Schering-Plough Reports Financial Results for 2009 Second Quarter

Diversification Strategy and Strong Execution Continue to Drive Solid Performance; Robust Pipeline Continues To Advance and Build Long-Term Value
KENILWORTH, N.J., July 21 /PRNewswire-FirstCall/ -- Schering-Plough Corporation (NYSE:SGP) today reported financial results for the 2009 second quarter.
 
"Our successful diversification strategy and strong execution by our people have given us the strength to again power through tough challenges - delivering operational sales growth and reconciled earnings-per-share growth for the second quarter," said Fred Hassan, chairman and CEO.
 
"Meantime, we can see that six years of focus and investment in our R&D pipeline have created enormous long-term value," said Hassan. "Our rich late-stage pipeline continues to advance. We continue to achieve positive regulatory actions in major markets - for example, the recent approval of two products - ASMANEX and REMERON - on the same day in Japan, and a recommendation for approval in Europe of SIMPONI, a novel biologic treatment for inflammatory diseases. In our industry, long-term strength comes from creating a continuous flow of new innovations. We are proud that we have created such a strong and productive R&D engine at Schering-Plough."
 
For the 2009 second quarter, Schering-Plough reported net income available to common shareholders of $633 million or 38 cents per common share on a GAAP basis. Earnings per common share for the 2009 second quarter would have been 46 cents on net income of $769 million on a reconciled basis, which excludes purchase accounting adjustments related to the acquisition of Organon BioSciences (OBS) and special, merger- and acquisition-related items. For the 2008 second quarter, Schering-Plough reported net income available to common shareholders of $424 million or 26 cents per common share on a GAAP basis and earnings of 45 cents per common share on a reconciled basis.
 
GAAP net sales for the 2009 second quarter totaled $4.6 billion, down 6 percent as compared to the second quarter of 2008, reflecting operational growth of 4 percent and an unfavorable impact from foreign exchange of 10 percent during the quarter.
 
Net sales of the cholesterol joint venture with Merck & Co., Inc., which include VYTORIN and ZETIA, totaled $1.0 billion in the 2009 second quarter. Schering-Plough does not record sales of its cholesterol joint venture with Merck as the venture is accounted for under the equity method. Including an adjustment of an assumed 50 percent of the global cholesterol joint venture net sales, Schering-Plough's adjusted net sales for the 2009 second quarter would have been $5.2 billion.
 
"Our diverse product strength - from REMICADE to TEMODAR to NUVARING to MIRALAX - and our rich geographic diversity helped drive our operational growth. In fact, we grew sales in most regions around the world on an operational basis. Achieving operational growth on such a broad front in the midst of a severe global recession is no small feat," said Hassan.
 
Regarding the company's R&D strength, the company highlighted its strong R&D engine and steady product flow as a special asset at a time when R&D innovation in the industry is so critical. The company noted that the "Five Stars" in its product pipeline, highlighted at its November 2008 R&D Update meeting, continued to advance: thrombin receptor antagonist (TRA), in Phase III for atherothrombosis; SIMPONI (golimumab), a subcutaneous treatment for certain inflammatory diseases; SAPHRIS (asenapine), for the acute treatment of schizophrenia and bipolar disorder; boceprevir, a protease inhibitor in Phase III for hepatitis C; and BRIDION (sugammadex), an innovative agent for use in anesthesiology.
 
The company's R&D engine has produced a number of recent regulatory and pipeline advances, including:
 
  --  Approvals in Japan, the world's second-largest pharmaceutical market,
      in July of ASMANEX (mometasone furoate) for asthma and REMERON
      (mirtazapine) for depression; these approvals bring the number of new
      products approved in Japan to eight since the beginning of 2007;
  --  Positive opinion from the EU's regulatory authority in June
      recommending approval of SIMPONI as a once-monthly, subcutaneous
      therapy for rheumatoid arthritis, psoriatic arthritis and ankylosing
      spondylitis; SIMPONI was also launched in Canada in June as the first
      once-monthly subcutaneous treatment;
  --  Acceptance for review by the European Medicines Agency (EMEA) in June
      of the marketing application for asenapine (to be marketed as SYCREST
      in Europe) sublingual tablets for schizophrenia and bipolar I
      disorder;
  --  Initiation of patient enrollment in a Phase III trial (RED-CABG) in
      May for acadesine, an investigational, potentially first-in-class
      adenosine regulating agent for use in heart bypass surgery; and

