SCHERING PLOUGH CORP, 10-K, 1997-03-03

SCHERING PLOUGH CORP
10-K, 1997-03-03
PHARMACEUTICAL PREPARATIONS

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-K Annual Report

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [FEE REQUIRED]

For the fiscal year ended December 31, 1996 Commission file
number 1-6571
SCHERING-PLOUGH CORPORATION

Incorporated in New Jersey 22-1918501
One Giralda Farms (I.R.S. Employer
Madison, New Jersey 07940-1000 Identification No.)
(201) 822-7000 (telephone number)

Securities registered pursuant to section 12(b) of the Act:

Name of each exchange
Title of each class on which registered

Common Shares, $1 par value New York Stock Exchange

Preferred Share Purchase Rights* New York Stock Exchange

*At the time of filing, the Rights were not traded separately
from the Common Shares.

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 X NO

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. X

Common shares outstanding as of January 31, 1997: 365,597,802

Aggregate market value of common shares at January 31, 1997 held
by non-affiliates based on closing price: $27.6 billion.

Part of Form 10-K
Documents incorporated by reference incorporated into

Schering-Plough Corporation 1996 Parts I, II and IV
Annual Report to Shareholders

Schering-Plough Corporation Proxy Part III
Statement for the annual meeting of
shareholders on April 22, 1997

Part I
Item 1. Business

General

The terms "Schering-Plough" and the "Company," as used herein,
refer to Schering-Plough Corporation and its subsidiaries, except
as otherwise indicated by the context. Schering-Plough
Corporation is a holding company which was incorporated in 1970.
Subsidiaries of Schering-Plough Corporation are engaged in the
discovery, development, manufacturing and marketing of
pharmaceutical and health care products worldwide. Products
include prescription drugs, animal health, over-the-counter
(OTC), foot care and sun care products.

Business Segment and Other Financial Information

The "Business Segment Data" as set forth in the Notes to
Consolidated Financial Statements in the Company's 1996 Annual
Report to Shareholders is incorporated herein by reference. Sales
by major product groups for continuing operations for each of the
three years in the period ended December 31, 1996 were as follows
(dollars in millions):

1996 1995 1994
Allergy/Respiratory $2,113 $1,834 $1,465
Anti-infective and Anticancer 1,135 1,031 939
Dermatologicals 560 515 488
Cardiovasculars 533 408 333
Other Pharmaceuticals 512 493 489
OTC 210 250 264
Foot Care 261 240 248
Animal Health 196 190 167
Sun Care 123 127 129
Other Health Care Products 13 16 15

Consolidated Sales $5,656 $5,104 $4,537

Pharmaceutical Products

The Company's pharmaceutical operations include prescription
drugs and animal health products. Prescription products include:
CELESTAMINE, CLARITIN, CLARITIN-D, POLARAMINE, PROVENTIL, THEO-
DUR, TRINALIN, VANCENASE and VANCERIL, allergy/respiratory;
CEDAX, EULEXIN, GARAMYCIN, INTRON A, ISEPACIN and NETROMYCIN,
anti-infective and anticancer; DIPROLENE, DIPROSONE, ELOCON,
LOTRISONE, QUADRIDERM and VALISONE, dermatologicals; IMDUR,K-DUR,
NITRO-DUR and NORMODYNE, cardiovasculars; CELESTONE, DIPROSPAN,
LOSEC, NOIN, and PALACOS, other pharmaceuticals. Animal health
biological and pharmaceutical products include antibiotics,
vaccines, anti-arthritics, steroids and nutritionals. Major
animal health products are: GENTOCIN and NUFLOR, antibiotics;
BANAMINE, an anti-arthritic; OTOMAX, a steroid ointment and
OPTIMMUNE, an ophthalmic ointment.

Pharmaceutical products also include pharmaceutical chemical
substances sold in bulk to third parties for production of their
own products.

Prescription drugs are introduced and made known to physicians,
pharmacists, hospitals and managed care organizations by trained
professional service representatives, and are sold to hospitals,
managed care organizations and wholesale and retail druggists.
Pharmaceutical products are also promoted through journal
advertising, direct mail advertising, consumer advertising and by
distributing samples to physicians. Animal health products are
promoted and sold by a separate sales force to veterinarians,
distributors and animal producers.

The Company's subsidiaries own (or have licensed rights under) a
number of patents and patent applications, both in the United
States and abroad. In the aggregate, patents and patent
applications are believed to be of material importance to the
operations of the pharmaceutical segment. In December 1989, the
U.S. patent covering PROVENTIL, an asthma product, expired. In
December 1995, generic metered-dose inhalers entered the
market; the PROVENTIL solution, syrup and tablet formulations had
previously been subject to generic competition. In response to
generic inhaler competition, the Company's generic pharmaceutical
marketing subsidiary, Warrick Pharmaceuticals, launched its own
generic inhaler in December 1995. While generic inhalers
have significantly reduced branded PROVENTIL inhaler sales, the
Warrick inhaler has moderated the decline. In December 1996,
the Company further enhanced its position in the albuterol asthma
market by launching PROVENTIL HFA, a new metered-dose inhaler
that uses an advanced delivery system and a propellant free of
ozone-damaging chlorofluorocarbons. Competition from generic
metered-dose inhalers will, however, continue to negatively
affect future sales and profitability of the PROVENTIL
(albuterol) line of asthma products.

Raw materials essential to this segment are available in adequate
quantities from a number of potential suppliers. Energy was and
is expected to be available to the Company in sufficient
quantities to meet operating requirements.

Worldwide, the Company's pharmaceutical products are sold under
trademarks. Trademarks are considered in the aggregate to be of
material importance to the pharmaceutical business and are
protected by registration or common law in the United States and
most other markets where the products are sold or likely to be
sold.

Seasonal patterns do not have a pronounced effect on the combined
activities of this industry segment

There is generally no significant backlog of orders since the
Company's business is normally conducted on an immediate shipment
basis.

The pharmaceutical industry is highly competitive and includes
other large companies with substantial resources for research,
product development and promotion. There are numerous domestic
and international competitors in this industry. Some of the
principal competitive techniques used by the Company for its
pharmaceutical products include research and development of new
and improved products, high product quality, varied dosage forms
and strengths, disease management programs, and educational
services for the medical community. In the United States, many
of the Company's pharmaceutical products are subject to
increasingly competitive pricing as managed care groups,
institutions, government agencies and other buying groups seek
price discounts and rebates.

Health Care Products

The product categories in the health care segment are OTC
medicines, foot care and sun care products primarily sold in the
United States. Products include: AFRIN nasal decongestant;
CHLOR-TRIMETON antihistamine; CORICIDIN and DRIXORAL cold and
decongestant products; CORRECTOL laxative; CLEAR AWAY and DUO
FILM wart removers; GYNE-LOTRIMIN for vaginal yeast infections;
DR. SCHOLL'S foot care products; LOTRIMIN AF and TINACTIN
antifungals; COPPERTONE, SHADE and SOLARCAINE sun care products;
A & D ointment; and PAAS egg coloring and holiday products.
Business in this segment is conducted through wholesale and
retail drug, food chain and variety outlets, and is promoted
directly to the consumer through television, radio, print and
other advertising media.

