Schering-Plough Reports Financial Results for 2009 Third Quarter

Focus and Execution on Core Strategies Drive Solid Performance; 3 of '5 Stars' in Product Pipeline Launched in Major Markets

KENILWORTH, N.J., Oct. 22 /PRNewswire-FirstCall/ -- Schering-Plough Corporation (NYSE:SGP) today reported financial results for the 2009 third quarter.
 

"This quarter we delivered operational top-line growth, reconciled bottom-line growth and major pipeline successes. We powered through - even in the face of tough global economic and currency headwinds," said Fred Hassan, chairman and CEO. "As we near the anticipated close of our combination with Merck, we are proud of how our colleagues continue to drive Schering-Plough's strong performance."
 

He added, "Our people are focused and executing well on our core strategies. We continue to improve efficiencies and reduce costs through our Productivity Transformation Program (PTP). And, importantly, we are delivering our robust product pipeline."
 

  Hassan pointed to several recent examples:
  --  EU approval and launch in October of SIMPONI (golimumab), the first
      and only once-monthly, subcutaneous treatment for several inflammatory
      diseases;
  --  U.S. launch in October of SAPHRIS (asenapine) sublingual tablets for
      acute schizophrenia and bipolar I disorder;

  --  New product launches in Japan, the world's second largest
      pharmaceutical market, including ASMANEX (mometasone furoate) for
      asthma and REMERON (mirtazapine) for major depressive disorder, both
      in September.  These bring to eight the number of new product launches
      in Japan since the beginning of 2007.

For the 2009 third quarter, Schering-Plough reported net income available to common shareholders of $477 million or 29 cents per common share on a GAAP basis. Earnings per common share for the 2009 third quarter would have been 40 cents on net income of $670 million on a reconciled basis, which excludes purchase accounting adjustments related to the 2007 acquisition of Organon BioSciences NV (OBS) and special, merger- and acquisition-related items. For the 2008 third quarter, Schering-Plough reported net income available to common shareholders of $576 million or 35 cents per common share on a GAAP basis and earnings of 39 cents per common share on a reconciled basis. GAAP earnings in the 2008 period benefited from a $160 million pre-tax gain on divestitures of certain animal health products related to the OBS acquisition.
 

GAAP net sales for the 2009 third quarter totaled $4.5 billion, down 2 percent as compared to the third quarter of 2008, reflecting operational growth of 4 percent and an unfavorable impact from foreign exchange of 6 percent during the quarter.
 

"Our prescription pharmaceutical business performed particularly well in this past quarter," said Hassan. Six of the company's 10 largest-selling prescription products posted higher sales, even with the unfavorable impact of foreign exchange. "Now, six years into our Action Agenda, we have transformed our entire company while building a powerful R&D engine," he added.
 

At Schering-Plough's R&D Update meeting in November 2008, the company highlighted "Five Stars" in its late-stage pipeline: a thrombin receptor antagonist (TRA), in Phase III for atherothrombosis; SIMPONI; SAPHRIS; boceprevir, a protease inhibitor in Phase III for hepatitis C; and BRIDION (sugammadex), an innovative agent for use in anesthesiology. With the recent approvals of SIMPONI and SAPHRIS, three of those Five Stars - SIMPONI, SAPHRIS and BRIDION - have been launched in major markets.
 

Since the November 2008 meeting, the company has submitted regulatory filings for three new entities: corifollitropin alfa, a sustained follicle stimulant for controlled ovarian stimulation, filed in the EU; mometasone furoate/formoterol, a combination asthma therapy, filed in the U.S. and EU; and nomegestrol acetate/17 beta-estradiol, a combined oral contraceptive, filed in the EU.
 

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.
 

