310158--2/28/2006--SCHERING_PLOUGH

related topics

{product, candidate, development}

{product, liability, claim}

{financial, litigation, operation}

{property, intellectual, protect}

{operation, international, foreign}

{regulation, change, law}

{product, market, service}

{cost, regulation, environmental}

There is a high risk that funds invested in research will not generate financial returns because the development of novel drugs requires significant expenditures with a low probability of success. The Company s success is dependent on the development and marketing of new products, and uncertainties in the regulatory and approval process may result in the failure of products to reach the market. Intellectual property protection is an important contributor to the Company s profitability and as patents covering the Company s products expire or if they are found to be invalid, generic forms of the Company s products may be introduced to the market, which may have a material and negative affect on results of operations. Patent disputes can be costly to prosecute and defend and adverse judgments could result in damage awards, increased royalties and other similar payments and decreased sales. U.S. and foreign regulations, including those establishing the Company s ability to price products, may negatively affect the Company s sales and profit margins. There are material pending investigations against the Company, the outcome of which could include the commencement of civil and/or criminal proceedings involving the imposition of substantial fines, penalties and injunctive or administrative remedies, including exclusion from government reimbursement programs. There are other legal matters in which adverse outcomes could negatively affect the Company s business. The Company is subject to governmental regulations, and the failure to comply with, as well as the costs of compliance of, these regulations may adversely affect the Company s financial position and results of operations. Developments following regulatory approval may decrease demand for the Company s products. New products and technological advances developed by the Company s competitors may negatively affect sales. Because the Company often competes with other companies to acquire or license products (whether in early stage development or already approved for commercial sale) that the Company believes to be clinically or commercially attractive, it may be difficult for the Company to enter into such transactions. The Company relies on third party relationships for its key products and changes to the third parties that are outside its control may impact the business. The Company operates a global business that exposes the Company to additional risks, and any adverse events could have a material negative impact on results of operations. Insurance coverage for product liability may become unavailable or cost prohibitive. The Company is subject to evolving and complex tax laws, which may result in additional liabilities that may affect results of operations.

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310158--2/28/2006--SCHERING_PLOUGH_CORP