• Company Announces First-Quarter 2008 Non-GAAP EPS of $0.89, Excluding Certain Items; First-Quarter GAAP EPS of $1.52

WHITEHOUSE STATION, N.J.--(BUSINESS WIRE)--Merck & Co., Inc. today announced financial results for the first quarter of 2008.

Merck reported non-GAAP (generally accepted accounting principles) earnings per share (EPS) of $0.89 for the first quarter of 2008, excluding a $1.4 billion net aftertax gain from a distribution received from the AstraZeneca limited partnership and restructuring charges. GAAP EPS for the first quarter were $1.52. Worldwide sales were $5.8 billion for the quarter, an increase of 1 percent from the first quarter of 2007. Foreign exchange favorably affected global sales performance by 4 percent for the quarter. Net income for the first quarter of 2008 was $3,302.6 million compared with $1,704.3 million in the first quarter of 2007. A reconciliation of EPS as reported in accordance with GAAP to EPS that excludes certain items is provided in the table that follows.

"Our reaffirmation of 2008 financial guidance shows that Merck has the right strategy in place to manage through difficult industry dynamics and unexpected challenges," said Richard T. Clark, chairman, president and chief executive officer. "Merck posted solid first quarter results despite the loss of patent protection for FOSAMAX, as well as a decline in expected sales from our Merck/Schering-Plough joint venture.

"The 'Plan to Win' effort we began back in 2005 has allowed us to improve efficiencies while at the same time growing the top line," Mr. Clark said. "But make no mistake – we are not content. Even though several of our Plan to Win initiatives are ahead of schedule, we are picking up the pace of change," Mr. Clark added. "We are accelerating plans to optimize our cost base, transform our business model and maximize performance across all of our products."

¹ Merck is providing information on 2008 and 2007 non-GAAP earnings per share that excludes certain items because of the nature of these items and the impact they have on the analysis of underlying business performance and trends. Management believes that providing this information enhances investors' understanding of the Company's performance. This information should be considered in addition to, but not in lieu of, earnings per share prepared in accordance with GAAP.

Materials and production costs were $1.2 billion for the quarter, a decrease of 19 percent from the first quarter of 2007. The first-quarter 2008 and first-quarter 2007 costs include $15 million and $118 million, respectively, for costs associated with the global restructuring program. The gross margin was 78.7 percent for the first quarter of 2008 and 73.6 percent for the first quarter of 2007, reflecting 0.3 and 2.0 percentage point unfavorable impacts, respectively, relating to the restructuring costs noted above.

Marketing and administrative expenses were $1.9 billion for the first quarter of 2008, an increase of 3 percent from the first quarter of 2007. Included in marketing and administrative expenses in the first quarter of 2008 are $40 million in reserves solely for future legal defense costs for litigation related to FOSAMAX (alendronate sodium).

Research and development expenses were $1.1 billion for the quarter, an increase of 5 percent from the first quarter of 2007.

Restructuring costs, primarily representing employee separation costs associated with the Company's global restructuring program, net of gains on the sales of facilities and related assets, were $70 million for the first quarter of 2008. Total overall costs associated with the Company's global restructuring program included in materials and production and restructuring costs were $85 million and $186 million for the first quarter of 2008 and 2007, respectively, primarily related to separations, accelerated depreciation and asset impairment costs.

Other (income) expense for the quarter includes a $249 million gain on Merck's divestiture of its remaining worldwide rights to AGGRASTAT (tirofiban hydrochloride) to Iroko Pharmaceuticals and a gain of $2.2 billion from a distribution received from the AstraZeneca limited partnership in which Merck maintains an interest. Merck also recorded a $300 million expense in the first quarter for a contribution to The Merck Company Foundation. The contribution reinforces the Company's strong commitment to enhancing the health and well-being of people around the world. Other (income) expense also includes a $55 million charge in connection with the anticipated resolution of a previously disclosed investigation by a group of Attorneys General from 31 states and the District of Columbia into whether the Company violated state consumer protection laws with respect to the sales and marketing of VIOXX (rofecoxib). The resolution of these matters still is subject to execution of definitive agreements.

The first-quarter 2008 effective tax rate of 25.1 percent reflects the impacts of the gain on distribution from the AstraZeneca limited partnership and restructuring charges. The effective tax rate excluding the impact of these items was 14.5 percent, reflecting a first-quarter benefit of approximately eight percentage points relating to the realization of foreign tax credits.

Financial Guidance

Merck anticipates a full-year 2008 non-GAAP EPS range of $3.28 to $3.38 that adjusts for certain items and a 2008 GAAP EPS range of $3.84 to $4.00. The Company expects a generally even distribution of non-GAAP EPS across the remaining quarters in 2008. Both the non-GAAP and GAAP EPS ranges include a $700 million reduction in equity income guidance, attributable to the lower-than-anticipated contribution from the Merck/Schering-Plough joint venture, as well as updates to other guidance elements to reflect current business trends. The 2008 GAAP guidance includes:

• A pretax charge of approximately $100 million to $300 million associated with the Company's global restructuring program.
• The $2.2 billion gain from a distribution from the AstraZeneca limited partnership.

A reconciliation of 2008 EPS as reported in accordance with GAAP to non-GAAP EPS that adjusts for certain items is provided in the table that follows.

Details on Merck's full-year 2008 financial guidance can be found on pages 12 and 13 of this news release.