Third Quarter 2009 Results
 

For the 2009 third quarter, Schering-Plough reported net income available to common shareholders of $477 million or 29 cents per common share on a GAAP basis. Earnings per common share for the 2009 third quarter would have been 40 cents on net income of $670 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 third quarter, Schering-Plough reported net income available to common shareholders of $576 million or 35 cents per common share on a GAAP basis and earnings of 39 cents per common share on a reconciled basis. GAAP earnings in the 2008 period benefited from a $160 million pre-tax gain on divestitures of certain animal health products related to the OBS acquisition.
 

GAAP net sales for the 2009 third quarter totaled $4.5 billion, down 2 percent as compared to the third quarter of 2008, reflecting operational growth of 4 percent and an unfavorable impact from foreign exchange of 6 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 5 percent in the third quarter of 2009 to $1.1 billion, reflecting a 2 percent operational decrease and a 3 percent unfavorable impact from foreign exchange. Sales declined 10 percent in the U.S. In international markets, sales increased 3 percent, reflecting operational growth of 10 percent and a 7 percent unfavorable impact from foreign exchange. ZETIA in Japan, sold under a co-marketing agreement with Bayer, contributed $47 million to cholesterol franchise sales in the 2009 period.
 

Sales of Prescription Pharmaceuticals for the 2009 third quarter totaled $3.5 billion, reflecting operational growth of 6 percent offset by a 6 percent unfavorable impact from foreign exchange.
 

Sales of REMICADE increased 8 percent (18 percent operational growth offset by 10 percent unfavorable foreign exchange impact) to $608 million in the third quarter of 2009 due primarily 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. In addition, SIMPONI, a once-monthly, subcutaneous treatment for certain inflammatory diseases, has been launched in Canada and Germany; launches in other international markets are ongoing or planned.
 

Sales of TEMODAR, a treatment for certain types of brain tumors, increased 2 percent (7 percent operational growth offset by 5 percent unfavorable foreign exchange impact) to $278 million, with higher sales in all regions, excluding foreign exchange.
 

Global sales of NASONEX, an inhaled nasal corticosteroid for allergies, increased 3 percent to $266 million in the 2009 third quarter (7 percent operational growth offset by 4 percent unfavorable foreign exchange impact) as compared to $258 million in the third quarter of 2008. Operational sales increased in both the U.S. and internationally as compared to the 2008 period.
 

Sales of PEGINTRON for hepatitis C decreased 16 percent to $198 million in the 2009 third quarter (14 percent operational decrease and 2 percent unfavorable foreign exchange impact), with lower sales in both the U.S. and internationally.
 

In women's health care, sales of NUVARING, a contraceptive product, in the third quarter of 2009 increased 11 percent (15 percent operational growth offset by 4 percent unfavorable foreign exchange impact) to $131 million as compared to $118 million in the third quarter of 2008, with higher sales in all regions when excluding foreign exchange. Sales of FOLLISTIM/PUREGON, a fertility treatment, decreased 14 percent (10 percent operational decrease and 4 percent unfavorable foreign exchange impact) to $122 million as compared to the third quarter of 2008, primarily reflecting lower demand for fertility treatments.
 

Global sales of CLARINEX, a nonsedating antihistamine, were $164 million, a decrease of 7 percent (1 percent operational decrease and 6 percent unfavorable foreign exchange impact) as compared to the third quarter of 2008.
 

Sales of CLARITIN in the prescription business were $95 million, a 9 percent increase (13 percent operational growth offset by 4 percent unfavorable foreign exchange impact) compared to sales of $87 million in the third quarter of 2008.
 

Animal Health sales totaled $669 million in the 2009 third quarter, a 12 percent decrease as compared to $759 million in the third quarter of 2008 (5 percent operational decrease and 7 percent unfavorable foreign exchange impact). The sales decline was primarily due to the overall economic environment, difficult comparisons against the 2008 launch of bluetongue vaccine as well as back orders on certain products due primarily to the ongoing integration of Animal Health manufacturing practices and quality standards.
 

