Annual Report 2007. nopq

Annual Report 2007 Value Value through through Innovation nopq

Financial Highlights Boehringer Ingelheim group of companies Amounts in millions of EUR, unless otherwise indicated 2007 2006 change Net sales 10,952 10,574 4 % by region Europe 33 % 31 % Americas 50 % 51 % Asia, Australasia, Africa 17 % 18 % by business Human Pharmaceuticals 96 % 96 % Animal Health 4 % 4 % Research and development 1,730 1,574 10 % Personnel costs 2,886 2,836 2 % Average number of employees 39,800 38,428 4 % Operating income 2,100 2,140-2 % Operating income as % of sales 19.2 % 20.2 % Income after taxes 1,812 1,729 5 % Income after taxes as % of sales 16.5 % 16.4 % Shareholders equity 3,372 5,175-35 % Return on shareholders equity 35.0 % 37.4 % Cash flow 2,392 2,317 3 % Investments in tangible assets 654 596 10 % Depreciation of tangible assets 432 419 3 % Top 5 products Prescription Medicines Net sales 2007 in millions of EUR change spiriva 1,792 30 % micardis 1,123 16 % flomax 1,020 11 % combivent 647-4 % sifrol 644 20 % Top 5 products Consumer Health Care Net sales 2007 in millions of EUR change dulcolax 131 7 % mucosolvan 117 8 % zantac 111 > 100 % pharmaton 81-15 % buscopan 77 9 %

Contents 1 Value through Innovation 2 The shareholders perspective 6 Key aspects of 2007 11 Corporate bodies 12 Our caring culture 15 Our conviction 18 Caring for our neighbours 21 Our people 24 Our environment, health and employee safety 28 Research & Development 30 Our R&D strategy 32 Our R&D sites 34 Treating and preventing thrombo-embolic diseases 36 Addressing a taboo disorder Decreased sexual desire 38 Managing a daily burden Living with diabetes type II 40 Lung cancer Our current focus in oncology 42 Our business in figures 44 Human Pharmaceuticals * 48 Prescription Medicines 48 Branded Prescription Medicines 66 Generic Prescription Medicines 69 Consumer Health Care 73 Product Supply and Industrial Customer 75 Biopharmaceuticals 78 Pharmaceuticals Production 80 Pharma Chemicals 83 Animal Health 89 Our products 99 Group Management Report 2007 115 Consolidated Financial Statements 2007 116 Overview of the major consolidated companies 118 Consolidated balance sheet 119 Consolidated profit and loss statement 120 Cash flow statement 121 Statement of changes in group equity 122 Notes to the consolidated financial statements 2007 140 Auditor s Report Flap Comparison of balance sheets / financial data 1998 2007 Our driving force Research & Development Our own research and development continues to be the major driver of innovative, new medicines. page 28 For humans and animals Animal Health With innovative veterinary medicines that accommodate the needs of both man and animal, we are a reliable partner for animal owners and veterinarians. page 83 Our caring culture The ethical principles that guide our company have created a culture of social responsibility and commitment. page 12 Serving patients Human Pharmaceuticals* We are committed to the goal of serving humankind through new drugs and therapies. page 44 Serving customers Product Supply and Industrial Customer We produce drugs for our own Human Pharmaceuticals business in a globally coordinated production network. Furthermore, we offer customised manufacturing services to our industrial customers. page 73 * The patient reports are authentic reports which refer to personal experience only. Please note that other patients may experience different treatment results. Individual treatment schemes have always to be discussed between patient and physician case by case. please turn over

Value through Innovation Our vision drives us forward. It helps us to foster value creation through innovation in our company and to look to the future with constantly renewed commitment and ambition. Boehringer Ingelheim is a research-driven group of companies dedicated to researching and developing, manufacturing and marketing pharmaceuticals that improve health and quality of life. Our business consists of Human Pharmaceuticals and Animal Health. We focus on innovative drugs and treatments that represent major therapeutic advances. Excellence in innovation and technology guides our actions in all areas. Our products have long been highly successful in the treatment of central nervous system, respiratory, cardiovascular, urological and virological disorders. In addition, we have successfully advanced our research in thrombo-embolic, metabolic and oncological diseases. Boehringer Ingelheim has 39,800 employees in 135 affiliated companies worldwide. We have research and development facilities in ten countries and production plants in more than 20 countries. Expenditure on research and development in Prescription Medicines corresponds to more than 19 % of net sales in this business segment. Our headquarters is at Ingelheim, the German town where the familyowned company was founded in 1885.

The Shareholders Perspective The shareholders perspective Scientific research into family-owned companies lends support in its analyses to the financial and strategic success of such companies. The question is why. First of all, the causes mainly rest on a foundation of committed shareholders who, with their creative drive, actively concern themselves about the fortunes of their company. On this, as a bearing pillar, stands the shareholders intensive and conscious discussion and evaluation of corporate risk. They constantly take well-calculated corporate risks to further develop and enhance the innovative strength of their company, without putting at risk the overall existence of their company. And as an additional pillar, the shareholders long-term and sustainable perspective is given emphasis. Our commitment And it is precisely in this sense that we see ourselves as committed shareholders in our company, Boehringer Ingelheim. We actively concern ourselves about our company s interests. As shareholders, we have a vision that drives us. We have committed ourselves to the goal of serving mankind through research into diseases and the development of new drugs and therapies. As committed shareholders, actively concerning ourselves with our company in concrete terms means that we engage in intensive dialogue at all levels and continuously introduce topics of fundamental importance to our company, without intervening in the operative management of the company, which is the sole responsibility of the Board of Managing Directors. And ultimately commitment for us means: we make an active contribution to our corporate culture by walking the talk for our employees on ethical values. Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

Christian Boehringer By intensive cooperation between the Shareholders Committee and the Board of Managing Directors, we jointly assess the necessary corporate risks to the dynamic development of our company. Our decisions adhere to the principle of well-calculated and balanced risk and, at the same time, secure in each case our company s long-term independence. These conditions for our company make our long-term and sustainable way of thinking imperative. As shareholders, we must recognise the economic cycles of the pharmaceutical market from far off and steer our company on a calm course through changing external market conditions beyond our influence, between the dynamic growth coordinates of net sales and profitability on the one hand and ensuring financial stability on the other. Our results provide confirmation Our outstanding market position was further extended once again in 2007. Our core products offer real therapeutic benefit for patients. The volume of prescriptions tells us how much patients use our medications. Examples of the social commitment in our company are our worldwide promotion of projects and programmes focused on the health of people, not commercial success. Under our viramune Donation Programme, it pleased us greatly when, in summer 2007, we supplied the millionth dose of viramune for the prevention of mother-to-child transmission (pmtct) of HIV during birth. To date, 165 pmtct programmes are running in 59 countries. Our committed employees Our innovative strength is directed decisively by the driving force of our employees who we need to achieve the excellence and increased productivity at all stages in our value The shareholders perspective

creation chain. We build on their integrity, their expertise and their sustained commitment. We are proud of our employees and what they attain. But the social commitment of our employees is also valued highly in our company. Many of our employees have made our programmes and projects focused on people their own and adopted the idea of helping by volunteering. Examples of this are the refurbishment of a shelter for street children in South Africa and the construction of environmentally friendly wood-burning stoves in the homes of poor people in Mexico. For this social commitment we would like to express our heartfelt thanks to these employees. They support our company philosophy. It is also important for us that we are an outstanding employer for our employees and are attractive for interested people outside the company. Boehringer Ingelheim is considered to be one of the most interesting and desirable employers and that is what independent opinion polls are saying too. Moreover, in 2007, for the sixth time in a row, we were selected as the most preferred employer in a survey conducted among executives in the German chemical and pharmaceutical industries. In the annual Top Employers survey by the highly regarded magazine Science for scientists in pharmaceuticals and biopharmaceuticals, we in 2007 came No. 1 for the first time. Our contributions to success We, the shareholders of Boehringer Ingelheim, have in 2007 once again provided for a financially stable and strategically predictable overall framework. With this additional participation and commitment outside the Shareholders Committee, the family was again able in the reporting year to make its contribution within the given framework. We thank all our employees for their motivation and innovative strength in their shared efforts. With confidence in their own capabilities and identification with their work, they create the basis for the sustained optimal performance essential to our company s wellbeing. In maintaining our company s success, we have confidence in the competence and experience of the Board of Managing Directors and the Advisory Board s constructive support of our company. Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

On behalf of the shareholders, allow me to express our heartfelt thanks to all those mentioned for their contribution to our corporate success in 2007. You have all contributed to making us what we are: a successful and highly respected international pharmaceutical company with a unique corporate culture. We look forward to continuing to work closely with our employees, the Board of Managing Directors and the Advisory Board. We are confident in the path we have taken and, despite a difficult environment, aim to build up our position as one of the world s leading research-driven pharmaceutical companies. Christian Boehringer Chairman of the Shareholders Committee The shareholders perspective

Key aspects of 2007 Key Aspects of 2007 We can look back once again on a successful year. We note with satisfaction that our medications are benefiting patients worldwide. Again in 2007, we have grown above average and outpaced the world market for the eighth consecutive year. The acceptance of our core products was very good, resulting in a continuous improvement of their market position. Some of our major clinical studies are coming to completion in 2008. We are confident that we will further profile the great clinical benefits of our new products and already launched medications. We have thereby maintained and reinforced Boehringer Ingelheim s successful path as an independent, family-owned pharmaceutical company and we have been able to offer new job opportunities worldwide. The basis and the main reason for our excellent performance are our employees and our unique corporate culture. This is characterised by mutual trust, by goals set in open and constructive dialogue and by identification with our work. The focus on people We are proud of our employees and of what they achieve. Boehringer Ingelheim has long sought to create the preconditions within the company for fostering employee development. To this end we offer many initiatives and programmes from professional qualifications to healthcare. Our corporate environment is excellent. This is also the finding of several independent opinion polls. In many countries around the world Boehringer Ingelheim belongs to the most highly regarded employers. In the annual Top Employers survey of scientists in pharmaceuticals and biopharmaceuticals conducted by the prestigious magazine Science in 2007, we achieved No. 1 position for the first time. Our Leitbild (guiding principles) and vision have created a working environment in which trust and cooperation can flourish. In spring 2007, we conducted the first-ever worldwide survey (Your view on our culture) of our 39,800 employees. Participation was very high: almost 33,000 people worldwide, or over 80 % of the total workforce. The results confirmed that we are working well together with high ethical standards and are focused on delivering innovative medications to patients. This translates into our business success. Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

Dr Alessandro Banchi Dr Andreas Barner Dr Hans-Jürgen Leuchs Prof. Marbod Muff Value through Innovation We seek to help people by researching diseases and developing new medicines and therapies. In 2007, we again took a substantial step forward in this endeavour. In 2007, our corporation-wide net sales rose to EUR 10,952 million. In local currency terms, we recorded very gratifying 8.8 % growth. Due to the weakness of the US dollar and the Japanese yen, net sales increased by 3.6 % in euro terms versus the previous year. We also see this, from our point of view, as a very positive development of net sales against the background of the mobic patent expiry in 2006, which required a EUR 340 million decline in net sales to be offset. In our prime strategic business area, Human Pharmaceuticals, Prescription Medicines net sales rose by 9.9 % in local currency terms against 2006 to EUR 8,660 million (+4.2 % in euro terms), making by far the largest contribution to our turnover growth and enabling us for the eighth year in succession to grow markedly faster than the pharmaceutical market. We achieved a 1.9 % share of the world market 1, thereby securing our solid position among the leading international pharmaceutical companies. Our operating income of EUR 2,100 million was broadly in line with the previous year. This corresponds to a return on sales of 19.2 %. All our core products achieved distinct growth in 2007 and improved their market position. spiriva attained net sales of EUR 1,792 million (+29.8 %). Furthermore, the respimat Soft Mist Inhaler with spiriva was launched in autumn 2007 in Germany, Denmark, the Netherlands and the United Kingdom. The high level of patient and physician demand shows that we have potentially achieved another breakthrough with the spiriva respimat Soft Mist Inhaler. micardis (EUR 1,123 million, +16.1 %), flomax /alna (EUR 1,020 million, +10.7 %), sifrol /mirapex (EUR 644 million, +20.1 %) and aggrenox (EUR 278 million, +23.9 %) also developed very satisfactorily. In our portfolio we now have three blockbusters, all with further growth potential. Our Consumer Health Care (CHC) self-medication business also developed positively with turnover growth of 11.7 % in local currency terms (7.2 % in euro terms) in 2007 to EUR 1,141 million, with our international core brands dulcolax and buscopan continuing their 1) IMS Health Database Key aspects of 2007

gratifying development. Our newly acquired product zantac also extended its market position very well. Overall, our CHC business contributes some 10 % to Boehringer Ingelheim s total net sales. In 2007, we undertook the market withdrawal of our well-established self-medication active ingredient clobutinol, as a study had indicated possible risks to patients. While the risk potential was deemed to be extremely limited, we nevertheless decided, given the indication and the availability of alternative treatments, to withdraw the clobutinolcontaining form of silomat. This decision is in line with our high ethical standards. Boehringer Ingelheim s strategic business areas include Animal Health. Here the gratifying growth path of the past few years was continued with an increase in net sales of 13.1 % in local currency (9.1 % in euro terms) to EUR 408 million. This makes us one of the leading suppliers of veterinary medicine products worldwide. The year 2007 was marked by ingelvac circoflex, our new vaccine against weakness of the immune system in pigs caused by the porcine circovirus-2 (PCV-2). Strong demand for this vaccine resulted in pleasing net sales of EUR 37 million. The porcine vaccines enterisol ileitis and ingelvac prrs also achieved substantial growth. We are thereby well on our way to becoming world market leader in the porcine vaccines segment. As planned, turnover in our business segment Biopharmaceuticals declined by 7.9 % to EUR 463 million, due to expansion and modernisation investments at our plants in Biberach, Germany, one of which was out of action for three months. A well-filled pipeline 2007 saw important progress in the development of our innovative product pipeline, with our clinical studies running to plan, supported by high patient interest. This allowed several compounds in development from different therapeutic areas to be moved towards the next clinical research phase, including phase III. Foremost was pradaxa (dabigatran etexilate), a novel compound from our own research and development. It is an orally available anticoagulant which acts through direct thrombin inhibition. It is in clinical development to prevent or to treat thrombo-embolic events. Registration documentation was submitted in 2007 in its initial indication (prevention of deep vein thrombosis after total hip or total knee replacement surgery). In January 2008, the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency issued a positive opinion to recommend marketing authorisation of pradaxa in this indication. We are also developing pradaxa in other important indications, including the prevention of stroke in patients with atrial fibrillation. Clinical studies in this indication are far advanced. Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

Our oncology development portfolio showed further progress last year. Our frontrunner compound tovok (bibw 2992) is a compound which belongs to the group of signal transduction inhibitors. It will enter phase III clinical development in a subgroup of nonsmall cell lung cancer patients in 2008. Our second oncology compound, vargatef (bibf 1120), has successfully shown a good safety-benefit ratio in phase I and II trials and will also move forward into phase III clinical development in advanced lung cancer patients in 2008. In the disease area metabolism, we have made substantial progress with our diabetes type II programme. For our diabetes frontrunner compound bi 1356, which belongs to the novel class of DPP-IV inhibitors, a large phase III clinical programme was planned to start in 2008. We are developing flibanserin in clinical phase III for the treatment of premenopausal women suffering from hypoactive sexual desire disorder (HSDD), which can frequently cause substantial distress and interpersonal difficulties, and made major progress during 2007. Three phase III trials, with almost 4,000 patients, are ongoing. Our investments in research and development in Prescription Medicines increased again in 2007, rising by 9.9 % to EUR 1,649 million, corresponding to more than 19 % of our net sales in Prescription Medicines. Product launches and landmark studies in 2008 2008 will be an exceptionally important year for the further development of our company. In the first half of 2008, we plan to launch pradaxa in the first indication: prevention of deep vein thrombosis after total hip or total knee replacement surgery. Furthermore, 2008 will be marked by the publication of some of our numerous landmark trials (phase IV studies). The micardis trials ontarget and transcend have reached their close-out phase in cooperation with the academic clinical research centres with which we have conducted the programme. With data from more than 31,000 patients we are compiling the analyses to make initial results available to the public in the first half of 2008. Other trials coming to completion and disclosure include the profess trial which investigates the efficacy of aggrenox in the prevention of secondary stroke. Here the medical world expects the results in the first half of 2008. Important initial results are also expected from the uplift study, which should be published in autumn 2008. This trial investigates whether spiriva can slow the progression of chronic obstructive pulmonary disease. Key aspects of 2007

The medical world and Boehringer Ingelheim are eagerly awaiting the results of ontarget, transcend, profess and uplift. Positive outcomes from our studies mean further medical insights and expanded, new indications for our medications to benefit patients. Our goals for 2008 We, the Board of Managing Directors, will continue to do our utmost to ensure the reinforcing of the company s innovative power in order to achieve our demanding goals and to fulfil the company s long-term vision. Sustaining and raising the productivity of our research and development further is of particular importance to us. At the same time, we will ensure and extend the successful marketing of our products in a challenging market environment so that we can continue to offer patients the best possible products for treating their conditions. Dr Alessandro Banchi Dr Andreas Barner Dr Hans-Jürgen Leuchs Prof. Marbod Muff 10 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

Corporate bodies Shareholders Committee Advisory Board Board of Managing Directors Christian Boehringer Chairman of the Shareholders Committee Albert Boehringer Christoph Boehringer Erich von Baumbach jr. (from 1. 4. 2007) Ferdinand von Baumbach Hubertus von Baumbach (until 31.3. 2007) Dr Mathias Boehringer Prof. Michael Hoffmann-Becking Attorney at Law, Düsseldorf Chairman of the Advisory Board Dr Rolf-E. Breuer Frankfurt (Main) Prof. Fredmund Malik Chairman of the Board Malik Management Zentrum St. Gallen AG Dr Heinrich Weiss (until 31. 12. 2007) Chairman of the Board SMS GmbH, Düsseldorf Dr Alessandro Banchi Corporate Board Division Chairman of the Board Corporate Board Division Pharma Marketing and Sales Dr Andreas Barner Vice-Chairman of the Board Corporate Board Division Pharma Research, Development and Medicine Dr Hans-Jürgen Leuchs Corporate Board Division Operations Corporate Board Division Animal Health Prof. Marbod Muff Corporate Board Division Finance Corporate Board Division Human Resources Key aspects of 2007 / Corporate bodies 11

People are at the heart of all we do. 12 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

Our caring culture

We can only defeat AIDS if all stakeholders and all members of society contribute their share. Heidemarie Wieczorek-Zeul, German Federal Minister for Economic Cooperation and Development 14 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

our caring culture Our conviction The ethical principles that have guided our company for well over a century have created a culture of social responsibility and commitment. Our social activities encompass patients, employees, neighbouring communities and society at large, with the needs of patients of paramount importance. In improving access to anti-aids drugs, Boehringer Ingelheim acknowledges its special responsibility as a researchdriven pharmaceutical company in the fight against the HIV/AIDS pandemic. Our viramune Donation Programme (VDP), set up in 2000 to help the countries most in need of support in combating HIV/AIDS, targets the prevention of mother-to-child transmission (pmtct) of the HIV-1 virus during birth. The amount of drugs supplied under the VDP is now over 1 million doses, with the millionth dose going to Malawi in 2007. The first supplies of viramune (nevirapine), researched and developed by Boehringer Ingelheim to prevent mothers passing on the virus to their babies during birth, were delivered to the Republic of Congo (Brazzaville) and Senegal in 2000. Since then, 57 more countries have joined the VDP and the number of individual support programmes now totals 165. Boehringer Ingelheim strives to donate drugs in conjunction with comprehensive pmtct programmes. Mothers are treated not only during delivery, but that they also have access to HIV treatment with antiretrovirals on a continuous basis as an integral part of individual government programmes. The VDP is an excellent example of how the private sector can deliver active help in developing countries. We can only defeat AIDS if all stakeholders, all members of society, contribute their share, Heidemarie Wieczorek-Zeul, the German Federal Minister for Economic Cooperation and Development, said in conjunction with the viramune delivery to Malawi. In addition to making drugs freely available for patients who need it for pmtct, this offer acts as a catalyst for other organisations, e. g. NGOs, which benefit from the already developed infrastructure. Community education and awareness of HIV/AIDS, voluntary counselling and testing, and other healthcare provisions, have been put in place on-site in order to take advantage of the donation offer. The needs of individual countries and programmes designed to combat the spread of HIV vary. There is no one size fits all solution. Local programmes differ both in capacity and resources; this is a recognised principle upon which the World Health Organization (WHO) Guidelines for Drug Donations were established. Boehringer Ingelheim strictly adheres to these guidelines. In addition, viramune must be approved by the regulatory Our conviction 15

authorities for use for mothers and their babies in each country. The drug component is a substantial part of resources required for a comprehensive pmtct programme. Challenges include: community education and awareness of HIV and pmtct functional programme management training of dedicated and skilled medical staff voluntary counselling and testing of pregnant women and spouses ante-natal and post-natal care a clear policy on breastfeeding Until now, only 10 % of mother-child pairs in need receive preventative therapy as offered by Boehringer Ingelheim. The challenge is to achieve areawide effectiveness of the pmtct interventions. In this context, Boehringer Ingelheim works actively with partner institutions such as ministries of health, UNICEF, the German Institute for Technical Cooperation (GTZ), the Elizabeth Glaser Pediatric AIDS Foundation (EGPAF), churches, NGOs and charitable organisations. In the past, Boehringer Ingelheim granted voluntary licences to several companies in Africa, enabling them to produce generic nevirapine for low income countries. To further improve and facilitate access to nevirapine, Boehringer Ingelheim has decided not to enforce its patents and offers non-assert declarations to interested manufacturers on the WHO prequalification list. These allow them to supply nevirapine to all low income countries according to the World Bank classification, all countries classified as least developed countries (LDCs) by the United Nations, and all African states not classified as low income or LDCs, such as South Africa, Botswana, Namibia and Gabun, without having to pay license fees. Our other initiatives to assist healthcare systems in emerging economies include adjusted pricing for chronic treatment, which provides viramune at substantially reduced prices for chronic therapy to all low income countries, LDCs and all of Africa, and at a preferential price to middle income countries, such as Brazil and Russia. l Boehringer Ingelheim strives to donate viramune under comprehensive programmes for preventing mother-to-child transmisson of HIV. 16 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

our caring culture Malawi is making significant progress in preventing the transmission of HIV from mother to child. Aida Girma, UNICEF Representative Aida Girma, United Nations Children s Fund (UNICEF) Representative in Malawi. Miss Girma, what is the HIV/AIDS situation in Malawi? The HIV prevalence rate among adults aged 15 49 years was 14 % in 2005. An estimated one million people are living with HIV/AIDS. Mother-to-child transmission (MTCT) accounts for close to 30,000 infections among newborns annually, and less than 15 % of pregnant women attending antenatal clinics are accessing services to prevent it. What is the government doing to combat this dreadful situation? A rapid roll-out of the national AIDS treatment programme helped to put a total of 85,000 patients on antiretroviral treatment free of charge by January 2007, reaching 50 % of those in need of treatment. However, with regard to children, only 7 % of children in need of treatment are currently receiving it. Of Malawi s one million orphans, 500,000 have lost one or both parents to AIDS. Without parental protection, these children are exposed to neglect, abuse and exploitation and lack access to basic necessities and services. UNICEF is embarking on a special programme in Malawi to prevent motherto-child transmission of the AIDS virus during birth. What is being done to save the next generation from being infected so early in life? Malawi is making significant progress in preventing the transmission of HIV from mother to child. From 2003 to 2005, there were only 36 sites providing the prevention of MTCT, compared to 119 sites by the end of 2006. This already indicates a strong political commitment within the context of national health policy and the government aims at a rapid scale-up to all 542 healthcare sites in the country by June 2008. With support from partners in Malawi, as well as abroad, such as Boehringer Ingelheim s viramune Donation Programme (VDP), we are confident that the supply of drugs and HIV test kits will go a long way to helping Malawi meet the new targets. The response from Boehringer Ingelheim has been invaluable and the supplies have reached the health facilities where the need is overwhelming. Our conviction 17

Caring for our neighbours We are fundamentally committed to fostering economic and social well-being in the countries and communities where we operate. As a company and as individuals, we seek in a peopleorientated and inspirational way to deliver Value through Innovation in all we do. We contribute actively to communities, charitable organisations and projects in research, science, education, healthcare and environmental protection. The personal efforts of our employees, backed by substantial corporate resources, reaffirm our commitment to social responsibility. Asia, Australasia, Africa In addition to employees volunteering to build a local orphanage with a free learning centre for needy children, Boehringer Ingelheim Indonesia has also instituted a community healthcare programme for people living near its Bogor plant. Free treatment and medicines are supplied by our employees and by doctors and nurses dispensing healthcare to local residents. In sub-saharan Africa, our employees actively support many and varied community projects. Prominent among them in Botswana is the partnership with the government to build an infectious disease care clinic at Gumare. The hospital, opened in 2007, serves the community in a country severely stricken by AIDS. In South Africa, the staff of the Boehringer Ingelheim Medical Department in 2007 conducted their third annual Do It Day event, refurbishing the pre-school dining room and kitchen of Kids Haven, a residential and rehabilitation shelter and village for street children, and other children at risk, in Benoni, east of Johannesburg. The maintenance and upgrading of Kids Haven s buildings underlines to the children that they matter. Boehringer Ingelheim also provided the prime funding for South Africa s first lung institute among its other projects in the country. Americas In Canada, our employees devoted a whole day in 2007 to helping in the community. Each employee was asked to sign up for an activity. Options included working at local food banks and soup kitchens, building equipment for children s activities as well as homes for abused families and troubled young people. Some 500 Boehringer Ingelheim employees provided help for twelve community organisations in the Burlington and Hamilton areas. In the USA, the comprehensive range of community projects reflects the size and geographical distribution of our US company sites. The Boehringer Ingelheim Cares Foundation s patient assistance programme annually makes our products, worth millions of dollars, available to US patients without pharmaceutical insurance coverage, or who fall below certain household income levels. It is geared towards providing medication to those most in need, including senior citizens and lowincome families. In one of the US projects in 2007 our employees took part in a Day of Caring with the Local Way organisation in the area around our site at Ridgefield, Connecticut, where we also support a mobile clinic. Employees at our Vetmedica site in St. Joseph, Missouri, distributed toys and clothes to underprivileged children, read stories to severely disabled pupils at a local school and donated food to a local shelter. Europe Our community engagement in Germany ranges from kindergarten provision for local people to support for the aged and infirm. Our company fire and safety teams are also closely integrated in their communities emergency services, also acting as regular volunteers on local projects. The works safety team at Boehringer Ingelheim s Biberach site in southern Germany came No. 2 in the 2007 Baden- Württemberg Social Living (Soziales Leben) competition out of 1,200 nominations. The employees use their free time to help the physically or mentally disabled with moving house, home decoration, social occasions and outings. This takes place in cooperation with the Heggbacher Einrichtungen, a highly-regarded local care facility. 18 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

our caring culture Healthier stoves for poor Mexicans Among their many social responsibility approaches, Boehringer Ingelheim Mexico funded the building of ecological stoves for a poor Indian community at San Luis Potosi in order to help prevent chronic obstructive pulmonary disease (COPD) among the inhabitants. Traditional cooking fires in this community had meant that the inhabitants were constantly inhaling damaging smoke. The new wood-burning stoves also provide heating for the houses. Boehringer Ingelheim employees also donated blankets to provide extra warmth in winter in a very cold part of Mexico. And the stove project, completed in September 2007, brings more than health benefits. As the new stoves are more fuel-efficient, less wood is required, contributing to an improved environment. In Ingelheim, the German site where our headquarters is located, employees are engaged in a disease awareness campaign for stroke in the Rheinhessen region, in securing vocational opportunities for disadvantaged young people in Mainz, as well as many other social responsibility schemes. derelict spaces, repainting children s playgrounds, helping out at an animal shelter and constructing new garden buildings for a charity that helps people with learning disabilities. l In Portugal, Boehringer Ingelheim employees participated in 2007 in another project with Habitat for Humanity, helping to build homes for those most in need. This was highlighted in the prestigious Portuguese economic magazine Exame as an example of ambassadorship in social work. Over 300 employees from our UK operation spent a full day off-site in 2007, rejuvenating local parks and Caring for our neighbours 19

