Merck & Co., Inc. Annual Report, Year Ended Dec 31, 2007

Schering-Plough reported consolidated net sales of $12.7 billion for the fiscal year ending December 30, 2007, a 20% increase from the prior year, largely driven by the transformative acquisition of Organon BioSciences N.V. (OBS) in November 2007 and strong performance in its Human Prescription Pharmaceuticals segment. However, the company posted a net loss of $1.6 billion for the year, primarily due to significant purchase accounting charges related to the OBS acquisition, including a $3.8 billion charge for acquired in-process research and development. Despite the net loss, the company generated $2.6 billion in cash flow from operating activities. Key product sales, including REMICADE, NASONEX, and TEMODAR, demonstrated robust growth, contributing to the overall increase in revenue. The company also highlighted ongoing research and development investments, with spending increasing by 34% to $2.9 billion, signaling a commitment to pipeline development. Investors should note the significant impact of the OBS acquisition on the company's balance sheet and the ongoing integration process. Additionally, the company disclosed potential risks related to its Merck/Schering-Plough cholesterol joint venture products, VYTORIN and ZETIA, due to media scrutiny surrounding the ENHANCE clinical trial, which had begun impacting prescriptions in early 2008.