Consumer Health Care sales were $282 million in the 2009 third quarter, roughly in line with the 2008 period. Higher sales of MIRALAX and other OTC products were offset by lower sales of OTC CLARITIN, sun care and foot care products.
 

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 special items, and totaled 61.8 percent for the 2009 third quarter as compared to 62.0 percent in the 2008 period. On a reconciled basis, the gross margin percentage decreased to 65.9 percent for the third quarter of 2009 as compared to 66.9 percent for the third quarter of 2008, primarily due to the unfavorable impact from foreign exchange, partially offset by favorable product mix and manufacturing cost savings.
 

SG&A expenses were $1.5 billion in the third quarter of 2009, a 9 percent decrease versus the third quarter of 2008 (5 percent operational decrease and 4 percent favorable foreign exchange impact) primarily due to the impact of foreign exchange and the company's Productivity Transformation Program.
 

Research and development spending for the 2009 third quarter totaled $913 million, a 2 percent increase (4 percent operational increase and 2 percent favorable foreign exchange impact), related to higher spending for clinical trials and related activities, partially offset by 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:
 

  --  Announced FDA acceptance of a filing for a New Drug Application (NDA)
      for DULERA, a fixed-dose combination of mometasone furoate and
      formoterol fumarate, for the maintenance treatment of asthma in
      patients 12 years of age and older.  (Announced July 22)
  --  Reported a proposed settlement, subject to Court approval, to resolve
      litigation seeking to enjoin the planned merger with Merck & Co.,
      Inc., and other forms of relief.  The consolidated class action
      lawsuits were filed in U.S. District Court for the District of New
      Jersey.  (Announced July 24)
  --  Announced that SAPHRIS sublingual tablets met the primary endpoint
      over one year of treatment in an extension study in patients with
      predominant, persistent negative symptoms of schizophrenia. 
      (Announced July 24)
  --  With sanofi-aventis and Merck & Co., Inc., announced that the
      companies have signed a definitive agreement under which Merck will
      sell its 50 percent interest in the companies' animal health joint
      venture, Merial Limited, to sanofi-aventis.  (Announced July 30)
  --  With Merck and the companies' cholesterol joint venture,
      Merck/Schering-Plough Pharmaceuticals, announced agreements to resolve
      civil class action litigation relating to the purchase or use of
      VYTORIN and ZETIA.  (Announced Aug. 5)
  --  Announced results of a special shareholders meeting regarding the
      proposed merger with Merck.  More than 99 percent of votes cast voted
      to approve the merger agreement, with more than 78 percent of common
      shares voting.  (Announced Aug. 7)
  --  Reached agreement with Orchid Chemicals & Pharmaceuticals Ltd. and
      Orgenus Pharma, Inc., related to certain generic formulations of
      CLARINEX (desloratadine).  The agreement marks the end of all pending
      litigations filed and consolidated since 2006 in the U.S. District
      Court for the District of New Jersey against several generic drug
      manufacturing companies involving generic solid oral dosage forms of
      desloratadine.  (Announced Aug. 11)
  --  Gained U.S. approval for SAPHRIS sublingual tablets for acute
      treatment of schizophrenia in adults and acute treatment of manic or
      mixed episodes associated with bipolar I disorder.  (Announced Aug.
      14)
  --  Reported the European Medicines Agency's acceptance for review of two
      applications:  for a fixed-dose combination of mometasone furoate and
      formoterol fumarate for the maintenance treatment of asthma, and
      nomegestrol acetate/estradiol, a combined oral contraceptive.  
      (Announced Aug. 26)
  --  With Merck, announced that as part of the pending merger the following
      three Schering-Plough Board members are expected to remain on the
      Board of the newly combined company upon completion of the merger:  C.
      Robert Kidder, Patricia F. Russo and Craig B. Thompson, M.D. 
      (Announced Sept. 3)
  --  Reported final results of a SAPHRIS long-term schizophrenia relapse
      prevention clinical study, showing that time to relapse or impending
      relapse, the primary efficacy endpoint, was significantly longer with
      SAPHRIS than with placebo.  (Announced Sept. 14)
  --  Reported long-term data with vicriviroc, an investigational CCR5
      receptor antagonist, from an ongoing, open-label extension of the
      Phase II VICTOR-E1 study in treatment-experienced HIV-infected
      patients.  (Announced Sept. 14)
  --  Reported the recommended approval by the FDA's Oncologic Drugs
      Advisory Committee by a vote of six to four for PEGINTRON in the
      adjuvant treatment of patients with Stage III malignant melanoma. 
      (Announced Oct. 5)
  --  With Centocor Ortho Biotech Inc., reported the European Commission
      approval of SIMPONI as a once-monthly, subcutaneous therapy for the
      treatment of moderate-to-severe, active rheumatoid arthritis, active
      and progressive psoriatic arthritis and severe, active ankylosing
      spondylitis.  (Announced Oct. 6)
  --  Nobilon, Schering-Plough's human vaccine business unit, initiated a
      clinical Proof of Concept trial with a new intranasal Live Attenuated
      Influenza Vaccine (LAIV) for annual seasonal use.  (Announced Oct. 13)

