Schering-Plough Reports Financial Results for Third Quarter of 2007

Solid Performance Continues in Third Quarter of 2007; Company Prepares for

Integration of Organon BioSciences

    KENILWORTH, N.J., Oct. 22 /PRNewswire-FirstCall/ -- Schering-Plough
 Corporation ( SGP) today reported financial results for the third
 quarter of 2007 and commented on its planned acquisition of Organon
 BioSciences N.V. (OBS), which includes the Organon human health business
 and Intervet animal health business.
     "Schering-Plough has now recorded its 12th consecutive quarter of
 double- digit adjusted sales growth," said Fred Hassan, chairman and CEO.
 "Schering- Plough's long-term strategy continues to unfold. Our strategy to
 grow the top line, exercise financial discipline and expand our R&D
 pipeline again delivered strong results."
     Added Hassan: "Our focus on building R&D excellence is beginning to
 bear fruit. With the upcoming acquisition of Organon BioSciences, we will
 have a total of 12 significant projects in Phase III -- we will have a
 pipeline with a Phase III bulge. This, combined with relatively long
 exclusivity of our marketed product portfolio, puts Schering-Plough in a
 substantially stronger position in terms of its late-stage pipeline and
 portfolio than only four years ago," said Hassan.
     For the 2007 third quarter, Schering-Plough reported net income
 available to common shareholders of $713 million or 45 cents per common
 share on a GAAP basis. Excluding acquisition-related items and an upfront
 R&D payment, earnings per share for the 2007 third quarter would have been
 28 cents (see table below on page 13). For the 2006 third quarter,
 Schering-Plough reported net income of $287 million or 19 cents per common
 share on a GAAP basis.
     Net sales for the 2007 third quarter rose 9 percent on a GAAP basis and
 12 percent on an adjusted basis versus the 2006 period. GAAP net sales for
 the 2007 third quarter totaled $2.8 billion; adjusted net sales, which
 includes an assumed 50 percent of global cholesterol joint venture net
 sales (see table below on page 12 and hereinafter referred to as "adjusted
 sales") for the 2007 third quarter would have totaled $3.5 billion compared
 to $3.1 billion on a similar adjusted basis in the 2006 third quarter.
 Schering-Plough does not record sales of its cholesterol joint venture with
 Merck & Co., Inc. (Merck), as the venture is accounted for under the equity
 method.
     Hassan noted that Schering-Plough's expanding Phase III pipeline should
 provide important future strength. Schering-Plough recently advanced two
 compounds into Phase III trials -- vicriviroc for HIV and a thrombin
 receptor antagonist (TRA) for atherothrombosis; both have been granted
 "fast track" designation by the U.S. Food and Drug Administration (FDA).
 The number of patients in clinical trials in 2007 has increased
 substantially versus 2006, and is expected to increase again next year.
 This level of expanded R&D is unequaled in the company's history.
     As Schering-Plough advances in the Build the Base phase of its six- to
 eight-year Action Agenda, it has continued to resolve issues from the past
 -- most recently, the dissolution in August 2007 of the FDA consent decree,
 first entered into in May 2002, by the U.S. District Court for the District
 of New Jersey (Newark).
     "This was an unprecedented and heroic achievement by our people," said
 Hassan. "We are a company that stands out for injecting quality, compliance
 and business integrity into our DNA."
     Organon BioSciences Update
     Since the March 12 announcement, Schering-Plough has made significant
 progress toward completing the acquisition of OBS from Akzo Nobel N.V. This
 includes gaining European Commission approval for the acquisition and
 completing most of its financing plan by securing nearly $9 billion in
 financing through a mix of equity and debt of varying maturities (3-30
 years). The company has completed a customary consultative process with the
 OBS Works Council in the Netherlands in a positive manner, which will
 facilitate the transaction with Akzo Nobel.
     "The acquisition of Organon BioSciences will create a world-class human
 health business balanced by the diversification of a world-class animal
 health business, with its cash flow and strong operating margins," said
 Hassan. "We will be focused relentlessly on doing the right things to
 realize the enormous long-term promise of this combination. This means
 focusing on top-line growth, advancing key R&D projects, continuing to
 achieve productivity gains across the company and forging a unified,
 high-performance culture."
     In connection with the European Commission clearance, Schering-Plough
 has agreed to divest certain animal health products in Europe. The
 divestitures are not expected to be material to the company's financial
 results. Schering- Plough still needs to secure certain other regulatory
 approvals, including clearance from the U.S. Federal Trade Commission
 (FTC), and continues to expect the transaction to be completed by year-end
 2007.
     Third Quarter 2007 Results
     For the 2007 third quarter, Schering-Plough reported net income
 available to common shareholders of $713 million or 45 cents per common
 share on a GAAP basis. Excluding acquisition-related items and an upfront
 R&D payment, earnings per share for the 2007 third quarter would have been
 28 cents. The GAAP results include a favorable impact of 17 cents per share
 comprised of a net benefit of $294 million for acquisition-related items
 (primarily due to a mark-to-market gain on a currency option) and a charge
 of $20 million for an upfront licensing payment.
     For the 2006 third quarter, the company reported net income available