An opportunity for personal growth, experiencing the innovative power of diversity and generating real value for the company. Dr Duk-Ho Shin, a current International Management Development Programme (IMDP) participant 20 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

our caring culture Our people Creating Value through Innovation in everything we do provides us with a fundamental source of inspiration and encouragement. Our 39,800 dedicated people, driven by a spirit of innovation and the pursuit of excellence, are discovering novel solutions and making a real difference in treatments for diseases and well-being. Employer of choice The attractiveness of Boehringer Ingelheim as a place to work has long been acknowledged around the world. An outstanding example of this acknowledgment was the recognition of Boehringer Ingelheim in 2007 as the leading company in the Science magazine Top Employers Survey. Science s annual survey is conducted among scientists in biotechnology, biopharmaceuticals, pharmaceuticals and related industries in the USA and Europe. The lead ranking was given to Boehringer Ingelheim for our strong commitment to innovative thinking throughout the product pipeline, while establishing an excellent working environment. Boehringer Ingelheim also succeeded, for the sixth year in a row, in coming first in the VAA 1 most preferred employer survey of executives in the German chemical and pharmaceutical industries. This poll covered topics on company strategy, corporate culture, employment conditions and personal satisfaction. We achieved the best marks in all categories (see more best employer rankings on page 22). 1) Verband angestellter Akademiker und leitender Angestellter in der chemischen Industrie Always looking forward We recognise that achievements are not something we can become complacent about, and efforts to realise our common ambitions and joint commitment must be progressively intensified. We continue to shape our corporation to better meet the needs of an evolving marketplace through increasing employee participation. Effective streamlining and consolidation, identifying improved practices, more efficient structures and forms of operating, as well as process excellence, are also constantly in our focus. Polling our people worldwide For the first time in Boehringer Ingelheim s 122-year history, all employees were invited in an internal global opinion survey to share their views and experiences with the company on how they work together, where they perceive our strengths and where they see scope for change and improvement. This internally designed and executed survey, Your View on Our Culture, set out to gain valuable insights into where we stand regarding the company s core values. These are anchored in our Leitbild (guiding principles), our code of conduct and the corporate vision spelled out in our Value through Innovation and Lead & Learn initiatives, Our people 21

our common view of theway we work together. As a result of the high participation rate and intensive discussions throughout the organisation, we now have a far better understanding of where our employees see our current strengths and improvement opportunities. Initiatives and action plans are underway to address these findings. And the ambition remains to ensure that we continue together to shape a working environment which thrives on challenges and is characterised by open questioning, creativity, learning from one another, respect and fairness. Responding to external developments As globalisation advances, our organisations around the world are paying close attention to enhancing our people s capabilities to successfully operate in an increasingly interdependent and diverse world of business. In addition to developing language and technology skills, the acquisition of intercultural knowledge and abilities are encouraged, as too are experiences that give employees a broader global outlook. These include participation in international projects, cross-border delivery of expertise and involvement in developmental assignments abroad. All of these schemes are showing rapid growth. We are committed to finding further innovative and practical ways to enable our people to gain first-hand experience of the enriching diversity and wealth of knowledge within our corporation. To seize the opportunities arising from changing demographics and shifting workforce structures in various parts of the world, Boehringer Ingelheim also enhances our people s capabilities with a multi-dimensional, long-term approach. Analysis and discussions of workforce trends and their potential implications are increasingly integrated into our management practices. Efforts and programmes are introduced and developed which continue to foster life-long learning, diversity management, enhancement of worklife balance, the maintenance and enhancement of physical, mental and social well-being, as well as prompting own initiatives in this context. Furthermore, a dedicated task force, Perspektive Demographie, elaborates, recommends and initiates additional activities and approaches to support this endeavour. Awards 2007 Country Ranking Survey Worldwide 1 Science Top Employers Survey Argentina 6 Best Employers in Argentina (Apertura Business Magazine) Brazil Great Place to Work : The best companies to work for in Brazil Brazil Great Place to Work : The best companies to work for in Latin America Finland 9 Great Place to Work : The best companies to work for in Finland Germany 3 Deutschlands beste Arbeitgeber (Capital Magazine) Germany 1 Deutschlands beste Arbeitgeber (VAA) Germany 2 Gesundheitsmanagement 2007/2008 (EuPD Research) The Netherlands Top Employers 2007 (Corporate Research Foundation) Venezuela 4 Great Place to Work : The best companies to work for in Venezuela Venezuela 1 Great Place to Work, within pharmaceutical industry Turkey Investors in People Award Great Place to Work is an international initiative that has been undertaken for many years in various countries to evaluate the world of work and employee satisfaction. 22 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

our caring culture IMDP Developing leadership talent Our International Management Development Programme (IMDP), a bi-annual corporation-wide approach, brings together 120 130 potential leaders for a 14-month international, interdisciplinary and intercultural working and learning experience. Backed by executive-level sponsors, coaches and regional mentors, participants are exposed to the broader and diverse business world of Boehringer Ingelheim. In teams they identify hands-on solutions for challenging competence-expanding and strategically relevant projects. Right: A group of participants in the current IMDP programme 2007/2008. Providing personal development The Boehringer Ingelheim Academy plays a significant role in realising our company goals of internationalisation and life-long learning. It offers all of our employees a multitude of local and international options to address developmental aspects in a wide range of areas. Our International Management Development Programme (IMDP) is one of the popular Boehringer Ingelheim Academy developmental approaches. This particular programme provides a unique learning environment for management potentials from around the world in which they are challenged and developed over a 14- month course. An important factor in sustaining our international competitiveness is the building of local bench strength for the future. Again in 2007, our German operating unit was noteworthy for signing up a record number of people to its apprenticeship programme. At the end of 2007, 730 individuals in 34 different occupations were working towards formal certifications within the programme in Germany. Its dual system, which combines an apprenticeship with part-time vocational schooling, is recognised both internally and externally as a highly effective and widely supported means of acquiring and developing a skilled workforce. l Our people 23

Our environment, health and employee safety Our guiding principles state that in all our activities we will protect our employees, facilities and the environment from harmful influences, conserve natural resources and promote environmental awareness. This claim is reflected in our Safety, Quality and Environmental Protection (SQE) Principles and put into practice at all our sites on the basis of global standards. With regular on-site audits and the tracking of key indicators, we measure our performance and provide a basis for our annual targets. Environment, health and safety (EHS) management systems ensure that legal requirements are observed at all times and that we pursue continuous improvement in line with the chemical industry s Responsible Care Initiative. REACH regulation which specifies strict requirements relating to the registration, evaluation and authorisation of chemicals. We also started to prepare for the UN s Globally Harmonised System for the Classification and Labelling of Chemicals (GHS). Irrespective of the different legal requirements, we will continue to develop our own synthesis processes so as to minimise their environmental impact. Focus on energy efficiency In 2007, a Boehringer Ingelheim global team set itself the goal of systematically identifying and communicating examples of best practice in energy efficiency within the company. Energy efficiency is also to be given even higher priority during the evaluation of new investments. Another initiative is the development of specific energy efficiency indicators designed to simplify performance evaluation and the setting of quantifiable targets. Amid growing concern about global warming, measures to reduce CO ² emissions are a major issue. By using energy efficiently Boehringer Ingelheim contributes further towards reducing CO ² emissions. An example of our emissions-reduction measures is our new packaging centre in Ingelheim, completed in 2007, employs highly efficient ventilation technology to keep energy requirements and ultimately CO ² emissions to a minimum. Over the past three years, since the company switched the combined heat and power plant at its site in Ingelheim, Germany, to waste wood combustion, this major site has been CO ² -neutral and our global CO ² balance sheet has improved about 25 %. Campaigns like the CO ² and you venture at the Ridgefield site in the USA have also helped raise the general awareness of the issue. Responsibility for our products Product responsibility requires the implementation of environmental risk assessments for all newly launched drugs. Going beyond the official requirements for the authorisation of medicines, we voluntarily conduct studies on environmental fate and effects for more and more major products to gain a better appreciation of their potential environmental impact. In 2007, we also intensified our efforts to implement the new European Health and safety first The safety and health of our employees has the highest priority at Boehringer Ingelheim. This applies not only to our on-site staff, but equally to the on-site contractors and field force personnel. Since the latter group has suffered increasing and more serious accidents over the last two years, compared to the workers on site, we are currently working on a worldwide policy that underpins and supplements the existing safety requirements for our fieldbased staff. An important issue in the pharmaceutical industry is the handling of highly potent substances. In order to protect the health of our workforce, we establish exposure limits for potent compounds and monitor compliance. Closed systems allowing highly potent substances to be handled without respirators have already been installed at numerous locations and we intend to expand this programme. 24 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

our caring culture Responsible Care has many faces All Boehringer Ingelheim production sites are required to identify their potential areas for EHS improvement and to seek to achieve self-imposed targets in Responsible Care programmes. An example: our site in Vienna recognised potential for optimisation in the energy-intensive sterilisation of wastewater from biological production operations. In an innovative strategy, a process was developed in which the key component is a steam jet injector that combines metering, mixing, homogenisation and heating of the fluid. The so-called Eco-Lyser works with only 20 % of the amount of energy previously used, combines an increase in capacity with simplified operations and will pay for itself in a short time. Aside from technical measures in certain areas, Responsible Care can involve the active participation in local EHS improvement initiatives, such as Ecoprofit involving our German sites in Ingelheim and Dortmund, or the US Get Green campaign by our Columbus, Ohio, site. Targeted campaigns, such as the promotion of suggestions for improvement in EHS in Biberach, Germany, or the Caught being Safe campaign in Bedford, Ohio; Responsible Care action days in Mexico, or clean-up initiatives by personnel in Yamagata, Japan, are additionally designed to anchor the principle in the minds of our employees. Better air in Malgrat, Spain In June 2007, our new central waste air incineration plant in Malgrat de Mar, Spain, was officially opened. In this fullyautomated system, which cost EUR 4.8 million, the solventcontaminated process air from three production plants is burned at 950 C. This has produced a substantial improvement in the cleaning capacity compared to the existing decentralised system. The construction of a second waste air incineration plant is planned in the near future for our chemicals site at Fornovo, Italy, and additional plants will be connected at Ingelheim, Germany, to the existing incineration plant. All these measures will enable us to reduce our volatile organic carbon (VOC) emissions. VOCs contribute to the formation of ground-level ozone. 1,000 800 600 400 200 Volatile organic carbon (VOC) VOC emissions, non-halogenated (in tonnes) VOC emissions, halogenated (in tonnes) VOC emissions index (in %) 03 04 05 06 07 120 100 80 60 Our environment, health and employee safety 25

Awards In 2007, EHS activities at our sites were once again recognised with awards from numerous authorities and associations. Boehringer Ingelheim Indonesia received an award from the Ministry of Manpower and Transmigration for having achieved 1,500 days without a workplace accident. As in the previous year, the chemicals site in Malgrat, Spain, and the pharmaceutical site in Bedford, Ohio, were awarded for their accident prevention and health protection programmes. For the third time, our Mexico site obtained clean industry certification, while the site in Colombia received a prize for exemplary EHS management for the eighth time in succession. The Eco-Lyser project at Boehringer Ingelheim in Vienna received the bronze European Environmental Press Award after having already been recognised by the Austrian Ministry of Environmental Protection. Incidents We do all in our power to prevent people and the environment from being endangered. Our local and global crisis management allows us to react rapidly to potential incidents. No major incidents occurred in 2007 that would have put this to the test. Our objectives In our supplier qualification procedure we take EHS and social aspects into account when selecting our business partners. We will focus on the implementation of this procedure over the next few years. The worldwide introduction of a Safety in the Field policy will form another key area in 2008. We will continue to invest in closed systems to protect our employees handling highly potent substances. A high priority is given to the promotion of the sustainable use of energy. The Ingelheim site is planning another power plant in order to satisfy increasing energy demands. The site will actively focus on environment-friendly concepts with the aim of staying independent of fossil fuels. Our chemicals site in Spain is seeking ISO 14001 certification in 2008. The Fornovo site is seeking to have its safety management OSHA 18001 certified in 2008. Facts and figures The accompanying graphs show our performance figures for the last five years. The key parameter for our performance in occupational safety is the accident rate relative to hours worked. Our environmental impacts are shown both as absolute values and relative to production represented in our production index. This index represents our overall production in all business areas and is weighted to compensate for differences in environmental impact of each of the following production segments: Pharmaceuticals, Chemicals, Biopharmaceuticals and Animal Health. The calculation of the index was slightly revised in 2007. Our baseline year is 2000. Over the last few years, most indicators reached a stable level because many previous technical or organisational improvements had resulted in an already high performance standard. 2007 showed a decrease in water consumption due to new cooling water circles in Reims, France, and Fornovo, Italy. Since 2006, there has been a noticeable increase in hazardous waste and a decrease in the recycling rate. This effect can be mainly ascribed to the disposal of the slag from woodburning in the Ingelheim power plant. It is now brought to landfill. The slag is responsible for about a quarter of all disposed hazardous waste and half of hazardous waste going to landfill. l 26 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

our caring culture Facts and figures (For a more detailed explanation of the individual graphs, please visit www.boehringer-ingelheim.com/ehs.) Water Water consumption (in millions of m 3 ) Water consumption index (in %) Energy Energy consumption (in millions of gigajoules) Energy consumption index (in %) 120 100 80 120 100 80 10 8 6 4 2 60 5 4 3 2 1 03 04 05 06 07 03 04 05 06 07 Carbon dioxide (CO 2) CO 2 indirect emissions (in 1,000 tonnes) CO 2 direct emissions (in 1,000 tonnes) CO 2 emissions index, direct emissions (in %) (excluding company car fleet) Wastewater chemical oxygen demand (COD) COD load before treatment (in tonnes) COD load after treatment (in tonnes) COD load (after treatment) index (in %) 120 100 80 60 40 20 500 400 300 200 100 60 10,000 8,000 6,000 4,000 2,000 03 04 05 06 07 03 04 05 06 07 Work accidents Frequency rate = accidents x 1 million hours / total labour hours Severity rate = lost labour days x 1 million hours / total labour hours Disposed waste Domestic waste (in tonnes) Hazardous waste (in tonnes), incl. pharmaceutical waste Disposed waste index (in %) Recycling rate (in %) 80 70 60 50 120 100 80 60 4 3 2 1 40 30,000 22,500 15,000 7,500 03 04 05 06 07 03 04 05 06 07 Our environment, health and employee safety 27

Researching and developing therapeutic options for the effective and safe treatment of diseases drives us forward. 28 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

Our driving force Research & Development

Our R&D strategy Research and development has been the foundation of Boehringer Ingelheim s success and continues to be the major driver of innovative, new medicines for the treatment of diseases with an unmet therapeutic need. Furthermore, in our constant quest for pharmaceutical innovation we have successful ongoing collaborations and are actively seeking new collaborations with external partners, ranging from academic institutions to biopharmaceutical enterprises and start-up companies. Our R&D direction Our R&D strategy is directed towards our seven major therapeutic areas: central nervous system (CNS), cardiovascular, immunology/inflammation, metabolic diseases, oncology, respiratory diseases and virology. Continuous initiatives to increase research productivity have resulted in a well-balanced pipeline showing a substantial number of innovative new molecular entities (NMEs) and a high share of products in late phase development, thus strengthening the competitive portfolio position of Boehringer Ingelheim. We will continue to have a strong contribution of innovative new chemical entities (NCEs) to the pipeline, whereas another key element of the strategy is to expand the discovery and development portfolio into new biological entities (NBEs), derived from our internal research as well as from inlicensing efforts. The NBEs are planned to be co-developed and produced by our Biopharmaceuticals division. Boehringer Ingelheim has therefore continued to build up dedicated resources, predominantly in Vienna, Austria, and Biberach, Germany. To further strengthen our R&D organisation we have implemented global skill centers to improve efficiency and to secure equal access to state-ofthe-art technologies and informatics platforms for all sites. In order to ensure most efficient drug development, non-clinical development at Boehringer Ingelheim operates as one internationally integrated organisation with two major regional centers in the USA and Germany. Worldwide, we employ 3,500 scientists, technicians and support personnel in preclinical R&D. They are complemented by about 2,500 clinical monitors, statisticians and data managers in clinical development and medical departments. In-licensing and partnering Complementing our in-house R&D efforts, in-licensing and partnering activities focus on our strategic therapeutic areas, but we have successfully developed and marketed products outside these areas too. Strong alliance 30 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

research & development management functions ensure highlevel commitment to successful execution of the partnership. Collaboration agreements are crucial elements for the expansion of our NBE programme. The cooperation with the US company Xencor, Inc. allows us to use Xencor s XmAB technology to profile human monoclonal antibodies with improved therapeutic properties as development candidates. An initial worldwide research and licensing agreement with the Belgian company Ablynx nv, focusing on the development of new therapies for Alzheimer s disease, was strengthened and transformed during 2007 into a broader strategic alliance. Ablynx nv and Boehringer Ingelheim collaborate jointly in the discovery of Nanobodies, a new class of therapeutic proteins, against agreed targets across multiple therapeutic areas, including immunology, oncology and respiratory. In the field of small molecules, we have established a collaboration with the US company Vitae Pharmaceuticals, Inc. to develop and commercialise 11beta- HSD1 inhibitors. This novel approach may lead to improved treatment options for diabetes and metabolic syndrome related disease, including obesity, dyslipidemia and hypertension. Complementing our own diabetes research and development activities, the respective 11beta-HSD1 programmes of both companies will be combined to rapidly identify and advance drug candidates for clinical development. Cell division arrested in human cells treated with a polo-like kinase-1 (Plk-1) inhibitor from Boehringer Ingelheim, a potential cancer drug (microtubules stained green, chromosomes, blue). Basic research partnerships The bridge between our R&D researchers and academia is reinforced by the strong link to the renowned Research Institute of Molecular Pathology (IMP) in Vienna. IMP scientists from 30 different countries are at the forefront of discovery, defining fundamental mechanisms in areas ranging from cellular proliferation to cancer and neurobiology. The collaboration between the IMP and the Institute of Molecular Biotechnology of the Austrian Academy of Science (IMBA) has added an additional dimension to our academic network. l Courtesy of Institute of Molecular Pathology Our R&D strategy 31

Our R&D sites In accordance with our current strategy, we carry out drug discovery and development in seven major therapeutic areas at four major R&D sites. These R&D sites maintain responsibility and accountability for their therapeutic areas with regard to output and quality of novel drug candidates. Laval, Canada Main R&D area: Virology (acute and chronic viral diseases, HI virus, hepatitis C virus) Employees: more than 140 l Laval, Canada l Ridgefield, USA Ridgefield, USA Main R&D areas: Cardiovascular (chronic heart failure, atherosclerosis, hypertension) Immunology and inflammation (rheumatoid arthritis, psoriasis, multiple sclerosis) Non-clinical drug development Employees: 760 Buenos Aires, Argentina l Buenos Aires, Argentina Support center for non-clinical development: Support on drug formulation, manufacturing of medication for clinical trials l R&D site l Support center Employees: 30 32 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

research & development Vienna, Austria Main R&D area: Oncology (signal transduction, cell cycle therapeutic proteins) Employees: 210 l Biberach and Ingelheim, Germany l l Vienna, Austria Milan, Italy l Kawanishi, Japan l Biberach and Ingelheim, Germany Main R&D areas: Central nervous system CNS (Alzheimer s disease, Parkinson s disease, chronic pain, migraine) Metabolism (diabetes type II, obesity, dyslipidemia) Respiratory (COPD, asthma, chronic bronchitis, idiopathic pulmonary fibrosis) Non-clinical drug development Kawanishi, Japan Support center for molecular biology and non-clinical drug development: Support for international drug discovery activities Early drug formulation Specific pharmacokinetic investigations Employees: 90 Employees: 1,770 Milan, Italy Support center for chemical synthesis Support for synthesis in exploratory and lead optimisation projects Employees: 30 Our R&D sites 33

Treating and preventing thrombo-embolic diseases pradaxa (dabigatran etexilate), an orally applicable anticoagulant which acts through direct thrombin inhibition, will be used to prevent or treat thrombo-embolic events, including long-term prevention. pradaxa is a novel compound from our own R&D. In our Drug Discovery department new molecules designed by medicinal chemists are tested for their pharmacological potential using complex biological testing systems. Selective inhibition of thrombin to prevent the formation of blood clots was the target of a challenging cardiovascular research programme. Among the main challenges of nonclinical development were the supply of large volumes of dabigatran etexilate in parallel to the optimisation of its chemical synthesis and pharmaceutical formulation for robustness and costefficiency. The challenges also encompassed transfers of the dabigatran drug substance and its final capsule product from research labs to production plants, the development of special, moisturetight and childproof packaging, as well as the comprehensive testing of the non-clinical drug safety, including characterisation of the drug s metabolism and pharmacokinetics. Clinical trials A comprehensive clinical development programme with dabigatran etexilate was initiated in 1998, commencing with a series of more than 25 phase I studies. Promising results from these phase I studies prompted Boehringer Ingelheim to launch the bistro phase II trial programme, in 2001. bistro I and II were dose-finding studies in approximately 2,300 patients undergoing orthopaedic surgery total knee or hip replacement (TKR or THR). Equivalent to the bistro programme, further phase II studies for the prevention of stroke in patients with atrial fibrillation, the petro trial programme, began in 2003. Venous thrombosis is the formation of a blood clot (thrombus) in the deep vein system, mainly in the legs. The risk of such clots forming is significantly increased after surgery. Atrial fibrillation (AF) is an abnormal heart rhythm, caused by irregular beating of the atria. The atria are prevented from emptying adequately and the ventricles from normally filling with blood and pumping it out efficiently. It can lead to a blood clot (thrombus) in the atrium and heart failure. Dr Wolfgang Wienen, Director Lung Pharmacology (Biberach, Germany), and Dr Norbert Hauel, Director Medicinal Chemistry (Biberach, Germany), achieved the first successful synthesis of orally applicable dabigatran in 1996. 34 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

research & development Encouraging efficacy and safety data from bistro ii led Boehringer Ingelheim in 2004 to start the global re-volution phase III clinical trial programme, the then largest ever thrombo-embolic disease trial programme. re-volution will encompass more than 27,000 patients worldwide in six phase III trials. In 2007, our phase III clinical programme for pradaxa progressed successfully. The two European phase III pivotal trials, re-model in TKR patients and re-novate in THR patients, together with the primarily North American re-mobilize trial in TKR patients, provided the core data for the European submission for pradaxa in the indication primary VTE prevention in patients after THR or TKR surgery in 2007 1. The regulatory review is proceeding according to plan. The submission files for Japan were submitted in December 2007. US submission is planned for 2008. While our phase III programmes for the treatment of acute thrombosis (re-cover ) and secondary long-term prevention of thrombo-embolism in patients at risk (re-medy ) are ongoing, our largest trial re-ly for stroke Milestones 1996 First successful synthesis of dabigatran etexilate in Biberach, Germany 1996 Start of pre-clinical studies in Biberach 1998 Start of clinical development in three indications: Primary venous thrombo-embolism (VTE) prevention in total knee and total hip replacement (TKR, THR) patients Treatment of acute VTE Prevention of stroke in patients with atrial fibrillation 2004 Start of re-volution, a multi-centre, phase III clinical study programme 2007 Submission of registration documentation for primary VTE prevention in TKR and THR patients in Europe prevention in patients with atrial fibrillation completed recruitment of approximately 18,000 patients well ahead of schedule. pradaxa not only provides the pharmacodynamic efficacy of vitamin K antagonists (e. g. warfarin) or subcutaneously injected low molecular weight heparins, but also offers important clinical benefits. pradaxa requires no regular laboratory tests and no therapeutic dose monitoring. Hence, it will improve access to treatment for many patients and help to further reduce the thrombo-embolic risk. l 1) In January 2008, the Committee for Medicinal Products in Human Use (CHMP) of the European Medicines Agency (EMEA) issued a positive opinion to recommend marketing authorisation of pradaxa for the prevention of venous thrombo-embolic events in patients who have undergone total hip replacement surgery or total knee replacement surgery. From thrombus to embolus (venous thrombo-embolism VTE): a blood clot (thrombus) can break loose and be carried by the bloodstream to block other vessels (embolus). This can result in pulmonary embolism in the lungs and in an ischaemic stroke in the brain. Indications under investigation for pradaxa (dabigatran etexilate): primary prevention of VTE after orthopaedic surgery, treatment of acute VTE and secondary prevention of ischaemic stroke in atrial fibrillation. Treating and preventing thrombo-embolic diseases 35

Addressing a taboo disorder Decreased sexual desire Hypoactive sexual desire disorder (HSDD) is the medical term for a condition affecting millions of women who suffer from a decrease in sexual desire. It is the most common form of sexual dysfunction in women for whom no approved drug treatment is available 1. HSDD is defined 2 as the absence or diminishment of sexual thoughts, fantasies and desire for sexual activity. Women describe this decreased sexual desire as a serious condition, which can cause substantial distress or interpersonal difficulties. HSDD is without an obvious cause, such as medications or physical and psychical diseases. Even though women suffer for years from decreased sexual desire, most of them are not comfortable discussing the condition with their physicians or friends and the subject remains taboo. after six months of maintenance therapy. Three North American placebocontrolled pivotal phase III trials with almost 4,000 patients are ongoing. Submission to the US Food and Drug Administration is planned for the end of 2008. In Europe and Japan preparation for submission of the registration dossiers is also proceeding to plan. l 1) For pre-menopausal women suffering from HSDD, there is no medical treatment option. However, women who have undergone an ovarectomy or hysterectomy, a hormonal treatment is approved in Europe. 2) First defined in DSM-III in 1980: Diagnostic and Statistical Manual of Mental Disorders, published by the American Psychiatric Association. 3) Source: The Diagnostic and Statistical Manual for Mental Disorders (DSM-IV), Basson R, et al. J Urol. 2000; 163:888-893 4) Source: Epidemiology and neurobiology of female sexual dysfunction. Clayton AH. J Sex Med. 2007 Nov; 4 Suppl 4:260-8 Hypoactive sexual desire disorder (HSDD): absence or diminished sexual thoughts, fantasies and desire for sexual activity in women, which can cause marked distress and interpersonal difficulties. With the aim of further investigating decreased sexual desire in the new research area of female sexual medicine, Boehringer Ingelheim has together with the authorities developed a diagnostic questionnaire to help diagnose HSDD in women suffering from distressful desire disorder. Female sexual dysfunction (FSD) 3 Hypoactive sexual desire disorder (HSDD), decreased sexual desire Female sexual arousal disorder (FSAD) Female sexual orgasm disorder Boehringer Ingelheim is currently developing flibanserin in clinical phase III for the treatment of pre-menopausal women suffering from HSDD and made major progress during 2007. A large double-blind study showed flibanserin to be superior to placebo Sexual pain disorders Hypoactive sexual desire disorder (HSDD) is the most common form of female sexual dysfunction 4. It is currently under-diagnosed and under-treated. The reasons are that sexual dysfunctions are still not easily discussed. Furthermore, due to a current lack of effective treatment options, many physicians do not address the topic proactively. 36 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

research & development Great news for women suffering from decreased sexual desire. Professor Rossella Nappi Professor Rossella Nappi, gynaecologist, endocrinologist and sexologist, Professor at the Obstetric & Gynaecology Section of the Department of Morphological, Eidological and Clinical Sciences at the University of Pavia, Italy. Professor Nappi, from your experience as a gynaecologist, how often do women talk about their suffering from decreased sexual desire? There is a great silence even though suffering from decreased sexual desire is very common among women at any time during their reproductive lifetime. Women are usually distressed because they think My level of desire is low, so I m less of a woman. They neglect their femininity, don t look after themselves, don t go to the hairdresser, etc. We ve heard from women who even avoid being in bed with their partners. Because women believe there is no solution anyway, they suffer in silence. What is physically wrong in a woman with less sexual desire? Nothing is wrong with the body, if a woman suffers from decreased sexual desire! It is important to understand the difference from men with erectile dysfunction. In women, the biological route of sexual desire starts in the brain and is modulated by many messenger molecules. Is suffering from decreased sexual desire the same as suffering from depression? Not at all. We know that it s a completely independent condition from depression. Even though it might cause feelings of sadness, or a feeling that something important is missing, it s an entirely separate condition which should be discussed with a doctor sooner rather than later. Since when has the condition been known? Decreased sexual desire may have always existed, but only since 1980 has there been a definition in DSM-III. I appreciate that there has been a lot of research recently and that awareness is increasing. Through clinical expert discussions and also through research by the industry, we seem to be coming closer to a medical solution for these women. Isn t this just a fabricated disease? Clearly not. As a gynaecologist I ve seen too many women who truly suffer from their decreased desire. We shouldn t underestimate the problem just because women don t talk about it. Long before the first company ever thought about investigating a potential medication, our research in sexual well-being and its psycho-relational consequences had shown how devastating it can be. It s therefore great news for women that they might soon be offered a medical treatment and gradually switch back on this light of desire. Addressing a taboo disorder Decreased sexual desire 37

Managing a daily burden Living with diabetes type II A patient suffering from diabetes mellitus type II the most common form of diabetes self-manages one of the most difficult of all chronic illnesses. It can be considered a substantial burden to effectively control one s own blood sugar levels at all time. Not surprisingly, many people have difficulty meeting the demands of their illness, particularly if they are using complex treatment regimes. The need for even better therapeutic options for diabetes type II treatment is evident in view of the rapidly growing number of people affected: an estimated 180 million people worldwide suffer from diabetes type II and the incidence is expected to double during the next 20 years. Because of its associated complications, diabetes is currently the most frequent cause of loss of vision, renal failure and amputation in the industrialised world. Diabetes is also associated with a two to five fold increase in the risk of heart attacks. Boehringer Ingelheim s research and development in the area of metabolic diseases has resulted in major achievements in its diabetes type II programme. From the high potential research portfolio, compounds representing two different modes of action have now entered clinical phases of development. Molecular structure of bi 1356, a dipeptidyl-peptidase-iv inhibitor ( DPP-IV inhibitor). Boehringer Ingelheim s diabetes frontrunner compound bi 1356 belongs to the novel class of antidiabetic compounds, the DPP-IV inhibitors, which have shown long-lasting improvements of diabetes in preclinical studies, and clinical trials suggest that they are safer and better tolerated than established therapies. bi 1356 made substantial progress during the last year. In 2007, phase II b trials were conducted with the orally administered drug in monotherapy as well as in patients who were already taking an established anti-diabetic drug, but whose blood glucose exceeded normal levels. These trials in more than 600 patients confirmed bi 1356 s unique properties that may positively differentiate it from other compounds in the class. It was shown to be superior to placebo in lowering glucose parameters, including the HbA1c values, a marker of long-term glycaemic control. Unlike some molecules in this class, the safety profile was very favourable and a large phase III clinical programme commencing early 2008 aims to further confirm the efficacy and tolerability of bi 1356 in longterm use. The sodium-dependent glucose transporter-2 inhibitors (SGLT-2 inhibitors) are another class of novel antidiabetic 38 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

research & development compounds in development at the Boehringer Ingelheim R&D center in Biberach, Germany. These SGLT-2 inhibitors express their therapeutic effect mainly by eliminating excess blood glucose via the urine. In 2007, we investigated two compounds with different profiles in phase I trials. The results with regard to the glucoselowering effect and its tolerability in patients with diabetes type II were very positive and provide the basis for accelerated entry into clinical phase IIb trials in 2008. Diabetes type II: An estimated 180 million people worldwide suffer from diabetes type II. The disease is currently the most frequent cause of loss of vision, renal failure and amputation in the industrialised world. With the aim of further strengthening our portfolio in metabolic diseases, we signed an agreement with the US firm Vitae Pharmaceuticals Inc. for the development and commercialisation of potential new treatments for diabetes and other metabolic diseases in October 2007. With the described range of compounds in development, our portfolio encompasses a variety of different principles of action. Given that further principles are being investigated and that more compounds are expected to enter clinical development during the year, 2008 marks a significant expansion of our clinical programme in the area of metabolic diseases, thus making it another strongpoint in our overall pipeline of novel drugs. l Prof. Ele Ferrannini, Professor for Internal Medicine, University of Pisa, Italy, and president of the European Association for the Study of Diabetes (EASD): With BI 1356, we will soon see the breakthrough in the Boehringer Ingelheim diabetes portfolio. Though this compound will not be the first of its kind to reach the market, its risk-benefit ratio is at present more than acceptable and places it in a favourable position for the treatment of diabetes type II. Boehringer Ingelheim s SGLT-2 inhibitors seem to be interesting agents with an apparently clean safety profile and a unique mode of action. They re effective, safe compounds that substantially suppress glucose reabsorption in the kidney and I m glad to see them progressing in an advanced phase of development. Managing a daily burden Living with diabetes type II 39

