424B2 1 y37189bte424b2.htm FILED PURSUANT TO RULE 424(B)(2) 424B2
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Filed Pursuant to Rule 424(B)(2)
Registration Statement No. 333-145055
 
CALCULATION OF REGISTRATION FEE
 
                                         
              Proposed Maximum
                 
Title of Each Class of
    Amount to be
      Offering Price per
      Proposed Maximum
      Amount of
 
Securities to be Registered
    Registered(1)       Unit       Aggregate Offering Price(1)       Registration Fee(2)  
6.00% Mandatory Convertible Preferred Stock, par value $1.00
      11,500,000       $ 250.00       $ 2,875,000,000       $ 65,538.88  
Common shares, par value $0.50(3)
      104,545,350                         (4)
                                         
 
 
(1) Includes shares of 6.00% Mandatory Convertible Preferred Stock issuable upon the exercise of the underwriters’ overallotment option.
 
(2) A filing fee of $88,262.50, calculated in accordance with Rule 457(r), is payable in connection with the offering of 6.00% Mandatory Convertible Preferred Stock pursuant to this Registration Statement by means of this prospectus supplement. A filing fee of $71,268 has previously been paid in connection with Schering-Plough’s prior Registration Statement No. 333-113222 filed on March 2, 2004, with respect to securities that were not sold thereunder. Pursuant to Rule 457(p), the remaining unutilized filing fee may be applied to the filing fee payable pursuant to this Registration Statement. $48,544.38 of this unused filing fee was applied to the registration of 57,500,000 common shares by means of a separate prospectus supplement filed with the SEC on August 10, 2007. The remaining unutilized filing fee of $22,723.62 is being applied to the filing fee payable with respect to the shares of 6.00% Mandatory Convertible Preferred Stock being registered by means of this prospectus supplement.
 
(3) Represents the aggregate number of common shares that are issuable upon conversion of the 6.00% Mandatory Convertible Preferred Stock at the maximum fixed conversion rate of 9.0909 common shares per each share of 6.00% Mandatory Convertible Preferred Stock. Pursuant to Rule 416 under the Securities Act, Schering-Plough is registering such additional common shares that may be issued from time to time upon conversion of the 6.00% Mandatory Convertible Preferred Stock as a result of the anti-dilution provisions thereof.
 
(4) Pursuant to Rule 457(i) of the Securities Act, there is no additional filing fee payable with respect to the common shares issuable upon conversion of the 6.00% Mandatory Convertible Preferred Stock because no additional consideration will be received in connection with the exercise of the conversion privilege.
 
Prospectus Supplement to Prospectus Dated August 2, 2007
 
[SCHERING-PLOUGH LOGO]
10,000,000 Shares
 
Schering-Plough Corporation
6.00% Mandatory Convertible Preferred Stock
 
 
 
Schering-Plough is offering 10,000,000 shares of 6.00% mandatory convertible preferred stock, referred to as the 2007 Preferred Stock.
 
Schering-Plough will pay dividends on each share of the 2007 Preferred Stock at a rate of 6.00% per year on the liquidation preference of $250 per share. Dividends will accrue and cumulate from the date of issuance and, to the extent that Schering-Plough is legally permitted to pay dividends and its board of directors, or an authorized committee of its board of directors, declares a dividend payable, Schering-Plough will pay dividends in cash on February 15, May 15, August 15 and November 15 of each year prior to August 13, 2010 and on August 13, 2010. The first dividend payment will be made on November 15, 2007 in the amount of $3.75 per share of the 2007 Preferred Stock, which reflects the time period from the date of issuance to November 14, 2007.
 
Each share of the 2007 Preferred Stock has a liquidation preference of $250, plus accrued, cumulated and unpaid dividends. Each share of the 2007 Preferred Stock will automatically convert on August 13, 2010, into between 7.4206 and 9.0909 common shares, subject to anti-dilution adjustments depending on the average closing price per share of the common shares over the 20 trading day period ending on the third trading day prior to such date. At any time prior to August 13, 2010, holders may elect to convert each share of the 2007 Preferred Stock into 7.4206 common shares, subject to anti-dilution adjustments. If the closing price per share of the common shares exceeds $50.53 for at least 20 trading days within a period of 30 consecutive trading days, Schering-Plough may elect, subject to certain limitations, to cause the conversion of all, but not less than all, of the shares of 2007 Preferred Stock then outstanding at the conversion rate of 7.4206 common shares per share of the 2007 Preferred Stock, provided that at the time of such conversion Schering-Plough is then legally permitted to and does pay an amount equal to any accrued, cumulated and unpaid dividends (other than dividends payable to previous record holders) plus the present value of all remaining future dividend payments at that time.
 
Prior to this offering, there has been no public market for the 2007 Preferred Stock. The 2007 Preferred Stock has been approved for listing on the New York Stock Exchange, subject to issuance, under the symbol “SGP PrB.” Schering-Plough’s common shares are listed on the New York Stock Exchange under the symbol “SGP.” The last reported price of the common shares on August 9, 2007 was $27.52 per common share.
 
Concurrently with this offering, Schering-Plough is also conducting a separate registered public offering of 50,000,000 common shares (57,500,000 common shares if the underwriters exercise their option to purchase additional common shares in full). The common shares will be offered pursuant to a separate prospectus supplement. This offering is not conditioned upon the successful completion of the offering of common shares.
 
See “Risk Factors” on page S-11 of this prospectus supplement to read about factors you should consider before buying shares of the 2007 Preferred Stock.
 
 
Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus supplement or the accompanying prospectus. Any representation to the contrary is a criminal offense.
 
 
                 
   
Per Share
   
Total
 
 
Initial price to the public
  $ 250.00     $ 2,500,000,000  
Underwriting discount
  $ 6.25     $ 62,500,000  
Proceeds, before expenses, to Schering-Plough
  $ 243.75     $ 2,437,500,000  
 
To the extent the underwriters sell more than 10,000,000 shares of the 2007 Preferred Stock, the underwriters have the option to purchase up to 1,500,000 additional shares of the 2007 Preferred Stock from Schering-Plough at the initial price to the public less the underwriting discount.
 
 
The underwriters expect to deliver the 2007 Preferred Stock against payment in New York, New York on or about August 15, 2007.
 
Goldman, Sachs & Co.
Global Coordinator
Banc of America Securities LLC  
              Bear, Stearns & Co. Inc.  
                 Citi  
  Morgan Stanley
 
 
BNP PARIBAS  
  Credit Suisse  
  JPMorgan
Daiwa Securities America Inc.
Santander Investment
Utendahl Capital Partners, L.P.
The Williams Capital Group, L.P.
 
 
 
 
Prospectus Supplement dated August 9, 2007.


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ABOUT THIS PROSPECTUS SUPPLEMENT
 
This document is in two parts. The first part is this prospectus supplement, which describes the terms of this offering and also adds to and updates information contained in the accompanying prospectus and the documents incorporated by reference in this prospectus supplement. The second part, the accompanying prospectus, provides more general information, some of which may not apply to this offering. You should read both this prospectus supplement and the accompanying prospectus, together with additional information described below under the heading “Where You Can Find More Information.”
 
If the information contained in this prospectus supplement varies from that contained in the accompanying prospectus, you should rely on the information in this prospectus supplement.
 
You should rely only on the information provided in or incorporated by reference in this prospectus supplement or the accompanying prospectus. Schering-Plough has not authorized anyone else to provide you with different information. Schering-Plough is not making an offer of any securities in any state where the offer is not permitted. You should not assume that the information in this prospectus supplement or the accompanying prospectus is accurate as of any date other than the date on the front cover of those documents and that any information Schering-Plough has incorporated by reference is accurate as of any date other than the date of the document incorporated by reference or such other date referred to in such document, regardless of the time of delivery of this prospectus supplement or any sale or issuance of a security.
 
 
Unless indicated otherwise, or the context otherwise requires, references in this prospectus supplement and the accompanying prospectus to “Schering-Plough Corporation,” “Schering-Plough” and “the company” or similar terms are to Schering-Plough Corporation and its consolidated subsidiaries, unless, in each case, the context clearly indicates otherwise.
 
Unless indicated otherwise, or the context otherwise requires, references in this prospectus supplement to the “2007 Preferred Stock” mean the shares of mandatory convertible preferred stock offered by this prospectus supplement, and references to the “2004 Preferred Stock” mean the 6.00% Mandatory Convertible Preferred Stock issued by Schering-Plough on August 10, 2004, which will automatically convert into common shares on September 14, 2007, unless earlier converted, and that is listed on the New York Stock Exchange under the symbol “SGP PrM.”
 
The trademarks indicated by CAPITAL LETTERS in this prospectus supplement are the property of, licensed to, promoted or distributed by Schering-Plough Corporation, its subsidiaries or related companies. The trademarks indicated by ® in this prospectus supplement are the property of, licensed to, promoted or distributed by Organon BioSciences N.V., its subsidiaries or related companies.
 
FORWARD-LOOKING STATEMENTS
 
This prospectus supplement, the accompanying prospectus, the documents incorporated by reference in this prospectus supplement and the accompanying prospectus and other written reports and oral statements Schering-Plough makes from time to time may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to expectations or forecasts of future events. Schering-Plough uses words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “project,” “intend,” “plan,” “potential,” “will,” and other words and terms of similar meaning in connection with a discussion of potential future events, circumstances or future operating or financial performance. You can also identify forward-looking statements by the fact that they do not relate strictly to historical or current facts.
 
In particular, forward-looking statements include statements relating to future actions; ability to access the capital markets; prospective products or product approvals; timing and conditions of


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regulatory approvals; patent and other intellectual property protection; future performance or results of current and anticipated products; sales efforts; research and development programs and anticipated spending; estimates of rebates, discounts and returns; expenses and programs to reduce expenses; the anticipated cost of and savings from reductions in work force; the outcome of contingencies such as litigation and investigations; growth strategy; expected synergies, cost savings and acquisition costs related to the planned Organon BioSciences acquisition; financial risks with respect to funding acquisitions; and financial results.
 
By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. Actual results may vary materially from those anticipated in such forward-looking statements as a result of several factors, some of which are more fully described in the “Risk Factors” section beginning on page S-11 of this prospectus supplement and in the reports to the Securities and Exchange Commission incorporated by reference into this prospectus supplement and the accompanying prospectus, and there are no guarantees about the financial and operational performance or the performance of your investment. Schering-Plough does not assume the obligation to update any forward-looking statement for any reason.
 
EXCHANGE RATES
 
The following table sets forth, for the periods indicated, information concerning the noon buying rate for euro, expressed in U.S. dollars per €1.00. The rates set forth below are provided solely for your convenience and were not used by us in the preparation of the Organon BioSciences combined financial statements and accompanying notes included in the accompanying prospectus or the unaudited pro forma condensed combined financial statements and accompanying notes included elsewhere in this prospectus supplement. The “noon buying rate” is the noon buying rate in New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York.
 
Noon Buying Rate
 
                                 
   
Period End
   
Average(1)
   
High
   
Low
 
 
Year:
                               
2004
    1.3538       1.2478       1.3625       1.1801  
2005
    1.1842       1.2400       1.3476       1.1667  
2006
    1.3197       1.2665       1.3327       1.1860  
2007 (through August 9, 2007)
    1.3701       1.3421       1.3831       1.2904  
 
(1) The average of the noon buying rate for euro on the last day of each full month during the relevant year or period.
 
The noon buying rate for euro on August 9, 2007 was $1.3701.


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SUMMARY
 
This summary highlights information contained elsewhere or incorporated by reference in this prospectus supplement, the accompanying prospectus and in the documents incorporated by reference in this prospectus supplement and the accompanying prospectus. This summary does not contain all of the information that you should consider before buying shares of the 2007 Preferred Stock. You should read the entire prospectus supplement and the accompanying prospectus carefully, including the section titled “Risk Factors” beginning on page S-11 of this prospectus supplement and in the documents incorporated by reference in this prospectus supplement and the accompanying prospectus, before making an investment decision.
 
Schering-Plough Corporation
 
Overview
 
Schering-Plough is a global science-based company that discovers, develops and manufactures pharmaceuticals for three customer markets — human prescription, consumer and animal health. While most of the research and development activity is directed toward prescription products, there are important applications of this central research and development platform into the consumer healthcare and animal health products. Schering-Plough also accesses external innovation via partnering, in-licensing and acquisition for all three customer markets.
 
Strategy — Focused on Science
 
Earlier this decade, Schering-Plough experienced a number of business, regulatory, and legal challenges. In April 2003, the Board of Directors named Fred Hassan as the new Chairman of the Board and Chief Executive Officer of Schering-Plough Corporation. With support from the Board, he initiated a strategic plan, with the goal of stabilizing, repairing and turning around Schering-Plough in order to build long-term shareholder value. He also recruited a new senior executive team. That strategic plan, the Action Agenda, is a six- to eight-year, five-phase plan. In October 2006, Schering-Plough announced that it entered the fourth phase of the Action Agenda — Build the Base. During the Build the Base phase, Schering-Plough continues to focus on its strategy of value creation across a broad front, including:
 
  •  growing the business;
 
  •  penetrating new markets;
 
  •  expanding the product portfolio for Schering-Plough’s three customer markets — human pharmaceutical, consumer healthcare and animal health; and
 
  •  discovering and developing or acquiring new products.
 
As part of the Build the Base phase, in March 2007 Schering-Plough announced its planned acquisition of Organon BioSciences N.V., referred to as Organon BioSciences or the OBS Group, for approximately €11 billion in cash. This planned acquisition further supports Schering-Plough’s value creation strategy.
 
A key component of the Action Agenda is applying science to meet unmet medical needs. Research and development activities focus on mechanisms to treat serious diseases. As a result, a core strategy of Schering-Plough is to invest substantial funds in scientific research with the goal of creating therapies and treatments that address important unmet medical needs and also have commercial value. Consistent with this core strategy, Schering-Plough has been increasing its investment in research and development. Schering-Plough’s progressing pipeline includes drug candidates across a wide range of therapeutic areas with more than 20 compounds now approaching or in Phase I development. As Schering-Plough continues to develop the later phase growth-drivers of


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the pipeline (e.g., thrombin receptor antagonist, golimumab, vicriviroc and HCV protease inhibitor), it anticipates higher spending on clinical trial activities.
 
As part of the Action Agenda, Schering-Plough is enhancing infrastructure, upgrading processes and systems and strengthening talent — both the recruitment of talented individuals and the development of key employees. While these efforts are being implemented on a companywide basis, Schering-Plough is focusing especially on research and development to support Schering-Plough’s science-based business.
 
Schering-Plough’s principal executive offices are located at 2000 Galloping Hill Road, Kenilworth, NJ 07033, and Schering-Plough’s telephone number is (908) 298-4000. Schering-Plough was incorporated in New Jersey in 1970.
 
Concurrent Public Offering of Common Shares
 
Concurrently with this offering of 2007 Preferred Stock, Schering-Plough is offering 50,000,000 of its common shares in a registered public offering (57,500,000 common shares if the underwriters exercise their option to purchase additional common shares in full). The common shares will be offered pursuant to a separate prospectus supplement. There is no assurance that the concurrent offering of common shares will be completed or, if completed, that it will be completed for the amounts contemplated. The completion of this offering of 2007 Preferred Stock is not conditioned on the completion of Schering-Plough’s concurrent offering of common shares.
 
Planned Organon BioSciences Acquisition
 
On March 12, 2007, Schering-Plough announced that its board of directors approved the acquisition of Organon BioSciences, the human and animal health care businesses of Akzo Nobel N.V., referred to as Akzo Nobel, for approximately €11 billion in cash. Schering-Plough believes the acquisition of Organon BioSciences will be a strong fit strategically, scientifically and financially.
 
Organon BioSciences will provide Schering-Plough with a strong base of products and businesses. Organon BioSciences’ pharmaceutical business, Organon, includes leading products such as Puregon®/Follistim®, a follicle-stimulating hormone for infertility; Esmeron®/Zemuron®, a neuromuscular blocker used in surgical procedures; and NuvaRing® and Implanon® for contraception. In addition, Organon BioSciences’ animal health business, Intervet, is one of the top three animal health care companies globally, based on 2006 revenues, with products treating a broad array of animals and disease states.
 
The acquisition is subject to certain closing conditions, including regulatory approvals from the United States Federal Trade Commission and the European Commission and completion of customary consultation procedures with the Works Council of Organon BioSciences in the Netherlands.
 
The transaction, which is expected to close by the end of 2007, is anticipated to be accretive to Schering-Plough’s earnings per share in the first full year, excluding purchase-accounting adjustments and acquisition-related costs. Schering-Plough expects to achieve annual synergies of approximately $500 million, however, it is expected that it will take three years from the closing of the acquisition to reach this level of synergies. Schering-Plough will finance the Organon BioSciences acquisition through a mix of cash, debt, and equity, including the net proceeds from this offering and the concurrent offering of common shares. Neither this offering nor the concurrent offering of the common shares is conditioned upon the completion of the Organon BioSciences acquisition. For more information on the Organon BioSciences acquisition, see “Planned Acquisition of Organon BioSciences N.V.” on page S-58.


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The Offering
 
Issuer Schering-Plough Corporation.
 
Securities Offered 10,000,000 shares of 6.00% mandatory convertible preferred stock.
 
Initial Offering Price $250.00 for each share of 2007 Preferred Stock.
 
Option to Purchase Additional Shares of 2007 Preferred Stock To the extent the underwriters sell more than 10,000,000 shares of the 2007 Preferred Stock, the underwriters have the option to purchase up to 1,500,000 additional shares of the 2007 Preferred Stock from Schering-Plough at the initial price to the public, less the underwriting discounts, within 30 days from the date of this prospectus supplement.
 
Dividends 6.00% per year for each share of the 2007 Preferred Stock on the liquidation preference of $250 per share. Dividends will accrue and cumulate from the date of issuance and, to the extent that Schering-Plough is legally permitted to pay dividends and the board of directors, or an authorized committee of the board of directors, declares a dividend payable, Schering-Plough will pay dividends in cash on each dividend payment date. The expected dividend payable on each dividend payment date prior to the mandatory conversion date is $3.75 per share. The dividend payable on the mandatory conversion date is expected to be $3.67. See “Risk Factors—Risks Related to the Offering—New Jersey law may restrict Schering-Plough from paying cash dividends on the 2007 Preferred Stock” and “Description of Mandatory Convertible Preferred Stock—Dividends.”
 
Dividend Payment Dates February 15, May 15, August 15 and November 15 of each year (or the following business day if such date is not a business day) prior to the mandatory conversion date (as defined below), commencing on November 15, 2007, and on the mandatory conversion date.
 
Redemption The 2007 Preferred Stock is not redeemable.
 
Mandatory Conversion Date August 13, 2010, referred to as the “mandatory conversion date.”
 
Mandatory Conversion On the mandatory conversion date, each share of the 2007 Preferred Stock will automatically convert into common shares, based on the conversion rate as described below.
 
In addition to the number of common shares issuable upon conversion of each share of the 2007 Preferred Stock on the mandatory conversion date, you will receive in cash all accrued, cumulated and unpaid dividends that have not been declared for all dividend periods up to and excluding the mandatory conversion date. You will also receive any declared unpaid dividends on the mandatory conversion date. You will only receive dividends if Schering-Plough is legally permitted to pay dividends.


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Conversion Rate The conversion rate for each share of the 2007 Preferred Stock will be not more than 9.0909 common shares and not less than 7.4206 common shares, depending on the applicable market value of the common shares, as described below.
 
The “applicable market value” of the common shares is the average of the closing prices per common share on each of the 20 consecutive trading days ending on the third trading day immediately preceding the mandatory conversion date. It will be calculated as described under “Description of Mandatory Convertible Preferred Stock—Mandatory Conversion.”
 
The conversion rate is subject to certain adjustments, as described under “Description of Mandatory Convertible Preferred Stock—Anti-dilution Adjustments.”
 
The following table illustrates the conversion rate per share of the 2007 Preferred Stock on the mandatory conversion date, subject to certain anti-dilution adjustments described under “Description of Mandatory Convertible Preferred Stock—Anti-dilution Adjustments.”
 
     
Applicable Market Value
   
on the Mandatory Conversion Date
 
Conversion Rate
 
less than or equal to $27.50
  9.0909
between $27.50 and $33.69
  7.4206 to 9.0909
equal to or greater than $33.69
  7.4206
 
Optional Conversion At any time prior to August 13, 2010, you may elect to convert each of your shares of the 2007 Preferred Stock at the minimum conversion rate of 7.4206 common shares for each share of mandatory convertible preferred stock. This conversion rate is subject to certain adjustments as described under “Description of Mandatory Convertible Preferred Stock—Anti-dilution Adjustments.”
 
In addition to the number of common shares issuable upon conversion of each share of the 2007 Preferred Stock at the option of the holder on the effective date of any early conversion, referred to as the “early conversion date,” you will receive in cash all accrued, cumulated and unpaid dividends that have not been declared for all prior dividend periods ending on or prior to the dividend payment date immediately preceding the early conversion date. If the early conversion date is prior to the record date for any declared dividend for the dividend period in which you elect to convert early, you will not receive any declared dividends for that dividend period. If the early conversion date is after the record date for any declared dividend, you will receive that dividend on the relevant dividend payment date if you were the holder of record on the record date for that dividend; however, whether or not you were the holder of record on the record date, you must pay to the conversion agent an amount in cash equal to


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the full dividend payable on the dividend payment date for the then-current dividend period on the shares being converted. You will only receive dividends if Schering-Plough is legally permitted to pay dividends.
 
Provisional Conversion at Schering-Plough’s Option If, at any time prior to August 13, 2010, the closing price per common share exceeds $50.53 (150% of the threshold appreciation price of $33.69), subject to anti-dilution adjustments, for at least 20 trading days within a period of 30 consecutive trading days, Schering-Plough may elect to cause the conversion of all, but not less than all, of the 2007 Preferred Stock then outstanding at the minimum conversion rate of 7.4206 common shares for each share of 2007 Preferred Stock, subject to certain adjustments as described under “Description of Mandatory Convertible Preferred Stock—Anti-dilution Adjustments,” only if, in addition to issuing you such common shares, at the time of such conversion Schering-Plough is then legally permitted to and does pay you in cash an amount equal to the sum of:
 
(i) all accrued, cumulated and unpaid dividends on your shares of 2007 Preferred Stock that have not been declared for all dividend periods to, but excluding, the conversion date, plus
 
(ii) if the conversion date is prior to the record date for any declared dividend, all accrued, cumulated and unpaid dividends on your shares of 2007 Preferred Stock that have been declared for all dividend periods to, but excluding, the conversion date, plus
 
(iii) the present value of all remaining future dividend payments on your shares of the 2007 Preferred Stock through and including August 13, 2010 (excluding (a) any unpaid dividends accrued during the portion of the then-current dividend period through, but excluding, the conversion date, and (b) if the conversion date is after the record date for any declared dividend, any of those dividends for the then-current dividend period), computed using a discount rate equal to the treasury yield.
 
If the conversion date is after the record date for any declared dividends, you will be paid those unpaid dividends on the relevant dividend payment date, rather than the conversion date, if you were the holder of record on the record date for that dividend. See “Description of Mandatory Convertible Preferred Stock—Provisional Conversion at Schering-Plough’s Option.”
 
Early Conversion and Dividend Make-Whole Payment Upon Certain Acquisitions The following provisions will apply if, prior to the earlier of August 13, 2010 and Schering-Plough providing notice of a provisional conversion at its option, Schering-Plough is the


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subject of any acquisition or a series of related transactions or events pursuant to which:
 
     • 90% or more of Schering-Plough’s common shares are exchanged for, converted into or constitute solely the right to receive cash, securities or other property; and
 
     • more than 10% of such cash, securities or other property is:
 
          (1) cash; or
 
          (2) securities or other property that is not, or upon issuance will not be, shares of common equity or American depositary receipts in respect of common equity traded on the New York Stock Exchange, the Nasdaq Global Select Market or the Nasdaq Global Market.
 
These transactions are referred to as “make-whole acquisitions.”
 
Upon such make-whole acquisition, under certain circumstances, Schering-Plough will:
 
     • permit conversion of the 2007 Preferred Stock, during the period beginning on the effective date of the make-whole acquisition and ending on the date that is 15 days after the effective date, at a specified make-whole conversion rate determined by reference to the price per common share paid in the make-whole acquisition; and
 
     • pay you, upon conversion, in cash an amount equal to the sum of:
 
          (1) all accrued, cumulated and unpaid dividends on your shares of 2007 Preferred Stock that have not been declared for all dividend periods to, but excluding, the conversion date, plus
 
          (2) if the make-whole conversion date is prior to the record date for any declared dividend, all accrued, cumulated and unpaid dividends on your shares of 2007 Preferred Stock that have been declared for all dividend periods to, but excluding, the make-whole conversion date, plus
 
          (3) the present value of all remaining future dividend payments on your shares of 2007 Preferred Stock through and including August 13, 2010 (excluding (a) any unpaid dividends accrued during the portion of the then-current dividend period through, but excluding, the make-whole conversion date, and (b) if the make-whole conversion date is after the record date for any declared dividend, any of those dividends for the then-current dividend period) discounted at a rate equal to 6.75%,
 
            in each case, out of legally available assets.


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If the make-whole conversion date is after the record date for any declared dividends, you will be paid those dividends on the relevant dividend payment date for such declared dividends, rather than the make-whole conversion date, if you were the holder of record on the record date for that dividend.
 
See “Description of Mandatory Convertible Preferred Stock—Early Conversion and Dividend Make-Whole Payment Upon Certain Acquisitions.”
 
Reorganization Events (Including Mergers) The following provisions apply in the event of certain “reorganization events,” which include, subject to certain exceptions:
 
•  any consolidation or merger of Schering-Plough with or into another person;
 
•  any sale, transfer, lease or conveyance to another person of all or substantially all of Schering-Plough’s property and assets; or
 
•  certain reclassifications of common shares or statutory exchanges of securities of Schering-Plough.
 
Each share of the 2007 Preferred Stock outstanding immediately prior to the reorganization events will become convertible on the mandatory conversion date or upon any conversion by Schering-Plough or at the option of the holders of the 2007 Preferred Stock (other than an acquisition described above under “Early Conversion and Dividend Make-Whole Payment Upon Certain Acquisitions”) into the kind of securities, cash and other property receivable in the reorganization event by holders of the common shares. See “Description of Mandatory Convertible Preferred Stock—Reorganization Events.”
 
Anti-dilution Adjustments The conversion rate and the number of common shares to be delivered upon conversion may be adjusted in the event of, among other things, increases in cash dividends, stock dividends or distributions in common shares or subdivisions, splits and combinations of the common shares. See “Description of Mandatory Convertible Preferred Stock—Anti-dilution Adjustments.”
 
Liquidation Preference $250 per share of 2007 Preferred Stock, plus an amount equal to the sum of all accrued, cumulated and unpaid dividends.
 
Voting Rights Holders of the 2007 Preferred Stock will not be entitled to any voting rights, except as required by New Jersey law and as described under “Description of Mandatory Convertible Preferred Stock—Voting Rights.”
 
Ranking The 2007 Preferred Stock will rank as to payment of dividends and distributions of assets upon dissolution, liquidation or winding up:
 
•  junior to all existing and future debt obligations of Schering-Plough and its subsidiaries;


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• junior to any class or series of the capital stock of Schering-Plough, the terms of which provide that such class or series will rank senior to the 2007 Preferred Stock;
 
• senior to the common shares and any other class or series of the capital stock of Schering-Plough, the terms of which provide that such class or series will rank junior to the 2007 Preferred Stock; and
 
• on a parity with any other class or series of Schering-Plough’s capital stock, including the 2004 Preferred Stock;
 
in each case, whether now outstanding or to be issued in the future.
 
Schering-Plough will not be entitled to issue any class or series of its capital stock, the terms of which provide that such class or series will rank senior to the 2007 Preferred Stock as to payment of dividends or distribution of assets upon Schering-Plough’s dissolution, liquidation or winding up without the approval of the holders of at least two-thirds of the 2007 Preferred Stock and any other preferred shares ranking on a parity with the 2007 Preferred Stock then outstanding, voting together as a single class.
 
There are currently 28,750,000 preferred shares issued and outstanding, in the form of the 2004 Preferred Stock, which will convert automatically into common shares on September 14, 2007, unless earlier converted.
 
Listing Prior to this offering, there has been no public market for the 2007 Preferred Stock. The 2007 Preferred Stock has been approved for listing on the New York Stock Exchange, subject to issuance, under the symbol “SGP PrB.” Schering-Plough’s common shares are listed on the New York Stock Exchange under the symbol “SGP.”
 
Use of Proceeds Schering-Plough intends to use the net proceeds from the sale of the 2007 Preferred Stock and the concurrent offering of common shares to fund a portion of the purchase price for the planned Organon BioSciences acquisition. If the Organon BioSciences acquisition is not completed, Schering-Plough will use the net proceeds from this offering for general corporate purposes, and Schering-Plough will have broad discretion in allocating the net proceeds from this offering. See “Use of Proceeds.”
 
Unless otherwise stated, all information contained in this prospectus supplement assumes that the underwriters do not exercise their option to purchase additional shares of the 2007 Preferred Stock.


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SUMMARY HISTORICAL FINANCIAL DATA
 
The following summary historical financial data have been derived from Schering-Plough’s consolidated financial statements and should be read in conjunction with Schering-Plough’s 2006 10-K and the second quarter 2007 10-Q, which are incorporated by reference into this prospectus supplement. Schering-Plough’s unaudited financial information presented below for the six months ended June 30, 2007 and 2006 reflects all normal and recurring adjustments that, in the opinion of management, are necessary for a fair presentation of Schering-Plough’s results of operations and financial position. Results for the six months ended June 30, 2007 are not necessarily indicative of the results to be expected for the full year.
 
                                         
    As of and for the
    As of and for the
 
    Six Months Ended
    Year Ended
 
    June 30,     December 31,  
   
2007
   
2006
   
2006
   
2005
   
2004
 
    (Unaudited)                    
    (In millions, except per share data)  
 
Operating Results
                                       
Net sales
  $ 6,153     $ 5,369     $ 10,594     $ 9,508     $ 8,272  
Equity (income) from cholesterol joint venture
    (978 )     (666 )     (1,459 )     (873 )     (347 )
Income/(loss) before income taxes(1)
    1,293       780       1,483       497       (168 )
Net income/(loss)(1)(2)
    1,103       630       1,143       269       (947 )
Net income/(loss)available to common shareholders
    1,060       587       1,057       183       (981 )
Diluted earnings/(loss) per common share(1)
    0.70       0.40       0.71       0.12       (0.67 )
Basic earnings/(loss) per common share(1)
    0.71       0.40       0.71       0.12       (0.67 )
Research and development expenses
    1,403       1,020       2,188       1,865       1,607  
Depreciation and amortization expenses
    243       251       568       486       453  
Financial Position and Cash Flows
                                       
Property, net
  $ 4,395     $ 4,396     $ 4,365     $ 4,487     $ 4,593  
Total assets
    17,061       15,367       16,071       15,469       15,911  
Long-term debt
    2,414       2,413       2,414       2,399       2,392  
Shareholders’ equity
    8,870       7,968       7,908       7,387       7,556  
Capital expenditures
    275       192       458       478       489  
Other Data
                                       
Cash dividends per common share
  $ 0.12     $ 0.11     $ 0.22     $ 0.22     $ 0.22  
Cash dividends paid on common shares
    179       162       326       324       324  
Cash dividends paid on preferred shares(3)
    43       43       86       86       30  
Average shares outstanding used in calculating diluted earnings/(loss) per common share(4)
    1,579       1,487       1,491       1,484       1,472  
Average shares outstanding used in calculating basic earnings/(loss) per common share
    1,491       1,480       1,482       1,476       1,472  
Common shares outstanding at period-end
    1,496       1,481       1,487       1,479       1,474  
 
(1) Operating results for the years ended 2006, 2005 and 2004 include special charges and manufacturing streamlining costs of $248 million, $294 million and $153 million, respectively. Operating results for the six months ended June 30, 2007 and 2006 include special charges and manufacturing streamlining costs of $12 million and $138 million, respectively. See Note 2 to the Schering-Plough financial statements in the 2006 10-K incorporated by reference into this prospectus supplement for additional information on these charges that have been incurred in 2006, 2005, and 2004. See also Note 2 to the Schering-Plough financial statements in the second quarter 2007 10-Q incorporated by reference into this prospectus supplement for additional information on these charges that have been incurred in the six months ended June 30, 2007 and 2006.
(2) In 2004, Schering-Plough recorded the tax impact of the intended repatriation of funds under the American Jobs Creation Act of 2004.
(3) Reflects dividends paid on the 2004 Preferred Stock.
(4) The increase in average diluted shares outstanding for the six months ended June 30, 2007 was due to the 2004 Preferred Stock being dilutive under accounting rules. The 2004 Preferred Stock was not dilutive with respect to prior periods.