 to common shareholders of $287 million or 19 cents per common share on a
 GAAP basis.
     GAAP net sales for the 2007 third quarter totaled $2.8 billion, up 9
 percent as compared to the third quarter of 2006. The sales growth reflects
 a 3 percent favorable impact from foreign exchange and a 2 percent
 unfavorable impact related to the reversal of accrued rebates in the 2006
 third quarter for the TRICARE Retail Pharmacy Program in the United States.
     Global cholesterol joint venture net sales, which include VYTORIN and
 ZETIA, totaled $1.3 billion in the 2007 third quarter, a 26 percent
 increase compared to net sales of $1.0 billion in the comparable 2006
 period. 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 sales for the 2007
 third quarter would have been $3.5 billion, a 12 percent increase, compared
 to $3.1 billion on a similar adjusted basis in the 2006 third quarter.
     Overall, Schering-Plough shares in approximately 50 percent of the
 profits of the joint venture with Merck, although there are different
 profit-sharing arrangements for the cholesterol products in countries
 around the world. Schering-Plough records its share of the income from
 operations in "Equity income from cholesterol joint venture," which totaled
 $506 million in the 2007 third quarter versus $390 million in the third
 quarter of 2006. Schering- Plough noted that it incurs substantial costs
 such as selling, general and administrative costs that are not reflected in
 "Equity income from cholesterol joint venture" and are borne by its overall
 cost structure. There is a separate co-marketing agreement with Bayer for
 ZETIA in Japan, where the product was launched in June 2007.
     Sales of REMICADE increased 34 percent to $426 million in the third
 quarter of 2007 due to continued market growth and expanded use across
 indications. REMICADE is a treatment for inflammatory diseases that
 Schering- Plough markets in countries outside the United States (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,
 rose 10 percent to $242 million versus the 2006 period, due to increased
 sales in international markets.
     Sales of PEGINTRON for hepatitis C increased 7 percent to $221 million
 in the 2007 third quarter due to higher sales in Latin America and emerging
 markets across Europe, and tempered by lower sales in Japan and the United
 States.
     Sales of TEMODAR, a treatment for certain types of brain tumors, grew
 20 percent to $215 million due primarily to increased sales across all
 geographic markets, including Japan, where the product was launched in
 September 2006. The growth rate for TEMODAR is expected to continue to
 moderate as significant penetration in U.S. and EU markets has already been
 achieved for this product.
     Global sales of CLARINEX, a nonsedating antihistamine, in the third
 quarter of both 2007 and 2006 were $171 million. Higher sales of CLARINEX
 in international markets were offset by lower sales in the United States.
 International sales of prescription CLARITIN were $83 million in the third
 quarter of 2007 compared to sales of $74 million in the third quarter of
 2006.
     Among other prescription products posting higher sales in the 2007
 third quarter was the antibiotic AVELOX, up 24 percent to $78 million, as a
 result of increased market share.
     Consumer Health Care sales were $273 million in the 2007 third quarter,
 up 5 percent versus the 2006 period. The increase was primarily due to
 sales of MiraLAX, which was launched in February 2007 as the first
 Rx-to-OTC switch in the laxative category in more than 30 years; higher
 sales of OTC CLARITIN; partially offset by a decline in sun care sales.
     Animal Health sales increased 8 percent to $248 million, reflecting
 solid growth internationally, led by the poultry, companion animal,
 aquaculture and swine product lines, coupled with a positive impact from
 foreign currency exchange rates. The growth in international markets was
 tempered by a decline in the United States.
     Schering-Plough incurs substantial costs such as selling, general and
 administrative costs that are not reflected in "Equity income from
 cholesterol joint venture" 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.
     On a GAAP basis, Schering-Plough's gross margin was 67.1 percent for
 the 2007 third quarter as compared to 65.6 percent in the 2006 period.
     SG&A expenses were $1.3 billion in the third quarter of 2007, up 9
 percent versus $1.2 billion in the prior-year period. SG&A in the third
 quarter of 2007 increased primarily due to increased promotional spending.
     Research and development spending for the 2007 third quarter increased
 to $669 million compared to $536 million in the third quarter of 2006.
 Included in R&D spending in the third quarter of 2007 was $20 million
 related to an upfront payment made for in-licensing acadesine, a Phase III
 cardiovascular agent for ischemia-reperfusion injury. The increase in R&D
 expenses was also due to higher spending for clinical trials and related
 activities, and investments to build greater breadth and capacity to
 support the dramatic expansion of Schering-Plough's Phase III pipeline
 during the past 12 months.
     Recent Developments
     The company also offered the following summary of recent significant
 developments that have previously been announced, including:
     -- Reported results from a Phase II clinical trial showing that
        vicriviroc, the company's investigational CCR5 antagonist, demonstrated
        potent and sustained viral suppression through 48 weeks of therapy in
        treatment-experienced HIV patients.  (Announced July 24)
     -- Continued development of the company's new Pharmaceutical Sciences