  --  In Animal Health, the launch of the first vaccine against canine
      influenza virus, which was granted a conditional product license by
      the U.S. Department of Agriculture (USDA) in May.


Regarding the planned merger with Merck announced on March 9, 2009, the company noted that pre-integration planning teams at both Schering-Plough and Merck have been meeting collaboratively to plan for a smooth and effective integration. The merger is expected to close in the fourth quarter of 2009. Until the merger closes, both companies will continue to operate independently.
 
Second Quarter 2009 Results
 
For the 2009 second quarter, Schering-Plough reported net income available to common shareholders of $633 million or 38 cents per common share on a GAAP basis. Earnings per common share for the 2009 second quarter would have been 46 cents on net income of $769 million on a reconciled basis, which excludes purchase accounting adjustments related to the OBS acquisition and special, merger- and acquisition-related items. For the 2008 second quarter, Schering-Plough reported net income available to common shareholders of $424 million or 26 cents per common share on a GAAP basis and earnings of 45 cents per common share on a reconciled basis.
 
GAAP net sales for the 2009 second quarter totaled $4.6 billion, down 6 percent as compared to the second quarter of 2008, reflecting operational growth of 4 percent and an unfavorable impact from foreign exchange of 10 percent during the quarter.
 
Net sales of the cholesterol franchise, which include sales of the cholesterol joint venture plus sales recorded by Schering-Plough in non-joint venture territories (such as Japan and Latin America), declined 8 percent in the second quarter of 2009 to $1.1 billion, reflecting a 2 percent operational decrease and a 6 percent unfavorable impact from foreign exchange. Sales declined 10 percent in the U.S. In international markets, sales declined 4 percent, reflecting operational growth of 10 percent and a 14 percent unfavorable impact from foreign exchange. ZETIA in Japan, sold under a co-marketing agreement with Bayer, contributed $41 million to cholesterol franchise sales in the 2009 period.
 
Sales of Prescription Pharmaceuticals for the 2009 second quarter decreased 3 percent to $3.6 billion, reflecting 7 percent operational growth and an unfavorable impact from foreign exchange of 10 percent.
 
Sales of REMICADE increased 2 percent (19 percent operational growth offset by 17 percent unfavorable foreign exchange impact) to $565 million in the second quarter of 2009 due to continued market growth. REMICADE is a treatment for inflammatory diseases that Schering-Plough markets in countries outside the U.S. (except in Japan and certain other Asian markets) for rheumatoid arthritis, early rheumatoid arthritis, ankylosing spondylitis, psoriatic arthritis, plaque psoriasis, Crohn's disease, pediatric Crohn's disease and ulcerative colitis.
 
Global sales of NASONEX, an inhaled nasal corticosteroid for allergies, increased 3 percent to $321 million in the 2009 second quarter (10 percent operational growth offset by 7 percent unfavorable foreign exchange impact) as compared to $311 million in the second quarter of 2008. Operational sales were strong in both the U.S. and internationally as compared to the 2008 period.
 
Sales of TEMODAR, a treatment for certain types of brain tumors, increased 2 percent (11 percent operational growth offset by 9 percent unfavorable foreign exchange impact) to $256 million, with higher sales in the U.S. and Japan.
 
Sales of PEGINTRON for hepatitis C decreased 6 percent to $215 million in the 2009 second quarter, primarily due to the unfavorable foreign exchange impact of 6 percent.
 