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RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
 
Schering-Plough’s consolidated ratio of earnings to fixed charges for the six months ended June 30, 2007 and for the years ended December 31, 2002 through 2006 is set forth below. For the purpose of computing these ratios, “earnings” consist of income/(loss) before income taxes and equity income, plus fixed charges (other than capitalized interest and preference dividends), amortization of capitalized interest and distributed income of equity investee; and “fixed charges and preferred stock dividends” consist of interest expense, capitalized interest, preference dividends and one-third of rentals, which Schering-Plough believes to be a reasonable estimate of an interest factor on leases. Schering-Plough includes interest expense or interest income on unrecognized tax benefits as a component of income tax expense. The ratio was calculated by dividing the sum of the fixed charges into the sum of the earnings before taxes and fixed charges.
 
                                                 
    Six Months
                   
    Ended
                   
    June 30,
  Year Ended December 31,
   
2007
 
2006
 
2005
 
2004
 
2003
 
2002
 
Ratio of earnings to fixed charges and preferred stock dividends
    7.4       5.1       1.6       (0.3 )*     0.4 **     33.2  
 
For the year ended December 31, 2004, earnings were insufficient to cover fixed charges and preferred stock dividends by $322 million.
 
** For the year ended December 31, 2003, earnings were insufficient to cover fixed charges by $70 million.


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RISK FACTORS
 
Schering-Plough’s business faces significant risks. Before you invest in the 2007 Preferred Stock, you should carefully consider all of the information included or incorporated by reference in this prospectus supplement and in the accompanying prospectus. In addition, you should carefully consider the following risks in addition to the risks and uncertainties described in Schering-Plough’s reports to the SEC incorporated by reference into this prospectus supplement and the accompanying prospectus as the same may be updated from time to time.
 
Schering-Plough’s future operating results and cash flows may differ materially from the results described in the accompanying prospectus and the documents incorporated by reference due to risks and uncertainties related to Schering-Plough’s business, including those discussed below. In addition, these factors represent risks and uncertainties that could cause actual results to differ materially from those implied by forward-looking statements contained in this prospectus supplement and the accompanying prospectus and the documents incorporated by reference.
 
Risks Related to the Planned Organon BioSciences Acquisition
 
The acquisition of Organon BioSciences is subject to certain closing conditions, including regulatory approvals, that could delay or prevent the completion of the acquisition or change the anticipated structure of the acquisition, which could impact anticipated cost savings from synergies, projected accretion to earnings from the transaction and results of future operations.
 
The completion and structure of the Organon BioSciences acquisition is subject to certain outside factors, including
 
  •  regulatory approvals from the European Commission and the Federal Trade Commission; and
 
  •  completion of the consultation processes with the Works Council of Organon BioSciences in the Netherlands.
 
Schering-Plough expects that the outcome of these proceedings will not impact the anticipated synergies and earnings accretion that Schering-Plough currently expects to achieve upon the acquisition of Organon BioSciences, the integration of the businesses of Schering-Plough and Organon BioSciences, or its plans to complete the acquisition no later than the end of 2007. For example, one of the possible outcomes is that Schering-Plough could be required to divest certain businesses or products; however, Schering-Plough expects that all such divestitures in the aggregate will not be material. However, until all regulatory and Works Councils proceedings are concluded, there are no assurances that the outcome of these proceedings will occur in accordance with these expectations.
 
In addition, the failure to complete the acquisition as currently contemplated could negatively affect Schering-Plough’s stock price, future business and results of operations. The current market price of Schering-Plough’s common shares may reflect a market assumption that the acquisition will occur, and a failure to complete the acquisition could result in a decline in the market price of Schering-Plough’s common shares.
 
In the event that the Organon BioSciences acquisition does not close by December 30, 2007, Schering-Plough could incur material damages.
 
Schering-Plough currently anticipates that it will receive any necessary regulatory approvals and satisfy other closing conditions in sufficient time to close the acquisition of Organon BioSciences on or before December 30, 2007, as required by the binding offer from Schering-Plough to Akzo Nobel. However, were certain regulatory approvals not obtained by that date as a result of a failure by Schering-Plough to use its reasonable best efforts and Schering-Plough does not close by that date, then Schering-Plough might be liable for damages relating to its breach of its obligations to complete the transaction by December 30, 2007, and such damages could be material.


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Schering-Plough will face financial risks in funding the acquisition, which may have a material impact on results of operations and cash flows.
 
Schering-Plough intends to fund the acquisition purchase price with a mix of cash, proceeds from the issuance of the 2007 Preferred Stock in this offering and from the concurrent offering of the common shares, and debt (in one or more series of unsecured debt of varying maturities).
 
Schering-Plough has obtained a fully committed €11 billion bridge facility to fund any portion of the acquisition cost that has not been provided from the above sources by the acquisition closing date. The bridge facility must be repaid within a year of the acquisition closing date.
 
The ability to complete the anticipated issuances of debt and equity securities to fund the acquisition and/or repay the bridge facility, and the terms of the issuances, will depend upon market conditions, and unfavorable conditions could increase costs beyond what is anticipated. Such costs could have a material adverse impact on cash flows or the results of operations or both.
 
Further, the purchase price is significant and this use of funds will impact the availability of cash flows from operations and the capacity for future issuances of debt or equity or both, all of which could reduce Schering-Plough’s flexibility to pursue future acquisitions and other opportunities. In addition, higher debt levels may make Schering-Plough more vulnerable to general adverse economic conditions.
 
Schering-Plough’s credit ratings are currently under review due to the potential for increased debt levels relating to the acquisition, and the credit ratings could decline below their current levels. The impact of such decline could reduce the availability of commercial paper borrowing and could increase the interest rate on Schering-Plough’s short and long-term debt. Any such increase in cost would negatively impact future cash flows and results of operations.
 
The integration of the businesses of Schering-Plough and Organon BioSciences to create a combined company will be a complex process, subject to unforeseen developments, which could impact anticipated cost savings from synergies, expected accretion to earnings and results of future operations.
 
As the two companies are combined, the workforces of Schering-Plough and Organon BioSciences will face uncertainties in the interim period from the closing date until the completion of the integration phase. Although substantial efforts will be made to complete the integration phase as quickly as possible, it is difficult to predict how long the integration phase will last.
 
During the interim period from closing through completion of the integration phase, the workforces of both companies may need to learn to use new processes as work is integrated and streamlined. Further, for those employees of the new combined company who have not in the past worked for a U.S.-based global company, the applicable regulatory requirements are different in a number of respects. While substantial efforts will be made to facilitate smooth integration planning and execution — including thorough training and transparent and motivational employee communications — there may be an increased risk of slower execution of various work processes, repeated execution to achieve quality standards and reputational harm in the event of a compliance failure with new and complex regulatory requirements, even if such a failure were inadvertent. Any such events could have an adverse impact on anticipated cost savings from synergies, anticipated accretion to earnings from the transaction and the results of future operations.
 
Organon BioSciences currently is a subsidiary of Akzo Nobel, and Akzo Nobel performs certain functions for Organon BioSciences (including information technology, compensation, benefits and other human resources functions). Akzo Nobel and Organon BioSciences had made certain arrangements to separate those functions prior to the time Schering-Plough and Akzo Nobel agreed that Schering-Plough would purchase Organon BioSciences. To date, however, the separation has not been fully completed, and some separation activities are continuing. As a result, Organon BioSciences and Schering-Plough will need to depend on certain services and cooperation from Akzo Nobel for some period after the acquisition closing date to facilitate a smooth transition and complete


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separation. Unforeseen delays or complications in the transition and separation process or the lack of cooperation from Akzo Nobel could increase integration costs.
 
Schering-Plough has not completed an analysis of change of control or other contractual provisions that may result from the Organon BioSciences acquisition.
 
Certain of Organon BioSciences’ licenses and collaboration, co-development, co-marketing and other agreements may have change of control provisions that may be triggered by the acquisition. Should the final negotiation of these matters result in a loss of rights under these agreements, profits may be materially and adversely affected.
 
The acquisition of Organon BioSciences would increase the concentration of Schering-Plough’s global operations, particularly in Europe, which would increase the risk that negative events in Europe could have a negative impact on future results of operations.
 
The acquisition of Organon BioSciences would further expand Schering-Plough’s global human pharmaceutical and animal health businesses, particularly in Europe. Schering-Plough operates in more than 120 countries, and the majority of Schering-Plough’s profit and cash flow is generated from its non-U.S. operations. There are inherent risks in increasing the concentration in a particular geographic area. These risks include currency exchange rate volatility; increasing regulation of research and development, product marketing, and product pricing; economic destabilization; political instability or other disruption; or war, terrorism, or a natural disaster that resulted in disruption/destruction in a geographic region where there are substantial business operations. After the acquisition of Organon BioSciences’ businesses, Schering-Plough would become more vulnerable to these adverse risks were such events to occur in Europe.
 
The acquisition of Organon BioSciences would expand Schering-Plough’s animal health business worldwide, which would increase the risk that negative events in the animal health industry could have a negative impact on future results of operations.
 
Through the acquisition of Organon BioSciences’ animal health businesses, Schering-Plough’s global animal health business will become a more significant business segment. The combined company’s future sales of key animal health products could be adversely impacted by a number of factors including interruptions in manufacturing or supply, new competitive developments to treat the same conditions, technological advances, factors affecting production or marketing costs, or pricing actions by one or more of Schering-Plough’s competitors. Further, the outbreak of disease carried by animals, such as Bovine Spongiform Encephalopathy (“BSE”) or mad cow disease, could lead to their widespread death and precautionary destruction, which could adversely impact Schering-Plough’s results of operations. As the animal health segment of Schering-Plough’s business becomes more significant, the impact of any such events on future results of operations would also become more significant.
 
Upon the acquisition of Organon BioSciences, Schering-Plough would increase its 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.
 
The successful development, testing, manufacturing and commercialization of biologics, particularly human and animal health vaccines, is a long, expensive and uncertain process. There are unique risks and uncertainties with biologics, including:
 
  •  There may be limited access to and supply of normal and diseased tissue samples, cell lines, pathogens, bacteria, viral strains and other biological materials. In addition, government regulations in multiple jurisdictions such as the U.S. and European states within the E.U., could result in restricted access to, or transport or use of, such materials. If Schering-Plough loses access to sufficient sources of such materials, or if tighter restrictions are imposed on the use of such materials, Schering-Plough may not be able to conduct research activities as planned and may incur additional development costs.


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  •  The development, manufacturing and marketing of biologics are subject to regulation by the FDA, the European Medicines Agency and other regulatory bodies. These regulations are often more complex and extensive than the regulations applicable to other pharmaceutical products. For example, in the U.S., a Biologics License Application, including both preclinical and clinical trial data and extensive data regarding the manufacturing procedures, is required for vaccine candidates and FDA approval for the release of each manufactured lot.
 
  •  Manufacturing biologics, especially in large quantities, is sometimes complex and may require the use of innovative technologies to handle living micro-organisms. Manufacturing biologics requires facilities specifically designed for and validated for this purpose, and sophisticated quality assurance and quality control procedures are necessary. Slight deviations anywhere in the manufacturing process, including filling, labeling, packaging, storage and shipping and quality control and testing, may result in lot failures, product recalls or spoilage.
 
  •  Biologics are frequently costly to manufacture because the ingredients are derived from living animal or plant material, and most biologics cannot be made synthetically. In particular, keeping up with the demand for vaccines may be difficult due to the complexity of producing vaccines.
 
  •  The use of biologically derived ingredients can lead to allegations of harm, including infections or allergic reactions, or closure of product facilities due to possible contamination. Any of these events could result in substantial costs.
 
Upon the acquisition of Organon BioSciences, Schering-Plough would acquire 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 combined results of operations.
 
Organon BioSciences markets products in therapeutic areas that are new to Schering-Plough. Each therapeutic area presents a different risk profile, including different benefits and safety issues that must be balanced by Schering-Plough and the regulators as various R&D and marketing decisions are made; unique product liability risks; different patient and prescriber priorities; and different societal pressures. While adding new therapeutic areas may strengthen the business by increasing sales and profits; making the combined company more relevant to patients and prescribers; and diversifying enterprise risk across more areas, such positives may not outweigh the additional risk in a particular therapeutic area or could result in unanticipated costs that could be material.
 
If the Organon BioSciences acquisition does not close, Schering-Plough will have broad discretion to use the proceeds from this offering.
 
Because the closing of the Organon BioSciences acquisition is subject to a number of closing conditions as described above, Schering-Plough cannot assure you that the acquisition will close. If the acquisition does not close, the Board of Directors will have significant discretion to allocate the proceeds from this offering and the concurrent offering of common shares to other uses.
 
Risks Related to Schering-Plough
 
The risks and uncertainties described below related to Schering-Plough’s existing business will continue to apply to the combined company after the closing of Schering-Plough’s planned acquisition of Organon BioSciences. References to Schering-Plough in this section refer to Schering-Plough before the closing of the acquisition and the combined company from and after the closing of the acquisition.


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Key Schering-Plough products generate a significant amount of Schering-Plough’s profits and cash flows, and any events that adversely affect the market for its leading products could have a material and negative impact on results of operations and cash flows.
 
Schering-Plough’s ability to generate profits and operating cash flow is largely dependent upon the continued profitability of Schering-Plough’s cholesterol franchise, consisting of VYTORIN and ZETIA. In addition, other key products such as REMICADE, NASONEX, PEGINTRON, TEMODAR, CLARINEX, and AVELOX account for a material portion of revenues. As a result of Schering-Plough’s dependence on key products, any events that adversely affect the markets for these products could have a significant impact on results of operations. These events include loss of patent protection, increased costs associated with manufacturing, OTC availability of Schering-Plough’s product or a competitive product, the discovery of previously unknown side effects, increased competition from the introduction of new, more effective treatments and discontinuation or removal from the market of the product for any reason.
 
For example, the profitability of Schering-Plough’s cholesterol franchise may be adversely affected by the introduction of multiple generic forms in December 2006 of two competing cholesterol products that lost patent protection earlier in 2006.
 
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.
 
There is a high rate of failure inherent in the research to develop new drugs to treat diseases. As a result, there is a high risk that funds invested in research programs will not generate financial returns. This risk profile is compounded by the fact that this research has a long investment cycle. To bring a pharmaceutical compound from the discovery phase to market may take a decade or more and failure can occur at any point in the process, including later in the process after significant funds have been invested.
 
Schering-Plough’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.
 
Products that appear promising in development may fail to reach market for numerous reasons, including the following:
 
  •  findings of ineffectiveness, superior safety or efficacy of competing products, or harmful side effects in clinical or pre-clinical testing;
 
  •  failure to receive the necessary regulatory approvals, including delays in the approval of new products and new indications;
 
  •  lack of economic feasibility due to manufacturing costs or other factors; and
 
  •  preclusion from commercialization by the proprietary rights of others.
 
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.
 
Intellectual property protection is critical to Schering-Plough’s ability to successfully commercialize its products. Upon the expiration or the successful challenge of Schering-Plough’s patents covering a product, competitors may introduce lower-priced generic versions of that product, which may include Schering-Plough’s well-established products. In recent years, some generic manufacturers have launched generic versions of products before the ultimate resolution of patent litigation (commonly known as “at-risk” product launches). Such generic competition could result in the


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loss of a significant portion of sales or downward pressures on the prices at which Schering-Plough offers formerly patented products, particularly in the U.S. Patents and patent applications relating to Schering-Plough’s significant products are of material importance to Schering-Plough.
 
Additionally, certain foreign governments have indicated that compulsory licenses to patents may be granted in the case of national emergencies, which could diminish or eliminate sales and profits from those regions and negatively affect Schering-Plough’s results of operations. Further, recent court decisions relating to other companies’ patents in the U.S., as well as the discussion of regulatory initiatives, may result in further erosion of intellectual property protection.
 
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.
 
Patent positions can be highly uncertain and patent disputes in the pharmaceutical industry are not unusual. An adverse result in a patent dispute involving Schering-Plough’s patents, or the patents of its collaborators, may lead to a loss of market exclusivity and render such patents invalid. An adverse result in a patent dispute involving patents held by a third party may preclude the commercialization of Schering-Plough’s products, force Schering-Plough to obtain licenses in order to continue manufacturing or marketing the affected products, which licenses may not be available on commercially reasonable terms, negatively affect sales of existing products or result in injunctive relief and payment of financial remedies.
 
The potential for litigation regarding Schering-Plough’s intellectual property rights always exists and may be initiated by third parties attempting to abridge Schering-Plough’s rights, as well as by Schering-Plough in protecting its rights. A generic manufacturer may file an Abbreviated New Drug Application seeking approval after the expiration of the applicable data exclusivity and alleging that one or more of the patents listed in the innovator’s New Drug Application are invalid or not infringed. This allegation is commonly known as a Paragraph IV certification. The innovator then has the ability to file suit against the generic manufacturer to enforce its patents. In recent years, generic manufacturers have used Paragraph IV certifications extensively to challenge patents on a wide array of innovative pharmaceuticals, and it is anticipated that this trend will continue. Even if Schering-Plough is ultimately successful in a particular dispute, Schering-Plough may incur substantial costs in defending its patents and other intellectual property rights. See “Patent Challenges Under the Hatch-Waxman Act” in Part II, Item 1, “Legal Proceedings” in the second quarter 2007 10-Q, for a list of current Paragraph IV certifications for Schering-Plough products.
 
Multi-jurisdictional regulations, including those establishing Schering-Plough’s ability to price products, may negatively affect Schering-Plough’s sales and profit margins.
 
Schering-Plough faces increased pricing pressure globally from managed care organizations, institutions and government agencies and programs that could negatively affect Schering-Plough’s sales and profit margins. For example, in the U.S., the Medicare Prescription Drug Improvement and Modernization Act of 2003 contains a prescription drug benefit for individuals who are eligible for Medicare. The prescription drug benefit became effective on January 1, 2006 and is resulting in increased use of generics and increased purchasing power of those negotiating on behalf of Medicare recipients.
 
In addition to legislation concerning price controls, other trends that could affect Schering-Plough’s business include legislative or regulatory action relating to pharmaceutical pricing and reimbursement, health care reform initiatives and drug importation legislation, involuntary approval of medicines for OTC use, consolidation among customers and trends toward managed care and health care costs containment. Increasingly, market approval or reimbursement of products may be impacted by health technology assessments, which seek to condition approval or reimbursement on an assessment of the impact of health technologies on the healthcare system.
 
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managed care organizations continue to seek price discounts with respect to Schering-Plough’s products.
 
In other countries, many governmental agencies strictly control, directly or indirectly, the prices at which pharmaceutical products are sold. In these markets, cost control methods including restrictions on physician prescription levels and patient reimbursements; emphasis on greater use of generic drugs; and across-the-board price cuts may decrease revenues internationally.
 
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.
 
Schering-Plough cannot predict whether future or pending investigations to which it may become subject would lead to a judgment or settlement involving a significant monetary award or restrictions on its operations.
 
The pricing, sales and marketing programs and arrangements, and related business practices of Schering-Plough and other participants in the health care industry are under increasing scrutiny from federal and state regulatory, investigative, prosecutorial and administrative entities. These entities include the Department of Justice and its U.S. Attorney’s Offices, the Office of Inspector General of the Department of Health and Human Services, the FDA, the Federal Trade Commission and various state Attorneys General offices. Many of the health care laws under which certain of these governmental entities operate, including the federal and state anti-kickback statutes and statutory and common law false claims laws, have been construed broadly by the courts and permit the government entities to exercise significant discretion. In the event that any of those governmental entities believes that wrongdoing has occurred, one or more of them could institute civil or criminal proceedings which, if resolved unfavorably, could subject Schering-Plough to substantial fines, penalties and injunctive or administrative remedies, including exclusion from government reimbursement programs. In addition, an adverse outcome to a government investigation could prompt other government entities to commence investigations of Schering-Plough or cause those entities or private parties to bring civil claims against it. Schering-Plough also cannot predict whether any investigations will affect its marketing practices or sales. Any such result could have a material adverse impact on Schering-Plough’s results of operations, cash flows, financial condition, or its business.
 
Regardless of the merits or outcomes of any investigations, government investigations are costly, divert management’s attention from Schering-Plough’s business and may result in substantial damage to Schering-Plough’s reputation.
 
There are other legal matters in which adverse outcomes could negatively affect Schering-Plough’s business.
 
Unfavorable outcomes in other pending litigation matters, or in future litigation, including litigation concerning product pricing, securities law violations, product liability claims, ERISA matters, patent and intellectual property disputes, and antitrust matters could preclude the commercialization of products, negatively affect the profitability of existing products and could subject Schering-Plough to substantial fines, penalties and injunctive or administrative remedies, including exclusion from government reimbursement programs. Any such result could materially and adversely affect Schering-Plough’s results of operations, cash flows, financial condition, or its business.
 
Please refer to “Legal Proceedings” in Item 3 in Schering-Plough’s 2006 10-K and Part II, Item 1 in Schering-Plough’s second quarter 2007 10-Q for descriptions of significant pending litigation. For the combined company after the acquisition closing date, see also Note 27 of Organon BioSciences’ combined financial statements for the years ended December 31, 2006, 2005 and 2004 and Note 17 to Organon BioSciences’ unaudited condensed combined interim financial statements for the six months ended June 30, 2007 and 2006 included in the accompanying prospectus.


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Schering-Plough is subject to governmental regulations, and the failure to comply with, as well as the costs of compliance of, these regulations may adversely affect Schering-Plough’s financial position and results of operations.
 
Schering-Plough’s manufacturing facilities and clinical/research practices must meet stringent regulatory standards and are subject to regular inspections. The cost of regulatory compliance, including that associated with compliance failures, can materially affect Schering-Plough’s financial position, cash flows and results of operations. Failure to comply with regulations, which include pharmacovigilance reporting requirements and standards relating to clinical, laboratory and manufacturing practices, can result in delays in the approval of drugs, seizure or recalls of drugs, suspension or revocation of the authority necessary for the production and sale of drugs, fines and other civil or criminal sanctions.
 
For example, in May 2002, Schering-Plough agreed with the FDA to the entry of a Consent Decree to resolve issues related to compliance with current Good Manufacturing Practices at certain of Schering-Plough’s facilities in New Jersey and Puerto Rico. The Consent Decree work placed significant additional controls on production and release of products from these sites, which increased costs and slowed production and led to a reduction in the number of products produced at the sites. Further, Schering-Plough’s research and development operations were negatively impacted by the Consent Decree because these operations share common facilities with the manufacturing operations.
 
Schering-Plough also is subject to other regulations, including environmental, health and safety, and labor regulations.
 
Developments following regulatory approval may decrease demand for Schering-Plough’s products.
 
Even after a product reaches market, certain developments following regulatory approval, including results in post-marketing Phase IV trials, may decrease demand for Schering-Plough’s products, including the following:
 
  •  the re-review of products that are already marketed;
 
  •  new scientific information and evolution of scientific theories;
 
  •  the recall or loss of marketing approval of products that are already marketed;
 
  •  uncertainties concerning safety labeling changes; and
 
  •  greater scrutiny in advertising and promotion.
 
In the past several years, clinical trials and post-marketing surveillance of certain marketed drugs of competitors within the industry have raised safety concerns that have led to recalls, withdrawals or adverse labeling of marketed products. These situations also have raised concerns among some prescribers and patients relating to the safety and efficacy of pharmaceutical products in general, which have negatively affected the sales of such products.
 
In addition, following the wake of recent product withdrawals of other companies and other significant safety issues, health authorities such as the U.S. Food and Drug Administration, the European Medicines Agency and the Pharmaceuticals and Medicines Device Agency have increased their focus on safety when assessing the benefit/risk balance of drugs. Some health authorities appear to have become more cautious when making decisions about approvability of new products or indications and are re-reviewing select products that are already marketed, adding further to the uncertainties in the regulatory processes. There is also greater regulatory scrutiny, especially in the U.S., on advertising and promotion and in particular, direct-to-consumer advertising.
 
If previously unknown side effects are discovered or if there is an increase in the prevalence of negative publicity regarding known side effects of any of Schering-Plough’s products, it could significantly reduce demand for the product or may require Schering-Plough to remove the product from the market. Further, in the current environment in which all pharmaceutical companies operate, Schering-Plough is at risk for product liability claims for its products.


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New products and technological advances developed by Schering-Plough’s competitors may negatively affect sales.
 
Schering-Plough operates in a highly competitive industry. Schering-Plough competes with a large number of multinational pharmaceutical companies, biotechnology companies and generic pharmaceutical companies. Many of Schering-Plough’s competitors have been conducting research and development in areas served both by Schering-Plough’s current products and by those products Schering-Plough is in the process of developing. Competitive developments that may impact Schering-Plough include technological advances by, patents granted to, and new products developed by competitors or new and existing generic, prescription and/or OTC products that compete with products of Schering-Plough or the Merck/Schering-Plough Cholesterol Partnership. In addition, it is possible that doctors, patients and providers may favor those products offered by competitors due to safety, efficacy, pricing or reimbursement characteristics, and as a result Schering-Plough will be unable to maintain its sales for such products.
 
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 depends on acquisition and in-licensing arrangements as a source for new products. Opportunities for obtaining or licensing new products are limited, however, and securing rights to them typically requires substantial amounts of funding or substantial resource commitments. Schering-Plough competes for these opportunities against many other companies and third parties that have greater financial resources and greater ability to make other resource commitments. Schering-Plough may not be able to acquire or license new products, which could adversely impact Schering-Plough and its prospects. Schering-Plough may also have difficulty acquiring or licensing new products on acceptable terms. To secure rights to new products, Schering-Plough may have to make substantial financial or other resource commitments that could limit its ability to produce a positive financial impact from such transactions.
 
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 has several relationships with third parties on which Schering-Plough depends for many of its key products. Very often these third parties compete with Schering-Plough or have interests that are not aligned with the interests of Schering-Plough. Notwithstanding any contracts Schering-Plough has with these third parties, Schering-Plough may not be able to control or influence the conduct of these parties, or the circumstances that affect them, either of which could adversely impact Schering-Plough.
 
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.
 
Schering-Plough operates in more than 120 countries, and the majority of Schering-Plough’s profit and cash flow is generated from international operations. Acquisitions, such as the recently announced purchase of Organon BioSciences, would further expand the size, scale and scope of its global operations. Risks, inherent in conducting a global business include:
 
  •  changes in medical reimbursement policies and programs and pricing restrictions in key markets;
 
  •  multiple regulatory requirements that could restrict Schering-Plough’s ability to manufacture and sell its products in key markets;
 
  •  trade protection measures and import or export licensing requirements;
 
  •  diminished protection of intellectual property in some countries; and
 
  •  possible nationalization and expropriation.


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In addition, there may be changes to Schering-Plough’s business and political position if there is instability, disruption or destruction in a significant geographic region, regardless of cause, including war, terrorism, riot, civil insurrection or social unrest; and natural or man-made disasters, including famine, flood, fire, earthquake, storm or disease.
 
Schering-Plough is exposed to market risk from fluctuations in currency exchange rates and interest rates.
 
Schering-Plough operates in multiple jurisdictions and as such, virtually all sales are denominated in currencies of the local jurisdiction. Additionally, Schering-Plough has entered and will enter into acquisition, licensing, borrowings or other financial transactions that may give rise to currency and interest rate exposure. Since Schering-Plough cannot, with certainty, foresee and mitigate against such adverse fluctuations, fluctuations in currency exchange rates and interest rates could negatively affect Schering-Plough’s results of operations and/or cash flows.
 
In order to mitigate against the adverse impact of these market fluctuations, Schering-Plough will from time to time enter into hedging agreements. Schering-Plough has entered into a foreign currency option to partially mitigate the currency exchange rate risk on the euro purchase price of the Organon BioSciences acquisition. In addition, Schering-Plough has entered into a series of interest rate swaps to partially mitigate interest rate risk associated with financing the purchase of Organon BioSciences. While hedging agreements, such as currency options and interest rate swaps, limit some of the exposure to exchange rate and interest rate fluctuations, such attempts to mitigate these risks are costly and not always successful.
 
Insurance coverage for product liability may be limited, cost prohibitive or unavailable.
 
Schering-Plough maintains insurance coverage with such deductibles and self-insurance to reflect market conditions (including cost and availability) existing at the time it is written, and the relationship of insurance coverage to self-insurance varies accordingly. For certain products, third-party insurance may be cost prohibitive, available on limited terms or unavailable.
 
Schering-Plough is subject to evolving and complex tax laws, which may result in additional liabilities that may affect results of operations.
 
Schering-Plough is subject to evolving and complex tax laws in its jurisdictions. Significant judgment is required for determining Schering-Plough’s tax liabilities, and Schering-Plough’s tax returns are periodically examined by various tax authorities. Schering-Plough’s 1997–2006 tax returns remain open for examination by the Internal Revenue Service. Schering-Plough may be challenged by the IRS and other tax authorities on positions it has taken in its income tax returns. Although Schering-Plough believes that its accrual for tax contingencies is adequate for all open years, based on past experience, interpretations of tax law, and judgments about potential actions by tax authorities, due to the complexity of tax contingencies, the ultimate resolution of any tax matters may result in payments greater or less than amounts accrued.
 
In addition, Schering-Plough may be impacted by changes in tax laws including tax rate changes, changes to the laws related to the remittance of foreign earnings, new tax laws and revised tax law interpretations in domestic and foreign jurisdictions.
 
Risks Related to the Offering
 
The market price of the 2007 Preferred Stock will be directly affected by the market price of the common shares, which may be volatile.
 
To the extent there is a secondary market for the 2007 Preferred Stock, Schering-Plough believes that the market price of the 2007 Preferred Stock will be significantly affected by the market price of the common shares. Schering-Plough cannot predict how the common shares will trade. This may result in greater volatility in the market price of the 2007 Preferred Stock than would be expected for nonconvertible preferred stock. From the beginning of 2005 to June 30, 2007, the reported high and low sales prices for the common shares ranged from a low of $17.67 per share to a high of


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$33.81 per share. The market price of the common shares will likely continue to fluctuate in response to a number of factors including the following, most of which are beyond Schering-Plough’s control:
 
  •  quarterly fluctuations in Schering-Plough’s operating and financial results;
 
  •  developments related to investigations, proceedings or litigations that involve Schering-Plough;
 
  •  changes in financial estimates and recommendations by financial analysts;
 
  •  dispositions, acquisitions and financings;
 
  •  changes in the ratings of Schering-Plough’s other securities;
 
  •  fluctuations in the stock price and operating results of the competitors;
 
  •  regulatory developments; and
 
  •  developments related to the pharmaceutical industry.
 
