Merck & Co. (MRK) 10-Q 2009 Q3 Quarterly report

Exhibit 12

SCHERING-PLOUGH CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

	Nine Months
	Ended
	September 30,		Years Ended December 31,
	2009		2008(1)		2007(1)			2006		2005			2004
	(Dollars in millions)
Income/(Loss) Before Income Taxes	$	2,319	$	2,049	$	(1,215	)	$	1,483	$	497		$	(168	)
Less: Equity Income		1,157		1,870		2,049			1,459		873			347
Income/(Loss) Before Income Taxes and Equity Income		1,162		179		(3,264	)		24		(376	)		(515	)
Add Fixed Charges:
Preferred Stock Dividends		113		150		118			86		86			34
Interest Expense		332		536		245			172		163			168
One-third of Rental Expense		60		86		52			39		37			30
Capitalized Interest		16		19		18			13		14			20
Total Fixed Charges		521		791		433			310		300			252
Less: Capitalized Interest		16		19		18			13		14			20
Less: Preferred Stock Dividends		113		150		118			86		86			34
Add: Amortization of Capitalized Interest		8		12		15			10		10			9
Add: Distributed Income of Equity Investees		1,073		1,782		1,787			1,332		647			228
Earnings/(Loss) Before Income Taxes and Fixed Charges (other than Capitalized Interest)	$	2,635	$	2,595	$	(1,165	)	$	1,577	$	481		$	(80	)
Ratio of Earnings to Fixed Charges		5.1		3.3		(2.7	)*		5.1		1.6			(0.3	)**

(1)	Income/(loss) before income taxes includes the purchase accounting impacts of the OBS acquisition
*	For the year ended December 31, 2007, earnings were insufficient to cover fixed charges by $1.6 billion.
**	For the year ended December 31, 2004, earnings were insufficient to cover fixed charges by $332 million.

“Earnings” consist of income/(loss) before income taxes and equity income, plus fixed charges (other than capitalized interest and preferred stock dividends), amortization of capitalized interest and distributed income of equity investee. Schering-Plough includes interest expense or interest income on unrecognized tax benefits as a component of income tax expense. “Fixed charges” consist of interest expense, capitalized interest, preferred stock dividends and one-third of rentals which Schering-Plough believes to be a reasonable estimate of an interest factor on leases. Total rent expense was $179 million for the nine months ended September 30, 2009 and was $258 million, $156 million, $118 million, $110 million and $100 million for the years ended December 31, 2008, 2007, 2006, 2005 and 2004, respectively.