In women's health care, sales of FOLLISTIM/PUREGON, a fertility treatment, for the second quarter of 2009 decreased 11 percent (1 percent operational decrease and 10 percent unfavorable foreign exchange impact) to $145 million as compared to the second quarter of 2008. Sales of NUVARING, a contraceptive product, in the second quarter of 2009 increased 11 percent (19 percent operational growth offset by 8 percent unfavorable foreign exchange impact) to $129 million as compared to $116 million in the second quarter of 2008.
 
Global sales of CLARINEX, a nonsedating antihistamine, were $226 million, a decrease of 6 percent (4 percent operational growth offset by 10 percent unfavorable foreign exchange impact) as compared to the second quarter of 2008.
 
Sales of CLARITIN in the prescription business were $96 million, a 13 percent decrease (6 percent operational decrease and 7 percent unfavorable foreign exchange impact) compared to sales of $111 million in the second quarter of 2008.
 
Animal Health sales totaled $677 million in the 2009 second quarter, a 17 percent decrease as compared to $818 million in the second quarter of 2008 (7 percent operational decrease and 10 percent unfavorable foreign exchange impact). The sales decline was a result of the overall economic environment, difficult comparisons against the 2008 launch of bluetongue vaccine and the impact of 2008 product divestitures.
 
Consumer Health Care sales were $381 million in the 2009 second quarter, down 5 percent versus the 2008 period. The decrease was primarily due to lower sales of sun care products, which primarily reflected the impact of unseasonable weather conditions in many parts of the U.S. Higher sales of MIRALAX helped offset lower sales of OTC CLARITIN.
 
Schering-Plough does not record sales of its cholesterol joint venture and incurs substantial costs such as selling, general and administrative costs that are not reflected in "Equity income" and are borne by the overall cost structure of Schering-Plough. As a result, Schering-Plough's gross margin and ratios of selling, general and administrative (SG&A) expenses and R&D expenses as a percentage of sales do not reflect the benefit of the impact of the cholesterol joint venture's operating results.
 
Schering-Plough's gross margin on a GAAP basis was unfavorably affected by purchase accounting adjustments and totaled 65.1 percent for the 2009 second quarter as compared to 61.2 percent in the 2008 period. On a reconciled basis, the gross margin percentage decreased to 68.1 percent for the second quarter of 2009 as compared to 68.4 percent for the second quarter of 2008, primarily due to the unfavorable impact from foreign exchange.
 
SG&A expenses were $1.6 billion in the second quarter of 2009, a 13 percent decrease versus the second quarter of 2008 primarily due to the impact of foreign exchange and the company's Productivity Transformation Program (PTP).
 
Research and development spending for the 2009 second quarter totaled $863 million, a 5 percent decrease, primarily due to the impact of foreign exchange.
 
Recent Developments
 
In addition to the regulatory and pipeline advances discussed above, the company also offered the following summary of recent significant developments that have previously been announced, including:
 
