Sales
Worldwide sales were $5.94 billion for the third quarter of 2008, a decline of 2% compared with the third quarter of 2007, primarily attributable to a 6% unfavorable effect from volume, partially offset by a 4% favorable effect from foreign exchange. The revenue decline in the third quarter largely reflects lower sales of Fosamax for the treatment and prevention of osteoporosis. Fosamaxand Fosamax Plus D lost market exclusivity for substantially all formulations in the United States in February 2008 and April 2008, respectively. Also contributing to the decline were lower sales of vaccines, including Zostavax, a vaccine to help prevent shingles (herpes zoster), RotaTeq, a vaccine to help protect against rotavirus gastroenteritis in infants and children, and Haemophilus influenzae type b ("HIB") and hepatitis vaccines. Revenue was also negatively impacted by lower sales of Zocor, the Company's statin for modifying cholesterol which lost U.S. market exclusivity in 2006, and lower revenue from the Company's relationship with AstraZeneca LP ("AZLP"). These declines were partially offset by higher sales of Januvia and Janumet for the treatment of type 2 diabetes, Isentress for the treatment of HIV infection and Cozaar/Hyzaar* for the treatment of hypertension.
Worldwide sales were $17.82 billion for the first nine months of 2008, a decline of 1% compared with the first nine months of 2007, primarily attributable to a 4% unfavorable effect from volume and a 1% unfavorable effect from price changes, offset by a 4% favorable effect from foreign exchange. The revenue decline for the first nine months of 2008 reflects lower sales of Fosamax, decreased revenues from the Company's relationship with AZLP, lower sales of Zocor and lower sales of vaccines, including hepatitis and HIB vaccines. Partially offsetting these declines were higher sales of Januvia and Janumet, Isentress, Cozaar/Hyzaar, RotaTeq and Singulair, a medicine indicated for the chronic treatment of asthma and the relief of symptoms of allergic rhinitis.
* Cozaar and Hyzaar are registered trademarks of E.I. duPont de Nemours & Company, Wilmington, Delaware.

Sales of the Company's products were as follows:

                                                      Three Months Ended                     Nine Months Ended
                                                        September 30,                          September 30,
($ in millions)                                    2008               2007                2008                2007

Pharmaceutical:
Singulair                                       $ 1,029.3          $ 1,018.1          $  3,214.6          $  3,111.9
Cozaar/Hyzaar                                       888.3              813.6             2,676.3             2,458.8
Fosamax                                             353.9              725.2             1,234.8             2,253.0
Januvia                                             378.5              184.6               984.4               415.3
Cosopt/Trusopt                                      208.6              196.8               627.4               575.0
Zocor                                               157.2              217.8               513.1               654.2
Maxalt                                              136.4              125.0               388.3               341.5
Propecia                                            107.9               99.2               320.6               292.8
Arcoxia                                              96.8               76.1               294.1               245.2
Vasotec/Vaseretic                                    82.1              119.5               271.5               368.5
Proscar                                              80.9               89.6               251.9               328.0
Janumet                                             100.7               18.6               231.5                42.9
Emend                                                68.2               48.9               193.3               143.6
Other pharmaceutical (1)                            519.1              575.4             1,734.2             1,980.2
Vaccine and infectious disease product
sales included in the Pharmaceutical
segment (2)                                         596.7              456.8             1,686.1             1,328.1

Pharmaceutical segment revenues                   4,804.6            4,765.2            14,622.1            14,539.0

Vaccines (3) and Infectious Diseases:
Gardasil                                            401.0              418.4             1,117.1             1,141.3
RotaTeq                                             134.5              171.3               502.4               375.4
Zostavax                                             11.2               61.2               150.8               150.7
ProQuad/M-M-R II/Varivax                            430.4              428.5               973.8             1,018.1
Hepatitis vaccines                                   36.2               68.4               107.9               219.5
Other vaccines                                       80.6               96.5               222.8               284.6
Primaxin                                            187.6              185.6               591.5               568.4
Cancidas                                            147.9              135.2               457.4               403.2
Isentress                                           107.3                5.4               231.1                11.9
Crixivan/Stocrin                                     68.5               72.3               222.8               229.9
Invanz                                               71.1               49.5               197.0               137.4
Other infectious disease                              6.3                0.5                 9.6                 0.8
Vaccine and infectious disease product
sales included in the Pharmaceutical
segment (2)                                        (596.7 )           (456.8 )          (1,686.1 )          (1,328.1 )

Vaccines and Infectious Diseases segment
revenues                                          1,085.9            1,236.0             3,098.1             3,213.1