In addition, the stock markets in general, including the New York Stock Exchange, experience price and trading fluctuations. These fluctuations may result in volatility in the market prices of securities that could be unrelated or disproportionate to changes in operating performance. These broad market fluctuations may adversely affect the market prices of the 2007 Preferred Stock and the common shares.
 
Purchasers of the 2007 Preferred Stock may suffer dilution of the 2007 Preferred Stock upon the issuance of a new series of preferred stock ranking equally with the 2007 Preferred Stock.
 
The terms of the 2007 Preferred Stock do not restrict the ability of Schering-Plough to offer a new series of preferred stock that ranks equally with the 2007 Preferred Stock. Schering-Plough has no obligation to consider the interest of the holders of the 2007 Preferred Stock in engaging in any such offering or transaction.
 
A holder of 2007 Preferred Stock may realize some or all of a decline in the market value of the common shares.
 
The market value of the common shares on August 13, 2010 may be less than $27.50 per share, referred to as the initial price. If that market value is less than the initial price, then holders of the 2007 Preferred Stock will receive common shares on August 13, 2010 with a market value per share that is less than the initial price. Accordingly, a holder of 2007 Preferred Stock assumes the entire risk that the market value of the common shares may decline. Any decline in the market value of the common shares may be substantial.
 
Common shares issued pursuant to the concurrent offering or eligible for future issuance or sale may cause the common share price to decline, which may negatively impact your investment.
 
Issuances or sales of substantial numbers of additional common shares or the perception that such issuances or sales could occur, may cause prevailing market prices for the common shares to decline and may adversely affect the ability to raise additional capital in the financial markets at a time and price favorable to Schering-Plough. An additional 50,000,000 common shares are being issued concurrently with this offering (or 57,500,000 common shares if the underwriters exercise their option to purchase additional common shares). As noted above, a decline in the market price of the common shares may negatively impact the market price for the 2007 Preferred Stock.
 
The issuance of preferred shares could adversely affect holders of common shares, which may negatively impact your investment.
 
Schering-Plough’s board of directors is authorized to issue additional classes or series of preferred shares without any action on the part of the shareholders. The board of directors also has the power, without shareholder approval, to set the terms of any such classes or series of preferred shares that may be issued, including voting rights, dividend rights and preferences over the common shares with respect to dividends or upon the liquidation, dissolution or winding up of the business and


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other terms. If Schering-Plough issues preferred shares in the future that have preference over the common shares with respect to the payment of dividends or upon liquidation, dissolution or winding up, or if Schering-Plough issues preferred shares with voting rights that dilute the voting power of the common shares, the rights of holders of the common shares or the market price of the common shares could be adversely affected. As noted above, a decline in the market price of the common shares may negatively impact the market price for the 2007 Preferred Stock.
 
The opportunity for equity appreciation provided by an investment in the shares of the 2007 Preferred Stock is less than that provided by a direct investment in the common shares.
 
The number of common shares that are issuable upon mandatory conversion on the conversion date of the 2007 Preferred Stock will decrease if the applicable market value increases to above $27.50. Therefore, the opportunity for equity appreciation provided by an investment in the 2007 Preferred Stock is less than that provided by a direct investment in the common shares. Assuming the initial price accurately reflects fair market value, the market value of the common shares on August 13, 2010 must exceed the threshold appreciation price of $33.69 before a holder of the 2007 Preferred Stock will realize any equity appreciation.
 
Holders of the 2007 Preferred Stock will have no rights as holders of common shares until they acquire the common shares.
 
Until you acquire common shares upon conversion, you will have no rights with respect to the common shares, including voting rights (except as described under “Description of Mandatory Convertible Preferred Stock—Voting Rights” and as required by applicable state law), rights to respond to tender offers and rights to receive any dividends or other distributions on the common shares. Upon conversion, you will be entitled to exercise the rights of a holder of common shares only as to matters for which the record date occurs on or after the conversion date.
 
The 2007 Preferred Stock has never been publicly traded and may never be publicly traded.
 
Prior to this offering, there has been no public market for the 2007 Preferred Stock. The 2007 Preferred Stock is expected to be listed on the New York Stock Exchange. There can be no assurance, however, that an active trading market will develop, or if developed, that an active trading market will be maintained. The underwriters have advised Schering-Plough that they intend to facilitate secondary market trading by making a market in the 2007 Preferred Stock. However, the underwriters are not obligated to make a market in the 2007 Preferred Stock and may discontinue market making activities at any time.
 
New Jersey law may restrict Schering-Plough from paying cash dividends on the 2007 Preferred Stock.
 
New Jersey law provides that Schering-Plough may pay dividends on the 2007 Preferred Stock only to the extent by which the total assets exceed the total liabilities and so long as Schering-Plough is able to pay its debts as they become due in the usual course of the business.
 
The 2007 Preferred Stock will rank junior to all of Schering-Plough’s and its subsidiaries’ liabilities in the event of a bankruptcy, liquidation or winding up.
 
In the event of bankruptcy, liquidation or winding up, Schering-Plough’s assets will be available to pay obligations on the 2007 Preferred Stock only after all of Schering-Plough’s liabilities have been paid. In addition, the 2007 Preferred Stock will rank in parity with the 2004 Preferred Stock and will effectively rank junior to all existing and future liabilities of Schering-Plough’s subsidiaries and the capital stock (other than common shares) of the subsidiaries held by entities or persons other than Schering-Plough or entities owned or controlled by Schering-Plough. The rights of holders of the 2007 Preferred Stock to participate in the assets of Schering-Plough’s subsidiaries upon any liquidation or reorganization of any subsidiary will rank junior to the prior claims of that subsidiary’s creditors and equity holders. As of June 30, 2007, Schering-Plough had total consolidated liabilities of $8.2 billion. In addition, Schering-Plough intends to fund a portion of the planned Organon BioSciences acquisition


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with debt. In the event of bankruptcy, liquidation or winding up, there may not be sufficient assets remaining, after paying Schering-Plough and its subsidiaries’ liabilities, to pay amounts due on any or all of the 2007 Preferred Stock then outstanding.
 
The 2007 Preferred Stock provides limited conversion rate adjustments.
 
The number of common shares that you are entitled to receive on the mandatory conversion date, or as a result of early conversion of a share of 2007 Preferred Stock, is subject to adjustment for certain events arising from stock splits and combinations, stock dividends, certain cash dividends and certain other actions by Schering-Plough or a third party that modify the capital structure. See “Description of Mandatory Convertible Preferred Stock—Anti-Dilution Adjustments.” Schering-Plough will not adjust the conversion rate for other events, including offerings of common shares for cash by Schering-Plough or in connection with acquisitions. There can be no assurance that an event that adversely affects the value of the 2007 Preferred Stock, but does not result in an adjustment to the conversion rate, will not occur.
 
You may have to pay taxes with respect to distributions on the common shares that you do not receive.
 
The number of common shares that you are entitled to receive on the mandatory conversion date, or as a result of early conversion of the 2007 Preferred Stock, is subject to adjustment for certain events arising from stock splits and combinations, stock dividends, certain cash dividends and certain other actions by Schering-Plough or a third party that modify the capital structure. See “Description of Mandatory Convertible Preferred Stock—Anti-dilution Adjustments.” Under certain circumstances, you may be required to include an amount in income for U.S. federal income tax purposes, notwithstanding the fact that you do not actually receive such distribution. The amount that you would have to include in income is generally the fair market value of the additional common shares to which you would be entitled by reason of the adjustment. In addition, non-U.S. holders of the 2007 Preferred Stock may, in certain circumstances, be deemed to have received a distribution subject to U.S. federal withholding tax requirements.


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USE OF PROCEEDS
 
Schering-Plough estimates that the net proceeds from the sale of the 2007 Preferred Stock will be approximately $2.435 billion, or $2.801 billion if the underwriters exercise in full their option to purchase additional shares, after deducting the underwriting discounts and estimated offering expenses payable by Schering-Plough. Concurrently with this offering, Schering-Plough is also offering 50,000,000 common shares. Schering-Plough estimates that the net proceeds from the common share offering will be approximately $1.340 billion, or $1.541 billion if the underwriters exercise in full their option to purchase additional common shares, after deducting the underwriting discounts and estimated offering expenses payable by Schering-Plough. Neither the completion of this offering nor the completion of the common share offering is conditioned upon the other.
 
Schering-Plough intends to use the net proceeds from the sale of the 2007 Preferred Stock to fund a portion of the approximately €11 billion purchase price (or $15.1 billion based on the noon buying rate for euro on August 9, 2007) for the planned Organon BioSciences acquisition, which is expected to close by the end of 2007. Schering-Plough intends to fund the remainder of the acquisition price through a combination of the net proceeds from the concurrent offering of common shares, cash on hand and debt, which may include borrowings under a committed €11 billion bridge facility.
 
If the planned Organon BioSciences acquisition is not completed, Schering-Plough will use the net proceeds from this offering for general corporate purposes, including:
 
  •  to acquire additional marketed products and pipeline projects (through acquisitions of companies or through product licenses which may include royalties, license fees and milestone payments),
 
  •  research and development costs,
 
  •  the repayment of debt,
 
  •  litigation costs, and
 
  •  other capital expenses and other operating expenses.
 
Schering-Plough will invest the net proceeds from this offering in U.S. dollar or foreign currency denominated short-term, interest-bearing, investment-grade obligations and bank deposits until they are applied as described above. If the planned Organon BioSciences acquisition is not completed, Schering-Plough will have broad discretion in allocating the net proceeds from this offering.


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PRICE RANGE OF COMMON SHARES AND DIVIDENDS DECLARED
 
Schering-Plough’s common shares are traded on the New York Stock Exchange under the trading symbol “SGP.” The high and low closing sales prices per share for the periods indicated were as follows, together with the dividends declared per common share for such periods:
 
                         
            Dividends Per
   
High
 
Low
 
Common Share
 
Year Ended December 31, 2004:
                       
First Quarter
  $ 18.97     $ 15.96     $ .055  
Second Quarter
    18.70       16.10       .055  
Third Quarter
    19.98       17.55       .055  
Fourth Quarter
    21.76       19.05       .055  
Year Ended December 31, 2005:
                       
First Quarter
  $ 21.41     $ 17.68     $ .055  
Second Quarter
    20.94       17.89       .055  
Third Quarter
    22.45       18.48       .055  
Fourth Quarter
    21.76       19.05       .055  
Year Ended December 31, 2006:
                       
First Quarter
  $ 20.93     $ 18.00     $ .055  
Second Quarter
    20.00       18.25       .055  
Third Quarter
    22.09       18.60       .055  
Fourth Quarter
    23.90       21.25       .055  
Year Ended December 31, 2007:
                       
First Quarter
  $ 25.51     $ 22.75     $ .055  
Second Quarter
    33.34       25.42       .065  
Third Quarter (through August 9, 2007)
    32.83       27.52          
 
On August 9, 2007, the closing sale price of the common shares on the New York Stock Exchange was $27.52 per share. At the close of business on June 30, 2007, there were 35,221 holders of record of the common shares.


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DESCRIPTION OF MANDATORY CONVERTIBLE PREFERRED STOCK
 
 
This description of the terms of the 2007 Preferred Stock is only a summary. The terms of the 2007 Preferred Stock will be contained in a certificate of amendment to Schering-Plough’s amended and restated certificate of incorporation. Schering-Plough has previously filed with the SEC a copy of its amended and restated certificate of incorporation. See “Where You Can Find More Information.” The certificate of amendment will be filed as Exhibit 4 to an 8-K after the date of this prospectus supplement.
 
General
 
The certificate of incorporation authorizes the issuance of 50,000,000 preferred shares, par value $1.00 per share. In August 2004, Schering-Plough issued 28,750,000 preferred shares, designated as 6.00% Mandatory Convertible Preferred Stock, which will remain outstanding until their automatic conversion to common shares on September 14, 2007, unless earlier converted. See “Description of Capital Stock—Common Shares” and “Description of Capital Stock—Preferred Shares” in the accompanying prospectus for a description of the other classes of capital stock.
 
When issued, the 2007 Preferred Stock will constitute a single series of the preferred shares, consisting of 10,000,000 shares (or 11,500,000 shares if the underwriters exercise their option to purchase additional shares in full in accordance with the procedures set forth in “Underwriting”). The holders of the 2007 Preferred Stock will have no preemptive rights. All of the shares of the 2007 Preferred Stock, when issued and paid for, will be fully paid and non-assessable.
 
The 2007 Preferred Stock will rank as to payment of dividends and distributions of assets upon dissolution, liquidation or winding up:
 
  •  junior to all existing and future debt obligations of Schering-Plough and its subsidiaries;
 
  •  junior to any class or series of the capital stock of Schering-Plough, the terms of which provide that such class or series will rank senior to the 2007 Preferred Stock, which are collectively referred to as the “Senior Securities;”
 
  •  senior to the common shares and any other class or series of the capital stock of Schering-Plough, the terms of which provide that such class or series will rank junior to the 2007 Preferred Stock, which are collectively referred to as the “Junior Securities;” and
 
  •  on a parity with any other class or series of Schering-Plough’s capital stock, including the 2004 Preferred Stock, which are collectively referred to as the “Parity Securities;”
 
in each case, whether now outstanding or to be issued in the future.
 
Schering-Plough will not be entitled to issue any class or series of its capital stock, the terms of which provide that such class or series will rank senior to the 2007 Preferred Stock as to payment of dividends or distribution of assets upon the dissolution, liquidation or winding up without the approval of the holders of at least two-thirds of the shares of Schering-Plough’s mandatory convertible preferred stock then outstanding and any class or series of Parity Securities then outstanding, voting together as a single class, with each series or class having a number of votes proportionate to the aggregate liquidation preference of its outstanding shares. See “—Voting Rights.”
 
As of the date of this prospectus supplement, Schering-Plough is authorized to issue up to 2,400,000,000 common shares, $.50 par value per share. As of June 30, 2007, 1,496,297,204 common shares were issued and outstanding. In addition, as of such date, 547,238,751 common shares were held in treasury, 80,040,000 common shares were reserved for issuance upon conversion of the 2004 Preferred Stock and 166,632,803 common shares were reserved for issuance under stock incentive plans. Concurrently with this offering, Schering-Plough expects to issue an additional 50,000,000 common shares (or 57,500,000 common shares if the underwriters exercise their option to purchase additional shares in full) in a registered public offering. See “Summary—Schering-Plough Corporation—Concurrent Public Offering of Common Shares.” Additionally, the 2004 Preferred Stock will automatically convert into between 64,546,625 and 80,040,000 common shares (subject to any anti-dilution adjustments) depending on the average closing price of the common


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shares over a period immediately preceding the mandatory conversion date of September 14, 2007, unless earlier converted.
 
Under New Jersey law, Schering-Plough may declare or pay dividends on the 2007 Preferred Stock only to the extent by which the total assets exceed the total liabilities and so long as Schering-Plough is able to pay its debts as they become due in the usual course of its business. When the need to make these determinations arises, the board of directors will determine the amount of the total assets and total liabilities and the ability to pay its debts in accordance with New Jersey law.
 
Dividends
 
General
 
Dividends on the 2007 Preferred Stock will be payable quarterly in cash, when and if declared, on February 15, May 15, August 15 and November 15 of each year prior to the mandatory conversion date (or the following business day if such day is not a business day), and on the mandatory conversion date, each of which is a “dividend payment date,” at the rate of 6.00% per year on the liquidation preference of $250 per share (equal to $15.00 per share), subject to adjustment for stock splits, combinations, reclassifications or other similar events. The initial dividend on the 2007 Preferred Stock, for the first dividend period, assuming the issue date is August 15, 2007 is expected to be $3.75 per share, and is expected to be payable, when and if declared, on November 15, 2007. Each subsequent quarterly dividend on the 2007 Preferred Stock, when and if declared, is expected to be $3.75 per share. The dividend for the last dividend period is expected to be $3.67 per share and is expected to be payable, when and if declared, on August 13, 2010. All dividends are subject to adjustment for stock splits, combinations, reclassifications or other similar events.
 
The amount of dividends payable for any period that is shorter or longer than a full quarterly dividend period will be computed on the basis of a 360-day year consisting of twelve 30-day months.
 
A dividend period is the period ending on the day before a dividend payment date and beginning on the preceding dividend payment date or, if none, the first date of issuance of shares of the 2007 Preferred Stock. Except as provided under “—Liquidation Rights” below, dividends payable, when and if declared, on a dividend payment date will be payable to holders as they appear on the stock register on close of business on the first business day of the calendar month in which the applicable dividend payment date falls. Schering-Plough is only obligated to pay a dividend on the 2007 Preferred Stock if the board of directors, or an authorized committee thereof, declares the dividend payable and Schering-Plough is then legally permitted to pay the dividend.
 
Dividends on the 2007 Preferred Stock shall accrue and cumulate if Schering-Plough fails to declare one or more dividends on the 2007 Preferred Stock in any amount, whether or not Schering-Plough is then legally permitted under New Jersey law to pay such dividends.
 
Schering-Plough is not obligated to and will not pay holders of the 2007 Preferred Stock any interest or sum of money in lieu of interest on any dividend not paid on a dividend payment date or any other late payment. Schering-Plough is also not obligated to and will not pay holders of the 2007 Preferred Stock any dividend in excess of the full dividends on the 2007 Preferred Stock that are payable as described above.
 
If the board of directors (or an authorized committee of the board of directors) does not declare or pay a dividend in respect of any dividend payment date, the board of directors or an authorized committee thereof may declare and pay the dividend on any other date, whether or not a dividend payment date. The persons entitled to receive a dividend that is not payable on a dividend payment date will be holders of the 2007 Preferred Stock as they appear on the stock register on a record date selected by the board of directors or an authorized committee thereof. That date must (i) not precede the date the board of directors or an authorized committee of the board of directors declares the dividend payable and (ii) not be more than 60 days prior to the date the dividend is paid.
 
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Payment Restrictions
 
Unless all accrued, cumulated and unpaid dividends on the 2007 Preferred Stock for all past quarterly dividend periods shall have been paid in full, Schering-Plough will not:
 
  •  declare or pay any dividend or make any distribution of assets on any Junior Securities, unless it is paid in the form of Junior Securities and cash solely in lieu of fractional shares in connection with the dividend or distribution;
 
  •  redeem, purchase or otherwise acquire any Junior Securities or pay or make any monies available for a sinking fund for such Junior Securities, unless it is (A) upon conversion or exchange for other Junior Securities, or (B) the purchase of fractional interests in shares of any Junior Securities pursuant to the conversion or exchange provisions of those Junior Securities;
 
  •  declare or pay any dividend or make any distribution of assets on any Parity Securities unless it is on the 2004 Preferred Stock, or it is a dividend or distribution in the form of Parity Securities or Junior Securities and cash solely in lieu of fractional shares of the Parity Securities or Junior Securities; or
 
  •  redeem, purchase or otherwise acquire any Parity Securities, except upon conversion into or exchange for other Parity Securities or Junior Securities and cash solely in lieu of fractional shares of the Parity Securities or Junior Securities. However, a redemption, purchase or other acquisition of Parity Securities upon conversion into or exchange for other Parity Securities is only permitted if the following occurs:
 
  •  the aggregate amount of the liquidation preference of the other Parity Securities does not exceed the aggregate amount of the liquidation preference, plus accrued, cumulated and unpaid dividends, of the Parity Securities that are converted into or exchanged for the other Parity Securities;
 
  •  the aggregate number of common shares issuable upon conversion, redemption or exchange of the other Parity Securities does not exceed the aggregate number of common shares issuable upon conversion, redemption or exchange of the Parity Securities that are converted into or exchanged for the other Parity Securities; and
 
  •  the other Parity Securities contain terms and conditions that are not materially less favorable, taken as a whole, to Schering-Plough or the holders of the 2007 Preferred Stock than those contained in the Parity Securities that are converted or exchanged for the other Parity Securities.
 
Redemption
 
The 2007 Preferred Stock will not be redeemable.
 
Mandatory Conversion
 
Each share of the 2007 Preferred Stock, unless previously converted, will automatically convert on August 13, 2010, which is called the “mandatory conversion date,” into a number of common shares equal to the conversion rate described below. In addition to the number of common shares issuable upon conversion of each share of the 2007 Preferred Stock on the mandatory conversion date, you will receive in cash all accrued, cumulated and unpaid dividends that have not been declared for all dividend periods up to and excluding the mandatory conversion date. You will also receive any declared unpaid dividends on the mandatory conversion date. You will only receive dividends if Schering-Plough is legally permitted to pay dividends.
 
The conversion rate, which is the number of common shares issuable upon conversion of each share of the 2007 Preferred Stock on the applicable conversion date, will, subject to adjustment as described under “—Anti-Dilution Adjustments” below, be as follows:
 
  •  if the applicable market value (as defined below) of the common shares is equal to or greater than $33.69, which is called the “threshold appreciation price,” then the conversion rate will be 7.4206 common shares per share of the 2007 Preferred Stock, which is called the “minimum


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  conversion rate,” which is equal to $250.00 divided by $33.69 (the threshold appreciation price);
 
  •  if the applicable market value of the common shares is less than $33.69 (the threshold appreciation price) but greater than $27.50, which is called the “initial price,” then the conversion rate will be equal to $250.00 divided by the applicable market value of the common shares; or
 
  •  if the applicable market value of the common shares is less than or equal to $27.50 (the initial price), then the conversion rate will be 9.0909 common shares per share of the 2007 Preferred Stock, which is called the “maximum conversion rate,” and which is equal to $250.00 divided by $27.50 (the initial price).
 
Schering-Plough refers to the minimum conversion rate and the maximum conversion rate collectively as the “fixed conversion rates.”
 
Accordingly, assuming that the market price of the common shares on the mandatory conversion date is the same as the applicable market value, the aggregate market value of the shares you receive upon conversion will be:
 
  •  greater than the liquidation preference of the 2007 Preferred Stock if the applicable market value is greater than the threshold appreciation price;
 
  •  equal to the liquidation preference if the applicable market value is less than or equal to the threshold appreciation price and greater than or equal to the initial price; and
 
  •  less than the liquidation preference if the applicable market value is less than the initial price.
 
“Applicable market value” means the average of the closing prices per share of the common shares on each of the 20 consecutive trading days ending on the third trading day immediately preceding the mandatory conversion date. After a reorganization event, if securities received in such reorganization event are publicly traded, the applicable market value of such securities shall be calculated in the same manner as described in the preceding sentence, and for all other property, the value on the third trading day immediately preceding the mandatory conversion date. The “initial price” is 27.50. The threshold appreciation price represents an approximately 22.50% appreciation over the initial price.
 
The “closing price” of the common shares or of any securities distributed in a spin-off on any date of determination means the closing sale price or, if no closing sale price is reported, the last reported sale price of the common shares or any such securities distributed in a spin-off, as the case may be, on the New York Stock Exchange on that date. If the common shares or any such securities distributed in a spin-off, as the case may be, are not traded on the New York Stock Exchange on any date of determination, the closing price of the common shares or such securities on any date of determination means the closing sale price as reported in the composite transactions for the principal U.S. national or regional securities exchange on which the common shares or such securities are so listed or quoted, or if the common shares or such securities are not so listed or quoted on a U.S. national or regional securities exchange, the last quoted bid price for the common shares or such securities in the over-the-counter market as reported by Pink Sheets LLC or similar organization, or, if that bid price is not available, the market price of the common shares or such securities on that date as determined by a nationally recognized independent investment banking firm retained by Schering-Plough for this purpose.
 
A “trading day” is a day on which the common shares:
 
  •  are not suspended from trading on any national or regional securities exchange or association or over-the-counter market at the close of business; and
 
  •  have traded at least once on the national or regional securities exchange or association or over-the-counter market that is the primary market for the trading of the common shares.
 
For purposes of the prospectus supplement, all references herein to the closing price of the common shares on the New York Stock Exchange shall be such closing price as reflected on the


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website of the New York Stock Exchange (http://www.nyse.com) and as reported by Bloomberg Professional Service; provided that in the event that there is a discrepancy between the closing sale price as reflected on the website of the New York Stock Exchange and as reported by Bloomberg Professional Service, the closing sale price on the website of the New York Stock Exchange shall govern.
 
Conversion
 
Conversion into common shares will occur on the mandatory conversion date, unless:
 
  •  Schering-Plough has caused the conversion of the 2007 Preferred Stock prior to the mandatory conversion date in the manner described in “—Provisional Conversion at Schering-Plough’s Option;” or
 
  •  your shares of the 2007 Preferred Stock have been converted prior to the mandatory conversion date, in the manner described in “—Conversion at the Option of the Holder” or “—Early Conversion and Dividend Make-Whole Payment Upon Certain Acquisitions.”
 
On the mandatory conversion date, certificates representing common shares will be issued and delivered to you or your designee upon presentation and surrender of the certificate evidencing the 2007 Preferred Stock, to the conversion agent if shares of the 2007 Preferred Stock are held in certificated form, and upon compliance with some additional procedures. If a holder’s interest is a beneficial interest in a global certificate representing 2007 Preferred Stock, a book-entry transfer through DTC will be made by the conversion agent upon compliance with the depositary’s procedures for converting a beneficial interest in a global security.
 
On the date of any conversion made pursuant to “—Conversion at the Option of the Holder” or “—Early Conversion and Dividend Make-Whole Payment Upon Certain Acquisitions,” a holder must do each of the following:
 
  •  complete and manually sign the conversion notice provided by the conversion agent, or a facsimile of the conversion notice, and deliver this irrevocable notice to the conversion agent;
 
  •  surrender the shares of 2007 Preferred Stock to the conversion agent;
 
  •  if required, furnish appropriate endorsements and transfer documents;
 
  •  if required, pay all transfer or similar taxes; and
 
  •  if the conversion is being made pursuant to “—Conversion at the Option of the Holder” and the early conversion date is after the record date for any declared dividend, the holder must pay to the conversion agent an amount in cash equal to the full dividend payable on the dividend payment date for the then-current dividend period on the shares being converted.
 
If a holder’s interest is a beneficial interest in a global certificate representing 2007 Preferred Stock, in order to convert a holder must comply with the last three requirements listed above and comply with the depositary’s procedures for converting a beneficial interest in a global security.
 
The conversion agent for the 2007 Preferred Stock is initially the transfer agent. A holder may obtain copies of the required form of the conversion notice from the conversion agent. The conversion agent will, on a holder’s behalf, convert the 2007 Preferred Stock into common shares, in accordance with the terms of the notice delivered by Schering-Plough described below. Payments of cash for dividends, make-whole payments and in lieu of fractional shares and, if common shares are to be delivered, a stock certificate or certificates, will be delivered to the holder, or in the case of global certificates, a book-entry transfer through DTC will be made by the conversion agent.
 
The person or persons entitled to receive the common shares issuable upon conversion of the 2007 Preferred Stock will be treated as the record holder(s) of such shares as of the close of business on the applicable conversion date. Prior to the close of business on the applicable conversion date, the common shares issuable upon conversion of the 2007 Preferred Stock will not be deemed to be outstanding for any purpose and you will have no rights with respect to the common


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shares, including voting rights, rights to respond to tender offers and rights to receive any dividends or other distributions on the common shares, by virtue of holding the 2007 Preferred Stock.
 
Provisional Conversion at Schering-Plough’s Option
 
Prior to the mandatory conversion date, if the closing price per share of the common shares has exceeded $50.53 (150% of the threshold appreciation price of $33.69), subject to anti-dilution adjustments, for at least 20 trading days within a period of 30 consecutive trading days ending on the trading day prior to the date that Schering-Plough notifies you of the optional conversion, Schering-Plough may, at its option, cause the conversion of all, but not less than all, of the shares of the 2007 Preferred Stock then outstanding into the common shares. Such conversion shall be made at the minimum conversion rate of 7.4206 common shares for each share of the 2007 Preferred Stock, subject to adjustment as described under “—Anti-Dilution Adjustments” below. Schering-Plough will provide a notice of such conversion to each holder of the 2007 Preferred Stock by mail and issue a press release and publish such information on the Schering-Plough website (http://www.schering-plough.com); provided that the failure to mail such notice, issue such press release or publish such information on the website will not act to prevent or delay such conversion. The date specified in such notice for the optional conversion shall be at least 30 days but no more than 60 days from the date of such notice. Schering-Plough will be able to cause this conversion only if, in addition to issuing you the common shares as described above, Schering-Plough is then legally permitted to, and does, pay you in cash an amount equal to the sum of:
 
(i) all accrued, cumulated and unpaid dividends on your shares of 2007 Preferred Stock that have not been declared for all dividend periods to, but excluding, the conversion date, plus
 
(ii) if the conversion date is prior to the record date, all accrued, cumulated and unpaid dividends on your shares of 2007 Preferred Stock that have been declared for all dividend periods to, but excluding, the conversion date, plus
 
(iii) the present value of all remaining future dividend payments on your shares of the 2007 Preferred Stock through and including August 13, 2010 (excluding (a) any unpaid dividends accrued during the portion of the then-current dividend period through, but excluding, the conversion date, and (b) if the conversion date is after the record date for any declared dividend, any of those dividends for the then-current dividend period). The present value of the remaining future dividend payments will be computed using a discount rate equal to the Treasury Yield. “Treasury Yield” means the yield to maturity at the time of computation of U.S. Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two business days prior to the date fixed for conversion (or, if such Statistical Release is no longer published, any publicly available source for similar market data)) most nearly equal to the then-remaining term to August 13, 2010, provided, however, that if the then-remaining term to August 13, 2010 is not equal to the constant maturity of a U.S. Treasury security for which a weekly average yield is given, the Treasury Yield shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of U.S. Treasury securities for which such yields are given, except that if the then-remaining term to August 13, 2010 is less than one year, the weekly average yield on actually traded U.S. Treasury securities adjusted to a constant maturity of one year shall be used.
 
If the conversion date is after the record date for any declared dividend, you will be paid those unpaid dividends on the relevant dividend payment date, rather than the conversion date, if you were the holder of record on the record date for that dividend.
 
Conversion at the Option of the Holder
 
Holders of the 2007 Preferred Stock have the right to convert their shares of the 2007 Preferred Stock, in whole or in part, at any time prior to the mandatory conversion date, into common shares at the minimum conversion rate of 7.4206 common shares per share of the 2007 Preferred Stock, subject to adjustment as described under “—Anti-Dilution Adjustments” below.


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In addition to the number of common shares issuable upon conversion of each share of the 2007 Preferred Stock at the option of the holder on the effective date of any early conversion, referred to as the “early conversion date,” you will receive in cash all accrued, cumulated and unpaid dividends that have not been declared for all prior dividend periods ending on or prior to the dividend payment date immediately preceding the early conversion date. If the early conversion date is prior to the record date for any declared dividend, for the dividend period in which you elect to convert early, you will not receive any declared dividends for that dividend period. If the early conversion date is after the record date for any declared dividend, you will receive that dividend on the relevant dividend payment date if you were the holder of record on the record date for that dividend; however, whether or not you were the holder of record on the record date, you must pay to the conversion agent an amount in cash equal to the full dividend payable on the dividend payment date for the then-current dividend period on the shares being converted. You will only receive dividends if Schering-Plough is legally permitted to pay dividends.
 