  --  Presented Phase II results of the HCV SPRINT-1 study showing that
      boceprevir, an oral hepatitis C protease inhibitor, in combination
      with peginterferon alfa-2b and ribavirin significantly increased
      sustained virologic response compared to current standard of care. 
      (Announced April 23)
  --  Announced changes to the company's global collaboration with Novartis
      for the development and commercialization of fixed-dose combination
      therapies for the treatment of asthma and chronic obstructive
      pulmonary disease.  (Announced May 19)
  --  Reported that Johnson & Johnson, as a result of the proposed merger
      between Schering-Plough and Merck, has initiated arbitration
      proceedings relating to Schering-Plough's rights to REMICADE and
      SIMPONI.  (Announced May 27)
  --  Announced that the EMEA had accepted for review the Marketing
      Authorization Application for SYCREST (asenapine) sublingual tablets
      for the treatment of schizophrenia and manic episodes associated with
      bipolar I disorder.  (Announced June 2)
  --  Reported findings from extensions of two Phase III studies showing
      that subcutaneous injections of SIMPONI every four weeks provided
      persistent improvements in the signs and symptoms in patients with
      psoriatic arthritis and ankylosing spondylitis.  Separately, a new
      analysis was reported showing that a greater proportion of
      anti-TNF-experienced patients with moderately to severely active
      rheumatoid arthritis who received subcutaneous injections of SIMPONI
      every four weeks experienced significant improvements in signs and
      symptoms compared with patients receiving placebo.  (Announced June
      10)
  --  With Merck, reported the receipt of a request for additional
      information from the U.S. Federal Trade Commission with respect to the
      previously announced proposed merger.  (Announced June 22)
  --  Santarus, Inc. announced that Schering-Plough HealthCare Products,
      Inc. had received notification from the FDA of a December 2009 action
      date for an over-the-counter ZEGERID branded omeprazole/sodium
      bicarbonate product.  (Announced June 23)
  --  Schering-Plough and Merck scheduled special meetings of shareholders
      on Aug. 7, 2009, for purposes of voting on the proposed merger.  The
      transaction is subject to shareholder approvals as well as the
      satisfaction of customary closing conditions and regulatory approvals,
      including expiration or termination of the applicable waiting period
      under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
      amended, as well as clearance by the European Commission under the EC
      Merger Regulation and certain other foreign jurisdictions.  (Announced
      June 25)
  --  Reported results from the Phase III ENGAGE clinical trial
      demonstrating that a single injection of corifollitropin alfa, first
      in the class of sustained follicle stimulants, achieved similar
      efficacy to recombinant follicle stimulating hormone (rFSH) given once
      daily for seven days.  (Announced July 1)
  --  Extended to stage two an ongoing Phase II clinical study with
      vicriviroc, an investigational CCR5 antagonist, for use in first-line
      therapy of adult treatment-naive HIV-infected patients with R5-type
      virus only.  (Announced July 15)

  --  Merck and Schering-Plough and the companies' cholesterol joint
      venture, Merck/Schering-Plough Pharmaceuticals, reached a civil
      settlement with a multistate group of attorneys general representing
      35 states and the District of Columbia who investigated whether the
      companies violated state consumer protection laws in connection with
      the ENHANCE clinical trial or by their promotion and marketing of
      VYTORIN and ZETIA.  (Announced July 15)

  Second Quarter 2009 Conference Call and Webcast

Schering-Plough will conduct a conference call today at 7:45 a.m. (EDT) to review the 2009 second quarter results. To listen live to the call, dial 1-866-871-2144 or 1-706-634-5003 and enter conference ID # 13268740. A replay of the call will be available beginning later on July 21 through 5 p.m. on Tuesday, July 28. To listen to the replay, dial 1-800-642-1687 or 1-706-645-9291 and enter the conference ID # 13268740. A live audio webcast of the conference call also will be available by going to the Investor Relations section of the Schering-Plough corporate Web site, www.schering-plough.com, and clicking on the "Presentations/Webcasts" link. A replay of the webcast will be available starting on July 21 through 5 p.m. on Aug. 21.
 
DISCLOSURE NOTICE:
 
The information in this press release, the comments of Schering-Plough officers during the earnings teleconference/webcast on July 21, 2009, beginning at 7:45 a.m. (EDT), and other written reports and oral statements made from time to time by the company may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements do not relate strictly to historical or current facts and are based on current expectations or forecasts of future events. You can identify these forward-looking statements by their use of words such as "anticipate," "believe," "could," "estimate," "expect," "forecast," "project," "intend," "plan," "potential," "will," and other similar words and terms. In particular, forward-looking statements include statements relating to the company's plans; its strategies; business prospects; anticipated growth; timing and level of savings achieved from the Productivity Transformation Program; prospective products or product approvals; trends in performance; anticipated timing of clinical trials and its impact on R&D spending; anticipated exclusivity periods; the potential of products and trending in therapeutic markets, including the cholesterol market; and statements about the timing and potential benefits of the proposed merger between Merck and Schering-Plough and other statements that are not historical facts. Actual results may vary materially from the company's forward-looking statements, and there are no guarantees about the performance of Schering-Plough stock or Schering-Plough's business. Schering-Plough does not assume the obligation to update any forward-looking statement.
 