  --  Reported new long-term data from two pivotal, Phase III clinical
      trials showing that patients with active rheumatoid arthritis
      receiving SIMPONI every four weeks achieved sustained improvements in
      signs and symptoms and physical function response through one year. 
      (Announced Oct. 19)

  Third  Quarter 2009 Conference Call and Webcast

Schering-Plough will conduct a conference call today at approximately 7:15 a.m. (EDT) to review results for the 2009 third quarter. To listen live to the call, dial 1-877-565-9664 or 1-706-634-5003 and enter conference ID # 33373738. A replay of the call will be available beginning later on Oct. 22 through 5 p.m. on Thursday, Oct. 29. To listen to the replay, dial 1-800-642-1687 or 1-706-645-9291 and enter the conference ID #33373738. 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 October 22 through 5 p.m. on November 2.
 

DISCLOSURE NOTICE:
 

The information in this press release, the comments of Schering-Plough officers during the earnings teleconference/webcast on Oct. 22, 2009, beginning at 7:15 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 second quarter 2009 10-Q, filed July 24, 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 third quarter ended September 30 (unaudited):
  (Amounts in millions, except per share figures)

                                        Third Quarter         Nine Months
                                        -------------         -----------
                                        2009      2008      2009       2008
                                        ----      ----      ----       ----

  Net sales                           $4,499    $4,576   $13,539    $14,154
  Cost of sales 1/                     1,719     1,737     4,738      5,782
  Selling, general and administrative  1,511     1,660     4,629      5,208
  Research and development               913       893     2,580      2,679
  Other expense/(income), net 2/         102       (39)      297        189
  Special, merger and
   acquisition-related charges 3/         29       101       133        218
  Equity income 4/                      (387)     (434)   (1,157)    (1,444)
                                        ----      ----    ------     ------

  Income before income taxes             612       658     2,319      1,522
  Income tax expense                      97        44       328        133
                                          --        --       ---        ---
  Net income                            $515      $614    $1,991     $1,389
                                        ====      ====    ======     ======

  Preferred stock dividends               38        38       113        113
                                          --        --       ---        ---
  Net income available to common
   shareholders                         $477      $576    $1,878     $1,276
                                        ====      ====    ======     ======

  Diluted earnings per common share    $0.29     $0.35     $1.13      $0.78
                                       =====     =====     =====      =====

  Average shares outstanding -
   common and participating - diluted  1,667     1,636     1,658      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 September 30, 2009 and 2008
  include purchase accounting adjustments of $138 million and $221 million,
  respectively. For the nine months ended September 30, 2009 and 2008, cost
  of sales includes purchase accounting adjustments and special items of
  $394 million and $1.3 billion, respectively.  Special items included in
  cost of sales of $48 million and $55 million for the three and nine months
  ended September 30, 2009, relates to the closure of certain global supply
  chain operations.

