case2:08-cv-00397-dmc-mf document1 filed 01/18/2008 page 1...

Case 2:08-cv-00397-DMC-MF Document 1 Filed 01/18/2008 of 63

James E . CecchiLindsey H. TaylorCARELLA, BYRNE, BAIN, GILFILLAN,CECCHI, STEWART & OLSTEIN5 Becker Farm RoadRoseland , New Jersey 07068(973) 994-1700

David A.P. Brower

Charles J. Piven

BROWER PIVEN

The World Trade Center401 East Pratt Street, Suite 2525Baltimore, Maryland 21202(410) 332-0030

Lewis Kahn Kim E . Miller

KAHN GAUTHIER SWICK, LLC KAHN GAUTHIER SWICK, LLC650 Poydras Street - Suite 2150 12 East 41st StreetNew Orleans , LA 70130 New York, NY 10017(504) 455-1400 (212) 696 - 3730

Attorneys for Plaintiff andthe Class

UNITED STATES DISTRICT COURTDISTRICT OF NEW JERSEY

Civil Action No.F. RICHARD MANSON, Individually AndOn Behalf of All Others Similarly Situated,

Plaintiff,

vs.

SCHERING-PLOUGH CORPORATION,FRED HASSAN, ROBERT J. BERTOLINI,STEVEN H. KOEHLER and CARRIE S.COX,

CLASS ACTION COMPLAINTFOR VIOLATIONS OF

FEDERAL SECURITIES LAWS andDEMAND FOR TRIAL BY JURY

Defendants.

Plaintiff F. Richard Manson, individually and on behalf of all others similarly situated, by

way of Complaint against Defendants Schering-Plough Corporation, Fred Hassan, Robert J.

Bertolini, Steven H. Koehler and Carrie S. Cox, says:


1. This is a federal class action on behalf of purchasers of the common stock of

Schering-Plough Corp. ("Schering-Plough or the "Company) between July 24, 2006 and

January 14, 2008, inclusive (the "Class Period ), seeking to pursue remedies under the

Securities Exchange Act of 1934 (the "Exchange Act ). As alleged herein, defendants published

a series of materially false and misleading statements that defendants knew and/or recklessly

disregarded were materially false and misleading at the time of such publication, and that

omitted to reveal material information necessary to make defendants' statements, in light of such

material omissions, not materially false and misleading.

JURISDICTION AND VENUE

2. The claims asserted herein arise under and pursuant to Sections 10(b) and 20(a) of

the Exchange Act [15 U.S.C. §§ 78j(b) and 78t(a)] and Rule lOb-5 promulgated thereunder by

the United States Securities and Exchange Commission ("SEC ) [17 C.F.R. § 240.1Ob-5].

3. This Court has jurisdiction over the subject matter of this action pursuant to 28

U.S.C. §§ 1331 and 1337, and Section 27 of the Exchange Act [15 U.S.C. § 78aa].

4. Venue is proper in this District pursuant to Section 27 of the Exchange Act, and

28 U.S.C. § 1391(b). Schering-Plough maintains its principal place of business in this District

and many of the acts and practices complained of herein occurred in substantial part in this

District.

5. In connection with the acts alleged in this complaint, defendants, directly or

indirectly, used the means and instrumentalities of interstate commerce, including, but not

limited to, the mails, interstate telephone communications and the facilities of the national

securities markets.

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PARTIES

6. Plaintiff F. RICHARD MANSON is an individual residing at 1002 Fallscroft

Way, Lutherville, Maryland 21093. As is set forth in the accompanying certification,

incorporated by reference herein, Plaintiff purchased the common stock of Schering-Plough at

artificially inflated prices during the Class Period and has been damaged thereby.

7. Defendant SCHERING-PLOUGH CORP. is a New Jersey corporation with its

principal place of business located at 2000 Galloping Hill Road, Kenilworth, New Jersey.

According to the Company's profile, Schering-Plough engages in the discovery, development,

manufacture, and marketing of medical therapies and treatments worldwide, and is a science-

centered global health care company. Through its own biopharmaceutical research and

collaborations with partners, Schering-Plough creates therapies that purport to help save and

improve customer lives. Throughout the Class Period, two of the Company's most successful

drugs include ZETIA and VYTORIN, two drugs used to lower cholesterol

8. Defendant FRED HASSAN ("Hassan) is, and during the Class Period was,

Chief Executive Officer, President, Chairman of the Board of Directors and Chairman of the

Executive Committee of the Board of Directors of the Company. During the Class Period,

defendant Hassan signed the Company's SEC filings, including but not limited to Schering-

Plough's Form 2006 Form 10-K.

9. Defendant ROBERT J. BERTOLINI ("Bertolini) is and during the Class

Period was, Chief Financial Officer and Executive Vice President of the Company. During the

Class Period, defendant Bertolini signed the Company' s SEC filings , including but not limited to

Schering-Plough's 2006 Form 10-K.

10. Defendant STEVEN H. KOEHLER ("Koehler ) is, and during the Class Period

was, Controller and Vice President of the Company. During the Class Period , defendant Koehler

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signed the Company's SEC filings, including but not limited to Schering-Plough's Form(s) 10-Q

and 2006 Form 10-K.

11. Defendant CARRIE S. COX ("Cox ) is, and during the Class Period was

Executive Vice President and President of the Company' s Global Pharmaceutical Business.

During the Class Period, defendant Cox signed the Company's SEC filings, including but not

limited to Schering-Plough's 2006 Form 10-K.

12. Defendant RAUL E. KOHAN ("Kohan ) is, and during the Class Period was,

Senior Vice President and Member of Executive Management Team & Operations Management

Team and Strategic Advisor to Consumer Health Care for the Company. During the Class

Period, defendant Kohan signed the Company's SEC filings, including but not limited to

Schering-Plough's 2006 Form 10-K.

13. Defendant THOMAS P. KOESTLER ("Koestler) is, and during the Class

Period was, Executive Vice President and President of Schering-Plough Research Institute.

During the Class Period , defendant Koestler signed the Company' s SEC filings , including but

not limited to Schering-Plough's 2006 Form 10-K.

14. The defendants referenced above in ¶¶ 8 - 13 are referred to herein as the

"Individual Defendants.

15. Because of the Individual Defendants' positions with the Company, they had

access to the adverse undisclosed information about its drug products, the results of its drug

testing, its business, operations, operational trends, financial statements, markets and present and

future business prospects via access to internal corporate documents (including the Company's

operating plans, budgets and forecasts and reports of actual operations compared thereto),

conversations and connections with other corporate officers and employees, attendance at

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management and Board of Directors meetings and committees thereof and via reports and other

information provided to them in connection therewith.

16. It is appropriate to treat the Individual Defendants as a group for pleading

purposes and to presume that the false , misleading and incomplete information conveyed in the

Company's public filings , press releases and other publications as alleged herein are the

collective actions of the narrowly defined group of defendants identified above. Each of the

above officers of Schering-Plough, by virtue of their high-level positions with the Company,

directly participated in the management of the Company, was directly involved in the day-to-day

operations of the Company at the highest levels and was privy to confidential proprietary

information concerning the Company and its business , operations , products , growth, financial

statements, and financial condition, as alleged herein. Said defendants were involved in drafting,

producing, reviewing and/or disseminating the false and misleading statements and information

alleged herein, were aware, or recklessly disregarded, that the false and misleading statements

were being issued regarding the Company, and approved or ratified these statements, in violation

of the federal securities laws.

17. As officers and controlling persons of a publicly-held company whose common

stock was, and is, registered with the SEC pursuant to the Exchange Act, and was traded on the

New York Stock Exchange (the "NYSE ), and governed by the provisions of the federal

securities laws, the Individual Defendants each had a duty to disseminate promptly, accurate and

truthful information with respect to the Company's drug products and drug testing, its business,

financial condition and performance, growth, operations, financial statements, markets,

management, earnings and present and future business prospects, and to correct any previously-

issued statements that had become materially misleading or untrue, so that the market price of

the Company's publicly-traded common stock would be based upon truthful and accurate

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information. The Individual Defendants' misrepresentations and omissions during the Class

Period violated these specific requirements and obligations.

18. The Individual Defendants participated in the drafting, preparation, and/or

approval of the various public and shareholder and investor reports and other communications

complained of herein and were aware of, or recklessly disregarded, the misstatements contained

therein and omissions therefrom, and were aware of their materially false and misleading nature.

Because of their Board membership and/or executive and managerial positions with Schering-

Plough, each of the Individual Defendants had access to the adverse undisclosed information

about Schering-Plough's business prospects and financial condition and performance as

particularized herein and knew (or recklessly disregarded) that these adverse facts rendered the

positive representations made by or about Schering-Plough and its business issued or adopted by

the Company materially false and misleading.

19. The Individual Defendants, because of their positions of control and authority as

officers and/or directors of the Company, were able to and did control the content of the various

SEC filings, press releases and other public statements pertaining to the Company during the

Class Period. Each Individual Defendant was provided with copies of the documents alleged

herein to be misleading prior to or shortly after their issuance and/or had the ability and/or

opportunity to prevent their issuance or cause them to be corrected. Accordingly, each of the

Individual Defendants is responsible for the accuracy of the public reports and releases detailed

herein and is therefore primarily liable for the representations contained therein.

20. Each of the defendants is liable as a participant in a fraudulent scheme and course

ofbusiness that operated as a fraud or deceit on purchasers of Schering-Plough common stock by

disseminating materially false and misleading statements and/or concealing material adverse

facts. The scheme: (i) deceived the investing public regarding Schering-Plough's business,

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operations, management and the intrinsic value of Schering-Plough common stock; (ii) enabled

defendants to artificially inflate the price of Schering-Plough shares; (iii) enabled Schering-

Plough insiders to sell almost $45 million of their privately held Schering-Plough shares and it

allowed the Company itself to register and sell over $1.6 billion in newly issued common stock

during the Class Period and while in possession of material adverse non-public information

about the Company; and (iv) caused plaintiff and other members of the Class to purchase

Schering-Plough common stock at artificially inflated prices.

PLAINTIFF'S CLASS ACTION ALLEGATIONS

21. Plaintiff brings this action as a class action pursuant to Federal Rule of Civil

Procedure 23(a) and (b)(3) on behalf of a Class, consisting of all those who purchased or

otherwise acquired the common stock of Schering-Plough between July 24, 2006 and January

14, 2008, inclusive (the "Class ) and who were damaged thereby. Excluded from the Class are

defendants, the officers and directors of the Company, at all relevant times, members of their

immediate families and their legal representatives , heirs, successors or assigns and any entity in

which defendants have or had a controlling interest.

22. The members of the Class are so numerous that joinder of all members is

impracticable. Throughout the Class Period, Schering-Plough common shares were actively

traded on the NYSE. As of September 30, 2007, the Company had over 1.619 billion shares of

common stock issued and outstanding. While the exact number of Class members is unknown to

plaintiff at this time and can only be ascertained through appropriate discovery, plaintiff believes

that there are thousands of members in the proposed Class. Record owners and other members

of the Class may be identified from records maintained by Schering-Plough or its transfer agent

and may be notified of the pendency of this action by mail, using the form of notice similar to

that customarily used in securities class actions.

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23. Plaintiff s claims are typical of the claims of the members of the Class as all

members of the Class are similarly affected by defendants' wrongful conduct in violation of

federal law that is complained of herein.

24. Plaintiff will fairly and adequately protect the interests of the members of the

Class and has retained counsel competent and experienced in class and securities litigation.

25. Common questions of law and fact exist as to all members of the Class and

predominate over any questions solely affecting individual members of the Class. Among the

questions of law and fact common to the Class are:

(a) whether the federal securities laws were violated by defendants' acts as

alleged herein;

(b) whether statements made by defendants to the investing public during the

Class Period misrepresented material facts about the business, operations and management of

Schering-Plough; and

(c) to what extent the members of the Class have sustained damages and the

proper measure of damages.

26. A class action is superior to all other available methods for the fair and efficient

adjudication of this controversy since joinder of all members is impracticable. Furthermore, as

the damages suffered by individual Class members may be relatively small, the expense and

burden of individual litigation make it impossible for members of the Class to individually

redress the wrongs done to them. There will be no difficulty in the management of this action as

a class action.

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SUBSTANTIVE ALLEGATIONS

Defendants ' Materially False and MisleadingStatements Made During the Class Period

27. 2Q:06 Results Announced . On July 24, 2006, the inception of the Class Period,

defendants published a release on PR Newswire announcing purported results for the second

quarter of 2006, the period ended June 30, 2006. This release also announced the purported

success of the Company's "Turnaround plan, began at the end of 2003. and contained

statements regarding the purported success of its VYTORIN and ZETIA product sales , in part, as

follows:

Schering-Plough Reports Financial Results for 2006 Second QuarterTurnaround Phase of Action Agenda Well Under Way

KENILWORTH, N.J., July 24 /PRNewswire -FirstCall/ -- Schering-PloughCorporation (NYSE: SGP) today reported financial results for the 2006 secondquarter.

"Schering-Plough is executing on its six- to eight-year strategic plan that we laidout in 2003, said Fred Hassan, chairman and CEO. "Our Turnaround is wellunder way. We have been growing faster than our peers since the beginning of2005. Higher top-line sales performance, reinforced by financial discipline,continues to drive higher bottom-line earnings. And we are stepping up our effortsto build depth and strength for the long term, especially in R&D.

For the 2006 second quarter, the company reported net income available tocommon shareholders of $237 million or 16 cents per share on a GAAP basis.Excluding charges related to actions to streamline the company's manufacturingoperations announced June 1, 2006 (see table below), the company's income inthe 2006 second quarter would have been $375 million or 25 cents per share.

For the 2005 second quarter, the company reported a loss of $70 million or 5cents per share on a GAAP basis, which included special charges of $259 millionor approximately 18 cents per share.

GAAP net sales for the 2006 second quarter totaled $2.8 billion, up 11 percentversus the 2005 second quarter. Schering-Plough does not record sales of itscholesterol joint venture with Merck & Co., Inc., as the venture is accounted forunder the equity method . Including an adjustment of an assumed 50 percent ofglobal cholesterol joint venture net sales (see table below), Schering-Plough'sadjusted net sales for the 2006 second quarter would have totaled $3.3 billion, an

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18 percent increase, compared to $2.8 billion on a similar adjusted basis in the2005 second quarter.