Lung cancer Our current focus in oncology Substantial advances in the treatment of lung cancer were rare in the past decade. Progress against this tenacious and lethal disease has been incremental at best. However, this has changed significantly. Recent advances in oncology and genome research have widened the scope of opportunities and new treatments with significantly improved treatment success rates may be in sight in the near future. This holds true for Boehringer Ingelheim s research and development in oncology which is currently focused on non-small cell lung cancer (NSCLC). This is the most prevalent cancer among all cancer types. More than a million individuals in 2007 were confronted with this devastating diagnosis. It is anticipated that NSCLC will be increasingly diagnosed in the next decade, particularly in newly industrialising countries, such as China and Brazil. Our oncology development portfolio in three therapeutic principles has shown significant progress in the last year. We have strengthened our programme by adding a new compound, representing a fourth mode of action to our clinical development portfolio. Two of the four compounds under clinical development will already start phase III trials in lung cancer patients in 2008. The first substance, our frontrunner bibw 2992, is rapidly progressing in clinical development, based on strong preclinical results and on data from seven phase I trials, as well as promising lasting responses in heavily pretreated NSCLC patients. This small molecule compound will enter phase III clinical development in a subgroup of NSCLC patients in early 2008. If approved, we plan to market it under the brand name tovok. It belongs to the group of signal transduction inhibitors and is an irreversible dual inhibitor of the epidermal growth factor receptor (EGFR) and the related receptor HER2. Associate Professor James C. H. Yang of National Taiwan University Hospital, Taipei (Taiwan), lead investigator for this novel, orally applicable treatment, states: We are confident that bibw 2992 will significantly change the outlook of NSCLC patients with mutations in the EGFR, a group of individuals with very limited therapeutic options. Most recently, the US Food and Drug Administration (FDA) has granted fast-track designation for the approval of tovok. Our second oncology compound, vargatef (bibf 1120), will also move forward into phase III clinical development in advanced lung cancer patients in 2008. This triple angiokinase inhibitor is a proven therapeutic approach to effectively combat lung cancer which utilises the concept of inhibition of tumour blood vessel formation (angiogenesis). vargatef is also being developed for oral administration Non-small cell lung cancer (NSCLC) is the most prevalent cancer among all cancer types. More than a million individuals in 2007 were confronted with this devastating diagnosis. Structure of the epidermal growth factor receptor (EGFR) in a complex binding with irreversible dual EGFR/HER2 inhibitor tovok of Boehringer Ingelheim. 40 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

research & development Our oncology compounds in clinical development Therapeutic principle Mode of action Compound Clinical phase Indication Signal transduction inhibitors Dual irreversible EGFR / HER2 inhibitor bibw 2992 (tovok ) III Primary indication: NSCLC Angiogenesis inhibitors Triple angiokinase inhibitor bibf 1120 (vargatef ) III Primary indication: NSCLC Cell-cycle kinase inhibitors Plk-1 inhibitors II Variety of cancer types Mitotic kinase inhibitor I Variety of cancer types (tablet). The compound has been successfully tested in phase I and phase II trials in multiple countries, including Japan, and has shown a well-defined and very acceptable safety profile as a single agent as well as in combination with cytotoxic compounds. Based on these data, regulatory approval from the FDA has been obtained to enter phase III clinical studies with vargatef in combination with standard cytotoxic therapeutics. These large multi-institutional studies will pave the way for rapid completion of the development for patients with advanced NSCLC who are currently facing a dismal prognosis with standard therapy alone. Targeted inhibition of cell division (mitosis) is the third therapeutic group in which Boehringer Ingelheim has two compounds with different modes of action in clinical development. Pololike kinase-1 inhibition is being studied in well-advanced phase II trials in various cancer indications and an inhibitor of a different mitotic kinase entered phase I in summer 2007. A series of further Boehringer Ingelheim compounds for the treatment of individuals with malignant diseases is in the pipeline and expected to reach phase I in the near future. Our oncology programme has matured into a comprehensive clinical development portfolio spanning all clinical development phases and covering multiple promising molecular targets of relevance for many cancer types. l Lung cancer Our current focus in oncology 41

Our business in figures Boehringer Ingelheim is a company that is committed to the goal of serving humankind through research into diseases and the development of new drugs and therapies of real benefit to patients. Our business consists of Human Pharmaceuticals and Animal Health. Our Human Pharmaceuticals business is comprised of Branded Prescription Medicines (BPM), Generic Prescription Medicines (GPM), Consumer Health Care (CHC) and Industrial Customer business (IC). IC separates into Biopharmaceuticals, Pharmaceuticals Production and Pharma Chemicals. Our business generated net sales of EUR 10,952 million in 2007. This represents growth of 3.6 % in euro terms (+8.8 % in local currency terms). 42 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

Chapter Net sales 2007 in millions of EUR change in euro terms (change in local currency) Human Pharmaceuticals 10,544 +3.4 % (+8.6 %) Prescription Medicines 8,660 +4.2 % (+9.9 %) Branded Prescription Medicines 8,100 +5.8 % (+11.3 %) Consumer Health Care 1,141 +7.2 % (+11.7 %) Generic Prescription Medicines 560-14.8 % (-7.0 %) Animal Health 408 +9.1 % (+13.1 %) Industrial Customer 739-8.5 % (-6.5 %) Biopharmaceuticals 463-7.9 % (-7.9 %) 1) 2) 1) Pharmaceuticals Production 130-12.0 % (-5.0 %) 2) Pharma Chemicals 146-7.5 % (-3.1 %)

For me it s been a journey of acceptance, planning and ultimately life re-design. Colleen Aird, diagnosed with Parkinson s disease at 42. 44 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

Serving patients Human Pharmaceuticals

I want inspiration and challenge, so I ve structured my business to be highly flexible. This will help me retain a balanced life. 46 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

human pharmaceuticals A balanced approach to Parkinson s disease Colleen Aird from Haworth, England (picture left), quit her job as a strategic business manager to start her own design company after she learned two years ago that she had Parkinson s disease. I consider the business an important part of my therapy. It s a job I can do even when I become more physically challenged. Parkinson s disease (PD) is a progressive neurodegenerative disease that is estimated to affect 1 2 % of people worldwide aged 65 and older. It can, however, present as early as at 40 50 years of age. Patients usually notice motor symptoms, like hand tremor (shaking), as their first sign of the disease, which progresses eventually to include shaking of the arms, legs or head. Other motor symptoms that develop over time include stiffness that often results in loss of facial expression and a gradual slowing or loss of motion or freezing. About 30 40 % of patients also suffer from nonmotor symptoms associated with PD, such as depression and sleep disorders. These are often equally important to them and have an enormous impact on their health-related quality of life, as everyday tasks such as dressing, walking, speaking and even writing, become increasingly difficult. PD is therefore considered to be a much more complex syndrome involving motor, as well as nonmotor symptoms, and a balanced treatment approach capable of managing these symptoms is required in order to minimise significant functional disability as much as possible. The clinical benefits of early initiation of dopaminergic therapy on motor, as well as on non-motor symptoms, have become the focus of intensive medical research. As we are able to better manage the physical symptoms, such as tremor and stiffness, we are becoming more and more aware of the importance of non-motor symptoms, such as the depressive symptoms of PD. People assume that their low mood is a response to the diagnosis of PD, but we have come to realise it is often actually part of the condition. Alison Forbes, specialist PD nurse, Kings College Hospital, London, United Kingdom A balanced approach to Parkinson s disease 47

Prescription Medicines Branded Prescription Medicines Branded Prescription Medicines (BPM) represents the bulk of our Human Pharmaceuticals business, which in 2007 generated EUR 8,100 million in net sales, accounting for 74 % of our total net sales. Boehringer Ingelheim s focus remained on the therapeutic areas, central nervous system (CNS), respiratory, cardiovascular, virology, urology, oncology and metabolism. Central nervous system diseases Diseases of the central nervous system (CNS) are one of the core therapeutic areas for Boehringer Ingelheim. Our product portfolio consists of drugs for the treatment of Parkinson s disease (PD) and restless legs syndrome (RLS), as well as for treatment of major depressive disorder (MDD) and diabetic peripheral neuropathic pain (DPNP). Parkinson s disease and restless legs syndrome sifrol /mirapex has demonstrated significant benefit for patients in all stages of Parkinson s disease. In early PD, as monotherapy, sifrol / mirapex significantly reduces motor symptoms, such as tremor, and prevents the onset of motor complications often associated with other therapies. In moderate and advanced disease, in combination therapy with L-DOPA, sifrol /mirapex reduces periods of stiffness and improves the patient s ability to perform daily activities. Restless legs syndrome is a common neurological disorder that affects about one in ten of the adult population. It is characterised by an uncontrollable urge to move the legs, usually accompanied by unpleasant and sometimes painful sensations in the legs as well as disturbed sleep resulting in daytime tiredness or sleepiness. sifrol /mirapex provides patients with significant relief of their RLS symptoms and also significantly improves sleep parameters, helping patients to achieve a normal night s sleep. These benefits to patients are provided with a once- daily administration of the drug in the evening. sifrol mirapex mirapexin pexola pramipexole sifrol /mirapex /mirapexin /pexola tablets are indicated for the treatment of the signs and symptoms of Parkinson s disease, alone or in combination with other treatments for the disease, throughout all of its stages. sifrol /mirapex tablets are also indicated for the treatment of moderate to severe primary restless legs syndrome. Net sales 2007: EUR 644 million (+ 20.1 %) Depression and diabetic peripheral neuropathic pain Depression currently affects about 120 million people worldwide. Epidemiology shows that 30 50 % of patients with depression have painful symptoms, including joint and back pain, in addition to their emotional symptoms. Data that was presented in 2007 to the American Psychiatric Association demonstrated the clinical benefit of improving both the emotional and pain symptoms of depression with cymbalta /xeristar. Diabetic peripheral neuropathic pain (DPNP) is a progressive complication of diabetes that affects about 25 % of people with diabetes. Multiple studies have shown the independent analgesic effect of cymbalta /xeristar in DPNP. 48 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

human pharmaceuticals cymbalta xeristar duloxetine hydrochloride cymbalta / xeristar, a potent and balanced dual reuptake inhibitor of both serotonin and noradrenalin is indicated for the treatment of major depressive (MD) episodes and diabetic peripheral neuropathic pain (DPNP) in adults. Net sales 2007: EUR 87 million (+ 65.7 %) The drug, jointly developed and commercialised by Boehringer Ingelheim and Eli Lilly & Company outside of the USA and Japan, has been successfully launched in over 50 countries. xeristar was under regulatory review for both generalised anxiety disorder (GAD) and fibromyalgia indications in Europe. Our R & D in CNS diseases Our research in CNS diseases addresses four major indication areas characterised by a high unmet medical need and a heavy burden for patients and caregivers in an ageing population. These include the most prevalent neurodegenerative disorders such as Alzheimer s disease, Parkinson s disease, chronic pain and migraine. Our clinical studies in CNS diseases The results of a more than 1,000-patient survey (prodest ) of emotional, cognitive and motor symptoms in Parkinson s disease emphasised the clinical importance of non-motor Parkinson s disease symptoms, especially depression. In recognition of the importance of non-motor symptoms, a dedicated, randomised, placebocontrolled clinical trial programme is investigating the effect of sifrol /mirapex in alleviating Parkinson s disease-associated depressive symptoms. We expect the programme to conclude in mid-2008. Investigating the impact of sifrol /mirapex on sleep quality is the aim of two international studies in more than 700 patients with RLS. The studies will provide additional insight into the broad therapeutic potential of sifrol /mirapex in the treatment of RLS. An international phase III programme for pramipexole extended release has been initiated both in patients with early and with advanced PD. Recruitment in all studies, including the Japanese programme, is ongoing and will support worldwide submissions for registration. To extend its clinical role for mood and pain, disorders, cymbalta /xeristar has been evaluated in generalised anxiety disorder (GAD) and fibromyalgia. At the end of 2007, cymbalta / Our major goal in Alzheimer s disease and Parkinson s disease is to interfere with the processes underlying the continuous degeneration of nerve cells in these devastating disorders. Our research programmes therefore concentrate on targets established by histopathological and genetic evidence, for example reduction of the amyloidbeta peptide, the presumed major mediator of Alzheimer s disease progression. Moreover, we are investigating approaches with the potential to alleviate major symptoms of these diseases, such as pro-cognitive therapies beyond acetylcholine restoration in Alzheimer s disease and the reduction of treatment-induced motor complications (dyskinesias) in late-stage PD. Our focus in chronic pain is on new molecular targets such as ion channels and G-protein coupled receptors (GPCRs), which are involved in pain transduction pathways and have been validated in neuropathic and inflammatory pain models. Chronic pain is a condition for which medical attention is sought most frequently, yet satisfactory treatment options are still limited. Boehringer Ingelheim s drug discovery activities in the indication migraine address a new mechanism of action, a GPCR antagonist, that interferes with cerebral vasodilatation, for which we were the first research group to obtain clinical proof of concept. Prescription Medicines 49

Respiratory diseases Treatment of airway diseases has long been a major focus area for Boehringer Ingelheim and ample resources are dedicated to research in this field. Our main objective in research is to further improve treatment options for chronic obstructive pulmonary disease (COPD) and asthma. COPD and asthma Chronic obstructive pulmonary disease is the fourth leading cause of death in the world, claiming 2.75 million lives annually. By 2020, it is expected to become the third leading cause of death after heart disease and stroke. Yet, up to 75 % of patients in Europe and 45 % in the USA go undiagnosed. COPD is a progressive respiratory illness characterised by chronic airflow limitation, shortness of breath (or dyspnoea), cough, wheezing and increased sputum (mucus or phlegm) production. These symptoms, in particular breathlessness, can restrict a patient s ability to perform normal daily activities. Smoking is the predominant cause of COPD, accounting for 80 90 % of the risk of developing chronic obstructive pulmonary disease. The disease is increasingly observed in women. COPD has a significant physical and emotional impact on those who suffer from the disease. As chronic obstructive pulmonary disease progresses, lung function declines over time and physical activity becomes severely limited, disrupting the patients ability to lead a full life, interfering with everyday tasks, like participating in family routines and social interactions. Early diagnosis and treatment is important to help patients remain independent, prevent complications and exacerbations, and improve quality of life. Our respiratory portfolio consists of the COPD and asthma products, spiriva, combivent and atrovent. Since its initial launch in 2002, spiriva has been made available to COPD patients in more than 55 countries. It is the most prescribed medication for COPD and so far eight million patients worldwide benefited from taking spiriva. Discovered and developed by Boehringer Ingelheim, spiriva is co-promoted worldwide with Pfizer Inc. spiriva tiotropium bromide spiriva, the only once-daily COPD medication that maintains 24-hour bronchodilation through prolonged M3 receptor blockade, reduces smoothmuscle tone and dilates the airway, resulting in significant and sustained long-term improvements in lung function. Net sales 2007: EUR 1,792 million (+ 29.8 %) spiriva is recommended by international guidelines as first-line maintenance therapy for COPD. It positively impacts the clinical course of the disease, helping to change the way patients live with their condition over time. Its efficacy has been demonstrated by an extensive clinical development programme which included over 15,000 patients. spiriva maintenance therapy has been shown to be well tolerated. The most frequently reported adverse reaction with spiriva has been dry mouth. Cases of this have usually been mild and often resolved themselves with continued treatment. The spiriva respimat is a modern new generation, propellant-free inhaler that combines innovative technology with the proven efficacy of spiriva. It is an important advance in inhalation therapy for patients with COPD. The spiriva respimat Soft Mist Inhaler, with its unique slow-moving soft mist and the high fine particle fraction, optimises drug delivery and deposition in patients lungs, resulting in reduced deposition in the mouth and throat compared with pressurised multi-dose inhalers. 50 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

human pharmaceuticals The spiriva respimat Soft Mist Inhaler was introduced during 2007 in Germany, the United Kingdom, Denmark and the Netherlands. More countries are planning to launch this innovative product in 2008. We successfully completed the Japanese clinical trial programme in support of the submission for registration of the spiriva respimat Soft Mist Inhaler in Japan. In the USA, the spiriva respimat Soft Mist Inhaler new drug application (NDA) was filed in the fourth quarter 2007. Our clinical studies in respiratory diseases An extensive and successful clinical study programme has supported our respiratory clinical pipeline as well as our clinical life cycle management projects for our marketed respiratory product portfolio. Studies to explore new compounds and new principles targeting mucus production, tissue hyperplasia and fibrosis have been initiated. They have successfully moved forward in patients with asthma, COPD, chronic bronchitis as well as idiopathic pulmonary fibrosis and provided us with encouraging efficacy and safety results. Most prominently, a fixed-dose combination product developed for the maintenance treatment of chronic obstructive pulmonary disease has successfully completed phase II with promising results and will now move into clinical phase III. The new molecule and mechanism in our pipeline aimed at treating idiopathic pulmonary fibrosis has entered its first proof of concept study in patients and is proceeding well. The respimat Soft Mist Inhaler The respimat Soft Mist Inhaler, which represents a new class of propellant-free inhaler, is a hand-held, pocket-sized oral inhalation device that uses mechanical energy to create a slow-moving aerosol cloud. The key principle of the innovative inhaler is to meter a constant volume of inhalation solution and to nebulise it by forcing it through very fine nozzles. This produces two jets of the solution which combine to create the aerosol cloud that is inhaled by the patient. The respimat Soft Mist Inhaler is convenient and is easy to handle for the patient. Due to the long spray time of about 1.5 seconds, there is no need for high coordination efforts of the inhaler actuation and immediate inhalation of the aerosol plume by the patient. Furthermore, the outflow of inhalable particles is independent of patients inspiratory flow rate. The respimat Soft Mist Inhaler delivers the active ingredient very effectively. The high inhalable particle fraction increases the lung deposition of the active ingredient; the inhaler generates over 60 % of liquid droplets of a size in the respirable range (i. e. less than 5.0 µm in diameter). Due to the low velocity of the aerosol cloud, significantly less drug is deposited in the mouth and throat compared to conventional inhalers. The efficiency which the respimat Soft Mist Inhaler offers in delivering drugs to the lungs has made it possible to reduce the nominal dose of the drug administered from the inhaler to around a quarter to half of the dose for the same drug administered from conventional inhalers, while still achieving comparable therapeutic effectiveness. The clinical profiling of the spiriva respimat Soft Mist Inhaler is further supported by a double-blind randomised exacerbation study which is well advanced in recruiting the expected 4,000 COPD patients. Prescription Medicines 51

uplift A landmark trial involving more than 450 study centres on all continents uplift (Understanding Potential Long-term Impacts on Function with Tiotropium), is a four-year, randomised, doubleblind, placebo-controlled, parallel-group landmark trial involving 5,993 patients with COPD. Sponsored by Boehringer Ingelheim and Pfizer Inc., uplift is assessing the long-term effects of tiotropium (spiriva ) on lung-function decline, health-related quality of life, exacerbations and associated hospitalisations and mortality (respiratory and all-cause) over four years. A post-hoc analysis of data from two 1-year studies showed that spiriva patients had a rate of decline in lung function parameter through FEV1 of 12 ml/year compared with 58 ml/year for placebo, thus positively supporting the scientific rationale underlying uplift. uplift will be completed in 2008. Our ipratropium bromide plus salbutamol combination medication combivent remains an important product, well accepted by patients and physicians for the treatment of COPD. A multinational phase III registration study for combivent, in the spiriva respimat Soft Mist Inhaler is ongoing and will complete recruitment in early 2008. Our R & D for respiratory diseases As bronchodilation therapy is primarily a symptomatic treatment for chronic obstructive pulmonary disease, key goals in our research are to extend our product portfolio to drugs which provide additional therapeutic benefit, such as directly treating the underlying inflammation and the related tissue remodelling process. Inflammation in COPD patients is characterised by leukocyte infiltration of the lungs, primarily by macrophages and neutrophils. Thus, we specifically aim at targeting neutrophil- and macrophage-driven inflammatory processes as an alternative to the widely used, but poorly disease-controlling, corticosteroids. In addition, we aim at preventing or delaying tissue remodelling processes by targeting lung growth factors. Two first-in-class mechanisms targeting mucous hyperplasia and fibrosis are being tested clinically. Beyond COPD, such new mechanisms have a therapeutic potential in idiopathic pulmonary fibrosis (IPF), a life-threatening disease, and in severe asthma, where mucous plugging is considered the main cause of death. High unmet need still exists for severe asthmatics, as those patients often respond weakly to steroids and are thus very difficult to manage. Mechanisms to overcome this phenomenon of steroid resistance and the search for alternatives to injectable anti-immunoglobulin E antibodies are our prime areas in asthma research. Further goals are directed to new mechanisms and immunological paradigms that would allow us to replace or reduce the doses of inhaled steroids by providing 52 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

human pharmaceuticals anti-inflammatory therapy superior in efficacy to leukotriene receptor antagonists and better tolerated by patients. Cardiovascular diseases Despite significant advances in the understanding and treatment of cardiovascular diseases, they remain the leading cause of premature death in the developed world and are predicted to become the most common cause of premature death worldwide within the next decade. Boehringer Ingelheim s cardiovascular product portfolio consists of drugs for preventive treatment in patients with major risk factors, such as hypertension, drugs for secondary prevention, for example after stroke, as well as treatment for patients with acute cardiovascular conditions, such as myocardial infarction, acute massive pulmonary embolism and stroke. Hypertension and cardiovascular protection About one billion people worldwide are affected by hypertension. The prevalence of essential hypertension increases steadily with age. As the world population ages and preventive strategies in terms of lifestyle changes are so far failing, the prevalence of hypertension is set to increase even further. Hypertension is a major risk factor for cardiovascular morbidity and mortality. The organs at risk are primarily the heart, the main blood vessels, the brain and the kidneys. The primary goal of any antihypertensive treatment is to prevent cardiovascular events, such as heart attacks or strokes, and finally to reduce cardiovascular mortality. Current evidence suggests that even moderately high blood pressure increases cardiovascular risk and should therefore be treated and targeted with the lower the better approach. Beyond antihypertensive treatment, the aim of additional cardiovascular protection requires treatment of all identified risk factors and associated clinical conditions amenable to therapeutic approaches and/or changes in lifestyle. micardis micardisplus micardis plus micardis hct co-micardis telmisartan telmisartan / hydrochlorothiazide micardis (telmisartan 20/40/80 mg), an angiotensin II receptor blocker (ARB), and micardisplus / micardis hct (telmisartan with the diuretic hydrochlorothiazide 40/12.5, 80/12.5, 80/25 mg), is indicated for the treatment of essential hypertension. Net sales 2007: EUR 1,123 million (+ 16.1 %) micardis, one of the most powerful antihypertensives of the angiotensin receptor blocker (ARB) class, is also characterised by the longest duration of action in its class due to its strong link to the ARB-II receptor. With a once-daily dosage, a powerful blood pressure control over the full 24-hour period is achieved. Due to its 24-hour duration, it is the best ARB for covering the risky early morning blood pressure increase. Our clinical studies in cardiovascular protection and hypertension Beyond the treatment of hypertension, micardis alone, or in combination with ramipril, the landmark trials ontarget and transcend are investigating whether prevention of cardiovascular events, such as acute myocardial infarction, stroke and heart failure, is achievable. Due to the therapeutic properties of micardis and its complementary effect with ramipril, it is expected that the results of ontarget will show a positive impact on the lives of cardiovascular highrisk patients. The micardis landmark trials ontarget and transcend have reached their close-out phase in cooperation with the academic clinical research centres with which we have conducted the programme. With data of more than 31,000 patients, Prescription Medicines 53

analyses are now being conducted to make primary results available to the public in the first half of 2008. Landmark trial ontarget Interview with Professor Ulrich Dietz, specialist for internal medicine/cardiologist, German Clinic for Diagnostics, Wiesbaden Why is ontarget important? Growing numbers of patients have cardiovascular risk factors. Telmisartan, is believed to influence the course of arteriosclerosis, reducing cardiovascular events (myocardial infarction, stroke or sudden heart death), as was demonstrated for the angiotensinconverting enzyme (ACE) inhibitor ramipril. ontarget is the first investigation designed to prove efficacy of the potential protective actions using telmisartan alone or in combination with ramipril. Why did your clinic participate in the trial? We found that this trial offers great benefit for participating patients and the global population in seeking answers to the core questions about the differences between telmisartan and ramipril, as well as their combined value. How did you motivate your patients? Patients easily understood that they would benefit from participating in the trial, regardless of which drug they received in the trial arms. The well-founded assumption of actively reducing cardiovascular events by participating, along with the good tolerance of the medication, prompted the vast majority of patients to adhere to the medication throughout the trial. What outcome do you expect? I anticipate that the ontarget results will have a positive impact on patients lives. I could also anticipate that additional benefits of blocking the RAS (renin angiotensin system) at two key points with telmisartan and ramipril will improve vessel elasticity and decrease the number of patients developing diabetes and diabetic nephropathy. What would such results change? If the outcome for telmisartan is as expected, it ll most certainly challenge current treatment guidelines and influence future clinical practice for cardiovascular disease prevention. The well-established antihypertensive efficacy of micardis was confirmed in multifactor clinical studies investigating micardis alone and in combination with amlodipine, ramipril and the lipid-lowering statin simvastatin. Follow-up trials will investigate the efficacy of micardis in hypertensive patients not, or not sufficiently, responding to amlodipine alone. Acute myocardial infarction Every year, approximately three million people worldwide suffer from acute myocardial infarction (AMI), or heart attack. However, only about 47 % are diagnosed and treated. The most important factor for the patient prognosis after an AMI is time to treatment. Thrombolytic therapy is established as one of the most successful modern acute myocardial infarction treatment options, in particular in patients for whom percutaneous transluminal coronary angiography (PTCA) cannot be performed within 90 minutes after first medical contact. metalyse tenecteplase metalyse is the only thrombolytic to be administered as a single bolus for thrombolytic treatment in AMI patients for whom a coronary intervention cannot be performed in time. With its ease of administration, thrombolysis with metalyse is very well-suited for pre-hospital and in-hospital thrombolysis to keep the time from the onset of symptoms to effective treatment as short as possible. Net sales 2007: EUR 77 million (- 7.3 %) actilyse alteplase actilyse is also indicated for the thrombolytic treatment in patients with AMI as well as for thrombolytic treatment in acute massive pulmonary embolism with haemodynamic instability. actilyse is the first and only thrombolytic indicated for treatment of acute ischaemic stroke within three hours after symptom onset. Net sales 2007: EUR 89 million (+ 17.5 %) 54 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

human pharmaceuticals Stroke treatment and prevention Stroke management is divided into two strategic approaches: acute stroke therapy aimed at restoring blood supply as quickly as possible to the affected area in the brain; secondary therapy aimed at preventing the occurrence of further events. Secondary prevention of stroke aggrenox asasantin retard dipyridamole extended release / ASA aggrenox / asasantin retard is indicated for reducing the risk of secondary stroke in patients who have had a TIA or an ischaemic stroke due to thrombosis. Net sales 2007: EUR 278 million (+ 23.9 %) Acute stroke treatment Stroke is the second leading cause of death worldwide and a major cause of long-term disability. a first-line treatment for secondary stroke pre- The use of aggrenox /asasantin retard as Although the risk of stroke is increased by multiple risk factors, the most important is a previous guidelines, such as those issued by the American vention is recommended in many international transient ischaemic attack (TIA; neurological Heart and Stroke Association (AHA/ASA), the impairment with complete restitution within American College of Chest Physicians (ACCP), the 24 hours) or stroke. Nearly one in five patients European Stroke Initiative (EUSI), and the UK s who have had a TIA or stroke will experience a National Institute of Health and Clinical Excellence (NICE). Recently, the US National Stroke recurrence within three months. Association (NSA) also recommended aggrenox A stroke occurs when a blood clot blocks an artery for use as a first-line treatment for prevention of in the brain (ischaemic stroke), or when a blood recurrent stroke in patients with TIA. vessel ruptures (haemorrhagic stroke), interrupting blood supply to an area of the brain. If For more information please visit the website: the symptoms resolve within 24 hours, it is www.stroke-forum.com classified as a TIA. Beginning a few minutes after onset, stroke kills brain cells in the immediate Our clinical studies in stroke prevention area. However, the surrounding area, called the profess, a landmark trial which has recruited penumbra, is also at risk, if rapid reperfusion 20,300 post-stroke patients is in close-out phase (restored blood flow) is not achieved and subsequently neurological deficits result. demonstrate superiority of aggrenox over and will confirm the efficacy and potentially clopidogrel in the prevention of secondary stroke. The results of sits-most the largest international stroke registry were published in The and will therefore also elucidate the additive effect profess includes a micardis treatment arm Lancet in 2007. It was concluded that actilyse of this drug in secondary stroke prevention. As is as safe and effective for thrombolysis of profess is well in plan, we are confident that ischaemic stroke in routine clinical practice as we can conclude and analyse the trial in time to in randomised clinical trials, if given within provide relevant primary study outcome results at three hours of onset of symptoms. Solely sponsored by Boehringer Ingelheim, the sits registry the European Stroke Conference in May 2008. is ongoing and has been expanded to include Our R & D in cardiovascular diseases stroke patients from more countries, such as Our research activities are focused on the treatment of risk factors, such as hypertension, on Australia, China and India, to form the sits-new (non-eu world) registry. Some 1,000 patients are disease-modifying therapeutic strategies, such as recruited every three months and data from over 15,000 patients have been entered into the registry. continued on page 58 Prescription Medicines 55

