Executive Officer,
Retirement Policy Center,
Marsh & McLennan
Companies, Inc.

Christopher J. Coughlin1,4
Former Executive Vice
President and Chief Financial
Officer, Tyco

EXECUTIVE MANAGEMENT

David Hallal
Chief Executive Officer

John T. Mollen1,2,3
Former Executive Vice
President, Human Resources,
EMC Corporation

Alvin S. Parven1,2,3
Former Vice President,
Aetna Health Plans

Vikas Sinha, MBA, CA, CPA
Executive Vice President,
Chief Financial Officer

Martin Mackay, PhD
Executive Vice President,
Global Head of Research &
Development

ANNUAL
SHAREHOLDERS
MEETING

To be held on

May 11, 2016

5:30 p.m.

The Study at Yale

1157 Chapel Street

New Haven, CT 06511

tel 203.503.3900

Andreas Rummelt, PhD4,5
CEO, InterPharmaLink AG
Former Group Head,
Quality Assurance and Technical
Operations, Novartis

Ann M. Veneman, JD3,4,5
Former Executive Director
of UNICEF
Former Secretary of
U.S. Department of Agriculture

Clare Carmichael
Executive Vice President,
Chief Human Resources Officer

OTHER
INFORMATION

John B. Moriarty, Jr., JD
Executive Vice President,
General Counsel

Julie O’Neill
Executive Vice President,
Global Operations

Carsten Thiel, PhD
Executive Vice President,
Chief Commercial Officer

Edward Miller, JD
Senior Vice President,
Global Chief Compliance Officer

Heidi L. Wagner, JD
Senior Vice President,
Global Government Affairs

CORPORATE HEADQUARTERS

Alexion Pharmaceuticals, Inc.

100 College Street

New Haven, CT 06510

tel 203.272.2596

fax 203.271.8190

TRANSFER AGENT AND

REGISTRAR

Computershare Trust Company, N.A.

250 Royall Street

Canton, MA 02021

INVESTOR RELATIONS

Alexion Pharmaceuticals, Inc.

100 College Street

New Haven, CT 06510

tel 203.699.7457

fax 203.271.8198

email InvestorRelations@alxn.com

LEGAL COUNSEL

Ropes & Gray LLP

Boston, MA

INDEPENDENT AUDITORS

PricewaterhouseCoopers LLP

Hartford, CT

TRADING SYMBOL

Listing for Alexion Pharmaceuticals, Inc.
is found on the NASDAQ stock market

under the symbol ALXN.

alexion.com

1 Member of the Audit and

Finance Committee

2 Member of the Leadership and

Compensation Committee

3 Member of the Nominating and

Corporate Governance Committee

4 Member of the Quality Compliance

Committee

5 Member of the Strategy and

Risk Committee

ALEXION, KANUMA, SOLIRIS, STRENSIQ,
and the Alexion logo are trademarks of Alexion
Pharmaceuticals, Inc., registered in the United
States and in other countries worldwide.

About the Cover When Tanner was diagnosed with HPP shortly
after birth, his mom, René, was told her new baby boy had
only a 50 percent chance of survival. Tanner began a clinical
trial with Strensiq, and over several months, his bone

development began to improve. Although his motor skills have been delayed
and he receives ongoing physical therapy, today Tanner can walk and even run
slowly without assistance. René’s dreams for her son, now six years old, are
similar to any mother’s—to receive a great education, to grow old, and to help
others. Tanner himself dreams of being a superhero.

New Haven, CT, USA
Global Headquarters

Zürich, Switzerland
EMEA Regional Headquarters

Tokyo, Japan
Japan Headquarters

Sydney, Australia
Asia-Pacific Regional Headquarters

Miami, FL, USA
Latin America Regional Headquarters

alexion.com