Early Conversion and Dividend Make-Whole Payment Upon Certain Acquisitions
 
General.  The following provisions will apply if, prior to the earlier of the mandatory conversion date and the date on which Schering-Plough provides you with notice of a provisional conversion at the option of Schering-Plough (so long as the provisional conversion occurs within the time period described above in “—Provisional Conversion at Schering-Plough’s Option”), and if, upon the consummation of any acquisition (whether by means of a liquidation, share exchange, tender offer, consolidation, recapitalization, reclassification, merger of Schering-Plough or any sale, lease or other transfer of the consolidated assets of Schering-Plough and its subsidiaries) or a series of related transactions or events pursuant to which:
 
  •  90% or more of Schering-Plough’s common shares are exchanged for, converted into or constitutes solely the right to receive cash, securities or other property; and
 
  •  more than 10% of such cash, securities or other property is:
 
(1) cash; or
 
(2) securities or other property that is not, or upon issuance will not be, shares of common equity or American depositary receipts in respect of common equity traded on the New York Stock Exchange, the Nasdaq Global Select Market or the Nasdaq Global Market.
 
These transactions are referred to as “make-whole acquisitions.”
 
Upon a make-whole acquisition, Schering-Plough will provide for the conversion of shares of 2007 Preferred Stock and pay a dividend make-whole amount (as defined below) by:
 
  •  permitting holders to submit their shares of 2007 Preferred Stock for conversion at any time during the period (the “make-whole acquisition conversion period”) beginning on the effective date of the make-whole acquisition (the “effective date”) and ending on the date that is 15 days after the effective date at the conversion rate (the “make-whole acquisition conversion rate”) specified in the table below; and
 
  •  paying converting holders the amount set forth under “—Dividend Make-Whole Payment.”
 
Schering-Plough will notify holders, at least 20 days prior to the anticipated effective date of such make-whole acquisition, of the anticipated effective date of such transaction. The notice will specify the anticipated effective date of the make-whole acquisition and the date by which each holder’s make-whole acquisition early conversion right must be exercised. The notice will set forth, among other things, the applicable make-whole conversion rate and the amount of the cash, securities and other consideration receivable by the holder upon conversion. To exercise the make-whole acquisition early conversion right, a holder must deliver to the conversion agent, on or before the close of business on the date specified in the notice, the certificate evidencing such holder’s shares of the 2007 Preferred Stock, if the 2007 Preferred Stock are held in certificated form. If a holder’s interest is a beneficial interest in a global certificate representing 2007 Preferred Stock, in order to convert a holder must comply with the requirements listed above under “—Conversion” and comply with the depositary’s procedures for converting a beneficial interest in a global security. The date that the


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holder complies with these requirements is referred to as the “make-whole conversion date.” If a holder does not elect to exercise the make-whole acquisition early conversion right, such holder’s shares of the 2007 Preferred Stock will remain outstanding and subject to conversion on the mandatory conversion date or any applicable optional conversion date or provisional conversion date.
 
Make-Whole Acquisition Conversion Rate.  The following table sets forth the make-whole acquisition conversion rate per share of 2007 Preferred Stock for each hypothetical share price and effective date set forth below:
 
                                                                                                                                 
    Share Price  
Effective Date
 
$10.00
   
$15.00
   
$20.00
   
$25.00
   
$27.50
   
$30.00
   
$33.69
   
$35.00
   
$40.00
   
$45.00
   
$50.00
   
$55.00
   
$60.00
   
$65.00
   
$75.00
   
$100.00
 
 
8/15/2007
    8.1797       7.9890       7.8360       7.7129       7.6145       7.4869       7.3271       7.2854       7.1930       7.1697       7.1672       7.1673       7.1676       7.1678       7.1681       7.1685  
8/15/2008
    8.7368       8.6200       8.4101       8.0711       7.8702       7.6758       7.4494       7.3929       7.2777       7.2515       7.2485       7.2488       7.2494       7.2500       7.2503       7.2523  
8/15/2009
    8.9569       8.9515       8.8654       8.5305       8.2348       7.9071       7.5392       7.4625       7.3432       7.3303       7.3302       7.3309       7.3315       7.3321       7.3329       7.3343  
8/13/2010
    9.0909       9.0909       9.0909       9.0909       9.0909       8.3333       7.4206       7.4206       7.4206       7.4206       7.4206       7.4206       7.4206       7.4206       7.4206       7.4206  
 
The make-whole acquisition conversion rate will be determined by reference to the table above and is based on the effective date and the price (the “share price”) paid per Schering-Plough common share in such transaction. If the holders of Schering-Plough common shares receive only cash in the make-whole acquisition, the share price shall be the cash amount paid per share. Otherwise the share price shall be the average of the closing price per share of Schering-Plough common shares on the 10 trading days up to but not including the effective date.
 
The share prices set forth in the first row of the table (i.e., the column headers) will be adjusted as of any date on which the fixed conversion rates of the 2007 Preferred Stock are adjusted. The adjusted stock prices will equal the share prices applicable immediately prior to such adjustment multiplied by a fraction, the numerator of which is the minimum conversion rate immediately prior to the adjustment giving rise to the share price adjustment and the denominator of which is the minimum conversion rate as so adjusted. Each of the conversion rates in the table will be subject to adjustment in the same manner as each fixed conversion rate as set forth under “—Anti-dilution Adjustments.”
 
The exact share price and effective dates may not be set forth on the table, in which case:
 
  •  if the share price is between two share price amounts on the table or the effective date is between two dates on the table, the make-whole acquisition conversion rate will be determined by straight-line interpolation between the make-whole acquisition conversion rates set forth for the higher and lower share price amounts and the two dates, as applicable, based on a 365-day year;
 
  •  if the share price is in excess of $100.00 per share (subject to adjustment as described above), then the make-whole acquisition conversion rate will be the minimum conversion rate, subject to adjustment; and
 
  •  if the share price is less than $10.00 per share (subject to adjustment as described above), then the make-whole acquisition conversion rate will be the maximum conversion rate, subject to adjustment.
 
Dividend Make-Whole Payment.  For any shares of the 2007 Preferred Stock that are converted during the make-whole conversion period Schering-Plough must pay you in cash, the sum of (which is referred to as the “dividend make-whole amount”):
 
  (i)  all accrued, cumulated and unpaid dividends on your shares of 2007 Preferred Stock that have not been declared for all dividend periods to, but excluding, the make-whole conversion date, plus
 
  (ii)  if the make-whole conversion date is prior to the record date, all accrued, cumulated and unpaid dividends on your shares of 2007 Preferred Stock that have been declared for all dividend periods to, but excluding, the make-whole conversion date, plus
 
  (iii)  the present value of all remaining future dividend payments on your shares of 2007 Preferred Stock through and including August 13, 2010 (excluding (a) any unpaid dividends accrued during the portion of the then-current dividend period through, but excluding, the


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  make-whole conversion date, and (b) if the make-whole conversion date is after the record date for any declared dividend, any of those dividends for the then-current dividend period) discounted at a rate equal to 6.75%,
 
in each case, out of legally available assets.
 
If the make-whole conversion date is after the record date for any declared dividends, you will be paid those dividends on the relevant dividend payment date, rather than the make-whole conversion date, if you were the holder of record on the record date for that dividend.
 
Schering-Plough’s obligation to deliver shares at the make-whole acquisition conversion rate and pay the acquisition dividend make-whole amount could be considered a penalty, in which case the enforceability thereof would be subject to general principles of reasonableness, as applied to such payments.
 
Conversion at Schering-Plough’s Option Upon Certain Reorganization Events.  In the event that a reorganization event (as described under “—Reorganization Events”) occurs in which (x) Schering-Plough is not the surviving entity, and (y) the shares of 2007 Preferred Stock cannot become shares of the surviving entity with, in respect of such surviving entity, the same rights, preferences and voting powers as the 2007 Preferred Stock, then immediately prior to the consummation of such reorganization event, Schering-Plough may, at its option, cause the conversion of all, but not less than all, of the shares of the 2007 Preferred Stock then outstanding into common shares (the “reorganization event conversion”); provided that Schering-Plough is legally able to pay in cash out of legally available funds the dividend make-whole amount referred to in the second succeeding sentence. The reorganization event conversion will occur immediately prior to the effective time of such reorganization event. As a result of the reorganization event conversion, each holder of 2007 Preferred Stock will receive (x) the consideration payable as if such reorganization event were a make-whole acquisition, with the “effective date” being the effective date of the reorganization event and the “share price” being the consideration payable per Schering-Plough common share in the reorganization event and (y) a dividend make-whole amount, calculated on the same basis as a dividend make-whole payment in the event of a make-whole acquisition. In order to exercise its option for a reorganization event conversion, Schering-Plough must provide written notice to the holders not later than 30 days prior to the anticipated effective date of the reorganization event and concurrently issue a press release and publish such notice on the Schering-Plough website. If Schering-Plough exercises this option for a reorganization event conversion, it will not need to comply with the procedures relating to a make-whole acquisition early conversion at the option of a holder as provided for in this “—Early Conversion and Dividend Make-Whole Payment Upon Certain Acquisitions.”
 
Reorganization Events
 
In the event of:
 
  (a)  any consolidation or merger of Schering-Plough with or into another person (other than a merger or consolidation in which Schering-Plough is the continuing corporation and in which the common shares outstanding immediately prior to the merger or consolidation are not exchanged for cash, securities or other property of Schering-Plough or another person);
 
  (b)  any sale, transfer, lease or conveyance to another person of all or substantially all of the property and assets of Schering-Plough;
 
  (c)  any reclassification of the common shares into securities, including securities other than the common shares; or
 
  (d)  any statutory exchange of securities of Schering-Plough with another person (other than in connection with a merger or acquisition)
 
each of which is referred to as a “reorganization event,” each share of the 2007 Preferred Stock outstanding immediately prior to such reorganization event would, without the consent of the holders of the 2007 Preferred Stock, become convertible into the kind of securities, cash and other property receivable in such reorganization event by a holder of the common shares that was not the


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counterparty to the reorganization event or an affiliate of such other party and did not exercise any rights of election with respect to the kind or amount of consideration to be received upon such reorganization event. Following such event, on the applicable conversion date, the applicable conversion rate then in effect will be applied to determine the amount and value of securities, cash or property a holder of one common share would have received in such transaction (without interest thereon and without any right to dividends or distributions thereon which have a record date prior to the date such shares of the 2007 Preferred Stock are actually converted). The applicable conversion rate shall be (a) the minimum conversion rate, in the case of an early conversion date or a provisional conversion date, (b) determined based upon the definition of the conversion rate in the case of the mandatory conversion date, determined using the applicable market value of the exchanged property, or (c) shall be the make-whole acquisition conversion rate as set out above in the case of a make-whole acquisition. Holders have the right to convert their shares of the 2007 Preferred Stock early in the event of certain acquisitions as described under “—Early Conversion and Dividend Make-Whole Payment Upon Certain Acquisitions.” In connection with certain reorganization events, holders of the 2007 Preferred Stock may have the right to vote as a class, see “—Voting Rights.”
 
Anti-Dilution Adjustments
 
Each fixed conversion rate and the number of common shares to be delivered upon conversion will be adjusted in the following circumstances:
 
(1) Stock Dividend Distributions. If Schering-Plough pays dividends or other distributions on the common shares in common shares.
 
(2) Subdivisions, Splits and Combination of the Common Shares. If Schering-Plough subdivides, splits or combines the common shares.
 
(3) Issuance of Stock Purchase Rights. If Schering-Plough issues to all holders of the common shares rights or warrants (other than rights or warrants issued pursuant to a dividend reinvestment plan or share purchase plan or other similar plans) entitling them, for a period of up to 45 days from the date of issuance of such rights or warrants, to subscribe for or purchase the common shares at less than the “current market price,” as defined below, of the common shares on the date fixed for the determination of shareholders entitled to receive such rights or warrants.
 
(4) Debt or Asset Distributions. If Schering-Plough distributes to all holders of its common shares evidences of indebtedness, shares of capital stock, securities, cash or other assets (excluding any dividend or distribution covered by adjustment provisions (1) or (2) above, any rights or warrants referred to in (3) above, any dividend or distribution paid exclusively in cash, any consideration payable in connection with a tender or exchange offer made by Schering-Plough or any of its subsidiaries, and any dividend of shares of capital stock of any class or series, or similar equity interests, of or relating to a subsidiary or other business unit in the case of certain spin-off transactions as described below), then each fixed conversion rate in effect immediately prior to the close of business on the date fixed for the determination of shareholders entitled to receive such distribution will be multiplied by the following fraction:
 
SPo
SPo − FMV
 
Where,
 
     
     
SPo=
  the current market price per common share on the date fixed for distribution.
     
FMV=
  the fair market value of the portion of the distribution applicable to one common share as determined by Schering-Plough’s board of directors.
 
In a “spin-off,” where Schering-Plough makes a distribution to all holders of its common shares consisting of capital stock of, or similar equity interests in, or relating to a subsidiary or other business unit of Schering-Plough, each fixed conversion rate will be adjusted on the fifteenth trading day after the “ex-date” for the distribution by multiplying the conversion rate in effect immediately prior to the


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close of business on the date fixed for the determination of shareholders entitled to receive such distribution by the following fraction:
 
MPo + MPs
MPo
 
Where,
 
     
     
MPo=
  the current market price per common share on the fifteenth trading day after the “ex-date” for the distribution.
     
MPs=
  the current market price of the shares representing the portion of distribution applicable to one common share on the fifteenth trading day after the “ex-date” for the distribution.
 
(5) Cash Distributions. If Schering-Plough makes a distribution consisting exclusively of cash to all holders of the common shares, excluding (a) any cash dividend on the common shares to the extent that the aggregate cash dividend per share of the common shares does not exceed $.065 in any fiscal quarter (the “dividend threshold amount”), (b) any cash that is distributed in a reorganization event (as described below) or as part of a distribution referred to in adjustment provision (4) above, (c) any dividend or distribution in connection with the liquidation, dissolution or winding up of Schering-Plough, and (d) any consideration payable in connection with a tender or exchange offer made by Schering-Plough or any of its subsidiaries, then in each event, the fixed conversion rate in effect immediately prior to the close of business on the date fixed for determination of the holders of the common shares entitled to receive such distribution will be multiplied by the following fraction:
 
SPo
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Where,
 
     
     
SPo=
  the current market price per common share on the “ex-date.”
     
DIV=
  the amount per common share of the dividend or distribution.
 
If an adjustment is required to be made as set forth in this clause as a result of a distribution (1) that is a regularly scheduled quarterly dividend, such adjustment would be based on the amount by which such dividend exceeds the dividend threshold amount or (2) that is not a regularly scheduled quarterly dividend, such adjustment would be based on the full amount of such distribution.
 
The dividend threshold amount is subject to adjustment on an inversely proportional basis whenever fixed conversion rates are adjusted, provided that no adjustment will be made to the dividend threshold amount for any adjustment made to the fixed conversion rates pursuant to this adjustment provision (5) or adjustment provisions (3), (4), (6), (7) or (8).
 
(6) Self Tender Offers and Exchange Offers. If Schering-Plough or any of its subsidiaries successfully complete a tender or exchange offer for Schering-Plough common shares where the cash and the value of any other consideration included in the payment per share of the common shares exceeds the current market price per share of the common shares on the seventh trading day after the expiration of the tender or exchange offer, immediately prior to the opening of business on the eighth trading day after the expiration date of the tender or exchange offer, then each fixed conversion rate in effect on the eighth trading day after the expiration of the tender or exchange offer will be divided by the following fraction:
 
(SPo x OSo) − AC
SPo x (OSo − TS)
 
Where,
 
     
     
SPo=
  the current market price per common share on the seventh trading day after the expiration of the tender or exchange offer.
     
OSo=
  the number of common shares outstanding at the expiration of the tender or exchange offer, including any shares validly tendered and not withdrawn.
     
AC=
  the aggregate cash and fair market value of the other consideration payable in the tender or exchange offer, as determined by Schering-Plough’s board of directors.
     
TS=
  the number of common shares validly tendered and not withdrawn at the expiration of the tender or exchange offer.
 
(7) Third Party Tender Offers and Exchange Offers. If someone other than Schering-Plough or one of its subsidiaries makes a payment in respect of a tender offer or exchange offer in which, as of the expiration time of the offer, the board of directors is not recommending rejection of the offer, then each fixed conversion rate in effect immediately prior to the close of business on the date of the expiration time of the offer will be multiplied by the following fraction:
 
FMV + (OS’ x SPo)
OSo x SPo


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Where,
 
     
     
FMV=
  the fair market value of the aggregate consideration payable to all holders of the common shares based on the acceptance (up to any maximum specified in the terms of the tender or exchange offer) of all shares validly tendered or exchanged and not withdrawn as of the expiration of the offer, as determined by Schering-Plough’s board of directors.
     
OS’=
  the number of common shares outstanding immediately prior to the expiration of the offer, less all shares validly tendered or exchanged and not withdrawn as of the expiration of the offer, as determined by Schering-Plough’s board of directors.
     
SPo=
  the current market price per common share on the seventh trading day after the expiration of the tender or exchange offer.
     
OSo=
  the number of common shares outstanding immediately prior to the expiration of the offer, including any tendered or exchanged shares.
 
The adjustment referred to in this adjustment provision (7) will only be made if:
 
•  the tender offer or exchange offer is for an amount that increases the offeror’s ownership of common shares to more than 30% of the total common shares outstanding; and
 
•  the cash and fair market value of any other consideration included in the payment per common share exceeds the current market price per common share on the seventh trading day next succeeding the last date on which tenders or exchanges may be made pursuant to the tender or exchange offer.
 
However, the adjustment referred to in this clause will generally not be made if, as of the closing of the offer, the offering documents disclose a plan or an intention to cause Schering-Plough to engage in a consolidation or merger or a sale of all or substantially all of its assets.
 
(8) Rights Plans.  To the extent that Schering-Plough has a rights plan in effect with respect to the common shares on any conversion date, upon conversion of any shares of the 2007 Preferred Stock, you will receive, in addition to the common shares, the rights under the rights plan, unless, prior to such conversion date, the rights have separated from the common shares, in which case each fixed conversion rate will be adjusted at the time of separation as if Schering-Plough made a distribution to all holders of the common shares as described in adjustment provision (4) above, subject to readjustment in the event of the expiration, termination or redemption of such rights.
 
General
 
In addition, Schering-Plough may make such increases in each fixed conversion rate as it deems advisable in order to avoid or diminish any income tax to holders of the common shares resulting from any dividend or distribution of the shares (or issuance of rights or warrants to acquire the shares) or from any event treated as such for income tax purposes or for any other reason. Schering-Plough may only make such a discretionary adjustment if it makes the same proportionate adjustment to each fixed conversion rate.
 
In the event of a taxable distribution to holders of the common shares that results in an adjustment of each fixed conversion rate or an increase in each fixed conversion rate in the discretion of Schering-Plough, holders of the 2007 Preferred Stock may, in certain circumstances, be deemed to have received a distribution subject to U.S. federal income tax as a dividend. In addition, non-U.S. holders of the 2007 Preferred Stock may, in certain circumstances, be deemed to have received a distribution subject to U.S. federal withholding tax requirements. See “Certain United States Federal Income Tax Consequences—U.S. Holders—Adjustment of Conversion Rate” and “Certain United States Federal Income Tax Consequences—Non-U.S. Holders—Distributions” in this prospectus supplement.
 
Adjustments to the conversion rate will be calculated to the nearest 1/10,000th of a share. Prior to August 13, 2010, no adjustment in the conversion rate will be required unless the adjustment would


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require an increase or decrease of at least one percent in the conversion rate. If any adjustment is not required to be made because it would not change the conversion rate by at least one percent, then the adjustment will be carried forward and taken into account in any subsequent adjustment; provided that on the earlier of August 13, 2010 and the date Schering-Plough consummates an acquisition, adjustments to the conversion rate will be made with respect to any such adjustment carried forward and which has not been taken into account before such date.
 
No adjustment to the conversion rate need be made if holders may participate in the transaction that would otherwise give rise to an adjustment, so long as the distributed assets or securities the holders would receive upon conversion of the 2007 Preferred Stock, if convertible, exchangeable, or exercisable, are convertible, exchangeable or exercisable, as applicable, without any loss of rights or privileges for a period of at least 45 days following conversion of the 2007 Preferred Stock.
 
The applicable conversion rate will not be adjusted:
 
(a) upon the issuance of any common shares pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on the securities and the investment of additional optional amounts in common shares under any plan;
 
(b) upon the issuance of any common shares or rights or warrants to purchase those shares pursuant to any present or future employee, director or consultant benefit plan or program of or assumed by Schering-Plough or any of its subsidiaries;
 
(c) upon the issuance of any common shares pursuant to any option, warrant, right or exercisable, exchangeable or convertible security outstanding as of the date the 2007 Preferred Stock were first issued;
 
(d) for a change in the par value or no par value of the common shares; or
 
(e) for accrued, cumulated and unpaid dividends.
 
Schering-Plough will be required, as soon as practicable after the conversion rate is adjusted, to provide or cause to be provided written notice of the adjustment to the holders of shares of 2007 Preferred Stock. Schering-Plough will also be required to deliver a statement setting forth in reasonable detail the method by which the adjustment to each fixed conversion rate or the acquisition conversion rate, as applicable, was determined and setting forth each revised fixed conversion rate or the acquisition conversion rate, as applicable.
 
If an adjustment is made to the fixed conversion rates, an adjustment also will generally be made to the threshold appreciation price and the initial price solely for the purposes of determining which clauses of the definition of the conversion rate will apply on the conversion date.
 
The “current market price” on any date is the average of the daily closing price per share of the common shares or other securities on each of the five consecutive trading days preceding the earlier of the day before the date in question and the day before the “ex-date” with respect to the issuance or distribution requiring such computation. The term “ex-date,” when used with respect to any such issuance or distribution, means the first date on which the common shares or other securities trade without the right to receive such issuance or distribution. For the purposes of determining the adjustment to the fixed conversion rate for the purposes of adjustment provision (4) in the event of a spin-off, the “current market price” per share of the common shares or other securities means the average of the closing prices over the first ten trading days commencing on and including the fifth trading day following the “ex-date” for such distribution.
 
Fractional Shares
 
No fractional common shares will be issued to holders of the 2007 Preferred Stock upon conversion. In lieu of any fractional common share otherwise issuable in respect of the aggregate


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number of shares of the 2007 Preferred Stock of any holder that are converted, that holder will be entitled to receive an amount in cash (computed to the nearest cent) equal to the same fraction of:
 
  •  in the case of mandatory conversion, an early conversion at the option of Schering-Plough or a make-whole acquisition early conversion, the average of the daily closing price per common share for each of the five consecutive trading days preceding the trading day immediately preceding the date of conversion; or
 
  •  in the case of each early conversion at the option of a holder, the closing price per common share determined as of the second trading day immediately preceding the effective date of conversion.
 
If more than one share of the 2007 Preferred Stock is surrendered for conversion at one time by or for the same holder, the number of full common shares issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of the 2007 Preferred Stock so surrendered.
 
Common Share Rights
 
Reference is made to the “Description of Capital Stock—Common Shares” in the accompanying prospectus for a description of the rights of holders of common shares to be delivered upon conversion of the 2007 Preferred Stock.
 
Liquidation Rights
 
In the event of a voluntary or involuntary liquidation, dissolution or winding up, subject to the rights of holders of any shares of the capital stock then outstanding ranking senior to or pari passu with the 2007 Preferred Stock in respect of distributions upon Schering-Plough’s liquidation, dissolution or winding up, the holders of the 2007 Preferred Stock then outstanding will be entitled to receive, out of the net assets legally available for distribution to shareholders, before any distribution or payment is made on any shares of the capital stock ranking junior as to the distribution of assets upon Schering-Plough’s voluntary or involuntary liquidation, dissolution or the winding up of its affairs, a liquidating distribution in the amount of $250 per share, subject to adjustment for stock splits, combinations, reclassifications or other similar events involving the 2007 Preferred Stock, plus an amount equal to the sum of all accrued, cumulated and unpaid dividends, whether or not declared, for the portion of the then-current dividend period until the payment date and all prior dividend periods, and such holders shall be deemed to be the holders of record for such dividend periods or portions thereof.
 
For the purpose of the immediately preceding paragraph, none of the following will constitute or be deemed to constitute a voluntary or involuntary liquidation, dissolution or winding up of the affairs:
 
  •  the sale, transfer, lease or conveyance of all or substantially all of the property or business;
 
  •  the consolidation or merger of Schering-Plough Corporation with or into any other person; or
 
  •  the consolidation or merger of any other person with or into Schering-Plough Corporation.
 
In the event the Schering-Plough assets available for distribution to the holders of the preferred shares, including the 2007 Preferred Stock, upon any Schering-Plough liquidation, dissolution or winding up, whether voluntary or involuntary, are insufficient to pay in full all amounts to which such holders are entitled, the holders of the 2007 Preferred Stock and the holders of the securities ranking pari passu with the 2007 Preferred Stock as to distribution of Schering-Plough assets upon such liquidation, dissolution or winding up, shall share ratably in any distribution of the assets based upon the proportion of the full respective liquidation preference of such series to the aggregate liquidation preference for all outstanding shares for each series.
 
After the payment to the holders of the 2007 Preferred Stock of the full preferential amounts provided for above, the holders of the 2007 Preferred Stock will have no right or claim to any of the remaining assets.


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Voting Rights
 
The holders of the 2007 Preferred Stock are not entitled to any voting rights, except as required by applicable New Jersey law, the certificate of incorporation and as described below.
 
Unless the approval of a greater number of shares of the 2007 Preferred Stock is required by law, Schering-Plough will not, without the approval of the holders of at least two-thirds of the shares of the 2007 Preferred Stock then outstanding voting separately as a single class, amend, alter or repeal any provisions of the certificate of incorporation by way of merger, consolidation, combination, reclassification or otherwise, so as to affect adversely any right, preference or voting power of the holders of the 2007 Preferred Stock; provided that any amendment of the provisions of the certificate of incorporation so as to issue, authorize or increase the authorized amount of, or issue or authorize any obligation or security convertible into or evidencing a right to purchase, any Parity Securities or Junior Securities shall be deemed not to affect adversely the right, preference or voting power of the holders of the 2007 Preferred Stock. Notwithstanding anything in the foregoing to the contrary, any amendment, alteration or repeal of any of the provisions of Schering-Plough’s certificate of incorporation occurring in connection with any merger or consolidation of Schering-Plough of the type described in clause (a) of the definition of reorganization event (as defined above) or any statutory exchange of Schering-Plough’s securities with another person (other than in connection with a merger or acquisition) of the type described in clause (d) of the definition of reorganization event shall be deemed not to adversely affect the rights, preferences or voting power of the holders of the 2007 Preferred Stock; provided that, subject to a holder’s make-whole acquisition early conversion right, in the event that Schering-Plough does not survive the transaction, the shares of the 2007 Preferred Stock will become shares of the successor person, having in respect of such successor person the same rights, preferences or voting powers of the holders of the 2007 Preferred Stock immediately prior to the consummation of such merger, consolidation, or statutory exchange and shall be convertible into the kind and amount of net cash, securities and other property as determined in accordance with the provisions governing reorganization events as described above; provided further that following any such merger, consolidation or statutory exchange, such successor person shall succeed to and be substituted for Schering-Plough with respect to, and may exercise all of Schering-Plough’s rights and powers under, the 2007 Preferred Stock.
 
In addition, Schering-Plough will not, without the approval of the holders of at least two-thirds of the shares of the 2007 Preferred Stock and any class or series of Parity Securities then outstanding, voting together as a single class:
 
  •  reclassify any of Schering-Plough’s authorized shares into any shares of any class, or any obligation or security convertible into or evidencing a right to purchase such shares, ranking senior to the 2007 Preferred Stock as to payment of dividends or distribution of assets upon the dissolution, liquidation or winding up; or
 
  •  issue, authorize or increase the authorized amount of, or issue or authorize any obligation or security convertible into or evidencing a right to purchase any stock of any class or series ranking senior to the 2007 Preferred Stock as to payment of dividends or distribution of assets upon Schering-Plough’s dissolution, liquidation or winding up, provided that Schering-Plough may issue, authorize or increase the authorized amount of, or issue or authorize any obligation or security convertible into or evidencing a right to purchase, any shares of capital stock ranking on a parity with or junior to the 2007 Preferred Stock as to payment of dividends or distribution of assets upon Schering-Plough’s dissolution, liquidation or winding up without the vote of the holders of the 2007 Preferred Stock.
 
If and whenever an amount equal to six full quarterly dividends, whether or not consecutive, payable on any class or series of Schering-Plough’s preferred shares, including the 2007 Preferred Stock, are not paid or otherwise declared and set aside for payment, the holders of Schering-Plough’s preferred shares, including the 2007 Preferred Stock, voting separately as a single class shall be entitled to increase the authorized number of directors on Schering-Plough’s board of directors by two


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and elect such two additional directors to the board of directors at the next annual meeting or special meeting of the shareholders. Not later than 40 days after the entitlement arises the board of directors shall convene a special meeting of the holders of the preferred shares for the purpose of electing the additional two directors. If Schering-Plough’s board of directors fails to convene such meeting within such 40-day period, then holders of 10% of Schering-Plough’s outstanding preferred shares, including the 2007 Preferred Stock, taken as a single class, may call the meeting. If all accrued, cumulated and unpaid dividends in default on Schering-Plough’s preferred shares, including the 2007 Preferred Stock, have been paid in full or declared and set apart for payment, the holders of the 2007 Preferred Stock and the other preferred shares will no longer have the right to vote on directors and the term of office of each director so elected will terminate at the next annual meeting of shareholders and the authorized number of Schering-Plough’s directors will, without further action, be reduced accordingly.
 
In any case where the holders of the 2007 Preferred Stock are entitled to vote as a class, each holder of the 2007 Preferred Stock will be entitled to one vote for each share of the 2007 Preferred Stock. In any case where the holders of the 2007 Preferred Stock are entitled to vote as a class with holders of Parity Securities or other classes or series of preferred shares, each class or series shall have a number of votes proportionate to the aggregate liquidation preference of its outstanding shares.
 
In addition to the requirements set forth above, under New Jersey law, holders of the 2007 Preferred Stock generally have the right to vote as a class upon any proposed amendment to Schering-Plough’s certificate of incorporation that would adversely affect or subordinate their rights or preferences as holders of the 2007 Preferred Stock. Such an amendment generally would require the affirmative vote of a majority of the votes cast by the holders of the shares of capital stock entitled to vote thereon, and, if any class or series of capital stock is entitled to vote thereon as a class, the affirmative vote of a majority of the votes cast in each class vote.
 
Miscellaneous
 
Schering-Plough will at all times reserve and keep available out of the authorized and unissued common shares or shares held in the treasury by Schering-Plough, solely for issuance upon the conversion of the 2007 Preferred Stock, that number of common shares as shall from time to time be issuable upon the conversion of all the 2007 Preferred Stock then outstanding. Any shares of the 2007 Preferred Stock converted into the common shares or otherwise reacquired by Schering-Plough shall resume the status of authorized and unissued preferred shares, undesignated as to series, and shall be available for subsequent issuance.
 
Transfer Agent, Registrar, Paying Agent and Conversion Agent
 
The Bank of New York will act as transfer agent, registrar and paying agent for the payment of dividends for the 2007 Preferred Stock and the conversion agent for the conversion of the 2007 Preferred Stock.
 
Title
 
Schering-Plough and the transfer agent, registrar, paying agent and conversion agent may treat the registered holder of the 2007 Preferred Stock as the absolute owner of the 2007 Preferred Stock for the purpose of making payment and settling the related conversions and for all other purposes.
 
Book-Entry, Delivery and Form
 
The Depository Trust Company will act as securities depositary for the 2007 Preferred Stock. The 2007 Preferred Stock will be issued only as fully registered securities registered in the name of Cede & Co., the depositary’s nominee. One or more fully registered global security certificates, representing the total aggregate number of shares of the 2007 Preferred Stock, will be issued and


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deposited with or on behalf of the depositary and will bear a legend regarding the restrictions on exchanges and registration of transfer referred to below.
 