I feel I m in nearly as good shape as I was before my stroke. Markku Lehtinen, an excavator business owner in Kuusankoski, Finland, received thrombolytic treatment for an acute ischaemic stroke within an hour of onset due to a video link from his local hospital to a major hospital. 56 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

human pharmaceuticals Combating stroke More high-quality years of life are lost due to stroke than to any other disease. The disability caused by the disease can be significantly reduced by efficient treatment of those affected. Acute ischaemic stroke patients race against time in Finland, as hospitals are far apart and thrombolytic therapy must be started as early as possible. Most hospitals lack comprehensive 24-hour thrombolytic treatment capability. So a video link Telestroke equipped with video cameras, has since May 2007 been installed by the regional authorities between the Neurological Emergency Room of the Meilahti Hospital, Helsinki University Central Hospital, Lappeenranta Central Hospital and Kuusankoski Regional Hospital. Two hospitals from Northern Finland, Kemi and Rovaniemi Central Hospitals, also joined the network during 2007. In the future, the number of links may be increased in different parts of Finland as needed. The network enables doctors with extensive experience of thrombolytic treatment to monitor the examination of a stroke patient, where symptoms, such as possible speech impairment and paralysis of the extremities and face, are charted. Doctors can also assess computerised brain images. Finally, the thrombolytic treatment specialist on duty advises colleagues at the other end on whether to use thrombolytic treatment and on how to implement the treatment. After consultation, patients are treated and their condition monitored at the hospital where the treatment was given. A new brain scan is taken after 24 hours to exclude haemorrhages and to see how effective the treatment has been. Secondary prevention of stroke Patients who have had an ischaemic stroke are at higher risk for a recurrence of a stroke. By controlling the risk factors, the chance of a secondary stroke can, however, be reduced. This involves many common sense measures, such as weight reduction, increased exercise, a healthier diet and abstinence from smoking. As to drug treatments, the extended-release antiplatelet dipyridamole plus acetylsalicylic acid (ASA) is the widely recommended first line treatment for secondary stroke prevention. Acute ischaemic stroke: improved access to acute treatment for patients with acute ischaemic stroke through Telestroke in Finland Combating stroke 57

continued from page 55 in heart failure, and on underlying cardiovascular pathogenesis, such as atherothrombosis. Chronic heart failure remains an area of high medical need. Despite the common perception that effective therapeutics are available, the rates of mortality and morbidity are astoundingly high and predicted to grow with an ageing population. Our research efforts utilise recent advances in the understanding of pathogenic pathways underlying this complex cardiac disorder and target disease-modifying strategies to provide long-term benefit to heart failure patients. HIV/AIDS AIDS is a continuously growing pandemic, with 40 million people infected with the human immunodeficiency virus (HIV). And it is no longer a disease predominantly affecting men. Since 1985, the percentage of women among adults living with HIV has grown particularly, from 35 % to 48 % globally. Worldwide, there are now nearly 18 million women living with the disease. As women may respond to HIV/AIDS treatment differently than men, there is a need for additional medical investigation. Boehringer Ingelheim is addressing this in its clinical studies programme. Our research efforts also focus on atherosclerosis, the most common cause underlying life threatening clinical events, such as myocardial infarction or stroke. Gaining a better understanding of the pathogenic mechanisms in the vascular wall by internal research efforts, as well as collaborations with leading research groups, will assist in the development of therapeutic strategies to prevent the subsequent thrombo-embolic events. Indeed, continuing research efforts in the thromboembolic area resulted in compounds with alternative anti-thrombotic mechanisms, the efficacysafety profile of which is currently being assessed in the clinic and compared to that of existing therapies. These research programmes are facilitated by the use of in vivo imaging and biomarker studies that assist in the transition from bench to bedside and enhanced by external collaborations with academic and biotechnology industry partners. Viral diseases Boehringer Ingelheim is committed to improving HIV/AIDS therapy by providing patients and physicians with innovative antiretroviral drugs. Our second focus in virology is research directed towards innovative antiviral treatment of the hepatitis C virus (HCV). viramune has already demonstrated its proven benefit for HIV-infected women in various clinical trials and has therefore been established as a cornerstone of therapy, particularly in the treatment of HIV-positive women of child-bearing age, being the only non-nucleoside reverse transcriptase inhibitor (NNRTI) in US Food and Drug Administration (FDA) pregnancy category B, as well as in the prevention of mother-to-child transmission (pmtct) of the virus. It has therefore become one of the most prescribed antiretrovirals worldwide. viramune nevirapine viramune the first non-nucleoside reverse transcriptase inhibitor (NNRTI) has been launched in about 100 countries as an effective part of combination therapy of HIV-1. In 2007, it was upgraded to risk category B in pregnant women by the FDA. Net sales 2007: EUR 262 million (- 5.0 %) aptivus tipranavir aptivus, a non-peptidic protease inhibitor, blocks the viral protease, an enzyme needed to complete HIV replication. In co-administration with ritonavir, aptivus is indicated for combined antiretroviral treatment of HIV infection in highly treatmentexperienced patients with resistance to multiple protease inhibitors. aptivus was launched in 2005 in the USA and the EU. In October 2007, it obtained traditional FDA approval for the USA. Net sales 2007: EUR 45 million (- 14.9 %) 58 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

human pharmaceuticals Our clinical studies and R&D in HIV/AIDS With its ongoing clinical HIV trial programme for aptivus, a non-peptidic protease inhibitor, Boehringer Ingelheim will provide answers to some of the important open questions which are related to women infected with AIDS. A sub-study of the resist clinical trials shows that aptivus, used with ritonavir (aptivus /r) as part of combination antiretroviral therapy, provides a potent and durable treatment response also in highly treatment-experienced female patients through 48 weeks and is as safe as in male patients. These data were presented at the International AIDS Society Congress in Sydney, Australia, in July 2007. Moreover, the spring study initiated in 2007 by Boehringer Ingelheim is one of the largest ethnicity and gender-diverse international studies of highly treatment-experienced HIV-1 infected patients. The trial examines the safety, efficacy and pharmacokinetics of aptivus in a group of 200 female and 200 male treatmentexperienced patients. Non-Caucasian patients make up half of each group. The spring study plans to enrol these patients at 72 sites in the USA, Canada, Mexico, Germany, Italy, Spain, Argentina and Brazil. Additional clinical trials to investigate the efficacy and safety of aptivus in special minority patient groups and hepatitis co-infected patients are ongoing. potent, a large efficacy study versus another protease inhibitor drug, has been initiated and will provide further evidence of the antiviral potency as well as the resistance profile of aptivus. For viramune we have succeeded in developing and clinically profiling a once-daily extended release form which has now entered clinical phase III with the aim of establishing advanced convenience and safety combined with reliable efficacy for later worldwide registration. Women living positive Sharon Walmsley, MSc, MD, Professor of Medicine, Division of Infectious Diseases, Toronto Hospital, University of Toronto, Canada, is also Senior Scientist in the Toronto Hospital Research Institute and Director of Clinical Research in its Immunodeficiency Clinic. What does the proportion of women living with HIV imply for treatment? It s become even more important for physicians to be familiar with the unique therapeutic needs of positive women. Women respond to antiretroviral therapy differently than men because of their different physical constitution and psycho-social factors. But with the various medications available nowadays we can offer women effective long-term treatment regimens. What is the first line therapy for HIV-positive women? There s no such thing as a one-size-fits-all medication. We need to consider a variety of health and personal factors and to assess the presence of other illnesses and other medications required, in order to find the right therapy for the individual. Are there special issues for women of child-bearing age? As over half of all pregnancies are unplanned, it is vital that HIV-positive women and their physicians discuss family planning when initiating therapy. This is especially important because only some antiretroviral medications, such as viramune, the only NNRTI recommended by the US authorities in pregnant HIVinfected women provided the woman has a CD4 count < 250/ul, are recommended for use in pregnancy. Can mother-to-child transmission be prevented? As HAART 1 has improved the lives of HIV-infected women, more are considering pregnancy. Women under efficacious drug treatment and observation of their HIV status can be more assured about the ability to have a healthy baby. Proper use of antiretrovirals and a consideration for a planned Caesarean section can minimise the risk that the baby will be born with HIV infection. 1) Highly active antiretroviral therapy Prescription Medicines 59

Our research activities in HIV are aimed at developing new treatment options for all patients infected with HIV, especially those who have failed prior therapy due to the development of drug resistance. Boehringer Ingelheim s research in this area focuses on novel therapeutic principles with potential for use in combination with other antiretroviral medicines. Several small molecule therapies are currently being pursued in preclinical research and offer promise as future treatments for both treatment-naive and treatment-experienced HIV patients. Our clinical studies and R&D in hepatitis C For the indication hepatitis C we forwarded compounds for two different specific antiviral mechanisms under investigation. Both compounds have passed healthy volunteer studies and are now investigated in hepatitis C-infected patients, both in treatment-naive patients and in treatment nonresponders. Research into antiviral therapies for the treatment of hepatitis C virus (HCV) receives a high priority at Boehringer Ingelheim. Our efforts are directed toward identifying direct-acting antivirals, which offer the potential for new therapies with improved safety and efficacy compared to current treatments of chronic hepatitis C. Boehringer Ingelheim s virology drug discovery centre in Laval, Quebec, Canada, is pursuing several promising HCV-directed targets. Inhibitors which interfere with essential virally encoded enzymes involved in the replication of the virus within the infected cell are candidate antiviral treatments. Our ongoing activities in HCV continue to exploit these antiviral targets together with other novel approaches and are complemented by a collaboration with the Australian company Biota Holdings to jointly discover and develop novel nucleoside analogues designed to treat HCV infections and other diseases. Urological diseases Boehringer Ingelheim offers its well-established alpha-1 receptor antagonist tamsulosin (flomax, alna, flomax ocas ) to treat benign prostate hyperplasia. Benign prostate hyperplasia Lower urinary tract symptoms (LUTS) suggestive of benign prostate hyperplasia (BPH) are today the most common urological condition in older men. This chronic disease is characterised by the presence of several urinary symptoms that can be related to bladder emptying (voiding or obstructive symptoms) or filling (storage or irritative symptoms). Typical voiding symptoms are slow stream, hesitancy and intermittency. Typical storage symptoms are increased daytime frequency, nocturia and urgency. Nocturia, i. e. awakening one or more times at night for voiding, reduces the patient s quality of sleep and has a significant negative impact on how the patient feels the next day in terms of energy level/fatigue, concentration and mood and ultimately overall well-being and quality of life. Pharmacological therapy, in particular alpha-1 receptor antagonists, is the cornerstone of initial treatment for this condition, to relieve bothersome symptoms, to reduce the static and/or dynamic component of obstruction and to improve the quality of life. flomax alna josir pradif secotex urolosin tamsulosin flomax /alna capsules, an alpha-1 receptor antagonist, are indicated for the treatment of Lower urinary tract symptoms (LUTS) suggestive of BPH and provide effective and safe improvement of symptoms. Net sales 2007: EUR 1,020 million (+ 10.7 %) 60 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

human pharmaceuticals flomax ocas tamsulosin flomax ocas, a new tablet formulation, using the Oral Controlled Absorption System (ocas ), was developed by Boehringer Ingelheim and its partner Astellas to further optimise pharmacological therapy for LUTS/BPH. Net sales 2007: EUR 78 million (+ 35.4 %) The flomax ocas system provides effective daytime and nighttime symptom control, a very good safety profile and excellent convenience for the patient (e. g. once-daily dosing without the need of dose titration and medication intake independent of meals). flomax /alna using the ocas technology, already available in Germany, Spain, Switzerland, Portugal, France, Greece and Canada, was launched in Argentina and Mexico in 2007. Our clinical studies in urology flomax, our leading treatment for the symptoms of BPH, is potentially effective in the treatment of children with neurogenic bladder dysfunction. Affected children are often those suffering the congenital malformation spina bifida. In agreement with the US Food and Drug Administration (FDA) we have a demanding international paediatric clinical programme ongoing. Metabolic diseases Metabolic diseases, such as diabetes type II, obesity and dyslipidemias of various origin, are major risk factors for cardiovascular diseases and cause other serious health problems that affect more and more people worldwide. Many patients suffer in parallel from several such risk factors. The cluster of hyperglycemia, dyslipidemia and obesity, together with hypertension, has thus been classified as metabolic syndrome. Our clinical studies in metabolic diseases Our broad engagement in preclinical research in metabolic diseases is focused on diabetes type II, obesity and dyslipidemia. We have established a clinical development programme in diabetes with three compounds from two different mechanisms of action. With a comprehensive phase I and phase II programme we not only demonstrated reliable proof of concept for bi 1356, our dipeptidylpeptidase-iv (DPP-IV) frontrunner compound, but also completed phase II with very favourable results. For a second mechanism of action, sodiumdependent glucose transporter-2 inhibition (SGLT-2), we have two compounds with different profiles in phase I evaluation. Results with respect to efficacy and tolerability have been very positive and are a basis for accelerated entry into clinical phase II with longer-term exposure in diabetic type II patients. We expect that in 2008, with compounds in phase II and III and additional mechanisms of action entering clinical development, our clinical programme in metabolic diseases will expand, becoming another strongpoint in growing our portfolio. Our R & D in metabolic diseases Our research activities in the field of diabetes type II focus on several additional approaches to delay disease progression. Furthermore, new projects have been initiated with the potential to target other cardiovascular risk factors in addition to their glucose-lowering effect, thus allowing simultaneous intervention in various factors of the metabolic syndrome. Obesity remains an unresolved global problem and currently available therapies suffer from side effects or are not sufficiently efficacious in lowering body weight. There are multiple mechanisms and pathways involved which control appetite, energy expenditure and ultimately body weight. It is now clear that both peripheral and central signals play a decisive role in the regulation of those pathways. Our preclinical projects are Prescription Medicines 61

aiming at both a reduction of appetite and an increase in energy expenditure. The vessel-protective role of high-density lipoprotein (HDL) cholesterol has recently been much under debate. Novel strategies are needed to raise HDL cholesterol levels and to increase the reverse cholesterol transport efficiency. Oncology Boehringer Ingelheim is actively developing small molecules and biopharmaceuticals as novel drugs for combating cancer. With front-line research and development projects, the company aims to fill therapeutic gaps by offering treatments that improve survival and enhance the quality of life of cancer patients. This research has resulted in promising drug candidates to establish a full pipeline of preclinical and clinical development programmes. Our clinical studies in oncology Our clinical programmes in oncology have seen substantial growth in the number of patients recruited, the international scope of clinical trials initiated and conducted, and the range of compounds and mechanisms introduced to the clinic. Specifically, we have strengthened our programme by adding a fourth mechanism of action to our clinical development portfolio. We have substantially expanded our clinical trial programme for tovok (bibw 2992), our leading molecule, an irreversible dual inhibitor of the epidermal growth factor receptor (EGFR) and the EGFR-related HER2 receptor kinase. Clinical phase III in lung cancer patients has been released and the international pivotal study programme is progressing. inhibitor which we could show to be highly effective in preventing the development of new blood vessels in experimental tumour models (tumour angiogenesis). In a third therapeutic principle of drugs directly interfering with uncontrolled cell division (mitosis) in tumour, we are developing our pololike kinase-1 (Plk-1) inhibitors now in clinical phase II. A second inhibitor of a mitotic kinase entered phase I studies in mid-2007. Our R & D in oncology The sequencing of the human genome and detailed studies of genetic changes in human cancer cells, known as oncogenome signature typing, have accelerated the identification of the faulty biochemical circuitry that underlies the proliferation, invasion and metastasis of cancerous cells in the body. These insights provide important clues to new drug targets and the early identification of patients whose cancers are most likely to respond to novel drugs, a process known as biomarkerguided therapy. Further key goals in our oncology research include the transfer of the signal transduction inhibitor pipeline into clinical development. One initiative aims to advance human monoclonal antibodies into development by targeting peptide growth factors, as well as cancer cell surface antigens. This antibody initiative for novel cancer treatments is strengthened by external technology alliances with our biotech partners MorphoSys AG, Medarex, Inc., Xencor, Inc. and Ablynx nv, as well as in-house collaborations with Biopharmaceuticals. l The clinical development of vargatef (bibf 1120) progresses well, too. It is a triple angiokinase 62 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

human pharmaceuticals Market net sales in 2007 by region in millions of EUR change in EUR (change in local currency) Americas 3,943 + 3.7 % (+ 12.3 %) Economic regions Branded Prescription Medicines Americas In the Americas region, 2007 saw continued strong development of our core product portfolio. Net sales in our Branded Prescription Medicines business reached EUR 3,943 million, despite a weakening dollar. The USA remains the main driver of our growth in absolute terms and is the main contributor to the company s net sales and operating income worldwide. The US market continues to be highly competitive due to its size and attractiveness to the pharmaceutical industry. The year 2007 saw growth of +3.6 % compared to 2006. spiriva, flomax, aggrenox and micardis were the main growth drivers, with mirapex /mirapexin making a considerable contribution due to the new indication in RLS launched at the beginning of 2007. Europe 2,374 + 9.0 % (+ 9.0 %) In Canada, we maintained a stable market position versus 2006, in spite of an evolving and far more challenging regulatory environment. Among others, the Patented Medicines Prices Review Board (PMPRB), the Common Drug Review (CDR) and Provincial Reimbursement processes, tightened the development of the pharmaceutical market in an economy that grew by 2.6 %. The most important growth drivers included spiriva, micardis, flomax, combivent and sifrol. Africa, Asia, Australasia 1,446 + 4.9 % (+ 11.8 %) Mexico has our largest operating unit in Latin America. In the dynamic public sector, the company significantly increased its participation in the social security system. micardis is now No. 1 in the portfolio, mainly due to sales to the country s most important social security institutions. combivent No. 3 in the internal portfolio ranking in Mexico has become one of the fastestgrowing products in the respiratory field. The Economic regions Branded Prescription Medicines 63

Mexican operation still depends a great deal on our legacy products portfolio, such as buscapina and macrodantina, but core brands, including flomax and spiriva, grew more than 13 % in total too. One of the main challenges in our regional operating unit for South America remains protecting intellectual property. Three tiotropium MDI generics, as copies of spiriva, have already been launched in the region. The region s positive performance was in 2007 mainly driven by Venezuela, with a growth rate close to 50 % and No. 1 ranking in the regional operating unit. Performance was guided by micardis, spiriva, sifrol and buscopan. Our Brazilian company maintained continuous growth in 2007, mainly due to the development of micardis in the private market and the increased social security access given to sifrol. These two brands are ranked second and third, respectively, in our Brazilian portfolio, behind buscopan, which has also shown a positive development. The decision to withdraw all clobutinol-containing application forms of silomat had a negative impact for Brazil of around EUR 2 million on net sales in 2007. Europe In 2007, the overall European pharmaceutical market showed growth of around 6 % 1. A major factor leading to this level of growth was the restrictions that the health authorities in several countries imposed on innovative products. These included lowering prices and limiting reimbursement and access to innovative medicines. Despite this challenging environment, net sales of Boehringer Ingelheim evolved positively in 2007 with a growth rate of almost 9 % in the region. The drivers of this progress were again our four main patent-protected products spiriva, micardis /micardisplus, sifrol /mirapexin and cymbalta/xeristar, which all posted doubledigit growth rates. spiriva, the leading medication in Europe and worldwide for the treatment of COPD, maintained its position as the product that generated most sales for us in the European region in 2007. It grew by 22 %, becoming the fastest-growing product in the European market for respiratory products. In July, spiriva respimat received approval from the European Medicines Agency and was subsequently launched in Germany, the UK, the Netherlands and Denmark. Further European launches will follow in 2008. micardis net sales grew by 16 % in 2007. Our sifrol / mirapexin brand achieved a growth rate of 21 %, due to the consolidation of its leadership for the treatment for restless legs syndrome. But generic competition in Europe affected net sales of alna /pradif /josir /urolosin significantly. In Germany, Boehringer Ingelheim matched overall prescription medicine market growth as the strong development of spiriva and sifrol offset the loss of alna sales. In Spain, the strong growth of spiriva, micardis and xeristar led to the company growing considerably faster than the overall market, while the introduction of alna (urolosin ) ocas compensated for the sales erosion by generics. In France, excellent market acceptance of spiriva continued to boost growth, resulting in a growth rate of 17 %. In the UK, Boehringer Ingelheim grew by more than 13 %, with spiriva and sifrol the main growth drivers. In Italy, price cuts had a significant impact on market growth. Despite this, our strong sales resulted in Boehringer Ingelheim achieving 2.7 % growth. We see Eastern Europe providing significant future opportunities, as the quality of healthcare and expenditure increases in the region, driven by higher average incomes and dynamic economic growth. In 2007, strong demand for our respiratory products 64 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

human pharmaceuticals in Eastern Europe provided growth in excess of 17 % in this region. Our Russian business is an important focus in Eastern Europe and sales in Russia grew by 14 % in 2007. Asia, Australasia, Africa (AAA) Solid progress was achieved with our Prescription Medicines business in 2007 in local currency terms. However, all the major currencies in the region were weaker against the euro. Japan is the dominant market, providing more than 59 % of the net sales of our AAA region. After Japan, the major countries in terms of sales are Australia, Turkey, South Korea, China and South Africa. also started further improving our performance in the region in terms of growth, market share and profitability. The strong growth in nearly all the AAA countries can be directly traced to the continuing implementation of marketing and sales efficiency initiatives and the sustained robust development of our core products micardis, spiriva and sifrol. In some countries, more mature products, such as mucosolvan, combivent and lendormin, also continue to generate good contributions to our business and show an upward sales trend. l In Japan, for the third year running, Nippon Boehringer Ingelheim had the fastest growing business among the leading 20 pharmaceutical companies 1. Net sales of our prescription products, driven by our core products micardis, sifrol, spiriva and alesion, increased by 1.5 % to EUR 861 million. Australia, the second most important market in AAA, achieved annual net sales of EUR 124 million (+ 5.3 %). In Turkey, we achieved significant net sales of EUR 112 million (+ 21.2 %), making it the third most important country in our AAA region. China s sheer size, its ageing population and rapid economic growth were the reasons for establishing our first representative office in 1994. We have since built up a wholly-owned enterprise, including a manufacturing plant. In 2007, we achieved substantial growth of 36.3 % in our net sales growth in China, reaching EUR 57 million. In the Near East and Middle East, we already in 2006 established a regional operative unit in Dubai to build on synergies between the 18 countries in the region, and increased delegation of operational business responsibility and accountability to regional management. In parallel during 2007, we 1) IMS Health Database Economic regions Branded Prescription Medicines 65

Generic Prescription Medicines In the US generic drug market sales increased at an annual rate of approximately 8 % in 2007 1. While sales are not expected to return to doubledigit growth rates observed in recent years, it is predicted that generic prescriptions will continue to increase at a level of 10 % annually in volume terms over the next five years, while prices continue to fall. Generic drugs account for 63 % of all prescriptions in the USA and new generic drugs are expected to increase generic penetration further. In 2007, drugs worth USD 12 billion lost patent protection and it is estimated that in 2008 drugs worth USD 20 billion will be going off patent and become available for the generics industry. Additionally, the 2006 Medicare Prescription Drug Benefit Program has boosted federal spending on pharmaceuticals. It accounts for about 20 % of the prescriptions filled in the USA, of which 66 % are for generic drugs. As more retiring baby boomers become eligible over the next five to ten years, it is estimated the government will handle more than 50 % of US prescriptions. Boehringer Ingelheim s Generic Prescription Medicines (GPM) business, which operates exclusively in the USA, consists of Roxane Laboratories, Inc. and Bedford Laboratories, a division of Ben Venue Laboratories. Together, these two entities generated net sales of EUR 560 million (USD 767 million) in 2007, which accounts for approximately 15 % of our total US Prescription Medicines net sales in 2007. Compared to 2006, when the two entities generated net sales of EUR 657 million (USD 825 million), this represented a 14.8 % contraction, but only a 7.0 % decline in US dollar terms. 1) IMS 12/2007, US generic market, all segments In all, the year was characterised by even stronger competition with price erosion greater than anticipated. In 2007 competition against our Fluticasone increased significantly and we were unable in 2007 to reach the 2006 sales record. Nevertheless, we consider 2007 a successful year, marked by solid profitability. Oral generics Roxane Laboratories, Inc. develops, manufactures and markets a broad line of tablets, capsules, liquids and intranasal products. In 2007, the company achieved net sales of EUR 227 million (USD 311 million), compared to EUR 261 million (USD 328 million), -13.0 % (-5.2 % in USD terms) in 2006. Fluticasone propionate nasal spray, the first approved generic version of GSK s Flonase, continues to be a key contributor to Roxane s net sales. Fluticasone posted net sales of EUR 80 million (USD 110 million) in 2007. In 2007, Roxane submitted 17 abbreviated new drug applications (ANDAs) to the US Food and Drug Administration (FDA), received ten tentative approvals (TAs) and launched seven new products. Roxane develops the majority of its products internally, but additionally leverages partnerships with external active pharmaceutical ingredient (API) as well as finished product dosage form manufacturers. Injectable generics In the past 14 years, Bedford Laboratories has achieved substantial growth in the multisource injectable market. Bedford sells 91 drugs in 276 presentations that cover a wide variety of therapeutic classes; mainly in the areas of oncology, 66 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

human pharmaceuticals cardiology, anaesthesia, anti-infective and antipsychotic. Bedford, currently the second-largest generic injectable company in the USA, will continue to file a growing number of ANDAs each year, focusing on products that create a pipeline which will allow it to maintain a leadership position in generic injectables. This growth is driven by strong development and by manufacturing capabilities provided by Ben Venue Laboratories. Bedford posted net sales of EUR 333 million (USD 456 million) in 2007, compared to EUR 396 million (USD 497 million) in 2006, which represents a decline of -15.9 % (-8.2 % in USD terms). Key products included propofol, octreotide, GlucaGen, paclitaxel, Adriamycin, ondansetron and polymyxin B. Four new products were launched in 2007: methyl-prednisolone, a corticosteroid, and epirubicin, idarubicin and pentostatin, all oncology products. A large generic injectable oncology portfolio in the USA Bedford Laboratories is committed to helping cancer patients with safe, effective and affordable medication. With 26 oncology products, Bedford offers the largest line of injectable oncology products in the USA. Its portfolio impacts the lives of patients across numerous cancer indications such as ovarian cancer, leukaemia and breast cancer. In a very competitive oncology market, 16 of those 26 products rank 1st in unit market share. Overall, our US multisource business posted net sales of EUR 560 million (USD 767 million) in 2007. Generic Prescription Medicines 67

