It's good to see all of you here today. It's especially good to see so many Merck retirees and have the opportunity to talk with you about some of the exciting things on our horizon.

This certainly has been an eventful year – for this country, for the healthcare industry and for Merck

Major shifts in the economic and political landscape have coincided with significant changes in our industry. At the same time, we continue to dramatically transform this company to build a new Merck for a new era.

This process has not been without its challenges. We've had to make some tough decisions along the way. Our experiences in 2008 both tested – and proved – Merck's resilience. But we have some terrific opportunities as well. One of the most exciting is the opportunity to combine with our long-term partner, Schering-Plough.

We will come back to the proposed merger in a few minutes. But first, I want to take a moment to look back on the progress we've made since our last meeting.

Our strategic actions over the past four years have been focused on positioning Merck for long-term success. My goal – and the goal of this leadership team – is to ensure that Merck emerges as a leader in the healthcare industry of the future.

This year, we have continued to make progress toward fundamentally changing this company.

We have made good strides toward re-engineering our business model. We continue to change the way we approach research and development. New initiatives are enabling us to accelerate the discovery process, improve our research productivity and increase our probability of success. At the same time, we continue to seek out external collaborations that complement and extend our own world-class internal capabilities.

In fact, we are now operating in our new commercial sales model in the United States and in other markets around the world. At the same time, we continue to drive improvements in efficiency and effectiveness.

We are especially excited about the opportunity presented by Merck BioVentures. Using a proprietary technology we brought into our labs with our 2006 acquisition of GlycoFi, we believe this new business has the potential to position Merck to become a leading provider of high-quality, competitively priced follow-on biologics.

In addition, we are working actively to expand our presence in emerging markets such as China, India, Korea, Russia, Turkey, Poland and Brazil. We are on track to achieve our goal of $2 billion in sales from emerging markets by 2010.

We have made great strides in positioning Merck for success. But there's no question that these are challenging times. Let's look back briefly at our 2008 results. Full-year 2008 earnings per share were $3.42, excluding certain items. Reported EPS was $3.64

While we were pleased with the performance of many of our new products, strong revenue growth internationally was offset last year by continued challenges in demand for SINGULAIR and GARDASIL in the United States.

Back in January, we said that the first quarter of 2009 would be the most challenging quarter of the year. Our first-quarter earnings per share were 74 cents, excluding certain items. Our reported EPS was 67 cents. Looking ahead, we continue to believe our performance in the second half of the year will be stronger relative to the first quarter because of the normal seasonality of vaccines and SINGULAIR, improvements in supply for our ZOSTAVAX shingles vaccine, and continued growth in our newest products.

Let me take a moment to address how the difficult global economy is affecting Merck's business. Many of our customers are experiencing the effects of the harsh economic environment. Patients, providers and payors around the world are facing difficult choices about spending on healthcare, including medicines and vaccines. This is evident based on decreases in physician visits, and lower treatment initiation and compliance rates for patients with chronic disease, such as diabetes.

In the U.S., wholesalers, too, appear to be responding to the uncertain economy by reducing their inventory levels for some of our most widely used products. All of this puts additional pressure on us to continue providing significant value and innovation to all of our customers.

In addition to external economic factors, our performance in the first quarter also was hurt by the 2008 loss of marketing exclusivity for FOSAMAX, the soft performance of SINGULAIR and GARDASIL, and manufacturing constraints in our vaccine supply.

We achieved continued strong growth around the world from our newest medicines – JANUVIA, JANUMET and ISENTRESS – and sales volume increased by 6 percent outside the United States.

However, this growth was more than offset by the unfavorable effects of foreign exchange.

During the first quarter, we also announced four significant agreements with new partners including biotech and pharmaceutical companies that will bolster our late-stage therapeutic pipeline and drive near- and long-term growth.

Looking ahead, we believe our performance in the second half of the year will be stronger, and we remain on track to meet our full-year earnings guidance.

Of course, our major news last quarter was our announcement that we plan to merge with our longtime partner, Schering-Plough. We believe this transaction makes outstanding strategic sense and will create meaningful value for our shareholders.

