James Kelly (Goldman Sachs): Can you give an update on the gross margins inside the OBS business?
Robert J. Bertolini: Our gross margin came in about 68.9 versus the 68.5. Going forward product mix will be the primary driver over the near term. OBS was better in the Schering margin this quarter. It came in close to 71% this quarter. We are still getting our hands on that business but it was a strong quarter, also helped by the Intervet business.
James Kelly (Goldman Sachs): Could you give an update on boceprevir, Phase III timing and the prod status and progress of that program?
Thomas P. Koestler: The boceprevir program, we have submitted our protocols to FDA for Phase III, and we are waiting feedback from them. In addition, we are now in the process of building clinical supplies. This is a complex synthetic production for this API, the active ingredient for this product. That is what we are doing, we are building our clinical supplies right now for the Phase III program and waiting for feedback from FDA. We do have some data that will be presented at a late breaker at EASL this coming Saturday in Milan, Italy and there will be two arms of the ongoing SPRINT-1 trial which is our treatment naive trail.
John Boris (Bear Stearns): You reported 19% growth in the U.S., Bob. If you strip out the Organon business, what growth was for the underlying Schering business?
Robert J. Bertolini: If we carve out the Organon business on the prescription side, we are down about 2%.
Carrie S. Cox: We have a number of strong brands in the U.S. today and we are also excited about the potential of some of the products that we see as the future growth drivers in the U.S. market. We have talked about a number of them that do come from the OBS acquisition and the opportunities that we still have in front of us. Sugammadex will be particularly exiting when it comes to market because it represents a major change in a market that has seen little innovation in about 50 years now. The opportunity to completely change the treatment paradigm in that marketplace is an exiting one. It may take some time to accomplish but bringing up the product that represents those innovations to market is exiting. We also see some interesting opportunities within the Organon women''s health portfolio. Products that we think are every strong and have good profile but have not had the overall support that we can provide now is part of the combined company. We are exited about what we can do now going into some new product cycles and some new areas of growth.
Fred Hassan: We are committed to growing our US business and we know that product cycles influence the U.S. business a lot more in the short-term compared to international markets. So certain products which might be more advanced in their lifecycle in the U.S. are still growth products in international markets, and that is the strength with the diversity that we have in our company.
John Boris (Bear Stearns): When are you anticipating that the political inquiry on VYTORIN that is on-going might to wrap up and is that influencing your ability to restart direct-to-consumer advertising and have you seen a slowdown in enrollment in the IMPROVE-IT trial that correlates to the slowdown in prescription trends?
Thomas P. Koestler: We have to watch this trial closely, but recruitment is going well. We have over 11,000 patients to-date that are in that trial and we are recruiting up to 18,000 patients for the trial.
Anthony Butler (Lehman Brothers): You made some reference to the strong growth of REMICADE X-US. J&J made some commentary in their call about superfluous bulk shipments, X-US. Is a part of this year''s strong growth related to some excess stocking?
Carrie S. Cox: What we see is REMICADE is reflective of the in-market demand. We only book the sales when we ship it to the trade, so the inventory that we are working with is consistent demand. So the figures that I am providing you are reflective of what is happening with our customers in the market and the on going increased use both of overall anti-TNF in the market but also the specific strength of REMICADE. You are aware that REMICADE holds a reputation with physicians as perhaps the greatest efficacy product in the anti T&F category, so it has a strong position in a market, which is still an overall growth market. We are going across to all indications and are just delighted that we have such breadth with this product but also continued potential for growth.
Robert J. Bertolini: We are building some safety stock in the quarter for REMICADE, so it is sitting in our inventory. We do not report a sale until we ship it to our customers. We just wanted to have more safety stock on hand to make sure we meet future demand.
Anthony Butler (Lehman Brothers): Has there been a time in the pharmaceutical industry that you can remember when absolute costs have been reduced to any one company and has that been over some extended period of time?
Fred Hassan: We are not the same fast growing industry that we might have been 10 years ago or 15 years ago and is largely influenced by new product flow. The new product flow in our industry has dropped by about 50% in the last 10 years and that is creating a big pressure on our industry. Our industry grew the slowest it has grown since 1961 than last year. This has become a big challenge for us, and in many ways we are going to have to look at our overall business models. We have to look at our cost structures, we have to look at our R&D as well as way we do business. In many ways the R&D costs as that will be hard to reduce because their requirements go up all the time. If we go back to the 1993, 1994 period, there was an effect on R&D costs that time but they did not go down, but there was an effect. In terms of the SG&A costs, we used to be an industry that used to be in the low 40s, high 30s, many years ago. Now we are headed for the mid 30s, low 30s, and we as an industry are going to have to adapt to a much slower growth environment if that truly will occur. I firstly am more optimistic that the new product cycle in our industry will create more speed in the next several years, but we are not encouraged with what we have seen in the last five to seven years, and next question please.
Craig Baskin (Putnam Investments): Could you provide us with pro forma results for improved disclosure and transparency in 2007?
Robert J. Bertolini: Organon was a part of a division of the company under a different set of accountings, so it is not in our accounting records, so I will not be able to provide that at this point in time. It is not audited.
Steve Scala (Cowen & Company): Do you have visibility on when you will host an analyst meeting in the second half of his year that is key to the time you have the SEAS trial results or some other new product data?
Fred Hassan: We will have an R&D day in the October, November timeframe. We were going to do it last year but then because of the OBS transaction, we did postpone it and we would like to show the new portfolio, not only R&D portfolio but also our product portfolio around the world at that time.
Steve Scala (Cowen & Company): The company had committed to deliver 10 cents of accretion from OBS in the first full year of ownership, but the first quarter would suggest that you are going to beat that forecast by wide margin. Is that forecast either intact or are you revising it upward?
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