        Center in Summit, N.J.  (Announced July 25)
     -- Announced the dissolution of the Consent Decree of Permanent Injunction
        by the U.S. District Court for the District of New Jersey (Newark).
        (Announced Aug. 2)
     -- Completed three significant financing rounds in conjunction with the
        planned acquisition of Organon BioSciences N.V., including:
          -- a registered public offering of 57.5 million common shares
             (approximately $1.5 billion) and a registered public offering of
             $2.5 billion of mandatory convertible preferred stock (announced
             Aug. 9);
          -- a $1 billion 10-year U.S. bond offering and a $1 billion 30-year
             U.S. bond offering (announced Sept. 12); and
          -- a 1.5 billion Euro seven-year bond offering and a 500 million Euro
             three-year bond offering (announced Sept. 26).
     -- Schering-Plough/Merck Pharmaceuticals announced that a New Drug
        Application filing for loratadine/montelukast has been accepted by the
        FDA for standard review for treatment of allergic rhinitis symptoms in
        patients who want relief from nasal congestion.  (Announced Aug. 28)
     -- Announced that all of Schering-Plough's outstanding 6% mandatory
        convertible preferred stock issued in 2004 converted into shares of its
        common stock on Sept. 14, 2007.  (Announced Sept. 13)
     -- Announced the initiation of two large Phase III clinical studies with
        vicriviroc, the company's investigational CCR5 antagonist, administered
        once-daily in combination with an optimized background therapy in adult
        treatment-experienced HIV patients with R5-type virus only.  (Announced
        Sept. 17)
     -- Reported that the Committee for Medicinal Products for Human Use (CHMP)
        of the European Medicines Agency (EMEA) had issued a positive opinion
        recommending approval of combination therapy with PEGINTRON
        (peginterferon alfa-2b) and REBETOL (ribavirin) for retreating adult
        patients with chronic hepatitis C whose previous treatment with
        interferon alpha (pegylated or non-pegylated) and ribavirin combination
        therapy or interferon alpha monotherapy did not result in a sustained
        response.  (Announced Sept. 24)
     -- Received approval from the European Commission for Schering-Plough's
        planned acquisition of Organon BioSciences N.V. from Akzo Nobel N.V.
        (Announced Oct. 11)
     -- Provided an update on the clinical development program for boceprevir,
        the company's investigational oral hepatitis C protease inhibitor.  In
        a Phase II study in treatment-na�ve hepatitis C patients, boceprevir
        combination therapy with PEGINTRON and REBETOL achieved a high rate of
        early virologic response.  In a second study in treatment non
        responders (the most difficult-to-treat patient population), while
        boceprevir combination therapy with PEGINTRON and REBETOL demonstrated
        antiviral activity, the majority of patients did not achieve a
        sustained virologic response (SVR).  No increase in skin adverse events
        (rash) beyond what was seen in the control group was observed in these
        studies.  (Announced Oct. 18)
     Third Quarter 2007 Conference Call and Webcast
     Schering-Plough will conduct a conference call today at 8 a.m. (EDT) to
 review the 2007 third quarter results. To listen live to the call, dial 1-
 877-565-9664 or 1-706-634-5003 and enter conference ID #17949276. A replay
 of the call will be available beginning later today through 5 p.m. on Nov.
 19. To listen to the replay, dial 1-800-642-1687 or 1-706-645-9291 and
 enter the conference ID #17949276. 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 Oct. 22 through 5 p.m. on Nov. 19.
     DISCLOSURE NOTICE: The information in this press release, the comments
 of Schering-Plough officers during the earnings teleconference/webcast on
 Oct. 22, 2007, beginning at 8 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; its progress under the Action Agenda and
 anticipated timing regarding future performance of the Action Agenda;
 business prospects; anticipated growth; timing and conditions of regulatory
 approvals and expected synergies related to the Organon BioSciences
 acquisition; prospective products or product approvals; trends in
 performance; anticipated timing of clinical trials and its impact on R&D
 spending; anticipated exclusivity periods; actions to enhance clinical,
 R&D, manufacturing and post-marketing systems; and the potential of certain
 products including VYTORIN and ZETIA. 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 forces; economic factors such as interest
 rate and exchange rate fluctuations; obtaining regulatory approvals and
 satisfaction of other customary closing conditions for the Organon
 BioSciences acquisition; 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); and scientific
 developments relating to marketed products or pipeline projects. 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 Item 8.01 of the company's 8-K filed today.
     Schering-Plough is a global science-based health care company with
 leading prescription, consumer and animal health products. Through internal
 research and collaborations with partners, Schering-Plough discovers,
 develops, manufactures and markets advanced drug therapies to meet
 important medical needs. Schering-Plough's vision is to earn the trust of
 the physicians, patients and customers served by its approximately 33,500
 people around the world. The company is based in Kenilworth, N.J., and its
 Web site is www.schering-plough.com.
     SCHERING-PLOUGH CORPORATION
 