Under the terms of the deal, each Merck share will automatically become a share of the combined company. Upon the closing of this transaction, Merck's shareholders are expected to own approximately 68 percent of the combined company and Schering-Plough's shareholders approximately 32 percent. We are on track to complete the merger in the fourth quarter of 2009, subject to regulatory and shareholder approval.

The combination of these companies makes for a uniquely suitable match. It brings together two strong, science-based organizations with complementary products and customer-focused selling models to create a global healthcare leader that can deliver consistent, sustainable growth and meaningful value for shareholders.

Peter Kim will talk more in a few minutes about the benefit of the proposed merger on our R&D capabilities. For now, let me just say that this transaction will significantly expand not only the number, but also the diversity, of potential medicines and vaccines in our pipeline.

The combination also will significantly expand our global reach – while providing substantial synergies and opportunities for efficiencies above and beyond the cost programs already under way at both companies. The new Merck will have a much more diverse product portfolio, as you can see on this slide. Merck and Schering-Plough have targeted many of the same therapeutic areas. So, we expect to benefit from our combined capabilities and expertise in these areas by increasing the new company's ability to help physicians and healthcare systems improve patient outcomes.

This transaction also gives us a broader set of products with significant market exclusivity – contributing to our goal of maintaining stable, consistent top-line growth.

The new Merck also will benefit from an industry-leading team of marketing and sales professionals throughout the world. Merck has been working to build our presence outside the United States. The combination of Merck and Schering-Plough will dramatically accelerate those efforts.

We believe this merger makes sound strategic sense and will drive compelling financial benefits for shareholders. One of our goals going into this was to maintain Merck's strong financial profile. We believe we have done that.

In addition to significant cost savings opportunities, this transaction gives us the enhanced financial flexibility to invest in promising drug candidates as well as external R&D. Moreover, we believe the Merck/Schering-Plough combination will generate $15 billion in free cash flow in 2013.

The transaction with Schering-Plough was structured to maintain our current credit ratings. We are pleased to confirm that the rating agencies have maintained Merck's current strong rating following the merger announcement.

Let me also say that we are committed to maintaining our current annual dividend of $1.52 per share for shareholders of the combined company.

Merck and Schering-Plough are making good progress toward completing the merger on schedule. We have taken a number of key steps since our March 9th announcement.

The syndication of financing has been completed. We have made the appropriate filings with regard to the Hart-Scott-Rodino Antitrust Improvements Act. And we expect to file our preliminary S-4 proxy filing toward the end of next month, so that both companies' shareholders can vote on the transaction.

This pending merger is a remarkable moment for this company. Merck hasn't entered into a merger of this magnitude since we combined with Sharp & Dohme more than 50 years ago.

The integration of Merck and Schering-Plough will be a significant undertaking. Our integration team is focused on bringing our two companies together as quickly as we can, once the transaction closes, and doing so in a thoughtful, deliberate and collaborative .

As I've said before, a key priority is keeping the best talent from both companies. The new Merck will be a much larger organization and we expect that the substantial majority of Schering-Plough employees will remain with the combined company.

The past few years have been a time of transformation for Merck. And the coming months will bring even more change. But even as we work to align and integrate these two great companies, we know there are some things that will not change.

First and foremost, we remain true to our core principle of putting patients first. We continue to seek out new and innovative ways to meet patients' needs, while also maintaining our long-standing commitment to help people around the world get the medicines and vaccines they need.

Scientific excellence has always been – and remains – the cornerstone of Merck. We believe the merger with Schering-Plough will help us take our scientific passion and drive to the next level.

At the same time, our commitment to operating openly, honestly and ethically remains as strong as ever. Last October, Merck began reporting grants over $500 to U.S. organizations in support of independent, accredited educational programs for healthcare professionals.

In 2009, Merck will begin to voluntarily disclose payments to U.S.-based medical and scientific experts who speak on our behalf regarding our company, our products or other healthcare topics we identify.

We also remain committed to supporting the communities in which we live.

Every day, Merck employees are giving back to their communities through our recently enhanced MerckVolunteers program, which grants employees up to 20 hours of time annually during regular work hours to volunteer at approved non-profit organizations.

In tough economic times, we know it is more important than ever to help people get the medicines they need. So we recently increased the income parameters of the Merck Patient Assistance Program to provide greater access to our 50-year-old program.

