SECURITIES AND EXCHANGE COMMISSION

Form 10-K/A

SCHERING-PLOUGH CORPORATION

Indicate by check mark whether the registrant has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and has been subject to such filing requirements for the past 90 days. YES þ NO o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). YES þ NO o

Aggregate market value of common shares held by non-affiliates computed by reference to the price at which the common shares were last sold as of June 30, 2004 (the last business day of the registrant’s most recently completed second fiscal quarter): $27,193,312,423

Common shares outstanding as of February 28, 2005: 1,474,973,248

TABLE OF CONTENTS

Explanatory Note:

Schering-Plough Corporation is filing Amendment No. 1 to its Annual Report on Form 10-K for the year ended December 31, 2004 to amend Item 15. Exhibits, Financial Statement Schedules, to include audited combined financial statements for the year ended December 31, 2004 and unaudited combined financial statements for the year ended December 31, 2003 for the Merck/Schering-Plough Cholesterol Partnership, in accordance with Rule 3-09 of Regulation S-X. Item 15 is also amended to include reference to the following exhibits:

No other portions of the 10-K are being amended.

SIGNATURE(S)

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Merck/Schering-Plough Cholesterol Partnership

The accompanying notes are an integral part of these combined financial statements.

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Merck/Schering-Plough Cholesterol Partnership

The accompanying notes are an integral part of these combined financial statements.

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Merck/Schering-Plough Cholesterol Partnership

The accompanying notes are an integral part of these combined financial statements.

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Merck/Schering-Plough Cholesterol Partnership

The accompanying notes are an integral part of these combined financial statements.

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Merck/Schering-Plough Cholesterol Partnership

1. Description of Business and Basis of Presentation

Description of Business

In May 2000, Merck & Co., Inc. (“Merck”) and Schering-Plough Corporation (“Schering-Plough”) (collectively “Management” or the “Partners”) entered into agreements to jointly develop and market in the United States, Schering-Plough’s then experimental cholesterol absorption inhibitor ezetimibe (marketed today in the United States as ZETIA and as EZETROL in most other countries) (the “Agreements”) and certain respiratory products. The cholesterol collaboration is formally referred to as the Merck/Schering-Plough Cholesterol Partnership (the “Partnership”). In December 2001, the Agreements were expanded to include all countries of the world except Japan. The Agreements provide for ezetimibe to be developed and marketed in the following forms:

ZETIA and VYTORIN were approved by the U.S. FDA in October 2002 and July 2004, respectively. To date, ZETIA and VYTORIN have been launched in more than 50 and 15 countries, respectively, outside of the United States. Together, these products, whether marketed as ZETIA, VYTORIN or under other trademarks globally, are referred to as the “Cholesterol Products”.

Clinical development activities of the respiratory partnership are ongoing and operations were not material in 2004 or 2003.

Under the Agreements, the Partners established jointly-owned, limited purpose legal entities in Canada, Puerto Rico, and the United States through which to carry out the contractual activities of the Partnership in these countries. An additional jointly-owned, limited purpose legal entity was established in Singapore to own the intellectual property of the Partnership and to fund and oversee research and development and manufacturing activities of the Partnership. In all other markets except Latin America, the Agreements provide for subsidiaries of Merck or Schering-Plough to effectively act in an agent capacity on behalf of the Partnership. These legal entity and agent market operations are collectively referred to as the “Combined Companies”. Latin American subsidiaries of Schering-Plough and Merck compete against one another in the cholesterol market and as such, activities for the Cholesterol Products within Latin America are not included in the Combined Companies.

The Partnership is substantially reliant on the infrastructures of Merck and Schering-Plough. There are limited employees of the legal entities of the Partnership and most activities are performed by employees of either Merck or Schering-Plough under service agreements with the Partnership. Profits, which are shared by the Partners under differing arrangements in countries around the world, are defined as net sales minus (1) agreed upon manufacturing costs incurred by the Partners and invoiced to the Partnership, (2) direct promotion costs incurred by the Partners and invoiced to the Partnership, (3) costs for a limited specialty sales force incurred by the Partners and invoiced to the Partnership and certain amounts for sales force physician detailing of the Cholesterol Products in the United States, Puerto Rico and Canada, (4) administration costs based on a fixed percentage of 1.0% to 1.4% of Cholesterol Product sales, which are invoiced by one of the Partners, and (5) other costs incurred by the Partners that were not contemplated when the Agreements were entered into but that were subsequently agreed to by both Partners. Agreed upon research and development expenses incurred by the Partners and invoiced to the Partnership are shared equally by the Partners.

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Basis of Presentation

The accompanying combined balance sheets and combined statements of net sales and contractual expenses, cash flows and partners’ capital (deficit) include the activities of the Combined Companies. Interpartnership balances and profits are eliminated.

Net sales include the net sales of the Cholesterol Products sold by the Combined Companies. Expenses include costs that Merck and Schering-Plough have contractually agreed to directly invoice to the Partnership, or are shared through the contractual profit sharing arrangements between the Partners described above.