The cholesterol franchise, managed through a joint venture with Merck,comprises VYTORIN (ezetimibe/simvastatin) and ZETIA (ezetimibe).VYTORIN has been launched in more than 35 countries and ZETIA in more than80.

"While the U.S. cholesterol-lowering market adjusts to the entry of generic Zocorcompetition, we remain confident in the value proposition afforded by VYTORINand ZETIA, said Hassan. The company pointed to head-to-head clinical trialsversus Crestor, Lipitor and Zocor that have shown VYTORIN to be the mosteffective medicine for lowering cholesterol and getting patients to moreaggressive treatment goals. Further, new recommendations from the AmericanHeart Association and the American College of Cardiology are calling forincreasingly aggressive treatment of high cholesterol for certain patients."VYTORIN and ZETIA are valuable tools for doctors seeking to get their patientsto goal, Hassan said, "with VYTORIN offering the added benefit of being ableto get more patients to goal at the initial starting dose.

The company continues to direct significant investments in R&D to advance theproduct pipeline and build long-term strength, particularly in drug development.

The company noted that GAAP net sales do not include sales of the cholesterolproducts marketed in partnership with Merck, as described below . Globalcholesterol joint venture net sales , which include VYTORIN and ZETIA, totaledapproximately $958 million in the 2006 second quarter compared to net sales of$514 million in the comparable 2005 period . Including an adjustment of anassumed 50 percent of global cholesterol joint venture net sales , Schering-Plough's adjusted net sales for the second quarter of 2006 would have totaled $3.3billion, an 18 percent increase , as compared to $2.8 billion on a similar adjustedbasis in the second quarter of 2005.

The company utilizes the equity method of accounting for its cholesterol jointventure with Merck. Overall, the company shares in approximately 50 percent ofthe profits of the joint venture with Merck, although there are different profit-sharing arrangements for the cholesterol products in countries around the world.There is a separate co-marketing agreement with Bayer for ZETIA in Japan,where the product is currently under regulatory review. Under the equity method,the company records its share of the income from operations (which includesmilestones earned from Merck) in "Equity income from cholesterol jointventure, which totaled $355 million in the 2006 second quarter versus $170million in the second quarter of 2005. The increase in equity income reflected the

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strong sales of VYTORIN and ZETIA in the 2006 second quarter, which werefavorably impacted by a modest increase in U. S. trade inventory buying patterns.

28. 2Q:06 Form 10-Q. On or about July 28, 2006, defendants filed with the SEC the

Company's 2Q:06 Form 10-Q, for the quarter ended June 30, 2006, signed by defendant Koehler

and certified by defendants Hassan and Bertolini. In addition to making substantially similar

statements concerning the Company' s operations , financial results , and the progress of its

turnaround plan and its marketing of VYTORIN and ZETIA as had been published previously,

the 2Q:06 Form 10-Q also contained representations which attested to the purported

effectiveness and sufficiency of the Company's controls and procedures, as follows:

Item 4. Controls and Procedures

Management, including the chief executive officer and the chief financial officer,has evaluated the Company's disclosure controls and procedures as of the end ofthe quarterly period covered by this Form 10-Q and has concluded that theCompany's disclosure controls and procedures are effective. They also concludedthat there were no changes in the Company's internal control over financialreporting that occurred during the Company's most recent fiscal quarter that havematerially affected, or are reasonably likely to materially affect, the Company'sinternal control over financial reporting.

As part of the changing business environment in which the Company operates, theCompany is replacing and upgrading a number of information systems. Thisprocess will be ongoing for several years. In connection with these changes, aspart of the Company's management of both internal control over financialreporting and disclosure controls and procedures, management has concluded thatthe new systems are at least as effective with respect to those controls as the priorsystems.

29. Certifications . In addition to the foregoing, the Company's 2Q:06 Form 10-Q

also contained Certifications by defendants Hassan and Bertolini , that attested to the purported

accuracy and completeness of the Company' s financial and operational reports , as follows:

CERTIFICATION

1. I have reviewed this quarterly report on Form 10-Q of Schering-PloughCorporation (the "registrant );

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2. Based on my knowledge, this report does not contain any untrue statementof a material fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, notmisleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financialinformation included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of,and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible forestablishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financialreporting (as defined in Exchange Act Rules 13a - 15(f) and 15d - 15(f)) forthe registrant and have:

(a) Designed such disclosure controls and procedures, or caused suchdisclosure controls and procedures to be designed under our supervision, to ensurethat material information relating to the registrant, including its consolidatedsubsidiaries, is made known to us by others within those entities, particularlyduring the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or causedsuch internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controlsand procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the periodcovered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internalcontrol over financial reporting that occurred during the registrant's most recentfiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report)that has materially affected, or is reasonably likely to materially affect, theregistrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on ourmost recent evaluation of internal control over financial reporting, to theregistrant's auditors and the audit committee of the registrant's board of directors(or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the designor operation of internal control over financial reporting which are reasonably

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Case 2 : 08-cv-00397-DMC-MF Document 1 Filed 01/18/2008 of 63

likely to adversely affect the registrant 's ability to record, process , summarize andreport financial information; and

(b) Any fraud, whether or not material , that involves management orother employees who have a significant role in the registrant ' s internal controlover financial reporting.

/s/ FRED HASSANFred HassanChairman of the Board and Chief Executive Officer

Date: July 28, 2006

/s/ ROBERT J. BERTOLINIRobert J. BertoliniExecutive Vice President and Chief Financial Officer

Date: July 28, 2006

CERTIFICATION

I, Fred Hassan, Chairman of the Board and Chief Executive Officer of Schering-Plough Corporation, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of2002, that:

(1) the Quarterly Report on Form 10-Q for the period ended June 30,2006 (the "Report ) which this statement accompanies fully complies with therequirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C.78m); and

(2) information contained in the Report fairly presents, in all materialrespects, the financial condition and results of operations of Schering-PloughCorporation.

/s/ FRED HASSANFred HassanChairman of the Board and Chief Executive OfficerDated: July 28, 2006

CERTIFICATION

I, Robert J. Bertolini, Executive Vice President and Chief Financial Officer ofSchering-Plough Corporation, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

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30. In addition to the foregoing, on August 29, 2006, defendants also published a

release on PR Newswire that purported to announce that the Company had resolved prior claims

against it by the U.S. Attorney's Office for the District of Mass . And the U.S. Department of

Justice. This release served to further condition investors to believe that defendants had already

strengthened Schering-Plough's internal controls and operational procedures, in part, as follows:

Schering-Plough Reaches Agreement With U.S. Attorney' s Office for Districtof Massachusetts and U.S. Department of Justice

KENILWORTH, N.J., Aug. 29 /PRNewswire-FirstCall/ -- Schering-PloughCorporation (NYSE: SGP) has reached an agreement with the U. S. Attorney'sOffice for the District of Massachusetts and the U. S. Department of Justice tosettle the previously disclosed investigation involving the company' s sales,marketing and clinical trial practices and programs. The agreement reached todayresolves that investigation, which began prior to the arrival of the newmanagement team.

"Since April 2003 when new management joined Schering-Plough and launchedits Action Agenda to transform the company, we have made great progress inbuilding an organization that puts business integrity at the center of its work, saidBrent Saunders, senior vice president, Global Compliance and Business Practices,Schering-Plough Corporation. "With this agreement, we are putting issues fromthe past behind us. It is another step as we transform Schering-Plough into a high-performance competitor for the long term.

The agreement provides for an aggregate settlement amount of $435 million andis subject to court approval. Under the agreement, Schering Sales Corporation, asubsidiary of Schering-Plough Corporation, will plead guilty to one count ofconspiracy to make false statements to the government and pay a criminal fine of

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$180 million , and Schering-Plough Corporation will pay $255 million to resolvecivil aspects of the investigation.

The company's previously disclosed litigation reserves will be sufficient to coverthe settlement amount under the agreement announced today.

In connection with the settlement, Schering-Plough Corporation will also sign anaddendum to an existing corporate integrity agreement with the Office ofInspector General (OIG) of the U.S. Department of Health and Human Services(HHS)....

31. On September 12, 2006, Schering-Plough presented at the Bear Stearns 19th

Annual Healthcare Conference held in New York City, New York. At this conference,

defendants reiterated many of the same or similar materially false and misleading statements as

had been published by defendants previously. This conference was also broadcast live on the

Internet in a widely disseminated webcast.

32. Later, on September 19, 2006, when defendants announced that defendant

Koestler had been elected Head of Research and Development for the Company, Schering-

Plough also published a release on PR Newswire that stated, in part, the following:

KENILWORTH, N.J., Sept. 19 /PRNewswire/ -- Schering-Plough Corporation(NYSE: SGP) announced today that its Board of Directors has elected Thomas P.Koestler, Ph.D., as executive vice president and president of Schering-PloughResearch Institute (SPRI), the company's pharmaceutical research anddevelopment arm.

Fred Hassan, Schering -Plough chairman and CEO, said : "R&D is the centralengine of an innovation-based health care company such as ours , and TomKoestler brings exceptional strengths to his new role.

Koestler joined Schering-Plough in August 2003 as head of global regulatory andproject management. Before joining Schering-Plough, Koestler held executivepositions at Pharmacia Corporation, Novartis, Ortho-McNeil, Inc. and Bristol-Myers Squibb.

33. The statements made by defendants and contained in the Company's July 24,

2006, August 29, 2006 and September 19, 2006 releases, the statements made during the

Company's investor conference, and those statements contained in its 2Q:06 Form 10-Q were

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each materially false and misleading when made, and were know by defendants to be false at that

time or were recklessly disregarded as such thereby for, among other reasons, the following:

(a) At all times during the Class Period, it was not true that the Company's

purported financial success was the result of the markets' acceptance of the Company's leading

drugs VYTORIN and ZETIA, when, in fact, throughout the Class Period, defendants had

propped up the Company's results by manipulating Schering-Plough's drug testing results by

failing to report bad test date and failed to reveal material adverse issues related to the safety and

efficacy of Schering-Plough's leading cholesterol drugs , and failed to report other material

information about the Company;

(b) At all times during the Class Period, unbeknownst to investors, defendants

had artificially inflated drug sales and materially overstated the Company's profitability by

failing to properly account for the Company's drug trial results and this effect on the results of

operations , and by artificially inflating the Company' s financial results;

(c) Throughout the Class Period, it was also not true that Schering-Plough

contained adequate systems of internal operational or financial controls, such that Schering-

Plough's reported financial statements were true, accurate or reliable;

(d) As a result of the foregoing, throughout the Class Period it also was not

true that the Company's quarterly reports were true, accurate or transparent, or prepared in

accordance with the Sarbanes-Oxley Act or with the rules and regulations of the Securities

Exchange Commission; and

(e) As a result of the aforementioned adverse conditions which defendants

failed to disclose, throughout the Class Period, defendants lacked any reasonable basis to claim

that Schering-Plough was operating according to plan, or that Schering-Plough could achieve

guidance sponsored and/or endorsed by defendants.

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34. 3Q:06 Results Announced . On October 20, 2006, defendants published a release

on PR Newswire announcing purported results for the third quarter of 2006, the period ended

June 30, 2006. This release also announced the purported success of the Company's turnaround

plan. and contained statements regarding the purported success of its VYTORIN and ZETIA

product sales in part, as follows:

Schering-Plough Reports Financial Results for 2006 Third QuarterTransformation Advances to Next Phase of Action Agenda

KENILWORTH, N.J., Oct 20, 2006 /PRNewswire-FirstCall via COMTEX NewsNetwork/ -- "Schering-Plough today enters a new period in the transformation ofthis company -- the Build the Base phase of our Action Agenda, said FredHassan, chairman and CEO of Schering-Plough Corporation (NYSE: SGP). "TheTurnaround phase we announced a year ago set a strong foundation. Now thecompany is operating from a position of growing strength.

Describing the Build the Base phase, Hassan said, "We will be honing our edge --in people, products and processes. We will be getting even more from what wehave. And we will be extending our core -- to new patients, new customers, newmarkets. We will be investing to advance important new treatments in ourpipeline through phases II and III. We have built a strong engine. Now we'regoing to let it run.

Hassan made these comments in conjunction with the company's announcementof third quarter 2006 sales and earnings results. He referred to the five- phaseAction Agenda, which is the six- to eight-year plan for transforming Schering-Plough announced in the spring of 2003.

"Three years ago, this company was facing severe challenges, said Hassan."Today, we are achieving solid growth across a broad front. We have been thefastest-growing company in our peer group for the past year. Our people aremotivated and engaged. They are building toward our goal of sustainable highperformance.

For the 2006 third quarter, the company reported net income available to commonshareholders of $287 million or 19 cents per share on a GAAP basis. For the 2005third quarter, the company reported net income of $43 million or 3 cents per shareon a GAAP basis.

GAAP net sales for the 2006 third quarter totaled $2.6 billion, up 13 percentversus the 2005 third quarter . Schering-Plough does not record sales of itscholesterol joint venture with Merck & Co., Inc ., as the venture is accounted forunder the equity method . Including an adjustment of an assumed 50 percent of

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global cholesterol joint venture net sales (see table below), Schering-Plough'sadjusted net sales for the 2006 third quarter would have totaled $3.1 billion, a 19percent increase compared to $2.6 billion on a similar adjusted basis in the 2005third quarter.

Hassan added, "We are building strength and depth across our product lines.While our cholesterol franchise has been pivotal to our success, we are alsopleased with the important contributions from other key products, such as ourrejuvenated NASONEX allergy treatment and REMICADE with its expandedrange of indications.

Hassan stated that as the company shifts into the Build the Base phase, buildingexcellence in drug development will be a priority. "In today's difficultenvironment, development excellence is critical for our industry, said Hassan."We are determined to become a leader in this area.