Trademarks for the major products included in this segment are
registered in the United States and most overseas countries where
these products are marketed. Trademarks are considered to be
very important to the operations of this segment.

Principally due to the seasonal sales of sun care products,
operating profits in this segment are relatively higher in the
first half of the year.

There is generally no significant backlog of orders since the
Company's business is normally conducted on an immediate shipment
basis.

The health care products' industry is highly competitive and
includes other large companies with substantial resources for
product development and promotion. There are several dozen
significant competitors in this industry. The Company believes
that in the United States it has a leading position in the foot
care and sun care industries, with its DR. SCHOLL'S lines of foot
pads, cushions, wart removal and other treatments and its brands
of sun care products. In addition, the Company's brands are
among the leaders in nasal sprays, laxatives and antifungals sold
OTC. The principal competitive techniques used by the Company in
this industry segment include switching prescription products to
OTC medicines, the development and introduction of new and
improved products, and product promotion methods to gain and
retain consumer acceptance.

Foreign Operations

Foreign activities are carried out primarily through wholly-owned
subsidiaries wherever market potential is adequate and circum-
stances permit. In addition, the Company is represented in some
markets through joint ventures, licensees or other distribution
arrangements. There are approximately 11,700 employees outside
the United States.

Foreign operations are subject to certain risks which are
inherent in conducting business overseas. These risks include
possible nationalization, expropriation, importation limitations
and other restrictive governmental actions. Also, fluctuations
in foreign currency exchange rates can impact the Company's
consolidated financial results. For additional information on
foreign operations, see "Management's Discussion and Analysis of
Operations and Financial Condition", "Financial Instruments" and
"Business Segment Data" in the Company's 1996 Annual Report to
Shareholders which is incorporated herein by reference.

Research and Development

The Company's research activities are primarily aimed at
discovering and developing new and enhanced pharmaceutical
products of medical and commercial significance. Company
sponsored research and development expenditures were $722.8
million, $656.9 million, $610.1 million in 1996, 1995, and 1994,
respectively. Research expenditures represented approximately 13
percent of consolidated sales in each of the three years.

The Company's pharmaceutical research activities are concentrated
in the therapeutic areas of allergic and inflammatory disorders,
infectious and cardiovascular diseases, oncology and central
nervous system disorders. The Company also has substantial
efforts directed toward biotechnology, gene therapy and
immunology. Research activities include expenditures for both
internal research efforts and research collaborations with
various partners.

While several pharmaceutical compounds are in varying stages of
development, it cannot be predicted when or if products will
become available for commercial sale.

Government Regulation

Most products manufactured or sold by the Company are subject to
varying degrees of governmental regulation in the countries in
which operations are conducted. In the United States, the drug
industry has long been subject to regulation by various federal,
state and local agencies, primarily as to product safety,
efficacy, advertising and labeling. Compliance with the broad
regulatory powers of the FDA requires significant amounts of
Company time, testing and documentation, and corresponding costs
to obtain clearance of new drugs. Similar product regulations
also apply in many international markets.

In most international markets, the Company operates in an
environment of government-mandated cost-containment programs.
Several governments have placed restrictions on physician
prescription levels and patient reimbursements, emphasized
greater use of generic drugs and enacted across-the-board price
cuts as methods of cost control.

Since the Company is unable to predict the final form and timing
of any future domestic and international governmental or other
health care initiatives, their effect on operations and cash
flows cannot be reasonably estimated.

The Company has and will continue to comply with the government
regulations of the countries in which operations are conducted.

Environment

To date, compliance with federal, state and local environmental
protection laws has not had a materially adverse effect on the
Company. The Company has made and will continue to make
necessary expenditures for environmental protection. Worldwide
capital expenditures during 1996 included approximately $11.1
million for environmental control purposes. It is anticipated
that continued compliance with such environmental regulations
will not significantly affect the Company's financial statements
or its competitive position. For additional information on
environmental matters, see "Legal and Environmental Matters" in
the Notes to the Consolidated Financial Statements in the
Company's 1996 Annual Report to Shareholders which is
incorporated herein by reference.

Employees

There were approximately 20,600 people employed by the Company at
December 31, 1996.

Item 2. Properties

The Company's corporate headquarters is located in Madison, New
Jersey. Principal manufacturing facilities are located in
Kenilworth, New Jersey, Miami, Florida, the Commonwealth of
Puerto Rico, Argentina, Australia, Belgium, Canada, Colombia,
France, Ireland, Italy, Japan, Mexico and Spain (pharmaceutical
products); Cleveland, Tennessee (health care products). Other
manufacturing facilities are located in Omaha, Nebraska. In
addition, a manufacturing facility for pharmaceutical products is
currently under construction in Singapore. This facility is
scheduled for completion in 1997.

The Company's principal research facilities are located in
Kenilworth and Union, New Jersey and Palo Alto, California (DNAX
Research Institute) and San Diego, California (Canji, Inc.).

The major portion of properties are owned by the Company. These
properties are well maintained, adequately insured and in good
operating condition. The Company's manufacturing facilities have
capacities considered appropriate to meet the Company's needs.

Item 3. Legal Proceedings

Subsidiaries of the Company are defendants in 149 lawsuits
involving approximately 600 plaintiffs arising out of the use of
synthetic estrogens by the mothers of the plaintiffs. In
virtually all of these lawsuits, one being an alleged class
action, many other pharmaceutical companies are also named
defendants. The female plaintiffs claim various injuries,
including cancerous or precancerous lesions of the vagina and
cervix and a multiplicity of pregnancy problems. A number of
suits involve infants with birth defects born to daughters whose
mother took the drug. The total amount claimed against all
defendants in all the suits amounts to more than $2 billion.
While it is not possible to precisely predict the outcome of
these proceedings, it is management's opinion that it is remote
that any material liability in excess of the amount accrued will
be incurred.

The Company is a party to, or otherwise involved in,
environmental clean-ups or proceedings under the Comprehensive
Environmental Response, Compensation and Liability Act, commonly
known as Superfund, or under equivalent state laws. These
proceedings seek to require the owners or operators of facilities
that treated, stored or disposed of hazardous substances and
transporters and generators of such substances to clean-up
contaminated facilities or reimburse the government or private
parties for their clean-up costs. The Company is alleged to be a
potentially responsible party ("PRP") as an alleged generator of
hazardous substances found at certain facilities. In each
proceeding, the government or private litigants allege that any
one PRP, including the Company, is jointly and severally liable
for clean-up costs. Although joint and several liability is
alleged, a company's share of clean-up costs is frequently
determined on the basis of the type and quantity of hazardous
substances sent to a facility by the generator. However, this
allocation process varies greatly from facility to facility and
can take years to complete. The Company's potential share of
clean-up costs also depends on how many other PRP's are involved
in the proceedings, insurance coverage, available indemnity
contracts and contribution rights against other PRP's or parties.
While it is not possible to precisely predict the outcome of
these proceedings, it is management's opinion that it is remote
that any material liability in excess of amounts accrued will be
incurred.