A number of risks and uncertainties could cause results to differ materially from forward-looking statements, including, among other uncertainties, market viability of the company's (and the cholesterol joint venture's) marketed and pipeline products; market forces; economic factors such as interest rate and exchange rate fluctuations; the outcome of contingencies such as litigation and investigations; product availability; patent and other intellectual property protection; current and future branded, generic or over-the-counter competition; the regulatory process (including product approvals, labeling and post-marketing actions); scientific developments relating to marketed products or pipeline projects; media and societal reaction to such developments; and the ability of Schering-Plough and Merck to obtain governmental and self-regulatory organization approvals of the merger on the proposed terms and schedule. For further details of these and other risks and uncertainties that may impact forward-looking statements, see Schering-Plough's Securities and Exchange Commission filings, including Part II, Item 1A "Risk Factors" in the company's first quarter 2009 10-Q, filed May 1, 2009.
 
Schering-Plough is an innovation-driven, science-centered global health care company. Through its own biopharmaceutical research and collaborations with partners, Schering-Plough creates therapies that help save and improve lives around the world. The company applies its research-and-development platform to human prescription, animal health and consumer health care products. Schering-Plough's vision is to "Earn Trust, Every Day" with the doctors, patients, customers and other stakeholders served by its colleagues around the world. The company is based in Kenilworth, N.J., and its Web site is www.schering-plough.com.
 
  SCHERING-PLOUGH CORPORATION
  U.S. GAAP report for the second quarter ended June 30 (unaudited):
  (Amounts in millions, except per share figures)

                                         Second Quarter       Six Months
                                         --------------       ----------
                                         2009       2008    2009       2008
                                         ----       ----    ----       ----
   Net sales                           $4,647     $4,921  $9,040     $9,577
   Cost of sales 1/                     1,620      1,908   3,019      4,044
  Selling, general and administrative   1,626      1,870   3,119      3,547
  Research and development                863        906   1,667      1,786
  Other expense/(income), net             106        134     194        229
  Special, merger and
   acquisition-related charges 2/          29         94     104        117
  Equity income 3/                       (370)      (493)   (770)    (1,010)
                                        -----      -----   -----    -------

  Income before income taxes              773        502   1,707        864
  Income tax expense                      102         40     231         89
                                          ---         --     ---         --
  Net income                             $671       $462  $1,476       $775
                                         ====       ====  ======       ====

  Preferred stock dividends                38         38      75         75
                                           --         --      --         --
  Net income available to common
   shareholders                          $633       $424  $1,401       $700
                                         ====       ====  ======       ====

  Diluted earnings per common share 4/  $0.38      $0.26   $0.85      $0.43
                                        =====      =====   =====      =====

  Average shares outstanding - common
   and participating - diluted 4/       1,658      1,632   1,744      1,635

  Note: The Company incurs substantial costs related to the cholesterol
  joint venture, such as selling, general and administrative costs, that
  are not reflected in the "Equity income" and are borne by the overall
  cost structure of Schering-Plough.

  1/ Cost of sales for the three months ended June 30, 2009 and 2008
  include purchase accounting adjustments of $131 million and $354 million,
  respectively. For the six months ended June 30, 2009 and 2008, cost of
  sales includes purchase accounting adjustments of $256 million and $1.0
  billion, respectively.

  2/ Special, merger and acquisition-related charges relate to the
  Productivity Transformation Program (PTP) and costs incurred related to
  the proposed merger with Merck. For the three months ended June 30, 2009
  and 2008 these charges were $29 million ($18 million for severance costs
  and $11 million for merger costs) and $94 million ($77 million for
  severance costs and $17 million for integration-related costs),
  respectively. For the six months ended June 30, 2009 and 2008 these
  charges were $104 million ($74 million for severance costs and $30 million
  for merger costs) and $117 million ($84 million for severance costs and
  $33 million for integration-related costs), respectively.

  3/ Included in Equity income for the three and six months ended June 30,
  2008 was $64 million of income related to the termination of a
  respiratory joint venture with Merck.