Besides traditional Chinese medicines, modern pharmaceuticals with scientifically proven active ingredients are increasingly gaining acceptance among our self-medication customers. Tong Han Chun, Chinese pharmacy, Shanghai 68 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

human pharmaceuticals Consumer Health Care Consumer Health Care (CHC), our self-medication business, achieved worldwide net sales of EUR 1,141 million in 2007, an increase of 7.2 % compared to the previous year, despite the strength of the euro, which had a negative impact on business development. After currency adjustment, positive growth of 11.7 % was achieved in 2007. All regions showed positive development. The Americas region posted the highest growth, both in percentage and absolute terms. Additionally Europe and the Asian region reported very satisfying growth rates. Our international CHC core brands continued to grow very favourably, primarily due to the launching of new line extensions. The US product acquisition zantac, which was not included in the sales figures for 2006, was an especially powerful growth driver in 2007. core brands chc Net sales in millions of EUR change dulcolax 131 + 7.3 % mucosolvan 117 + 8.3 % zantac 111 > 100.0 % pharmaton 81-14.9 % buscopan 77 + 8.7 % bisolvon 73 + 8.4 % thomapyrin 33-3.1 % antistax 27 + 18.6 % mucoangin 7-5.6 % Our brands dulcolax has been providing relief to sufferers of constipation in many countries for over 50 years. With its active ingredient bisacodyl, it has grown into one of our flagship CHC brands. The initial introduction in mid-2007 of two new ingredients (macrogol and glucomannan) under the brand names dulcolax balance and dulcofibre, helped the dulcolax franchise to maintain its position as the No. 1 laxative brand worldwide, while advancing further into the newly and more broadly defined category of intestinal irregularity. zantac, our heartburn brand in the USA, strengthened our presence and business in the gastrointestinal market. Through a seamless integration into the company, impactful marketing activities and the launch of a line extension delivering a cooling sensation, zantac achieved double-digit sales growth and increased market share to 9.1 % 1, outperforming the category. buscopan is an over-the-counter (OTC) antispasmodic available in over 100 countries. Its medically proven targeted effectiveness and safety is the basis for its success as the leading OTC medicine for abdominal cramping, pain and discomfort. The 2007 results again showed strong sales growth. The buscopan franchise continued its international development through line extensions in different consumer-relevant indications. In this respect, buscapina fem a new product for menstrual pain was successfully launched in Mexico, Argentina and Columbia. 1) Source IRI-Database Consumer Health Care 69

antistax is our global flagship brand targeting specifically leg health. antistax s positioning helps consumers to engage in life more by regenerating and providing relief for their legs, restoring and protecting their mobility. Currently, the promotional focus is specifically related to vein issues such as heavy, aching, tired legs, well as pain from inflammation and swelling. The recent launch of antistax tablets (360 mg) has proven very successful in Germany and Belgium, resulting in double-digit growth rates for the brand at a global level. antistax is currently marketed in 12 countries. CHC enters Chinese retail market mucosolvan was launched in China in 1994 and has since been successfully marketed specifically in hospitals. Due to the strong development of the retail market and the OTC segment in China, Boehringer Ingelheim s CHC business began to target mucosolvan directly at consumers during the winter season 2006/2007. At the same time, a strong retail sales team was set up to detail the brand at outlet and distributor level. Within one year the brand has grown from No. 6 category position to No. 2 (according to reported market figures of the top 12 cities provided by CMH). As the hospital business remains a key segment of the business and ensures positive sustainability in the Chinese market, hospital doctors play a vital role and are continuously detailed through a separate team of medical representatives. Besides traditional Chinese medicines, products with scientifically proven active pharmaceutical ingredients are increasingly gaining acceptance for self-medication by Chinese consumers. This provides our CHC business with the basis for establishing its defined portfolio of core brands in China in the foreseeable future. mucoangin, our sore throat brand, offers fast and long-lasting pain relief in sore throat. Marketing in this specific indication is patentprotected. The active ingredient ambroxol has effective local anaesthetic properties. mucoangin has already been launched in 10 countries with Germany, Mexico and Belgium representing the biggest markets. mucosolvan, our leading cough brand, has maintained its No. 1 position in the global cough category in 2007. It is now marketed in more than 80 countries and it has grown into one of our international CHC brands, trusted by millions of users worldwide who seek to be freed of the annoyance of a cough. Marketing campaigns launched in several markets in 2006 and 2007 which were for the first time directly targeted at consumers, were the key reason for growth of mucosolvan. Leading countries in sales terms are Germany, Russia, China and Spain. bisolvon, one of our leading cough brands, has been providing relief to sufferers of coughs in many countries for over 40 years. Continuous brand extensions since 2000 of a dry cough syrup containing dextromethorphan, and a herbal combination product against congested nose and sinus, helped the bisolvon franchise 70 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

human pharmaceuticals continue to strengthen and expand its position as a key player in the treatment of coughs. Our cough brand silomat, containing clobutinol, was in 2007 withdrawn from the market, as a study indicated possible risk to patients, albeit risk deemed to be extremely limited. Economic regions Consumer Health Care Asia, Australasia, Africa (AAA) The AAA region in CHC 1 performed well again in 2007, achieving net sales of EUR 77 million and growth of 7.5 % versus previous year. The international core brands continued to drive growth, with mucosolvan up 54.6 % and dulcolax up 2.3 %. The leading countries in sales terms were China, South Korea, Indonesia and Australia. The Japanese OTC market returned to growth after declining by 2 % the previous year. In 2007, the market grew by 3 % 2. This trend is expected to continue. SSP Co., Ltd., where Nippon Boehringer Ingelheim has a majority holding, is now No. 4 in a difficult market. It is particularly noteworthy that eve, an analgesic, posted net sales growth of more than 15 %. Europe In 2007, the Europe region reported net sales growth of 2.7 % compared to the previous year, in spite of limited market growth. pharmaton No. 2 worldwide pharmaton is the No. 2 worldwide brand in the multivitamins category. Its balanced combination of vitamins, minerals and ginseng extract has been providing mental and physical wellbeing, for over 40 years to millions of people in over 90 countries. In the world of multivitamins, the impressive numbers of clinical tests proving the efficacy of pharmaton has made it a unique brand and therefore, in many markets, the key recommended multivitamin brand by the medical community. In recent years, the pharmaton franchise has been extended with the roll-out of the following brands: pharmaton kiddi syrup provides children and adolescents with a vitamin and mineral supplementation appropriate during active growth. It is also helpful in cases of tiredness, excitability and school stress, conditions facing many of children nowadays. pharmaton matruelle contains a unique formulation of vitamins and minerals, omega-3 fatty acids, to support both the expectant mother s well-being and the healthy physical and neuronal development of the unborn child. The pharmaton range maintained its strong market position in 2007, reinforced by launches and enlarged regional markets in South America and Europe. Strong growth versus 2006 came from our flagship brands dulcolax (+ 16 %), buscopan (+ 9 %) and antistax (+ 11 %). Launches of line extensions for these brands were strong growth drivers. There was a successful start for a new line extension of dulcolax in our core market 1) without SSP Co., Ltd., Japan 2) SDI (Shakai-chosa Drugstore Index) Consumer Health Care 71

Germany. Additional launches in several other countries are planned for the future. In the cough and cold area, bisolvon posted solid growth of around 19 %, driven by the existing portfolio as well as new preparations. There was a very positive rebuild of our sore throat remedy lysopaine in France. In 2007, Boehringer Ingelheim was the fastest-growing OTC company in France. In Eastern Europe, net sales in Russia and Ukraine are growing very strongly. Americas In 2007, net sales in the Americas region grew by more than 39 % (47 % currency adjusted) compared to 2006, mainly driven by the acquisition of the heartburn medicine zantac in the USA. The US business reached EUR 144 million, due to the strong development of dulcolax and zantac. Mexico, one of the biggest markets in the region, showed a positive trend in the market. Brazil performed well in 2007, although the environment has been very competitive. The majority of the brands showed positive development, both in net sales and in the market. Only the cough brands (mucosolvan / bisolvon ) suffered due to strong generic competition. Our regional operating unit South America closed the year with growth of 13 % (21 % currency adjusted), mainly due to the strong development of Venezuela. l 72 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

Serving customers Product Supply and Industrial Customer

Outstanding experience in the development and manufacture of therapeutic proteins, antibodies, gene therapeutics and DNA vaccines. 74 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

product supply and industrial customer Product Supply and Industrial Customer Biopharmaceuticals Our Biopharmaceuticals business is continuously improving the production of highly demanded therapeutics derived from mammalian cell cultures in Biberach, Germany, and from bacterial fermentation in Vienna, Austria. Its expertise is also increasingly in demand for gene therapeutics and DNA products. Boehringer Ingelheim started the development of biopharmaceuticals back in 1963, with a broad range of interferons, superoxid dismutase and interleukins from microbial organisms and mammalian cell culture. Based on Boehringer Ingelheim s expertise, major research collaboration agreements were concluded in 1982 with Genentech Inc. Tissue plasminogen activator (tpa), jointly launched worldwide in 1987 by Boehringer Ingelheim and Genentech Inc., was the first therapeutic glycoprotein from mammalian cell culture ever approved. This early involvement has led to more than 40 years of experience in the development and manufacture of therapeutic proteins. Support for Research and Development The biopharmaceutical business segment supports the efforts of R&D s NBE development in the area of gene cloning, lead optimisation and supply of tox, preclinical, clinical and commercial material. Biopharmaceuticals is an integral part of the in-licensing activities as well as in the identification of new product potentials. Furthermore, it scouts for innovative process and product technologies through database screenings and by participating actively in biopartnering conferences. These activities foster the development of cutting-edge NBEs in the respective therapeutic areas. Mammalian cell culture expression system Only a decade ago, typical expression levels in mammalian cell cultures for the manufacture of biopharmaceuticals were measured in a tenth of a gram per litre. Today, the industrial standard is more than one to two grams per litre. At Boehringer Ingelheim s mammalian cell culture facility in Biberach, Germany, dedicated experts in molecular and cell culture biology are continuously improving high expression systems for mammalian cell cultures. They have developed a high-titre expression system bi-hex for mammalian cell cultures, which is applied especially for economic, high-volume production of monoclonal antibodies. This system has proven that more than six grams of protein per litre can be produced, which is about four times above the current industrial standard for products on the market. The right expression system is a fundamental part in the development of a commercially viable manufacturing process for high-dose therapeutic monoclonal antibodies. Our technology is also available for all customers in our Industrial Customer business looking for a safe, high-production, robust cell line. In 2007, Boehringer Ingelheim successfully finalised the innovation-driven upgrade of the protein purification unit in Biberach. The new unit is adapted to the improvements which have been achieved in the upstream process with the bi-hex system. Biopharmaceuticals 75

In a move to improve its one-stop-shop service, we also inaugurated a new fill and finish facility for pre-filled syringes as a patient-convenient parenteral application form. The facility received the approval by the European Medicines Agency (EMEA) and the US Food and Drug Administration (FDA) in 2007. bi-hex Technology Boehringer Ingelheim High Expression Technology (bi-hex ) is an established platform technology that enables fast-track development of high-quality, high-titre processes for the production of biopharmaceuticals from mammalian cell cultures (Chinese hamster ovary cell CHO cells). The insertion of the gene of interest into the cell culture genome enables the isolation of large qualities of the desired protein. bi-hex combines several state-of-the art technology platforms: Vector: Efficient vector systems with novel proprietary genetic elements for high-level of product expression and selection of high producers Host cell: CHO suspension-adapted, serum-free transfection, cultivated at high density in chemically defined serum-free media Single-cell cloning: High-throughput automated clone screening, improved selection markers Shorter development time, lower cost The bi-hex platform meets the demand for shorter development times for new biological medicines and follows the paradigm do-it-right-the-first-time to avoid unnecessary costs and delays in our time-to-clinic and time-to-market approaches. Early focus on commercial scale potential, process performance and product quality, safety and comparability avoids unnecessary costs and delays later. Technology platform for plasmid DNA In 2000, Boehringer Ingelheim Austria established a technology platform for the manufacture of plasmid DNA (pdna) which is mainly used to produce gene therapeutics and DNA vaccines. Since the process has been optimised, yields are 40-fold higher, reaching more than two grams per litre. With the development of this franchise technology, Boehringer Ingelheim Austria is today the only good manufacturing practice (cgmp) manufacturer for late-stage DNA gene therapeutics and vaccines. A worldwide product pipeline for DNA vaccines is emerging. In 2006 and 2007, the first positive results showed that the approach with pdna may replace traditional vaccines in the future, thus leading to a growing area with high demands on pdna. For this purposes, the pdna manufacturing process at Vienna is scalable up to 4,000 litres, yielding several kilograms of high-quality supercoiled pdna. Regulatory approvals Our manufacturing sites in Biberach and Vienna are aimed at supplying the world market with therapeutic proteins as well as gene therapeutics and DNA vaccines. Approvals from different regulatory authorities around the world for the global supply of biopharmaceuticals are therefore essential. In 2007, inspections of both sites by the FDA, the Canadian and the South Korean authorities were successful and again confirmed our competence and high compliance status in biopharmaceutical manufacturing facilities. This is a prerequisite for our long-term collaborations with companies from the USA, Europe and Asia. In 2007, Boehringer Ingelheim contributed with the preparation of the chemistry, manufacturing 76 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

product supply and industrial customer and control (CMC) section of our clients dossiers for FDA filing of a monoclonal antibody for respiratory diseases and Ministry of Health, Labour and Welfare (MHLW) filing in Japan for the first gene therapeutic for treatment of angiogenesis. The approval of both compounds will extend our biopharmaceutical track record to 15 products manufactured for the market. New network PAN Biologics With our recently established Production Alliance Network Biologics (PAN Biologics) we are coming closer to our customer in many aspects. The network is a global production alliance of currently ten medium-sized contract manufacturing companies located in biotech clusters around the world. PAN Biologics is working with Boehringer Ingelheim s high-expression systems, process formats and know-how in the early stage development and manufacture of biopharmaceuticals. In this attractive business concept clients gain access to Boehringer Ingelheim s intellectual property rights for early stage product development and also preferred access to our large-scale manufacturing capacities in late-stage product development. This global manufacturing concept was launched in 2007 with two new projects in cell line development at Boehringer Ingelheim and two projects that we transferred to our PAN Biologics partners. Time-to-market Long-term strategic orientation, innovation in all technology aspects, expertise in time-to-market, track records in successful regulatory approvals and availability of commercial capacities are the key success factors of Boehringer Ingelheim s well-respected global biopharmaceuticals contract manufacturing business. In addition to our existing long-term contracts with key clients, we in 2007 signed additional new contracts with major pharmaceutical and biotech companies. Plasmid DNA manufacturing Supercoiled plasmid DNA can function as a vector in gene therapy to transfer a gene of interest into human cells to be expressed as a therapeutic protein. In plasmid DNA vaccination the gene of interest expresses the antigenic protein for immunostimulation. Boehringer Ingelheim Austria has become one of the world s leading contract manufacturers in this field. Upstream processing: high plasmid DNA fermentation titre of more than 2.0 g/l proprietary E.coli host strain ensuring high, supercoiled pdna content in fermentation proprietary high cell-density cultivation process up to 4,000 litres custom-designed solutions for genetic host/vector engineering no animal derivatives, no antibiotics Downstream processing: proprietary, continuous, RNAse-free and gentle cell lysis maintenance of supercoiled plasmid conformation (up to 98 %) innovative three-step chromatographic purification final purity of more than 99 % validated analytical methods for pdna characterisation and impurity detection no detergents, organic solvents and enzymes in large-scale GMP purification Boehringer Ingelheim provides formulated bulk drug substance and liquid or lyophilised drug product. All development and production processes are cgmp-compliant. The research collaboration and licence agreement which Boehringer Ingelheim has signed with Biopharmaceuticals 77

Ablynx nv will strengthen our franchise technologies in the field of protein scaffolds produced in microorganisms at Boehringer Ingelheim Austria. Pharmaceuticals Production Our Pharmaceuticals Production Division produces Boehringer Ingelheim s own drugs in a globally coordinated production network, as well as offering manufacturing services to our industrial customers according to their specific needs. Securing product supply Our production sites In 2007, our Ingelheim production site in Germany demonstrated that it is on a world-class level for the manufacturing of product launches. Our second launch site in Columbus, USA, reached best-in-class level in North America. This competitive position will be further strengthened by the Pharmaceuticals Production s worldwide business process excellence initiative, which also showed significant improvements in competitiveness at all sites. Highlights of 2007 for Pharmaceuticals Production included the successful launch of the spiriva respimat in Europe in the fourth quarter of 2007 and the construction start for the second module for respimat production in Dortmund, Germany, due for completion in the second quarter of 2009. In preparation for the pradaxa (dabigatran etexilate) launch in 2008, we are investing in the pradaxa production module 1 in Ingelheim, due for completion in the final quarter of 2009. At our Columbus site in the USA we are investing in a high containment facility for our multisource business, scheduled for completion in the third quarter of 2010, as well as in another spray drier for micardis production, with completion set for the fourth quarter of 2008. The investments mentioned in Germany and the USA amount to more than EUR 180 million. In order to fulfil the increasing demands of our customers, our Asian plants will be further strengthened through specific investments for micardis (Japan), ampoule packaging (China) and CHC products (Indonesia). Our sites market competitiveness was not only demonstrated in Asia, but also very successfully by our sites in Brazil for South America, Mexico for NAFTA and Greece for eastern Europe. For our industrial customers Our Industrial Customer business is growing successfully, reflecting our external customer interest in outsourcing production to Boehringer Ingelheim as a reliable and competitive partner. Eight world-class state-of-the-art manufacturing facilities offer a wide range of services in three continents. Our proven track record of scaleup and wide ranges of manufacturing and packaging technologies in combination with the fully harmonised supply chain network offers many possibilities for the success of our customers. In successful partnerships we are providing services to eight out of the top 20 pharmaceutical companies. Inhaler and microsystems technology Based in Dortmund, Germany, Boehringer Ingelheim microparts GmbH is our competence centre for the development and production of innovative inhalers, as well as for development and production of microsystem technology for industrial customers in the diagnostic and analytic area. Production of the respimat device The respimat Soft Mist Inhaler was initially launched with the airways drug berodual in 2004. In 2007, the launch of the spiriva respimat Soft Mist Inhaler was a further big step forward in marketing the device worldwide. For this, the fully automated first production 78 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

product supply and industrial customer line has been ramped up to 4 million devices in 2007. The full capacity of 10 million devices per year will be reached in 2009. A second production line with an annual capacity of another 10 million devices is under construction and will start production in the middle of 2009. Boehringer Ingelheim microparts key aspects in production of the respimat Soft Mist Inhaler are the use of microstructure technologies, production of polymer components with injection moulding processes and the automated assembly as well as the inspection of the devices. The transfer and implementation of additional analytical processes from Boehringer Ingelheim Corporation to Boehringer Ingelheim microparts, resulted in the synergistic increase of the efficiency of our supply chain processes. Design and scale-up of innovative inhalers In the past, Boehringer Ingelheim microparts developed the respimat Soft Mist Inhaler. For our future innovative drugs the respimat platform will be further developed in order to meet additional requirements. First batches have been delivered for clinical trials. Besides the expansion of the respimat technology to a platform of inhaler devices, Boehringer Ingelheim microparts develops, for example, new inhalers for dry powder formulations. Due to the close proximity to respimat production, design and scale-up can give a strong support to productionoptimising programmes. Advancing inhaler and microsystems technology Based in Dortmund, Germany, Boehringer Ingelheim microparts GmbH is our centre of competence for the development and production of innovative inhalers and a reliable contract developer and manufacturer of microsystems technology. The work rests on three pillars: Manufacturing the respimat device and establishing respimat technology as the gold standard in its field. The development of innovative inhalers by further developing the respimat platform (e. g. ethanolic systems) and the development of inhalers for application of dry powder formulations in close cooperation with the drug delivery department in Ingelheim. The development and production of microsystems for industrial customers with focus on microfluidic applications for analytical instrumentation and medical diagnostics. Industrial customer business For many years now, Boehringer Ingelheim micro- Parts industrial customer business has acquired an international reputation as a reliable contract developer and manufacturer of microsystems and microfluidic lab-on-a-chip platforms for analytical instrumentation and medical diagnostics. Boehringer Ingelheim microparts significant know-how in the development and fabrication of polymer-based microfluidic and microoptic devices, as well as a broad patent portfolio, are Pharmaceuticals Production 79

New plant doubles respimat output A new state-of-the-art production facility will double output of the respimat Soft Mist Inhaler, our innovative, new generation inhalation device, to 20 million units a year. Work on the plant, located at Boehringer Ingelheim microparts site at Dortmund, Germany, commenced in March 2007 and is due for completion in mid-2008. The four-storey, 12,000 m² facility, of which a third will be under clean-room conditions, is part of a more than EUR 70 million expansion programme at Boehringer Ingelheim microparts. major benefits for our customers to meet the everincreasing market demand for miniaturised and rapid testing. As a world leader in microstructure technology, Boehringer Ingelheim microparts provides its customers with an integrated service from early product development to large-scale manufacturing. In close collaboration, novel medical devices and in vitro diagnostic systems are realised for critical care, point of care and patient self-testing applications, thus addressing unmet needs in today s healthcare. Personalised medicine has recently received particular attention. In this new therapy concept the so-called companion diagnostics could play an outstanding role by testing biomarkers in order to identify the best and most efficient therapy for the patient or to control and optimise the therapy by monitoring treatment results. Boehringer Ingelheim microparts is uniquely positioned to add value to Boehringer Ingelheim s therapy areas by developing companion diagnostics platforms aimed at improved patient care. Pharma Chemicals Global production network Our five chemical production sites in France, Germany, Italy, Spain and the USA form a worldwide network. They have state-of-the art chemical development facilities, all the required expertise and highly flexible, multi-purpose production plants. We have the capacity range to seamlessly upscale the production of extremely complex chemicals from one kilo to multi-ton levels. Our facilities enable active ingredients to be synthesised chemically or extracted and refined from medicinal plants. Indeed, Pharma Chemicals has developed specific expertise in manufacturing phytochemicals. It is the world leader in extract- 80 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

product supply and industrial customer ing active ingredients from medicinal plants and commands the whole process chain from plant cultivation to marketable pharmaceuticals. For our industrial customers In 2007, the consolidated sales of our worldwide Pharma Chemicals business amounted to EUR 146 million, slightly below the level of 2006 (EUR 158 million), as we had expected, because of the increased demand for captive use. The negative currency effect of EUR 8 million was partially offset by growth in our established line products in an increasingly challenging competitive environment. Our organic mineral salts business, which included products such as magnesium citrate and magnesium aspartate, was sold in 2007 to a German company specialised in producing a wide range of mineral salts. Expansion projects on track As a result of the dynamic growth of micardis and the expected launch of pradaxa (dabigatran etexilate) in 2008, two major expansion projects for the global chemical production network were started in 2006. During 2007, the construction of our new plants in Petersburg, Virginia, USA, and Fornovo, Italy, made significant progress. Completion of the investment projects is expected for the end of 2008. The efficiency of the existing assets in the corporate network was further increased by business process excellence projects at each production site. In the area of new business development we progressed successfully and several very promising projects will ensure future growth. l Pharmaceuticals Production / Pharma Chemicals 81

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For humans and animals Animal Health

Boehringer Ingelheim is on the way to becoming world leader in the porcine vaccine segment. 84 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

animal health Hope for Harrison Creek Farm In rural, idyllic Calloway County in the US Midwest is Harrison Creek Farm. The farm owners, Kenny, Dale and Ronnie Brinker, keep around 3,000 sows as part of a bigger operation. The owners and farm personnel are proud that they have created an extremely successful swine farm with very healthylooking pigs. In February 2006, however, the situation suddenly changed dramatically, as piglets became seriously ill and many died soon following a mysterious disease, which proved impossible to treat or protect against. The Brinker family realised that this situation could also put at risk their previously stable financial status of Harrison Creek Farm. In addition, farm employers became increasingly disheartened, as they were very proud of their past achievements and could not see any solution to the problem. Then, Dr Mac Wilt, the farm veterinarian, and the Brinker family decided on a new course of action and enrolled in a diagnostic programme initiated, designed and financed by Boehringer Ingelheim. In this study programme it was finally possible to find answers about the disease and soon after to provide a solution. This solution came in the form of a newly developed porcine circovirus-2 (PCV-2) vaccine against a disease now termed PCV-2 associated disease (PCVAD). The administration of the vaccine had a remarkably positive effect and first results exceeded the expectations of everybody involved. Kenny Brinker happily remembers: The vaccine completely eliminated all signs of classical PCVAD. PCVAD is a relatively new disease, which was first recognised in Canada in 1991. From 1997, PCVAD then took hold in Europe and Asia and led to serious economic losses on a large scale for which no solution could be found for a long time. Prior to the vaccine being used on Harrison Creek Farm, it had been tested in Europe where PCVAD was still causing losses. Professor Matthias Ritzmann of the swine clinic of the Ludwig-Maximilians- University of Munich recalls: PCVAD is a very complicated disease and prior to the vaccine trials together with Boehringer Ingelheim, we could not imagine a solution to this problem. Once we realised the remarkable disease resolution the vaccine achieved we were truly amazed. Back at Harrison Creek the Brinker family, together with employees and their veterinary surgeon, Dr Wilt, are happy that the difficult and tough times have been overcome. Dale Brinker comments: After using the vaccine it s like someone flipped a switch and the disease went away. It s again fun to work with the finishing pigs. It s fun when they re all healthy. Hope for Harrison Creek Farm 85

Animal Health 2007 was a banner year for our Animal Health business, with marked improvements in all strategic core segments and main regions. We generated net sales of EUR 408 million, amounting to a growth rate of 9.1 % (13.1 % in local currency terms) compared to the previous year. We once again performed better than the total market for animal health products, giving us a global market share of 3.1 %. We thereby further strengthened our position amongst the top ten animal health companies in the world. Food producing animals Swine Our new vaccine ingelvac circoflex clearly dominated the past year. This innovative vaccine against porcine circovirus type 2 (PCV-2), that causes immune deficiency, was launched in March 2007 in the USA and Canada, and later in the year also in Mexico on the basis of a special permit. The disease is currently putting great pressure on the pig farmers in these countries, but with our vaccine we saved many producers from major financial losses. Demand for this product was unexpectedly high and its success would not have been possible without the superb commitment of our US production teams. We will launch ingelvac circoflex in Europe and Asia in 2008. Our aim is to establish ingelvac circoflex as the standard vaccination for piglets. For enterisol ileitis, the success story also continued at a growth rate of 18 %. Since its registration in South Africa, enterisol ileitis is the first live vaccine which has marketing authorisations on all continents. The sales performance of the product has been especially satisfactory in the USA, where it grew by 18 %. The classic vaccines in our swine product portfolio, ingelvac m.hyo and ingelvac prrs, also maintained their strong positions in the market. At a growth rate of 40 %, we made a big step towards our strategic aim of becoming the global leader in the segment of porcine vaccines. Cattle In 2007, we maintained our strong market position in the cattle segment. Our top product, metacam, increased sales strongly and established itself as the standard product for the effective treatment of pain and inflammation. The business development of our traditional mastitis products was also very satisfactory. We also strengthened our position in the US market for cattle vaccines. This is a great success, which proves that by strategically focusing on innovative vaccines, mastitis products and pharmaceutical specialties, our organisation has made sustainable progress in recent years. Companion animals Small animals The market for small animal products currently represents a focus point within our industry. Despite the competitive situation, we succeeded in reaching our strategic aims in 2007. Our strongest brand, metacam, maintained its prominent market position during the first year facing generic competition, closing at the previous year s level. In the USA, metacam is now regarded as the fastest-growing brand in the segment of management of pain and inflammation. Additionally, the 86 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

animal health launch of metacam cats in Europe generated further growth. During a scientific symposium renowned experts welcomed this innovative formulation for the treatment of pain and inflammation in cats. We deem it a great success that in total metacam was the first Boehringer Ingelheim Animal Health brand to break the USD 100 million net sales barrier, despite generic competition. An important event was the launch of vetmedin on the US market. With our dedicated team we managed to improve our position in the largest companion animal market in the world and also received much positive feedback from veterinary practitioners. This brand s strong growth of 26 % is primarily due to its high product quality. There is no question about the outstanding efficacy of vetmedin in the treatment of congestive heart failure. We clearly proved that this medication can improve both the quality of life and the survival time of affected dogs. Consequently, vetmedin already ranks second in the market globally, and we are confident that by next year Boehringer Ingelheim will have the world s largest cardiovascular drug for dogs in its portfolio. Horses In 2007, nearly all our equine products increased their market share and the respiratory portfolio recorded its best performance yet. The worldfamous brand, ventipulmin, in particular, stepped up a gear and showed double-digit growth compared to the previous year. We expect the horse segment to become more important over the next few years. Fastest-growing heart drug for dogs vetmedin is a breakthrough treatment for congestive heart failure in dogs. Since its first introduction in Europe in 1999, it has been shown to increase both quality and length of life in dogs suffering from congestive heart failure, above and beyond previous treatment regimes. vetmedin reached an important milestone in 2007 with the granting of the US Food and Drug Administration (FDA) licensing and the subsequent launch in the USA, the largest, most important veterinary companion animal market worldwide. A new user-friendly meat-flavoured vetmedin formulation, developed for the US market, has now also been introduced in Europe and Australia. The new flavoured tablets meet the needs of both veterinarians and pet owners, helping to ease administration and increase compliance. Globally, vetmedin is the fastest-growing cardiovascular treatment for dogs and is expected to achieve worldwide market leader status in 2008. Animal Health 87

Research and development Following our vision Value through Innovation, Boehringer Ingelheim Animal Health has been investing a consistently high percentage of its sales in research and development for many years. In 2007, this figure was again in the region of 12 %. Moreover, we decided to make a significant investment in the expansion of research into vaccines in Europe. Our new Center for Research will be set up in Hanover, Germany. There, in the immediate vicinity of the Foundation of the University of Veterinary Medicine Hanover, we will research new vaccines, initially with approximately 50 members of staff. The continuous advances of our product pipeline mean that we will continue to hold a leading position in the battle against new diseases and in the development of novel chemical formulations. The growth prospects for the animal health sector have rarely been better than at the end of 2007. We want to remain the way we have been so far: a reliable partner for veterinarians and animal owners. In this manner we will stay on our successful course and continue to manufacture innovative and ethical products that accommodate the needs of both man and animal. Economic regions Animal Health All regions performed very satisfactorily in 2007. In the NAFTA region, USA, Mexico and Canada recorded double-digit growth in local currency terms. These increases are primarily due to our leading position in the segment of porcine vaccines and to the strong growth of the American market for small animal products. Our Mexican affiliate significantly increased sales of our poultry vaccines. Growth in Europe was in the region of 5 % in 2007 and business performance was also very good in Asia. South Korea and China presented excellent sales figures yet again. Emerging markets We are consistently striving for a global presence in our core segments. In 2007, we continued the geographic expansion of our business activities and the progressive expansion into new regions. In the course of the year, we introduced our own teams in Taiwan and Indonesia and further expanded our organisations in the North African and the Arabic-speaking region. The market development in Eastern Europe, through our Regional Center Vienna, is on schedule. l 88 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