We also have rolled up our sleeves to work with the Obama Administration and Congress to support the enactment of common-sense plans to expand healthcare coverage, improve quality and ensure that we all get good value for our healthcare dollars.

As a global company, we know that our impact on the communities in which we live and work goes beyond healthcare. Two weeks ago, Governor Jon Corzine and other officials joined us at our headquarters nearby in Whitehouse Station to dedicate a new solar energy system. This new system covers 7.5 acres and will provide about 2.5 million kilowatt hours of energy per year.

We rely on the integrity, skills and diversity of our employees to achieve our business goals. We value the many contributions of our current and former employees, and are committed to keeping you informed about the company. We've launched a new retiree web site – MerckConnections.com – to help us do this. I hope you had a chance to preview the site before the meeting. If not, please pick up a special notepad about the retiree web site in the lobby as you leave today's meeting.

I believe the values on which this company was built will serve us in good stead as we continue to transform ourselves for a new era.

As I said last year, our goal is to deliver results and honor the values that reflect Merck's ongoing commitment to patients, and to our stockholders. I hope that you will leave this meeting confident that the decisions we are making will help to ensure the best possible future for Merck.

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Forward-Looking Statements

These remarks include "forward-looking statements" within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Such statements may include, but are not limited to, statements about the benefits of the proposed merger between Merck and Schering-Plough, including future financial and operating results, the combined company's plans, objectives, expectations and intentions and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of Merck's and Schering-Plough's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements.

The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: the possibility that the expected synergies from the proposed merger of Merck and Schering-Plough will not be realized, or will not be realized within the expected time period, due to, among other things, the impact of pharmaceutical industry regulation and pending legislation that could affect the pharmaceutical industry; the ability to obtain governmental and self-regulatory organization approvals of the merger on the proposed terms and schedule; the actual terms of the financing required for the merger and/or the failure to obtain such financing; the failure of Schering-Plough or Merck stockholders to approve the merger; the risk that the businesses will not be integrated successfully; disruption from the merger making it more difficult to maintain business and operational relationships; the possibility that the merger does not close, including, but not limited to, due to the failure to satisfy the closing conditions; Merck's and Schering-Plough's ability to accurately predict future market conditions; dependence on the effectiveness of Merck's and Schering-Plough's patents and other protections for innovative products; the risk of new and changing regulation and health policies in the U.S.

and internationally and the exposure to litigation and/or regulatory actions. Merck and Schering-Plough undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in Merck's 2008 Annual Report on Form 10-K, Schering-Plough's 2008 Annual Report on Form 10-K and each company's other filings with the Securities and Exchange Commission (the "SEC") available at the SEC's Internet site (www.sec.gov).

Additional Information

In connection with the proposed transaction, Schering-Plough will file a registration statement, including a joint proxy statement of Merck and Schering-Plough, with the SEC. Investors are urged to read the registration statement and joint proxy statement (including all amendments and supplements to it) because they will contain important information. Investors may obtain free copies of the registration statement and joint proxy statement when they become available, as well as other filings containing information about Merck and Schering-Plough, without charge, at the SEC's Internet web site (www.sec.gov). These documents may also be obtained for free from Schering-Plough's Investor Relations web site (www.schering-plough.com) or by directing a request to Schering-Plough's Investor Relations at (908) 298-7436. Copies of Merck's filings may be obtained for free from Merck's Investor Relations Web Site (www.merck.com) or by directing a request to Merck at Merck's Office of the Secretary, (908) 423-1000.

Merck and Schering-Plough and their respective directors and executive officers and other members of management and employees are potential participants in the solicitation of proxies from Merck and Schering-Plough shareholders in respect of the proposed transaction.

Information regarding Schering-Plough's directors and executive officers is available in Schering-Plough's proxy statement for its 2008 annual meeting of shareholders, filed with the SEC on April 23, 2008, and information regarding Merck's directors and executive officers is available in Merck's proxy statement for its 2009 annual meeting of stockholders, filed with the SEC on March 13, 2009. Additional information regarding the interests of such potential participants in the proposed transaction will be included in the registration statement and joint proxy statement filed with the SEC in connection with the proposed transaction.

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