The accompanying combined financial statements were prepared for the purpose of complying with certain rules and regulations of the Securities and Exchange Commission, and reflect the activities of the Partnership based on the contractual agreements between the Partners. Such combined financial statements include only the expenses agreed by the Partners to be included in the calculation of profits under the contractual agreements of the Partnership, and are not intended to be a complete presentation of all of the expenses that would be incurred by a stand-alone pharmaceutical company for the discovery, development, manufacture, distribution, and marketing of pharmaceutical products. Under the Agreements, certain expenses are invoiced to the Partnership by the Partners based on contractually agreed upon allocations of Partner-incurred expenses as described below. In the opinion of Management, any allocations of expenses described below were made on a basis that reasonably reflects the actual level of support provided. All other expenses are expenses of the Partners and accordingly, are reflected in each Partner’s respective expense line items in their separate consolidated financial statements. Future results of operations, financial position, and cash flows could differ materially from the historical results presented herein.

As described above, the profit sharing arrangements under the Agreements provide that only certain Partner-incurred costs are permitted to be invoiced to the Partnership by the Partners and are therefore part of the profit calculation. The following paragraphs list the typical cost categories that are generally incurred in the discovery, development, manufacture, distribution, and marketing of the Cholesterol Products and provide a description of how such costs are treated in the accompanying combined statements of net sales and contractual expenses, which is consistent with how such costs are treated for purposes of determining profits under the contractual agreements.

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2. Summary of Significant Accounting Policies

Principles of Combined Financial Statements

The combined financial statements include results for the jointly-owned, legal entities in the United States, Canada, Puerto Rico and Singapore, as well as allocated balances for markets where Merck or Schering-Plough effectively act in an agent capacity on behalf of the Partnership, which are most other markets worldwide where Cholesterol Products are sold except for Latin America and Japan. Interpartnership balances and profits are eliminated.

Use of Estimates

The combined financial statements are prepared based on contractual agreements between the Partners, as described above, and include certain amounts that are based on Management’s best estimates and judgments. Estimates are used in determining such items as provisions for sales discounts and returns. Because of the uncertainty inherent in such estimates, actual results may differ from these estimates.

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Foreign Currency Translation

The United States dollar is the functional currency for the Partnership’s foreign operations.

Cash and Cash Equivalents

Cash equivalents are comprised of certain highly liquid investments with original maturities of less than three months.

Inventories

Substantially all inventories are valued at the lower of first in, first out cost or market.

Intangible Assets

Intangible assets consist of licenses, trademarks and trade names owned by the Partnership. These intangible assets have been recorded at the Partners’ historical cost at the date of contribution, which for the intangible assets held by the Partnership was a nominal value.

Revenue Recognition

Revenues from sales of Cholesterol Products are recognized when title and risk of loss pass to the customer. Recognition of revenue also requires reasonable assurance of collection of sales proceeds and completion of all performance obligations. In the United States, sales discounts are issued to customers as direct discounts at the point-of-sale or indirectly through an intermediary wholesale purchaser, known as chargebacks, or indirectly in the form of rebates. Additionally, sales are generally made with a limited right of return under certain conditions. Revenues are recorded net of provisions for sales discounts and returns, which are established at the time of sale.

Income Taxes

No provision has been made for federal, foreign or state income taxes as taxable income or losses of the Partnership are allocated to the Partners and included in their income tax returns.

Concentrations of Credit Risk

The Partnership’s concentrations of credit risk consist primarily of accounts receivable. Three customers represented, in aggregate, approximately 80% of the Partnership’s “Accounts receivable” at December 31, 2004. Bad debts have been minimal. The Partnership does not normally require collateral or other security to support credit sales. The Partnership derived approximately 83% in 2004 and 88% in 2003 of its combined net sales in the United States.

3. Inventories

Inventories at December 31 consisted of:

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4. Related Party Transactions

The Partnership purchases substantially all of its goods and services, including pharmaceutical product, manufacturing services, promotion and sales force services, administrative services and R&D services, from its Partners. Summarized information about related party transactions is as follows:

In Latin America, the Partners compete with one another in the cholesterol market and thereby sell products separately. The Partnership sells Cholesterol Products to the Partners for this purpose and these sales are included in “Net sales” in the accompanying combined statements of net sales and contractual expenses. In 2004, sales to Merck and Schering-Plough for Latin America were $12 million and $30 million, respectively. In 2003, sales to Merck and Schering-Plough for Latin America were $2 million and $7 million, respectively.

5. Insurance Coverage

The Partnership maintains insurance coverage with deductibles and self-insurance as Management believes is cost beneficial. The Partnership self-insures a significant portion of risk as it relates to product liability.

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INDEPENDENT AUDITORS’ REPORT

The Partners of the Merck/Schering-Plough Cholesterol Partnership

We have audited the accompanying combined balance sheet of the Merck/Schering-Plough Cholesterol Partnership as of December 31, 2004, as described in Note 1, and the related combined statements of net sales and contractual expenses, partners’ capital (deficit) and cash flows as described in Note 1 for the year then ended. These financial statements are the responsibility of the management of Merck & Co., Inc. and Schering-Plough Corporation, collectively “Management” or “the Partners”. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Partnership’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

The accompanying statements were prepared for the purpose of complying with certain rules and regulations of the Securities and Exchange Commission and, as described in Note 1, are not intended to be a complete presentation of the financial position, results of operations or cash flows of all of the activities of a stand-alone pharmaceutical company involved in the discovery, development, manufacture, distribution and marketing of pharmaceutical products.

In our opinion, the statements referred to above present fairly, in all material respects, the combined financial position of the Merck/Schering-Plough Cholesterol Partnership, as described in Note 1, as of December 31, 2004, and the combined results of its net sales and contractual expenses and its combined cash flows, as described in Note 1, for the year then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ Deloitte & Touche LLP
Parsippany, New Jersey
March 30, 2005

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