  4/ Diluted EPS for the three months ended June 30, 2009 is calculated
  based on net income available to common shareholders and average diluted
  shares - common and participating - outstanding. For the three months
  ended June 30, 2009, approximately 91 million common shares obtainable
  upon conversion of Schering-Plough's 2007 mandatory convertible preferred
  stock were excluded from the computation of diluted EPS because their
  effect would have been antidilutive. For the six months ended June 30,
  2009, diluted EPS is calculated based on net income and average diluted
  shares - common and participating - outstanding. For the six months ended
  June 30, 2009, approximately 91 million common shares obtainable upon
  conversion of Schering-Plough's 2007 mandatory convertible preferred stock
  were included in the computation of diluted EPS because their effect would
  have been dilutive.

 

  SCHERING-PLOUGH CORPORATION

  Reconciliation from Reported Net Income Available to Common Shareholders
  and Reported Diluted Earnings Per Common Share to As Reconciled Amounts
  for Net Income Available to Common Shareholders and Diluted Earnings per
  Common Share
  (Amounts in Millions, except per share figures)

  To supplement its consolidated financial statements presented in
  accordance with accounting principles generally accepted in the United
  States of America (U.S. GAAP), Schering-Plough is providing the
  supplemental financial information below and on the following pages to
  reflect "As Reconciled" amounts related to Net income available to common
  shareholders and Diluted earnings per common share.  "As Reconciled"
  amounts exclude the effects of purchase accounting adjustments, special
  and acquisition-related items and other specified items.

  "As Reconciled" amounts related to Net income available to common
  shareholders and Diluted earnings per common share are non-U.S. GAAP
  measures used by management in evaluating the performance of
  Schering-Plough's  overall business.  The effects of purchase accounting
  adjustments, special and acquisition-related items and other specified
  items have been excluded from Net income available to common shareholders
  and Diluted earnings per common share as management of Schering-Plough
  does not consider these charges to be indicative of continuing operating
  results.  Schering-Plough believes that these "As Reconciled" performance
  measures contribute to a more complete understanding by investors of the
  overall results of the company and enhances investor understanding of
  items that impact the comparability of results between fiscal periods.
  Net income available to common shareholders and Diluted earnings per
  common share, as reported, are required to be presented under U.S. GAAP.


                                Three months ended June 30, 2009
                                            (unaudited)
                                            -----------
                                             Special,
                                Purchase    Merger and
                               Accounting  Acquisition-   Other       As
                       As       Adjust-      Related    Specified Reconciled
                    Reported     ments        Items       Items      (1)
                    --------     -----        -----       -----      ---
  Net sales            $4,647          $-           $-        $-    $4,647
  Cost of sales         1,620        (131)          (5)        -     1,484
  Selling,
   general and
  administrative        1,626          (1)           -         -     1,625
  Research and
   development            863          (3)           -         -       860
  Other expense/
   (income), net          106           -            -         -       106
  Special, merger and
  acquisition-related
   charges                 29           -          (29)        -         -
  Equity income          (370)          -            -         -      (370)
                        -----           -            -         -     -----

  Income before
   income taxes           773         135           34         -       942
  Income tax
  expense/(benefit)       102         (27)          (6)        -       135
                          ---        ----          ---         -       ---

  Net income             $671        $108          $28        $-      $807
                         ----        ----          ===        --      ----

  Preferred stock
   dividends               38           -            -         -        38
                           --           -            -         -        --
  Net income available
   To common
   shareholders          $633        $108          $28        $-      $769
                         ====        ====          ===        ==      ====

  Diluted earnings per
   common share (2)     $0.38                                        $0.46
                        =====                                        =====

  Average shares
   outstanding
   common and
   participating
   - diluted (2)        1,658                                        1,658

  (1)  "As Reconciled" to exclude purchase accounting adjustments, special,
  merger and acquisition-related items and other specified items.