In 1994, a judgment in the amount of $63.6 million, including
$57.5 million in punitive damages, was entered against the
Company in state court in Portland, Oregon in connection with a
product liability lawsuit involving THEO-DUR. An appeal from the
judgment has been taken. While the success of the appeal cannot
be predicted with certainty, the Company will vigorously pursue
its case through the appellate courts. The Company currently has
insurance coverage for amounts in excess of a $3 million self-
insured retention.

The Company is a defendant in more than 160 antitrust actions
commenced in state and federal courts by independent retail
pharmacies, chain retail pharmacies and consumers. The
plaintiffs allege price discrimination and/or conspiracy between
the Company and other defendants to restrain trade by jointly
refusing to sell prescription drugs at discounted prices to the
plaintiffs. One of the federal cases is a class action on behalf
of approximately two-thirds of all retail pharmacies in the
United States alleging a price-fixing conspiracy. The Company
has agreed to settle the federal class action for a total of
$22.1 million payable over three years. The settlement provides,
among other things, that the Company shall not refuse to grant
discounts on brand-name prescription drugs to a retailer based
solely on its status as a retailer and that, to the extent a
retailer can demonstrate its ability to affect market share of a
Company brand name prescription drug in the same manner as a
managed care organization with which the retailer competes, it
will be entitled to negotiate similar incentives subject to the
rights, obligations, exemptions and defenses of the Robinson-
Patman Act and other laws and regulations. The District Court
approved the settlement of the federal class action on June 21,
1996. In early July, the Seventh Circuit Court of Appeals agreed
to review before trial the District Court's denial of defendant's
summary judgment motion seeking dismissal of all claims by
indirect purchasers of pharmaceutical products in all remaining
cases before the District Court. In addition, the Seventh Circuit
Court of Appeals will hear an appeal by the plaintiffs from the
grant of summary judgment to the wholesaler defendants and an
appeal by certain plaintiffs from the approval of the settlement
by the District Court. Four of the state antitrust cases have
been certified as class actions. Two are class actions on behalf
of certain retail pharmacies in California and Wisconsin, and the
other two are class actions in California and the District of
Columbia, on behalf of certain consumers of prescription
medicine. Plaintiffs seek treble damages in an unspecified amount
and an injunction against the allegedly unlawful conduct. The
Company believes that all the antitrust actions are without merit
and is defending itself vigorously against all such claims.

Another of the actions, which was commenced in June 1994 by a
group of nine chain food stores, including The Great Atlantic and
Pacific Tea Company, Inc. ("A&P"), against three mail order
pharmacies and 16 drug manufacturers, is pending in the United
States District Court for the Northern District of Illinois. Mr.
James Wood, a director of the Company, is an executive officer of
A&P. Mr. Wood does not participate in any review or
deliberations by the Board of Directors relating to this action.
Plaintiffs in all cases seek treble damages and/or penalties in
an unspecified amount and an injunction against the allegedly
unlawful conduct. The Company believes that all these actions
are without merit and is defending itself vigorously against all
such claims.

The Company is a defendant in a state court action in Texas
brought by Foxmeyer Health Corporation, the parent of a
pharmaceutical wholesaler that filed for bankruptcy in August
1996, against another pharmaceutical wholesaler and 11
pharmaceutical companies alleging that the defendants conspired
to drive the plaintiff out of business. Plaintiff is seeking
damages in the amount of $400 million. The Company believes that
this action is without merit and is defending itself vigorously
against all claims.

On March 13, 1996, the Company was notified that the United
States Federal Trade Commission (FTC) is investigating whether
the Company, along with other pharmaceutical companies, conspired
to fix prescription drug prices. The Company has produced a
substantial amount of documentation to the FTC. The Company
vigorously denies that it has engaged in any price-fixing
conspiracy.

Item 4. Submission of Matters to a Vote of Security Holders

Not applicable.

Executive Officers of the Registrant

The following information regarding executive officers is included
herein in accordance with Part III, Item 10.

Officers are elected to serve for one year and until their successors
shall have been duly elected.

Name and Current Position Business Experience Age

Robert P. Luciano Present position 1996; Chairman 63
Chairman of the Board and Chief Executive Officer
1986-1995

Richard Jay Kogan Present position 1996; 55
President and President and Chief
Chief Executive Officer Operating Officer 1986-1995

Hugh A. D'Andrade Present position 1996; 58
Vice Chairman and Executive Vice President
Chief Administrative Officer Administration 1984-1995

Rodolfo C. Bryce Present position 1997; President 50
Executive Vice President Schering-Plough HealthCare
and President Schering-Plough Products 1996; President
HealthCare Products Schering-Plough International
1993-1996; President Schering
Laboratories 1990-1992.

Raul E. Cesan Present position 1994; 49
Executive Vice President President Schering
and President Laboratories 1992-1994;
Schering-Plough President Schering-Plough
Pharmaceuticals International 1988-1992

Joseph C. Connors Present position 1996; 48
Executive Vice President Senior Vice President and
and General Counsel General Counsel 1992-1995

Jack L. Wyszomierski Present position 1996; 41
Executive Vice President Vice President and Treasurer
and Chief Financial Officer 1991-1995

Name and Current Position Business Experience Age

Geraldine U. Foster Present position 1994; 54
Senior Vice President Vice President - Investor
Investor Relations and Relations 1988-1994
Corporate Communications

Daniel A. Nichols Present position 1991 56
Senior Vice President
Taxes

Gordon C. O'Brien Present position 1988 56
Senior Vice President
Human Resources

Thomas H. Kelly Present position 1991 47
Vice President and
Controller

Robert S. Lyons Present position 1991 56
Vice President
Corporate Information
Services

E. Kevin Moore Present position 1996; 44
Vice President and Staff Vice President and
Treasurer Assistant Treasurer 1993-1995;
Treasurer-Europe, The Dun and
Bradstreet Corporation 1990-1993

John E. Nine Present position 1996; 60
Vice President President - Technical Operations
and President, Schering Schering Laboratories 1990-1995
Technical Operations

William J. Silbey Present position 1996; 37
Staff Vice President, Corporate Counsel 1993-1995;
Secretary and Associate Partner - Stearns, Weaver, Miller,
General Counsel Weissler, Alhadeff & Sitterson,
P.A. 1992-1993

Part II

Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters

The Common Share Dividends and Market Data as set forth in the
Company's 1996 Annual Report to Shareholders are incorporated herein
by reference.

Item 6. Selected Financial Data

The Six-Year Selected Financial & Statistical Data as set forth in
the Company's 1996 Annual Report to Shareholders is incorporated
herein by reference.

Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations

Management's Discussion and Analysis of Operations and Financial
Condition as set forth in the Company's 1996 Annual Report to
Shareholders is incorporated herein by reference.