Our products Glossary

Glossary Human Pharmaceuticals Product name Active ingredients Indication actilyse alteplase Fibrinolytic treatment of acute myocardial infarction, acute massive pulmonary embolism and ischaemic stroke. aggrenox asasantin persantin plus dipyridamole, acetylsalicylic acid Prevention of stroke following a first stroke or for transient ischaemic attacks. As above and adjunct to coumarin anti-coagulants in the prevention of post-operative thrombo-embolic complications of cardiac valve replacement. alesion flurinol epinastine Prophylactic treatment of bronchial asthma. Prophylaxis and symptomatic treatment of allergic rhinitis, allergic skin disorders with pruritus, such as urticaria, and eczema /dermatitis. antistax red vine leaf extract Prevention and treatment of symptoms of chronic venous insufficiency; varicose veins, leg oedema, painful swollen legs, tingling legs, tired and heavy legs. aptivus tipranavir Available as capsules for adults used co-administered with 200 mg of ritonavir, is indicated for combination antiretroviral treatment of HIV-1-infected adult patients with evidence of viral replication, who are treatment-experienced and infected with HIV-1 strains resistant to more than one protease inhibitor. 90 Boehringer Ingelheim a n n u a l r e p o r t 2 0 0 7

our products Product name Active ingredients Indication atrovent ipratropium bromide Bronchodilator for maintenance treatment of bronchospasm associated with chronic obstructive pulmonary disease, including chronic bronchitis, emphysema and asthma. berodual bronchodual duovent fenoterol, ipratropium bromide For prevention and treatment of symptoms in chronic obstructive airway disorders with reversible bronchospasm, such as bronchial asthma, and especially chronic bronchitis, with or without emphysema. berotec dosberotec fenoterol Symptomatic treatment of acute asthma attacks, prophylaxis of exercise induced asthma, symptomatic treatment of bronchial asthma and other conditions with reversible airway narrowing, e.g. chronic obstructive bronchitis. bisolvon bromhexine Secretolytic therapy in acute and chronic bronchopulmonary diseases associated with abnormal mucus secretion and impaired mucus transport. dextrometorphane Symptomatic treatment of irritable, non-productive cough. buscopan buscapina hyoscine butylbromide Treatment for the relief of abdominal cramping, pain and discomfort. Glossary 91

Product name Active ingredients Indication catapresan catapres catapressan atensina clonidine All forms of high blood pressure, unless caused by phaeochromocytoma. combivent ipratropium bromide, salbutamol Treatment of bronchospasms associated with reversible obstructive airway diseases in patients requiring more than one bronchodilator. cymbalta xeristar duloxetine hydrochloride Treatment of depression. Treatment of diabetic neuropathic pain (DNP). dulcolax dulcolax balance dulcofibre bisacodyl (tablets, suppositories), sodium picosulphate (drops, pearls) macrogol 4000 glucomannan Laxative for use in patients suffering from constipation. In preparation for diagnostic procedures, in pre- and post-operative treatment and in conditions, which require defecation to be facilitated. Symptomatic treatment of constipation for adults and children from eight years onwards. Reactivation/regulation of bowel movement; helps restore and maintain regularity. flomax alna josir pradif secotex urolosin mecir tamsulosin Lower urinary tract symptoms (LUTS) associated with benign prostatic hyperplasia (BPH). 92 Boehringer Ingelheim a n n u a l r e p o r t 2 0 0 7

our products Product name Active ingredients Indication flomax cr alna ocas pradif t urolosin ocas tamsulosin, orally controlled absorption system Lower urinary tract symptoms (LUTS) associated with benign prostatic hyperplasia (BPH). inflammide budesonide Chronic control of symptoms and signs of bronchial asthma. laxoberal laxoberon guttalax sodium picosulphate (drops, pearls, tablets) Laxative for use in cases of constipation and in conditions which require defecation to be facilitated. lendormin lendorm lindormin sintonal brotizolam Short-term treatment of disorders of initiating and maintaining sleep. metalyse tenecteplase Fibrinolytic treatment of acute myocardial infarction. Glossary 93

Product name Active ingredients Indication mexitil mexitilen mexiletine Serious symptomatic ventricular tachycardic heart rhythm disturbances. micardis micardisplus micardis plus micardis hct co-micardis telmisartan; telmisartan, hydrochlorothiazide Treatment of essential hypertension. mobic mobec movalis movatec meloxicam Symptomatic treatment of rheumatic diseases. motens caldine tens midotens lacidipine Treatment of essential hypertension. mucoangin frubizin akut ambroxol (lozenges) Pain relief in acute sore throat. 94 Boehringer Ingelheim a n n u a l r e p o r t 2 0 0 7

our products Product name Active ingredients Indication mucosolvan motosol mucosan surbronc vaksan lasolvan mucosal ambroxol Secretolytic therapy in acute and chronic bronchopulmonary diseases associated with abnormal mucus secretion and impaired mucus transport. pharmaton standardised ginseng extract, vitamins, minerals, trace elements For states of exhaustion (e. g. caused by stress), tiredness, feeling of weakness, decreasing concentration as well as decreasing mental alertness. pharmaton kiddi vitamins, minerals, amino acids Increasing demand for vitamins, minerals and amino acids, especially during the period of growth. Preventive treatment in case of vitamin deficiencies, e. g. restricted diets, convalescence, loss of appetite, following illness, infection or surgery. pharmaton matruelle vitamins, minerals, trace elements, omega-3 fatty acids [docosahexaenoic acid (DHA)] For women of child-bearing age intending to become pregnant, already pregnant and lactating, to cover the increased needs for vitamins, minerals, trace elements and DHA. To provide protection against embryonal neural tube diseases of the foetus, and prophylaxis of iron and folic acid anaemia during pregnancy. sifrol mirapex mirapexin pramipexole Symptomatic treatment of idiopathic Parkinson s disease. It may be used as monotherapy or in combination with levodopa. Symptomatic treatment of idiopathic restless legs syndrome. Glossary 95

Product name Active ingredient Indication silomat dmp dextrometorphane Symptomatic treatment of irritable, non-productive cough. spiriva tiotropium bromide Maintenance treatment of patients with COPD (chronic obstructive pulmonary disease, including chronic bronchitis and emphysema), the maintenance treatment of associated dyspnoea and for prevention of exacerbations. thomapyrin acetylsalicylic acid, paracetamol, caffeine Mild to moderate pain. thomapyrin intensiv acetylsalicylic acid, paracetamol, caffeine For adults and adolescents older than twelve years for acute treatment of mild to moderate headache, migraine attacks, with and without aura, and for the treatment of tension-type headache. viramune nevirapine Available as tablets for adults and suspension for children for the combination therapy of HIV-1 infection and for the prevention of mother-to-child transmission of HIV-1 in pregnant women who are not taking antiretroviral therapy at time of labour. zantac ranitidine Relieves heartburn associated with acid indigestion and sour stomach. Prevents heartburn associated with acid indigestion and sour stomach brought on by certain foods and beverages. 96 Boehringer Ingelheim a n n u a l r e p o r t 2 0 0 7

our products Animal Health Product name Active ingredient Indication enterisol ileitis attenuated live vaccine (Lawsonia intracellularis) For active immunisation of pigs from three weeks of age and older to reduce intestinal lesions caused by Lawsonia intracellularis infection and to reduce growth variability and loss of weight gain associated with the disease. express attenuated live vaccine (IBRV, BVDV, PI3V, BRSV) For prevention of reproductive and respiratory diseases in cattle. ingelvac circoflex recombinant vaccine (porcine circovirus type 2, PCV-2) For the active immunisation of pigs over the age of two weeks against porcine circovirus type 2 to reduce mortality, clinical signs including weight loss and lesions in lymphoid tissues associated with porcine circovirus diseases (PCVDs). ingelvac m.hyo inactivated vaccine (Mycoplasma hyopneumoniae) For the active immunisation of pigs from three weeks of age to reduce lung lesions following infection with Mycoplasma hyopneumoniae. ingelvac prrs mlv attenuated live vaccine (PRRS virus) For the active immunisation of swine from three weeks of age against the respiratory and reproductive form of PRRS virus infection (porcine reproductive and respiratory syndrome). mamyzin penethamate hydroiodide For the treatment of mastitis in dairy cows caused by Gram-positive pathogens. Glossary 97

Product name Active ingredient Indication metacam meloxicam Dog, cat: Alleviation of inflammation and pain associated in both acute and chronic musculo-skeletal disorders. Reduction of postoperative pain and inflammation following orthopaedic and soft tissue surgery. Cattle: Acute respiratory infection with appropriate antibiotic therapy, diarrhoea in combination with oral re-hydration therapy, adjunctive therapy of acute mastitis in combination with antibiotic therapy. Swine: Non-infectious locomotor disorders to reduce lameness and inflammation. Adjunctive therapy against mastitis-metritis-agalactiasyndrome. Horse: Alleviation of inflammation and relief of pain in both acute and chronic musculo-skeletal disorders. Relief of pain associated with colic. ventipulmin clenbuterol Bronchodilator for the treatment of acute, sub-acute and chronic obstructive airway disease in horses. vetmedin pimobendan For the treatment of congestive heart failure in dogs. 98 Boehringer Ingelheim a n n u a l r e p o r t 2 0 0 7

Group Management Report 2007

Group Management Report Business and operating environment Overview The growth of the world economy moderated somewhat from 3.9 % in 2006 to a still relatively robust 3.7 % in 2007. In spite of this positive key indicator, we saw some strong pointers to upcoming clouds on the economic horizon in 2007. Noteworthy were the ongoing housing downturn in the USA, the resulting sub-prime mortgage crisis, the all-time high for oil prices and the further weakening of the US dollar and the Japanese yen compared to our reporting currency, the euro. In 2007 the German economy grew by 2.5 % which is below the growth rate for 2006. The continued growth also extended to the labour market. The number of unemployed fell distinctly to a level of 3.8 million and the number of people in employment rose further. Because of the implications of the above-mentioned economic limitations (the US economy, the oil price), the expected development of the German economy for 2008 has been adjusted downwards to an expected growth of only 1.7 % by key institutions monitoring economic development, such as the Bundesbank. Based on current estimates from market research institutes, 2007 was the fifth year in succession with declining growth rates (based on a constant euro) for the pharmaceutical industry. Governmental price regulations, increased pressure from healthcare providers to prescribe generic products and patent expiry for some Net Net sales sales by businesses by 2007 2007 (in Net millions (in sales millions by of businesses EUR) of EUR) 2007 (in millions of EUR) Net Net sales sales by region by region 2007 2007 (in Net millions (in sales millions by of region EUR) of EUR) 2007 (in millions of EUR) Prescription Medicines Medicines Prescription Medicines 8,311 8,311 8,660 8,660 8,311 8,660 Consumer Consumer Health Health Care Care Consumer Health 1,064 Care 1,064 1,141 1,141 1,064 1,141 Biopharmaceuticals Biopharmaceuticals 503 503 463 463 503 463 Pharma Pharma Chemicals Chemicals and and Pharmaceuticals Chemicals Production Production and Pharmaceuticals Production 306 306 276 276 306 276 Animal Animal Health Health Animal Health 374 374 408 408 374 408 06 07 06 07 06 07 Americas Americas Americas 5,388 5,388 5,463 5,463 5,388 5,463 Europe Europe Europe 3,295 3,295 3,578 3,578 3,295 3,578 Asia, Asia, Australasia, Asia, Australasia, Africa Africa Africa 1,891 1,891 1,891 06 07 06 07 06 07 1,911 1,911 1,911 Total Total Total 10,574 10,574 10,952 10,574 10,952 10,952 100 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

group management report blockbuster products are the major reasons for this development. In 2007, we recorded a very gratifying sales growth in local currency terms of 8.8 % for the Boehringer Ingelheim group, thus enabling us for the 8 th time in a row to grow faster than the pharmaceutical market. Nevertheless, we were faced with two major challenges in 2007: on the one hand, the strength of the euro (mainly against the US dollar and Japanese yen) and, on the other hand, the loss of turnover for mobic due to the expiration of exclusivity in the US market in 2006 (revenue loss in 2007: USD 387 million). The increased strength of the euro in 2007 compared to the US dollar and the Japanese yen resulted in an overall loss of revenue of more than 5 % versus the prior year. The fact that we were able to grow by 3.6 % in euro terms, despite these adversities, demonstrates the growth dynamics of our portfolio. Group net sales were increased to almost EUR 11 billion (+ 3.6 %). Adjusted for the currency effects and loss of the mobic patent, this development would have been in double-digits, as in the previous years (2006: + 10.9 %, 2005: + 16.9 %, 2004: + 10.5 %). Growth in 2007 was again borne by all three regions. According to IMS, only in the Americas region did we fail to beat market growth, which can be explained by the decline in sales for our product mobic in the US market. Net sales by region (in millions of EUR) 2007 2006 Americas 5,463 5,388 Europe 3,578 3,295 Asia, Australasia, Africa 1,911 1,891 The strongest growth was achieved in Europe with 8.6 %. Sales growth in the regions Asia, Australasia, Africa (AAA) and Americas was significantly impacted by the unfavourable exchange rate developments and thus the net sales in euro terms only rose slightly above the prior year. The US dollar and the Japanese yen lost about 10 % of their value versus the euro compared to 2006. The most important business segment for Boehringer Ingelheim is Prescription Medicines (PM), which accounts for 79 % of the group sales. This business segment showed pleasing development in 2007, with sales increasing by 10 % currency adjusted. Net sales (in millions of EUR) 2007 2006 Change Prescription Medicines 8,660 8,311 +4.2 % Consumer Health Care 1,141 1,064 +7.2 % Biopharmaceuticals 463 503-8.0 % Pharma Chemicals and Pharmaceuticals Production 276 306-9.8 % Animal Health 408 374 +9.1 % Key driver of our sales increase in 2007 was the strength of our key brands. With spiriva, micardis and flomax Boehringer Ingelheim had three blockbusters (sales of more than USD 1 billion) on the market. All three products grew by more than 10 % in 2007. spiriva, our innovative medication for chronic obstructive pulmonary disease (COPD), achieved the strongest growth with a 30 % increase compared to the previous year, reflecting thus 101

the continued appreciation by physicians and patients for this modern once-a-day anticholinergic. It is also the first product in Boehringer Ingelheim s history which has surpassed the US dollar 2 billion revenue mark. micardis, for the treatment of hypertension, achieved a growth of 16 %, which underlines the strength of this medication in its highly contested market segment. micardis has thereby fully met our expectations and its further growth potential can gain additional momentum on publication of the results of the ontarget study in 2008. flomax /alna, a medication for the treatment of benign prostatic hyperplasia (BPH), achieved a sales growth of 11 %. This growth was primarily attributable to its success in the USA, where it holds a market share of more than 60 %. Our product aggrenox, the widely recommended treatment for secondary stroke prevention, produced growth of 24 % in 2007, and we expect further potential based on the outcome of our landmark study profess which will be completed in the second quarter of 2008. In 2006, we received registration approval for sifrol /mirapex in the additional indication for the treatment of the restless legs syndrome (RLS) in both Europe and the USA. This is a major reason for the further sales increase of more than 20 % in 2007. Our Consumer Health Care business developed very well in 2007 with growth of more than 7 %. The product acquisition zantac in the USA at the end of 2006 has proven very successful. In its first year in our portfolio zantac surpassed our expectations and we recorded sales of more than EUR 110 million in the US market for this brand. One of the challenges last year for our Consumer Health Care (CHC) business was our decision to withdraw our well-established clobutinol-containing over-the-counter medication silomat from the market. When new data from a study in healthy volunteers became available, putting patient safety first, we made the decision to withdraw this compound that had been well-established for more than 30 years, although the risk potential was deemed to be very limited. Growth of 9 % (+ 15 % in local currency terms) achieved by our Animal Health business reflects a very good year for this business, which once again performed better than the market. This represents a further strengthening of our market share of 3 %. The previously shown decline in sales for our Biopharmaceuticals business had been expected and planned for. In 2007, Boehringer Ingelheim successfully finalised the innovation-driven upgrade of the protein purification unit in Biberach, Germany. Because of this we had to shut down our production unit for several weeks. Our Leitbild (guiding principles) and vision, spelled out in the Lead & Learn initiative, have created a working environment in which trusting and productive cooperation can flourish. As a result of our first worldwide employee survey we have gained further insights into our working culture and have identified further improvement potentials on which we will focus our attention. In summary, the year 2007 has reaffirmed our strategic direction, linking up with the success of previous years. Due to a solid product portfolio, a well-equipped and promising pipeline and, most importantly, a motivated workforce, for which the company is offering many initiatives and programmes for further professional 102 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

group management report qualification, we feel well-prepared to face the challenges ahead. The most important figures on earnings for 2007 are as follows: (in millions of EUR) 2007 2006 Change Net sales 10,952 10,574 +3.6% Operating income 2,100 2,140-1.9 % Return on net sales (as %) 19.2 20.2 Research and development Driven by our guiding principle to help people suffering from diseases by researching innovative medicines, research and development has been the foundation of our success, and will continue to be the major driver of our future growth. As a research-driven pharmaceutical company, our future success depends essentially on our ability to discover new, innovative active ingredients for the treatment of diseases with an unmet therapeutic need. This strategic orientation, is, on the one hand, documented in our current R&D projects and initiatives, and, on the other hand, in our worldwide financial investment in this area, which has been significantly increased over the past years. In our strategic R&D sites in Germany, USA, Austria and Canada we have invested more than EUR 1.7 billion, which represented 15.8 % of net sales in 2007 (2006: 14.9 %). The lion s share of our R&D activities is related to the development of Prescription Medicines. In this segment we spent 19 % of our net sales. Our efforts for innovative medicines are based on our own R&D capacities and are complemented by in-licensing and partnering activities. Over the years, we have gained experience with a number of strategic partnerships. This has helped us to build up strong alliance management functions, ensuring high-level commitment to the successful execution of partnerships. In 2007, we expanded our alliance with the Belgian company Ablynx nv on collaboration in the development of Nanobodies, a new class of therapeutic proteins, which can act across multiple therapeutic areas. In addition, we entered a new partnership with the US company Xencor, Inc. in the field of new biological entities (NBEs). The US company Vitae Pharmaceuticals, Inc. is a new Boehringer Ingelheim alliance partner for developing and commercialising 11beta-HSD1 inhibitors. As a result of this partnership, we expect to develop new treatment options for diabetes and metabolic syndrome-related diseases. Research and development 2007 2006 2005 2004 2003 Expenditure in millions of EUR 1,730 1,574 1,360 1,232 1,176 - as % of net sales 15.8 14.9 14.3 15.1 15.9 Prescription Medicines expenditure in millions of EUR 1,649 1,501 1,293 1,173 1,123 - as % of Prescription Medicines net sales 19.1 18.1 17.8 19.0 20.3 Average number of employees 6,405 6,003 5,678 5,471 5,362 Investments in tangible assets (without investments in infrastructure) in millions of EUR 157 125 116 97 93 103

In accordance with our current strategy, we carry out drug discovery and development at the four previously mentioned R&D sites in seven major therapeutic areas: respiratory diseases virology oncology metabolic diseases cardiovascular diseases central nervous system diseases immunology and inflammation With the launch of spiriva respimat Soft Mist Inhaler in Germany in 2007, we reinforced our strong position in the area of respiratory diseases. We consider this device a major milestone in inhalation therapy and drug delivery. The respimat represents a new class of inhaler, which is highly effective, due to its innovative technology in delivering the active ingredient and is furthermore convenient and easy to handle for the patient. In the therapeutic area of treating and preventing thrombo-embolic diseases, Boehringer Ingelheim has developed the novel chemical compound dabigatran etexilate, with the designated brand name pradaxa. A Large phase III programme with the acronym re volution, including more than 27,000 patients, is ongoing in a number of different indications such as primary prevention of venous thrombo-embolism (VTE) for patients after total knee or total hip replacement (TKR or THR) surgery or prevention of stroke in patients with atrial fibrillation. The former indication (primary VTE prevention) was submitted for registration in Europe. In Japan, the documentation for registration for treatment of TKR patients was submitted in December 2007. Submission in the USA is planned in 2008. Our first clinical studies for flibanserin in the indication hypoactive sexual desire disorder (HSDD), a medical condition in women who suffer from a decrease in sexual desire, resulting in stress and interpersonal difficulties, have shown efficacy for this novel treatment. Studies with more than 4,000 patients are ongoing and submission to the US Food and Drug Administration (FDA) is planned for the end of 2008. For the treatment of patients who suffer from diabetes mellitus type II, our novel compound bi 1356, which belongs to the class of DPP-IV inhibitors, has shown very favourable progress in 2007 and will enter phase III in 2008. Our oncology portfolio has shown significant progress in the last year: two compounds out of this portfolio will start phase III trials in 2008. Other compounds from Boehringer Ingelheim s pipeline being currently in clinical phase II and in preclinical phase are progressing well and will help to ensure a continuous flow of innovative products. Production Production sites belonging to the Boehringer Ingelheim group of companies focus on three major areas: Pharmaceuticals Production Pharma Chemicals Biopharmaceutical Production Pharmaceuticals Production s objective is the manufacturing of finished goods for our Human Pharmaceuticals business. Designated launch sites in Germany and the USA ensure timely 104 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

group management report product availability when new products or technologies are implemented. Corporate initiatives in business process excellence will further strengthen our competitive position. From a launch perspective, the successful supply for spiriva respimat in the fourth quarter of 2007 from our production sites Dortmund and Ingelheim, Germany, have to be mentioned. Investments in Dortmund of more than EUR 100 million (expansion of respimat production capacities), and EUR 65 million in Ingelheim for the production of dabigatran etexilate, will strengthen the German launch sites. With overall investments of EUR 1,500 million in our pharmaceutical production plants over the next few years, we will establish the basis to be able to meet future capacity demands and fulfil the growing regulatory requirements from the authorities. Two significant investment projects, currently in the implementation phase, characterise the importance of our Pharma Chemicals production. The projects in Fornovo, Italy, and Petersburg, USA, will help to meet expected demand driven by our planned launches in the near future. Total investments at these two sites exceed EUR 160 million. Boehringer Ingelheim s Biopharmaceuticals division (Vienna, Austria, and Biberach, Germany) is a well-established and recognised leading manufacturer in the biopharmaceutical industry. Its expertise is also increasingly in demand for gene therapeutics and DNA products. In 2007, Boehringer Ingelheim successfully finalised the innovation-driven upgrade of the protein purification unit at Biberach. Environmental and employee protection The high priority that we attach to safety for our employees and protection of the environment is expressed in our Leitbild (guiding principles). Here we state that in all our activities we will protect our employees, the facilities and the environment from harmful influences, conserve natural resources and promote environmental awareness. This claim is reflected in our Safety, Quality and Environmental Protection (SQE) Principles and put into practice at all our sites on the basis of global standards. Environment, health and safety (EHS) management systems help to ensure that legal requirements are observed at all times and that we pursue continuous improvement in line with the chemical industry s Responsible Care Initiative. All Boehringer Ingelheim production sites are required to identify their potential areas for EHS improvement and to seek to achieve self-imposed targets. Regular on-site audits form an important part of the comprehensive system and are accompanied with the tracking of key indicators. These indicators are the basis for measuring our performance and identifying improvement opportunities. In 2007, one of the core Boehringer Ingelheim initiatives in the area of protecting our environment focused on energy efficiency. A global team was set up to identify and communicate best practice across the Boehringer Ingelheim organisation in using energy in the most efficient way. One of the key parameters for measuring our performance in occupational safety is the accident rate relative to hours worked. Here we can demonstrate that Boehringer Ingelheim s performance was in 2007, as in the years before, below the European chemical industry average of about seven accidents per million hours worked. 105

The certification of our production sites is an integral part of our target to maintain and fulfil standards which meet the criteria set by external organisations. Our plant in Reims, France, received recertification in 2007. Our chemical site in Malgrat, Spain, is seeking ISO 14001 certification in 2008 and our chemical site in Fornovo, Italy, is seeking to have its safety management OSHA 18001 certified in 2008. Employee reporting In generating Value through Innovation our employees are the driving force for achieving this ambitious target. This vision is a fundamental source of inspiration and encouragement to our organisation worldwide for facing the challenges ahead. 2007 was another year in which Boehringer Ingelheim s attractiveness as a workplace was acknowledged by surveys. Recognition as the leading company in Science magazine s Top Employers survey has filled us with particular pride. This award was given for our strong commitment to innovative thinking and doing throughout the product pipeline, while establishing an excellent working environment. We know that we cannot rest on our laurels and that our efforts to realise our ambitions and our commitment to maintaining our position as an employer of choice have to be further intensified. The participation of our employees in this development plays a key role. For the first time in our history, Boehringer Ingelheim has conducted a worldwide survey amongst its employees, which was called Your View on Our Culture. We have gained valuable insights and now have a better understanding of our current strengths and have identified a number of opportunities for improvement. To develop and secure employees as a success factor in the future, we provide a variety of development opportunities, enhancing people s capabilities and offering talented employees various paths to personal and leadership development. Under the given demographic development we also enriched our activities by addressing life-long learning, diversity management and enhancement of work-life balance, to mention only a few of our focus areas. We are convinced that our remuneration schemes also put us in a competitive market position. An integral part of our system of financial rewards is performance-based compensation. Beside a basic market-orientated salary, variable salary elements that follow company success and the achievement of personal targets are part of the overall compensation. Alongside this, our extensive social contributions play an important role in the overall remuneration concept. In fiscal year 2007, the number of Boehringer Ingelheim employees increased further, 1,372 new positions were established and an annual average of 39,800 people were on Boehringer Ingelheim s payroll (+ 3.6 %). In Germany, we employed 11,564 individuals, including the 660 young people to whom we offered apprenticeship programmes in more than 30 different occupations. Personnel cost increased by 2 % to EUR 2,886 million in 2007. Social responsibility Boehringer Ingelheim actively practices social responsibility in a caring and enthusiastic way. According to our Leitbild, we are fundamentally committed to fostering economic and social 106 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

group management report well-being in the countries and communities where we operate. Our understanding of Good Corporate Citizenship is that our responsibility applies to our patients, our employees and their families as well as the community at large. With a wide range of charitable activities we demonstrate our social responsibility. One of the cornerstones of our actions are our activities to provide help and support in the fight against the HIV/AIDS pandemic. Since 2000, we have helped countries most in need of support in combating HIV/AIDS, targeting the prevention of mother-to-child transmission (pmtct) of the HIV-1 virus during birth. Since then, we have initiated more than 160 individual support programmes. In this context, Boehringer Ingelheim works actively with partner institutions such as UNICEF, ministries of health, the Elizabeth Glaser Pediatric AIDS Foundation (EGPAF), churches, the German Institute for Technical Cooperation (GTZ), NGOs and charitable organisations. Besides our company s engagement in providing medicines and financial help, a wide range of activities are provided by our employees. In Indonesia, our employees volunteered to build a local orphanage with a free learning centre for needy children. In Canada, our employees devoted a whole day in 2007 to help in the community. Some 500 employees provided help for twelve community organisations in the Burlington and Hamilton area. Actively helping people, is for us the expression of an attitude that reflects the way Boehringer Ingelheim perceives itself and offers as much support as possible. Results from operations, financial position and net assets Results from operations Independent market data show that Boehringer Ingelheim again grew faster than the overall market in 2007. We thereby gained market share for the eighth year in succession. This success is even more remarkable considering that we have lost more than EUR 600 million of mobic revenue worldwide since 2005 (annual revenue in 2007: EUR 238 million compared to 2005: EUR 848 million). We were able to compensate for this shortfall mainly due to the success of products from our own research. According to current market data, Boehringer Ingelheim ranks 15 th among the world s largest pharmaceutical companies, with a market share of about 1.9 %. Driven by growth of 8.8 % in local currency terms compared to 2006, we recorded net sales of EUR 10,952 million in 2007 (+ 3.6 % in euro terms). Besides the above-mentioned revenue loss for mobic, caused by the patent expiry in Components of growth in net sales (as %) 2007 2006 2005 2004 2003 Price/quantity/new introductions 7.9 12.1 17.4 16.1 7.8 Acquisitions and sale of business 0.9-0.3-0.5-0.5-0.2 Currency effect -5.2-0.9 0-5.1-10.2 107

the USA in 2006, our business performance was affected by exchange rate developments. The two major currencies, the US dollar and the Japanese yen, lost more than 10 % of their value compared to prior year. As we generate more than 50 % of our total revenue in these currencies, this has caused a revenue loss of more than EUR 500 million compared to the exchange rates we had in 2006. When analysing our growth, it must be noted that changes in the consolidation were negligible. Only the acquisition of the product zantac in the USA which took place at the end of 2006 should be mentioned (net sales 2007: EUR 111 million). Boehringer Ingelheim is focused on two businesses: Human Pharmaceuticals and Animal Health. The Human Pharmaceuticals business encompasses the segments Prescription Medicines (PM), Consumer Health Care (CHC) as well as Industrial Customer. In 2007, this business achieved net sales of EUR 10,544 million, corresponding to growth of 3.4 %. The Human Pharmaceuticals business thereby accounted for 96 % of group net sales. Prescription Medicines Prescription Medicines (PM) is by far the most important segment in our Human Pharmaceuticals business. In 2007, net sales of EUR 8,660 million were achieved, which represents a growth of 4.2 % compared to prior year (2006: EUR 8,311 million). The significance of this segment is evident in that it accounts for 82 % of our Human Pharmaceuticals business. This positive development in PM was borne by our strategic products which all showed marked growth (sort order by growth rate): Net sales (in millions of EUR) 2007 2006 Growth spiriva 1,792 1,381 30 % aggrenox 278 225 24 % sifrol /mirapex micardis 644 1,123 536 967 20 % 16 % flomax 1,020 922 11 % spiriva continued to develop favourably and is our fastest-growing product. Furthermore, the spiriva respimat, with the innovative inhalation device, the respimat Soft Mist Inhaler, was launched in Germany, Denmark, the Netherlands and the United Kingdom in autumn 2007. For the cardiovascular products micardis and aggrenox we also expect further growth, supported by the outcome of clinical studies. The granted market approval for our medication sifrol /mirapex in the indication restless legs syndrome (RLS) in 2006 supported this drug s 20 % growth in 2007. From a sales perspective the Americas region has for years been the strongest region in our business segment PM. Because of the exchange rate development and the mobic revenue loss in the USA (USD 387 million), the share dropped slightly from 54 % to 52 %. Net sales for this region amounted to EUR 4.5 billion. As a single market, the USA remained the largest and most important country for Boehringer Ingelheim, with an 85 % share of our net sales in the Americas. 108 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

group management report In the region Europe a net sales volume of EUR 2,374 million was achieved, resulting in a share of 27 % in the PM segment. Compared to prior year, sales growth of 8.9 % was achieved. The country with the largest turnover in this region was Germany, which contributed EUR 444 million to total net sales. This only represents an increase of 3.4 % compared to prior year. Our businesses in Eastern Europe showed a very pleasing development, with net sales in this area 17 % above prior year. Sales in our business region Asia, Australasia and Africa (AAA) increased by 4.9 %, to EUR 1,446 million. In Japan, we have our largest business in this region. Japan s share of the region s sales was almost 60 % and reached a turnover of EUR 861 million in 2007. Exchange rate movements, particularly that of the Japanese yen (- 10 %), had a negative impact, whereas our product micardis in particular developed favourably in Japan, with a local growth of 24 %. Consumer Health Care In the business segment CHC we generated net sales of EUR 1,141 million, an increase of almost 12 % compared to the previous year, discounting currency effects. The lion s share of this increase is due to our acquisition of zantac in the US over-the-counter (OTC) market. This product amounted to more than EUR 110 million in 2007. Together with our product dulcolax, we now have a strong position in the gastrointestinal medications segment in the US market. The most important product groups in this segment in 2007 were: Net sales (in millions of EUR) 2007 2006 Growth dulcolax 131 122 7 % mucosolvan 117 108 8% zantac 111 4 > 100 % buscopan 77 71 9 % Business development was very different from region to region. The Americas region showed the strongest increase in sales (EUR 96 million), driven by zantac, which compensated for the exchange rate effects in this region. Net sales in Europe increased by + 3 %, whereas the turnover in the AAA region declined (- 8 %). Besides the difficult business environment in the Japanese market, the depreciation of the Japanese yen against the euro also had a negative impact. Industrial Customers The third party business of Pharmaceuticals Production, Pharma Chemicals and our contract manufacturing by Biopharmaceuticals are combined under the Industrial Customer business. Total revenue in this segment amounted to EUR 739 million, which is below prior year (- 9 %). Beside exchange rate effects, our revenue dropped in our Biopharmaceuticals business, as we had shut down our plant in Biberach, Germany, because of technical upgrades. This effect had been planned and foreseen. 109