Other segment (4)                                    21.2               44.9                65.3               125.6

Total segment revenues                            5,911.7            6,046.1            17,785.5            17,877.7

Other (5)                                            32.2               28.0                32.4                77.1

                                                $ 5,943.9          $ 6,074.1          $ 17,817.9          $ 17,954.8

(1) Other pharmaceutical primarily includes sales of other human pharmaceutical products and revenue from the Company's relationship with AZLP primarily relating to sales of Nexium, as well as Prilosec. Revenue from AZLP was $375.2 million and $416.3 million for the third quarter of 2008 and 2007, respectively, and was $1,235.7 million and $1,438.2 million for the first nine months of 2008 and 2007, respectively.

(2) Sales of vaccine and infectious disease products by non-U.S. subsidiaries are included in the Pharmaceutical segment.

(3) These amounts do not reflect sales of vaccines sold in most major European markets through the Company's joint venture, Sanofi Pasteur MSD, the results of which are reflected in Equity income from affiliates. These amounts do, however, reflect supply sales to Sanofi Pasteur MSD.

(4) Includes other non-reportable human and animal health segments.

(5) Other revenues are primarily comprised of miscellaneous corporate revenues, sales related to divested products or businesses and other supply sales not included in segment results.

Sales by product are presented net of discounts and returns. The provision for discounts includes indirect customer discounts that occur when a contracted customer purchases directly through an intermediary wholesale purchaser, known

as chargebacks, as well as indirectly in the form of rebates owed based upon definitive contractual agreements or legal requirements with private sector and public sector (Medicaid and Medicare Part D) benefit providers, after the final dispensing of the product by a pharmacy to a benefit plan participant. These discounts, in the aggregate, reduced revenues by $529.7 million and $492.4 million for the three months ended September 30, 2008 and 2007, respectively, and by $1,581.7 million and $1,536.1 million for the nine months ended September 30, 2008 and 2007, respectively. Inventory levels at key wholesalers for each of the Company's major pharmaceutical products are generally less than one month.
Pharmaceutical Segment Revenues
Sales of the Pharmaceutical segment increased 1% for both the third quarter and first nine months of 2008 to $4.80 billion and $14.62 billion, respectively, compared with the corresponding periods of 2007. These results reflect growth of Januvia, Janumet, Isentress and Cozaar/Hyzaar, offset by declines in Fosamax, Zocor and supply sales to AZLP.
Worldwide sales for Singulair were $1.03 billion for the third quarter of 2008, representing an increase of 1% over the third quarter of 2007. Sales for the first nine months of 2008 reached $3.21 billion, a 3% increase over the comparable prior year period. Sales in the third quarter and first nine months of 2008 reflect the continued demand for asthma and seasonal and perennial allergic rhinitis medications. Sales performance for the quarter and year-to-date period benefited from higher sales outside the United States, including the positive effect of foreign exchange and volume growth in Europe and Japan. Sales performance in the United States also reflects the impact of the switch of a competing allergic rhinitis product to over-the-counter status in the United States in early 2008, the timing and public reaction to the U.S. Food and Drug Administration ("FDA") early communication regarding a very limited number of post-marketing adverse event reports which created uncertainty in the marketplace, and a shorter and milder spring allergy season. Singulair continues to be the number one prescribed branded product in the U.S. respiratory market.
Global sales of Cozaar and Hyzaar were $888.3 million for the third quarter of 2008, an increase of 9% compared with the third quarter of 2007. Sales for the first nine months of 2008 were $2.68 billion, an increase of 9% compared with the first nine months of 2007. The increase in both periods was driven in part by the positive effect of foreign exchange and strong performance of Hyzaar in Japan (marketed as Preminent). Cozaar and Hyzaar are among the leading medicines in the growing angiotensin receptor blocker class.
Global sales for Fosamax and Fosamax Plus D (marketed as Fosavance throughout the European Union ("EU") and as Fosamac in Japan) were $353.9 million for the third quarter of 2008 and were $1.23 billion for the first nine months of 2008, representing declines of 51% and 45%, respectively, over the comparable prior year periods of 2007. Since substantially all formulations of these medicines have lost U.S. market exclusivity, the Company is experiencing a significant decline in sales in the United States within the Fosamax franchise and the Company expects such declines to continue.
Global sales of Januvia, Merck's dipeptidyl peptidase-4 ("DPP-4") inhibitor for the treatment of type 2 diabetes, were $378.5 million in the third quarter of 2008 compared with $184.6 million for the third quarter of 2007. Sales for the first nine months of 2008 were $984.4 million compared with $415.3 for the first nine months of 2007. Januvia was approved by the FDA in October 2006 and by the European Commission ("EC") in March 2007. Januvia continues to be the second leading branded oral anti-diabetic agent in terms of new prescription share. DPP-4 inhibitors represent a class of prescription medications that improve blood sugar control in patients with type 2 diabetes by enhancing a natural body system called the incretin system, which helps to regulate glucose by affecting the beta cells and alpha cells in the pancreas.
In September 2008, new data analyses from five new studies were presented at the 44thAnnual Meeting of the European Association for the Study of Diabetes. These data showed initial combination therapy with Januvia and metformin provided improvements in blood sugar levels as measured by A1C (a measure of a person's average blood glucose over a two-month to three-month period) over two years of treatment and was generally well tolerated. Also presented at the meeting was a separate, new pooled analysis of 6,139 patients that showed that Januvia was generally well tolerated in clinical trials up to two years in duration. Three additional studies further demonstrated the safety and efficacy profile of Januvia as an add-on to other oral diabetes treatments and efficacy when analyzed based on different baseline characteristics.
Global sales of Janumet, Merck's oral antihyperglycemic agent that combines sitagliptin (Merck's DPP-4 inhibitor, Januvia) with metformin in a single tablet to target all three key defects of type 2 diabetes, were $100.7 million for the third quarter of 2008 compared with $18.6 million for the third quarter of 2007. Sales for the first nine months of 2008 were $231.5 million compared with $42.9 million for the same period of 2007. Janumet, launched in the United States in April 2007, was approved, as an adjunct to diet and exercise, to improve blood sugar control in adult patients with type 2