     Report for the third quarter ended September 30 (unaudited):
     (Amounts in millions, except per share figures)
 
                                             Third Quarter        Nine Months
                                             2007     2006       2007    2006
 
     Net sales  1/                         $2,812   $2,574     $8,965  $7,944
     Cost of sales 2/                         925      885      2,838   2,782
     Selling, general and administrative    1,262    1,158      3,833   3,467
     Research and development 3/              669      536      2,071   1,557
     Other income, net 4/                    (390)     (37)      (451)    (89)
     Special and acquisition related
      charges 5/.                              20       10         32      90
     Equity income from cholesterol joint
      venture                                (506)    (390)    (1,483) (1,056)
 
     Income before income taxes               832      412      2,125   1,193
     Income tax expense                        82      103        272     275
     Net income before cumulative effect
       of a change in accounting
        principle                            $750     $309     $1,853    $918
     Cumulative effect of a change in
      accounting
       principle, net of tax 6/                 -        -          -     (22)
     Net income                              $750     $309     $1,853    $940
 
     Preferred stock dividends                 37       22         80      65
     Net income available to common
      shareholders                           $713     $287     $1,773    $875
 
     Diluted earnings per common share:
     Earnings available to common
      shareholders before cumulative
       effect of a
        change in accounting principle 7/   $0.45    $0.19      $1.15   $0.57
     Cumulative effect of a change in
      accounting
       principle, net of tax 6/                 -        -          -    0.02
     Diluted earnings per common share 7/   $0.45    $0.19      $1.15   $0.59
 