The laws of some jurisdictions require that some purchasers of securities take physical delivery of securities in definitive form. Those laws may impair the ability to transfer beneficial interests in the 2007 Preferred Stock so long as the 2007 Preferred Stock is represented by global security certificates.
 
The depositary is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934.
 
The depositary holds securities that its participants deposit with the depositary. The depositary also facilitates the settlement among participants of securities transactions, including transfers and pledges, in deposited securities through electronic computerized book-entry changes in participants’ accounts, thus eliminating the need for physical movement of securities certificates. Direct participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. The depositary is owned by a number of its direct participants and by the New York Stock Exchange, the American Stock Exchange, Inc. and the National Association of Securities Dealers, Inc., collectively referred to as participants. Access to the depositary system is also available to others, including securities brokers and dealers, bank and trust companies that clear transactions through or maintain a direct or indirect custodial relationship with a direct participant, collectively referred to as indirect participants. The rules applicable to the depositary and its participants are on file with the SEC.
 
Except as otherwise required by applicable law, no shares of the 2007 Preferred Stock represented by global security certificates may be exchanged in whole or in part for the 2007 Preferred Stock registered, and no transfer of global security certificates will be made in whole or in part for the 2007 Preferred Stock registered, and no transfer of global security certificates in whole or in part may be registered, in the name of any person other than the depositary or any nominee of the depositary, unless (i) the depositary has notified Schering-Plough that it is unwilling or unable to continue as depositary for the global security certificates and Schering-Plough does not appoint a qualified replacement within 90 days; (ii) the depositary has ceased to be qualified to act as such and Schering-Plough does not appoint a qualified replacement within 90 days; or (iii) Schering-Plough decides to discontinue the use of book-entry transfer through the depositary (or any successor depositary). All of the 2007 Preferred Stock represented by one or more global security certificates or any portion of them will be registered in those names as the depositary may direct.
 
As long as the depositary or its nominee is the registered owner of the global security certificates, the depositary or that nominee will be considered the sole owner and holder of the global security certificates and all of the 2007 Preferred Stock represented by those certificates for all purposes under the 2007 Preferred Stock. Notwithstanding the foregoing, nothing herein shall prevent Schering-Plough or any of its agents or the registrar or any of its agents from giving effect to any written certification, proxy or other authorization furnished by the depositary or impair, as between the depositary and its members or participants, the operation of customary practices of the depositary governing the exercise of the rights of a holder of a beneficial interest in any global security certificates. The depositary or any nominee of the depositary may grant proxies or otherwise authorize any person to take any action that the depositary or such nominee is entitled to take pursuant to the 2007 Preferred Stock, the certificate of amendment of the certificate of incorporation, which contains the terms of the 2007 Preferred Stock, or the certificate of incorporation.
 
Except in the limited circumstances referred to above or as otherwise required by applicable law, owners of beneficial interests in global security certificates will not be entitled to have the global security certificates or the 2007 Preferred Stock represented by those certificates registered in their


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names, will not receive or be entitled to receive physical delivery of the 2007 Preferred Stock certificates in exchange and will not be considered to be owners or holders of the global security certificates or any of the 2007 Preferred Stock represented by those certificates for any purpose under the 2007 Preferred Stock. All payments on the 2007 Preferred Stock represented by the global security certificates and all related transfers and deliveries of common shares will be made to the depositary or its nominee as their holder.
 
Ownership of beneficial interests in the global security certificates will be limited to participants or persons that may hold beneficial interests through institutions that have accounts with the depositary or its nominee, including Euroclear Bank S.A./N.V., as the operator of the Euroclear System, and Clearstream Banking, société anonyme. Ownership of beneficial interests in global security certificates will be shown only on, and the transfer of those ownership interests will be effected only through, records maintained by the depositary or its nominee with respect to participants’ interests or by the participant with respect to interests of persons held by the participants on their behalf.
 
Procedures for conversion on the conversion date or upon early conversion will be governed by arrangements among the depositary, participants and persons that may hold beneficial interests through participants designed to permit the settlement without the physical movement of certificates. Payments, transfers, deliveries, exchanges and other matters relating to beneficial interests in global security certificates may be subject to various policies and procedures adopted by the depositary from time to time.
 
Neither Schering-Plough nor any of the agents will have any responsibility or liability for any aspect of the depositary’s or any participant’s records relating to, or for payments made on account of, beneficial interests in global security certificates, or for maintaining, supervising or reviewing any of the depositary’s records or any participant’s records relating to those beneficial ownership interests.
 
The information in this section concerning the depositary and its book-entry system has been obtained from sources that Schering-Plough believes to be reliable, but Schering-Plough does not take responsibility for its accuracy.
 
Replacement of Mandatory Convertible Preferred Stock Certificates
 
If physical certificates are issued, Schering-Plough will replace any mutilated certificate at your expense upon surrender of that certificate to the transfer agent. Schering-Plough will replace certificates that become destroyed, stolen or lost at your expense upon delivery to Schering-Plough and the transfer agent of satisfactory evidence that the certificate has been destroyed, stolen or lost, together with any indemnity that may be required by the transfer agent and Schering-Plough.
 
However, Schering-Plough is not required to issue any certificates representing the 2007 Preferred Stock on or after the applicable conversion date. In place of the delivery of a replacement certificate following the applicable conversion date, the transfer agent, upon delivery of the evidence and indemnity described above, will deliver the common shares pursuant to the terms of the 2007 Preferred Stock formerly evidenced by the certificate.


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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
 
The following is a summary of certain U.S. federal income tax consequences relevant to the purchase, ownership, conversion and disposition of the 2007 Preferred Stock and common shares received in respect thereof. The following summary is based upon current provisions of the Internal Revenue Code of 1986, as amended, referred to as the Code, Treasury Regulations and judicial and administrative authority, all of which are subject to change, possibly with retroactive effect. State, local and foreign tax consequences are not summarized, nor are tax consequences to special classes of investors including, but not limited to, tax-exempt organizations, insurance companies, banks or other financial institutions, partnerships or other entities classified as partnerships for U.S. federal income tax purposes, dealers in securities, persons liable for the alternative minimum tax, traders in securities that elect to use a mark-to-market method of accounting for their securities holdings, and persons that will hold the 2007 Preferred Stock or common shares as a position in a hedging transaction, “straddle,” “conversion transaction” or other risk reduction transaction. Tax consequences may vary depending upon the particular status of an investor. The summary is limited to taxpayers who will hold the 2007 Preferred Stock and the common shares received in respect thereof as “capital assets” (generally, held for investment) and who purchase the 2007 Preferred Stock in the initial offering at the initial offering price. Each potential investor should consult with its own tax adviser as to the federal, state, local, foreign and any other tax consequences of the purchase, ownership, conversion, and disposition of the 2007 Preferred Stock and common shares received in respect thereof.
 
If an entity treated as a partnership for U.S. federal income tax purposes holds the 2007 Preferred Stock or common shares received in respect thereof, the U.S. federal income tax treatment of the partnership and its partners will generally depend on the status of the partners and the activities of the partnership and its partners. A partner in a partnership holding the 2007 Preferred Stock or common shares received in respect thereof should consult its own tax advisor with regard to the U.S. federal income tax treatment of an investment therein.
 
U.S. Holders
 
The discussion in this section is addressed to a holder of the 2007 Preferred Stock and common shares received in respect thereof that is a “U.S. holder” for federal income tax purposes. You are a U.S. holder if you are a beneficial owner of the 2007 Preferred Stock or common shares received in respect thereof that is for U.S. federal income tax purposes (i) a citizen or individual resident of the United States; (ii) a corporation created or organized in the United States or under the laws of the United States or of any State (or the District of Columbia); (iii) an estate whose income is subject to United States federal income tax regardless of its source; or (iv) a trust if (x) a United States court can exercise primary supervision over the trust’s administration and one or more United States persons are authorized to control all substantial decisions of the trust or (y) the trust has validly elected to be treated as a U.S. domestic trust.
 
Distributions
 
Distributions with respect to the 2007 Preferred Stock or the common shares (other than certain stock distributions) will be taxable as dividend income when paid to the extent of Schering-Plough’s current or accumulated earnings and profits as determined for U.S. federal income tax purposes. To the extent that the amount of a distribution with respect to the 2007 Preferred Stock or common shares exceeds Schering-Plough’s current and accumulated earnings and profits, such distribution will be treated first as a tax-free return of capital to the extent of the U.S. holder’s adjusted tax basis in the 2007 Preferred Stock or common shares, as the case may be, and thereafter as capital gain.
 
Investors should be aware that although Schering-Plough believes that the 2007 Preferred Stock should not constitute “disqualified preferred stock” within the meaning of Section 1059(f) of the Code, the matter is not free from doubt. If the 2007 Preferred Stock were to be characterized as “disqualified preferred stock,” then dividends paid in respect of the stock would constitute “extraordinary dividends”


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with the result that: (i) U.S. holders that are corporations would be required to (x) reduce their stock basis in the 2007 Preferred Stock (but not below zero) by the portion of any dividends received by them in respect of the 2007 Preferred Stock that are not taxed because of the dividends received deduction and (y) treat the non-taxed portion of such dividends as gain from the sale or exchange of the 2007 Preferred Stock for the taxable year in which such dividend is received (to the extent that the non-taxed portion of such dividend exceeds such U.S. holder’s basis); and (ii) U.S. holders that are individuals would be required to treat any losses on the sale of 2007 Preferred Stock as long-term capital losses to the extent of dividends received by them in respect of the 2007 Preferred Stock that qualify for the reduced 15% tax rate (see below). Similarly, if a dividend were to be paid in respect of the 2007 Preferred Stock that is in excess of 5% of a U.S. holder’s adjusted tax basis in the 2007 Preferred Stock (as could occur if accumulated and unpaid dividends were allowed to accumulate to a sufficiently large amount), such a dividend would also constitute an “extraordinary dividend” with the results described in clauses (i) and (ii) above.
 
Distributions constituting dividend income received by an individual in respect of the 2007 Preferred Stock or common shares before January 1, 2011 are generally subject to taxation at a maximum rate of 15%. Distributions on the 2007 Preferred Stock or common shares constituting dividend income paid to holders that are U.S. corporations will generally qualify for the dividends received deduction. A U.S. holder should consult its own tax advisor regarding the availability of the reduced dividend tax rate and the dividends received deduction in light of its particular circumstances.
 
Dispositions
 
A U.S. holder will generally recognize capital gain or loss on a sale or exchange of the 2007 Preferred Stock or the common shares equal to the difference between the amount realized upon the sale or exchange and the holder’s adjusted tax basis in the shares sold or exchanged. Such capital gain or loss will be long-term capital gain or loss if the holder’s holding period for the shares sold or exchanged is more than one year. Long-term capital gains of noncorporate taxpayers are generally taxed at a lower maximum marginal tax rate than the maximum marginal tax rate applicable to ordinary income. The deductibility of net capital losses by individuals and corporations is subject to limitations.
 
Conversion Into Common Shares
 
As a general rule, a U.S. holder will not recognize any gain or loss in respect of the receipt of common shares upon the conversion of the 2007 Preferred Stock. The adjusted tax basis of common shares received on conversion will equal the adjusted tax basis of the 2007 Preferred Stock converted (reduced by the portion of adjusted tax basis allocated to any fractional common shares exchanged for cash and subject to downward adjustment, if any, described below), and the holding period of such common shares received on conversion will generally include the period during which the converted 2007 Preferred Stock was held prior to conversion.
 
Cash received in lieu of a fractional common share will generally be treated as a payment in a taxable exchange for such fractional common share, and gain or loss will be recognized on the receipt of cash in an amount equal to the difference between the amount of cash received and the amount of adjusted tax basis allocable to the fractional common share.
 
In the event Schering-Plough exercises the option to cause an early conversion of the 2007 Preferred Stock, and, in respect of such conversion, pays a U.S. holder cash in an amount equal to the net present value of future dividends (see “Description of Mandatory Convertible Preferred Stock—Provisional Conversion at Schering-Plough’s Option”), such cash should be taxable (to the extent of gain realized by the U.S. holder) either as a dividend, in the event Schering-Plough has sufficient accumulated earnings and profits at the time of such conversion, or otherwise as capital gain. For this purpose, a U.S. holder realizes gain on the conversion equal to the excess, if any, of the sum of the fair market value of the common shares and the cash received upon early conversion over


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the U.S. holder’s adjusted tax basis in the 2007 Preferred Stock immediately prior to conversion. To the extent the amount of cash that the U.S. holder receives exceeds the gain realized, the excess amount will not be taxable to such U.S. holder but will reduce its adjusted tax basis in the common shares. A U.S. holder will not be permitted to recognize any loss realized by it upon conversion of 2007 Preferred Stock into common shares.
 
U.S. holders should be aware that the tax treatment described above in respect of the payments made in respect of future dividends is not entirely certain and may be challenged by the Internal Revenue Service, or the “IRS,” on grounds that the cash received attributable to future dividends represents a taxable dividend to the extent Schering-Plough has earnings and profits at the time of conversion. Under this characterization, the U.S. holder would be subject to tax on cash received on account of future dividends even if it realized a loss on its early conversion of the 2007 Preferred Stock into the common shares.
 
In the event a U.S. holder’s 2007 Preferred Stock is converted pursuant to an election by the holder in the case of certain acquisitions, or is converted pursuant to certain other transactions including the consolidation or merger into another person, the tax treatment of such a conversion will depend upon the facts underlying the particular transaction triggering such a conversion. Each U.S. holder should consult its tax advisor to determine the specific tax treatment of a conversion under such circumstances.
 
Adjustment of Conversion Rate
 
A U.S. holder’s right to receive a greater number of the common shares upon conversion based on the conversion rate formula linked to the value of the common shares could be viewed as a constructive distribution of stock to such U.S. holder under section 305 of the Code, which, if so treated, would be subject to tax as a dividend to the extent of Schering-Plough’s current or accumulated earnings and profits. While the matter is not free from doubt due to lack of authority directly on point, Schering-Plough intends to take the position that such a right on the part of the holder of the 2007 Preferred Stock to receive a greater number of common shares, as described in this paragraph, should not result in a constructive distribution of stock.
 
Under certain circumstances, adjustments (or failure to make adjustments) to the conversion rate of the 2007 Preferred Stock may result in constructive distributions under Section 305(c) of the Code to the holders of the 2007 Preferred Stock or holders of the common shares includable in income in the manner described under “Distributions,” above. Thus, under certain circumstances, U.S. holders may recognize income in the event of a constructive distribution even though they may not receive any cash or property.
 
Information Reporting and Backup Withholding on U.S. Holders
 
Certain U.S. holders may be subject to backup withholding with respect to the payment of dividends on the 2007 Preferred Stock or common shares and to certain payments of proceeds on the sale or redemption of the 2007 Preferred Stock unless such U.S. holders provide proof of an applicable exemption or a correct taxpayer identification number, and otherwise comply with applicable requirements of the backup withholding rules.
 
Any amount withheld under the backup withholding rules from a payment to a holder is allowable as a credit against such holder’s U.S. federal income tax, which may entitle the holder to a refund, provided that the holder timely provides the required information to the IRS. Moreover, certain penalties may be imposed by the IRS on a holder who is required to furnish information but does not do so in the proper manner. Holders are urged to consult their own tax advisors regarding the application of backup withholding in their particular circumstances and the availability of and procedure for obtaining an exemption from backup withholding under current Treasury Regulations.


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Non-U.S. Holders
 
The discussion in this section is addressed to holders of the 2007 Preferred Stock and common shares received in respect thereof that are “non-U.S. holders.” You are a non-U.S. holder if you are not a U.S. holder or an entity treated as a partnership for U.S. federal income tax purposes.
 
Distributions
 
Generally, distributions treated as dividends as described above (including any constructive distributions taxable as dividends and any cash paid upon an early conversion that is treated as a dividend) paid to a non-U.S. holder with respect to the 2007 Preferred Stock or the common shares will be subject to a 30% U.S. withholding tax, or such lower rate as may be specified by an applicable income tax treaty, unless the dividends are (i) effectively connected with a trade or business carried on by the non-U.S. holder within the United States (and the non-U.S. holder provides the payor with a Form W-8ECI (or other applicable form)) and (ii) if an income tax treaty applies, attributable to a U.S. permanent establishment or, in the case of an individual, a fixed base maintained by the non-U.S. holder. Dividends effectively connected with such trade or business, and, if an income tax treaty applies, attributable to such permanent establishment, will generally be subject to U.S. federal income tax on a net basis at applicable individual or corporate rates. A non-U.S. holder that is a corporation may be subject to a “branch profits tax” at a 30% rate (or such lower rate as may be specified by an applicable income tax treaty) on the deemed repatriation from the United States of its “effectively connected earnings and profits,” subject to certain adjustments. Under applicable Treasury Regulations, a non-U.S. holder (including, in certain cases of non-U.S. holders that are entities, the owner or owners of such entities) will be required to satisfy certain certification requirements in order to claim a reduced rate of withholding pursuant to an applicable income tax treaty.
 
Dispositions
 
A non-U.S. holder generally will not be subject to U.S. federal income or withholding tax on gain realized on the sale or exchange of the 2007 Preferred Stock or the common shares (including, in the case of conversion, the deemed exchange that gives rise to a payment of cash in lieu of a fractional common share) so long as:
 
  •  the gain is not effectively connected with a U.S. trade or business of the holder (or, if a tax treaty applies, the gain is not attributable to a U.S. permanent establishment or, in the case of an individual, a fixed base maintained by such non-U.S. holder); and
 
  •  in the case of a non-resident alien individual, such holder is not present in the United States for 183 or more days in the taxable year of the sale or disposition and certain other conditions are met.
 
Conversion Into Common Shares
 
As a general rule, a non-U.S. holder will not recognize any gain or loss in respect of the receipt of common shares upon the conversion of the 2007 Preferred Stock.
 
Information Reporting and Backup Withholding on Non-U.S. Holders
 
Payment of dividends (including constructive dividends), and the tax withheld with respect thereto, is subject to information reporting requirements. These information reporting requirements apply regardless of whether withholding was reduced or eliminated by an applicable income tax treaty or withholding was not required because the dividends were effectively connected with a trade or business in the United States conducted by the non-U.S. holder. Copies of the information returns reporting such dividends and withholding may also be made available under the provisions of an applicable income tax treaty or agreement to the tax authorities in the country in which the non-U.S. holder resides. U.S. backup withholding will generally apply on payment of dividends to


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non-U.S. holders unless such non-U.S. holders furnish to the payor a Form W-8BEN (or other applicable form), or otherwise establish an exemption.
 
Payment by a U.S. office of a broker of the proceeds of a sale of the 2007 Preferred Stock or common shares is subject to both backup withholding and information reporting unless the non-U.S. holder, or beneficial owner thereof, as applicable, certifies that it is a non-U.S. holder on Form W-8BEN (or other applicable form), or otherwise establishes an exemption. Subject to exceptions, backup withholding and information reporting generally will not apply to a payment of proceeds from the sale of the 2007 Preferred Stock or common shares if such sale is effected through a foreign office of a broker.
 
Any amount withheld under the backup withholding rules from a payment to a holder is allowable as a credit against such holder’s U.S. federal income tax, which may entitle the holder to a refund, provided that the holder timely provides the required information to the IRS. Moreover, certain penalties may be imposed by the IRS on a holder who is required to furnish information but does not do so in the proper manner. Holders are urged to consult their own tax advisors regarding the application of backup withholding in their particular circumstances and the availability of and procedure for obtaining an exemption from backup withholding under current Treasury Regulations.


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UNDERWRITING
 
Schering-Plough and the underwriters for the offering named below have entered into an underwriting agreement with respect to the shares being offered. Subject to certain conditions, each underwriter has severally agreed to purchase the number of shares of 2007 Preferred Stock indicated in the following table. Goldman, Sachs & Co. is acting as global coordinator, and Banc of America Securities LLC, Bear, Stearns & Co. Inc., Citigroup Global Markets Inc. and Morgan Stanley & Co. Incorporated are acting as joint bookrunners and together with Goldman, Sachs & Co. are the representatives of the underwriters.
 
         
    Number of
Underwriters
 
Shares
 
Goldman, Sachs & Co. 
    2,172,500  
Banc of America Securities LLC
    1,481,250  
Bear, Stearns & Co. Inc. 
    1,481,250  
Citigroup Global Markets Inc. 
    1,481,250  
Morgan Stanley & Co. Incorporated
    1,481,250  
BNP Paribas Securities Corp. 
    444,375  
J.P. Morgan Securities Inc. 
    444,375  
Credit Suisse Securities (USA) LLC
    444,375  
Daiwa Securities America Inc.
    148,125  
Santander Investment Securities Inc.
    148,125  
The Williams Capital Group, L.P. 
    99,063  
Utendahl Capital Partners, L.P. 
    74,062  
ABN AMRO Rothschild LLC
    25,000  
BNY Capital Markets, Inc. 
    25,000  
ING Financial Markets LLC
    25,000  
Mizuho Securities USA Inc. 
    25,000  
         
Total
    10,000,000  
         
 
The underwriters are committed to take and pay for all of the shares being offered, if any are taken, other than the shares covered by the option described below unless and until this option is exercised. Goldman, Sachs & Co. has agreed to purchase any unsold allotment of 2007 Preferred Stock that Utendahl Capital Partners, L.P. would otherwise be required to purchase.
 
If the underwriters sell more shares of the 2007 Preferred Stock than the total number set forth in the table above, the underwriters have an option to buy up to an additional 1,500,000 shares of the 2007 Preferred Stock from Schering-Plough. They may exercise that option for 30 days. If any shares of the 2007 Preferred Stock are purchased pursuant to this option, the underwriters will severally purchase shares in approximately the same proportion as set forth in the table above.
 
The following table shows the per share and total underwriting discounts to be paid to the underwriters by Schering-Plough. Such amounts are shown assuming both no exercise and full exercise of the underwriters’ option to purchase 1,500,000 additional shares.
 
                 
Paid by Schering-Plough
 
No Exercise
   
Full Exercise
 
 
Per Share
  $ 6.25     $ 6.25  
Total
  $ 62,500,000     $ 71,875,000  
 
Shares of 2007 Preferred Stock will initially be offered at the initial price to the public set forth on the cover of this prospectus supplement. Any shares sold by the underwriters to securities dealers may be sold at a discount of up to $3.75 per share from the initial price to the public. If all the shares are not sold at the initial price to the public, the representatives may change the offering price and the


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other selling terms. The offering of the shares by the underwriters is subject to receipt and acceptance and subject to the underwriters’ right to reject any order in whole or in part.
 
Subject to some exceptions, including with respect to the issuance of the 2007 Preferred Stock and the common shares to be issued and sold in the concurrent public offering, and issuances or sales in connection with employee or director stock incentive or option plans, Schering-Plough has agreed with the underwriters, for a period of 90 days from the date of this prospectus supplement, not to offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of, any of the common shares, or any options or warrants to purchase any of the common shares, or any of the securities that are substantially similar to the common shares, including, but not limited to, any securities that are convertible into or exchangeable for, or that represent the right to receive, the common shares or any substantially similar securities, without the prior written consent of the representatives of the underwriters.
 
In addition, subject to some exceptions, certain of Schering-Plough’s executive officers, directors and significant holders have agreed with the underwriters, for a period beginning from the date of the preliminary prospectus supplement covering the 2007 Preferred Stock and the preliminary prospectus supplement covering the common shares in the concurrent offering and continuing to and including the date 90 days after the date of the final prospectus supplement covering the 2007 Preferred Stock and the final prospectus supplement covering the concurrent offering of the common shares, not to (i) offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of any of Schering-Plough’s common shares, or any options or warrants to purchase any of Schering-Plough’s common shares, or any securities convertible into, exchangeable for or that represent the right to receive common shares, in each case, whether now beneficially owned or hereinafter acquired by the executive officer, director or significant holder, or (ii) enter into any hedging or other transaction which is designed to or which reasonably could be expected to lead to or result in a sale or disposition of the shares of 2007 Preferred Stock even if such shares would be disposed of by someone other than the executive officer, director or significant holder, in each case, without the prior written consent of the representatives of the underwriters.
 
In connection with the offering, the underwriters may purchase and sell shares in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the offering. “Covered” short sales are sales made in an amount not greater than the underwriters’ option to purchase additional shares in the offering. The underwriters may close out any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market. In determining the source of 2007 Preferred Stock to close out the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase shares through the option to purchase additional shares of 2007 Preferred Stock pursuant to the option granted to them. “Naked” short sales are any sales in excess of such option. The underwriters must close out any naked short position by purchasing 2007 Preferred Stock in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the shares in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of 2007 Preferred Stock made by the underwriters in the open market prior to the completion of the offering.
 
The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.
 
Purchases to cover a short position and stabilizing transactions, as well as other purchases by the underwriters for their own accounts, may have the effect of preventing or retarding a decline in the


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market price of 2007 Preferred Stock, and together with the imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of the 2007 Preferred Stock. As a result, the price of the 2007 Preferred Stock may be higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be discontinued at any time. These transactions may be effected on the New York Stock Exchange, in the over-the-counter market or otherwise.
 
Schering-Plough estimates that its share of the total expenses of the offering, excluding underwriting discounts, will be approximately $2,500,000.
 
Schering-Plough has agreed to indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended.
 
Goldman, Sachs & Co. is currently acting as financial advisor to Schering-Plough, for which they are paid usual and customary fees. Bank of America, N.A., an affiliate of Banc of America Securities LLC, is the administrative agent, Banc of America Securities LLC and Citigroup Global Markets Inc. are the joint lead arrangers and joint book managers, and BNP Paribas is the syndication agent under Schering-Plough’s $2 billion credit agreement entered into on August 9, 2007. Certain of the other underwriters or their affiliates are also lenders under the credit agreement. Additionally, Goldman, Sachs & Co., Banc of America Securities LLC, Bear, Stearns & Co. Inc., Citigroup Global Markets Inc., Morgan Stanley & Co. Incorporated, BNP Paribas Securities Corp. and J.P. Morgan Securities Inc., or their respective affiliates, have committed to act as lenders under Schering-Plough’s €11 billion bridge facility.
 
In addition, the underwriters and their affiliates have, from time to time, performed, and may in the future perform, various financial advisory, commercial banking or investment banking services for Schering-Plough, its subsidiaries or its affiliates for which they received or will receive customary fees and expenses.
 
Daiwa Securities America Inc. (“DSA”) has entered into an agreement with SMBC Securities, Inc. (“SMBCSI”) pursuant to which SMBCSI provides certain advisory and/or other services to DSA, including services with respect to this offering. In return for the provision of such services by SMBCSI to DSA, DSA will pay to SMBCSI a mutually agreed-upon fee.
 
The 2007 Preferred Stock will be offered in the United States through the underwriters either directly or through their respective U.S. broker-dealer affiliates or agents.
 
European Economic Area
 
In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a Relevant Member State), each underwriter has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the Relevant Implementation Date) it has not made and will not make an offer of shares to the public in that Relevant Member State prior to the publication of a prospectus in relation to the shares which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of shares to the public in that Relevant Member State at any time:
 
(a) to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;
 
(b) to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts;


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(c) to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospective Directive) subject to obtaining the prior consent of the representatives for any such offer; or
 
(d) in any other circumstances which do not require the publication by the Issuer of a prospectus pursuant to Article 3 of the Prospectus Directive.
 
For the purposes of this provision, the expression an “offer of shares to the public” in relation to any shares in any Relevant Member State means the communication in any form by any means of sufficient information on the terms of the offer and the shares to be offered so as to enable an investor to decide to purchase or subscribe the shares, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State and the expression Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.
 
United Kingdom
 
Each underwriter has represented and agreed that:
 
(a) it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of the shares in circumstances in which Section 21(1) of the FSMA does not apply to the Issuer; and
 
(b) it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the 2007 Preferred Stock in, from or otherwise involving the United Kingdom.
 
Italy
 
The offering of the 2007 Preferred Stock has not been registered with CONSOB (the Italian Securities Exchange Commission) pursuant to Italian securities legislation and, accordingly, no shares may be offered, sold or delivered, nor may copies of this document or of any other document relating to the shares be distributed in the Republic of Italy except: (i) to qualified investors (operatori qualificati), as defined in Article 31, second paragraph of CONSOB Regulation No. 11522 of 1 July 1998, as amended; and (ii) in circumstances which are exempt from public offer rules pursuant to Article 100 of Legislative Decree no. 58 of 24 February 1998, as amended (the “Financial Services Act”) and Article 33, first paragraph, of CONSOB Regulation No. 11971 of 14 May 1999, as amended.
 
Any offer, sale or delivery of the 2007 Preferred Stock or distribution of copies of this document or any other document relating to the shares in the Republic of Italy under (i) or (ii) above must be: (a) made by an investment firm, bank or financial intermediary permitted to conduct such activities in the Republic of Italy in accordance with the Financial Services Act and Legislative Decree No. 385 of 1 September 1993, as amended; and (b) in compliance with any other applicable laws and regulations.
 
France
 
This document is not being distributed in the context of a public offering in France within the meaning of Article L.411-1 of the Code monétaire et financier, and has therefore not been submitted to the Autorité des Marchés Financiers for prior approval and clearance procedure.
 
Each of the underwriters represents and agrees that it has not offered or sold and will not offer or sell, directly or indirectly, the 2007 Preferred Stock to the public in France, and has not distributed or caused to be distributed and will not distribute, or cause to be distributed to the public in France, this prospectus supplement, the accompanying prospectus and any other document or material in connection with the offer or sale, or invitation or subscription or purchase, of the shares, and that such offers, sales and distributions have been and will be made in France only to (a) providers of the


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investment service of portfolio management for the account of third parties, and/or (b) qualified investors (investisseurs qualifiés) acting for their own account (other than individuals), all as defined in, and in accordance with, Articles L. 411-1, L. 411-2 and D. 411-1 of the French Code monétaire et financier.
 
The 2007 Preferred Stock may be resold directly or indirectly only in compliance with Articles L. 411-1, L. 411-2, L. 412-1 and L. 621-8 to L. 621-8-3 of the French Code monétaire et financier.
 
Sweden
 
Each underwriter has represented and agreed that when an offer of shares to the public is made in Sweden, the guidelines enumerated for the European Economic Area apply, except that, with respect to paragraph (b), offers may only be made to legal entities who, for each of the last two financial years, fulfilled at least two of the following conditions: (1) an average of at least 250 employees, (2) a total balance sheet of more than €43,000,000 and (3) a net turnover of more than €50,000,000, as shown in its profit and loss account.
 
Switzerland
 
No public solicitation of investors or other offering or advertising activities in respect of the 2007 Preferred Stock can be carried out in Switzerland. The 2007 Preferred Stock may only be offered by way of private placement to banks, securities dealers or other regulated entities, to institutional investors with a professional treasury management, or to a limited number of other investors not exceeding 20.
 
Japan
 
The securities have not been and will not be registered under the Securities and Exchange Law of Japan (the Securities and Exchange Law) and each underwriter has agreed that it will not offer or sell any securities, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Securities and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.
 
Hong Kong
 
The 2007 Preferred Stock may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), or (ii) to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a “prospectus” within the meaning of the Companies Ordinance (Cap. 32, Laws of Hong Kong), and no advertisement, invitation or document relating to the shares may be issued or may be in the possession of any person for the purpose of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to “professional investors” within the meaning of the Securities and Futures Ordinance (Cap. 571, Laws of Hong Kong) and any rules made thereunder.
 