Animal Health In the global market for animal health products, Boehringer Ingelheim is in No. 9 position, with a market share of 3 %. Compared to the prior year, net sales increased by 9 % in 2007, despite negative exchange rate effects. In local currency terms, growth in 2007 was 15 %. Net sales amounted to EUR 408 million. One of the key drivers of this positive development was the success of our new product ingelvac circoflex which achieved net sales of EUR 37 million. Worldwide growth was achieved by the following product groups in particular: Other operating expenses rose by EUR 469 million (+ 12 %). Operating income of EUR 2,100 million exceeded the EUR 2 billion mark and is at the same level as the previous year. The return on net sales came in at 19 %, which is very close to our results from prior years. Financial income in 2007 amounted to EUR 262 million, which is EUR 160 million above the prior year results. It was significantly affected by the sale of a number of financial assets. Together with the operating income, income before taxes rose to EUR 2,362 million, which is EUR 119 million better than the 2006 result. Net sales (in millions of EUR) 2007 2006 Growth ingelvac circoflex 37 3 > 100 % vetmedin 24 19 26 % enterisol ileitis 26 22 18 % metacam 77 75 3 % From a regional point of view, Americas showed marked growth. With an increase of more than 15 %, net sales reached a volume of EUR 172 million. Development in the other two regions was positive too. In the AAA region, the currency effect of the Japanese yen had a negative impact. Expenditure and income Total operating costs increased by 7.2 % above prior year and resulted in EUR 9,484 million compared to EUR 8,848 million. Resulting from a 1,372 increase in the average headcount, personnel costs rose by 2 % to EUR 2,886 million in 2007, which was EUR 50 million above prior year. Depreciation of EUR 504 million fell below the volume we reported for 2006 (EUR 530 million). Tax expenses were recorded at EUR 550 million, corresponding to the same tax ratio of 23 % as in 2006. Here, it must be taken into consideration that, due to regulations of the German commercial code, personal taxes on group activities levied on the shareholders must not be shown as tax expenses. These are presented as part of withdrawals from accumulated group equity. Taking this extraordinary effect into consideration, the actual tax ratio is markedly higher than the figure shown in the profit and loss statement. Net income (income after tax) rose by EUR 87 million to EUR 1,809 million. Financial position Boehringer Ingelheim s financial management instruments and methods are aligned with international standards for a modern industrial company. The goal of the financial management is to support the business strategy of our company by providing or investing financial assets and taking account of the foreign exchange risk. 110 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

group management report As a result of Boehringer Ingelheim s international orientation, exchange rate fluctuations have a considerable impact on the measure of the company s success. Here, the exchange rate development of the US dollar represents the highest single risk. Within the framework of group-wide financial reporting, foreign exchange risk is regularly investigated and analysed. To secure against this risk, particularly from goods and services, derivative financial instruments are employed. The manner and extent of these measures are regulated by the relevant group guideline. Because of our asset strategy and the balanced asset allocation, the financial assets increased their market value despite the effects of the US sub-prime crisis. Boehringer Ingelheim s good economic development in 2007 is also reflected in the development of the cash flow, which rose by 3 % to EUR 2,392 million. The cash flow from operating activities of EUR 2,342 million clearly exceeded funds used for investment activities. In 2007, we increased our investment efforts again (+ 9.7 %) which resulted in an investment volume of EUR 654 million in tangible assets. Investments in intangible assets were substantially below the prior year, as 2006 was significantly influenced by the expenditure for the product acquisition zantac. Cash flow from investing and financing activities exceeded cash flow from operating activities and thus resulted in reduced securities and liquid funds at year-end of EUR 2,581 million. Based on the cash flow from our operating activities, existing liquidity, and the given financial structure, the financial preconditions for successfully realising our strategy remain in place. In Germany a number of large investment projects were either in their implementation phase or were finalised in 2007. Major projects were the new canteen on the Ingelheim site, as well as a production facility in Ingelheim for the new product pradaxa and investments in upgrading our chemical production facilities. In Biberach the main focus was on the innovationdriven upgrade of the protein purification unit and further new lab buildings. We are currently significantly expanding our capacities for the production of active pharmaceutical ingredients. At our site in Italy and in Petersburg, Virginia, both projects are in their implementation phase. Our expansion project to increase production capacity at Ben Venue, Cleveland, Ohio is completed. In the USA, construction was also started at the site at Ridgefield, Connecticut, for a laboratory building in order to increase our research capacity. Another new lab building for development research was handed over to the employees at Ridgefield in 2007. Net assets Total assets in 2007 stood at EUR 10,471 million. Tangible and intangible assets are covered by Boehringer Ingelheim s group equity. By actively managing the days of sales outstanding of our receivables and due to exchange rate effects, we achieved a decrease in receivables. In this context, it should be mentioned that we have changed our contracts on factoring in Japan (ABS), which also reduced receivables. Financial assets at year-end were recorded at EUR 1,638 million, which is below the prior year because of the disposal of some assets. Total liquid funds of EUR 853 million remained at the same level as in 2006 (EUR 866 million). 111

Driven by the changes in securities and liquid funds, group equity was reported at EUR 3,539 million at year-end. Long-term disposable capital (equity, pension provisions and long-term liabilities) amounted to EUR 5,824 million, corresponding to 56 % of the balance sheet total. This capital also covered all intangible assets, tangible assets, inventories and more than half of trade accounts receivables. A group-wide risk reporting and messaging system is used to identify significant risks, especially such risks that may jeopardise the continued existence of the company. Hereby, we ensure that all risks known to us are reported, thoroughly analysed and evaluated. Following appropriate classification, adequate countermeasures are commenced and their implementation consistently monitored. The combined evaluation of the net assets, financial position and results of operations shows that Boehringer Ingelheim is a soundly financed and profitable company. In 2007, we created a solid basis for our further business development. Report on post-balance sheet date events Since the end of the financial year 2007, we have not become aware of any events that are of material significance to the group of companies, or could lead to a reappraisal of its asset, financial or earnings position. Risk report Boehringer Ingelheim has an established risk management system to identify and to reduce risks to an appropriate amount considering the expected benefit of the business activity involved. The Boehringer Ingelheim group s risk management system has proved effective over recent years and the concept was unchanged in the reporting period. Within the framework of the audit plan approved by the Board of Managing Directors, internal auditing conducted routine and extraordinary audits worldwide during the reporting year. The major focus is on the efficiency of structures and processes, securing assets, adherence to legal requirements and guidelines, the functionality of systems and the effectiveness of internal controls. Risks in the area of environmental health and safety are minimised preventively by adherence to our own very high safety standards. For possible incidents appropriate emergency plans are in place that are regularly tested and trained. Furthermore, Boehringer Ingelheim has riskadjusted insurance coverage. Currency and interest rate risks, which arise because of our group s international business relationships, are constantly examined and limited by appropriate hedging strategies. From the portfolio of receivables and liabilities on trade accounts no risk exceeding the industry norm arose for the Boehringer Ingelheim group. This applies equally to the default risks that are mainly secured against economic and political uncertainties. 112 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

group management report Apart from general business risks associated with the industry as outlined in detail before, such as patent expiry, governmental price regulations and successful launches, we are currently not aware of any risks that substantially threaten the further development of Boehringer Ingelheim s business. Report on expected developments After several years of robust growth, the world economy is now facing some serious challenges to sustaining its brisk pace. The end of the housing bubble in the USA, as well as the unfolding credit crisis, the decline of the US dollar vis-à-vis other major currencies, the persistence of large global imbalances and the high oil prices will all threaten the sustainability of global economic growth in the coming years. With 3.7 % economic growth in 2007, we have already seen a slowing down compared to 2006 (3.9 %), and the majority of economic experts and organisations is predicting another decline to a level slightly above 3 %. On top of this a number of potential downside risks are looming much larger than a year ago. The pharmaceutical industry is affected from this overall development like any other industry. In addition, the imminent challenges of developing and launching new molecules and facing patent expiry with the consequent sales erosion are specific threats for the pharmaceutical industry. Boehringer Ingelheim has demonstrated once more that we are well positioned to face the threats described above. Although we have experienced the patent expiry for mobic in 2006 in our major market the USA, with the consequence that we have lost more than half a billion euros in turnover, we once again grew faster than the market average and increased our sales by a currency-adjusted 9 %. Furthermore, with the spiriva respimat, we have launched another promising innovation on the market. Moreover, in the two molecules dabigatran etexilate and flibanserin we have two promising products in phase III of our pipeline. Both products will provide innovative treatment in their therapy class and will help to ensure future sustainable growth of the company. In our major business segment PM, we have four key brands on the market: spiriva, micardis, flomax and sifrol, of which the first three have achieved blockbuster status. All key brands have further growth potential in 2008. For spiriva and micardis we expect positive outcomes from various clinical studies, such as uplift (spiriva ), ontarget and transcend (both micardis ) in 2008. From the profess study on micardis and aggrenox, we also expect results in 2008. In January 2008, the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMEA) issued a recommendation for approval of dabigatran etexilate for the prevention of venous thrombo-embolic events in patients who have undergone total hip replacement surgery or total knee replacement surgery. First launches of pradaxa (dabigatran etexilate) in Europe are planned for the second quarter of 2008. First in class, pradaxa is a novel, oral direct thrombin inhibitor. 113

The spiriva respimat Soft Mist Inhaler was launched in October 2007 and further launches in Europe are planned for 2008. Other important development projects are in phases II and III. In flibanserin, which is currently in clinical phase III for the treatment of pre-menopausal women suffering from hypoactive sexual desire disorder (HSDD), we made major progress in 2007. Based on the ongoing clinical studies, we expect submission by the end of 2008. In oncology we have four compounds in clinical development of which we expect that two will advance in 2008 in phase III in the treatment of lung cancer. For the treatment of diabetes type II our compound bi 1356, which belongs to the novel class of DPP-IV inhibitors will enter phase III in 2008. Because of the launches ahead we have planned capital investments of more than EUR 800 million in 2008. Investments in our chemical production facilities to expand our production capacities (Italy and USA) and to prepare for the production of our new drug pradaxa (Germany) play a key role in our investments. To strengthen our position in the biopharmaceutical production, further investments are under consideration. At our R&D site in Biberach, we have laid the foundation stone for another lab building, to host more than 250 scientists as part of our development organisation. key brands, expected results from clinical studies and planned new launches, we aim to again grow faster than the pharmaceutical market, which is expected to grow between 5 % and 6 % in 2008. On the basis of current expectations, we plan to achieve a similar revenue growth as in 2007 (depending on exchange rate developments). 2009 will be the last full-year of having exclusivity for our blockbuster flomax on the US market. Given the strength of our key brands and planned new launches, we assume further sales growth above market average in 2009. One of the declared goals of our shareholders is to remain and to manage Boehringer Ingelheim in the long term as an independent, familyowned company. Our endeavour in this context is to achieve above-average growth in the market that will deliver a corresponding increase in the value of the company. To this end, we will also continue to monitor closely, the profitability of our group. Our strategic orientation gives us confidence to reinforce our innovative power in order to achieve our demanding goals and to fulfil the company s long-term vision. We will take every initiative to enable Boehringer Ingelheim to successfully develop further. We consider it our duty to all stakeholders, primarily towards all patients, to make effective and safe medicines available in the future. Besides our ongoing long-term planning process in 2008, we will focus on reviewing our strategic objectives to ensure strategic growth in the mid and long-term future. Due to the strengths of our 114 Boehringer Ingelheim A n n u a l R e p o r t 2 0 0 7

Value through Innovation Our vision drives us forward. It helps us to foster value creation through innovation throughout our company and to look to the future with constantly renewed commitment and ambition. Consolidated Financial Statements 2007

Overview of the major consolidated companies C. H. Boehringer Sohn AG & Co. KG* Boehringer Ingelheim GmbH Boehringer Ingelheim Europe GmbH Boehringer Ingelheim International GmbH Germany Boehringer Ingelheim Pharma GmbH & Co. KG, Ingelheim Boehringer Ingelheim Vetmedica GmbH, Ingelheim Boehringer Ingelheim microparts GmbH, Dortmund Finland Boehringer Ingelheim Finland Ky, Espoo Norway Boehringer Ingelheim Norway KS, Asker Austria Forschungsinstitut für Molekulare Pathologie Gesellschaft mbh, Vienna Belgium SCS Boehringer Ingelheim Comm. V., Brussels China Boehringer Ingelheim International Trading (Shanghai) Co. Ltd., Shanghai Boehringer Ingelheim Shanghai Pharmaceuticals Co. Ltd., Shanghai Philippines Boehringer Ingelheim (Phil.), Inc., Manila South Korea Boehringer Ingelheim Korea Ltd., Seoul Boehringer Ingelheim Vetmedica Korea Ltd., Seoul Distribution Production Research *sole general partner: Boehringer AG 116 Boehringer Ingelheim a n n u a l r e p o r t 2 0 0 7

C. H. Boehringer Sohn Grundstücksverwaltung GmbH & Co. KG Boehringer Ingelheim Auslandsbeteiligungs GmbH Argentina France New Zealand Turkey Boehringer Ingelheim S.A., Buenos Aires Boehringer Ingelheim France S.A.S., Paris Boehringer Ingelheim (N.Z.) Ltd., Auckland Boehringer Ingelheim Ilac Ticaret A.S., Istanbul Australia Boehringer Ingelheim Pty. Ltd., North Ryde Labso Chimie Fine S.A.R.L., Blanquefort Greece Poland Boehringer Ingelheim Sp.zo.o., Warsaw United Kingdom Boehringer Ingelheim Ltd., Bracknell Austria Boehringer Ingelheim Austria GmbH, Vienna Boehringer Ingelheim Ellas AE, Athens Indonesia Portugal Boehringer Ingelheim Lda., Lisbon USA Boehringer Ingelheim Corp., Ridgefield, Connecticut Boehringer Ingelheim Pharma Ges.m.b.H., Vienna Brazil Boehringer Ingelheim do Brasil Quimica e Farmaceutica Ltda., São Paulo Solana Agro Pecuaria Ltda., Arapongas Canada Boehringer Ingelheim (Canada) Ltd., Burlington Chile Boehringer Ingelheim Ltda., Santiago de Chile Colombia Boehringer Ingelheim S.A., Bogotá Czech Republic Boehringer Ingelheim s.r.o., Prague Denmark Boehringer Ingelheim Danmark A/S, Copenhagen Ecuador Boehringer Ingelheim del Ecuador Cia. Ltda., Quito PT Boehringer Ingelheim Indonesia, Jakarta Italy Boehringer Ingelheim Italia S.p.A., Reggello Bidachem S.p.A., Fornovo S. Giovanni Istituto De Angeli srl, Reggello Japan Nippon Boehringer Ingelheim Co. Ltd., Tokyo SSP Co. Ltd., Tokyo (57 %) Boehringer Ingelheim Vetmedica Japan Co. Ltd., Kawanishi Boehringer Ingelheim Seiyaku Co. Ltd., Yamagata Mexico Boehringer Ingelheim Promeco S.A. de C.V., Mexico City Boehringer Ingelheim Vetmedica S.A. de C.V., Guadalajara Netherlands Boehringer Ingelheim B. V., Alkmaar Unilfarma Lda., Lisbon South Africa Boehringer Ingelheim (Pty.) Ltd., Randburg Ingelheim Pharmaceuticals (Pty.) Ltd., Randburg Spain Boehringer Ingelheim España S.A., Barcelona Boehringer Ingelheim S.A., Barcelona Europharma S.A., Barcelona Laboratorios Fher S.A., Barcelona Sweden Boehringer Ingelheim AB, Stockholm Switzerland Boehringer Ingelheim (Schweiz) GmbH, Basel Pharmaton S.A., Lugano Taiwan Boehringer Ingelheim Taiwan Ltd., Taipei Thailand Boehringer Ingelheim (Thai) Ltd., Bangkok Boehringer Ingelheim Pharmaceuticals, Inc., Ridgefield, Connecticut Boehringer Ingelheim USA Corporation, Ridgefield, Connecticut Ben Venue Laboratories, Inc., Bedford, Ohio Roxane Laboratories, Inc., Columbus, Ohio Boehringer Ingelheim Vetmedica, Inc., St. Joseph, Missouri Boehringer Ingelheim Roxane, Inc., Columbus, Ohio Boehringer Ingelheim Chemicals, Inc., Petersburg, Virginia Venezuela Boehringer Ingelheim C.A., Caracas Overview of the major consolidated companies 117

C. H. Boehringer Sohn AG & Co. KG, Ingelheim Consolidated balance sheet Assets (in millions of EUR) Notes 1) 31.12.2007 31.12.2006 Intangible assets (3.1) 547 554 Tangible assets (3.2) 2,972 2,886 Financial assets (3.3) 1,638 3,043 Fixed assets 5,157 6,483 Inventories (3.4) 1,387 1,280 Accounts receivable (3.5) 2,165 2,333 Securities 162 79 Cash and cash equivalents 853 866 Current assets 4,567 4,558 Deferred taxes 691 746 Deferred charges and prepaid expenses 56 58 Total assets 10,471 11,845 Liabilities and equity (in millions of EUR) Notes 1) 31.12.2007 31.12.2006 Shareholders capital 178 178 Group reserves 1,670 3,415 Balance sheet currency conversion difference -285-140 Net income 1,809 1,722 Equity 3,372 5,175 Minority interests 167 188 Group equity 3,539 5,363 Provisions (3.6) 4,567 4,459 Accounts payable (3.7) 2,151 1,774 Liabilities 6,718 6,233 Deferred taxes 159 182 Deferred charges 55 67 Total liabilities and equity 10,471 11,845 1) For explanation, see relevant section in the notes to the consolidated financial statements. 118 Boehringer Ingelheim a n n u a l r e p o r t 2 0 0 7

consolidated financial statements C. H. Boehringer Sohn AG & Co. KG, Ingelheim Consolidated profit and loss statement (in millions of EUR) Notes 1) 2007 2006 Net sales (4.1) 10,952 10,574 Changes in inventories 89 40 Other internal work performed and capitalised 4 4 Other operating income 539 370 Total revenues 11,584 10,988 Material costs (4.2) -1,627-1,484 Personnel costs (4.3) -2,886-2,836 Amortisation of intangible and depreciation of tangible assets (4.4) -504-530 Other operating expenses (4.5) -4,467-3,998 Operating income 2,100 2,140 Financial income (4.6) 262 102 Holding income (4.7) 0 1 Income before taxes 2,362 2,243 Taxes 2) (4.8) -550-514 Income after taxes 1,812 1,729 Third-party share -3-7 Net income (4.9) 1,809 1,722 1) For explanation, see relevant section in the notes to the consolidated financial statements. 2) Due to legal requirements the disclosure of the shareholders personal taxes arising from consolidated business activities as tax expenses is not allowed. These taxes are shown as withdrawals from the accrued group capital. Consolidated balance sheet / Consolidated profit and loss statement 119

C. H. Boehringer Sohn AG & Co. KG, Ingelheim Cash flow statement (in millions of EUR) 2007 2006 Income after taxes 1,812 1,729 Write-downs/write-ups on fixed assets 1) 508 527 Change in provisions for pensions 72 61 Cash flow 2,392 2,317 Change in other provisions 172-184 Other non-cash income and expenses -13-5 Loss/gain on disposals of fixed assets 8-30 Change in inventories -164-99 Change in accounts receivable and other assets not related to investing or financing activities 24-238 Change in trade accounts payable and other liabilities not related to investing or financing activities -77 18 Cash flow from operating activities 2,342 1,779 Investments in intangible assets -98-451 Investments in property, plant and equipment -654-596 Investments in non-current financial assets 1) -35-11 Proceeds from disposals of intangible assets 0 2 Proceeds from disposals of property, plant and equipment 23 92 Proceeds from disposals of non-current financial assets 1) 7 13 Cash flow from investing activities 757 951 Cash payments to shareholders and minority shareholders -3,355-1,367 Cash proceeds from borrowings/repayments of loans 442-96 Cash flow from financing activities 2,913 1,463 Change in liquid funds from cash-relevant transactions -1,328-635 Changes in liquid funds due to changes in scope of consolidation 0 0 Changes in liquid funds due to exchange rate movements -25-16 Securities and liquid funds 2) as of 1. 1. 3,934 4,585 Securities and liquid funds 2) as of 31. 12. 2,581 3,934 1) excl. fixed-asset securities 2) liquid funds, securities within fixed and current assets (+) = source of funds, ( ) = use of funds 120 Boehringer Ingelheim a n n u a l r e p o r t 2 0 0 7

consolidated financial statements C. H. Boehringer Sohn AG & Co. KG, Ingelheim Statement of changes in group equity (in millions of EUR) Shareholders capital 1) Accrued group capital thereof currency effects Equity Minority interests thereof currency effects Group equity Balance as of 31. 12. 2005 178 4,431-61 4,609 216-27 4,825 Contributions 0 0 0 0 0 0 0 Withdrawals 0-1,077 0-1,077 0 0-1,077 Net income 0 1,722 0 1,722 7 0 1,729 Change of scope of consolidation 0 0 0 0 0 0 0 Other changes 0-79 -79-79 -35-24 -114 Balance as of 31. 12. 2006 178 4,997-140 5,175 188-51 5,363 Contributions 0 0 0 0 0 0 0 Withdrawals 0-3,467 0-3,467 0 0-3,467 Net income 0 1,809 0 1,809 3 0 1,812 Change of scope of consolidation 0 0 0 0 0 0 0 Other changes 0-145 -145-145 -24-9 -169 Balance as of 31. 12. 2007 178 3,194-285 3,372 167-60 3,539 1) The shareholders capital consists of the equity of C. H. Boehringer Sohn AG & Co. KG and C. H. Boehringer Sohn Grundstücksverwaltung GmbH & Co. KG. It consists only of capital of the limited partners. The shareholders personal taxes arising from consolidated business activities are shown as withdrawals from the accrued group capital. Cash flow statement / Statement of changes in group equity 121

C. H. Boehringer Sohn AG & Co. KG, Ingelheim Notes to the consolidated financial statements 2007 1 Principles and methods 1.1 General principles The consolidated financial statements of Boehringer Ingelheim for the fiscal year 2007 have been prepared pursuant to section 264a German Commercial Code (HGB) by applying the group accounting regulations of section 290 to 314 HGB. In accordance with section 297, paragraph 1 HGB, the consolidated financial statements are composed of the consolidated balance sheet, the consolidated profit and loss statement, notes to the consolidated financial statements, the consolidated cash flow statement and the statement on changes in equity. 1.2 Companies included in the consolidation The ultimate parent of the Boehringer Ingelheim group is C. H. Boehringer Sohn AG & Co. KG. Boehringer AG is the sole unlimited managing partner of this company. Besides C. H. Boehringer Sohn AG & Co. KG there is C. H. Boehringer Sohn Grundstücksverwaltung GmbH & Co. KG whose unlimited partner is under the unified management of C. H. Boehringer Sohn AG & Co. KG. The Boehringer Ingelheim group of companies consists of 135 affiliated companies in and outside Germany. In addition to C. H. Boehringer Sohn AG & Co. KG and C. H. Boehringer Sohn Grundstücksverwaltung GmbH & Co. KG, a further 107 companies in which C. H. Boehringer Sohn AG & Co. KG holds directly or indirectly the majority of voting shares are included in the consolidated financial statements. Twenty-four companies were not consolidated in the reporting year, as the net assets, financial position and results of operations of these companies were insignificant to Boehringer Ingelheim. Combined they represent less than 1 % of the Group s net sales, equity and net profit. A further two companies are subject to bylaws containing enduring restrictions. Compared to the previous year, the total number of affiliated companies was reduced by two: one company was liquidated two companies were sold two companies were dissolved due to mergers three companies were established 122 Boehringer Ingelheim a n n u a l r e p o r t 2 0 0 7

consolidated financial statements A separate statement of interests held by Boehringer Ingelheim will be submitted to the authority operating the German Federal Gazette in order to place it in the Register of Companies. The following subsidiaries were exempted from the reporting and disclosure obligations in accordance with section 264, paragraph 3 HGB: Boehringer Ingelheim GmbH, Ingelheim Boehringer Ingelheim International GmbH, Ingelheim Dr. Karl Thomae GmbH, Biberach Dr. Karl Thomae Wohnungsbau GmbH, Biberach Boehringer Ingelheim Europe GmbH, Ingelheim Boehringer Ingelheim Vetmedica GmbH, Ingelheim Boehringer Ingelheim Secura Versicherungsvermittlungs GmbH, Ingelheim Boehringer Ingelheim Grundstücks-GmbH, Ingelheim Boehringer Ingelheim Finanzierungs GmbH, Ingelheim Exempted from reporting and disclosure obligations of annual financial statements according to HGB regulations for joint stock companies under section 264b HGB are: C. H. Boehringer Sohn AG & Co. KG, Ingelheim C. H. Boehringer Sohn Grundstücksverwaltung GmbH & Co. KG, Ingelheim Boehringer Ingelheim Pharma GmbH & Co. KG, Ingelheim 1.3 Consolidation methods For inventories, accounts receivable and payable, and the income and expense items, business transactions among the consolidated companies were eliminated as part of the debt consolidation, according to section 303 HGB, the elimination of inter-company profits according to section 304 HGB, and the income and expense consolidation according to section 305 HGB. The purchase method of accounting was used for the capital consolidation of those subsidiaries that were included for the first time in the consolidated financial statements. First-time consolidation takes place at the time of the respective company becoming a subsidiary. Notes to the consolidated financial statements 2007 123

