Schering-Plough - About Us - Letter from the CEO

Schering-Plough has come a long way in five years. When we began our Action Agenda in 2003, your Company was struggling merely to survive. Today, Schering-Plough is stronger, larger, more diverse and pursuing a broad array of exciting growth opportunities. This greater breadth and depth makes us better able to surmount the new challenges we face.

The five-phase Action Agenda has been our roadmap to transform Schering-Plough - to turn it into a company that can deliver high performance over the long term. We have advanced through the Stabilize and Repair phases, through the Turnaround, and now we are in the Build the Base phase.

Over this time, Schering-Plough has undergone a remarkable transformation. Highlights include:

• Growing sales on an adjusted basis* from $8.6 billion in 2003 to $15.2 billion in 2007. Over the past four years on this adjusted basis, the Company has achieved the highest rate of sales growth among our peers.

• Strengthening the Company's integrated business model, with human pharmaceuticals, animal health and consumer health providing important diversity. Each of these segments grew sales by double digits in 2007.

• Going from not having a single product with sales above $1 billion in 2003 to having four products with sales above $1 billion (including our cholesterol franchise) at year-end 2007.

• Achieving an impressive reversal of free cash flow*, going from negative free cash flow of nearly $1 billion in 2003 to a positive $1.5 billion in 2007.

• Substantially increasing both R&D investments and the number of compounds in development. Today, we have one of the strongest late-stage human pharmaceuticals pipelines among our peer group companies.

• Undertaking a targeted geographic expansion drive to build strength in new markets, particularly those with high growth prospects, such as Russia, China and Brazil.

Our great progress has come from focusing intensely on the fundamentals - and taking the long view. Our strategy for creating value and transforming Schering-Plough is based on: growing the top line, growing the R&D pipeline, and containing and reducing costs while investing wisely.

In our industry, value is created through good science - by discovering, developing and bringing to market innovative new medicines that deliver substantive benefits. Schering-Plough is a science-centered company because we know our value is driven by the quality of the science we deliver.

By focusing relentlessly on these basics, we built the strength and wherewithal to undertake a major acquisition, our combination with Organon BioSciences N.V. (OBS). The OBS transaction was completed in November 2007 at a cost of approximately Euro 11 billion.

This combination begins an important and exciting chapter in our Company's transformation. With the Organon franchises, we become a world-class leader in women's health and fertility treatments. These add breadth to our existing human pharmaceutical strengths in cardiovascular care, immunology, respiratory and oncology. Intervet, the animal health unit of OBS, is being combined with Schering-Plough Animal Health to make us one of the largest animal health organizations in the world.

Through Organon we also add important R&D strengths and compounds to our pipeline. They include two innovative therapies: sugammadex, a novel selective relaxant binding agent that may profoundly change the practice of surgical anesthesia, and asenapine, for treating schizophrenia and bipolar disorder. Applications have been filed with regulatory authorities for both treatments.

As we move ahead with the OBS integration, we continue to address the fallout from and overreaction to the ENHANCE trial, a surrogate imaging study that was started by the Merck/Schering-Plough cholesterol joint venture in 2002. This small study used ultrasound scans of neck arteries in a rare patient population to compare our cholesterol-lowering treatment VYTORIN versus simvastatin alone. This study was not designed to measure hard clinical outcomes such as heart attacks. While the study did not meet its primary endpoint involving the thickness of arterial walls in the neck, it reconfirmed the effectiveness of VYTORIN in reducing LDL ("bad") cholesterol as well as the overall safety profile of VYTORIN.

Many experts believe this single trial should not have any impact on current standards of care; however, the confusion about appropriate cholesterol management caused by various interpretations of the study findings has had a negative impact on prescriptions for VYTORIN and ZETIA. What has not changed is our confidence in these medicines and the important role we know they can play in helping many patients achieve their LDL cholesterol goals.

Facing this and other challenges in 2008, we have begun taking actions to improve productivity, which include significant reductions in costs. We know we have our work cut out for us. But our Company has been tested before and proven to be a tough, resilient competitor, grounded in a culture of integrity, of taking the right actions for long-term performance, of doing what is right for the patients who use our products.

We view the future with confidence and see this as a time of enormous opportunity. We have the additional strength and diversity gained through our combination with OBS. We have our other strong product lines, which include such leading medicines as REMICADE, NASONEX, PEGINTRON and TEMODAR, as well as our cholesterol franchise. Nearly all of our key growth products have long periods of market exclusivity. There is the diversity from having integrated business units - human prescription pharmaceuticals, animal health and consumer health care - and from the geographic presence we have built around the globe.

Importantly, there is our R&D product pipeline, which has never been stronger. In addition to sugammadex and asenapine, we are advancing other important compounds, including four designated "fast track" by the U.S. Food & Drug Administration. Our most promising compounds in advanced development include a thrombin receptor antagonist (TRA) for atherothrombosis, vicriviroc for HIV and boceprevir for hepatitis C. In addition, golimumab, licensed outside the U.S. from Centocor, Inc., has been filed in the EU for treating rheumatoid arthritis, psoriatic arthritis and ankylosing spondylitis.

One important reason we are confident about this Company's future is our people. The colleagues who drive Schering-Plough are the reason for our progress to date. And they will be the reason for our success in the future.

Throughout our journey, we have benefited from the careful oversight and diligent service of our Board of Directors. We welcome Craig B. Thompson, M.D., to our Board. He is Director of the Abramson Cancer Center and Professor of Medicine at the University of Pennsylvania School of Medicine. We also thank Philip Leder, M.D., who will be retiring from the Board in May 2008, for his wise counsel during the past five years and his leadership in chairing our Science and Technology Committee since it was established in 2005.

Finally, we want to thank our shareowners for the trust they have put in us to lead and grow this Company. We will continue to strive to prove that their faith is deserved.

Message from the CEO