- Sales outside the US of JANUVIA and JANUMET were $77 million as recent launches in key markets such as France, Spain, Italy and Canada continue to progress.
- The recent European approval for JANUMET will provide an additional growth opportunity for the diabetes franchise in the 27 markets in which the regulatory decision is applicable.
- Worldwide sales of ZETIA and VYTORIN as reported by the Merck/Schering-Plough joint venture were $560 million and $592 million as sales declines in the U.S. were partially offset by strong growth outside the U.S.

Strategic Thoughts:

- The results for SEAS have just been presented publicly and the firm is moving quickly to assess the data in a substantial implication for the cholesterol joint venture.
- On July 10th, Merck received a letter from the FDA closing out its recent inspection of the West Point manufacturing facility.
- As a result, any filed sBLA which were held up due to the inspection can now move through the agency''s normal review and approval process.
- In addition, varicella supply issues, which were unrelated to the issuance of the warning letter, have been resolved, and the firm has resumed manufacturing of bulk varicella.
- It is producing doses of VARIVAX, and does not anticipate any supply interruption of VARIVAX.

Management decided to move forward on several immediate and long-term steps designed to accelerate revenue growth.

- Emerging markets will become an even more central part of the company''s business strategy.
- In addition, the firm will aggressively seek out the best partners in the regions outside United States to support in line product acquisitions, co-marketing and promotion agreements, as well as country and regional licensing opportunities.
- It is accelerating development programs or novel mechanisms and fixed dose combinations in some of the key therapeutic areas, with significant incremental revenue potential.
- The firm has advanced the robust research and development of pipeline that contains nine late stage breakthrough investigational candidates that are just critical unmet medical needs.

Fiscal 2008 Outlook:

- Regarding SINGULAIR, the firm is lowering full year guidance by $200 million and now anticipate revenue in the range of $4.4 billion to $4.6 billion.
- For COZAAR/HYZAAR, it is raising guidance by $100 million, and now anticipate revenue in the range of $3.5 billion to $3.7 billion, driven by the strong performance in Japan.
- Guidance for GARDASIL revenue is now anticipated to be in the range of $1.4 billion to $1.6 billion.
- Other vaccines guidance of $2.7 billion to $2.9 billion has been reduced by $200 million.

Key questions and answers from the second quarter earnings call conducted by Merck & Co. (MRK: chart) on July 21, 2008.

Chris Schott (J.P. Morgan): On GARDASIL, the cuts of the guidance, what age group specifically was driving bulk of the clients here?

Kenneth C. Frazier: The cohort we have seen the most difficulty with is the 19 to 26-year old cohort. Trying to get actual the women even when you can drive high levels of awareness has proven more difficult than we anticipated.

In addition, these women primarily visit PCP then OBGYNs who are not typical routine vaccinators. And who in many cases have no established infrastructure for routine vaccination of this age group.

In addition, there is some lack of consistency around benefit design with the portion of these women which causes additional confusion with their physician, despite the fact that there are high levels of this individual have some coverage if they are privately insured.

Timothy Anderson (Sanford Bernstein): Can you give an update on the ongoing SINGULAIR safety review by FDA in terms of when we might learn more?

Kenneth C. Frazier: We can not predict what the FDA will do. We are in the process of interacting with the FDA now, and providing that information to the FDA.

Roopesh Patel (UBS): Given the challenges experienced with penetrating the 19 to 26 years olds, what do you believe the company will have to do differently when it gets approved for adult women 27 to 45 year olds?

Kenneth C. Frazier: As we deal with older population including adult women, we obviously will be dealing with very different populations than we did with adolescent girls.

What we found in the adolescent population was that our efforts to motivate the primary actors in that case, largely mothers of young girls as well as pediatrician, that''s something that our early efforts were relatively successful and that created a very large uptake in the first year.

As we deal with older populations, we are going to have to find strategies and we are in fact defining and working on strategies that allow us to communicate what is clearly a valuable therapeutic offerings to those women as well as to their doctors and get people to begin acting on it, when they have that level of awareness. So that is the challenge.

Roopesh Patel (UBS): On GARDASIL,when do you expect the drug to resume growth and what will the drivers be?

Kenneth C. Frazier: We have a number of programs in place to address some of the primary concerns and barriers that we have experienced in the market particularly from the 19 to 26-year old.

They include, financial issues that affect the physician as well as actions that are intended to drive more action among our young adult females including new consumer DTC campaigns that are end directly at young adult women.