1.4 Currency conversions The financial statements prepared in foreign currencies were translated into euros, the functional currency of the group parent company, C. H. Boehringer Sohn AG & Co. KG, according to the modified closing rate concept. All assets and liabilities have been converted at the year-end rate. The profit and loss statement and, consequently, net income, were converted at the average annual rate for the reporting year. The shareholders capital and the group reserves are calculated using historical exchange rates. Translation differences due to the conversion of foreign currencies are shown as a balancing item in the equity without impact on income. In general the functional currency of subsidiaries is the respective local currency. Annual financial statements in high inflation countries are in principle drawn up in accordance with German Accounting Standard 14 (GAS 14); in the financial year 2007, no group company was affected by high inflation accounting. The most important currencies for Boehringer Ingelheim reflect the following changes in the reporting year (base 1 euro): year-end rate average annual rate 31.12.2007 31.12.2006 2007 2006 US dollar 1.47 1.32 1.37 1.26 Japanese yen 164.93 156.93 161.24 146.06 Pound sterling 0.73 0.67 0.68 0.68 Canadian dollar 1.44 1.53 1.47 1.42 124 Boehringer Ingelheim a n n u a l r e p o r t 2 0 0 7

consolidated financial statements 2 Accounting and evaluation methods 2.1 Fixed assets Intangible and tangible assets are shown at purchase or manufacturing cost, net of regular straight-line depreciation, according to the technical and economic situation. The following periods of use were applied: Intangible assets Buildings Technical facilities and machinery Other facilities, operating and business equipment 3 to 15 years 20 years 10 years 3 to 10 years Diverging from the declining-balance method of depreciation applied in the individual financial statements of C. H. Boehringer Sohn AG & Co. KG, the straight-line method of depreciation is used in the consolidated financial statements for the purpose of uniformity in group-wide measurement. Anticipated long-term losses in the value of investments were accounted for by unscheduled write-offs. Cost of direct material and production as well as appropriate portions of material and production overheads were taken into consideration for the determination of the manufacturing costs. Fully amortised goodwill that is more than five years old, or is materially insignificant, is shown under disposals. All capitalised intangible assets have a limited useful life. The goodwill resulting from the consolidation of the purchase of shares of Boehringer Ingelheim Korea Ltd. and Baiksu Pharmaceutical Co. Ltd. is being amortised according to plan over ten years. The financial assets were valued at the lower of either purchase cost or fair market value. The valuation of securities in case of temporary diminution in value is made at the lower current value. 2.2 Current assets Inventories are valued at purchase or manufacturing cost using the weighted average cost flow method as the group-wide uniform method of measurement, whereas C. H. Boehringer Sohn AG & Co. KG applies the LIFO Method in its individual financial statements. The cost of direct material and production as well as appropriate portions of material and production overheads were taken into consideration for the determination of the manufacturing costs. Necessary reductions were made for inventory risks. Accounts receivable were stated at their purchase cost net of any individual valuation allowances required. The general credit risk was covered by a general valuation allowance for bad debt. Other assets and liquid funds were stated at the lower of either purchase cost, present value or fair market value. Foreign currency items were recorded at the year-end rate of exchange. Notes to the consolidated financial statements 2007 125

2.3 Group reserves Group reserves include the retained earnings of the consolidated subsidiaries from prior years, consolidation entries that affect earnings and credit balances arising from capital consolidation, where they respectively relate to prior years. 2.4 Provisions The provisions include amounts necessary to cover any perceptible obligations and risks that require recognition in the accounts, including provisions for contingent losses from pending contracts. The valuation is made on the basis of reasonable commercial judgement. Provisions with an implied interest are shown on a discounted basis (e. g. certain personnel provisions). 2.5 Liabilities Liabilities are shown in the balance sheet at the repayable amount. Liabilities in foreign currencies were recorded at the year-end rate of exchange. 2.6 Deferred taxes The deferred tax assets and liabilities represent the tax deferral in accordance with sections 274 and 306 HGB, which arise because of temporary differences between the tax balance sheets of the individual companies and the consolidated balance sheet (including differences arising from adjustments for conformity in group-wide reporting and evaluation as well as consolidation measures). Quasi-permanent differences between the consolidated balance sheet and the tax balance sheet are treated as temporary differences in accordance with German Accounting Standard 10 (GAS 10). In the individual balance sheets (i.e. the financial statements II) the consolidated companies made use of their option to capitalise assets to the amount of probable tax relief in the following years in accordance with section 274, paragraph 2 HGB. The calculation of deferred taxes is based on the tax rates that are expected to be valid at the time of their realisation. The capitalisation of deferred tax assets on tax loss carryforwards is carried out if it is sufficiently probable that the tax benefits can be realised. 126 Boehringer Ingelheim a n n u a l r e p o r t 2 0 0 7

consolidated financial statements 3 Notes to the consolidated balance sheet 3.1 Intangible assets (in millions of EUR) Concessions/ similar rights Goodwill Advance payments Total Procurement/manufacturing costs Balance as of 1. 1. 2006 573 806 6 1,385 Currency conversion difference -30 0 0-30 Additions due to first consolidation 0 0 0 0 Additions 443 0 8 451 Disposals -18 0 0-18 Reclassifications 7 0-3 4 Balance as of 31. 12. 2006 975 806 11 1,792 Currency conversion difference -46 0 0-46 Additions due to first consolidation 0 0 0 0 Additions 43 48 7 98 Disposals -17-285 0-302 Reclassifications 11 0-6 5 Balance as of 31. 12. 2007 966 569 12 1,547 Accumulated depreciations Balance as of 1. 1. 2006 394 758 0 1,152 Currency conversion difference -10 0 0-10 Additions due to first consolidation 0 0 0 0 Additions 63 48 0 111 Write-ups 0 0 0 0 Disposals -15 0 0-15 Reclassifications 0 0 0 0 Balance as of 31. 12. 2006 432 806 0 1,238 Currency conversion difference -8 0 0-8 Additions due to first consolidation 0 0 0 0 Additions 65 7 0 72 Write-ups 0 0 0 0 Disposals -17-285 0-302 Reclassifications 0 0 0 0 Balance as of 31. 12. 2007 472 528 0 1,000 Book value as of 31. 12. 2006 543 0 11 554 Book value as of 31. 12. 2007 494 41 12 547 Notes to the consolidated financial statements 2007 127

3.2 Tangible assets (in millions of EUR) Land and buildings Technical facilities and machines Other facilities/ operating equipment Advance payments/ construction in progress Total Procurement/manufacturing costs Balance as of 1. 1. 2006 2,183 2,199 1,475 352 6,209 Currency conversion difference -115-81 -56-17 -269 Additions due to first consolidation 0 0 0 0 0 Additions 54 70 164 308 596 Disposals -78-57 -82-2 -219 Reclassifications 66 107 89-266 -4 Balance as of 31. 12. 2006 2,110 2,238 1,590 375 6,313 Currency conversion difference -80-64 -52-21 -217 Additions due to first consolidation 0 0 0 0 0 Additions 75 97 158 324 654 Disposals -17-47 -98-5 -167 Reclassifications 89 98 66-258 -5 Balance as of 31. 12. 2007 2,177 2,322 1,664 415 6,578 Accumulated depreciations Balance as of 1. 1. 2006 1,089 1,198 1,022 0 3,309 Currency conversion difference -58-45 -38 0-141 Additions due to first consolidation 0 0 0 0 0 Additions 83 172 164 0 419 Write-ups -1-1 -1 0-3 Disposals -36-48 -73 0-157 Reclassifications -1 1 0 0 0 Balance as of 31. 12. 2006 1,076 1,277 1,074 0 3,427 Currency conversion difference -39-37 -36 0-112 Additions due to first consolidation 0 0 0 0 0 Additions 83 176 173 0 432 Write-ups 0-1 0 0-1 Disposals -11-43 -86 0-140 Reclassifications 0-7 7 0 0 Balance as of 31. 12. 2007 1,109 1,365 1,132 0 3,606 Book value as of 31. 12. 2006 1,034 961 516 375 2,886 Book value as of 31. 12. 2007 1,068 957 532 415 2,972 128 Boehringer Ingelheim a n n u a l r e p o r t 2 0 0 7

consolidated financial statements 3.3 Financial assets (in millions of EUR) Investments in affiliated companies Loans to affiliated companies Investments in related companies Loans to related companies Investment securities Other loans Total Procurement/manufacturing costs Balance as of 1. 1. 2006 20 9 10 6 3,356 25 3,426 Currency conversion difference -2-1 -1 0-9 0-13 Additions due to first consolidation 0 0 0 0 0 0 0 Additions 0 0 7 0 603 4 614 Disposals 0 0-6 0-911 -6-923 Reclassifications 0 0 0 0 0 0 0 Balance as of 31. 12. 2006 18 8 10 6 3,039 23 3,104 Currency conversion difference -1 0 0 0-5 0-6 Additions due to first consolidation 0 0 0 0 0 0 0 Additions 1 0 30 0 257 4 292 Disposals -6-1 0-3 -1,672-7 -1,689 Reclassifications 0 0 0 0 0 0 0 Balance as of 31. 12. 2007 12 7 40 3 1,619 20 1,701 Accumulated depreciations Balance as of 1. 1. 2006 3 0 3 3 18 3 30 Currency conversion difference 0 0-1 0 0 0-1 Additions due to first consolidation 0 0 0 0 0 0 0 Additions 0 0 0 0 38 0 38 Write-ups 0 0 0 0-1 0-1 Disposals 0 0 0 0-5 0-5 Reclassifications 0 0 0 0 0 0 0 Balance as of 31. 12. 2006 3 0 2 3 50 3 61 Currency conversion difference 0 0 0 0 0 0 0 Additions due to first consolidation 0 0 0 0 0 0 0 Additions 0 0 5 0 12 0 17 Write-ups 0 0 0 0-2 0-2 Disposals -3 0 0-3 -7 0-13 Reclassifications 0 0 0 0 0 0 0 Balance as of 31. 12. 2007 0 0 7 0 53 3 63 Book value as of 31. 12. 2006 15 8 8 3 2,989 20 3,043 Book value as of 31. 12. 2007 12 7 33 3 1,566 17 1,638 As in the previous year, the item other loans includes no loans to shareholders. Notes to the consolidated financial statements 2007 129

3.4 Inventories (in millions of EUR) 31.12.2007 31.12.2006 Raw materials and supplies 242 224 Unfinished products 598 549 Finished products and goods for resale 540 501 Advance payments to suppliers 7 6 1,387 1,280 3.5 Accounts receivable Residual term Residual term 31.12.2006 (in millions of EUR) 31.12.2007 over 1 year over 1 year Trade accounts receivable 1,797 6 1,937 2 Receivables from affiliated companies 3 0 7 0 Receivables from related companies 3 0 6 0 Other assets 362 20 383 19 2,165 26 2,333 21 The item other assets contains receivables from shareholders amounting to EUR 1 million (2006: EUR 64 million). 3.6 Provisions (in millions of EUR) 31.12.2007 31.12.2006 Pension provisions 2,110 2,062 Tax provisions 486 382 Other provisions 1,971 2,015 4,567 4,459 130 Boehringer Ingelheim a n n u a l r e p o r t 2 0 0 7

consolidated financial statements Pension provisions Boehringer Ingelheim s pension schemes are based on various defined contribution plans as well as defined benefit plans. Pension obligations arising from direct or indirect defined benefit plans are determined on the basis of the projected unit credit method, taking future salary and pension increases into consideration. The actuarial calculation of the pension obligation from defined benefit plans is based on countryspecific biometric data (e. g. in Germany the generation tables issued in 2005 by Professor Klaus Heubeck) and actuarial assumptions. The main countries applied the following parameters: Germany USA Japan Parameter (in % as of 31 December) 2007 2006 2007 2006 2007 2006 Discount rate 5.3 4.5 5.8 5.8 1.5 1.5 Expected return on plan assets 6.0 6.0 8.0 8.0 2.2 3.0 2.2 3.0 Salary increase 4.0 3.5 5.5 5.5 0.0 3.0 2.4 3.0 Pension increase 2.0 1.7 3.0 3.0 0.0 0.0 At the balance sheet date, the present value of the expected pension obligation was netted with the fair value of the respective pension plan assets (funded status). Based on this, pension provisions are determined by deducting unrealised transition amounts as well as unrealised actuarial gains and losses from the funded status. Based on the corridor approach, unrealised gains and losses are amortised over the expected average service periods of the respective active employees. At balance sheet date, pension commitments (including total unrealised transition amounts and actuarial gains and losses) of EUR 332 million (2006: EUR 498 million) were not recognised as part of pension provisions. In conjunction with defined contribution plans, group companies paid contributions to state or private insurers on the basis of legal or contractual regulations. On payment of the contributions the companies no longer have any performance obligations. Contributions are recognised as personnel costs. Notes to the consolidated financial statements 2007 131

3.7 Accounts payable Residual term Residual term Residual term Residual term (in millions of EUR) less than 1 year 1 5 years over 5 years 31.12.2007 31.12.2006 less than 1 year Bank loans 649 137 14 800 366 225 Other accounts payable 1,185 5 161 1,351 1,408 1,280 of which: Trade accounts payable 702 2 0 704 696 696 Advance payments 32 0 36 68 56 56 Notes payable 5 0 0 5 7 7 Accounts payable to affiliated companies 11 0 0 11 9 9 Accounts payable to related companies 1 0 0 1 1 1 Other liabilities * 434 3 125 562 639 511 *of which: 1,834 142 175 2,151 1,774 1,505 taxes 39 68 social security contributions 8 13 There were no liabilities secured by mortgages or similar rights on the balance sheet date consistent with the previous year. At year-end, liabilities due to shareholders amounted to EUR 64 million (2006: none). 132 Boehringer Ingelheim a n n u a l r e p o r t 2 0 0 7

consolidated financial statements 4 Notes to the consolidated profit and loss statement The consolidated profit and loss statement is presented in line with the total cost method. 4.1 Net sales by business and business segment (in millions of EUR) 2007 2006 Human Pharmaceuticals 10,544 10,200 of which: Prescription Medicines 8,660 8,311 Consumer Health Care 1,141 1,064 Industrial Customers 739 809 Other sales 4 16 Animal Health 408 374 10,952 10,574 by geographic region (in millions of EUR) 2007 2006 Europe 3,578 3,295 of which: Germany 853 822 Americas 5,463 5,388 of which: USA/Canada/Mexico 5,050 5,039 Asia/Australasia/Africa 1,911 1,891 of which: Japan 1,193 1,227 10,952 10,574 4.2 Material costs (in millions of EUR) 2007 2006 Costs of raw material, supplies and goods for resale 1,314 1,219 Expenditure on services 313 265 1,627 1,484 4.3 Personnel costs (in millions of EUR) 2007 2006 Salaries and wages 2,291 2,217 Social benefits and retirement benefits 595 619 of which: retirement benefits 197 231 2,886 2,836 The interest component with respect to the increase in pensions and similar obligations is included in financial income rather than in personnel costs and is, therefore, not included in the operating result of the company. Notes to the consolidated financial statements 2007 133

Average headcount 2007 2006 Production 12,502 12,380 Administration 5,095 4,972 Marketing and sales 15,095 14,368 Research and development 6,405 6,003 Apprentices 703 705 39,800 38,428 4.4 Amortisation of intangible and depreciation of tangible assets The amortisation of intangible assets and depreciation of tangible assets include unscheduled write-offs of EUR 8 million (2006: EUR 21 million). 4.5 Other operating expenses Other operating expenses include third-party services in research, development, medicine and marketing, further administration costs, fees, contributions, non-income-related taxes, commissions, rents, freight costs, and expenses for third-party repairs as well as expenses incurred by restructuring measures. 4.6 Financial income (in millions of EUR) 2007 2006 Interest expense relating to pensions and similar obligations -107-100 Other interest expense and similar expenditure -51-53 Interest expense and similar expenditure -158-153 Amortisation of other financial assets and short-term investments -13-38 Income from other investment securities and from long-term loans 346 226 Other interest income and similar proceeds 87 67 262 102 134 Boehringer Ingelheim a n n u a l r e p o r t 2 0 0 7

consolidated financial statements 4.7 Holding income (in millions of EUR) 2007 2006 Gains from the sale of investments 5 1 Amortisation of financial assets -5 0 0 1 4.8 Taxes (in millions of EUR) 2007 2006 Income taxes 554 501 Deferred taxes -4 13 550 514 By concluding profit transfer agreements, significant German companies have since 1 January 2004 belonged to the trade and corporate taxation group of integrated companies of the parent company C. H. Boehringer Sohn AG & Co. KG. As income tax levied on taxable income allocated to the shareholders of C. H. Boehringer Sohn AG & Co. KG may not be shown in the consolidated profit and loss statement, only the trade tax of the relevant companies is shown as a tax expense. In the effective tax-rate reconciliation the expected tax expense for Boehringer Ingelheim is calculated on the profit tax rate for corporations (corporate tax, solidarity levy and trade tax). As in the profit and loss statement tax expenses related to the income tax for partnerships and integrated companies of C. H. Boehringer Sohn AG & Co. KG are limited to showing trade tax, the expected tax expense in the effective tax-rate reconciliation is in this respect adjusted for fictive current and deferred corporate tax expenses in order to link to the profit tax expense shown in the profit and loss statement. This elimination of fictive corporate tax (including the solidarity levy) is shown in the items Fictive Corporation. Notes to the consolidated financial statements 2007 135

The expected tax expense derived by using a fictive tax rate of 37.1 % (average tax rate for a German corporation at a municipal trade tax levy rate of 340 %; 2006: 340 %) can be reconciled to the actual tax expense as follows: (in millions of EUR) 2007 2006 Income before taxes 2,362 2,243 Expected tax expense (current and deferred) 876 37.1 % 832 37.1 % Decrease/increase in expected tax expense by Fictive Corporation current taxes -317-13.4 % -284-12.7 % Fictive Corporation deferred taxes -25-1.1 % -25-1.1 % Local tax rate divergences -72-3.0 % -28-1.2 % Non-taxable income -54-2.3 % -26-1.2 % Non-tax-deductible expenses 165 7.0 % 59 2.6 % Taxes related to prior periods 2 0.1 % -10-0.4 % Amortisation of goodwill 2 0.1 % 18 0.8 % Changes in applicable tax rates 83 3.5 % -5-0.2 % Withholding taxes not subject to tax credits 7 0.3 % 5 0.2 % Tax credits for research activities -4-0.2 % -39-1.7 % Other effects -113-4.8 % 17 0.7 % Actual tax expense (current and deferred) 550 23.3 % 514 22.9 % The deferred taxes can be attributed to the following balance sheet items: 31.12.2007 31.12.2006 (in millions of EUR) Assets Liabilities Assets Liabilities Intangible assets 7 2 9 2 Tangible assets 29 90 32 122 Financial assets 22 17 13 17 Inventories 106 14 116 14 Receivables 19 11 21 9 Provisions 469 24 511 16 Liabilities 23 1 17 2 Tax loss carryforwards and tax credits 16 0 27 0 691 159 746 182 136 Boehringer Ingelheim a n n u a l r e p o r t 2 0 0 7

consolidated financial statements Other mandatory disclosures according to GAS 10.39: (in millions of EUR) 2007 2006 Deferred tax expense from changes in law 83-5 Deferred tax expense relating to the write-off of deferred tax assets in fiscal year 1 5 The absence of changes in accounting and evaluation methods results, as in the previous year, in no deferred tax income. The valuation allowances relating to deferred tax assets amount to EUR 9 million. Unused tax loss carryforwards, on which no deferred tax assets are recognised in the balance sheet, amount to EUR 20 million at year-end, of which EUR 18 million expire in five years and EUR 2 million expire in ten years at the latest. 4.9 Net income Net income for the year 2007 includes operating income unrelated to the accounting period (mainly the release of other provisions) amounting to EUR 125 million (2006: EUR 136 million). Operating expenditure unrelated to the accounting period amounted to EUR 53 million (2006: EUR 17 million). Notes to the consolidated financial statements 2007 137

5 Notes to the cash flow statement The cash flow statement shows how the total liquid funds (liquid assets and securities in fixed and current assets) of the Boehringer Ingelheim group have changed during the reporting year through inflow and outflow of cash and cash equivalents. In accordance with German Accounting Standard No. 2 (GAS 2), Cash Flow Statements, cash flows are classified by operating, investing or financing activities. Changes reported by consolidated companies are converted at the average annual rate. Liquid funds are converted, as shown in the balance sheet, according to the year-end rate method. The influence of exchange rate changes on liquid funds is provided separately. As of the reporting year, cash inflows and cash outflows resulting from changes in receivables from shareholders or payables to shareholders are shown under Cash flow from financing activities instead of being shown under Cash flow from operating activities. Prior year figures have been adjusted accordingly. 6 Other information 6.1 Derivative financial instruments Boehringer Ingelheim is, due to its extensive international structure, highly dependent on the development of the major world currencies and interest rates. In order to hedge against the risks, particularly those inherent in supplies and services and financial funding, use is generally made of foreign exchange forward contracts in the case of currency risks. Regarding interest rate risks, use is made of interest rate swaps and interest rate options. The use of derivative financial instruments and the organisational procedure are laid down in internal guidelines. Trade, processing, documentation, and control are kept strictly separate. The risk positions are recorded, analysed and assessed regularly in a special consolidated financial report. The items are periodically re-evaluated and monitored. Derivative financial instruments are only agreed on with banks of sound financial standing. 138 Boehringer Ingelheim a n n u a l r e p o r t 2 0 0 7

consolidated financial statements As of 31 December 2007, the nominal value of all foreign currency and interest rate hedging transactions amounted to EUR 3,266 million (2006: EUR 2,506 million). The corresponding market values amounted to EUR 139 million (2006: EUR 103 million). Derivative financial instruments at year-end were as follows: Nominal value Market value (in millions of EUR) 31.12.2007 31.12.2006 31.12.2007 31.12.2006 Foreign exchange forward contracts 1,871 2,448 49 103 Foreign exchange options 1,217 0 90 0 Interest instruments 178 58 0 0 The nominal value is the sum of all purchases and sales. The market value of foreign exchange forward contracts is calculated by comparing the agreed forward rates to the market rates for the due date. Foreign exchange options are recorded at the lower of fair market value or paid option premium. They will be taken out of the books at their respective expiry date. 6.2 Contingent liabilities to the benefit of third parties (in millions of EUR) 31.12.2007 31.12.2006 Liabilities from guarantees, guarantees for bills and cheques, warranties and provisions of collateral for third-party liabilities 19 12 6.3 Other financial obligations (in millions of EUR) 31.12.2007 31.12.2006 To third parties 1,192 967 At year-end, other financial obligations included capital investments of EUR 657 million (2006: EUR 665 million). Furthermore, EUR 196 million (2006: EUR 195 million) from renting and leasing contracts are included, of which EUR 75 million concern long-term rent contracts with subsidiaries not included in the consolidation. 6.4 Research and development expenses (in millions of EUR) 2007 2006 Expenditures for research and development 1,730 1,574 Notes to the consolidated financial statements 2007 139

Auditor s Report We have audited the consolidated financial statements prepared by C. H. Boehringer Sohn AG & Co. KG, Ingelheim comprising the balance sheet, the income statement, statement of changes in equity, cash flow statement and the notes to the consolidated financial statements together with the group management report for the business year from 1 January to 31 December 2007. The preparation of the consolidated financial statements and the group management report in accordance with German commercial law is the responsibility of the Managing Directors of the managing corporate general partner. Our responsibility is to express an opinion on the consolidated financial statements and the group management report based on our audit. We conducted our audit of the consolidated financial statements in accordance with 317 HGB (German Commercial Code) and German generally accepted standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer (Institute of Public Auditors in Germany) (IDW). Those standards require that we plan and perform the audit such that misstatements materially affecting the presentation of the net assets, financial position and results of operations in the consolidated financial statements in accordance with (German) principles of proper accounting and in the group management report are detected with reasonable assurance. Knowledge of the business activities and the economic and legal environment of the group and expectations as to possible misstatements are taken into account in the determination of audit procedures. The effectiveness of the accounting-related internal control system and the evidence supporting the disclosures in the consolidated financial statements and the group management report are examined primarily on a test basis within the framework of the audit. The audit includes assessing the annual financial statements of the companies included in consolidation, the determination of the companies to be included in consolidation, the accounting and consolidation principles used and significant estimates made by the Managing Directors of the managing corporate general partner, as well as evaluating the overall presentation of the consolidated financial statements and the group management report. We believe that our audit provides a reasonable basis for our opinion. 140 Boehringer Ingelheim a n n u a l r e p o r t 2 0 0 7

With the following exception, our audit has not led to any reservations: contrary to 314 paragraph 1 number 6 HGB compensation of the members and the former members of the board of managing directors has not been disclosed. In our opinion based on the findings of our audit, the consolidated financial statements with the exception mentioned comply with the legal requirements. The consolidated financial statements give a true and fair view of the net assets, financial position and results of operations of the group in accordance with German principles of proper accounting. The group management report is consistent with consolidated financial statements that comply with the legal requirements and as a whole provides a suitable view of the group s position and suitably presents the opportunities and risks of future development. Frankfurt am Main, 14 February 2008 PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft (Philip Marshall) Wirtschaftsprüfer (German Certified Public Accountant) (Klaus Höfer) Wirtschaftsprüfer (German Certified Public Accountant) Auditor s Report 141

If you have any queries or comments, please contact us: Boehringer Ingelheim GmbH Binger Strasse 173 55216 Ingelheim Germany Telephone + 49 6132 77-0 Fax + 49 6132 77-3000 Contacts CD Communications Telephone + 49 6132 77-2270 Fax + 49 6132 77-6601 E-mail webmaster@boehringer-ingelheim.com Internet www.boehringer-ingelheim.com Issued by Boehringer Ingelheim GmbH Design and layout Neufrankfurt Corporate Design GmbH, Offenbach am Main info@neufrankfurt.net Photos on title page Peter Lénárt und Jan-Michael Peters, Jens Wunderlich Printed by Süddeutsche Verlagsgesellschaft, Ulm Copyright Boehringer Ingelheim GmbH, 2008 All rights reserved. No part of this Annual Report 2007 may be reproduced or transmitted in any form or by any means, electronic or photocopy, without permission in writing from Boehringer Ingelheim GmbH. Figures from third parties used in the annual report are based on data available at the time the financial statement was drawn up.

Comparison of balance sheets/ financial data 1998 2007 (in millions of EUR) Assets (as of 31.12.) 1998 1999 * 2000 2001 2002 2003 2004 2005 2006 2007 Intangible assets 452 400 344 322 302 242 267 233 554 547 Tangible assets 1,739 1,992 2,217 2,467 2,840 2,767 2,712 2,900 2,886 2,972 Financial assets 731 849 1,135 1,008 1,689 2,462 2,756 3,396 3,043 1,638 Fixed assets 2,922 3,241 3,696 3,797 4,831 5,471 5,735 6,529 6,483 5,157 Inventories 806 944 1,021 1,014 971 1,000 1,085 1,229 1,280 1,387 Accounts receivable (incl. deferred charges and deferred taxes) 1,255 1,870 1,938 2,314 2,360 2,537 2,477 3,013 3,137 2,912 Cash and cash equivalents (incl. securities) 299 459 477 1,002 1,055 1,134 1,333 1,247 945 1,015 Current assets 2,360 3,273 3,436 4,330 4,386 4,671 4,895 5,489 5,362 5,314 Total assets 5,282 6,514 7,132 8,127 9,217 10,142 10,630 12,018 11,845 10,471 Liabilities and equity (as of 31.12.) 1998 1999 * 2000 2001 2002 2003 2004 2005 2006 2007 Shareholders capital 441 332 211 200 178 178 178 178 178 178 Reserves (incl. currency conversion difference) 1,651 1,982 2,362 2,753 2,818 3,139 3,297 2,940 3,275 1,385 Net income 229 320 379 401 537 529 888 1,491 1,722 1,809 Total equity 2,321 2,634 2,952 3,354 3,533 3,846 4,363 4,609 5,175 3,372 Minority interests 0 0 0 1 203 188 193 216 188 167 Group equity 2,321 2,634 2,952 3,355 3,736 4,034 4,556 4,825 5,363 3,539 Provisions (incl. deferred taxes) 2,012 2,631 2,932 3,150 3,568 3,963 4,172 4,958 4,641 4,726 Liabilities (incl. deferred charges) 949 1,249 1,248 1,622 1,913 2,145 1,902 2,235 1,841 2,206 Total liabilities 2,961 3,880 4,180 4,772 5,481 6,108 6,074 7,193 6,482 6,932 Total liabilities and equity 5,282 6,514 7,132 8,127 9,217 10,142 10,630 12,018 11,845 10,471 Summary of selected financial data 1998 1999 * 2000 2001 2002 2003 2004 2005 2006 2007 Net sales 4,474 5,086 6,188 6,694 7,580 7,382 8,157 9,535 10,574 10,952 Operating income 336 655 800 980 1,082 901 1,372 1,923 2,140 2,100 Operating income as % of net sales 7.5 12.9 12.9 14.6 14.3 12.2 16.8 20.2 20.2 19.2 Income after taxes 229 320 379 401 551 537 908 1,514 1,729 1,812 Income after taxes as % of net sales 5.1 6.3 6.1 6.0 7.3 7.3 11.1 15.9 16.4 16.5 Return on equity (in %) 11.0 13.8 14.4 13.6 16.0 15.0 23.1 34.2 37.4 35.0 Own capital resources (in %) 43.9 40.4 41.4 41.3 38.3 37.9 41.0 38.4 43.7 32.2 Cash flow 595 737 791 1,117 1,049 1,059 1,430 2,069 2,317 2,392 Financial funds 858 1,055 1,094 1,645 2,645 3,516 4,015 4,585 3,934 2,581 Personnel costs 1,409 1,527 1,749 1,916 2,175 2,252 2,443 2,671 2,836 2,886 Personnel costs as % of net sales 31.5 30.0 28.3 28.6 28.7 30.5 29.9 28.0 26.8 26.4 Average number of employees 25,927 26,448 27,325 27,980 31,843 34,221 35,529 37,406 38,428 39,800 Research and development costs 812 826 968 1,019 1,304 1,176 1,232 1,360 1,574 1,730 R&D as % of net sales 18.1 16.2 15.6 15.2 17.2 15.9 15.1 14.3 14.9 15.8 Investments in tangible assets 421 377 497 548 634 516 427 532 596 654 Depreciation of tangible assets 211 256 288 305 340 354 377 439 419 432 *As of the comparative financial statement 1999, accounting and evaluation methods were brought closer into line with International Accounting Standards (IAS), particularly with regard to deferred taxes and provisions for pensions.

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