Item 8. Financial Statements and Supplementary Data

The Consolidated Balance Sheets as of December 31, 1996 and 1995,
and the related Statements of Consolidated Income, Consolidated
Retained Earnings and Consolidated Cash Flows for each of the three
years in the period ended December 31, 1996, Notes to Consolidated
Financial Statements, the Independent Auditors' Report of Deloitte &
Touche LLP dated February 14, 1997 and Quarterly Results of
Operations, as set forth in the Company's 1996 Annual Report to
Shareholders, are incorporated herein by reference.

Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure

Not applicable.
Part III

Item 10. Directors and Executive Officers of the Registrant

The information concerning directors and nominees for directors as
set forth in the Company's Proxy Statement for the annual meeting of
shareholders on April 22, 1997 is incorporated herein by reference.

Information required as to executive officers is included in Part I
of this filing under the caption "Executive Officers of the
Registrant."

Item 11. Executive Compensation

Executive compensation information as set forth in the Company's
Proxy Statement for the annual meeting of shareholders on April 22,
1997 is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management

Information concerning security ownership of certain beneficial
owners and management as set forth in the Company's Proxy Statement
for the annual meeting of shareholders on April 22, 1997 is
incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions

Information concerning certain relationships and related
transactions as set forth in the Company's Proxy Statement for the
annual meeting of shareholders on April 22, 1997 is incorporated
herein by reference.

Part IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K

(a) 1. Financial Statements

The following consolidated financial statements and
independent auditors' report, included in the Company's
1996 Annual Report to Shareholders, are incorporated
herein by reference.

Statements of Consolidated Income for the
Years Ended December 31, 1996, 1995 and 1994

Statements of Consolidated Retained Earnings for
the Years Ended December 31, 1996, 1995 and 1994

Statements of Consolidated Cash Flows for the Years
Ended December 31, 1996, 1995 and 1994

Consolidated Balance Sheets at December 31, 1996 and
1995

Notes to Consolidated Financial Statements

Independent Auditors' Report

(a) 2. Financial Statement Schedules

Page in
Form 10-K

Independent Auditors' Report . . . . . . . . . . . . 19

Schedule II - Valuation and Qualifying Accounts. . . 20

Schedules not included have been omitted because they are not
applicable or not required or because the required information
is set forth in the financial statements or the notes thereto.
Columns omitted from schedules filed have been omitted because
the information is not applicable.

Financial statements of fifty percent or less owned companies
accounted for by the equity method have been omitted because,
considered individually or in the aggregate, they do not
constitute a significant subsidiary.

(a) 3. Exhibits

Exhibit
Number Description

3(a) A complete copy of the Certificate of Incorporation
as amended and currently in effect. Incorporated by
reference to Exhibit 3 (i) to the Company's
Quarterly Report for the period ended June 30, 1995
on Form 10-Q, File No. 1-6571.

3(b) A complete copy of the By-Laws as amended and
currently in effect. Incorporated by reference to
Exhibit 4(2) to the Company's Registration Statement
on Form S-3, File No. 333-853.

4(a) Rights Agreement between the Company and The Bank of
New York dated July 25, 1989. Incorporated by
reference to Exhibit 4 to the Company's Quarterly
Report for the period ended June 30, 1989 on
Form 10-Q, File No. 1-6571.

4(b) Indenture dated as of November 1, 1982 between the
Company and The Chase Manhattan Bank, N.A. as
Trustee. Incorporated by reference to Exhibit 4(a)
to the Company's Registration Statement on Form S-3,
File No. 2-80012.

4(c) Supplemental Indenture No. 1 dated as of November 1,
1991 to Indenture dated as of November 1, 1982.
Incorporated by reference to Exhibit 4.1 to the
Company's Report on Form 8-K dated November 20,
1991, File No. 1-6571.

4(d) LYNX Equity Unit Agreement. Incorporated by
reference to Exhibit 10.1 to the Company's Report
on Form 8-K dated October 1, 1991, File No. 1-6571.

4(e) LYNX Equity Unit Guarantee Agreement. Incorporated
by reference to Exhibit 10.1 to the Company's Report
on Form 8-K dated October 1, 1991, File No. 1-6571.

Exhibit
Number Description

4(f) Form of Participation Rights Agreement between the
Company and The Chase Manhattan Bank (National
Association), as Trustee. Incorporated by reference
to Exhibit 4.6 to the Company's Registration
Statement on Form S-4, Amendment No. 1, File
No. 33-65107.

10(a) The Company's Executive Incentive Plan (as amended)
and Trust related thereto*. Plan incorporated by
reference to Exhibit 10 to the Company's Quarterly
Report for the period ended March 31, 1994 on
Form 10-Q; Trust Agreement incorporated by
reference to Exhibit 10(a) to the Company's Annual
Report for 1988 on Form 10-K, File No. 1-6571.

10(b) The Company's 1983 Stock Incentive Plan (as
amended)*. Incorporated by reference to Exhibit
10(c) to the Company's Annual Report for 1988 on
Form 10-K, File No. 1-6571.

10(c) The Company's 1987 Stock Incentive Plan (as
amended)*. Incorporated by reference to Exhibit
10(d) to the Company's Annual Report for 1990 on
Form 10-K, File No. 1-6571.

10(d) The Company's 1992 Stock Incentive Plan (as
amended)*. Incorporated by reference to Exhibit
10(d) to the Company's Annual Report for 1992 on
Form 10-K, File No. 1-6571; amendment of December 11,
1995 incorporated by reference to Exhibit 10(d)
to the Company's Annual Report for 1995 on Form 10-K,
File No. 1-6571.

10(e)(i) Employment agreement between the Company and Robert
P. Luciano (as amended)*. Incorporated by reference
to Exhibit 10(e) (i) to the Company's Annual Report
for 1989 on Form 10-K; first amendment incorporated
by reference to Exhibit 10(a) to the Company's
Quarterly Report for the period ended June 30, 1994
on Form 10-Q; second amendment incorporated by
reference to Exhibit 10(e)(i) to the Company's Annual
Report for 1994 on Form 10-K, File No. 1-6571.

10(e)(ii) Employment agreement between the Company and Richard
J. Kogan (as amended)*. Incorporated by reference to
Exhibit 10(e)(ii) to the Company's Annual Report
for 1989 on Form 10-K; first amendment incorporated
by reference to Exhibit 10(b) to the Company's
Quarterly Report for the period ended June 30, 1994
on Form 10-Q; second amendment incorporated by
reference to Exhibit 10(e)(ii) to the Company's
Exhibit
Number Description

Annual Report for 1994 on Form 10-K; third amendment
incorporated by reference to Exhibit 10(a) to the
Company's Quarterly Report for the period ended
September 30, 1995 on Form 10-Q, File No. 1-6571.

10(e)(iii) Employment agreement between the Company and Hugh A.
D'Andrade (as amended)*. Incorporated by
reference to Exhibit 10(c) to the Company's
Quarterly Report for the period ended June 30, 1994
on Form 10-Q; first amendment incorporated by
reference to Exhibit 10(e)(iii) to the Company's
Annual Report for 1994 on Form 10-K, File No. 1-
6571; second amendment incorporated by reference to
Exhibit 10(e)(iii) to the Company's Annual Report for
1995 on Form 10-K, File No. 1-6571.