diabetes who are not adequately controlled on metformin or sitagliptin alone, or in patients already being treated with the combination of sitagliptin and metformin. In February 2008, Merck received FDA approval to market Janumet as an initial treatment for type 2 diabetes. In July 2008, Janumet was approved for marketing in the EU, Iceland and Norway.
Worldwide sales of Zocor, Merck's statin for modifying cholesterol, declined 28% in the third quarter of 2008 compared with the third quarter of 2007 and 22% for the first nine months of 2008 over the corresponding period of 2007 reflecting the continuing impact of the loss of U.S. market exclusivity in June 2006. Other Pharmaceutical segment products experiencing growth in the third quarter and first nine months of 2008 compared with the same periods of 2007 include Arcoxia for the treatment of arthritis and pain, Emend for the prevention of acute and delayed nausea and vomiting associated with moderately and highly emetogenic cancer chemotherapy, as well as for the treatment of post-operative nausea and vomiting, Maxalt to treat migraine pain, Cosopt to treat elevated intraocular pressure in patients with open-angle glaucoma or ocular hypertension, and Propecia for male pattern hair loss.
In September 2008, Merck confirmed that the EC adopted the recommendation of the European Medicines Agency to approve Arcoxia 90 mg once daily as a new treatment for ankylosing spondylitis, maintain the 90 mg dose for rheumatoid arthritis, and modify the contraindications and warnings sections of the label for treating and monitoring patients with hypertension. In Europe, Arcoxia is indicated for the treatment of osteoarthritis (30 mg or 60 mg), rheumatoid arthritis (90 mg) and acute gouty arthritis (120 mg). National approval procedures to implement the new indication and prescribing information are underway in the 27 member states of the EU. Arcoxia is approved and launched in 69 countries in Europe, Latin America and the Asia-Pacific region.
In October 2008, Merck terminated its Phase II/III clinical study evaluating Zolinza in combination with paclitaxel and carboplatin in patients with Stage IIIB or Stage IV non-small cell lung cancer. The decision follows the recommendations of an independent Data Safety Monitoring Board ("DSMB"), which met on October 14, 2008 for a pre-planned interim analysis of the study. The DSMB recommended that the study, which had completed Phase II enrollment, be discontinued due to a lack of improvement in progression-free survival and a higher incidence of serious adverse experiences and discontinuations of therapy in the Zolinza plus carboplatin and paclitaxel arm. Merck currently remains blinded to the data and will evaluate the data once it has been fully analyzed. As lung cancer is a leading cause of cancer deaths worldwide, Merck is committed to further researching Zolinza in combination with other chemotherapy agents. Also in October 2008, the patent that provided U.S. market exclusivity for Trusopt and Cosoptexpired. The Company expects significant declines in U.S. sales of these products.
During the first quarter of 2008, Merck divested its remaining ownership of Aggrastat in foreign markets to Iroko Pharmaceuticals.
Also during the first quarter of 2008, the Company and AZLP entered into an agreement with Ranbaxy Laboratories Ltd. ("Ranbaxy") to settle patent litigation with respect to esomeprazole (Nexium)which provides that Ranbaxy will not bring its generic esomeprazole product to market in the United States until May 27, 2014.
Vaccines and Infectious Diseases Segment Revenues Sales of the Vaccines and Infectious Diseases segment declined 12% to $1.09 billion in the third quarter of 2008 from $1.24 billion in the third quarter of 2007 primarily due to lower sales of Zostavax, Gardasil, RotaTeq, hepatitis and HIB vaccines, partially offset by sales of Isentress. Sales for the first nine months of 2008 declined 4% to $3.10 billion from $3.21 billion for the first nine months of 2007 primarily due to lower sales of hepatitis and HIB vaccines, Gardasil and other viral vaccines, which include Varivax, M-M-R II and ProQuad, partially offset by sales of Isentress and growth in RotaTeq. The following discussion of vaccine and infectious disease product sales includes total vaccine and infectious disease product sales, the aggregate majority of which are included in the Vaccines and Infectious Diseases segment and the remainder, representing sales of these products by non-U.S. subsidiaries, are included in the Pharmaceutical segment. These amounts do not reflect sales of vaccines sold in most major European markets through Sanofi Pasteur MSD ("SPMSD"), the Company's joint venture with Sanofi Pasteur, the results of which are reflected in Equity income from affiliates (see "Selected Joint Venture and Affiliate Information" below). Supply sales to SPMSD are reflected in Vaccines and Infectious Diseases segment revenues.
Worldwide sales of the Company's cervical cancer vaccine Gardasil, as recorded by Merck, were $401.0 million for the third quarter of 2008, a decline of 4% compared with the third quarter of 2007 and were $1.12 billion for the first nine months of 2008, a decline of 2% over the comparable period of 2007. Sales performance reflects lower sales