     Average common shares
      outstanding - diluted                 1,622    1,492      1,596   1,489
     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 from cholesterol joint venture" and are
 borne by the overall cost structure of Schering-Plough.
     1/ Net sales for the third quarter and nine months ended September 30,
 2006, includes $47 million and $24 million, respectively, related to the
 reversal of previously accrued rebate amounts for the U.S. Government's
 TRICARE Retail Pharmacy Program that a U.S. Federal court ruled
 pharmaceutical manufacturers were not obligated to pay.
     2/ Included in costs of sales for the three and nine months ended
 September 30, 2006 is $43 million and $101 million, respectively, related
 to the manufacturing changes announced on June 1, 2006.
     3/ Research and development for the three months ended September 30,
 2007 includes $20 million related to an upfront payment made for licensing
 of a product. Research and development for the nine months ended September
 30, 2007 includes $176 million related to upfront payments made for
 licensing of products.
     4/ Included in other income, net for the three and nine months ended
 September 30, 2007 are mark-to-market gains of $321 million and $289
 million, respectively, from Euro denominated currency options related to
 the planned acquisition of Organon BioSciences. Also included in other
 income, net for both the three and nine months ended September 30, 2007 is
 $7 million of losses resulting from interest rate hedge contracts also
 related to the planned acquisition of Organon BioSciences.
     5/ Included in special and acquisition related charges for the three
 and nine months ended September 30, 2007 reflects $20 million and $32
 million, respectively, related to the planned acquisition of Organon
 BioSciences. Included in special and acquisition related charges for the
 three and nine months ended September 30, 2006 is $10 million and $90
 million, respectively, related to the manufacturing changes announced June
 1, 2006.
     6/ In the first quarter of 2006, Schering-Plough adopted the provisions
 of SFAS 123R. As a result of this adoption, Schering-Plough recognized a
 non- recurring cumulative effect adjustment of $22 million of income
 associated with Schering-Plough's liability-based compensation plans.
     7/ Diluted earnings per common share for the three month period ended
 September 30, 2007 is calculated using a numerator of $731 million, which
 is the arithmetic sum of net income available to common shareholders of
 $713 million plus dividends of $18 million related to the 2004 preferred
 stock which are dilutive, and a denominator of 1,622 which represents the
 average diluted shares outstanding for the third quarter of 2007. Diluted
 earnings per common share for the nine month period ended September 30,
 2007 is calculated using a numerator of $1.834 billion, which is the
 arithmetic sum of net income available to common shareholders of $1.773
 billion plus dividends of $61 million related to the 2004 preferred stock,
 and a denominator of 1,596 which represents the average diluted shares
 outstanding for the nine months ended September 30, 2007. The increase in
 average diluted shares outstanding in the three and nine months ended
 September 30, 2007 is due to the 2004 preferred stock being dilutive under
 accounting rules. The 2004 preferred stock was not dilutive for the three
 and nine months ended September 30, 2006. The 2007 preferred stock was not
 dilutive for the three and nine months ended September 30, 2007.
     SCHERING-PLOUGH CORPORATION
 
    Report for the period ended September 30 (unaudited):
 
     GAAP Net Sales by Key Product
     (Dollars in millions)             Third Quarter           Nine Months
                                     2007    2006     %      2007   2006   %
 
     GLOBAL PHARMACEUTICALS        $2,291  $2,087     10%  $7,209 $6,350  14%
      REMICADE                        426     317     34%   1,193    902  32%
      NASONEX                         242     221     10%     821    691  19%
      PEGINTRON                       221     206      7%     672    629   7%
      TEMODAR                         215     179     20%     627    513  22%
      CLARINEX / AERIUS               171     171      -      625    557  12%
      CLARITIN RX                      83      74     12%     297    279   7%
      INTEGRILIN                       78      82    (4%)     241    244  (1%)
      AVELOX                           78      63     24%     269    201  34%
      CAELYX                           64      52     23%     191    156  22%
      INTRON A                         61      57      7%     176    180  (2%)
      REBETOL                          60      72    (16%)    206    237 (13%)
      SUBUTEX / SUBOXONE               55      51      8%     163    152   7%
      PROVENTIL / ALBUTEROL CFC        52      45     16%     166    148  12%
      ELOCON                           40      36     11%     119    108  10%
      ASMANEX                          36      28     30%     121     68  79%
      FORADIL                          25      22     13%      77     66  16%
      NOXAFIL                          24       6     N/M      60     10  N/M
      Other Pharmaceuticals           360     405    (11%)  1,185  1,209  (2%)
 
     CONSUMER HEALTH CARE             273     259      5%   1,012    918  10%
        OTC                           162     138     17%     521    440  18%
         OTC CLARITIN                 104      95      9%     368    318  16%
        Foot Care                      92      92      -      272    270   1%
        Sun Care                       19      29    (33%)    219    208   6%
 
     ANIMAL HEALTH                    248     228      8%     744    676  10%
 
     CONSOLIDATED GAAP NET SALES
      a/                           $2,812  $2,574     9%   $8,965 $7,944  13%
     a/ Included in consolidated GAAP net sales for the three and nine month
 periods ended September 30, 2006 were approximately $47 million and $24
 million, respectively, related to the reversal of previously accrued rebate
 amounts for the U.S. Government's TRICARE Retail Pharmacy Program that a
 U.S. Federal court ruled pharmaceutical manufacturers were not obligated to
 pay.
     NOTE: Additional information about U.S. and international sales for
 specific products is available by calling the company or visiting the
 Investor Relations Web site at http://ir.schering-plough.com.
     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)
 