Hassan also commented on the critical importance of organizational health toperformance. "We recently did a benchmarked diagnostic of our organizationalhealth with the people who know it best -- our own employees, worldwide. Onmeasures of engagement, on trust in management, on recommending Schering-Plough as a good place to work, we benchmarked strongly against high-performance companies across all global industries. This is very importantinformation, because organizational health is a leading indicator of futureperformance. Added Hassan, "We also learned that our people see businessintegrity as a competitive advantage. This is what we mean when we say we areforging a high-performance culture.

"We are pleased that sales of our cholesterol joint venture have continued to growthis year, even with the U. S. introduction of new generic statins , said Hassan

Global cholesterol joint venture net sales , which include VYTORIN and ZETIA,totaled $ 1.010 billion in the 2006 third quarter compared to net sales of $616million in the comparable 2005 period.

The company utilizes the equity method of accounting for its cholesterol jointventure with Merck. Overall, the company shares in approximately 50 percent ofthe profits of the joint venture with Merck, although there are different profit-sharing arrangements for the cholesterol products in countries around the world.There is a separate co-marketing agreement with Bayer for ZETIA in Japan,where the product is currently under regulatory review. Under the equity method,the company records its share of the income from operations in "Equity incomefrom cholesterol joint venture, which totaled $390 million in the 2006 thirdquarter versus $215 million in the third quarter of 2005. The increase in equity

18


income reflected the strong sales of VYTORIN and ZETIA in the 2006 thirdquarter. The company noted that it incurs substantial costs such as selling, generaland administrative costs that are not reflected in "Equity income from cholesteroljoint venture and are borne by the overall cost structure of Schering-Plough.

35. 3Q:06 Form 10-Q. On or about October 28, 2006, defendants filed with the SEC

the Company's 3Q:06 Form 10-Q, for the quarter ended September 30, 2006, signed by

defendant Koehler and certified by defendants Hassan and Bertolini. In addition to making

substantially similar statements concerning the Company's operations , financial results, the

progress of its turnaround plan and its marketing of VYTORIN and ZETIA as had been

published previously, the 3Q:06 Form 10-Q also contained representations which attested to the

purported effectiveness and sufficiency of the Company's controls and procedures, as follows:


Management, including the chief executive officer and the chief financial officer,has evaluated the Company's disclosure controls and procedures as of the end ofthe quarterly period covered by this 10-Q and has concluded that the Company'sdisclosure controls and procedures are effective. They also concluded that therewere no changes in the Company's internal control over financial reporting thatoccurred during the Company's most recent fiscal quarter that have materiallyaffected, or are reasonably likely to materially affect, the Company's internalcontrol over financial reporting.

As part of the changing business environment in which the Company operates, theCompany is replacing and upgrading a number of information systems. Thisprocess will be ongoing for several years. In connection with these changes, aspart of the Company's management of both internal control over financialreporting and disclosure controls and procedures, management has concluded thatthe new systems are at least as effective with respect to those controls as the priorsystems.


also contained Certifications by defendants Hassan and Bertolini, that attested to the purported


19


CERTIFICATION


(1) the Quarterly Report on Form 10-Q for the period endedSeptember 30, 2006 (the "Report ) which this statement accompanies fullycomplies with the requirements of Section 13(a) of the Securities Exchange Act of1934 (15 U.S.C. 78m); and



Dated: October 27, 2006

CERTIFICATION






37. On November 16, 2006, Schering-Plough presented at the Credit Suisse Health

Care Conference held in Phoenix, Arizona. At this conference, defendants reiterated many of the

same or similar materially false and misleading statements as had been published by defendants

20


previously. This conference was also broadcast live on the Internet in a widely disseminated

webcast. Similarly , the Company' s participation at the Morgan Stanley Pharmaceutical CEOs

Unplugged Conference on January 3, 2007, at which defendant Hassan provided a presentation,

was also webcast. As was the Company's February 6, 2007 presentation a the Merrill Lynch

Global Pharmaceutical , Biotechnology and Medical Device Conference , held in New York City.

38. The statements made by defendants and contained in the Company's October 20,

2006 release , those statements made by defendant Hassan at the Morgan Stanley conference and

those statements contained in the Company's 3Q:06 Form 10-Q were materially false and

misleading when made and were know by defendants to be false at that time, or were recklessly

disregarded as such thereby, for the reasons stated herein in ¶ 33, supra.

39. 4Q and FY:2006 Results Announced . On January 29, 2007, defendants

published a release on PR Newswire announcing purported results for the fourth quarter and full

year 2006, the period ended December 31, 2006. This release again reported the purported

success of the Company' s turnaround plan, and contained statements regarding the purported

success of its VYTORIN and ZETIA product sales in part, as follows:

Schering-Plough Reports Financial Results for 2006 Fourth Quarter, FullYear; Strong Performance in 2006 and Over 3-year Period

KENILWORTH, N.J., Jan. 29 /PRNewswire-FirstCall/ -- Schering-PloughCorporation (NYSE:SGP) today reported financial results for the 2006 fourthquarter and full year.

"We registered strong performance both for the recent quarter and for 2006, saidFred Hassan, chairman and CEO. "After three full years of progress under theAction Agenda, Schering-Plough is doing what we set out to do -- deliver a solidrecord of performance while continuing an extraordinary transformation. Headded, "We have been achieving successes across all major fronts. We have beengrowing the top line, maintaining financial discipline and driving higher earnings.Our organization is becoming stronger, more efficient and more resilient. Ourresearch pipeline is progressing. In 2007, we look forward to further advances inbecoming the long-term, high-performance company of our aspirations.

21


For the 2006 fourth quarter, the company reported net income available tocommon shareholders of $182 million or 12 cents per share on a GAAP basis.Included in net income is an unfavorable impact of 4 cents per share related to theactions during 2006 to streamline the company's manufacturing operations and acharge of 1 cent per share related to the licensing of an over-the-counter (OTC)treatment for heartburn. For the 2005 fourth quarter, the company reported netincome of $104 million or 7 cents per share on a GAAP basis.

GAAP net sales for the 2006 fourth quarter totaled $2.7 billion , up 14 percentversus the 2005 fourth quarter . Including an adjustment of an assumed 50 percentof global cholesterol joint venture net sales (see table below), Schering-Plough'sadjusted net sales (hereinafter referred to as "adjusted sales ) for the 2006 fourthquarter would have totaled $ 3.2 billion , an 18 percent increase compared to $2.7billion on a similar adjusted basis in the 2005 fourth quarter . Schering-Ploughdoes not record sales of its cholesterol joint venture with Merck & Co., Inc., asthe venture is accounted for under the equity method.

The strength of Schering-Plough's 2006 performance reflects the company'sdramatic transformation since the 2003 launch of the Action Agenda, shortly afterHassan joined Schering-Plough. "We set out then with a clear strategy toreposition Schering-Plough, said Hassan. "Our goal was to shift to high value-creation activity across the company. We have executed on that strategy.

Over the past three years, said Hassan, "Schering-Plough's adjusted sales have

grown more than twice as fast as its U. S. peer group average sales. In 2006,

GAAP sales were $10.6 billion, up $2.3 billion or 27 percent from $8.3 billion in

2003; adjusted sales in 2006 were $12.5 billion, an increase of $3.9 billion or 46

percent compared to adjusted sales of $8.6 billion in 2003. During this time, cash

flow improved dramatically, he added, "going from a significant cash-bum rate to

generating significant positive cash flow. Major investments were made to

strengthen operations and infrastructure, improve quality and compliance, expand

product lines and advance the research pipeline. In addition, the company

succeeded in attracting and retaining many talented people, restoring

organizational health and resolving several major issues from the past. The

company made substantial and satisfactory progress on the consent decree entered

into with the U.S. Food and Drug Administration (FDA) in 2002.

"The people of Schering -Plough -- through their passion, courage and tenacity --reversed declining financial results and shrinking market shares , said Hassan,citing increased strength and depth across product portfolios , growth of thecholesterol franchise and the introduction of life-saving medicines likeNOXAFIL. New processes and systems were adopted to improve efficiencies andensure quality and compliance . "The results have been impressive , he said. "Aswe move forward with the Build the Base phase of our Action Agenda, we havegreater strength and flexibility to grow our businesses , penetrate new markets andseize promising opportunities.

22


Looking at 2006 results, Hassan emphasized the importance of Schering-Plough'sstrategic balance -- in its businesses, geographic presence and research programs."One of our prime objectives has been to build multiple growth drivers and not bedependent on a single product, he said. "We are now performing well across ourbusinesses, including our dynamic cholesterol franchise. ...

Global cholesterol joint venture net sales , which include VYTORIN and ZETIA,totaled $ 1.1 billion in the 2006 fourth quarter compared to net sales of $755million in the comparable 2005 period . Schering-Plough does not record sales ofits cholesterol joint venture with Merck as the venture is accounted for under theequity method. Including an adjustment of an assumed 50 percent of the globalcholesterol joint venture net sales , Schering-Plough's adjusted net sales for the2006 fourth quarter would have been $3 .2 billion, an 18 percent increase,compared to $2.7 billion on a similar adjusted basis in the 2005 fourth quarter.

Overall, the company shares in approximately 50 percent of the profits of the jointventure with Merck, although there are different profit-sharing arrangements forthe cholesterol products in countries around the world. There is a separate co-marketing agreement with Bayer for ZETIA in Japan, where the product iscurrently under regulatory review. Under the equity method, the company recordsits share of the income from operations in "Equity income from cholesterol jointventure , which totaled $403 million in the 2006 fourth quarter versus $268million in the fourth quarter of 2005 . The increase in equity income reflected thecontinued strong sales of VYTORIN and ZETIA, in conjunction with Merck. Thecompany noted that it incurs substantial costs such as selling , general andadministrative costs that are not reflected in "Equity income from cholesterol jointventure and are borne by the overall cost structure of Schering-Plough.

40. 2006 Form 10-K. On or about February 28, 2007, defendants filed with the SEC

the Company's 2006 Form 10-K, for the year ended December 31, 2006, signed by all

defendants and certified by defendants Hassan and Bertolini. In addition to making substantially

similar statements concerning the Company's operations, financial results, the progress of its


the 2006 Form 10-K also contained representations which attested to the purported effectiveness

and sufficiency of the Company's controls and procedures, as follows:

23


Item 9A. Controls and Procedures

Management, including the chief executive officer and the chief financial officer,has evaluated Schering-Plough's disclosure controls and procedures as of the endof the period covered by this 10-K and has concluded that Schering-Plough'sdisclosure controls and procedures are effective. They also concluded that therewere no changes in Schering-Plough's internal control over financial reportingthat occurred during Schering-Plough's most recent fiscal quarter that havematerially affected, or are reasonably likely to materially affect, Schering-Plough's internal control over financial reporting.

As part of the changing business environment in which Schering-Plough operates,Schering-Plough is replacing and upgrading a number of information systems.This process will be ongoing for several years. In connection with these changes,as part of Schering-Plough's management of both internal control over financialreporting and disclosure controls and procedures, management has concluded thatthe new systems are at least as effective with respect to those controls as the priorsystems.

MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIALREPORTING

The Management of Schering-Plough Corporation is responsible for establishingand maintaining adequate internal control over financial reporting. Schering-Plough's internal control system is designed to provide reasonable assurance toSchering-Plough's Management and Board of Directors regarding the preparationand fair presentation of published financial statements.

Schering-Plough's Management assessed the effectiveness of Schering-Plough'sinternal control over financial reporting as of December 31, 2006. In making thisassessment, Management used the criteria set forth by the Committee ofSponsoring Organizations of the Treadway Commission (COSO) in InternalControl - Integrated Framework. Based on its assessment, Management believesthat, as of December 31, 2006, Schering-Plough's internal control over financialreporting is effective.

41. Certifications . In addition to the foregoing, the Company's 2006 Form 10-K also

contained Certifications by defendants Hassan and Bertolini , that attested to the purported


24


CERTIFICATION


(1) the Annual Report on Form 10-K for the year ended December 31,2006 (the "Annual Report ) which this statement accompanies fully complieswith the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15U.S.C. 78m); and

(2) information contained in the Annual Report fairly presents, in allmaterial respects, the financial condition and results of operations of Schering-Plough Corporation.


Dated: February 27, 2007

CERTIFICATION


(1) the Annual Report on Form 10-K for the year ended December 31,2006 (the "Annual Report ) which this statement accompanies fully complieswith the requirements of Section 13(a) of the Securities Exchange Act of 1934 (15U.S.C. 78m); and

(2) information contained in the Annual Report fairly presents, in allmaterial respects, the financial condition and results of operations of Schering-Plough Corporation.


42. The statements contained in Schering-Plough's January 29, 2007 release and

those statements contained in the Company's 2006 Form 10-K, referenced above, were each

25


materially false and misleading when made and were known by defendants to be false at that

time, or were recklessly disregarded as such thereby, for the reasons stated herein in ¶ 33, supra.

43. On March 20, 2007, defendant Hassan and Schering-Plough presented at the

Lehman Brothers Tenth Annual Global Healthcare Conference held in Miami, Florida. At this

conference, defendant Hassan and the Company reiterated many of the same or similar

materially false and misleading statements as had been published by defendants previously. This

conference was also broadcast live on the Internet in a widely disseminated webcast.

44. In addition to the foregoing, on April 18, 2007, defendants also published a

release on PR Newswire that purported to announce that ZETIA had been approved in Japan for

treatment of high cholesterol. This release served to further condition investors to believe that

Zetia was safe and effective, and was expected to continued to fuel the Company's growth and

profitability, in the foreseeable near-term , as follows:

Schering-Plough Announces ZETIA Approved in Japan for Treatment ofHigh Cholesterol

Novel Cholesterol-Lowering Agent - Approved in 90 Countries Globally -

Works by Inhibiting Absorption of Cholesterol in the Intestine

KENILWORTH, N.J., April 18, 2007 /PRNewswire -FirstCall via COMTEXNews Network/ -- Schering-Plough Corporation (NYSE: SGP) today announcedthat Schering -Plough K.K., the company' s country operation in Japan, hasreceived marketing approval for ZETIA(R) (ezetimibe), a novel cholesterol-lowering agent that inhibits the absorption of cholesterol in the intestine. ZETIAis approved in Japan for use in patients with hypercholesterolemia, familialhypercholesterolemia or homozygous sitosterolemia . ZETIA can be used as amonotherapy and co- administered with a statin, for further reduction of LDL"bad cholesterol in patients with hypercholesterolemia, familial hyper-cholesterolemia or homozygous sitosterolemia . ZETIA will not become availablein Japan until National Health Insurance Reimbursement price listing.