domestically, partially offset by growth outside the United States. Sales growth outside the United States was aided by the adoption of school-based programs in all Canadian provinces, which was the primary driver of a $34 million increase in sales in Canada in the third quarter of 2008 compared with the third quarter of 2007. Based on market research, the third quarter 2008 performance for Gardasil in the United States was driven by a generally consistent monthly vaccination rate among 19 to 26 year old women over the past year, and while the annual vaccination rate of the remaining 13 to 18 year olds increased, the overall number of first dose vaccinations declined because of the early success in vaccinating this age group following launch. Also, utilization during the back to school season appears to have been tempered by media coverage over the summer on post-marketing reports. 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, vulvar and vaginal cancers, precancerous or dysplastic lesions, and genital warts caused by HPV types 6, 11, 16 and 18.
In September 2008, the FDA approved Gardasil for the prevention of vulvar and vaginal cancers caused by HPV types 16 and 18. The approval is based on data from a combined analysis of three studies that demonstrated the efficacy and safety of Gardasil in more than 15,000 patients.
In June 2008, the FDA issued a complete response letter regarding the supplemental biologics license application ("sBLA") for the use of Gardasil in women ages 27 through 45. The agency issued the letter to advise that it has completed its review of the submission and that there are issues that preclude approval of the supplement within the expected review timeframe. Merck discussed with the FDA their questions related to this application and responded to the agency in July 2008. The agency has informed the Company that the response was a class 2 response, which typically undergo a six month review. The letter does not affect current indications for Gardasilin females aged nine through 26. Clinical studies to evaluate the safety and efficacy of Gardasilin males 16 to 26 years of age continue and the Company expects to submit to the FDA an application to support an indication for males nine to 26 years of age in 2008.