  2/ For the three and nine months ended September 30, 2008, Other
  expense/(income), net includes $160 million of gain on sale of certain
  divested animal health products associated with the OBS acquisition.

  3/ 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 September 30,
  2009 and 2008 these charges were $29 million ($24 million for severance
  costs and $5 million for merger costs) and $101 million ($93 million for
  severance costs and $8 million for integration-related costs),
  respectively. For the nine months ended September 30, 2009 and 2008
  these charges were $133 million ($98 million for severance costs and $35
  million for merger costs) and $218 million ($178 million for severance
  costs and $40 million for integration related costs), respectively.

  4/ Included in Equity income for the three and nine months ended September
  30, 2008 were $19 million and $83 million, respectively, of income related
  to the termination of a respiratory joint venture with Merck.



  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 merger 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 September 30, 2009
                                              (unaudited)
                                              -----------
                                               Special,
                                                Merger
                                                 and
                                   Purchase  Acquisition-  Other      As
                           As     Accounting   Related  Specified Reconciled
                       Reported   Adjustments   Items      Items      (1)
                       --------   -----------   -----      -----      ---

                        $4, 499        $-         $-        $-     $4,499
  Net sales
  Cost of sales           1,719      (138)       (48)(2)     -      1,533
  Selling, general and
   administrative         1,511        (1)         -         -      1,510
  Research and development  913        (4)         -         -        909
  Other expense/(income),
   net                      102         -          -         -        102
  Special, merger and
   acquisition-related
   charges                   29         -        (29)        -          -
  Equity income            (387)        -          -         -       (387)
                          -----        --         --        --      -----

  Income before income
   taxes                    612       143         77         -        832
  Income tax expense/
   (benefit)                 97       (22)        (5)        -        124
                             --      ----        ---        --        ---

  Net income               $515      $121        $72        $-       $708
                           ----      ----        ===        --       ----

  Preferred stock dividends  38         -          -         -         38
                             --        --         --        --         --
  Net income available to
   common shareholders     $477      $121        $72        $-       $670
                           ====      ====        ===        ==       ====

  Diluted earnings per
   common share           $0.29                                     $0.40
                          =====                                     =====

  Average shares
   outstanding common
   and participating -
   diluted                1,667                                     1,667

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

  (2) Relates to the closure of certain global supply chain operations.



  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 September 30, 2008
                                              (unaudited)
                                              -----------
                                               Special,
                                                Merger
                                                 and
                                   Purchase  Acquisition-  Other      As
                           As     Accounting   Related  Specified Reconciled
                       Reported   Adjustments   Items      Items      (1)
                       --------   -----------   -----      -----      ---

  Net sales             $4,576        $-           $-        $-      $4,576
  Cost of sales          1,737      (221)           -         -       1,516
  Selling, general and
   administrative        1,660        (1)           -         -       1,659
  Research and
   development             893        (3)           -         -         890
  Other expense/(income),
   net                     (39)        -            -       160         121
  Special and
   acquisition-related
   charges                 101         -         (101)        -           -
  Equity income           (434)        -            -        19        (415)
                         -----        --           --        --       -----

  Income before income
   taxes                   658       225          101      (179)        805
  Income tax expense/
   (benefit)                44       (79)         (16)       11         128
                            --      ----         ----        --         ---

  Net income              $614      $146          $85     $(168)       $677
                          ----      ----          ===     -----        ----

  Preferred stock
   dividends                38         -            -         -          38
                            --        --           --        --          --
  Net income available
   to common
   shareholders           $576      $146   $85  $(168)     $639
                          ====      ====   ===  =====      ====

  Diluted earnings per
   common share          $0.35                                        $0.39
                         =====                                        =====