Singapore
 
Each underwriter has acknowledged that this prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, the underwriters have represented


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and agreed that they have not offered or sold any 2007 Preferred Stock or caused the 2007 Preferred Stock to be made the subject of an invitation for subscription or purchase and will not offer or sell the 2007 Preferred Stock or cause the 2007 Preferred Stock to be made the subject of an invitation for subscription or purchase, and have not circulated or distributed, nor will they circulate or distribute, this prospectus or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the shares, whether directly or indirectly, to persons in Singapore other than (i) to an institutional investor under Section 274 of the Securities and Futures Act, Chapter 289 of Singapore (the “SFA”), (ii) to a relevant person pursuant to Section 275(1), or any person pursuant to Section 275(1A), and in accordance with the conditions specified in Section 275, of the SFA or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.
 
VALIDITY OF SECURITIES
 
McCarter & English, LLP is passing upon the validity of the issuance of the 2007 Preferred Stock in this offering. In addition, Susan Ellen Wolf, Esq., the Corporate Secretary, is passing upon certain matters related to this offering. Ms. Wolf is an officer of Schering-Plough and beneficially owns common shares and holds options to purchase additional common shares. Ms. Wolf is eligible to participate in the Schering-Plough Corporation 2006 Stock Incentive Plan and the Schering-Plough Employees’ Saving Plan and may receive benefits under those plans. Shearman & Sterling LLP, New York, New York, is passing upon certain legal matters for the underwriters.
 
EXPERTS
 
The consolidated financial statements, the related financial statement schedule, and management’s report on the effectiveness of internal control over financial reporting incorporated in this prospectus supplement and the accompanying prospectus by reference from Schering-Plough’s 2006 10-K have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their reports, which are incorporated herein by reference (which reports (1) express an unqualified opinion on the consolidated financial statements and financial statement schedule and include an explanatory paragraph regarding Schering-Plough’s adoption of Statement of Financial Accounting Standards (“SFAS”) No. 123 (Revised 2004), “Share-Based Payment,” and SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans;” (2) express an unqualified opinion on management’s assessment regarding the effectiveness of internal control over financial reporting; and (3) express an unqualified opinion on the effectiveness of internal control over financial reporting), and have been so incorporated in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.
 
With respect to the unaudited interim financial information for the periods ended March 31, 2007 and 2006, and June 30, 2007 and 2006, which is incorporated herein by reference, Deloitte & Touche LLP, an independent registered public accounting firm, have applied limited procedures in accordance with the standards of the Public Company Accounting Oversight Board (United States) for a review of such information. However, as stated in their reports included in Schering-Plough’s first and second quarter 2007 10-Q, and incorporated by reference herein, they did not audit and they do not express an opinion on that interim financial information. Accordingly, the degree of reliance on their reports on such information should be restricted in light of the limited nature of the review procedures applied. Deloitte & Touche LLP are not subject to the liability provisions of Section 11 of the Securities Act of 1933 for their reports on the unaudited interim financial information because those reports are not “reports” or a “part” of the registration statement prepared or certified by an accountant within the meaning of Sections 7 and 11 of the Securities Act.


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WHERE YOU CAN FIND MORE INFORMATION
 
Schering-Plough files reports, proxy statements and other information with the SEC. You may read and copy any document Schering-Plough files at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. In addition, the SEC maintains a website that contains reports, proxy statements and other information that Schering-Plough electronically files. The address of the SEC’s website is http://www.sec.gov. You may also inspect Schering-Plough’s SEC reports and other information at the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
 
INCORPORATION OF INFORMATION SCHERING-PLOUGH FILES WITH THE SEC
 
The SEC allows Schering-Plough to incorporate by reference the information it files with them, which means:
 
  •  incorporated documents are considered part of this prospectus;
 
  •  Schering-Plough can disclose important information to you by referring you to those documents; and
 
  •  information that Schering-Plough files with the SEC will automatically update and supersede this incorporated information.
 
Schering-Plough incorporates by reference the documents listed below, which were filed with the SEC under the Securities Exchange Act of 1934, as amended, referred to as the Exchange Act, (excluding any portions of such documents that have been “furnished” but not “filed” for purposes of the Exchange Act):
 
  •  its 2006 10-K filed with the SEC on February 28, 2007;
 
  •  its first quarter 2007 10-Q filed with the SEC on April 27, 2007;
 
  •  its second quarter 2007 10-Q filed with the SEC on July 27, 2007;
 
  •  its 8-K filed with the SEC on January 29, 2007;
 
  •  its 8-K filed with the SEC on March 16, 2007;
 
  •  its 8-K filed with the SEC on April 19, 2007;
 
  •  its 8-K filed with the SEC on June 28, 2007;
 
  •  its 8-K filed with the SEC on July 11, 2007;
 
  •  its 8-K filed with the SEC on July 23, 2007;
 
  •  its 8-K filed with the SEC on August 2, 2007;
 
  •  the description of Schering-Plough’s 6.00% Mandatory Convertible Preferred Stock contained in its Registration Statement on Form 8-A filed with the SEC on August 9, 2007, and any amendment or report filed for the purpose of updating such description;
 
  •  the following sections of its Proxy Statement for the 2007 Annual Meeting of Shareholders on Schedule 14A filed with the SEC on April 20, 2007: “Proposal One: Elect Eleven Directors for a One-Year Term,” “Section 16(a) Beneficial Ownership Reporting Compliance,” “Information About the Audit Committee of the Board of Directors and its Practices,” “Committees of the Board of Directors,” “Executive Compensation,” “Director Compensation,” “Stock Ownership,” “Certain Transactions,” “Procedures for Related Party Transactions and Director Independence Assessments,” “Director Independence,” and “Proposal Two: Ratify the Designation of Deloitte & Touche LLP to Audit Schering-Plough’s Books and Accounts for 2007;” and


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  •  the description of Schering-Plough’s common shares contained in its Registration Statement on Form 8-A filed with the SEC on March 16, 1979, and any amendment or report filed for the purpose of updating such description.
 
Schering-Plough also incorporates by reference each of the following documents that Schering-Plough will file with the SEC after the date of this prospectus (excluding any portions of such documents that have been “furnished” but not “filed” for purposes of the Exchange Act) until the offering of 2007 Preferred Stock pursuant to this prospectus supplement and the accompanying prospectus is complete:
 
  •  reports filed under Section 13(a) and (c) of the Exchange Act;
 
  •  definitive proxy or information statements filed under Section 14 of the Exchange Act in connection with any subsequent stockholders’ meeting; and
 
  •  any reports filed under Section 15(d) of the Exchange Act.
 
Schering-Plough does not incorporate by reference any information furnished under items 2.02 or 7.01 (or corresponding information furnished under item 9.01 or included as an exhibit) in any past or current Form 8-K filing (unless otherwise indicated).
 
You may request a copy of any filings referred to above (excluding exhibits not specifically incorporated by reference into the filing), at no cost, by contacting Schering-Plough in writing or by telephone (908-298-7436) at the following address: Investor Relations, Schering-Plough Corporation, 2000 Galloping Hill Road, Kenilworth, NJ 07033. Documents may also be available on Schering-Plough’s website at http://www.schering-plough.com. Please note that all references to “http://www.schering-plough.com” in this prospectus supplement are inactive textual references only and that the information contained on Schering-Plough’s website is not incorporated by reference into this prospectus supplement or the accompanying prospectus, or intended to be used in connection with the offering of the 2007 Preferred Stock.


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PLANNED ACQUISITION OF ORGANON BIOSCIENCES N.V.
 
On March 12, 2007, Schering-Plough announced that its board of directors approved the acquisition of Organon BioSciences, the human and animal health care businesses of Akzo Nobel, for approximately €11 billion in cash ($15.1 billion based on the noon buying rate for euro on August 9, 2007). Schering-Plough believes the acquisition of Organon BioSciences will be a strong fit strategically, scientifically and financially.
 
Organon BioSciences will provide Schering-Plough with a strong base of products and businesses. Organon BioSciences’ pharmaceutical business, Organon, includes leading products such as Puregon®/Follistim®, a follicle-stimulating hormone for infertility; Esmeron®/Zemuron®, a neuromuscular blocker used in surgical procedures; NuvaRing®, Implanon®, Marvelon/Desogen® and Mercilon®/Mirecette® for contraception; Livial® for menopause/osteoporosis; Ovestin® for menopause-related symptoms; and Remeron® and Tolvon® for depression.
 
In addition to the currently marketed products, Organon currently has five compounds in Phase III development, including:
 
  •  Asenapine, a psychopharmacologic agent for the treatment of patients with schizophrenia and acute mania bipolar disorder;
 
  •  Sugammadex, for the reversal of neuromuscular blockade induced during surgical procedures;
 
  •  NOMAC/E2, an oral contraceptive product containing nomegestrol acetate, a novel progesterone, and estriadiol, a natural estrogen;
 
  •  ORG36286, a long-acting recombinant follicle-stimulating hormone for infertility; and
 
  •  Esmirtazapine (ORG50081), for the treatment of insomnia and potentially for hot flashes in menopausal women.
 
Organon BioSciences’ animal health business, Intervet, is one of the top three animal health care companies globally, based on 2006 revenues. The Intervet business has a strong science base. Intervet’s products treat a broad array of animals and disease states. Intervet’s products include Nobivac®, a range of canine vaccines; Panacur®, a de-wormer; Bovilis®, a bovine biological for disease control and eradication; and Nobilis®, a poultry vaccine to keep flocks free from infectious disease.
 
The transaction, which is expected to close by the end of 2007, is anticipated to be accretive to Schering-Plough’s earnings per share in the first full year, excluding purchase-accounting adjustments and acquisition-related costs. Schering-Plough expects to achieve annual synergies of approximately $500 million, however, it is expected that it will take three years from the closing of the acquisition to reach this level of synergies. Schering-Plough will finance the Organon BioSciences acquisition through a mix of cash, debt, and equity, including the net proceeds from this offering and the concurrent offering of common shares. Schering-Plough also has a committed €11 billion bridge facility. Any borrowings under the bridge facility may remain outstanding for up to one year following closing.
 
Schering-Plough and Organon have entered into a binding offer letter and have agreed to execute a fully negotiated share purchase agreement upon completion of customary consultation procedures involving the Works Council of Organon BioSciences in the Netherlands. The acquisition is also subject to certain closing conditions, including regulatory approvals from the United States Federal Trade Commission and the European Commission.
 
Under Dutch law, Organon BioSciences is required to seek the Works Council’s advice regarding the planned acquisition by Schering-Plough. The initial advice from the Works Council was issued on July 27, 2007 and was positive, but contained a number of conditions which are now being negotiated by the parties. In addition, Organon BioSciences has provided the Works Council with a written response supporting its decision not to comply with certain of the conditions set forth in the Works


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Council’s initial advice. The Works Council has the right to appeal with the appropriate appeals court in Amsterdam alleging that Organon BioSciences was not reasonable in determining to move forward with the transaction. The court can reject Organon BioSciences’ decision to move forward only if the decision was “manifestly unreasonable” or if Organon BioSciences did not properly conduct the consultations with the Works Council or did not sufficiently consider the Works Council’s position, in which case, a further appeal may be taken. If the court is of the opinion that this is not the case, then it would reject the Works Council’s appeal.
 
Schering-Plough has completed customary due diligence, however, Schering-Plough’s access to some information during that process was limited because of antitrust regulations. Until Schering-Plough consummates the acquisition, Schering-Plough will not have complete access to information about Organon BioSciences. Further, because Organon BioSciences is not itself a public company, but part of the Akzo Nobel family of companies, public information about Organon BioSciences is limited. For historical financial information about Organon BioSciences, see Organon BioSciences’ combined financial statements in the accompanying prospectus.


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SCHERING-PLOUGH CORPORATION
 
 
The following unaudited pro forma condensed combined balance sheet and unaudited pro forma condensed statements of combined operations as of and for the six months ended June 30, 2007 and for the year ended December 31, 2006 have been prepared on a basis consistent with accounting principles generally accepted in the United States of America, referred to as U.S. GAAP, and applicable requirements of the Securities and Exchange Commission (SEC). The unaudited pro forma condensed combined financial statements are derived by applying pro forma adjustments to the combined historical financial statements of Schering-Plough and Organon BioSciences N.V., referred to as Organon BioSciences or the OBS Group, as the case may be, and which comprise the human and animal health businesses of Akzo Nobel N.V. Organon BioSciences’ historical audited combined financial statements as of December 31, 2006 and 2005 and for each of the years in the three-year period ended December 31, 2006, and the historical unaudited condensed combined interim financial statements as of and for the six month periods ended June 30, 2007 and 2006, each of which have been prepared under International Financial Reporting Standards, as adopted by the European Union, referred to as IFRS, appear on pages F-1 to F-104 in the accompanying prospectus. The unaudited pro forma condensed statements of combined operations give effect to the following transactions as if such transactions had occurred on January 1, 2006. The unaudited pro forma condensed combined balance sheet gives effect to the following transactions as if such transactions had occurred on June 30, 2007:
 
•  The planned acquisition by Schering-Plough of Organon BioSciences, referred to as the Organon BioSciences acquisition, for aggregate cash consideration of approximately $14.79 billion (approximately €11.00 billion).
 
  •  The financing of the Organon BioSciences acquisition with aggregate proceeds of $10.30 billion from the following financing transactions:
 
  •  Issuance of the 2007 Preferred Stock for net proceeds of $2.44 billion;
 
  •  Issuance of common shares for net proceeds of $1.46 billion; and
 
  •  Draw down of debt under a committed bridge facility in the amount of $6.40 billion.
 
  •  The use of existing Schering-Plough cash, cash equivalents and short-term investments of $4.49 billion to fund the purchase price.
 
The pro forma adjustments are based upon available information, preliminary estimates and certain assumptions that Schering-Plough believes are reasonable based on information currently available, and are described in the accompanying notes to the unaudited pro forma condensed combined financial statements. The unaudited pro forma condensed statements of combined operations should not be considered indicative of actual results that would have been achieved had the Organon BioSciences acquisition been consummated on the dates indicated and does not purport to indicate results of operations as of any future date or for any future period.
 
The acquisition of Organon BioSciences is currently under regulatory review, and a share purchase agreement has not been executed between Akzo Nobel and Schering-Plough. Further, Schering-Plough has not completed an analysis of change of control or other contractual provisions that may result from the acquisition. As a result, pro forma adjustments related to the following matters have not been included in the unaudited pro forma condensed combined financial statements:
 
  •  The effects of business or product divestitures required to obtain regulatory clearance. Currently such divestitures are not expected to be material in the aggregate.
 
  •  The effects of change of control or other contractual provisions. Should the final negotiation of these matters result in a loss of rights under these contracts, profits may be materially and adversely affected.
 
In addition, final agreements have not been reached on the transfer of Organon BioSciences’ pension and other post-employment and post-retirement assets and liabilities from Akzo-Nobel to


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SCHERING-PLOUGH CORPORATION
 
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS — (Continued)

Schering-Plough. As a result, these unaudited pro forma condensed combined financial statements reflect a reasonable allocation of such assets and liabilities and related expense amounts made by Organon BioSciences’ management as described in Note 21 to the Organon BioSciences combined financial statements for the years ended December 31, 2006, 2005 and 2004 included in the accompanying prospectus. Such allocations may not be indicative of the actual separation of the pension and other post-employment and post-retirement assets and liabilities.
 
The Organon BioSciences acquisition will be accounted for using the purchase method of accounting in conformity with Statement of Financial Accounting Standards (“SFAS”) No. 141, “Business Combinations” as issued by the Financial Accounting Standards Board (“FASB”) in the U.S. Under this method, the purchase price and transaction related costs will be allocated to the assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. Any excess of the purchase price over the estimated fair value of the net assets acquired (including identifiable intangible assets) will be allocated to goodwill.
 
In connection with the preliminary purchase price allocation, Schering-Plough has made estimates of the fair values of assets and liabilities based upon assumptions that Schering-Plough believes are reasonable. The allocation of purchase price for acquisitions requires use of accounting estimates and judgments to allocate the purchase price to the identifiable tangible and intangible assets acquired and liabilities assumed based on their respective fair values. Schering-Plough’s process for estimating the fair values of in-process research and development, identifiable intangible assets and certain tangible assets requires significant estimates and assumptions including, but not limited to, determining the timing and estimated costs to complete the in-process projects, projecting regulatory approvals, estimating future cash flows and developing appropriate discount rates.
 
The allocation of purchase price is subject to finalization of Schering-Plough’s analysis of the fair value of the assets acquired and liabilities assumed as of the acquisition date. The final allocation of the purchase price may result in additional adjustments to the recorded amounts of assets and liabilities and may also result in adjustments to depreciation, amortization and in-process research and development. These adjustments could result in material increases or decreases to net income available to common shareholders. Further revisions to the purchase price allocation will be made as additional information becomes available.
 
Accordingly, the purchase price allocation in the unaudited pro forma condensed combined financial statements is preliminary and will be adjusted upon completion of the final valuation. Such adjustments could be material. The final valuation is expected to be completed as soon as practicable but no later than 12 months after the consummation of the Organon BioSciences acquisition.
 
The U.S. GAAP historical Organon BioSciences amounts included in the unaudited pro forma condensed combined balance sheet as of June 30, 2007 and the unaudited pro forma condensed statement of combined operations for the six months ended June 30, 2007 are derived from the Organon BioSciences’ unaudited IFRS condensed combined interim balance sheet and statement of income presented in Euro as of and for the six months ended June 30, 2007 converted to U.S. GAAP and translated to U.S. Dollars. The U.S. GAAP historical Organon BioSciences amounts included in the unaudited pro forma condensed statement of combined operations for the year ended December 31, 2006 are derived from the Organon BioSciences’ audited IFRS statement of income presented in Euro for the year ended December 31, 2006 converted to U.S. GAAP and translated to U.S. Dollars.
 
A reconciliation of Organon BioSciences’ combined net income and combined invested equity between U.S. GAAP and IFRS as of and for the year ended December 31, 2006 have been included as Note 32 to the Organon BioSciences historical audited combined financial statements included in the accompanying prospectus.


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SCHERING-PLOUGH CORPORATION
 
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS — (Continued)

A reconciliation of Organon BioSciences’ unaudited combined net income and combined invested equity between U.S. GAAP and IFRS as of and for the six months ended June 30, 2007 has been included as Note 21 to the Organon BioSciences historical unaudited condensed combined interim financial statements included in the accompanying prospectus.
 
The unaudited pro forma condensed combined financial statements are presented for informational purposes only. They do not purport to present what Schering-Plough’s results of operations or financial condition would have been had these transactions actually occurred on the dates indicated, nor do they purport to represent Schering-Plough’s results of operations for any future period or financial condition for any future date. Furthermore, no effect has been given in the unaudited pro forma condensed statements of combined operations for synergistic benefits that may be realized through the combination of Schering-Plough and Organon BioSciences or the costs that have been or may be incurred in integrating their operations.
 
The unaudited pro forma condensed combined financial statements should be read in conjunction with Schering-Plough’s historical consolidated financial statements and related notes thereto, Management’s Discussion and Analysis of Financial Condition and Results of Operations included in Schering-Plough’s 2006 10-K and second quarter 2007 10-Q, which are incorporated by reference into this prospectus supplement, and Organon BioSciences’ historical audited combined financial statements as of December 31, 2006 and 2005 and for each of the years in the three-year period ended December 31, 2006 and historical unaudited condensed combined interim financial statements as of June 30, 2007 and for the six months ended June 30, 2007 and 2006 included in the accompanying prospectus.


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SCHERING-PLOUGH CORPORATION
 
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 30, 2007
(in millions)
 
                                         
    U.S. GAAP Historical            
        Organon
  Pro Forma Adjustments
  Pro Forma
    Schering-
  BioSciences
  (See Note 3)   Condensed
   
Plough
 
(See Note 2)
 
Financing
 
Purchase Accounting
 
Combined
            Increase/(Decrease)    
 
ASSETS
Cash, cash equivalents and short-term investments
  $ 6,234     $ 154     $ 10,300 (a)   $ (14,792 )(b)   $ 1,896  
Accounts receivable, net
    2,119       1,058                   3,177  
Receivables from related parties, net
          509             (509 )(c)      
Inventories
    1,723       1,180             745 (d)     3,648  
Deferred income taxes
    234       34                   268  
Prepaid expenses and other current assets
    993       35                   1,028  
                                         
Total current assets
    11,303       2,970       10,300       (14,556 )     10,017  
                                         
Property, plant and equipment, net
    4,395       1,499             672 (e)     6,566  
Goodwill
    210       540             3,633 (f)     4,383  
Other intangible assets, net
    265       113             5,337 (g)     5,715  
                              3,000 (h)        
                              (3,000 )(h)        
Other assets
    888       556                   1,444  
                                         
Total assets
  $ 17,061     $ 5,678     $ 10,300     $ (4,914 )   $ 28,125  
                                         
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable
  $ 1,334     $ 817     $     $     $ 2,151  
Payables to related parties
          1,570             (1,570 )(c)      
Short-term borrowings and current portion of long-term debt
    246       186                   432  
U.S., foreign and state income taxes
    169       177                   346  
Other accrued liabilities
    2,178       51             500 (i)     2,729  
                                         
Total current liabilities
    3,927       2,801             (1,070 )     5,658  
                                         
Long-term debt
    2,414       76       6,400 (a)           8,890  
Deferred income taxes
    111       76             1,544 (j)     1,731  
Other long-term liabilities
    1,739       337                   2,076  
                                         
Total long-term liabilities
    4,264       489       6,400       1,544       12,697  
                                         
Mandatory convertible preferred shares
    1,438             2,500 (a)           3,938  
Common shares
    1,021             25 (a)           1,046  
Paid-in capital
    1,921             1,375 (a)           3,296  
Invested equity
            2,388               (2,388 )(k)      
Retained earnings
    10,723                   (3,000 )(h)     7,723  
Accumulated other comprehensive loss
    (773 )                       (773 )
Treasury shares
    (5,460 )                       (5,460 )
                                         
Total shareholders’ equity
    8,870       2,388       3,900       (5,388 )     9,770  
                                         
Total liabilities and shareholders’ equity
  $ 17,061     $ 5,678     $ 10,300     $ (4,914 )   $ 28,125  
                                         


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SCHERING-PLOUGH CORPORATION
 
UNAUDITED PRO FORMA CONDENSED STATEMENT OF COMBINED OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2007
(in millions, except per share amounts)
 
                                         
            Pro Forma Adjustments
   
    U.S. GAAP Historical  
(See Note 3)
  Pro Forma
    Schering
  Organon BioSciences
      Purchase
  Condensed
   
Plough
 
(See Note 2)
 
Financing
 
Accounting
 
Combined
            Increase/(Decrease)    
 
Net sales
  $ 6,153     $ 2,468     $     $     $ 8,621  
Cost of sales
    1,913       766             245 (l)     2,924  
Selling, general and administrative
    2,572       855                   3,427  
Research and development
    1,403       442                   1,845  
Other (income)/expense, net
    (62 )     25       268 (m)           231  
Special and acquisition related charges
    12                         12  
Equity income
    (978 )     (1 )                 (979 )
                                         
Income before income taxes
    1,293       381       (268 )     (245 )     1,161  
                                         
Income tax expense/(benefit)
    190       74       (54 )(n)           210  
                                         
Net income
    1,103       307       (214 )     (245 )     951  
                                         
Preferred stock dividends
    43             75 (o)           118  
                                         
Net income available to common shareholders
  $ 1,060     $ 307     $ (289 )   $ (245 )   $ 833  
                                         
Diluted earnings per common share
  $ 0.70                             $ 0.53 (p)
Basic earnings per common share
  $ 0.71                             $ 0.54 (p)
Weighted average shares outstanding:
                                       
Diluted
    1,579                               1,564  
Basic
    1,491                               1,541  


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SCHERING-PLOUGH CORPORATION
 
UNAUDITED PRO FORMA CONDENSED STATEMENT OF COMBINED OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2006
(in millions, except per share amounts)
 
                                         
    U.S. GAAP Historical   Pro Forma Adjustments
   
        Organon
  (See Note 3)   Pro Forma
    Schering
  BioSciences
      Purchase
  Condensed
   
Plough
 
(See Note 2)
 
Financing
 
Accounting
 
Combined
            Increase/(Decrease)    
 
Net sales
  $ 10,594     $ 4,643     $     $     $ 15,237  
Cost of sales
    3,697       1,498             490 (l)     5,685  
Selling, general and administrative
    4,718       1,694                   6,412  
Research and development
    2,188       781                   2,969  
Other (income)/expense, net
    (135 )     23       537 (m)           425  
Special and acquisition related charges
    102                         102  
Equity income
    (1,459 )     (3 )                   (1,462 )
                                         
Income before income taxes
    1,483       650       (537 )     (490 )     1,106  
                                         
Income tax expense/(benefit)
    362       9       (108 )(n)           263  
                                         
Net income before cumulative effect of a change in accounting principle
    1,121       641       (429 )     (490 )     843  
                                         
Cumulative effect of a change in accounting principle, net of tax
    (22 )                       (22 )
                                         
Net income
    1,143       641       (429 )     (490 )     865  
                                         
Preferred stock dividends
    86             150 (o)           236  
                                         
Net income available to common shareholders
  $ 1,057     $ 641     $ (579 )   $ (490 )   $ 629  
                                         
Diluted earnings per common share:
                                       
Earnings available to common shareholders before cumulative effect of a change in accounting principle
  $ 0.69                             $ 0.39  
Cumulative effect of a change in accounting principle
    0.02                               0.02  
                                         
Diluted earnings per common share
  $ 0.71                             $ 0.41 (p)
                                         
Basic earnings per common share:
                                       
Earnings available to common shareholders before cumulative effect of a change in accounting principle
  $ 0.69                             $ 0.39  
Cumulative effect of a change in accounting principle
    0.02                               0.02  
                                         
Basic earnings per common share
  $ 0.71                             $ 0.41 (p)
                                         
Weighted average shares outstanding:
                                       
Diluted
    1,491                               1,541  
Basic
    1,482                               1,532  


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SCHERING-PLOUGH CORPORATION
 
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
 
1.   DESCRIPTION OF THE PLANNED ORGANON BIOSCIENCES ACQUISITION AND BASIS OF PRESENTATION
 
On March 12, 2007, Schering-Plough announced its plan to acquire Organon BioSciences for approximately €11.00 billion in cash. The transaction is subject to certain closing conditions, including regulatory approvals, and is expected to close by the end of 2007.
 
The Organon BioSciences acquisition will be accounted for in accordance with U.S. GAAP using the purchase method of accounting. Under this method, the purchase price and transaction related costs are allocated to the assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date. Any excess of the purchase price over the estimated fair value of the net assets acquired (including identifiable intangible assets) is allocated to goodwill.
 
This allocation of the purchase price is subject to finalization of Schering-Plough’s analysis of the fair value of the assets acquired and liabilities assumed as of the Organon BioSciences acquisition date. The final allocation of the purchase price may result in additional adjustments to the recorded amounts of assets and liabilities and may also result in adjustments to depreciation, amortization and in-process research and development. The adjustments arising out of the finalization of the purchase price allocation will not impact cash flows. However, such adjustments could result in material increases or decreases to net income available to common shareholders. Further revisions to the purchase price allocation will be made as additional information becomes available.
 
Accordingly, the purchase price allocation in the unaudited pro forma condensed combined financial statements is preliminary and will be adjusted upon completion of the final valuation. Such adjustments could be material. The final valuation is expected to be completed as soon as practicable but no later than 12 months after the consummation of the Organon BioSciences acquisition.
 
The unaudited pro forma condensed combined balance sheet gives effect to the Organon BioSciences acquisition and related financing as if it had occurred on June 30, 2007. The historical unaudited condensed combined balance sheet for Organon BioSciences at June 30, 2007, prepared in accordance with IFRS and presented in Euro, has been converted to U.S. GAAP and has been translated to U.S. Dollars using a rate of $1.35, which approximates the Euro conversion rate to U.S. Dollars at June 30, 2007. The unaudited pro forma condensed statement of combined operations for the six months ended June 30, 2007 and the twelve months ended December 31, 2006, gives effect to the Organon BioSciences acquisition and related financing as if it had occurred on January 1, 2006. The historical combined statement of income for Organon BioSciences for the six months ended June 30, 2007 and the twelve months ended December 31, 2006, prepared in accordance with IFRS and presented in Euro, have been converted to U.S. GAAP and have been translated to U.S. Dollars using exchange rates of $1.33 and $1.25, respectively, which approximates the average Euro conversion rate to U.S. Dollars for the applicable period.
 
The estimated purchase price was calculated as follows:
 
         
(in millions, except exchange rate)
   
Consideration in Euro
  11,000 (1)
Exchange rate in U.S. Dollars per 1.00 Euro
  $ 1.35  
         
Consideration in U.S. Dollars
  $ 14,850  
Transaction costs
    50  
         
Estimated purchase price including net debt assumed
  $ 14,900  
         
  (1)  Includes €80 million (approximately $108 million using the June 30, 2007 exchange rate of €1.00 = $1.35) of net debt assumed by Schering-Plough.


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SCHERING-PLOUGH CORPORATION
 
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS — (Continued)

 
The preliminary allocation of the purchase price as of June 30, 2007 is summarized below:
 
         
    Allocation of
    Purchase Price
Preliminary Purchase Price
  to Net Assets
Allocation as of June 30, 2007
 
Acquired
    (in millions)
 
         
         
Identifiable intangible assets
  $ 5,450 (1)
Property, plant and equipment
    2,171  
Inventories
    1,925  
Other non-current assets
    196  
Net working capital, excluding Inventories
    28  
Deferred income tax, net
    (1,238 )
Acquisition related liabilities
    (500 )
Other long-term liabilities
    (413 )
Goodwill
    4,173  
In-process research and development (IPR&D)
    3,000 (2)
         
Estimated purchase price to be allocated
  $ 14,792  
         
Net debt assumed by Schering-Plough
    108  
         
Estimated purchase price including net debt assumed
  $ 14,900  
         
  (1)  The allocation of the purchase price to intangible assets includes trade names, products and product rights, and other identifiable intangibles, with a composite estimated useful live of approximately 12 years.
 
  (2)  The amounts allocated to in-process research and development will be charged to the statement of operations in the period the Organon BioSciences acquisition is consummated. This IPR&D amount is excluded from the unaudited pro forma condensed statements of combined operations as this charge is not expected to have a continuing impact on operations.
 
2.   HISTORICAL COMBINED FINANCIAL STATEMENTS OF ORGANON BIOSCIENCES
 
The historical combined financial statements of Organon BioSciences as of December 31, 2006 and 2005 and for each of the years in the three-year period ended December 31, 2006, prepared in accordance with IFRS, are included in the accompanying prospectus. A reconciliation of Organon BioSciences’ combined net income and combined invested equity between U.S. GAAP and IFRS as of and for the year ended December 31, 2006 has been included in Note 32 to those financial statements included in the accompanying prospectus.
 
The unaudited condensed combined interim financial statements of Organon BioSciences as of and for the six-month period ended June 30, 2007 have been prepared in accordance with IFRS. A reconciliation of Organon BioSciences’ combined net income and combined invested equity between U.S. GAAP and IFRS as of June 30, 2007 and for the six-month period ended June 30, 2007 has been included as Note 21 to those financial statements, included in the accompanying prospectus.
 
The amounts in the U.S. GAAP historical Organon BioSciences columns in the unaudited pro forma condensed combined financial statements were derived from the Organon BioSciences


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SCHERING-PLOUGH CORPORATION
 
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS — (Continued)

historical annual audited and unaudited condensed combined interim financial statements included in the accompanying prospectus and have been adjusted for the following:
 
  •  U.S. GAAP adjustments applied to the Organon BioSciences IFRS financial statements, including but not limited to, adjustments related to business combinations, pensions and other postretirement benefits, the impairment of goodwill, research and development costs, differing treatment of subsequent events between U.S. GAAP and IFRS, tax on elimination of intercompany profits and deferred income taxes.
 