"ZETIA has achieved worldwide recognition for its unique mechanism of actionin lowering LDL cholesterol levels. The ezetimibe molecule represents animportant innovation by Schering-Plough's scientists, said Robert J. Spiegel,M.D., chief medical officer and senior vice president of medical affairs, Schering-Plough Research Institute (SPRI). "ZETIA offers an advance for Japanese

26


patients at risk for cardiovascular disease, and provides a new option in thephysician's armamentarium for the treatment of elevated LDL cholesterol,Spiegel added.

Schering-Plough obtained FDA approval for ZETIA in 2002, and the medicationhas been approved in 90 countries worldwide. The cholesterol - managementmarket is one of the largest worldwide , with total global sales of $34 billion andsales in the United States of $22 billion in 2006 (IMS Health). The total numberof hypercholesterolemia patients in Japan, including those undiagnosed, isestimated to be approximately 30 million.

ZETIA will be co-marketed in Japan with Bayer Yakuhin Ltd., a globalpharmaceutical company with a large expertise in cardiovascular disease- relatedproducts. Schering-Plough, in collaboration with Merck, has developed andcommercialized ZETIA for lipid management in the United States and the rest ofthe world (excluding Japan).

ZETIA, which works in the digestive tract to inhibit the absorption of cholesterol,is complementary to the class of cholesterol -lowering agents known as statins,which work in the liver to reduce the production of cholesterol . ZETIA, alone orin combination with statins , has been proven to significantly improve LDLcholesterol levels . ZETIA,

45. 1Q:07 Results Announced . The following day, April 19, 2007, defendants

published another release on PR Newswire announcing purported results for the first quarter of

2007, the period ended March 31, 2007. This release again reported the purported success of the

Company's turnaround plan and its VYTORIN and ZETIA product sales , in part, as follows:

Schering-Plough Reports Financial Results for First Quarter of 2007;Company Sustains Momentum into First Quarter of 2007, Moves Ahead onPlanned Organon BioSciences Acquisition

KENILWORTH, N.J., April 19 /PRNewswire-FirstCall/ -- Schering-PloughCorporation (NYSE: SGP) today reported financial results for the first quarter of2007 and commented on its planned acquisition of Organon BioSciences N.V.(OBS).

"Our first quarter performance demonstrates that we continue to hone our

competitive edge, extend our core businesses and deliver very strong results, said

Fred Hassan, chairman and CEO. "We sustained the momentum in the first

quarter that we built in our business over the last three years. At the same time,

we are gaining momentum in R&D. And our planned combination with OBS and

its Organon, Intervet and Nobilon businesses promises to build on that

momentum.

27


For the 2007 first quarter, net income available to common shareholders increasedto $543 million or 36 cents per common share on a GAAP basis versus netincome of $350 million or 24 cents per common share in the 2006 first quarter.Excluding charges of $96 million related to three upfront licensing paymentsincluded in research and development expenses, earnings per share for the 2007first quarter would have been 42 cents (see table below). The 2006 first quarterincludes income of $22 million or approximately 2 cents per share resulting fromthe cumulative effect of the adoption of SFAS 123R related to stock-basedcompensation.

GAAP net sales for the 2007 first quarter totaled $3.0 billion, up 17 percentversus the 2006 first quarter . Including an adjustment of an assumed 50 percent ofglobal cholesterol joint venture net sales (see table below), Schering-Plough'sadjusted net sales (hereinafter referred to as "adjusted sales ) for the 2007 firstquarter would have totaled $3.6 billion , a 21 percent increase compared to $2.9billion on a similar adjusted basis in the 2006 first quarter. Schering-Plough doesnot record sales of its cholesterol joint venture with Merck & Co., Inc. (Merck), asthe venture is accounted for under the equity method.

"Schering-Plough has now delivered 10 consecutive quarters of double-digitadjusted sales growth on a year-over-year basis, said Hassan. "We are growingour core businesses across all major geographic regions. We have sustained thestrength of our cholesterol, respiratory, immunology and oncology franchises. OurAnimal Health and Consumer Health Care businesses are also growing. Ourstrategy of growing the top line while maintaining financial discipline is clearlypaying off - with higher bottom-line earnings and growing financial headroom.

In cardiovascular care , Schering-Plough "is emerging as a leader, both in themarketplace and in clinical research , said Hassan . He pointed to the approval ofZETIA in Japan announced yesterday.....

Schering-Plough has also extended its research pipeline by capturing externalinnovation through business development and licensing agreements. Over the lastthree years, the company has entered into a series of agreements in support of itskey therapeutic areas, including respiratory, infectious diseases, cardiovascular,oncology, immunology, as well as in Consumer Health Care and Animal Health.Examples include last month's agreement with Merck to develop an ezetimibe(ZETIA) and atorvastatin fixed-dose combination medicine for loweringcholesterol. This could further realize the value of Schering- Plough's ZETIAdiscovery....

28


GAAP net sales for the 2007 first quarter totaled $3.0 billion, up 17 percent ascompared to the first quarter of 2006. The sales growth versus 2006 reflects a 3percent favorable impact from foreign exchange.

Global cholesterol joint venture net sales , which include VYTORIN and ZETIA,totaled $ 1.2 billion in the 2007 first quarter, a 48 percent increase compared to netsales of $778 million in the comparable 2006 period . Schering-Plough does notrecord sales of its cholesterol joint venture with Merck as the venture is accountedfor under the equity method . Including an adjustment of an assumed 50 percent ofthe global cholesterol joint venture net sales, Schering-Plough ' s adjusted sales forthe 2007 first quarter would have been $3 . 6 billion , a 21 percent increase,compared to $2.9 billion on a similar adjusted basis in the 2006 first quarter.

46. 1Q:07 Form 10-Q. On or about April 27, 2007, defendants filed with the SEC

the Company's 1Q:07 Form 10-Q, for the quarter ended March 31, 2007, signed by defendant

Koehler and certified by defendants Hassan and Bertolini. In addition to making substantially

similar statements concerning the Company's operations, financial results, and the progress of its





Management, including the chief executive officer and the chief financial officer,has evaluated Schering-Plough's disclosure controls and procedures as of the endof the quarterly period covered by this 10-Q and has concluded that Schering-Plough's disclosure controls and procedures are effective. They also concludedthat there were no changes in Schering-Plough's internal control over financialreporting that occurred during Schering-Plough's most recent fiscal quarter thathave materially affected, or are reasonably likely to materially affect, Schering-Plough's internal control over financial reporting.

As part of the changing business environment in which Schering-Plough operates,Schering-Plough is replacing and upgrading a number of information systems.This process will be ongoing for several years. In connection with these changes,as part of Schering-Plough's management of both internal control over financialreporting and disclosure controls and procedures, management has concluded thatthe new systems are at least as effective with respect to those controls as the priorsystems. An example of a change in information systems that occurred during thefirst quarter of 2007 is the replacement of Schering-Plough's system forconsolidation and reporting.

29


47. Certifications . The Company's 1Q:07 Form 10-Q also contained Certifications

by defendants Hassan and Bertolini, that attested to the purported accuracy and completeness of

the Company' s financial and operational reports , as follows:

CERTIFICATION


(1) the Quarterly Report on Form 10-Q for the period ended March 31,2007 (the "Report ) which this statement accompanies fully complies with therequirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C.78m); and



Dated : April 26, 2007

CERTIFICATION


(1) the Quarterly Report on Form 10-Q for the period ended March 31,2007 (the "Report ) which this statement accompanies fully complies with therequirements of Section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C.78m); and



30


Dated : April 26, 2007

48. The statements made by defendant Hassan and the Company at the Lehman Bros.

conference as well as those statements contained in Schering-Plough's April 19, 2007 release

and in the Company's 1Q:07 Form 10-Q, referenced above, were each materially false and

misleading when made and were known by defendants to be false at that time, or were recklessly

disregarded as such thereby, for the reasons stated herein in ¶ 33, supra.

49. 2Q:07 Results Announced . On July 23, 2007, defendants published a release on

PR Newswire announcing purported results for the second quarter of 2007, the period ended June

30, 2007. This release again reported the purported success of the Company's turnaround plan

and its VYTORIN and ZETIA product sales , in part, as follows:

Schering-Plough Reports Financial Results for Second Quarter of 2007;Company Continues Strong Performance in Second Quarter of 2007,Prepares for Integration of Organon BioSciences

KENILWORTH, N.J., July 23 /PRNewswire-FirstCall/ -- Schering-PloughCorporation(NYSE:SGP)today reported financial results for the second quarter of2007 and commented on its planned acquisition of Organon BioSciences N.V.(OBS), including its Organon human health business and Intervet animal healthbusiness, as announced March 12, 2007.

"Schering-Plough's second quarter performance shows clearly that we havesustained our momentum, said Fred Hassan, chairman and CEO. "Our strategy togrow the top line is succeeding - we have now recorded our 11th consecutivequarter of double-digit adjusted sales growth. Our strong top-line growthcombined with financial discipline have produced superior EPS growth. We areadvancing and expanding our research pipeline. And we look forward to addingOrganon BioSciences to our company.

For the 2007 second quarter, Schering-Plough reported net income available tocommon shareholders of $517 million or 34 cents per common share on a GAAPbasis. The results include charges of $106 million or 7 cents per share related to a$60 million upfront licensing payment and $46 million in items related to theplanned OBS acquisition. Excluding those charges, earnings per share for the2007 second quarter would have been 41 cents (see table below). For the 2006second quarter, Schering-Plough reported net income of $237 million or 16 centsper common share on a GAAP basis. Excluding charges of $138 million or 9

31


cents per share related to actions to streamline Schering- Plough's manufacturingoperations as announced June 1, 2006 (see table below), Schering-Plough'sincome in the 2006 second quarter would have been $375 million or 25 cents pershare.

GAAP net sales for the 2007 second quarter totaled $3.2 billion , up 13 percentversus the 2006 second quarter. Including an adjustment of an assumed 50 percentof global cholesterol joint venture net sales (see table below), Schering-Plough'sadjusted net sales (hereinafter referred to as "adjusted sales ) for the 2007 secondquarter would have totaled $3.8 billion , a 15 percent increase compared to $3.3billion on a similar adjusted basis in the 2006 second quarter. Schering-Ploughdoes not record sales of its cholesterol joint venture with Merck & Co., Inc.(Merck), as the venture is accounted for under the equity method.

On the planned OBS acquisition, the company noted that the transaction remainssubject to certain closing conditions, including regulatory approvals. Hassan said,"We are making steady progress and continue to expect to close by year-end. Weare moving carefully and deliberately to ensure that we execute this transactionthe right way - to build strength and value for the long term.

He added, "We are excited about the opportunities created by Organon ingynecology, fertility, anesthesia and neuroscience. In animal health, we see greatpotential in bringing together our product lines with those of Intervet. Schering-Plough's late-stage research pipeline will also be significantly strengthened withthe addition of five Phase III compounds from Organon.

"Overall, this combination offers a strong strategic fit, a strong scientific fit, and astrong financial fit. It's about becoming a company with greater balance in ourbusinesses and an exciting and productive pipeline. As we prepare to completethis transaction, we are also being careful not to get distracted, knowing thatsustaining the momentum in our business and research operations continues to bea top priority.

Reviewing second quarter results , Hassan emphasized , "We're growing across abroad front . Seven out of our 10 largest-selling products , including VYTORINand ZETIA, posted double-digit sales growth for the quarter, he said . "And evenwith the recent arrival of multi-source U.S. generic competition, our cholesterolfranchise continues to be dynamic . In fact, VYTORIN and ZETIA are the onlymajor cholesterol -lowering brands to have grown U. S. market share in 2007. Thestrategy to expand Schering-Plough ' s geographic presence is paying off, withhigher sales in emerging markets. Also contributing to second quarter results weresolid performances from the company' s Animal Health and Consumer HealthCare businesses.

R&D remains a critical investment area for Schering-Plough as a research- basedpharmaceutical company. "We are investing in internal innovation, said Hassan,

32


"and we are bringing in external innovation. Together, they will be the engine thatdrives our future growth.

GAAP net sales for the 2007 second quarter totaled $3.2 billion , up 13 percent ascompared to the second quarter of 2006. The sales growth versus 2006 reflects a 3percent favorable impact from foreign exchange.

Global cholesterol joint venture net sales , which include VYTORIN and ZETIA,totaled $ 1.2 billion in the 2007 second quarter, a 30 percent increase compared tonet sales of $958 million in the comparable 2006 period . Schering -Plough doesnot record sales of its cholesterol joint venture with Merck as the venture isaccounted for under the equity method . Including an adjustment of an assumed 50percent of the global cholesterol joint venture net sales , Schering-Plough'sadjusted sales for the 2007 second quarter would have been $3 . 8 billion, a 15percent increase , compared to $3.3 billion on a similar adjusted basis in the 2006second quarter.

Overall, Schering-Plough shares in approximately 50 percent of the profits of thejoint venture with Merck, although there are different profit-sharing arrangementsfor the cholesterol products in countries around the world . Schering -Ploughrecords its share of the income from operations in "Equity income fromcholesterol joint venture , which totaled $490 million in the 2007 second quarterversus $355 million in the second quarter of 2006 . Schering- Plough noted that itincurs substantial costs such as selling , general and administrative costs that arenot reflected in "Equity income from cholesterol joint venture and are borne byits overall cost structure . There is a separate co-marketing agreement with Bayerfor ZETIA in Japan , where the product was launched in June 2007.

50. 2Q:07 Form 10-Q. On or about July 27, 2007, defendants filed with the SEC the

Company's 2Q:07 Form 10-Q, for the quarter ended June 30, 2007, signed by defendant Koehler

and certified by defendants Hassan and Bertolini . In addition to making substantially similar

statements concerning the Company' s operations , financial results , and the progress of its




33



Management, including the chief executive officer and the chief financial officer,has evaluated Schering-Plough's disclosure controls and procedures as of the endof the quarterly period covered by this 10-Q and has concluded that Schering-Plough's disclosure controls and procedures are effective. They also concludedthat there were no changes in Schering-Plough's internal control over financialreporting that occurred during Schering-Plough's most recent fiscal quarter thathave materially affected, or are reasonably likely to materially affect, Schering-Plough's internal control over financial reporting.