  (2)  Diluted EPS for the three months ended June 30, 2009 is calculated
  based on net income available to common shareholders and average diluted
  shares - common and participating - outstanding. For the three months
  ended June 30, 2009, approximately 91 million common shares obtainable
  upon conversion of Schering-Plough's 2007 mandatory convertible preferred
  stock were excluded from the computation of diluted EPS because their
  effect would have been antidilutive.


  SCHERING-PLOUGH CORPORATION

  Reconciliation from Reported Net Income Available to Common Shareholders
  and Reported Diluted Earnings Per Common Share to As Reconciled Amounts
  for Net Income Available to Common Shareholders and Diluted Earnings per
  Common Share
  (Amounts in Millions, except per share figures)

                               Three months ended June 30, 2008
                                          (unaudited)
                                          -----------
                                            Special
                               Purchase       and
                              Accounting  Acquisition-   Other      As
                       As      Adjust-      Related    Specified Reconciled
                    Reported    ments        Items       Items      (1)
                    --------    -----        -----       -----      ---
  Net sales           $4,921        $-           $-        $-    $4,921
  Cost of sales        1,908      (354)           -         -     1,554
  Selling,
   general and
  administrative       1,870         (1)           -         -     1,869
  Research and
   development           906         (2)           -         -       904
  Other
  expense/(income),
   net                   134          -            -         -       134
  Special and
  acquisition-related
   charges                94          -          (94)        -         -
  Equity income         (493)         -            -        64      (429)
                       -----          -            -        --     -----

  Income before
   income taxes          502        357           94       (64)      889
  Income tax
  expense/(benefit)       40        (73)          (7)        -       120
                          --       ----          ---         -       ---

  Net income            $462       $284          $87      $(64)     $769
                        ----       ----          ===      ----      ----

  Preferred
   stock
   dividends              38          -            -         -        38
                          --          -            -         -        --
  Net income
   available to
   common
   shareholders         $424       $284          $87      $(64)     $731
                        ====       ====          ===      ====      ====

  Diluted
   earnings per
   common share        $0.26                                       $0.45
                       =====                                       =====

  Average shares
   outstanding
   common and
   participating
   - diluted           1,632                                       1,632

  (1)  "As Reconciled" to exclude purchase accounting adjustments, special
  and acquisition-related items and other specified items.

 

  SCHERING-PLOUGH CORPORATION

  Reconciliation from Reported Net Income Available to Common Shareholders
  and Reported Diluted Earnings Per Common Share to As Reconciled Amounts
  for Net Income Available to Common Shareholders and Diluted Earnings per
  Common Share
  (Amounts in Millions, except per share figures)

                                  Six months ended June 30, 2009
                                           (unaudited)
                                           -----------
                                             Special,
                                Purchase    Merger and
                               Accounting  Acquisition-   Other       As
                       As       Adjust-      Related    Specified Reconciled
                    Reported     ments        Items       Items       (1)
                    --------     -----        -----       -----       ---
  Net sales           $9,040          $-           $-        $-    $9,040
  Cost of sales        3,019        (256)          (7)        -     2,756
  Selling,
   general and
  administrative       3,119          (3)           -         -     3,116
  Research and
   development         1,667          (5)          (2)        -     1,660
  Other
  expense/(income),
   net                   194           -            -         -       194
  Special,
   merger and
  acquisition-related
   charges               104           -         (104)        -         -
  Equity income         (770)          -            -         -      (770)
                       -----           -            -         -     -----

  Income before
   income taxes        1,707         264          113         -     2,084
  Income tax
   expense/(benefit)     231         (59)         (13)        -       303
                         ---        ----         ----         -       ---

  Net income          $1,476        $205         $100        $-    $1,781
                      ------        ----         ----        --    ------

  Preferred stock
   dividends              75           -            -         -        75
                          --           -            -         -        --
  Net income
   available to
   common
   shareholders       $1,401        $205         $100        $-    $1,706
                      ======        ====         ====        ==    ======

  Diluted earnings
   Per common share
    (2)   &

Posted: July 2009


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