  •  Currency amounts have been translated from Euro to U.S. Dollars (at the rates specified in Note 1 to these unaudited pro forma condensed combined financial statements in accordance with SFAS No. 52 “Foreign Currency Translation.”)
 
Schering-Plough is in the process of reviewing Organon BioSciences’ accounting policies and financial statement classifications. As a result of that review, it may become necessary to make reclassifications or adjustments to the consolidated financial statements of Schering-Plough on a prospective basis.
 
3.   PRO FORMA ADJUSTMENTS
 
Pro forma condensed combined balance sheet adjustments
 
(a) Reflects the following financing transactions:
 
— Issuance of the 2007 Preferred Stock for net proceeds of $2.44 billion;
 
— Issuance of common shares for net proceeds of $1.46 billion; and
 
  —  Draw down of debt under a committed bridge facility in the amount of $6.40 billion. The bridge facility has been classified as long-term debt, reflecting Schering-Plough’s intention to replace the bridge facility with long-term debt of varying maturities.
 
(b) Reflects use of cash, cash equivalents and short-term investments of $14.79 billion, including the financing discussed in (a) above, to fund the purchase price.
 
(c) Reflects related party receivables, net and payables that will be settled as part of the transaction.
 
(d) Reflects the adjustment of the historical Organon BioSciences inventories to estimated fair value. Because this adjustment is directly attributed to the transaction and will not have a continuing impact, it is not reflected in the unaudited pro forma condensed statements of combined operations. However, this inventory adjustment will result in an increase in cost of sales in the periods subsequent to the consummation of the transaction during which the related inventories are sold.
 
(e) Reflects the adjustment to step-up the carrying values of the Organon BioSciences property, plant and equipment to estimated fair value.
 
(f) Reflects the addition of goodwill from the purchase price allocation of $4.17 billion and the elimination of historical Organon BioSciences goodwill of $540 million.
 
(g) Reflects the portion of the purchase price allocated to Organon BioSciences’ acquired identifiable intangible assets.
 
(h) Reflects the portion of the purchase price allocated to acquired in-process research and development projects that, as of the closing date of the Organon BioSciences acquisition, will not have reached technological feasibility and will have no alternative future use. Because this expense is directly attributable to the Organon BioSciences acquisition and will not have a continuing impact, it is not reflected in the unaudited pro forma condensed statements of combined operations. However, this


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SCHERING-PLOUGH CORPORATION
 
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS — (Continued)

item will be recorded as an expense in the financial statements of Schering-Plough in the period that the Organon BioSciences acquisition is completed.
 
(i) Reflects an estimate of acquisition-related liabilities.
 
(j) Reflects net deferred tax liabilities arising from the acquisition.
 
(k) Reflects the elimination of all components of the historical equity of Organon BioSciences.
 
Pro forma condensed statement of combined operations adjustments
 
(l) Reflects additional annual depreciation of $45 million ($23 million on a six-month basis) related to the fair value adjustment to depreciable property, plant and equipment depreciated over a weighted average useful life of approximately 15 years.
 
Also reflects annual amortization expense of $445 million ($222 million on a six-month basis) for identifiable intangible assets in connection with the Organon BioSciences acquisition at their estimated fair values.
 
(m) Adjustment reflects $236 million ($118 million on a six-month basis) of lower annual interest income due to the use of cash to fund the Organon BioSciences acquisition. An interest rate of 5.25%, which represents Schering-Plough’s current weighted average interest rate, was used to estimate the reduction in interest income.
 
Also reflects the increase in annual interest expense of $301 million, ($150 million on a six-month basis). The interest rate used to calculate this adjustment was 4.7% and is based on the terms of the variable rate bridge facility as of June 30, 2007. A 1/8% increase in the bridge facility interest rate would increase annual interest expense by approximately $8 million.
 
The bridge facility is expected to be refinanced into long-term debt of varying maturities. The adjustments included in the unaudited pro forma condensed statements of combined operations do not reflect the interest rates to be incurred upon the refinancing.
 
(n) Reflects the recognition of the income tax benefit of the above pro forma adjustments at an estimated tax rate of 25%.
 
(o) Reflects the additional Preferred Stock dividends resulting from the issuance of the 2007 Preferred Stock. This adjustment reflects a dividend rate of 6% consistent with the 2004 Preferred Stock.
 
(p) Earnings per share amounts are calculated using net income available to common shareholders as the numerator and reflect the following weighted average shares outstanding:
 
                                 
          Issuance of
          Pro Forma
 
    Schering-Plough
    Common
    2004 Preferred
    Condensed
 
(all share amounts in millions)   Historical     Shares     Stock     Combined  
 
For the year ended December 31, 2006:
                               
Diluted shares outstanding
    1,491       50 (1)           1,541  
Basic shares outstanding
    1,482       50 (1)           1,532  
For the six months ended June 30, 2007:
                               
Diluted shares outstanding
    1,579       50 (1)     (65 )(2)     1,564  
Basic shares outstanding
    1,491       50 (1)           1,541  
 
(1)  50 million of additional weighted average shares outstanding reflects an assumed Schering-Plough stock price of $30.
 
(2)  65 million common shares obtainable upon conversion of the 2004 Preferred Stock were dilutive to Schering-Plough’s historical earnings per share for the six months ended June 30, 2007, but would not be dilutive to the pro forma condensed combined earnings per share and are therefore excluded from the computation. The 2007 Preferred Stock is assumed to be anti-dilutive to the pro forma condensed combined earnings per share and is therefore excluded from the computation for all periods presented.


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PROSPECTUS
 
Schering-Plough Corporation
 
Debt Securities
Preferred Shares
Common Shares
 
 
Schering-Plough may offer from time to time in one or more classes or series, together or separately:
 
  •  debt securities;
 
  •  preferred shares;
 
  •  common shares; or
 
  •  any combination of these securities.
 
Schering-Plough will provide specific terms of any securities that it offers for sale in supplements to this prospectus. You should read this prospectus and any prospectus supplement carefully before you invest. This prospectus may not be used to sell securities unless accompanied by a prospectus supplement or a term sheet.
 
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
 
Schering-Plough may sell these securities on a continuous or delayed basis directly, through agents or underwriters as designated from time to time, or through a combination of these methods. Schering-Plough reserves the sole right to accept, and together with any agents, dealers and underwriters, reserves the right to reject, in whole or in part, any proposed purchase of securities. If any agents, dealers or underwriters are involved in the sale of any securities, the applicable prospectus supplement will set forth any applicable commissions or discounts. Schering-Plough’s net proceeds from the sale of securities will also be set forth in the applicable prospectus supplement.
 
The date of this prospectus is August 2, 2007.


 

 
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ABOUT THIS PROSPECTUS
 
The information contained in this prospectus is not complete and may be changed. You should rely only on the information provided in or incorporated by reference in this prospectus and the applicable prospectus supplement. Schering-Plough has not authorized anyone else to provide you with different information. Schering-Plough is not making an offer of any securities in any state where the offer is not permitted. You should not assume that the information in this prospectus or any prospectus supplement is accurate as of any date other than the date on the front cover of those documents and that any information Schering-Plough has incorporated by reference is accurate as of any date other than the date of the document incorporated by reference or such other date referred to in such document, regardless of the time of delivery of this prospectus or any sale or issuance of a security.
 
This prospectus is part of a registration statement that Schering-Plough has filed with the Securities and Exchange Commission using a “shelf” registration process. Under this shelf registration process, Schering-Plough may from time to time sell or issue, in one or more offerings, Schering-Plough’s:
 
  •  debt securities, in one or more series, which may be senior debt securities or subordinated debt securities;
 
  •  preferred shares;
 
  •  common shares; or
 
  •  any combination of these securities.
 
This prospectus provides you with a general description of the securities Schering-Plough may offer. Each time Schering-Plough sells or issues securities, Schering-Plough will provide a prospectus supplement that will contain information about the terms of that specific offering of securities and the specific manner in which they may be offered. The prospectus supplement may also add to, update or change any of the information contained in this prospectus and, accordingly, to the extent inconsistent, the information in this prospectus is superseded by the information in the prospectus supplement. The prospectus supplement may also contain information about any material federal income tax considerations relating to the securities described in the prospectus supplement. You should read both this prospectus and the applicable prospectus supplement together with the additional information described under “Where You Can Find More Information” before making an investment in Schering-Plough’s securities.


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This prospectus contains summaries of certain provisions contained in some of the documents described herein, but reference is made to the actual documents for complete information. All of the summaries are qualified in their entirety by the actual documents. Copies of some of the documents referred to herein have been filed, or will be filed or incorporated by reference as exhibits to the registration statement of which this prospectus is a part, and you may obtain copies of those documents as described below under “Where You Can Find More Information”.
 
Because Schering-Plough is a “well-known seasoned issuer”, as defined in Rule 405 of the Securities Act of 1933, as amended, referred to as the Securities Act, Schering-Plough may add to and offer additional securities, including secondary securities, by filing a prospectus supplement with the SEC at the time of the offer.
 
The registration statement that contains this prospectus (including the exhibits to the registration statement) contains additional information about Schering-Plough and the securities offered under this prospectus. The registration statement can be read at the SEC website (http://www.sec.gov) or at the SEC offices listed under the heading “Where You Can Find More Information”.
 
You should rely only on the information contained or incorporated by reference or deemed to be incorporated by reference in this prospectus or in a prospectus supplement related to an offering prepared by or on behalf of Schering-Plough or used or referred to by Schering-Plough. Schering-Plough has not authorized anyone else to provide you with different or additional information. You should not rely on any other information or representations. Schering-Plough’s affairs may change after this prospectus and any related prospectus supplement are conveyed. You should not assume that the information in this prospectus and any related prospectus supplement is accurate as of any date other than the dates indicated in such documents. You should read all information supplementing this prospectus.
 
All references to “Schering-Plough Corporation”, “Schering-Plough” and “the company” in this prospectus refer to Schering-Plough Corporation and its consolidated subsidiaries, unless, in each case, the context clearly indicates otherwise.
 
WHERE YOU CAN FIND MORE INFORMATION
 
Schering-Plough files reports, proxy statements and other information with the SEC. You may read and copy any document Schering-Plough files at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. In addition, the SEC maintains a website that contains reports, proxy statements and other information that Schering-Plough electronically files. The address of the SEC’s website is http://www.sec.gov. You may also inspect Schering-Plough’s SEC reports and other information at the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.
 
INCORPORATION OF INFORMATION SCHERING-PLOUGH FILES WITH THE SEC
 
The SEC allows Schering-Plough to incorporate by reference the information it files with them, which means:
 
  •  incorporated documents are considered part of this prospectus;
 
  •  Schering-Plough can disclose important information to you by referring you to those documents; and
 
  •  information that Schering-Plough files with the SEC will automatically update and supersede this incorporated information.
 
Schering-Plough incorporates by reference the documents listed below, which were filed with the SEC under the Securities Exchange Act of 1934, as amended, referred to as the Exchange Act, (excluding any portions of such documents that have been “furnished” but not “filed” for purposes of the Exchange Act):
 
  •  its 2006 10-K filed with the SEC on February 28, 2007;


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  •  its first quarter 2007 10-Q filed with the SEC on April 27, 2007;
 
  •  its second quarter 2007 10-Q filed with the SEC on July 27, 2007;
 
  •  its 8-K filed with the SEC on January 29, 2007;
 
  •  its 8-K filed with the SEC on March 16, 2007;
 
  •  its 8-K filed with the SEC on April 19, 2007;
 
  •  its 8-K filed with the SEC on June 28, 2007;
 
  •  its 8-K filed with the SEC on July 11, 2007;
 
  •  its 8-K filed with the SEC on July 23, 2007;
 
  •  the following sections of its Proxy Statement for the 2007 Annual Meeting of Shareholders on Schedule 14A filed with the SEC on April 20, 2007: “Proposal One: Elect Eleven Directors for a One-Year Term”, “Section 16(a) Beneficial Ownership Reporting Compliance”, “Information About the Audit Committee of the Board of Directors and its Practices”, “Committees of the Board of Directors”, “Executive Compensation”, “Director Compensation”, “Stock Ownership”, “Certain Transactions”, “Procedures for Related Party Transactions and Director Independence Assessments”, “Director Independence”, and “Proposal Two: Ratify the Designation of Deloitte & Touche LLP to Audit Schering-Plough’s Books and Accounts for 2007”; and
 
  •  the description of Schering-Plough’s common shares contained in its Registration Statement on Form 8-A filed with the SEC on March 16, 1979, and any amendment or report filed for the purpose of updating such description.
 
Schering-Plough also incorporates by reference each of the following documents that Schering-Plough will file with the SEC after the date of this prospectus (excluding any portions of such documents that have been “furnished” but not “filed” for purposes of the Exchange Act):
 
  •  reports filed under Section 13(a) and (c) of the Exchange Act;
 
  •  definitive proxy or information statements filed under Section 14 of the Exchange Act in connection with any subsequent stockholders’ meeting; and
 
  •  any reports filed under Section 15(d) of the Exchange Act.
 
Schering-Plough does not incorporate by reference any information furnished under items 2.02 or 7.01 (or corresponding information furnished under item 9.01 or included as an exhibit) in any past or current Form 8-K filing (unless otherwise indicated).
 
You may request a copy of any filings referred to above (excluding exhibits not specifically incorporated by reference into the filing), at no cost, by contacting Schering-Plough in writing or by telephone (908-298-7436) at the following address: Investor Relations, Schering-Plough Corporation, 2000 Galloping Hill Road, Kenilworth, NJ 07033.
 
Documents may also be available on Schering-Plough’s website at http://www.schering-plough.com. Please note that all references to “http://www.schering-plough.com” in this prospectus and any prospectus supplement that accompanies this prospectus and the related registration statement are inactive textual references only and that the information contained on Schering-Plough’s website is neither incorporated by reference into the registration statement or prospectus or any accompanying prospectus supplement nor intended to be used in connection with any offering hereunder.


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FORWARD-LOOKING STATEMENTS
 
This prospectus, the prospectus supplement, the documents incorporated by reference in this prospectus and other written reports and oral statements made from time to time by Schering-Plough may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to expectations or forecasts of future events. Schering-Plough uses words such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “forecast”, “project”, “intend”, “plan”, “potential”, “will”, and other words and terms of similar meaning in connection with a discussion of potential future events, circumstances or future operating or financial performance. You can also identify forward-looking statements by the fact that they do not relate strictly to historical or current facts.
 
In particular, forward-looking statements include statements relating to future actions; ability to access the capital markets; prospective products or product approvals; timing and conditions of regulatory approvals; patent and other intellectual property protection; future performance or results of current and anticipated products; sales efforts; research and development programs and anticipated spending; estimates of rebates, discounts and returns; expenses and programs to reduce expenses; the anticipated cost of and savings from reductions in work force; the outcome of contingencies such as litigation and investigations; growth strategy; expected synergies and financial results.
 
By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. Schering-Plough’s actual results may vary materially from those anticipated in such forward-looking statements as a result of many factors, some of which are more fully described in the following “Risk Factors” section, in the accompanying prospectus supplement and Schering-Plough’s reports to the SEC incorporated by reference into this prospectus, and there are no guarantees with respect to Schering-Plough’s performance. Schering-Plough does not assume the obligation to update any forward-looking statement for any reason.
 
RISK FACTORS
 
Schering-Plough’s business faces significant risks. Before you invest in any of Schering-Plough’s securities, in addition to the other information in this prospectus and in the accompanying prospectus supplement, you should carefully consider the risks and uncertainties identified in Schering-Plough’s reports to the SEC incorporated by reference into this prospectus and the accompanying prospectus supplement. These risks may not be the only risks Schering-Plough faces. Additional risks that Schering-Plough does not yet know of or that Schering-Plough currently believes are immaterial or are based on assumptions that are later determined to be inaccurate also may impair Schering-Plough’s business. If any of the risks described herein or in the accompanying prospectus supplement or Schering-Plough’s reports to the SEC actually occur, Schering-Plough’s business and operating results could be materially harmed. This could cause the value of the purchased securities to decline, and you may lose all or part of your investment.


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THE COMPANY
 
Schering-Plough is a global science-based company that discovers, develops and manufactures pharmaceuticals for three customer markets—human prescription, consumer and animal health. While most of the research and development activity is directed toward prescription products, there are important applications of this central research and development platform into the consumer healthcare and animal health products. Schering-Plough also accesses external innovation via partnering, in-licensing and acquisition for all three customer markets.
 
Schering-Plough’s principal executive offices are located at 2000 Galloping Hill Road, Kenilworth, NJ 07033, and Schering-Plough’s telephone number is (908) 298-4000. Schering-Plough was incorporated in New Jersey in 1970.
 
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
 
Schering-Plough’s consolidated ratio of earnings to fixed charges for the six months ended June 30, 2007 and for the years ended December 31, 2002 through 2006 is set forth below. For the purpose of computing these ratios, “earnings” consist of income/(loss) before income taxes and equity income, plus fixed charges (other than capitalized interest and preference dividends), amortization of capitalized interest and distributed income of equity investee; and “fixed charges and preferred stock dividends” consist of interest expense, capitalized interest, preference dividends and one-third of rentals, which Schering-Plough believes to be a reasonable estimate of an interest factor on leases. Schering-Plough includes interest expense or interest income on unrecognized tax benefits as a component of income tax expense. The ratio was calculated by dividing the sum of the fixed charges into the sum of the earnings before taxes and fixed charges.
 
                                             
    Six Months
                             
    Ended
                             
    June 30,
  Year Ended December 31,  
   
2007
 
2006
   
2005
   
2004
   
2003
   
2002
 
 
Ratio of earnings to fixed charges and preferred stock dividends
  7.4     5.1       1.6       (0.3 )*     0.4 **     33.2  
 
 
* For the year ended December 31, 2004, earnings were insufficient to cover fixed charges and preferred stock dividends by $322 million.
 
** For the year ended December 31, 2003, earnings were insufficient to cover fixed charges by $70 million.
 
USE OF PROCEEDS
 
Unless the applicable prospectus supplement indicates otherwise, Schering-Plough currently intends to use the net proceeds from any sale of the offered securities for general corporate purposes, which may include, among other things, expenses to acquire additional marketed products and pipeline projects (through acquisitions of companies or through product licenses which may include royalties, license fees and milestone payments), research and development costs, litigation costs, the repayment of debt, other capital expenses and other operating expenses. Schering-Plough may temporarily invest funds that are not immediately needed for these general corporate purposes. If Schering-Plough intends to use the proceeds to repay outstanding debt, Schering-Plough will provide details about the debt that is being repaid in the applicable prospectus supplement.


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DESCRIPTION OF CAPITAL STOCK
 
This section contains a description of Schering-Plough’s capital stock. The following summary of the terms of Schering-Plough’s capital stock is not meant to be complete and is qualified by reference to Schering-Plough’s amended and restated certificate of incorporation, referred to as the certificate of incorporation, and Schering-Plough’s amended and restated by-laws, referred to as the by-laws, which are incorporated by reference as exhibits into the registration statement of which this prospectus is a part.
 
As of June 30, 2007, Schering-Plough’s authorized capital stock consisted of:
 
(i) 2,400,000,000 common shares, par value $0.50 per share, of which:
 
  •  1,496,297,204 were issued and outstanding,
 
  •  547,238,751 were issued and held in treasury,
 
  •  80,040,000 were reserved for issuance upon conversion of the 6.00% Mandatory Convertible Preferred Stock issued in 2004, referred to as the 2004 Preferred Stock, and
 
  •  166,632,803 were reserved for issuance under stock incentive plans; and
 
(ii) 50,000,000 preferred shares, par value $1.00 per share, of which:
 
  •  28,750,000 were designated as the 2004 Preferred Stock (28,750,000 shares of 2004 Preferred Stock will automatically convert into common shares on September 14, 2007, unless earlier converted, and such preferred shares will become undesignated and available for issuance in the future),
 
  •  12,000,000 were designated as Series A Junior Participating Preferred Stock (which, in connection with the expiration of Schering-Plough’s shareholder rights plan on July 10, 2007, were redesignated as authorized but unissued preferred shares), and
 
  •  9,250,000 which are undesignated.
 
Common Shares
 
Holders of Schering-Plough’s common shares, subject to any preferential rights of the holders of any preferred shares, are entitled to participate equally and ratably in dividends when and as declared by Schering-Plough’s board of directors. In the event of the liquidation or dissolution of Schering-Plough, holders of Schering-Plough’s common shares are entitled to share ratably in the remaining assets of Schering-Plough available for distribution, subject to prior or equal distribution rights of any holders of preferred shares. Record holders of common shares are entitled to one vote per share for the election of directors and upon all matters on which holders of common shares are entitled to vote. Holders of Schering-Plough’s common shares do not have cumulative voting rights. There are no preemptive or conversion rights applicable to Schering-Plough’s common shares. All outstanding shares of Schering-Plough’s common shares are fully paid and non-assessable.
 
Preferred Shares
 
Schering-Plough’s certificate of incorporation provides that its board of directors is authorized to issue preferred shares from time to time in one or more series without stockholder approval. Subject to limitations prescribed by law and Schering-Plough’s certificate of incorporation, the board of directors may fix for any series of preferred shares the number of shares of such series and the voting powers, designations, preferences, rights, qualifications, limitations and restrictions of such series.
 
Schering-Plough’s certificate of incorporation provides that whenever Schering-Plough is in default as to accrued dividends on preferred shares in an amount equivalent to six quarterly dividends, the holders of preferred shares, voting separately as a class, will be entitled to elect two directors at the next annual or special meeting of Schering-Plough’s shareholders. The right of holders


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of preferred shares to elect two directors will continue until dividends in default on the preferred shares have been paid in full or declared and a sum sufficient for the payment thereof has been set aside. During any time that the holders of preferred shares, voting as a class, are entitled to elect two directors, as described in this paragraph, the holders of any series of preferred shares normally entitled to participate with the holders of the common shares in the election of directors shall not be entitled to participate with the holders of the common shares in the election of such directors.
 
For any series of preferred shares that Schering-Plough may issue pursuant to this prospectus, Schering-Plough’s board of directors will determine and the prospectus supplement relating to such series will describe:
 
  •  the designation and number of shares of such series;
 
  •  the rate and time at which, and the preferences and conditions under which, any dividends will be paid on shares of such series, as well as whether such dividends are cumulative or non-cumulative and participating or non-participating;
 
  •  any provisions relating to convertibility or exchangeability of the shares of such series;
 
  •  the rights and preferences, if any, of holders of shares of such series upon Schering-Plough’s liquidation, dissolution or winding up of its affairs;
 
  •  the voting powers, if any, of the holders of shares of such series;
 
  •  any provisions relating to the redemption of the shares of such series;
 
  •  whether and upon what terms a sinking fund will be used to purchase or redeem the shares;
 
  •  any limitations on Schering-Plough’s ability to pay dividends or make distributions on, or acquire or redeem, other securities while shares of such series are outstanding;
 
  •  any conditions or restrictions on Schering-Plough’s ability to issue additional shares of such series or other securities; and
 
  •  any other relative powers, preferences and participating, optional or special rights of shares of such series, and the qualifications, limitations or restrictions thereof.
 
When Schering-Plough issues preferred shares under this prospectus and any applicable prospectus supplement, the shares will be fully paid and non-assessable and will not have, or be subject to, any preemptive or similar rights.
 
Anti-takeover Protections
 
The following discussion summarizes certain provisions of the New Jersey Business Corporation Act, as amended, referred to as the NJBCA, and of Schering-Plough’s certificate of incorporation and by-laws, which may have the effect of prohibiting, raising the costs of, or otherwise impeding, a change of control of Schering-Plough, whether by merger, consolidation or sale of assets or stock (by tender offer or otherwise), or by other methods.
 
Limits on Shareholder Action by Written Consent; Special Meetings
 
Schering-Plough’s certificate of incorporation and by-laws provide that, subject to the rights of the holders of any series of preferred shares then outstanding, any action required or permitted to be taken by Schering-Plough’s shareholders must be effected at a duly called annual or special meeting of shareholders and may not be effected by any consent in writing by such shareholders unless all of the shareholders entitled to vote on the matter consent in writing. Schering-Plough’s certificate of incorporation and by-laws also provide that the affirmative vote of the holders of more than 50% of the voting power of all of the shares entitled to vote generally in the election of directors, voting together as a single class, will be required to amend Schering-Plough’s certificate of incorporation or by-laws with respect to shareholder action by written consent.


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Except as otherwise provided by the NJBCA, under Schering-Plough’s by-laws, a special meeting of shareholders may only be called by the Chairman of Schering-Plough’s board of directors, Schering-Plough’s Chief Executive Officer or board of directors and shall be held at such time and such place and for such purpose(s) as stated in the notice of the meeting. No business other than that stated in the notice of meeting may be transacted at any special meeting.
 
The above provisions may have the effect of delaying consideration of a stockholder proposal until the next annual meeting unless a special meeting is called by the Chairman of Schering-Plough’s board of directors, Chief Executive Officer or board of directors.
 
Corporation’s Best Interest
 
Under the NJBCA, the director of a New Jersey corporation may consider, in discharging his or her duties to the corporation and in determining what he or she reasonably believes to be in the best interest of the corporation, any of the following (in addition to the effects of any action on shareholders): (i) the effects of the action on the corporation’s employees, suppliers, creditors and customers, (ii) the effects of the action on the community in which the corporation operates, and (iii) the long-term as well as the short-term interest of the corporation and its shareholders, including the possibility that these interests may be best served by the continued independence of the corporation. If, on the basis of the foregoing factors, the board of directors determines that any proposal or offer to acquire the corporation is not in the best interest of the corporation, it may reject such proposal or offer, in which event the board of directors will have no duty to remove any obstacles to, or refrain from impeding, such proposal or offer.
 
Required Vote for Authorization of Certain Actions; Anti-Greenmail Provisions
 
Under the NJBCA, the consummation of a merger or consolidation of a New Jersey corporation organized subsequent to January 1, 1969, such as Schering-Plough, requires the approval of such corporation’s board of directors and the affirmative vote of a majority of the votes cast by each of the holders of shares of the corporation entitled to vote thereon and any class or series entitled to vote thereon as a class, unless such corporation is the surviving corporation, and: (i) such corporation’s certificate of incorporation is not amended, (ii) the stockholders of the surviving corporation whose shares were outstanding immediately before the effective date of the merger will hold the same number of shares, with identical designations, preferences, limitations and rights, immediately after the merger or consolidation, as the case may be, and (iii) the number of voting shares and participating shares outstanding after the merger will not exceed by more than 40% the total number of voting or participating shares of the surviving corporation immediately before the merger. Similarly, in the case of a New Jersey corporation organized subsequent to 1969, such as Schering-Plough, a sale of all or substantially all of a corporation’s assets other than in the ordinary course of business, or a voluntary dissolution of a corporation, requires the approval of such corporation’s board of directors and the affirmative vote of a majority of the votes cast by each of the holders of shares of the corporation entitled to vote thereon and any class or series entitled to vote thereon as a class.
 
Schering-Plough’s certificate of incorporation contains an “anti-greenmail” provision pursuant to which Schering-Plough or its subsidiaries may not purchase shares of voting stock from a 5% or greater shareholder at a per share price in excess of the market price unless (a) approved by the affirmative vote of the holders of the amount of voting power of the voting stock equal to the sum of the voting power of such 5% or greater shareholder and a majority of the voting power of the remaining outstanding shares of voting stock, voting together as a single class, or (b) the purchase is made pursuant to an offer made available to all holders of the same class of stock or an open market purchase.
 
No Rights Plan in Effect
 
The preferred share purchase right (commonly known as a “poison pill”) that Schering-Plough declared as a dividend on each share of its common stock on June 24, 1997 expired on July 10, 2007. The Schering-Plough board of directors committed to Schering-Plough’s shareholders that no


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new shareholder rights plan will be adopted in the future, unless the plan is submitted to shareholders for approval within 12 months of adoption. This commitment is reflected in the Schering-Plough Corporate Governance Guidelines.
 
Restrictions on Business Combinations with Certain Stockholders
 
The NJBCA provides that no corporation organized under the laws of New Jersey with its principal executive offices or significant operations located in New Jersey (a “resident domestic corporation”) may engage in any “business combination” (as defined in the NJBCA) with any interested stockholder (generally a 10% or greater stockholder) of such corporation for a period of five years following such interested stockholder’s stock acquisition, unless such business combination is approved by the board of directors of such corporation prior to the stock acquisition. A resident domestic corporation, such as Schering-Plough, cannot opt out of the foregoing provisions of the NJBCA.
 
In addition, no resident domestic corporation may engage, at any time, in any business combination with any interested stockholder of such corporation other than: (i) a business combination approved by the board of directors prior to the stock acquisition, (ii) a business combination approved by the affirmative vote of the holders of two-thirds of the voting stock not beneficially owned by such interested stockholder at a meeting called for such purpose, or (iii) a business combination in which the interested stockholder pays a formula price designed to ensure that all other stockholders receive at least the highest price per share paid by such interested stockholder.
 
In connection with business combinations with any 10% stockholder, Schering-Plough’s certificate of incorporation contains provisions requiring the approval of more than 50% of the voting power of all of the then-outstanding shares of capital stock of the corporation entitled to vote in the election of directors, voting together as a single class. Any amendments or repeal of the business combination provisions require the affirmative vote of the holders of more than 50% of the voting power of all of the shares entitled to vote, voting together as a single class.
 
DESCRIPTION OF DEBT SECURITIES
 
Schering-Plough may issue debt securities from time to time in one or more series. The following description summarizes the general terms and provisions of the debt securities that Schering-Plough may offer pursuant to this prospectus. The specific terms relating to any series of debt securities that Schering-Plough may offer will be described in a prospectus supplement. Please read and rely on the prospectus supplement, which includes important information for investors evaluating an investment in a series of Schering-Plough debt securities. Because the terms of specific series of debt securities offered may differ from the general information that Schering-Plough has provided below, you should rely on information in the applicable prospectus supplement that contradicts any information below.
 
As required by federal law for all bonds and notes of companies that are publicly offered, the debt securities will be governed by a document called an “indenture”. An indenture is a contract between a financial institution, acting on your behalf as trustee of the debt securities offered, and Schering-Plough. The debt securities will be issued pursuant to an indenture that Schering-Plough will enter into with a trustee. References to the “indenture” in this prospectus are to the indenture, dated November 26, 2003, as amended and restated, between Schering-Plough and The Bank of New York, as trustee, as may be supplemented by any supplemental indenture applicable to your debt securities. The trustee has two main roles. First, subject to some limitations on the extent to which the trustee can act on your behalf, the trustee can enforce your rights against Schering-Plough if Schering-Plough defaults on its obligations under the indenture. Second, the trustee performs certain administrative duties for Schering-Plough with respect to the debt securities. Unless otherwise provided in any applicable prospectus supplement, the following section is a summary of the principal terms and provisions that will be included in the indenture. The indenture has been filed as an exhibit incorporated by reference in the registration statement of which this prospectus is a part. If this


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summary refers to particular provisions of the indenture, such provisions, including the definitions of terms, are incorporated by reference in this prospectus as part of the summary. Schering-Plough urges you to read the indenture and any supplement thereto because these documents, and not this section or any description of the debt securities in any prospectus supplement, define your rights as a holder of debt securities.
 
In this “Description of Debt Securities” section, “Schering-Plough” refers to Schering-Plough Corporation, excluding its subsidiaries, unless otherwise expressly stated or the context otherwise requires.
 