As part of the changing business environment in which Schering-Plough operates,Schering-Plough is replacing and upgrading a number of information systems.This process will be ongoing for several years. In connection with these changes,as part of Schering-Plough's management of both internal control over financialreporting and disclosure controls and procedures, management has concluded thatthe new systems are at least as effective with respect to those controls as the priorsystems. An example of a change in information systems that occurred during thefirst six months of 2007 is the replacement of Schering-Plough's system forconsolidation and reporting.




CERTIFICATION





Dated : July 26, 2007

34


CERTIFICATION





52. The statements contained in Schering-Plough's July 23, 2007 release and those

statements contained in the Company's 2Q:07 Form 10-Q, referenced above, were each

materially false and misleading when made and were known by defendants to be false at that

time, or were recklessly disregarded as such thereby, for the reasons stated herein in ¶ 33, supra.

53. Unbeknownst to shareholders, however, defendants next took advantage of the

artificial inflation in the price of Company stock caused as a result of the publication of their

false and materially misleading statements , and on September 12, 2007 , defendants announced

the registration and sale of over 57.5 million shares of common stock priced at $ 27.50 per share.

This registration and sale allowed Schering-Plough to reap illicit gross proceeds of over $1.581

billion.

54. Less than one week later, on September 19, 2007, Schering-Plough presented at

the Merrill Lynch Global Pharmaceutical, Biotech & Medtech Conference held in London

England. At this conference, defendants reiterated many of the same or similar materially false

35


and misleading statements as had been published by defendants previously. This conference was

also broadcast live on the Internet in a widely disseminated webcast. Similarly, on November

13, 2007, defendant Bertolini also presented at the 2007 Credit Suisse Health Care Conference in

Phoenix, Ariz., where he too reiterated many of the same or similar materially false and

misleading statements as are reported herein, supra.

55. 3Q:07 Results Announced . On October 22, 2007, defendants published a release

on PR Newswire announcing purported results for the third quarter of 2007, the period ended

September 30, 2007. This release again reported the purported success of the Company's

turnaround plan and its VYTORIN and ZETIA product sales , in part, as follows:

Schering-Plough Financial Results for Third Quarter of 2007; SolidPerformance Continues in Third Quarter of 2007; Company Prepares forIntegration of Organon BioSciences

KENILWORTH, N.J., Oct. 22 /PRNewswire-FirstCall/ -- Schering-PloughCorporation today reported financial results for the third quarter of 2007 andcommented on its planned acquisition of Organon BioSciences N.V. (OBS),which includes the Organon human health business and Intervet animal healthbusiness.

"Schering-Plough now recorded its 12th consecutive quarter of double- digitadjusted sales growth, said Fred Hassan, chairman and CEO. "Schering- Plough`s long-term strategy continues to unfold. Our strategy to grow the top line,exercise financial discipline and expand our R&D pipeline again delivered strongresults.

Added Hassan: "Our focus on building R&D excellence is beginning to bear fiuit.With the upcoming acquisition of Organon BioSciences, we will have a total of12 significant projects in Phase III -- we will have a pipeline with a Phase IIIbulge. This, combined with relatively long exclusivity of our marketed productportfolio, puts Schering-Plough in a substantially stronger position in terms of itslate-stage pipeline and portfolio than only four years ago, said Hassan.

For the 2007 third quarter, Schering-Plough reported net income available tocommon shareholders of $713 million or 45 cents per common share on a GAAPbasis. Excluding acquisition-related items and an upfront R&D payment, earningsper share for the 2007 third quarter would have been 28 cents (see table below onpage 13). For the 2006 third quarter, Schering-Plough reported net income of$287 million or 19 cents per common share on a GAAP basis.

36


Net sales for the 2007 third quarter rose 9 percent on a GAAP basis and 12percent on an adjusted basis versus the 2006 period . GAAP net sales for the 2007third quarter totaled $2.8 billion ; adjusted net sales , which includes an assumed 50percent of global cholesterol joint venture net sales (see table below on page 12and hereinafter referred to as "adjusted sales ) for the 2007 third quarter wouldhave totaled $3.5 billion compared to $3.1 billion on a similar adjusted basis inthe 2006 third quarter. Schering-Plough does not record sales of its cholesteroljoint venture with Merck & Co., Inc . (Merck), as the venture is accounted forunder the equity method.

GAAP net sales for the 2007 third quarter totaled $2.8 billion , up 9 percent ascompared to the third quarter of 2006 . The sales growth reflects a 3 percentfavorable impact from foreign exchange and a 2 percent unfavorable impactrelated to the reversal of accrued rebates in the 2006 third quarter for theTRICARE Retail Pharmacy Program in the United States.

Global cholesterol joint venture net sales , which include VYTORIN and ZETIA,totaled $ 1.3 billion in the 2007 third quarter, a 26 percent increase compared tonet sales of $ 1.0 billion in the comparable 2006 period . Schering-Plough does notrecord sales of its cholesterol joint venture with Merck as the venture is accountedfor under the equity method . Including an adjustment of an assumed 50 percent ofthe global cholesterol joint venture net sales , Schering-Plough ' s adjusted sales forthe 2007 third quarter would have been $3 . 5 billion, a 12 percent increase,compared to $3.1 billion on a similar adjusted basis in the 2006 third quarter.

56. 3Q:07 Form 10-Q. On or about October 26, 2007, defendants filed with the SEC

the Company's 3Q:07 Form 10-Q, for the quarter ended September 30, 2007, signed by

defendant Koehler and certified by defendants Hassan and Bertolini. In addition to making

substantially similar statements concerning the Company' s operations , financial results , and the

progress of its turnaround plan and its marketing of VYTORIN and ZETIA as had been

published previously, the 3Q:07 Form 10-Q also contained representations which attested to the

purported effectiveness and sufficiency of the Company's controls and procedures, as follows:


Management, including the chief executive officer and the chief financial officer,has evaluated Schering-Plough's disclosure controls and procedures as of the endof the quarterly period covered by this 10-Q and has concluded that Schering-

37


Plough's disclosure controls and procedures are effective. They also concludedthat there were no changes in Schering-Plough's internal control over financialreporting that occurred during Schering-Plough's most recent fiscal quarter thathave materially affected, or are reasonably likely to materially affect, Schering-Plough's internal control over financial reporting.

As part of the changing business environment in which Schering-Plough operates,Schering-Plough is replacing and upgrading a number of information systems.This process will be ongoing for several years. In connection with these changes,as part of Schering-Plough's management of both internal control over financialreporting and disclosure controls and procedures, management has concluded thatthe new systems are at least as effective with respect to those controls as the priorsystems. An example of a change in information systems that occurred during thefirst nine months of 2007 is the replacement of Schering-Plough's system forconsolidation and reporting.



accuracy and completeness of the Company' s financial and operational reports, as follows:

CERTIFICATION






38


CERTIFICATION






58. On January 3, 2008, defendant Hassan and Schering-Plough presented at the

Morgan Stanley Pharmaceutical CEOs Unplugged Conference, that was also broadcast live on

the Internet in a widely disseminated webcast. At this conference, defendants reiterated many of

the same or similar materially false and misleading statements as had been published by

defendants previously. Moreover, when announcing Hassan and the Company's participation,

defendants also published a release that stated, in part, the following:

Schering-Plough to Webcast Presentation at Morgan Stanley PharmaceuticalCEOs Unplugged Conference

KENILWORTH, N.J., Dec. 27 /PRNewswire-FirstCall/ -- Schering-PloughCorporation (NYSE: SGP) will provide a live audio webcast of an informalpresentation by Fred Hassan, chairman and chief executive officer, followed by aquestion-and-answer session, at the Morgan Stanley Pharmaceutical CEOsUnplugged Conference on Jan. 3, 2008, at approximately 8:45 a.m. (ET). MorganStanley hosts will moderate the informal "unplugged presentation.

Included in Mr. Hassan's comments will be Schering-Plough's strategic evolutionand the acquisition of Organon BioSciences N.V. (OBS). During the conferencehe may confirm that the company is still targeting the same accretion and synergytargets mentioned when the OBS acquisition was announced March 12, 2007,

39


specifically that the transaction is anticipated to be accretive to Schering-Plough'searnings per share by about 10 cents in the first full year, excluding purchase-accounting adjustments and acquisition- related costs; and Schering-Ploughexpects to achieve annual synergies of $500 million. It is expected to take threeyears from the closing to reach this level of synergies.

Hassan may also reaffirm the following items as disclosed in previous Securitiesand Exchange Commission filings:

• Schering-Plough anticipates that sales from VYTORIN and ZETIA willcontinue to grow in the fourth quarter of 2007 and in 2008;

• Schering-Plough is confident in its key products; however, these products facegrowing competition. Schering-Plough will invest in its key brands to sustaintheir leadership position;

59. The statements made by defendants at the Merrill Lynch conference, at the Credit

Suisse conference and at the Morgan Stanley conference as well as those statements contained in

Schering-Plough's October 22, 2007 release and and/or contained in the 3Q:07 Form 10-Q,

referenced above, were each materially false and misleading when made and were known by

defendants to be false at that time, or were recklessly disregarded as such thereby, for the reasons

stated herein in ¶ 33, supra.

THE TRUE FINANCIAL AND OPERATIONAL CONDITIONOF SCHERING-PLOUGH IS BELATED DISCLOSED

60. On January 14, 2008 , investors were shocked and alarmed after it was revealed,

for the first time, that not only were there severe safety and efficacy issues related to the

Company's sale of VYTORIN, but that defendants had purposefully delayed the publication of a

study that they possessed throughout the Class Period that demonstrated that VYTORIN was

neither safe nor effective . That day, Fortune.com reported, in part, the following:

Merck, Schering Study Falls Flat

The wait was long but the result is out. Vytorin failed.

Shares of drugmakers Merck and Schering-Plough dropped 2.0%, to $59.32, and5.9%, to $26.09, respectively, on Monday morning, after a long-delayed study

40


found that high cholesterol patients fared no better taking Vytorin over the genericform of Zocor (See "Long-Delayed Vytorin Study Fails ).

Forbes.com had previously reported that the study, Enhance, had been delayed

for eighteen months, raising expectations among some cardiologists of a

negative result. (See "The Vytorin Question") The House Committee on Energy

and Commerce has started an investigation into the delay.

Enhance focused on a group of 720 patients with a rare condition that made themsusceptible to high cholesterol . The patients were given either Vytorin, or a highdose of generic Zocor, known as simvastatin . Vytorin itself is a combination ofSchering-Plough ' s Zetia and Merck's Zocor, which lost patent protection in 2006.

Vytorin and its sister pill Zetia generate $5 billion in sales annually for Merck,based in Whitehouse Station, N.J., and Schering-Plough. The medicines aretaken by millions of people; Vytorin lowers low-density liproprotein (LDL) morethan any other single pill. But the study raises questions about whether it has thesame benefits as other cholesterol drugs such as Lipitor from Pfizer, and Crestorfrom AstraZeneca.

Patients on Vytorin actually had more heart attacks, cardiovascular deaths, andheart procedures than those who were on Zocor, according to the Enhancestudy.... Patients on Vytorin actually ended the study with slightly more plaquein their arteries....

Still, the negative result is likely to result in further scrutiny of Merck andSchering-Plough. Drug safety advocates and others have called for studies to beput in the public domain more quickly. The long delay to getting the Enhancestudy out is likely to raise questions about how much control drug companiesshould have over the conduct oftheir clinical trials.

Earlier in January, Merck Chief Executive Richard Clark said he expectedVytorin to keep a secure position in the cholesterol drug market and citedseveral other ongoing studies in addition to this one [Emphasis added.]

61. Moreover, the following day, shares of the Company continued to decline as more

reports about the safety and efficacy of VYTORIN and defendants long-time knowledge of these

adverse conditions reached the market. As evidence of this as shares of Schearing Plough

continued to fall, the Associated Press reported, in part, the following:

41


Study: Cholesterol Combination Drug Vytorin Not Superior to Solo Drug

NEWARK, N.J. (AP) -- A clinical trial has shown that the combinationcholesterol drug Vytorin is no more effective than a high dose of one of itscomponents available generically, Vytorin's makers said Monday.

Vytorin, developed by Merck & Co. and Schering-Plough Corp., is a combinationof Zetia and Merck's Zocor, which lost patent protection in 2006. Amid concernsabout whether Vytorin posed a risk of liver damage, Wall Street has beenanxiously awaiting details on results of the study begun in 2002.

In the quarter ended Sept. 30, sales of Zetia and Vytorin hit $1.3 billion, up 26percent from the year-ago period.

The study measured the amount of artery-clogging plaque in three areas.

It focused on a group of 720 patients with a rare condition predisposing them tohigh cholesterol . The patients were given either Vytorin or a high dose of genericZocor, known as simvastatin.

In December, a congressional committee requested more information on thestudy. The results were delayed, the companies maintained, because of thecomplexity of the data. [Emphasis added.]

62. Again, on January 16, 2008, shares of the Company continued to decline as

reports that Congress was investigating Schering-Plough over its advertising, reached the market.

As evidence of this, that day the Associated Press further reported, in part, that:

Congress Investigating Vytorin Ads in Wake of Study

WASHINGTON (AP) -- Congress is investigating advertising for the cholesterol-busting drug Vytorin following a study that suggested the pill may have noadvantage over a generic cholesterol medicine , according to letters releasedWednesday.

In letters dated Wednesday and addressed to Schering-Plough Corp. and Merck

& Co., which jointly sell Vytorin, and the U.S. Food and Drug Administration,

Reps. John Dingell and Bart Stupak, Michigan Democrats, raised questions

about the adsfor the medicine.

In the letter to the companies, the congressmen wrote that the House ofRepresentatives ' Committee on Energy and Commerce and its Subcommittee onOversight and Investigations are probing the "withholding of clinical trial data

42


that may significantly affect the medical management of hypercholesterolemia,as well as the use ofmisleading statement in direct-to-consumer advertisementsforprescription medicines.