  Average shares
   outstanding common
   and participating -
   diluted               1,636                                        1,636

  (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)



                                 Nine months ended September 30, 2009
                                               (unaudited)
                                               -----------
                                               Special,
                                                Merger
                                                 and
                                   Purchase  Acquisition-  Other      As
                           As     Accounting   Related  Specified Reconciled
                       Reported   Adjustments   Items      Items      (1)
                       --------   -----------   -----      -----      ---

  Net sales             $13,539       $-         $-          $-    $13,539
  Cost of sales           4,738     (394)       (55)(2)       -      4,289
  Selling, general and
   administrative         4,629       (4)         -           -      4,625
  Research and
   development            2,580       (9)        (2)          -      2,569
  Other expense/(income),
   net                      297        -          -           -        297
  Special, merger and
   acquisition-related
   charges                  133        -       (133)          -          -
  Equity income          (1,157)       -          -           -     (1,157)
                        -------       --         --          --    -------

  Income before income
   taxes                  2,319      407        190           -      2,916
  Income tax expense/
   (benefit)                328      (81)       (18)          -        427
                            ---     ----       ----          --        ---

  Net income             $1,991     $326       $172          $-     $2,489
                         ------     ----       ----          --     ------

  Preferred stock
   dividends                113        -          -           -        113
                            ---       --         --          --        ---
  Net income available
   to common
   shareholders          $1,878     $326       $172          $-     $2,376
                         ======     ====       ====          ==     ======

  Diluted earnings per
   common share           $1.13                                      $1.43
                          =====                                      =====

   Average shares
    outstanding common
    and participating -
    diluted               1,658                                      1,658

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

  (2) Relates to the closure of certain global supply chain operations.



  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)

                                 Nine months ended September 30, 2008
                                                (unaudited)
                                                -----------
                                               Special,
                                                Merger
                                                 and
                                   Purchase  Acquisition-  Other      As
                           As     Accounting   Related  Specified Reconciled
                       Reported   Adjustments   Items      Items      (1)
                       --------   -----------   -----      -----      ---

  Net sales             $14,154        $-         $-        $-     $14,154
  Cost of sales           5,782    (1,264)         -         -       4,518
  Selling, general and
   administrative         5,208        (3)         -         -       5,205
  Research and
   development            2,679        (7)         -         -       2,672
  Other expense/(income),
   net                      189         -          -       177         366
  Special and
   acquisition-related
   charges                  218         -       (218)        -           -
  Equity income          (1,444)        -          -        83      (1,361)
                        -------         -          -        --     -------

  Income before income
   taxes                  1,522     1,274        218      (260)      2,754
  Income tax expense/
   (benefit)                133      (266)       (25)       16         408
                            ---     -----       ----        --         ---

  Net income             $1,389    $1,008       $193     $(244)     $2,346
                         ------    ------       ----     -----      ------

  Preferred stock
   dividends                113         -          -         -         113
                            ---         -          -         -         ---
  Net income available
   to common
   shareholders          $1,276    $1,008       $193     $(244)     $2,233
                         ======    ======       ====     =====      ======

  Diluted earnings per
   common share           $0.78                                      $1.37
                          =====                                      =====

  Average shares
   outstanding common
   and participating -
   diluted                1,635                                      1,635

  (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)

  "As Reconciled" amounts related to Net income available to common
  shareholders and Diluted earnings per common share reflect the following
  adjustments:

                                              Third Quarter     Nine Months
                                               (unaudited)      (unaudited)
                                               ----------       ----------
                                             2009       2008   2009    2008
                                             ----       ----   ----    ----
  Purchase accounting adjustments:
  --------------------------------
       Amortization of intangibles in
        connection with the acquisition
        of Organon BioSciences (a)           $127       $136   $368    $407
       Depreciation related to the fair
        value adjustment of fixed assets
        related to the acquisition of
        Organon BioSciences (b)                16         11     39      27
       Charge related to the fair value
        adjustment to inventory related
        to the acquisition of Organon
        BioSciences (a)                         -         78      -     840
                                               --         --     --     ---
  Total purchase accounting
   adjustments, pre-tax                       143        225    407   1,274
       Income tax benefit                      22         79     81     266
                                               --         --     --     ---
  Total purchase accounting
   adjustments                               $121       $146   $326  $1,008
                                             ====       ====   ====  ======