General
 
The indenture does not limit the amount of debt that Schering-Plough may issue under the indenture or otherwise.
 
Under the indenture, Schering-Plough may issue the securities in one or more series. The securities may have the same or various maturities. The securities may be issued at par, at a premium or with original issue discount. Schering-Plough may also reopen a previous issue of securities and issue additional securities of the series.
 
The debt securities described in this prospectus and any prospectus supplement will be Schering-Plough’s direct unsecured obligations. Senior debt securities will rank equally with Schering-Plough’s other unsecured and senior indebtedness. Subordinated debt securities will be unsecured and subordinated in right of payment to the prior payment in full of all of Schering-Plough’s unsecured and senior indebtedness. See “—Subordination” below. Any of Schering-Plough’s secured indebtedness will rank ahead of the debt securities to the extent of the assets securing such indebtedness. Also, Schering-Plough conducts operations primarily through its subsidiaries and substantially all of Schering-Plough’s consolidated assets are held by its subsidiaries. Accordingly, Schering-Plough’s cash flow and Schering-Plough’s ability to meet its obligations under the debt securities will be largely dependent on the earnings of its subsidiaries and the distribution or other payment of these earnings to Schering-Plough in the form of dividends, loans or advances, and repayment of loans and advances from Schering-Plough. Schering-Plough’s subsidiaries are separate and distinct legal entities and have no obligation to pay the amounts which will be due on Schering-Plough’s debt securities or to make any funds available for payment of amounts which will be due on Schering-Plough’s debt securities. Therefore, Schering-Plough’s rights, and the rights of Schering-Plough’s creditors, including the rights of the holders of the debt securities to participate in any distribution of assets of any of Schering-Plough’s subsidiaries, if such subsidiary were to be liquidated or reorganized, is subject to the prior claims of the subsidiary’s creditors. To the extent that Schering-Plough may be a creditor with recognized claims against its subsidiaries, Schering-Plough’s claims will still be effectively subordinated to any security interest in, or mortgages or other liens on, the assets of the subsidiary that are senior to Schering-Plough.
 
Terms
 
The prospectus supplement relating to any series of debt securities being offered will include specific terms relating to the offering. These terms will include, among other terms, some or all of the following:
 
  •  the title and type of the series;
 
  •  the total principal amount;
 
  •  the percentage of the principal amount at which the securities will be issued;
 
  •  the dates on which the principal of the securities will be payable;
 
  •  any payments due if the maturity of the securities is accelerated;


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  •  any interest rates or the method of determining the interest rates;
 
  •  the dates from which any interest will accrue or the method of determining those dates;
 
  •  the interest payment record and payment dates;
 
  •  whether the securities are redeemable at Schering-Plough’s option;
 
  •  any sinking fund or other provisions that would obligate Schering-Plough to repurchase or otherwise redeem the securities;
 
  •  the option of either Schering-Plough or the holder to elect the currency (for example, U.S. dollars, euros, or other non-U.S. currency, currency unit or composite currency) of payment on the securities;
 
  •  the currency of the payment of principal, any premium, and any interest;
 
  •  any index or other method Schering-Plough will use to determine the amount of principal or any premium or interest;
 
  •  the form in which Schering-Plough will issue the securities (for example, registered or bearer book-entry form, or registered or bearer certificated form) and any restrictions related to the form;
 
  •  any covenants, defaults, events of default or provisions applicable to the securities;
 
  •  any special tax implications, including provisions for original issue discount securities, if offered;
 
  •  any provisions for convertibility or exchangeability of the debt securities into or for any other securities;
 
  •  any provisions granting special rights to the holders of the securities upon the occurrence of specified events;
 
  •  the denominations of the securities;
 
  •  whether the securities are subject to subordination and, if so, the subordination terms; and
 
  •  any other specific terms of the securities.
 
Schering-Plough may in the future issue debt securities other than the debt securities described in this prospectus. There is no requirement that any other debt securities be issued under the indenture. Thus, Schering-Plough may issue any other debt securities under other indentures or documentation containing provisions different from those included in the indenture or any series of securities issued pursuant to this prospectus.
 
Events of Default
 
When Schering-Plough uses the term “event of default” in the indenture, here are some examples of what is meant. An event of default occurs if:
 
  •  Schering-Plough fails to make the principal or any premium payment on any debt security when due;
 
  •  Schering-Plough fails to pay interest on any debt security for 45 days after payment was due;
 
  •  Schering-Plough fails to make any sinking fund payment when due;
 
  •  Schering-Plough fails to perform any other covenant in the indenture and this failure continues for 90 days after Schering-Plough receives written notice of it from the trustee or the holders of at least 25% in principal amount of outstanding debt securities of that series; or
 
  •  Schering-Plough or a court takes certain actions relating to the bankruptcy, insolvency or reorganization of the company.


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The supplemental indenture or the form of security for a particular series of debt securities may include additional events of default or changes to the events of default described above. The events of default applicable to a particular series of debt securities will be described in the prospectus supplement relating to that series. A default under Schering-Plough’s other indebtedness will not be a default under the indenture for the debt securities covered by this prospectus, and a default under one series of debt securities will not necessarily be a default under another series. The trustee may withhold notice to the holders of debt securities of any default (except for defaults that involve Schering-Plough’s failure to pay principal or interest) if it considers such withholding of notice to be in the best interests of the holders.
 
If an event of default with respect to outstanding debt securities of any series occurs and is continuing, then the trustee or the holders of at least 25% in principal amount of outstanding debt securities of that series may declare, in a written notice, the principal amount (or specified amount) plus accrued and unpaid interest on all debt securities of that series to be immediately due and payable. If Schering-Plough or a court takes certain actions relating to the bankruptcy, insolvency or reorganization of the company, the principal amount plus accrued and unpaid interest on all debt securities will become immediately due and payable without any declaration or other act on the part of the trustee or holders of securities. At any time after a declaration of acceleration with respect to debt securities of any series has been made, the holders of a majority in principal amount (or specified amount) of the outstanding debt securities of that series, by written notice to Schering-Plough and the trustee, may rescind and annul such declaration and its consequences if:
 
  •  Schering-Plough has paid or deposited with the trustee a sum sufficient to pay overdue interest and overdue principal other than the accelerated interest and principal; and
 
  •  Schering-Plough has cured or the holders have waived all events of default, other than the non-payment of accelerated principal and interest with respect to debt securities of that series, as provided in the indenture.
 
Schering-Plough refers you to the prospectus supplement relating to any series of debt securities that are discount securities for the particular provisions relating to acceleration of a portion of the principal amount of the discount securities upon the occurrence of an event of default.
 
If a default in the performance or breach of the indenture shall have occurred and be continuing, the holders of not less than a majority in principal amount of the outstanding securities of all series, by notice to the trustee, may waive any past event of default or its consequences under the indenture.
 
However, an event of default cannot be waived with respect to any series of securities in the following two circumstances:
 
  •  a failure to pay the principal of, and premium, if any, or interest on any security; or
 
  •  a covenant or provision that cannot be modified or amended without the consent of each holder of outstanding securities of that series.
 
Other than its duties in case of a default, the trustee is not obligated to exercise any of its rights or powers under the indenture at the request, order or direction of any holders, unless the holders offer the trustee reasonable indemnity. If they provide this reasonable indemnity, the holders of a majority in principal amount outstanding of any series of debt securities may, subject to certain limitations, direct the time, method and place for conducting any proceeding or any remedy available to the trustee, or exercising any power conferred upon the trustee, for any series of debt securities.
 
Schering-Plough is required to deliver to the trustee an annual statement as to Schering-Plough’s fulfillment of all of its obligations under the indenture.


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Defeasance
 
The term “defeasance”, as used in the indenture means discharge from some or all of its obligations under the indenture. If Schering-Plough deposits with the trustee sufficient cash or government securities to pay the principal, any premium, interest and any other sums due on the stated maturity date or a redemption date of the securities of a particular series, then at Schering-Plough’s option:
 
  •  Schering-Plough will be discharged from its obligations with respect to the securities of such series; or
 
  •  Schering-Plough will no longer be under any obligation to comply with certain restrictive covenants under the indenture, and certain events of default will no longer apply to Schering-Plough.
 
If this happens, the holders of the securities of the affected series will not be entitled to the benefits of the indenture except for registration of transfer and exchange of debt securities and replacement of lost, stolen or mutilated securities. Such holders may look only to such deposited funds or obligations for payment.
 
To exercise the defeasance option, Schering-Plough must deliver to the trustee an opinion of counsel that the deposit and related defeasance would not cause the holders of the securities to recognize income, gain or loss for federal income tax purposes. Schering-Plough must also deliver any ruling received from or published by the United States Internal Revenue Service if Schering-Plough is discharged from its obligations with respect to the securities.
 
Modification of the Indenture
 
Under the indenture, Schering-Plough’s rights and obligations, as well as the rights of the holders, may be modified if the holders of a majority in aggregate principal amount of the outstanding debt securities of each series affected by the modification consent to the modification. However, none of the following modifications will be effective against any holder without its consent:
 
  •  modification of the maturity date;
 
  •  modification of the principal and interest payment terms;
 
  •  modification of the currency for payment;
 
  •  impairment of the right to sue for the enforcement of payment at the maturity of the debt security;
 
  •  modification of any conversion rights; or
 
  •  modification reducing the percentage required for modifications or modifying the foregoing requirements or reducing the percentage required to waive certain specified covenants.
 
In addition, no supplemental indenture shall adversely affect the rights of any holder of senior indebtedness with respect to subordination without the consent of such holder.
 
Subordination
 
The extent to which a particular series of subordinated debt securities may be subordinated to Schering-Plough’s unsecured and senior indebtedness will be set forth in the prospectus supplement for any such series. The indenture may be modified by a supplemental indenture to reflect such subordination provisions.


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Form and Denomination of Debt Securities
 
Denomination of Debt Securities
 
Unless otherwise indicated in the applicable prospectus supplement, the debt securities will be denominated in U.S. dollars, in minimum denominations of $1,000 and multiples thereof.
 
Registered Form
 
Schering-Plough may issue the debt securities in registered form. In that case, Schering-Plough may issue the securities either in book-entry form only or in “certificated” form. Schering-Plough will issue registered debt securities in book-entry form only, unless it specifies otherwise in the applicable prospectus supplement. Debt securities issued in book-entry form will be represented by global securities.
 
Bearer Form
 
Schering-Plough also will have the option of issuing debt securities in non-registered form, as bearer securities, if Schering-Plough issues the securities outside the United States to non-U.S. persons. In that case, the applicable prospectus supplement will set forth the mechanics for holding the bearer securities, including the procedures for receiving payments, for exchanging the bearer securities for registered securities of the same series and for receiving notices. The applicable prospectus supplement will also describe the requirements with respect to Schering-Plough’s maintenance of offices or agencies outside the United States and the applicable U.S. federal tax law requirements.
 
Holders of Registered Debt Securities
 
Book-Entry Holders
 
Schering-Plough will issue registered debt securities in book-entry form only, unless Schering-Plough specifies otherwise in the applicable prospectus supplement. Debt securities held in book-entry form will be represented by one or more global securities registered in the name of a depositary or its nominee. The depositary or its nominee will hold such global securities on behalf of financial institutions that participate in such depositary’s book-entry system. These participating financial institutions, in turn, hold beneficial interests in the global securities either on their own behalf or on behalf of their customers.
 
Under the indenture, only the person in whose name a debt security is registered is recognized as the holder of that debt security. Consequently, for debt securities issued in global form, Schering-Plough will recognize only the depositary or its nominee as the holder of the debt securities, and Schering-Plough will make all payments on the debt securities to the depositary or its nominee. The depositary will then pass along the payments that it receives to its participants, which in turn will pass the payments along to their customers who are the beneficial owners of the debt securities. The depositary and its participants do so under agreements they have made with one another or with their customers or by law; they are not obligated to do so under the terms of the debt securities or the terms of the indenture.
 
As a result, investors will not own debt securities directly. Instead, they will own beneficial interests in a global security, through a bank, broker or other financial institution that participates in the depositary’s book-entry system, or that holds an interest through a participant in the depositary’s book-entry system. As long as the debt securities are issued in global form, investors will be indirect holders, and not holders, of the debt securities.


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Street Name Holders
 
In the event that Schering-Plough issues debt securities in certificated form, or in the event that a global security is terminated, investors may choose to hold their debt securities either in their own names or in ”street name”. Debt securities held in street name are registered in the name of a bank, broker or other financial institution chosen by the investor, and the investor would hold a beneficial interest in those debt securities through the account that he or she maintains at such bank, broker or other financial institution.
 
For debt securities held in street name, Schering-Plough will recognize only the intermediary banks, brokers and other financial institutions in whose names the debt securities are registered as the holders of those debt securities, and Schering-Plough will make all payments on those debt securities to them. These institutions will pass along the payments that they receive from Schering-Plough to their customers who are the beneficial owners pursuant to agreements that they have entered into with such customers or by law; they are not obligated to do so under the terms of the debt securities or the terms of the indenture. Investors who hold debt securities in street name will be indirect holders, and not holders, of the debt securities.
 
Registered Holders
 
Schering-Plough’s obligations, as well as the obligations of the trustee and those of any third parties employed by the trustee or Schering-Plough, run only to the registered holders of the debt securities. Schering-Plough does not have obligations to investors who hold beneficial interests in global securities, in street name or by any other indirect means and who are, therefore, not the registered holders of the debt securities. This will be the case whether an investor chooses to be an indirect holder of a debt security, or has no choice in the matter because Schering-Plough is issuing the debt securities only in global form.
 
For example, once Schering-Plough makes a payment or gives a notice to the registered holder of the debt securities, Schering-Plough has no further responsibility with respect to such payment or notice even if that registered holder is required, under agreements with depositary participants or customers or by law, to pass it along to the indirect holders but does not do so. Similarly, if Schering-Plough wants to obtain the approval of the holders for any purpose (for example, to amend an indenture or to relieve Schering-Plough of the consequences of a default or of Schering-Plough’s obligation to comply with a particular provision of an indenture), Schering-Plough would seek the approval only from the registered holders, and not the indirect holders, of the debt securities. Whether and how the registered holders contact the indirect holders is up to the registered holders.
 
Notwithstanding the above, references to “you” or “your” in this description of debt securities are to investors who invest in the debt securities being offered by this prospectus, whether they are the registered holders or only indirect holders of the debt securities offered. References to “your debt securities” in this prospectus means the series of debt securities in which you hold a direct or indirect interest.
 
Special Considerations for Indirect Holders
 
If you hold debt securities through a bank, broker or other financial institution, either in book-entry form or in street name, Schering-Plough urges you to check with that institution to find out:
 
  •  how it handles securities payments and notices;
 
  •  whether it imposes fees or charges;
 
  •  how it would handle a request for its consent, as a registered holder of the debt securities, if ever required;
 
  •  if permitted for a particular series of debt securities, whether and how you can instruct it to send you debt securities registered in your own name so you can be a registered holder of such debt securities;


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  •  how it would exercise rights under the debt securities if there were a default or other event triggering the need for holders to act to protect their interests; and
 
  •  if the debt securities are in book-entry form, how the depositary’s rules and procedures will affect these matters.
 
Global Securities
 
A global security represents one or any other number of individual debt securities. Generally, all debt securities represented by the same global securities will have the same terms. Each debt security issued in book-entry form will be represented by a global security that Schering-Plough deposits with and registers in the name of a financial institution or its nominee that Schering-Plough selects. The financial institution that Schering-Plough selects for this purpose is called the depositary. Unless Schering-Plough specifies otherwise in the applicable prospectus supplement, The Depository Trust Company, New York, New York, known as DTC, will be the depositary for debt securities that Schering-Plough issues in book-entry form.
 
A global security may not be transferred to or registered in the name of anyone other than the depositary or its nominee, unless special termination situations arise. Schering-Plough describes those situations below under “—Special Situations When a Global Security Will Be Terminated”. As a result of these arrangements, the depositary, or its nominee, will be the sole registered holder of all debt securities represented by a global security, and investors will be permitted to own only beneficial interests in a global security. Beneficial interests must be held by means of an account with a broker, bank or other financial institution that in turn has an account either with the depositary or with another institution that has an account with the depositary. Thus, an investor whose security is represented by a global security will not be a registered holder of the debt security, but an indirect holder of a beneficial interest in the global security.
 
Special Considerations for Global Securities
 
As an indirect holder, an investor’s rights relating to a global security will be governed by the account rules of the investor’s financial institution and of the depositary, as well as general laws relating to securities transfers. The depositary that holds the global security will be considered the registered holder of the debt securities represented by such global security.
 
If debt securities are issued only in the form of a global security, an investor should be aware of the following:
 
  •  An investor cannot cause the debt securities to be registered in his or her name, and cannot obtain non-global certificates for his or her interest in the debt securities, except in the special situations described below under “—Special Situations When a Global Security Will Be Terminated”.
 
  •  An investor will be an indirect holder and must look to his or her own bank or broker for payments on the debt securities and protection of his or her legal rights relating to the debt securities, as described under “—Holders of Registered Debt Securities” above.
 
  •  An investor may not be able to sell his or her interest in the debt securities to some insurance companies and other institutions that are required by law to own their securities in non-book-entry form.
 
  •  An investor may not be able to pledge his or her interest in the debt securities in circumstances where certificates representing the debt securities must be delivered to the lender or other beneficiary of the pledge in order for the pledge to be effective.
 
  •  The depositary’s policies, which may change from time to time, will govern payments, transfers, exchanges and other matters relating to an investor’s interest in the debt securities. Neither the trustee nor Schering-Plough have any responsibility for any aspect of the depositary’s actions or


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  for the depositary’s records of ownership interests in a global security. Additionally, neither the trustee nor Schering-Plough supervise the depositary in any way.
 
  •  DTC requires that those who purchase and sell interests in a global security that is deposited in its book-entry system use immediately available funds. Your broker or bank may also require you to use immediately available funds when purchasing or selling interests in a global security.
 
  •  Financial institutions that participate in the depositary’s book-entry system, and through which an investor holds its interest in a global security, may also have their own policies affecting payments, notices and other matters relating to the debt security. There may be more than one financial intermediary in the chain of ownership for an investor. Schering-Plough does not monitor and is not responsible for the actions of any of such intermediaries.
 
Special Situations When a Global Security Will Be Terminated
 
In a few special situations described below, a global security will be terminated and interests in the global security will be exchanged for certificates in non-global form, referred to as “certificated” debt securities. After such an exchange, it will be up to the investor as to whether to hold the certificated debt securities directly or in street name. Schering-Plough has described the rights of direct holders and street name holders under “—Holders of Registered Debt Securities” above. Investors must consult their own banks or brokers to find out how to have their interests in a global security exchanged on termination of a global security for certificated debt securities to be held directly in their own names.
 
The special situations for termination of a global security are as follows:
 
  •  if the depositary notifies Schering-Plough that it is unwilling, unable or no longer qualified to continue as depositary for that global security, and Schering-Plough does not appoint another institution to act as depositary within 90 days of such notification; or
 
  •  if Schering-Plough notifies the trustee that it wishes to terminate that global security.
 
The applicable prospectus supplement may list situations for terminating a global security that would apply only to the particular series of debt securities covered by such prospectus supplement. If a global security were terminated, only the depositary, and not Schering-Plough or the trustee, would be responsible for deciding the names of the institutions in whose names the debt securities represented by the global security would be registered and, therefore, who would be the registered holders of those debt securities.
 
Form, Exchange and Transfer of Registered Securities
 
If Schering-Plough ceases to issue registered debt securities in global form, it will issue them:
 
  •  only in fully registered certificated form; and
 
  •  in the denominations specified in the applicable prospectus supplement.
 
Holders may exchange their certificated securities for debt securities of smaller denominations or combined into fewer debt securities of larger denominations, as long as the total principal amount is not changed.
 
Holders may exchange or transfer their certificated securities at the trustee’s office. Schering-Plough has appointed the trustee to act as its agent for registering debt securities in the names of holders transferring debt securities. Schering-Plough may appoint another entity to perform these functions or perform them itself.
 
Holders will not be required to pay a service charge to transfer or exchange their certificated securities, but they may be required to pay any tax or other governmental charge associated with the transfer or exchange. The transfer or exchange will be made only if Schering-Plough’s transfer agent is satisfied with the holders’ proof of legal ownership.


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If Schering-Plough has designated additional transfer agents for your debt security, they will be named in the applicable prospectus supplement. Schering-Plough may appoint additional transfer agents or cancel the appointment of any particular transfer agent. Schering-Plough may also approve a change in the location of the office through which any transfer agent acts.
 
If any certificated securities of a particular series are redeemable and Schering-Plough redeems less than all the debt securities of that series, Schering-Plough may block the transfer or exchange of those debt securities during the period beginning 15 days before the day Schering-Plough mails the notice of redemption and ending on the day of that mailing, in order to freeze the list of holders to prepare the mailing. Schering-Plough may also refuse to register transfers or exchanges of any certificated securities selected for redemption, except that Schering-Plough will continue to permit transfers and exchanges of the unredeemed portion of any debt security that will be partially redeemed.
 
If a registered debt security is issued in global form, only the depositary will be entitled to transfer and exchange the debt security as described in this subsection because it will be the sole holder of the debt security.
 
Payment and Paying Agents
 
On each due date for interest payments on the debt securities, Schering-Plough will pay interest to each person shown on the trustee’s records as owner of the debt securities at the close of business on a designated day that is in advance of the due date for interest. Schering-Plough will pay interest to each such person even if such person no longer owns the debt security on the interest due date. The designated day on which Schering-Plough will determine the owner of the debt security, as shown on the trustee’s records, is also known as the “record date”. The record date will usually be about two weeks in advance of the interest due date.
 
Because Schering-Plough will pay interest on the debt securities to the holders of the debt securities based on ownership as of the applicable record date with respect to any given interest period, and not to the holders of the debt securities on the interest due date (that is, the day that the interest is to be paid), it is up to the holders who are buying and selling the debt securities to work out between themselves the appropriate purchase price for the debt securities. It is common for purchase prices of debt securities to be adjusted so as to prorate the interest on the debt securities fairly between the buyer and the seller based on their respective ownership periods within the applicable interest period.
 
Schering-Plough will make payments on a global security by wire transfer of immediately available funds directly to the depositary, or its nominee, and not to any indirect holders who own beneficial interests in the global security. An indirect holder’s right to those payments will be governed by the rules and practices of the depositary and its participants, as described under “—Global Securities” above. Any other payments will be made as set forth in the applicable prospectus supplement.
 
If payment on a debt security is due on a day that is not a business day, Schering-Plough will make such payment on the next succeeding business day. The indenture will provide that such payments will be treated as if they were made on the original due date for payment. A postponement of this kind will not result in a default under any debt security or indenture, and no interest will accrue on the amount of any payment that is postponed in this manner.
 
Book-entry and other indirect holders should consult their banks or brokers for information on how they will receive payments on their debt securities.
 
Information Concerning the Trustee
 
The trustee, The Bank of New York (BONY), and certain of its affiliates have in the past and currently do provide banking, investment and other services to Schering-Plough. Those services


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include acting as a lender under Schering-Plough’s revolving credit agreement; trustee under the indenture, dated as of November 26, 2003, under which Schering-Plough issued $1.25 billion aggregate principal amount of 5.3% senior unsecured notes due 2013 and $1.15 billion aggregate principal amount of 6.5% senior unsecured notes due 2033; a transfer agent for Schering-Plough’s 2004 Preferred Stock and its common shares; and providing cash management services. Schering-Plough currently anticipates that BONY may continue to provide similar services in the future.
 
Governing Law
 
The indenture and the debt securities will be governed by, and construed in accordance with, the law of the State of New York.
 
PLAN OF DISTRIBUTION
 
Schering-Plough may sell the securities covered by this prospectus in any of the following methods:
 
  •  through underwriters, dealers or remarketing firms;
 
  •  directly to one or more purchasers, including to a limited number of institutional purchasers;
 
  •  through agents; or
 
  •  through a combination of any of the methods of sale.
 
Any such dealer or agent, in addition to any underwriter, may be deemed to be an underwriter within the meaning of the Securities Act. Any discounts or commissions received by an underwriter, dealer, remarketing firm or agent on the sale or resale of securities may be considered by the SEC to be underwriting discounts and commissions under the Securities Act.
 
Sale Through Underwriters
 
If underwriters are used in the sale of securities, such securities will be acquired by the underwriters for their own account and may be resold from time to time in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. The securities may be offered to the public either through underwriting syndicates represented by managing underwriters or directly by one or more underwriters acting alone. Unless otherwise set forth in the applicable prospectus supplement, the obligations of the underwriters to purchase the securities described in the applicable prospectus supplement will be subject to certain conditions precedent, and the underwriters will be obligated to purchase all such securities if any are purchased by them. Any public offering price and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time.
 
Direct Sales
 
The securities may be sold directly by Schering-Plough. In the case of securities sold directly by Schering-Plough, no underwriters or agents would be involved.
 
Sale Through Agents
 
The securities may be sold through agents designated by Schering-Plough from time to time. Any agents involved in the offer or sale of the securities in respect of which this prospectus is being delivered, and any commissions payable by Schering-Plough to such agents, will be set forth in the applicable prospectus supplement. Unless otherwise indicated in the applicable prospectus supplement, any such agent will be acting on a best efforts basis for the period of its appointment.


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General Information
 
The terms of the offering of the securities with respect to which this prospectus is being delivered will be set forth in the applicable prospectus supplement and will include among other things:
 
  •  the type of and terms of the securities offered;
 
  •  the price of the securities;
 
  •  the proceeds to Schering-Plough from the sale of the securities;
 
  •  the names of the securities exchanges, if any, on which the securities are listed;
 
  •  the name of any underwriters, dealers, remarketing firms or agents and the amount of securities underwritten or purchased by each of them;
 
  •  any over-allotment options under which underwriters may purchase additional securities from Schering-Plough;
 
  •  any underwriting discounts, agency fees or other compensation to underwriters or agents; and
 
  •  any discounts or concessions which may be allowed or reallowed or paid to dealers.
 
Agents, dealers, underwriters and remarketing firms may be entitled, under agreements entered into with Schering-Plough to indemnification by Schering-Plough against certain civil liabilities, including liabilities under the Securities Act, or to contribution to payments they may be required to make in respect thereof.
 
Agents, dealers, underwriters and remarketing firms may be customers of, engage in transactions with, or perform services for Schering-Plough or Schering-Plough’s subsidiaries in the ordinary course of business.
 
Unless otherwise indicated in the applicable prospectus supplement, all securities offered by this prospectus, other than Schering-Plough’s common shares, which are listed on the New York Stock Exchange, will be new issues with no established trading market. Schering-Plough may elect to list any series of securities on an exchange, and in the case of Schering-Plough’s common shares, on any additional exchange, but, unless otherwise specified in the applicable prospectus supplement, Schering-Plough shall not be obligated to do so. In addition, underwriters will not be obligated to make a market in any securities. No assurance can be given regarding the activity of trading in, or liquidity of, any securities.
 
VALIDITY OF SECURITIES
 
Unless otherwise indicated in a supplement to this prospectus, McCarter & English, LLP will pass upon the validity of the securities for Schering-Plough. In addition, Susan Ellen Wolf, Esq., Schering-Plough’s Corporate Secretary, will pass upon certain matters related to this offering. Ms. Wolf is an officer of Schering-Plough and beneficially owns common shares and holds options to purchase additional common shares. Ms. Wolf is eligible to participate in the Schering-Plough Corporation 2006 Stock Incentive Plan and the Schering-Plough Employees’ Saving Plan and may receive benefits under those plans.
 
EXPERTS
 
The consolidated financial statements, the related financial statement schedule, and management’s report on the effectiveness of internal control over financial reporting incorporated in this prospectus by reference from Schering-Plough’s 2006 10-K have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their reports, which are incorporated herein by reference (which reports (1) express an unqualified opinion on the consolidated financial statements and financial statement schedule and include an explanatory paragraph regarding Schering-Plough’s adoption of Statement of Financial Accounting Standards (“SFAS”) No. 123 (Revised 2004), “Share-Based Payment”, and SFAS No. 158, “Employers’ Accounting for Defined


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Benefit Pension and Other Postretirement Plans”, (2) express an unqualified opinion on management’s assessment regarding the effectiveness of internal control over financial reporting, and (3) express an unqualified opinion on the effectiveness of internal control over financial reporting), and have been so incorporated in reliance upon the reports of such firm given upon their authority as experts in accounting and auditing.
 
With respect to the unaudited interim financial information for the periods ended March 31, 2007 and 2006, and June 30, 2007 and 2006, which is incorporated herein by reference, Deloitte & Touche LLP, an independent registered public accounting firm, have applied limited procedures in accordance with the standards of the Public Company Accounting Oversight Board (United States) for a review of such information. However, as stated in their reports included in Schering-Plough’s first and second quarter 10-Q, and incorporated by reference herein, they did not audit and they do not express an opinion on that interim financial information. Accordingly, the degree of reliance on their reports on such information should be restricted in light of the limited nature of the review procedures applied. Deloitte & Touche LLP are not subject to the liability provisions of Section 11 of the Securities Act of 1933 for their reports on the unaudited interim financial information because those reports are not “reports” or a “part” of the registration statement prepared or certified by an accountant within the meaning of Sections 7 and 11 of the Securities Act.
 
The combined financial statements of the OBS Group as of December 31, 2006 and 2005, and for each of the years in the three-year period ended December 31, 2006, have been included herein in reliance upon the report of KPMG Accountants N.V., an independent public accounting firm, appearing elsewhere in this prospectus, and upon the authority of said firm as experts in accounting and auditing.


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INDEX TO OBS GROUP COMBINED FINANCIAL STATEMENTS
 
         
   
Page
 
  F-2
  F-3
  F-4
  F-5
  F-6
  F-64
  F-65
  F-66
  F-67
  F-68
  F-69


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OBS GROUP
 
(Amounts in millions of euros)
 
                                                     
        For the Year Ended December 31,  
   
Note
       
2006
         
2005
         
2004
 
 
Revenues
  4,5             3,718               3,499               3,339  
Cost of sales
                (1,159 )             (1,122 )             (1,112 )
                                                     
Gross profit
                2,559               2,377               2,227  
Selling and distribution expenses
        (1,137 )             (1,055 )             (1,060 )        
Research and development expenses
        (612 )             (544 )             (555 )        
General and administrative expenses
        (244 )             (227 )             (201 )        
Other operating income/(expense)
  6     17               173               119          
                                                     
                  (1,976 )             (1,653 )             (1,697 )
                                                     
Operating income
                583               724               530  
Financial expenses
  7     (45 )             (35 )             (25 )        
Financial income
  7     10               6               10          
                                                     
                  (35 )             (29 )             (15 )
                                                     
Operating income less net financing costs
                548               695               515  
Share of profit of associates
  14             2               2               1  
                                                     
Profit before tax
                550               697               516  
Income tax expense
  8             (157 )             (131 )             (158 )
                                                     
Profit for the period
                393               566               358  
                                                     
Attributable to:
                                                   
Equity holders of the OBS Group
                393               566               358  
Minority interest
                                             
                                                     
Profit for the period
                393               566               358  
                                                     
 
The accompanying notes are an integral part of these combined financial statements.


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OBS GROUP
 
COMBINED BALANCE SHEETS
(Amounts in millions of euros)
 
                                         
          As of December 31,  
   
Note
          2006           2005  
 
ASSETS
                                       
Property, plant and equipment, net
    10               1,097               1,121  
Intangible assets, net
    11               145               164  
Financial non-current assets:
    12                                  
— deferred tax assets
    13       281               367          
— investments in associates
    14       13               8          
— other investments
    12       118               137