RotaTeq, Merck's vaccine to help protect against rotavirus gastroenteritis in infants and children, achieved worldwide sales as recorded by Merck of $134.5 million for the third quarter of 2008, a decline of 21% compared with the third quarter of 2007. In the third quarter of 2007, the Company recorded $51 million in revenue as a result of a government purchase for the U.S. Centers for Disease Control and Prevention ("CDC") stockpile. Sales were $502.4 million for the first nine months of 2008, an increase of 34% compared with the first nine months of 2007. The increase for the year-to-date period was driven largely by the continued uptake in the United States and successful launches around the world. Sales in the first nine months of 2008 included purchases of $54 million to support the CDC stockpile compared with $51 million in the first nine months of 2007.
In October 2008, Merck announced that RotaTeq has been awarded pre-qualification status by the World Health Organization ("WHO"). WHO pre-qualification allows for expanded access to RotaTeq and provides a greater opportunity to help protect millions of babies from rotavirus gastroenteritis. Because RotaTeq is pre-qualified by the WHO, the vaccine is eligible for procurement by the Pan American Health Organization, UNICEF and other United Nations' agencies for use in national vaccination programs. RotaTeq is the only ready-to-use oral liquid rotavirus vaccine to receive WHO pre-qualification. Merck has committed to providing RotaTeq to the Global Alliance for Vaccines and Immunization-eligible countries at prices at which it does not profit.
Also in October 2008, data on RotaTeq were presented at the 48th Interscience Conference on Antimicrobial Agents and Chemotherapy / Infectious Diseases Society of America 46th Annual Meeting in Washington, D.C. that showed RotaTeq reduced rotavirus-related hospitalizations and emergency room visits combined by 100% during the 2007 and 2008 rotavirus seasons (January through May of each year) in an observational study in the United States. The large, national, post-licensure observational study was based on a review of health insurance claims data from approximately 61,000 infants in the United States. Additionally, in October 2008, the CDC Advisory Committee on Immunization Practices ("ACIP") voted unanimously to recommend that adults ages 19 to 64 with asthma receive pneumococcal polysaccharide vaccine ("PPSV23"), known as Pneumovax 23 (Pneumococcal Vaccine Polyvalent). Merck is the sole supplier of Pneumovax 23 in the United States. The ACIP based this recommendation on study data that showed an increased risk of pneumococcal disease among people with asthma. Pneumococcal diseases are caused by common bacteria and can lead to potentially serious bacterial infections of the lungs (pneumonia), lining of the brain (meningitis) and blood (bacteremia). The ACIP also voted to recommend that people aged 19 through 64 years who smoke cigarettes should receive PPSV23 as well as smoking-cessation counseling. This recommendation is the first time the ACIP has recommended a vaccine specifically for people who smoke.
As previously disclosed, the Company has resolved an issue related to the bulk manufacturing process for the Company's varicella zoster virus ("VZV")-containing vaccines. The Company is manufacturing bulk varicella and is producing doses of Varivax and Zostavax. The Company has received regulatory approvals in the United States and certain other markets

to increase its manufacturing capacity for VZV-containing vaccines. ProQuad, the Company's combination vaccine that helps protect against measles, mumps, rubella and chickenpox, one of the VZV-containing vaccines, is currently not available for ordering; however, orders have been transitioned, as appropriate, to M-M-R II and Varivax. Total sales as recorded by Merck for ProQuad were $259.9 million for the first nine months of 2007.
Merck's sales of Varivax, the Company's vaccine for the prevention of chickenpox (varicella), were $336.7 million for the third quarter of 2008 compared with $284.3 million for the third quarter of 2007 and were $710.6 million for the first nine months of 2008 compared with $585.1 million for the first nine months of 2007. Varivax is currently the only vaccine available in the United States to help protect against chickenpox due to the unavailability of ProQuad. Merck's sales of M-M-R II, a vaccine to help protect against measles, mumps, and rubella, were $93.9 million for the third quarter of 2008 compared with $75.3 million for the third quarter of 2007 and were $253.7 million for the first nine months of 2008 compared with $173.1 million for the first nine months of 2007. Sales of Varivax and M-M-R II were affected by the unavailability of ProQuad. Combined sales of ProQuad, M-M-R II and Varivax in the third quarter of 2008 were comparable with sales for the third quarter of 2007 and declined in the first nine months of 2008 compared with the corresponding period of 2007. Sales of Zostavax, the Company's vaccine to help prevent shingles (herpes zoster), as recorded by Merck were $11.2 million for the third quarter of 2008 as compared with $61.2 million in the third quarter of 2007. Sales in the quarter were impacted by bulk vaccine supply issues that caused delays in the fulfillment of customer orders. Merck expects to fill the customer back orders that existed at the end of the third quarter by the end of 2008. Sales of Zostavax for the first nine months of 2008 of $150.8 million were comparable with sales for same period a year ago. The Company currently anticipates launching Zostavax outside the United States beyond 2009.
The Company has been working to resolve manufacturing issues related to its HIB-containing vaccines, PedvaxHIB and Comvax since December 2007. The Company has resolved the original issue related to equipment sterilization, but has identified another unrelated manufacturing process change that will require a regulatory filing. Merck anticipates that PedvaxHIB and Comvax will return to the U.S. market in mid-2009. Additionally, Merck anticipates the pediatric . . .