  Special, merger and
   acquisition-related items:
  ---------------------------
       Accelerated depreciation (a)            $5         $-    $12      $-
       Special, merger and
        acquisition-related activities
        (d)/(a)                                72        101    178     218
                                               --        ---    ---     ---
  Total special, merger and
   acquisition-related items,
   pre-tax                                    77        101    190      218
       Income tax benefit                      5         16     18       25
                                              --         --     --       --
  Total special, merger and
   acquisition-related items                 $72        $85   $172     $193
                                             ===        ===   ====     ====

  Other specified items:
  ----------------------
       Income from respiratory JV
        termination (e)                       $-       $(19)    $-     $(83)
       (Gain) on sale of manufacturing
        plant (c)                              -          -      -      (17)
          (Gain) on sale of previously
           announced divestiture of certain
           Animal Health products (d)          -       (160)     -     (160)
                                              --      -----     --    -----
  Total other specified items,
   pre-tax                                     -       (179)     -     (260)
       Income tax expense                      -        (11)     -      (16)
                                              --       ----     --     ----
  Total other specified items                 $-      $(168)    $-    $(244)
                                              ==      =====     ==    =====

  Total purchase accounting
   adjustments, special, merger and
   acquisition-related items and
   other specified items                    $193        $63   $498     $957
                                            ====        ===   ====     ====

  (a) Included in cost of sales
  (b) Included in cost of sales, selling, general and administrative and
  research and development
  (c) Included in other expense (income), net
  (d) Included in special, merger and acquisition-related charges
  (e) Included in equity income



  SCHERING-PLOUGH CORPORATION

  Report for the period ended September 30 (unaudited):

  GAAP Net Sales by Key Product
  (Dollars in millions)             Third Quarter            Nine Months
                                    -------------            -----------
                                 2009   2008      %     2009     2008    %
                                 ----   ----      -     ----     ----    -

  PRESCRIPTION PHARMACEUTICALS $3,548 $3,539      -% $10,515  $10,798   (3%)
     REMICADE                     608    564      8%   1,691    1,627    4%
     NASONEX                      266    258      3%     893      876    2%
     TEMODAR                      278    273      2%     781      760    3%
     PEGINTRON                    198    235   (16%)     629      689   (9%)
     CLARINEX / AERIUS            164    176    (7%)     564      630  (10%)
     FOLLISTIM/PUREGON            122    142   (14%)     397      450  (12%)
     NUVARING                     131    118     11%     375      330   14%
     CLARITIN Rx                   95     87      9%     323      326   (1%)
     AVELOX                        70     65      7%     250      274   (9%)
     INTEGRILIN                    74     84   (12%)     223      236   (5%)
     REBETOL                       64     63      1%     197      193    2%
     CAELYX                        67     80   (16%)     195      232  (16%)
     INTRON                        56     61    (8%)     177      177    -%
     REMERON                       74     61     21%     174      190   (8%)
     PROVENTIL / ALBUTEROL         59     38     53%     169      127   33%
     ASMANEX                       53     40     31%     156      131   19%
     SUBUTEX / SUBOXONE            53     63   (16%)     155      178  (13%)
     CERAZETTE                     49     49      1%     134      142   (5%)
     ELOCON                        45     45      1%     132      137   (3%)
     NOXAFIL                       47     40     20%     129      111   16%
     IMPLANON                      45     37     20%     125      119    5%
     LIVIAL                        38     48   (21%)     110      143  (23%)
     MARVELON                      34     37    (7%)     102      114  (11%)
     MERCILON                      33     38   (12%)     101      128  (21%)
     ZEMURON                       30     72   (59%)      95      202  (53%)
     FORADIL                       24     25    (5%)      72       76   (4%)
     Other Pharmaceuticals        771    740      4%   2,166    2,200   (2%)