10(e)(iv) Form of employment agreement between the Company and
its executive officers effective upon a change of
control*. Incorporated by reference to Exhibit
10(e)(iv) to the Company's Annual Report for 1994 on
Form 10-K, File No. 1-6571.

10(f) Directors Deferred Compensation Plan and Trust
related thereto*. Plan incorporated by reference to
Exhibit 10(f) to the Company's Annual Report for
1991 on Form 10-K; Trust Agreement incorporated by
reference to Exhibit 10(a) to the Company's Annual
Report for 1988 on Form 10-K, File No. 1-6571.

10(g) Pension Plan for Directors and Trust related
thereto*. Plan incorporated by reference to Exhibit
10(g) to the Company's Annual Report for 1987 on
Form 10-K; Trust Agreement incorporated by reference
to Exhibit 10(g) to the Company's Annual Report for
1988 on Form 10-K; amendment to Trust Agreement
incorporated by reference to Exhibit 10(g) to the
Company's Annual Report for 1993 on Form 10-K, File
No. 1-6571.

10(h) Supplemental Executive Retirement Plan and Trust
related thereto*. Plan incorporated by reference
to Exhibit 10(h) to the Company's Annual Report for
1987 on Form 10-K; amendments to Plan incorporated
by reference to Exhibit 10(h) to the Company's
Annual Report for 1994 on Form 10-K; Trust
Agreement incorporated by reference to Exhibit 10(g)
to the Company's Annual Report for 1988 on Form
10-K; amendment to Trust Agreement incorporated by
reference to Exhibit 10(g) to the Company's Annual
Report for 1993 on Form 10-K, File No. 1-6571.

Exhibit
Number Description

10(i) Directors' Stock Award Plan*. Incorporated by
reference to Exhibit 10 to the Company's Quarterly
Report for the period ended September 30, 1994 on
Form 10-Q, File No. 1-6571; amendment of January 1,
1997 filed with this document.

10(j) The Company's Deferred Compensation Plan*. Plan
incorporated by reference to Exhibit 10(b) to the
Company's Quarterly Report for the period ended
September 30, 1995 on Form 10-Q, File No. 1-6571.

10(k) The Company's Directors Deferred Stock Equivalency
Program*. Filed with this document.

11 Computation of Earnings Per Common Share.

12 Computation of Ratio of Earnings to Fixed Charges.

13 The Financial Section of the Company's 1996 Annual
Report to Shareholders. With the exception of those
portions of said Annual Report which are specifically
incorporated by reference in this Form 10-K, such
report shall not be deemed filed as part of this Form
10-K.

21 Subsidiaries of the registrant.

23 Consents of experts and counsel.

24 Power of attorney.

27 Financial Data Schedule.

99.1 Cautionary Statements regarding "Safe Harbor" provision
of the Private Securities Litigation Reform Act of
1995.

99.2 Forward-looking statements by the Company.

All other exhibits are not applicable. Copies of above
exhibits will be furnished upon request.

* Compensatory plan, contract or arrangement.

(b) Reports on Form 8-K

None

SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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
Schering-Plough Corporation
(Registrant)

Date March 3, 1997 By /s/ Thomas H. Kelly
Thomas H. Kelly
Vice President and Controller

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the date indicated.

By * By *
Robert P. Luciano H. Barclay Morley
Chairman and Director Director

By * By *
Richard Jay Kogan Carl E. Mundy, Jr.
President and Chief Executive Director
Officer and Director

By * By *
Jack L. Wyszomierski Richard de J. Osborne
Executive Vice President and Director
Chief Financial Officer

By * By *
Thomas H. Kelly Patricia F. Russo
Vice President and Controller Director
and Principal Accounting Officer

By * By *
Hans W. Becherer William A. Schreyer
Director Director

By * By *
Hugh A. D'Andrade Robert F. W. van Oordt
Director Director

By * By *
David C. Garfield R. J. Ventres
Director Director

By * By *
Regina E. Herzlinger James Wood
Director Director

*By /s/ Thomas H. Kelly Date March 3, 1997
Thomas H. Kelly
Attorney-in-fact

INDEPENDENT AUDITORS' REPORT

Schering-Plough Corporation:

We have audited the consolidated balance sheets of Schering-
Plough Corporation and subsidiaries as of December 31, 1996 and
1995 and the related statements of consolidated income, retained
earnings and cash flows for each of the three years in the period
ended December 31, 1996, and have issued our report thereon dated
February 14, 1997; such financial statements and report are
included in your 1996 Annual Report to Shareholders and are
incorporated herein by reference. Our audits also included the
financial statement schedule of Schering-Plough Corporation and
subsidiaries, listed in Item 14. This financial statement
schedule is the responsibility of the Company's management. Our
responsibility is to express our opinion based on our audits. In
our opinion, such financial statement schedule, when considered
in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set
forth therein.

/s/DELOITTE & TOUCHE LLP

Parsippany, New Jersey
February 14, 1997

SCHEDULE II
<TABLE>
SCHERING-PLOUGH CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995, AND 1994
(Dollars in millions)
<CAPTION>

Valuation and qualifying accounts deducted from assets to which
they apply:

Allowances for accounts receivable:

RESERVE RESERVE RESERVE
FOR DOUBTFUL FOR CASH FOR CLAIMS
ACCOUNTS DISCOUNTS AND OTHER TOTAL
<S> <C> <C> <C> <C>
1996
Balance at beginning of year $ 49.6 $ 8.1 $ 11.4 $ 69.1

Additions:
Charged to costs and expenses 2.4 90.4 10.2 103.0

Translation adjustment (.1) .1 .1 .1

Deductions from reserves (1.5) (86.7) (11.0) (99.2)

Balance at end of year $ 50.4 $ 11.9 $ 10.7 $ 73.0

1995
Balance at beginning of year $ 44.0 $ 7.9 $ 5.6 $ 57.5
Additions:
Charged to costs and expenses 14.9 74.3 12.1 101.3

Translation adjustment .3 (.1) - .2

Deductions from reserves (9.6) (74.0) (6.3) (89.9)

Balance at end of year $ 49.6 $ 8.1 $ 11.4 $ 69.1

1994
Balance at beginning of year $ 30.5 $ 7.9 $ 6.5 $ 44.9

Additions:
Charged to costs and expenses 17.1 62.4 3.2 82.7

Translation adjustment .6 (.1) .1 .6

Deductions from reserves (4.2) (62.3) (4.2) (70.7)

Balance at end of year $ 44.0 $ 7.9 $ 5.6 $ 57.5
</TABLE>

Exhibit 10(i)

SCHERING-PLOUGH CORPORATION

Amendments to

Directors Stock Award Plan

The Schering-Plough Corporation Directors Stock Award Plan is hereby
amended effective as of January 1, 1997, by deleting Section 4 thereof and
substituting therefore the following:

4. From and after January 1, 1997, upon election of any new non-employee
Director or re-election of any incumbent non-employee Director, he or she
shall receive 550 shares of Common Stock of the Corporation for each
year or partial year of the term to which he or she has been elected;
provided, however, that if a Director is scheduled to retire prior to the end
of his or her current term, or does not intend to serve his or her current
term, his or her actual expected remaining term shall be used to calculate
the award herein.
Effective as of the close of business on
the date of the Corporation's
1997 Annual Meeting of Shareholders, each then incumbent non-
employee Director not standing for election at such Meeting shall receive
150 shares of Common Stock of the Corporation for each year remaining
in his or her then current term of directorship.
26036-1

Exhibit 10(k)
SCHERING-PLOUGH CORPORATION
DIRECTORS DEFERRED STOCK EQUIVALENCY PROGRAM

I. Purpose
The purposes of the Schering-Plough Corporation Directors
Deferred Stock Equivalency Program ("Program") are (a) to
attract and retain highly qualified individuals to serve as
Directors of Schering-Plough Corporation ("Corporation")
and (b) to relate non-employee Directors' interests more
closely to the Corporation's performance and its
shareholders' interests.