                                                2007          2006       %
 
     Net sales, as reported                   $2,812        $2,574      9%
 
     50 percent of cholesterol joint
     venture net sales  a/                       639           505
 
     Adjusted net sales b/                    $3,451        $3,079     12%
 
 
                                            Nine months ended September 30
     (Dollars in millions)                            (unaudited)
 
                                                2007          2006       %
 
     Net sales, as reported                   $8,965        $7,944     13%
 
     50 percent of cholesterol joint
     venture net sales  a/                     1,838         1,373
 
     Adjusted net sales b/                   $10,803        $9,317     16%
     a/ Total net sales of the cholesterol joint venture for the three
 months ended September 30, 2007 and 2006 were $1.3 billion and $1.0
 billion, respectively. Total net sales of the cholesterol joint venture for
 the nine months ended September 30, 2007 and 2006 were $3.7 billion and
 $2.7 billion, respectively.
     b/ Included in adjusted net sales for the three and nine month ended
 September 30, 2006 are approximately $60 million and $32 million,
 respectively, related to the reversal of previously accrued rebate amounts
 for the U.S. Government's TRICARE Retail Pharmacy Program that a U.S.
 Federal court ruled pharmaceutical manufacturers were not obligated to pay.
     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 from
 cholesterol joint venture." Net sales of the cholesterol joint venture do
 not include net sales of cholesterol products in non-joint venture
 territories.
     SCHERING-PLOUGH CORPORATION
 
     Reconciliation of Non-U.S. GAAP Financial Measures
 
     Net income available to common shareholders and diluted earnings per
     common share, excluding specified items
 
                                      Three months ended   Nine months ended
                                      September 30, 2007   September 30, 2007
                                         (unaudited)          (unaudited)
 
                                     Net income Diluted   Net income   Diluted
                                     available  earnings  available    earnings
                                      to common   per      to common     per
     (Dollars in millions)          shareholders common   shareholders  common
                                                 share(1)              share(1)
 
     As reported                          $713     $0.45     $1,773     $1.15
     Specified items
       -- Upfront R&D payments              20      0.01        176      0.11
       -- Acquisition-related items
          Gain on currency option         (321)                (289)
          Integration planning costs        20                   32
          Ineffective portion of
           interest rate swaps               7                    7
             Total acquisition-                             -
              related items               (294)    (0.18)      (250)    (0.16)
          Total specified items           (274)    (0.17)       (74)    (0.05)
      Excluding specified items           $439     $0.28     $1,699     $1.10
     1/ Diluted earnings per common share for the three month period ended
 September 30, 2007 is calculated using a numerator of $731 million, which
 is the arithmetic sum of net income available to common shareholders of
 $713 million plus dividends of $18 million related to the 2004 preferred
 stock which are dilutive, and a denominator of 1,622 which represents the
 average diluted shares outstanding for the third quarter of 2007. Diluted
 earnings per common share for the nine month period ended September 30,
 2007 is calculated using a numerator of $1.834 billion, which is the
 arithmetic sum of net income available to common shareholders of $1.773
 billion plus dividends of $61 million related to the 2004 preferred stock,
 and a denominator of 1,596 which represents the average diluted shares
 outstanding for the nine months ended September 30, 2007. The increase in
 average diluted shares outstanding in the three and nine months ended
 September 30, 2007 is due to the 2004 preferred stock being dilutive under
 accounting rules. The 2004 preferred stock was not dilutive for the three
 and nine months ended September 30, 2006. The 2007 preferred stock was not
 dilutive for the three and nine months ended September 30, 2007.
     NOTE: Net income available to common shareholders and diluted earnings
 per common share, excluding specified items are non-U.S. GAAP measures used
 by management in evaluating the performance of Schering-Plough's overall
 business. Upfront licensing payments and acquisition-related items have
 been excluded from net income available to common shareholders as
 Schering-Plough does not consider these charges to be indicative of
 continuing operating results. Schering-Plough believes that these
 performance measures contribute to a more complete understanding by
 investors of the overall results of the company. Net income available to
 common shareholders and diluted earnings per common share, as reported, are
 required to be presented under U.S. GAAP.
 
 

SOURCE Schering-Plough Corporation