Product Performance Highlights

Worldwide sales of SINGULAIR (montelukast sodium), a once-a-day oral medicine indicated for the chronic treatment of asthma and the relief of symptoms of allergic rhinitis, were $1.1 billion for the first quarter of 2008, an increase of 10 percent compared with the first quarter of 2007. SINGULAIR continues to be the No. 1 prescribed product in the U.S. respiratory market².

Combined worldwide sales of ZETIA (ezetimibe) and VYTORIN (ezetimibe/simvastatin), as reported by the Merck/Schering-Plough joint venture, were $1.2 billion for the first quarter of 2008, representing a 6 percent increase compared with the first quarter of 2007. Worldwide sales of ZETIA, marketed as EZETROL outside the United States, were $582 million in the first quarter of 2008, an increase of 7 percent compared with the previous year's first quarter. First-quarter 2008 worldwide sales of VYTORIN, marketed outside the United States as INEGY, were $651 million, an increase of 4 percent compared with the first quarter of 2007. The Company records the results from its interest in the Merck/Schering-Plough joint venture, which totaled $393 million in the first quarter of 2008 compared with $347 million in the same quarter a year earlier, in equity income from affiliates.

Worldwide sales of Merck's antihypertensive medicines COZAAR (losartan potassium) and HYZAAR³ (losartan potassium and hydrochlorothiazide) were $847 million for the first quarter of 2008, a 6 percent increase compared with the first quarter of 2007. COZAAR and HYZAAR are among the leading medicines in the angiotensin receptor blocker class.

Worldwide sales of FOSAMAX and FOSAMAX PLUS D (alendronate sodium/cholecalciferol), which is marketed as FOSAVANCE throughout the European Union, were $470 million for the first quarter of 2008, representing a decrease of 37 percent compared with the first quarter of 2007. Since most formulations of these medicines have lost U.S. marketing exclusivity, the Company is experiencing a significant decline in sales in the United States of FOSAMAX and FOSAMAX PLUS D.

Total worldwide sales of Merck's other promoted medicines, which include JANUVIA (sitagliptin), JANUMET (sitagliptin phosphate and metformin hydrochloride) and ISENTRESS (raltegravir), were $1.8 billion for the first quarter, representing a 14 percent increase compared with the first quarter of 2007. Merck's portfolio of medicines are approved to treat a broad range of medical conditions, including glaucoma, migraine, pain, diabetes, HIV/AIDS and other infectious diseases.

JANUVIA, Merck's treatment for type 2 diabetes, recorded worldwide sales of $272 million in the first quarter of 2008 compared with $87 million in the same quarter in 2007.

² Source: IMS NPA

³ COZAAR and HYZAAR are registered trademarks of E.I. duPont de Nemours and Company, Wilmington, Del.

JANUMET, a single tablet that addresses all three key defects of type 2 diabetes launched in the United States in April 2007, recorded sales of $58 million during the quarter.

Worldwide sales of ISENTRESS, Merck's first-in-class HIV integrase inhibitor for use in combination with other antiretroviral agents for the treatment of HIV-1 infection in treatment-experienced adult patients, were $47 million in first-quarter 2008. Merck launched ISENTRESS in the United States in October 2007.

Worldwide sales of vaccines, as recorded by Merck, were $986 million for the first quarter compared with $903 million in the first quarter of 2007. Vaccines in most major European markets are sold through the Company’s joint venture, Sanofi Pasteur MSD, and the results from its interest in the joint venture are recorded in equity income from affiliates.

Worldwide sales of the Company's cervical cancer vaccine GARDASIL (Human Papillomavirus (HPV) Quadrivalent (types 6, 11, 16, 18) Recombinant Vaccine) as recorded by Merck, were $390 million for the first quarter of 2008, an increase of 7 percent from the first quarter of 2007. GARDASIL, the world's top-selling HPV vaccine and only HPV vaccine available for use in the United States, currently is indicated for girls and women nine through 26 years of age for the prevention of cervical cancer, precancerous or dysplastic lesions, and genital warts caused by HPV types 6, 11, 16 and 18. During the first quarter of 2008, the U.S. Food and Drug Administration (FDA) accepted, and designated for priority review, a supplemental Biologics License Application for the potential use of GARDASIL in women aged 27 through 45. A priority designation is intended for products or indications that address unmet medical needs. Additional applications under FDA review include data on protection against vaginal and vulvar cancer caused by HPV types 16 and 18, data on immune memory and data on cross protection.

Worldwide sales of ROTATEQ (rotavirus vaccine, live, oral, pentavalent), Merck's vaccine to help protect children against rotavirus gastroenteritis and one of the world's leading rotavirus vaccines, as recorded by Merck, were $190 million in the first quarter of 2008 compared with $85 million in the same quarter a year earlier.

Worldwide sales of Merck's other pediatric vaccines, which include VARIVAX (varicella virus vaccine live {Oka/Merck}), M-M-R II (measles, mumps and rubella virus vaccine live) and PROQUAD (measles, mumps, rubella and varicella {Oka/Merck} virus vaccine live), as recorded by Merck, were $226 million for the first quarter of 2008, a decrease of 8 percent compared with the same period a year earlier. Sales of VARIVAX, a vaccine for the prevention of chickenpox, were $149 million for the quarter as the Advisory Committee on Immunization Practices' second-dose recommendation continued to be implemented. VARIVAX sales were $104 million during the same quarter in 2007.

Merck records ongoing revenue based on sales of products that are associated with alliances, the most significant of which is AstraZeneca LP. Revenue from AstraZeneca LP recorded by Merck was $405 million in the first quarter of 2008.

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