II. Effective Date
The effective date of the Schering-Plough Corporation
Directors Deferred Stock Equivalency Program is January 1,
1997 ("Effective Date").

III. Participation
From and after the Effective Date, each Director shall be a
participant in the Program throughout his or her term of
service as a Director; except that any Director who has
attained age 72 prior to the Effective Date or is entitled
to receive employee pension benefits from the Corporation
or any of its subsidiaries shall not be a participant in
the Program. Directors who are participants in the Program
shall be entitled, effective as of the Effective Date, to
transfer to their account in the Program ("Deferred
Account") by an election made prior to the Effective Date
the lump-sum present value of their earned benefits under
the Corporation's Pension Plan for Directors based on
service through December 31, 1996. For purposes of
calculating the lump-sum present value of earned pension
benefits, a discount rate of seven percent per annum shall
be used.

IV. Amount of Deferral
The Company shall credit an amount equal to $25,000 to each
participant's Deferred Account annually as of January 1;
except that in the case of any Director who is or will be a
participant in the Program for a portion of a calendar
year, a pro rata portion of $25,000 shall be credited to
the Deferred Account of such Director. Such pro rata
amount, if applicable, shall be credited as of the date on
which the Director becomes a participant in the Program or,
in the case of a Director expected to retire in a given
calendar year, as of January 1 of such calendar year. In
addition, amounts transferred by a Director from the
Pension Plan for Directors to this Program pursuant to
Article III hereof shall be credited to the Director's
Deferred Account as of the Effective Date. For purposes
hereof, "Deferred Amounts" shall mean all amounts credited
to a Director's Deferred Account.

V. Deferred Account
(a) The Corporation shall establish a separate Deferred
Account for each participant. Deferred Amounts shall be
expressed and credited to each participant's Deferred
Account in terms of units ("Units"). As of each date on
which Deferred Amounts are credited to a participant's
Deferred Account, the Corporation shall credit to such
Deferred Account a number of Units and fractional Units
determined by dividing the Deferred Amounts credited by the
Unit Value (as defined below) of one share of the
Corporation's Common Shares. The "Unit Value" of one share
of the Corporation's Common Shares shall be the closing
price of one share of the Corporation's Common Shares on
the New York Stock Exchange on the day on which Deferred
Amounts are credited or a payment is to be valued under
Article VI (b) below, as the case may be; or if there were
no sales on that day, then the closing price on the New
York Stock Exchange on the nearest preceding day on which
there were sales. Deferred Amounts transferred from the
Pension Plan for Directors shall be credited as of the
Effective Date.

(b) When dividends are paid with respect to the
Corporation's Common Shares, the Corporation shall
calculate the amount which would have been payable in cash
or property on the Units in each participant's Deferred
Account on each dividend payment date as if each Unit
represented one issued and outstanding share of the
Corporation's Common Shares. The applicable number of
Units and fractional Units equal to the amount of such
dividends (based on the Unit Value of one share of the
Corporation's Common Shares on the dividend payment date)
shall be credited to each participant's Deferred Account.
In the event of any capital stock adjustment to the
Corporation's Common Shares or other appropriate event or
circumstance, the number of Units or fractional Units
credited to Deferred Accounts shall be correspondingly
adjusted as of the date of such capital stock adjustment or
other event or circumstance.

VI. Payment of Benefits
(a) Except as provided in Article VII below, the value of
a participant's Deferred Account shall be payable solely in
cash, either in (i) a lump sum, or (ii) in approximately
equal annual installments of up to 10 years in accordance
with an election made by the participant by written notice
to the Corporation given at least one year prior to the
calendar year in which payments would otherwise be made or
commence. Such payment or payments shall be made or
commence, as the case may be, within 30 days following the
termination of service as Director.

(b) Any lump sum payment shall be valued as of the end of
the most recent calendar month prior to the payment date.
The amount of each installment payment shall be determined
by dividing the aggregate Unit Value of the Units credited
to the participant's Deferred Account valued as of the end
of the most recent calendar month prior to the payment date
by the remaining number of unpaid installments; provided,
however, that the Corporation's Executive Compensation and
Organization Committee may, in its absolute discretion,
approve any other method of determining the amount of each
installment payment in order to achieve approximately equal
installment payments over the installment period.

VII. Death of Participant
In the event of the death of a Director, the Corporation
shall pay in a lump sum on the 60th day thereafter the
balance of his or her Deferred Account to such beneficiary
or beneficiaries as the Director may have designated in
writing or, in the event a beneficiary has not been so
designated, to the Director's estate.

VIII. Miscellaneous
A. The amounts credited to the Deferred Account shall
constitute an unsecured claim against the general funds
of the Corporation.

B. The Program is unfunded, and the Corporation will make
Plan benefit payments solely on a current disbursement
basis; provided, however, the Corporation shall provide
alternative sources of benefit payments under this
Program through one or more grantor trusts. The
existence of any such trust or trusts shall not relieve
the Corporation of any liability to make benefit
payments under this Program, but to the extent any
benefit payments are made from any such trust, such
payment shall be in satisfaction of and shall reduce
the Corporation's liabilities under this Program.

C. No right or interest of the Director, his beneficiary,
or estate, established herein, shall be assignable or
transferable in whole or in part, either directly or by
operation of law or otherwise, including, but not by
way of limitation, execution, levy, garnishment,
attachment, pledge, bankruptcy, or in any other manner,
and no right or interest established herein shall be
liable for, or subject to, any obligation or liability
of the Director.

D. Except as herein provided, this Program shall be
binding upon the parties hereto, their heirs,
executors, administrators, successors (including but
not limited to successors resulting from any corporate
merger) or assigns.

E. This Program may be amended or terminated at any time
by the Board of Directors of the Corporation, but no
such termination or amendment shall adversely affect a
Director's rights and benefits under this Plan, except
with his consent.