Vytorin is in the news this week after the results of a long-awaited study, calledEnhance, indicated the drug may be no better than a generic statin at slowing theprogression of heart disease.

In the FDA letter, the lawmakers write that they are "concerned that the study'sresults may have been available to Schering-Plough and Merck officials, andyet the massive advertisement campaign for Vytorin was allowed to continue."They ask for agency records related to the Vytorin ads.

The congressmen also asked the companies for records related to the ads aswell materials related to Enhance study leader John Kastelein , a cardiologist inthe Netherlands. They also seek information about the press release this Mondaythat disclosed the Enhance results , almost two years after the last patientcompleted the study.

In 2005, the companies spent $155 million on Vytorin ads, a budget exceededthat year only by Sepracor Inc.'s Lunesta campaign and AstraZeneca PLC'sNexium ads, according to an article in the New England Journal of Medicine.[Emphasis added.]

63. Finally, on January 17, 2008, shares of the Company traded to just above $20.50

per share, as investors digested the news that defendants had purposefully delayed publishing the

report that demonstrated that VYTORIN was neither safe nor effective . That day, the

MotleyFool.com further reported, in part, the following:

2 Sources of Trouble for Vytorin

You know that a drug study has gone very, very bad when you can 'tfind out itsresults without a congressional inquiry.

Last month the House Committee on Energy and Commerce demandedinformation about the Enhance clinical trial. Some data was released on Jan. 14,and it's been a popular topic on television news since then.

Merck (NYSE: MRK) and Schering-Plough (NYSE: SGP) jointly market andshare the profits of Zetia and Vytorin. Zetia blocks the uptake of food-bornecholesterol from the digestive tract and thus lowers LDL (the lousy or lethal)cholesterol. Vytorin is a combination of Zetia and Zocor. Zocor is now availableas a generic, simvastatin.

43


Simvastatin is a well-studied medication, and like other statins works on receptorsin the liver to lower cholesterol . Simvastatin and other brand-name statins , such asPfizer's (NYSE: PFE) Lipitor and AstraZeneca 's (NYSE: AZN) Crestor, lowercholesterol levels and lower the risk of heart attacks for many patients.

It is certainly well marketed. Surely you've heard the commercial: "There are twosources of cholesterol: food and family. Vytorin treats both. Sales of Zetia,approved in 2002, and Vytorin, approved in 2004, are around $5 billion annually,making it one of the world's best-selling drugs.

Although multiple studies prove that Zocor not only lowered cholesterol levelsbut also lowered the risk of heart attacks, there are no similar studies for Zetia orVytorin that demonstrate clinical benefits. If adding Zetia to Zocor (to makeVytorin) does not improve patients ' clinical outcomes more than just Zocor,then why take the more expensive medication?

The Enhance study was designed to show a benefit among patients takingVytorin, primarily by documenting less buildup of plaque in the carotid arteries, asurrogate for the progression of coronary artery disease.

In the trial, 720 patients with a genetic abnormality that caused extremely highlevels of LDL cholesterol were randomized into two groups. One receivedVytorin (Zocor plus Zetia), and the other group received Zocor. The Vytoringroup had a statistically lower level of LDL cholesterol, as expected; theincidence of serious side effects was low and similar in both groups. So far, sogood.

While not statistically significant, there was evidence of more thickening ofcarotid arteries in patients in the Vytorin group than in the Zocor group. TheVytorin group also had a minuscule, statistically non-significant, higher numberof deaths, heart attacks, and angioplasty or bypass surgeries. Although the numberof patients studied is small, and the type of patients studied is different from thoseusually prescribed the medication, the outcome trends went in the wrongdirection.

Dr. Robert Califf, noted Duke University cardiologist, stated that he plans tocontinue to take Zetia. "I don't see any signal of toxicity from this trial, so that isreassuring. There's no indication that it 's working, either, but that was also thecase before Enhance came out. For me, the fact it lowers LDL and does notappear to have side effects is enough until definitive outcome data becomeavailable.

44


Dr. Steven Nissen, Cleveland Clinic cardiologist -- of anti-GlaxoSmithKline's

(NYSE: GSK) Avandia fame -- expressed a different sentiment: "The main

problem is that after six years on the market, there are no data for ezetimibe

demonstrating any health outcome benefit. Statins do much more than lower

LDL. They increase HDL, lower triglycerides, and reduce inflammation. In the

absence of any demonstrable effect beyond LDL lowering, nearly 1 millionprescriptions per week are written for ezetimibe . Is this rational?

Adding salt to the wound, the biggest headache might comefrom Congress as itbegins to investigate why it took so long for the Enhance results to be madepublic. Congress is also investigating those ubiquitous Vytorin ads.

In an election year, hearings about who knew what details of the study, and when,can only be bad newsforprescription sales. [Emphasis added.]

64. The chart below, indicates the dramatic decline in the price of Company shares in

the short period between January 14 and January 17, 2008 , that followed the belated disclosures

regarding VYTORIN and ZETIA reaching the market, as follows:

28

26

24

22

20

SCHERING PLOUGH CP 17-Jan 4:00pm

15.0

0 10.0

5.0

0 . 0

Fri Jan 11 Mon Jan 14 Tue Jan 15 Wed Jan 16 Thu Jan 17

Copgr i gFit 2008 Yahoo! Inc. http://finance. yahoo.com/

CAUSATION AND ECONOMIC LOSS

65. During the Class Period, as detailed herein, defendants engaged in a scheme to

deceive the market, and a course of conduct that artificially inflated Schering-Plough's stock

price and operated as a fraud or deceit on Class Period purchasers of Schering-Plough's stock by

misrepresenting the status and results of the ENHANCE Study as well as the safety and efficacy

45


of the Company' s leading drug products and, therefore, the Company' s financial results. Over a

period of approximately eighteen months, defendants improperly inflated the Company's

financial results . Ultimately, however, when defendants' prior misrepresentations and fraudulent

conduct came to be revealed and was apparent to investors, shares of Schering-Plough declined

precipitously - - evidence that the prior artificial inflation in the price of Schering-Plough's

shares was eradicated. As a result of their purchases of Schering-Plough stock during the Class

Period, plaintiff and other members of the Class suffered economic losses, i.e. damages under the

federal securities laws.

66. By improperly characterizing the status and results of the ENHANCE Study as

well as the safety and efficacy of the Company's leading drug products and, therefore, the

Company's financial results , costs and expenses, and misrepresenting its prospects, the

defendants presented a misleading image of Schering-Plough's business and future growth

prospects. During the Class Period, defendants repeatedly emphasized the safety and efficacy of

VYTORIN and ZETIA, and consistently reported costs and expenses within expectations and

within the range for which the Company was adequately reserved. These claims caused and

maintained the artificial inflation in Schering-Plough's stock price throughout the Class Period

and until the truth about the Company was ultimately revealed to investors.

67. Defendants' false and materially misleading statements had the intended effect of

causing Schering-Plough's shares to trade at artificially inflated levels throughout the Class

Period - - reaching a Class Period high of over $34.00 per share in late-May 2007.

68. On January 14 - 17, 2008, however, as investors learned the truth about the

Company, and learned that defendants had failed to report the results of the ENHANCE Study or

the impaired safety and efficacy of ZYTORIN, and once investors learned that Schering-Plough

was now being investigated by the Congress for its false advertising of its cholesterol drugs,

46


shares of the Company declined precipitously. Defendants ' belated disclosures had an

immediate, adverse impact on the price of Schering-Plough shares.

69. These belated revelations also evidenced defendants' prior falsification of

Schering-Plough's business prospects due to defendants' false statements. As investors and the

market ultimately learned, the Company' s prior business prospects had been overstated as were

the Company's results of operations. As this adverse information became known to investors,

the prior artificial inflation began to be eliminated from Schering-Plough's share price and were

damaged as a result of the related share price decline.

70. As a direct result of investors learning the truth about the Company between

January 14 and 17, 2008 , Schering-Plough ' s stock price declined precipitously from just below

$28.00 per share, to a low of just over $22.50 per share - - representing a loss of market

capitalization of over decline of almost $8 billion, on very heavy trading volume. This dramatic

share price decline, eradicated much of the artificial inflation from Schering-Plough's share

price, causing real economic loss to investors who purchased this stock during the Class Period.

71. The decline in Schering-Plough ' s stock price at the end of the Class Period was a

direct result of the nature and extent of defendants' fraud being revealed to investors and to the

market. The timing and magnitude of Schering-Plough's stock price decline negates any

inference that the losses suffered by plaintiff and the other members of the Class was caused by

changed market conditions, macroeconomic or industry factors or even Company-specific facts

unrelated to defendants' fraudulent conduct.

72. The economic loss, i. e. damages suffered by plaintiff and other members of the

Class, was a direct result of defendants' fraudulent scheme to artificially inflate the price of

Schering-Plough's stock and the subsequent significant decline in the value of the Company's

47


shares when defendants' prior misstatements and other fraudulent conduct was revealed,

evidenced by the chart below, as follows:

8GP Pa i Iy

IIm

1f17.O8

34

32

30

28

26

24

22

20

18

VoIUme - B1C,Cha rts.cc-n

100

SO

OSep Oct No... Dec 07 Feb Mar Apr May Jun JuI Aug Sep Oct No... Dec 08

VIOLATIONS OF GAAP AND SEC REPORTING RULES

73. During the Class period, defendants materially misled the investing public,

thereby inflating the price of the Company' s securities , by publicly issuing false and misleading

statements and omitting to disclose material facts necessary to make defendants' statements, as

set forth herein, not false and misleading. Said statements and omissions were materially false

and misleading in that they failed to disclose material adverse information and misrepresented

the truth about the Company, its financial performance, accounting, reporting, and financial

condition in violation of the federal securities laws and GAAP.

74. GAAP consists of those principles recognized by the accounting profession as the

conventions, rules, and procedures necessary to define accepted accounting practice at the

particular time. Regulation S-X, to which the Company is subject as a registrant under the

Exchange Act, 17 C.F.R. 210 .4-01(a)( 1), provides that financial statements filed with the SEC

48


which are not prepared in compliance with GAAP, are presumed to be misleading and

inaccurate . SEC Rule 13a-13 requires issuers to file quarterly reports.

75. SEC Rule 12b-20 requires that periodic reports must contain such further

information as is necessary to make the required statements, in light of the circumstances

under which they are made, not misleading.

76. In addition, Item 303 of Regulation S-K requires that, for interim periods, the

Management Division and Analysis Section ("MD&A ) must include, among other things, a

discussion of any material changes in the registrant's results of operations with respect to the

most recent fiscal year-to-date period for which an income statement is provided. Instructions to

Item 303 require that the this discussion identify any significant elements of registrant's income

or loss from continuing operations that are not necessarily representative of the registrant's

ongoing business. Item 303(a)(2)(ii) to Regulation S-K requires the following discussion in the

MD&A of a company's publicly filed reports with the SEC:

Describe any known trends or uncertainties that have had or that the registrantreasonably expects will have a material favorable or unfavorable impact on netsales or revenues or income from continuing operations. If the registrant knows ofevents that will cause a material change in the relationship between costs andrevenues (such as known future increases in costs of labor or materials or priceincreases or inventory adjustments), the change in relationship shall be disclosed.

Paragraph 3 of the Instructions to Item 303 states in relevant part:

The discussion and analysis shall focus specifically on material events anduncertainties known to management that would cause reported financialinformation not to be necessarily indicative of future operating results or of futurefinancial condition. This would include descriptions and amounts of (A) mattersthat would have an impact on future operations and have not had an impact in thepast. .

77. The GAAP requirement for recognition of an adequate provision for foreseeable

costs and an associated allowance applies to interim financial statements as required by

49


Accounting Principles Board Opinion No. 28 . Paragraph 17 of this authoritative pronouncement

states that:

The amounts of certain costs and expenses are frequently subjected to year-endadjustments even though they can be reasonably approximated at interim dates.To the extent possible such adjustments should be estimated and the estimatedcosts and expenses assigned to interim periods so that the interim periods bear areasonable portion of the anticipated annual amount.

78. The Company' s financial statements contained in the fiscal 2006 Form 10-K

and/or the quarterly reports filed with the SEC on Forms 10-Q for the quarterly periods

throughout the Class Period were presented in a manner that violated the principle of fair

financial reporting and the following GAAP, among others:

(a) The principle that financial reporting should provide information that is

useful to present and potential investors and creditors and other users in making rational

investment, credit and similar decisions (FASB Statement of Concepts No. 1).

(b) The principle that financial reporting should provide information about an

enterprise's financial performance during a period (FASB Statement of Concepts No. 1).

(c) The principle that financial reporting should be reliable in that it

represents what it purports to represent (FASB Statement of Concepts No. 2).

(d) The principle of completeness, which means that nothing material is left

out of the information that may be necessary to ensure that it validly represents underlying

events and conditions (FASB Statement of Concepts No. 2).

(e) The principle that conservatism be used as a prudent reaction to

uncertainty to try to ensure that uncertainties and risks inherent in business situations are

adequately considered (FASB Statement of Concepts No. 2).

50


(f) The principle that contingencies and other uncertainties that affect the

fairness of presentation of financial data at an interim date shall be disclosed in interim reports in

the same manner required for annual reports (APB Opinion No. 28).

0) The principle that disclosures of contingencies shall be repeated in interim

and annual reports until the contingencies and have been removed, resolved, or have become

immaterial (APB Opinion No. 28).

(k) The principle that management should provide commentary relating to the

effects of significant events upon the interim financial results (APB Opinion No. 28).

79. In addition, during the Class Period, defendants violated SEC disclosure rules:

(a) defendants failed to disclose the existence of known trends, events or

uncertainties that they reasonably expected would have a material, unfavorable impact on net

revenues or income or that were reasonably likely to result in the Company's liquidity decreasing

in a material way, in violation of Item 303 of Regulation S-K under the federal securities laws

(17 C.F.R. 229. 303), and that failure to disclose the information rendered the statements that

were made during the Class Period materially false and misleading; and

(b) by failing to file financial statements with the SEC that conformed to the

requirements of GAAP, such financial statements were presumptively misleading and inaccurate

pursuant to Regulation S-X, 17 C.F.R. § 210.4-01(a)(1).

