310158--2/29/2008--SCHERING_PLOUGH

related topics

{product, liability, claim}

{product, candidate, development}

{financial, litigation, operation}

{operation, international, foreign}

{product, market, service}

{property, intellectual, protect}

{regulation, change, law}

{customer, product, revenue}

{operation, natural, condition}

{cost, operation, labor}

{cost, regulation, environmental}

Key Schering-Plough products generate a significant amount of Schering-Plough s profits and cash flows, and any events that adversely affect the markets for its leading products could have a material and negative impact on results of operations and cash flows. 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. Schering-Plough s success is dependent on the successful development and marketing of new products, which are subject to substantial risks. Intellectual property protection for innovation is an important contributor to Schering-Plough s profitability. Generic forms of Schering-Plough s products may be introduced to the market as a result of the expiration of patents covering Schering-Plough s products, a successful challenge to Schering-Plough s patents, or the at-risk launch of a generic version of a Schering-Plough product, which may have a material and negative effect 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. Multi-jurisdictional regulations, including those establishing Schering-Plough s ability to price products, may negatively affect Schering-Plough s sales and profit margins. Through the acquisition of OBS, Schering-Plough acquired marketed products and pipeline projects in therapeutic areas not currently covered by Schering-Plough s existing marketed products portfolio and pipeline projects, including women s health and fertility, anesthesia, and neuroscience, each of which carry unique risks and uncertainties which could have a negative impact on future results of operations. Market forces continue to evolve and can impact Schering-Plough s ability to sell products or the price Schering-Plough can charge for products. Government investigations against Schering-Plough could lead to 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, which could give rise to other investigations or litigation by government entities or private parties. There are other legal matters in which adverse outcomes could negatively affect Schering-Plough s business. Issues concerning the Merck/Schering-Plough Cholesterol Joint Venture s ENHANCE clinical trial could have a material adverse effect on the joint venture s sales of VYTORIN and ZETIA, which in turn could have a material adverse impact on Schering-Plough s financial condition. Schering-Plough is subject to governmental regulations, and the failure to comply with, as well as the costs of compliance with, these regulations may adversely affect Schering-Plough s financial position and results of operations. Developments following regulatory approval may adversely affect sales of Schering-Plough s products. New products and technological advances developed by Schering-Plough s competitors may negatively affect sales. Competition from third parties may make it difficult for Schering-Plough to acquire or license new products or product candidates (regardless of stage of development) or to enter into such transactions on terms that permit Schering-Plough to generate a positive financial impact. Schering-Plough relies on third-party relationships for its key products, and the conduct and changing circumstances of such third parties may adversely impact the business. Schering-Plough s global operations expose Schering-Plough to additional risks, and any adverse event could have a material negative impact on results of operations. The integration of the businesses of Schering-Plough and OBS to create a combined company is a complex process and may be subject to unforeseen developments, which could impact anticipated cost savings from synergies, expected accretion to earnings and results of future operations. The acquisition of OBS expanded Schering-Plough s animal health business worldwide, which increases the risk that negative events in the animal health industry could have a negative impact on future results of operations. The acquisition of OBS increased Schering-Plough s biologics human and animal health product offerings, including animal health vaccines. Biologics carry unique risks and uncertainties, which could have a negative impact on future results of operations. Schering-Plough is exposed to market risk from fluctuations in currency exchange rates and interest rates. Insurance coverage for product liability may be limited, cost prohibitive or unavailable. Schering-Plough 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--2/29/2008--SCHERING_PLOUGH_CORP