  ANIMAL HEALTH                   669    759   (12%)   1,976    2,299  (14%)

  CONSUMER HEALTH CARE            282    278      2%   1,048    1,057   (1%)
     OTC                          173    160      8%     590      550    7%
       OTC CLARITIN                85     92    (7%)     342      350   (2%)
       MiraLAX                     41     31     33%     114       85   35%
       Other OTC                   47     37     26%     134      115   16%
     FoCare                        92     96    (5%)     266      286   (7%)
     Sun Care                      17     22   (19%)     192      221  (13%)
                                   --     --             ---      ---

  CONSOLIDATED GAAP NET SALES  $4,499 $4,576    (2%) $13,539  $14,154   (4%)
                               ====== ======         =======  =======

  NOTES:
  -- GAAP net sales for the three months ended September 30, 2009 totaled
     $4.5 billion, down 2 percent as compared to 2008, reflecting
     operational growth of 4 percent and an unfavorable impact from foreign
     exchange of 6 percent.
  -- GAAP net sales for the nine months ended September 30, 2009 totaled
     $13.5 billion, down 4 percent as compared to 2008, reflecting
     operational growth of 4 percent and an unfavorable impact from foreign
     exchange of 8 percent.


  SCHERING-PLOUGH CORPORATION

  Reconciliation of Non-U.S. GAAP Financial Measures

  Adjusted net sales, defined as Net sales plus an assumed 50 percent of
  global cholesterol joint venture net sales.

                                      Three months ended September 30,
  (Dollars in millions)                        (unaudited)
                                                ---------
                                    2009          2008        %
                                    ----          ----        -

  Net sales, as reported          $4,499        $4,576      (2%)

  50 percent of cholesterol joint
   venture net sales a/              506           545      (7%)
                                     ---           ---      ---

  Adjusted net sales              $5,005        $5,121      (2%)
                                  ======        ======      ===


                                      Nine months ended September 30,
  (Dollars in millions)                         (unaudited)
                                                 ---------
                                    2009          2008        %
                                    ----          ----        -

  Net sales, as reported         $13,539       $14,154      (4%)

  50 percent of cholesterol joint
   venture net sales a/            1,481         1,719     (14%)
                                   -----         -----     ----

  Adjusted net sales             $15,020       $15,873      (5%)
                                 =======       =======      ===

  a/ Total Net sales of the cholesterol joint venture for the three months
  ended September 30, 2009 and 2008 were $1.0 billion and $1.1 billion,
  respectively.  Total Net sales of the cholesterol joint venture for the
  nine months ended September 30, 2009 and 2008 were $3.0 billion and $3.4
  billion, respectively.

  NOTE:  Adjusted net sales, defined as net sales plus an assumed 50 percent
  of global cholesterol joint venture net sales, is a non-U.S. GAAP measure
  used by management in evaluating the performance of the Schering-Plough's
  overall business.  Schering-Plough believes that this performance measure
  contributes to a more complete understanding by investors of the overall
  results of the company.  Schering-Plough provides this information to
  supplement the reader's understanding of the importance to the company of
  its share of results from the operations of the cholesterol joint venture.
  Net sales (excluding the cholesterol joint venture net sales) is required
  to be presented under U.S. GAAP.  The cholesterol joint venture's net
  sales are included as a component of income from operations in the
  calculation of Schering-Plough's "Equity income."  Net sales of the
  cholesterol joint venture do not include net sales of cholesterol products
  in non-joint venture territories.

Source: Schering-Plough Corporation

Posted: October 2009


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