80. Defendants were required to disclose, in the Company's financial statements, the

existence of the material facts described herein and to appropriately recognize and report assets,

revenues , and expenses in conformity with GAAP. The Company failed to make such

disclosures and to account for and to report its financial statements in conformity with GAAP.

Defendants knew, or were reckless in not knowing, the facts which indicated that the fiscal 2006

51


Form 10-K and all of the Company's interim financial statements , press releases , public

statements, and filings with the SEC, which were disseminated to the investing public during the

Class Period, were materially false and misleading for the reasons set forth herein. Had the true

financial position and results of operations of the Company been disclosed during the Class

period, the Company's common stock would have traded at prices well below that which it did.

ADDITIONAL SCIENTER ALLEGATIONS

81. As alleged herein, defendants acted with scienter in that each defendant knew that

the public documents and statements issued or disseminated in the name of the Company were

materially false and misleading; knew that such statements or documents would be issued or

disseminated to the investing public; and knowingly and substantially participated or acquiesced

in the issuance or dissemination of such statements or documents as primary violations of the

federal securities laws. As set forth elsewhere herein in detail, defendants, by virtue of their

receipt of information reflecting the true facts regarding Schering-Plough, their control over,

and/or receipt and/or modification of Schering-Plough's allegedly materially misleading

misstatements and/or their associations with the Company which made them privy to

confidential proprietary information concerning Schering-Plough, participated in the fraudulent

scheme alleged herein.

82. Defendants were motivated to materially misrepresent to the SEC and investors

the true financial condition of the Company because : (i) deceive the investing public regarding

Schering-Plough's business, operations, management and the intrinsic value of Schering-Plough

common stock; (ii) enable defendants to artificially inflate the price of Schering-Plough shares;

(iii) enabled Schering-Plough insiders to sell almost $45 million of their privately held Schering-

Plough shares and it allowed the Company itself to register and sell over $1. 6 billion in newly

issued common stock during the Class Period and while in possession of material adverse non-

52


public information about the Company; and (iv) cause plaintiff and other members of the Class

to purchase Schering-Plough common stock at artificially inflated prices. In furtherance of this

unlawful scheme, plan and course of conduct, defendants, jointly and individually (and each of

them) took the actions set forth herein.

83. As further evidence of defendants' scienter, during the Class Period, while in

possession of material adverse non-public information about the Company, the senior-most

officers of Schering Plough liquidated large amounts of their privately held Company stock

while in possession of material adverse information about VYTORIN and ZETIA. These sales

were unusual in their timing and amount, and are evidenced by the chart below, as follows:

INSIDER TRANSACTIONS REPORTED WITHIN CLASS PERIOD

Date Insider Shares Sale/Disposition Prices Value3-Dec-07 KOHAN RAUL E

Officer 1 ,261 Disposition at $30.81 $39,00018-Aug-07 KOESTLER THOMAS P

Officer 13 ,905 Disposition at $29.56 $411,00021-May-07 CHEELEY C RON

Officer 21 ,986 Disposition at $33 . 14 $729,00021-May-07 CHEELEY C RON

Officer 78 ,014 Sale at $33.40 $2,606,0001-May-07 CHEELEY C RON

Officer 3 ,424 Disposition at $31 .73 $109,0001-May-07 CHEELEY C RON

Officer 17,513 Sale at $31.49 - $31. 51 $552,0001-May-07 COX CARRIE SMITH

Officer 450,000 Sale at $31.50 - $31 .51 $14,177,00027-Apr-07 SAUNDERS BRENT L

Officer 9 ,471 Disposition at $31 . 85 $302,00027-Apr-07 SAUNDERS BRENT L

Officer 35,529 Sale at $31.62 - $31. 67 $1,124,00020-Apr-07 COX CARRIE SMITH

Officer 450,000 Sale at $30.59 - $31 .06 $13 ,871,00015-Apr-07 SABATINO THOMAS J JR

Officer 32,445 Disposition at $27.94 $907,00031-Jan-07 CHEELEY C RON

Officer 41,480 Sale at $24 . 88 $1,032,000

53

Case 2:08-cv-00397-DMC-MF Document 1 Filed 01/18/2008

31-Jan-07

Officer

1-Dec-06

Officer

1-Dec-06

Officer

1-Dec-06

Officer

1-Dec-06

Officer

1-Dec-06

Officer

1-Dec-06

Officer

1-Dec-06

Officer

29-Nov-06

Officer

17-Nov-06

Officer

16-Nov-06

Officer

CHEELEY C RON

4,048

KOESTLER THOMAS P

5,562

KOHAN RAUL E

8,084

BERTOLINI ROBERT J

20,858

SAUNDERS BRENT L

6,953

CHEELEY C RON

11,588

HASSAN FRED

92,700

COX CARRIE SMITH

32,445

KOHAN RAUL E

10,200

BERTOLINI ROBERT J

30,128

KOHAN RAUL E

Disposition at $24.88








Sale at $22.20


10,200 Sale at $22.001-Nov-06 SAUNDERS BRENT L

Officer 11,588 Disposition at

$21.97 - $21.97 $255,00025-Aug-06 PICKETT CECIL BOfficer 100,000

$20.46 - $20.46

Sale at $20.10 - $20.10

1-Aug-06 CHEELEY C RON

Officer 11,088 Disposition at$227,000

All Trade Data Compiled From Yahoo.com

Applicability Of Presumption Of Reliance:Fraud-On-The-Market Doctrine

of 63

$101,000

$122,000

$177,000

$457,000

$152,000

$254,000

$2,033,000

$712,000

$226,000

$662,000

$224,000

$2,010,000

84. At all relevant times, the market for Schering-Plough's common stock was an

efficient market for the following reasons, among others:

(a) Schering-Plough's stock met the requirements for listing, and was listed

and actively traded on the NYSE national market exchange, a highly efficient and automated

market;

54


(b) As a regulated issuer, Schering-Plough filed periodic public reports with

the SEC and the NYSE;

(c) Schering-Plough regularly communicated with public investors via

established market communication mechanisms, including through regular disseminations of

press releases on the national circuits of major newswire services and through other wide-

ranging public disclosures , such as communications with the financial press and other similar

reporting services; and

(d) Schering-Plough was followed by several securities analysts employed by

major brokerage firm(s) who wrote reports which were distributed to the sales force and certain

customers of their respective brokerage firm(s). Each of these reports was publicly available and

entered the public marketplace.

85. As a result of the foregoing, the market for Schering-Plough securities promptly

digested current information regarding Schering-Plough from all publicly available sources and

reflected such information in Schering-Plough stock price. Under these circumstances, all

purchasers of Schering-Plough common stock during the Class Period suffered similar injury

through their purchase of Schering-Plough common stock at artificially inflated prices and a

presumption of reliance applies.

NO SAFE HARBOR

86. The statutory safe harbor provided for forward-looking statements under certain

circumstances does not apply to any of the allegedly false statements pleaded in this complaint.

Many of the specific statements pleaded herein were not identified as "forward-looking

statements when made. To the extent there were any forward-looking statements, there were no

meaningful cautionary statements identifying important factors that could cause actual results to

differ materially from those in the purportedly forward-looking statements . Alternatively, to the

55


extent that the statutory safe harbor does apply to any forward-looking statements pleaded

herein, defendants are liable for those false forward-looking statements because at the time each

of those forward-looking statements was made, the particular speaker knew that the particular

forward-looking statement was false, and/or the forward-looking statement was authorized

and/or approved by an executive officer of Schering-Plough who knew that those statements

were false when made.

BASIS OF ALLEGATIONS

87. Plaintiff has alleged the following based upon the investigation of plaintiff's

counsel, which included a review of SEC filings by Schering-Plough, as well as regulatory

filings and reports, securities analysts' reports and advisories about the Company, press releases

and other public statements issued by the Company, and media reports about the Company, and

plaintiff believes that substantial additional evidentiary support will exist for the allegations set

forth herein after a reasonable opportunity for discovery.

FIRST CLAIM

Violation Of Section 10(b) OfThe Exchange Act And Rule 10b-5

Promulgated Thereunder Against All Defendants

88. Plaintiff repeats and realleges each and every allegation contained above as if

fully set forth herein.

89. During the Class Period, defendants carried out a plan, scheme and course of

conduct which was intended to and, throughout the Class Period, did: (i) deceive the investing

public regarding Schering-Plough's business, operations, management and the intrinsic value of

Schering-Plough common stock; (ii) enable defendants to artificially inflate the price of

Schering-Plough shares; (iii) enabled Schering-Plough insiders to sell almost $45 million of their

privately held Schering-Plough shares and it allowed the Company itself to register and sell over

56


$1.6 billion in newly issued common stock during the Class Period and while in possession of

material adverse non-public information about the Company; and (iv) cause plaintiff and other

members of the Class to purchase Schering-Plough common stock at artificially inflated prices.

In furtherance of this unlawful scheme, plan and course of conduct, defendants, jointly and

individually (and each of them) took the actions set forth herein.

90. Defendants (a) employed devices, schemes, and artifices to defraud; (b) made

untrue statements of material fact and/or omitted to state material facts necessary to make the

statements not misleading; and (c) engaged in acts, practices, and a course of business which

operated as a fraud and deceit upon the purchasers of the Company's common stock in an effort

to maintain artificially high market prices for Schering-Plough's common stock in violation of

Section 10(b) of the Exchange Act and Rule lOb-5. All defendants are sued either as primary

participants in the wrongful and illegal conduct charged herein or as controlling persons as

alleged below.

91. Defendants, individually and in concert, directly and indirectly, by the use, means

or instrumentalities of interstate commerce and/or of the mails, engaged and participated in a

continuous course of conduct to conceal adverse material information about the business,

operations and future prospects of Schering-Plough as specified herein.

92. These defendants employed devices, schemes and artifices to defraud, while in

possession of material adverse non-public information and engaged in acts, practices, and a

course of conduct as alleged herein in an effort to assure investors of Schering-Plough's value

and performance and continued substantial growth, which included the making of, or the

participation in the making of, untrue statements of material facts and omitting to state material

facts necessary in order to make the statements made about Schering-Plough and its business

operations and future prospects in the light of the circumstances under which they were made,

57


not misleading, as set forth more particularly herein, and engaged in transactions, practices and a

course of business which operated as a fraud and deceit upon the purchasers of Schering-Plough

common stock during the Class Period.

93. Each of the Individual Defendants' primary liability, and controlling person

liability, arises from the following facts: (i) the Individual Defendants were high-level executives

and/or directors at the Company during the Class Period and members of the Company's

management team or had control thereof; (ii) each of these defendants, by virtue of his

responsibilities and activities as a senior officer and/or director of the Company was privy to and

participated in the creation, development and reporting of the Company's internal budgets, plans,

projections and/or reports; (iii) each of these defendants enjoyed significant personal contact and

familiarity with the other defendants and was advised of and had access to other members of the

Company's management team, internal reports and other data and information about the

Company's finances, operations, and sales at all relevant times ; and (iv) each of these defendants

was aware of the Company's dissemination of information to the investing public which they

knew or recklessly disregarded was materially false and misleading.

94. The defendants had actual knowledge of the misrepresentations and omissions of

material facts set forth herein, or acted with reckless disregard for the truth in that they failed to

ascertain and to disclose such facts. Such defendants' material misrepresentations and/or

omissions were done knowingly or with recklessly for the purpose and effect of concealing

Schering-Plough's operating condition and future business prospects from the investing public

and supporting the artificially inflated price of its common stock. As demonstrated by

defendants' overstatements and misstatements of the Company' s business , operations and

earnings throughout the Class Period, defendants, if they did not have actual knowledge of the

misrepresentations and omissions alleged, were reckless in failing to obtain such knowledge by

58


recklessly refraining from taking those steps necessary to discover whether those statements

were false or misleading.

95. As a result of the dissemination of the materially false and misleading information

and failure to disclose material facts, as set forth above, the market price of Schering-Plough

common stock was artificially inflated during the Class Period. In ignorance of the fact that

market prices of Schering-Plough's publicly-traded common stock were artificially inflated, and

relying directly or indirectly on the false and misleading statements made by defendants, or upon

the integrity of the market in which the securities trade, and/or on the absence of material

adverse information that was known to or recklessly disregarded by defendants but not disclosed

in public statements by defendants during the Class Period, plaintiff and the other members of

the Class acquired Schering-Plough common stock during the Class Period at artificially high

prices and were damaged thereby.

96. At the time of said misrepresentations and omissions , plaintiff and other members

of the Class were ignorant of their falsity, and believed them to be true. Had plaintiff and the

other members of the Class and the marketplace known the truth regarding the problems that

Schering-Plough was experiencing, which were not disclosed by defendants, plaintiff and other

members of the Class would not have purchased or otherwise acquired their Schering-Plough

common stock, or, if they had acquired such common stock during the Class Period, they would

not have done so at the artificially inflated prices which they paid.

97. By virtue of the foregoing, defendants have violated Section 10(b) of the

Exchange Act, and Rule IOb-5 promulgated thereunder.

98. As a direct and proximate result of defendants' wrongful conduct, plaintiff and

the other members of the Class suffered damages in connection with their respective purchases

and sales of the Company's common stock during the Class Period.

59


SECOND CLAIM

Violation Of Section 20(a) OfThe Exchange Act Against Individual Defendants

99. Plaintiff repeats and realleges each and every allegation contained above as if

fully set forth herein.

100. The Individual Defendants acted as controlling persons of Schering-Plough within

the meaning of Section 20(a) of the Exchange Act as alleged herein. By virtue of their high-level

positions, and their ownership and contractual rights, participation in and/or awareness of the

Company's operations and/or intimate knowledge of the false financial statements filed by the

Company with the SEC and disseminated to the investing public, the Individual Defendants had

the power to influence and control and did influence and control, directly or indirectly, the

decision-making of the Company, including the content and dissemination of the various

statements which plaintiff contends are false and misleading . The Individual Defendants were

provided with or had unlimited access to copies of the Company's reports, press releases , public

filings and other statements alleged by plaintiff to be misleading prior to and/or shortly after

these statements were issued and had the ability to prevent the issuance of the statements or

cause the statements to be corrected.