F. This Program shall be construed in accordance with the
laws of the State of New Jersey.

1/28/97
23421-3

-7-

<TABLE> Exhibit 11

SCHERING-PLOUGH CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER COMMON SHARE
(In millions, except per share figures)
<CAPTION>
Year Ended December 31,
1996 1995 1994

Earnings per Common Share, As Reported:
Income from continuing operations. . . . $1,212.8 $1,053.0 $ 926.2

Discontinued operations. . . . . . . . . - (166.4) (4.2)

Net Income Applicable
to Common Shares . . . . . . . . . . . $1,212.8 $ 886.6 $ 922.0

Average Number of Common Shares
Outstanding. . . . . . . . . . . . . . 367.7 369.7 382.5

Earnings Per Common Share:
Income from continuing operations. . . . $ 3.30 $ 2.85 $ 2.42

Discontinued operations. . . . . . . . . - (.45) (.01)

Net Income per Common Share. . . . . . . $ 3.30 $ 2.40 $ 2.41

Earnings per Common Share,
Assuming Full Dilution: (a)

Average Number of Common Shares
Outstanding . . . . . . . . . . . . 367.7 369.7 382.5

Shares Contingently Issuable for
Stock Incentive Plans and Warrant
Agreements. . . . . . . . . . . . 4.7 6.1 4.1

Average Number of Common Shares
and Common Share Equivalents
Outstanding . . . . . . . . . . . . 372.4 375.8 386.6

Net Income Per Common Share
Assuming Full Dilution . . . . . . $ 3.26 $ 2.36 $ 2.38
<FN>
(a) This calculation is submitted in accordance with the regulations of the
Securities and Exchange Commission although not required by APB Opinion No. 15
because it results in dilution of less than 3%.
</TABLE>

<TABLE>
Exhibit 12

SCHERING-PLOUGH CORPORATION AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Dollars in millions)
<CAPTION>

Year Ended December 31,

1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>

Income Before Income Taxes from
Continuing Operations . . . . . . $1,606.4 $1,394.7 $1,226.7 $1,073.1 $ 962.8 $ 847.6

Add : Fixed Charges
Interest Expense . . . . . . . . . 45.4 57.6 56.2 48.2 55.4 65.3
1/3 Rentals. . . . . . . . . . . . 12.2 10.5 8.7 8.0 7.7 7.0
Capitalized Interest . . . . . . . 10.8 11.4 11.4 12.7 15.8 11.8
Total Fixed Charges. . . . . . . 68.4 79.5 76.3 68.9 78.9 84.1

Less: Capitalized Interest . . . . . 10.8 11.4 11.4 12.7 15.8 11.8
Add : Amortization of
Capitalized Interest. . . . . . . . 5.0 4.8 4.1 3.5 4.1 4.0

Earnings Before Income Taxes and
Fixed Charges (other than
Capitalized Interest) . . . . . . . $1,669.0 $1,467.6 $1,295.7 $1,132.8 $1,030.0 $ 923.9

Ratio of Earnings to Fixed Charges . 24.4 18.5 17.0 16.4 13.1 11.0

"Earnings" consist of income before income taxes and fixed charges (other than capitalized
interest). "Fixed charges" consist of interest expense, capitalized interest and one-third of
rentals which Schering-Plough believes to be a reasonable estimate of an interest factor on
leases.
</TABLE>

WD011203.94K

Exhibit 13

Financial Section of the Company's 1996
Annual Report to Shareholder

Management's Discussion and Analysis of Operations and Financial
Condition

Sales
Consolidated sales in 1996 totaled $5.66 billion, an increase of
11 percent over 1995, due to volume growth of 13 percent tempered
by price decreases of 1 percent and unfavorable foreign exchange
rate fluctuations of 1 percent. This performance reflects
significant gains for the CLARITIN brand of nonsedating
antihistamines, which includes CLARITIN-D, a combination product
with a decongestant. Worldwide CLARITIN brand sales totaled
$1.15 billion in 1996, compared with $789 million in 1995.

Consolidated 1995 sales of $5.10 billion advanced 13 percent over
1994, reflecting volume growth of 10 percent and favorable
foreign exchange rate fluctuations of 3 percent. This increase
reflects worldwide CLARITIN brand sales growth of 56 percent in
1995.

Worldwide 1996 pharmaceutical sales of $5.05 billion rose 13
percent over 1995, due to volume growth of 15 percent tempered by
price declines of 1 percent and unfavorable foreign exchange rate
fluctuations of 1 percent. Worldwide sales of pharmaceutical
products in 1995 increased 15 percent over 1994, reflecting
volume growth of 12 percent and favorable foreign exchange rate
fluctuations of 3 percent.

Domestic prescription pharmaceutical product sales grew 23
percent in 1996. Sales of allergy/respiratory products increased
21 percent, due to continued strong growth of the CLARITIN brand
and increases for VANCENASE allergy and VANCERIL asthma products.

The allergy/respiratory sales gain reflects a 25 percent decline
in sales of the PROVENTIL (albuterol) line of asthma products,
due to increased generic competition. Sales of the PROVENTIL line
totaled $316 million in 1996, with metered-dose inhalers
contributing 65 percent. The PROVENTIL solution, syrup and tablet
formulations have been subject to generic competition and, in December
1995, generic metered-dose inhalers entered the market. In response,
the Company's generic pharmaceutical marketing subsidiary, Warrick
Pharmaceuticals, launched its own generic inhaler in December 1995.
While generic inhalers have significantly reduced branded PROVENTIL
inhaler sales, the Warrick inhaler has moderated the decline. In
December 1996, the Company further enhanced its position in the albuterol
asthma market by launching PROVENTIL HFA, a new metered-dose inhaler that
uses an advanced delivery system and a propellant free of ozone-damaging
chlorofluorocarbons. Competition from generic metered-dose inhalers
will, however, continue to negatively affect future sales and
profitability of the PROVENTIL (albuterol) line of asthma products.

Domestic sales of anti-infective and anticancer products rose 33
percent compared with 1995, due to increased utilization of
INTRON A, the Company's alpha interferon anticancer and antiviral
agent, for malignant melanoma and hepatitis C. Also contributing
to the sales increase was the 1996 first quarter launch of CEDAX,
a third-generation cephalosporin antibiotic. These increases
were tempered by lower sales of EULEXIN, a prostate cancer
therapy, due to branded competition. Sales of cardiovascular products
advanced 36 percent, reflecting significant market share
increases for IMDUR, an oral nitrate for angina, and K-DUR
potassium supplement. Dermatological product sales increased 11
percent, due to higher sales of LOTRISONE, an antifungal/anti-
inflammatory cream, and ELOCON, a mid-potency topical
corticosteroid.

Domestic prescription pharmaceutical sales in 1995 advanced 20
percent over 1994, led by gains in allergy/respiratory products,
primarily reflecting strong growth of the CLARITIN brand. Sales
growth of cardiovascular and anti-infective and anticancer
products was somewhat offset by lower dermatological product
sales.

In 1996, sales of international ethical pharmaceutical products
increased 4 percent. Excluding the impact of foreign exchange
rate fluctuations, sales would have risen approximately 6
percent.

International sales of allergy/respiratory products advanced 5
percent over 1995, led by growth for the CLARITIN brand, tempered
by lower sales of other allergy products in Japan. Sales of
dermatological products rose 8 percent, reflecting higher sales
of ELOCON. Sales of cardiovascular products were up slightly.