101. In particular, each of these defendants had direct and supervisory involvement in

the day-to-day operations of the Company and, therefore, is presumed to have had the power to

control or influence the particular transactions giving rise to the securities violations as alleged

herein, and exercised the same.

102. As set forth above, Schering-Plough and the Individual Defendants each violated

Section 10(b) and Rule lOb-5 by their acts and omissions as alleged in this Complaint. By virtue

of their positions as controlling persons, the Individual Defendants are liable pursuant to Section

60


20(a) of the Exchange Act. As a direct and proximate result of defendants' wrongful conduct,

plaintiff and other members of the Class suffered damages in connection with their purchases of

the Company' s common stock during the Class Period.

WHEREFORE, plaintiff prays for relief and judgment, as follows:

A. Determining that this action is a proper class action, designating plaintiff

as Lead Plaintiff and certifying plaintiff as a class representative under Rule 23 of the Federal

Rules of Civil Procedure and plaintiff's counsel as Lead Counsel;

B. Awarding compensatory damages in favor of plaintiff and the other Class

members against all defendants, jointly and severally, for all damages sustained as a result of

defendants' wrongdoing, in an amount to be proven at trial, including interest thereon;

C. Awarding plaintiff and the Class their reasonable costs and expenses

incurred in this action, including counsel fees and expert fees;

D. Awarding extraordinary, equitable and/or injunctive relief as permitted by

law, equity and the federal statutory provisions sued hereunder, pursuant to Rules 64 and 65 and

any appropriate state law remedies to assure that the Class has an effective remedy; and

E. Such other and further relief as the Court may deem just and proper.

CARELLA, BYRNE, BAIN, GILFILLAN,CECCHI, STEWART & OLSTEINAttorneys for Plaintiff

By: /s/ James E. CecchiJAMES E. CECCHI

DATED: January 18, 2008

Lewis KahnKAHN GAUTHIER SWICK, LLC650 Poydras Street - Suite 2150New Orleans , LA 70130(504) 455-1400

61


David A.P. Brower

Charles J. Piven

BROWER PIVENThe World Trade Center401 East Pratt Street, Suite 2525Baltimore, Maryland 21202(410) 332-0030

Kim E . Miller

KAHN GAUTHIER SWICK, LLC12 East 41st StreetNew York, NY 10017(212) 696 - 3730

62


JURY TRIAL DEMANDED

Plaintiff hereby demands a trial by jury as to all claims so triable.

By:

DATED: January 18, 2008

Lewis KahnKAHN GAUTHIER SWICK, LLC650 Poydras Street - Suite 2150New Orleans , LA 70130(504) 455-1400

David A.P. Brower

Charles J. Piven

BROWER PIVEN

The World Trade Center401 East Pratt Street, Suite 2525Baltimore, Maryland 21202(410) 332-0030

Kim E. Miller

KAHN GAUTHIER SWICK, LLC12 East 41st StreetNew York, NY 10017(212) 696 - 3730

CARELLA, BYRNE, BAIN, GILFILLAN,CECCHI, STEWART & OLSTEINAttorneys for Plaintiff

/s/ James E. CecchiJAMES E. CECCHI

63

Case 2:08-cv-00397-DMC-MF Document 1-2 Filed 01/18/2008 Page 1 of 2

A0440 (Rev. 8/01) Summons in a Civil Action

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

F. RICHARD MANSON, on behalf of himselfand all others similarly situated,

SUMMONS IN A CIVIL ACTION

Plaintiffvs.

CASE NUMBER:SCHERING-PLOUGH CORPORATION andMERCK & CO., INC.

Defendants.

TO: Schering-Plough Corporation2000 Galloping Hill RoadKenilworth, New Jersey 07033

YOU ARE HEREBY SUMMONED and required to serve on PLAINTIFF'S ATTORNEY (name and address)

James E. Cecchi, Esq.Carella, Byrne, Bain, Gilfillan, Cecchi, Stewart & Olstein5 Becker Farm RoadRoseland, NJ 07068

an answer to the complaint which is herewith served on you within 20 days after service of thissummons on you, exclusive of the day of service. If you fail to do so, judgment by default will be taken againstyou for the relief demanded in the complaint. Any answer that you serve on the parties to this action must befiled with the Clerk of this Court within a reasonable period of time after service.

CLERK, DATE

BY:DEPUTY CLERK


AO 440 (Rev. 8/01) Summons in a Civil Action

RETURN OF SERVICEDATE

Service of the Summons and Complaint was made by me'

NAME OF SERVER (PRINT) TITLE

Check one box below to indicate appropriate method ofservice

q Served personally upon the defendant . Place where served:

q Left copies thereof at the defendant ' s dwelling house or usual place of abode with a person ofsuitable age and discretion then residing therein.

Name ofperson with whom the summons and complaint were left:

q Returned unexecuted:

q Other (specify):

STATEMENT OF SERVICE FEES

TRAVEL SERVICES TOTAL

DECLARATION OF SERVER

I declare under penalty of perjury under the laws of the United States of America that the foregoinginformation contained in the Return of Service and Statement of Service Fees is true and correct.

Executed onDate Signature ofServer

Address ofServer

(1) As to who may serve a summons see Rule 4 of the Federal Rules of Civil Procedure.

#328686v1


PL F'S CFRTMCATION

F. Richard Manson (`Plaintiff) declares that:

1, Plaintiff has reviewed the complaint and authorized its filing.

2. Plaintiff did not purchase the security that is the subject of this action at the direction of

plaintiff's counsel or in order to participate in this private action.

3. Plaintiff is willing to serve as a representative party on behalf of the class, including

providing testimony at deposition and trial, if necessary, and Plaintiff is willing to serve as a lead

plaintiff either individually or as part of a group, a lead plaintiffbeing a representative party who acts on

behalf of other class members in directing the action.

4. Plaintiff' s transactions in Schering-Plough Corporation securities during the Class

Period are attached hereto.

5. During the three years prior to the date of this Certification, Plaintiff has not sought to

serve or served as a representative party for a class under the federal securities laws.

6. Plaintiff will not accept any payment for serving as a representative party on behalf of

the class beyond the Plaintiffs pro rata share of any recovery, except such reasonable costs and expenses

(including lost wages) directly relating to the representation of the class as ordered or approved by the

court. Plaintiff understands that this is not a claim form, and that Plaintiffs ability to share in any

recovery as a member of the class is unaffected by Plaintiffs decision to serve as a representative party.

I declare under penalty of perjury under the laws of the United States of America that the

foregoing is true and correct . Executed this l ?day of January 2008.

rJsr.

F. Richard Manson

Brower Piven, A Professional CorporationThe World Trade Center-Baltimore401 East Pratt Street, Suite 2525

Baltimore, Maryland 21202Telephone: 410-332-0030Facsimile: 410-685-1300www.browerpiven.com

Case 2 : 08-cv-00397-DMC-MF Document 1-3 Filed 01/18/2008 Page 2 of 2

ATTACHMINT TO CERTIFICATION

Schering-Plough Corporation Securities Litigation

Name: F. Richard Manson

Brower Piven, A Professional CorporationThe World Trade Center-Baltimore401 East Pratt Street, Suite 2525

Baltimore , Maryland 21202Telephone: 410-332-0030Facsimile: 410-685-1300www.browerpiven.com


RJS 44 (Rev 11/04) CIVIL COVER SHEETThe JS 44 civil cover sheet and the information contained herein neither replace nor supplement the f ling and service of pleadings or other papers as required by law , except as providedby local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is required for the use of the Clerk of Court for the purpose of smttatingthe civil docket sheet, (SEE INSTRUCTIONS ON THE REVERSE OF THE FORM.)

L (a) PLAINTIFFS

F. Richard Manson

(b) County of Residence of First Listed Plainiif€ Baltimore

(EXCEPT IN U.S. PLAINTIFF CASES)

DEFENDANTS

Schering-Plough Corporation, Fred Hassan , Robert J. Bertolini,Steven H . Koehler and Carrie S. Cox

County oi' Residence of First Listed Defendant

(IN U.S. PLAINTIFF CASES ONLY)

NOTE: IN LAND CONDEMNATION CASES, USE THE LOCATION OF THE

LAND[NVOLVED,

(C) Attorney ' s (Firm Name , Address , and Telephone Number) Attorneys ( If Known)

Carella , Byrne , Bain, Gilfillan, Ceechi , Stewart & Olstein , 5 Becker Farm

Road, Roseland , New Jersey 07068

H. BASIS OF JURISDICTION ( Place an "X" in One Box Only) III . CITIZENSHIP OF PRINCIPAL PARTIES ( Place an "X" in One Box for Plaintiff(For Diversity Caves Only ) and One Box for Defendant)

13 I U.S Government 00 3 Federal Question P"rF DER PTF DEFPlaintiff l U S Government Not a Party ) Citizen of This State 0 1 0 1 Incorporated oe Principal Place O 4 (714

02 U.S Government Cl 4 Diversity

Defendant(Indicate Citizenship of Parties in Item III)

of Business In This Slate

Citizen of Another State © 2 Cl 2 Incorporated and Principal Place 17 5 13 5of Business In Another State

Citizen or Subject of a 0 3 Cl 3 Foreign Nation 0 b C7 6

€V NATI 1R1lf11Fi' .C11AT Pi- o,,"v":.,n„on- n.,i,,;

TQIKT$ FQRKITQKE.1PF NA1TY Y STATMS

Cl 110 Insurance PERSONAL, INJURY PERSONAL INJURY 13 610 Agriculture Cl 422 Appeal 28 USC 158 0 400 State Reapportionment

0 120 Marine 11 310 Airplane O 362 Personal Injury - Cl 620 Other Food & Drug © 423 Withdrawal 17 410 Antitrust

Cl 130 Miller Act 3 315 Airplane Product Med. Malpractice Cl 625 Drug Related Seizure 28 USC 157 17 430 Banks and Banking

rJ 140 Negotiable Instrument Liability 0 365 Personal Injury - of Property 21 USC 811 0 450 Commerce0 150 Recovery of Overpayment CI 320 Assault, Libel & Product Liability L3 630 Liquor Laws I PROPER CI 460 Deportation

& Enforcement of Judgment Slander 0 368 Asbestos Personal 7) 640 RR & Truck 177 820 Copyrights CI 470 Racketeer Influenced and

13 151 Medicare Act 17.7 330 Federal Employers' Injury Product 0 650 Airline Regs Cl 830 Patent Corrupt Organizations71 152 Recovery of Defaulted Liability Liability 0 660 Occupational Cl 840 Trademark n 480 Consumer Credit

Student Loam Cl 340 Marine PERSONAL PROPERTY Safety/Health Cl 490 Cable/Sat TV

(Excl Veterans) Cl 345 Marine Product 0 370 Other Fraud n 690 Other 0 810 Selective Service

CI 153 Recovery of Overpaymenr Liability C7 371 Truth in Lending I LABOR OD 850 SecuriliesCommudities

of Veteran's Benefits CI 350 Motor Vehicle L7 380 Other Personal C7 710 Fair Labor Standards 86I H IA (134511) Exchange

J 160 Stockholders' Suits Cl 355 Motor Vehicle Property Damage Act Cl 862 Black Lung (923) ("l 875 Cuslomor Challenge

0 190 Other Contract Product Liability [3 385 Property Damage Cl 720 Labon/Mgmt, Relations Cl 863 DIWCIDIWW (405(g)) 12 USC 3410

171 195 Contract Product Liability Cl 360 Other Personal Product Liability 3 730 Labors MgmtReporting 13 864 SS] D Title XVI O 890 Other Statutory Actions

0 196 Franchise Inj u ry & Disclosure Act 0 865 RSI (405 0 891 Agricultural Acts

REAL PROPERTY CIVIL RIGHTS PRISONER PETI'T'IONS 17 740 Railway Labor Act FEDERAL TAX SUITS 7) 892 Economic Stabilization Act

n 210 Land Condemnation O 441 Voting Cl 510 Motions to Vacate Cl 790 Other Labor Litigation CI 870 Taxes (U.S. Plaintiff 0 893 Environmental Mailers

O 220 Foreclosure CI 442 Employment Sentence d 791 Empl, Ret. Inc. or Defendant) 0 894 Energy Allocation Act

0 230 Rent Lease & Ejectment Cl 443 Housing/ Habeas Corpus : Security Act Cl 871 IRS-"Third Party 0 895 Freedom of Information

0 240 Torts to Land Accorrunodations Ci 530 General 26 USC 7609 Act1 245 Tort Product Liability q 444 Welfare O 535 Death Penalty 0 9WAppeal of Fee Determination

1 290 All Other Real Property 0 445 Amer. w7Disabilitiea - C3 540 Mandamus & Other Under Equal Access

Employment O 550 Civil Rights to Justice

rJ 446 Amer. w/Disabilities - Cl 555 Prison Condition Cl 950 Constitutionality of

Other State Statutes13 440 Other Civil Rights

V. ORIGIN ( Place an "X" in One Box Only) Appea I to District

In l q 2 3 q 4 5 Transferred from 0 6 0 7 fudge fromOriginal Removed from Remanded from Reinstated or another distric t Multieiistrict MagistrateProceedin g State Court Appellate Court Reopened ( specify) Litigation Judgment

Cite the U.S. Civil Statute under which you are filing (Do not cite jurisdictional statutes unless diversity):

VI. CAUSE OFACTIONI Brief description of cause:

VII. REQUESTED IN CHECK IF THIS IS A CLASS ACTION DEMANDS CHECK YES only if demanded in complaint:

COMPLAINT : UNDER F.RC.P 23 JURY DEMAND : A Yes I No

VIII . RELATED CASE(S)

IF ANY( See initn ins) JUDGE Cavanaugh DOCKET NUMBER 08-285, 08-3116, 08-320

DATE A

FOR FF E U' ONLY

RECEIPT a AMOUNT APP PING ]FP JUDGE MAG, JUDGE

case2:08-cv-00397-dmc-mf document1 filed 01/18/2008 page 1...

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