International sales of anti-infective and anticancer products
rose 7 percent in 1996, due primarily to gains for INTRON A.
LOSEC, an anti-ulcer treatment licensed from AB Astra, also contributed to
higher overall international sales.

In 1995, international ethical pharmaceutical sales, excluding
foreign exchange, increased 5 percent over 1994, reflecting gains
in all therapy areas. LOSEC also contributed to the overall
international sales growth in 1995.

Worldwide sales of animal health products increased 4 percent in
1996, excluding unfavorable foreign exchange rate fluctuations of 1
percent. The sales growth was driven by NUFLOR, a broad-spectrum,
multispecies antibiotic. Sales of animal health products in 1995
increased 11 percent over 1994, excluding foreign exchange.

Sales of health care products in 1996 declined 4 percent compared
with 1995, as volume declines of 6 percent were partially offset
by price increases of 2 percent. Over-the-counter (OTC) product
sales decreased 16 percent, primarily due to aggressive private-
label competition for allergy/cold products, while sun care sales
were down slightly. Foot care product sales rose 9 percent due
primarily to the 1996 launch of gel insoles and higher TINACTIN and
LOTRIMIN AF antifungal products sales.

In 1995, health care product sales declined 4 percent as volume
declines of 6 percent were partially offset by price increases of
2 percent. The sales decline largely reflected lower sales of
OTC products, primarily due to competition for vaginal antifungal
products.

Income Before Income Taxes
Income before income taxes totaled $1.61 billion in 1996, an
increase of 15 percent over 1995. In 1995, income before income
taxes of $1.39 billion grew 14 percent over $1.23 billion in
1994.

<TABLE>
Summary of Costs and Expenses:
(Dollars in millions)
<CAPTION>
% Increase
1996 1995 1994 1996/95 1995/94
<S> <C> <C> <C> <C> <C>
Cost of sales . . . . . . $1,077.8 $1,004.8 $ 906.8 7 % 11%
% of sales. . . . . . . . 19.1 % 19.7 % 20.0 %

Selling, general and
administrative. . . . . $2,209.1 $1,990.4 $1,755.5 11 % 13 %
% of sales . . . . . . . 39.1 % 39.0 % 38.7 %

Research and development. $ 722.8 $ 656.9 $ 610.1 10 % 8 %
% of sales . . . . . . . 12.8 % 12.9 % 13.4 %

</TABLE>

Cost of sales as a percentage of sales has followed a downward
trend over the past three years. The improvement reflects a
favorable sales mix of higher-margin pharmaceutical products and
continuing cost-containment efforts throughout the world.

Selling, general and administrative expenses in 1996 increased as
a percentage of sales compared with 1995, due to increased
promotional and selling-related spending primarily for the
CLARITIN brand, INTRON A and the domestic launch of CEDAX. The 1995
increase as a percentage of sales from 1994 reflects higher
promotional and selling-related spending for the CLARITIN brand and
INTRON A.

Research and development expenses increased $65.9 million, or 10
percent, to $722.8 million in 1996 and represented 12.8 percent, 12.9
percent and 13.4 percent of sales in 1996, 1995 and 1994, respectively.
The higher spending reflects the Company's funding of both internal
research efforts and research collaborations with various partners to
develop a steady flow of innovative products. The Company also acquired
Canji, Inc. in February 1996 to serve as its center for gene therapy
research and development.

Income Taxes
The Company's effective tax rate was 24.5 percent in 1996, 1995
and 1994. The effective tax rate for each period was lower than
the U.S. statutory income tax rate, principally due to tax
incentives in certain jurisdictions where manufacturing facilities are
located. For additional information, see "Income Taxes" in the Notes to
Consolidated Financial Statements.

Income From Continuing Operations
Income in 1996 increased 15 percent to $1.21 billion. Income in
1995 increased 14 percent over 1994. Differences in year-to-year
exchange rates reduced comparative income growth in 1996, but
increased it in 1995. After eliminating these exchange
differences, income would have risen approximately 18 percent in
1996 and 12 percent in 1995.

Discontinued Operations
In June 1995, the Company sold its contact lens business. For
additional information, see "Discontinued Operations" in the
Notes to Consolidated Financial Statements.

Earnings Per Common Share
Earnings per common share were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Earnings per common share from
continuing operations $ 3.30 $ 2.85 $ 2.42

Discontinued operations -
loss from operations - (.03) (.01)

Discontinued operations - loss on
disposal - (.42) -

Earnings per common share $ 3.30 $ 2.40 $ 2.41

Average shares outstanding
(in millions) 367.7 369.7 382.5
</TABLE>

Earnings per common share from continuing operations rose 16
percent in 1996 and 18 percent in 1995. Earnings per common
share increased at a higher rate than income due to the Company's
share repurchase programs. Fluctuations in year-to-year exchange
rates decreased comparative growth in earnings per common share
in 1996, but increased it in 1995. Excluding the impact of these
exchange rate differences, earnings per common share from
continuing operations would have increased approximately 19 percent and
16 percent in 1996 and 1995, respectively.

Over the past three years, the Board of Directors has authorized
several share repurchase programs. Under these programs,
approximately 5.8 million common shares were purchased in 1996,
9.9 million common shares in 1995 and 17.2 million common shares
in 1994. At year-end, the most recent $500 million program was
74 percent completed.

Environmental Matters
The Company has obligations for environmental clean-up under
various state, local and federal laws, including the
Comprehensive Environmental Response, Compensation and Liability
Act, commonly known as Superfund. Environmental expenditures
have not had and, based on information currently available, are
not anticipated to have a material impact on the Company's
financial statements. For additional information, see "Legal and
Environmental Matters" in the Notes to Consolidated Financial
Statements.

Foreign Exchange and Inflation
Sales outside of the United States represented 42 percent of
worldwide sales in 1996 and 45 percent in 1995. Fluctuating
foreign exchange rates have affected sales and earnings, as
previously discussed. Sales and earnings growth in 1997 will be
negatively affected if the U.S. dollar strengthens. The Company
continues to implement selective hedging strategies to mitigate
the possible adverse effects of future exchange rate changes.
For additional information, see "Financial Instruments" in the
Notes to Consolidated Financial Statements. Inflation has had a minimal
impact on operations in recent years.

Additional Factors Influencing Operations
In the United States, many of the Company's pharmaceutical products are
subject to increasingly competitive pricing as managed care groups,
institutions, government agencies and other
buying groups seek price discounts. In most international
markets, the Company operates in an environment of government-
mandated cost-containment programs. Several governments have
placed restrictions on physician prescription levels and patient
reimbursements, emphasized greater use of generic drugs and
enacted across-the-board price cuts as methods of cost control.

The market for pharmaceutical products is competitive. The
Company's operations may be affected by technological advances of
competitors, patents granted to competitors, new products of
competitors, and generic competition as the Company's products
mature. In addition, patent positions can be highly uncertain
and an adverse result in a patent dispute can preclude
commercialization of products or negatively affect sales of
existing products. The effect on operations of competitive
factors and patent disputes cannot be predicted.

Uncertainties inherent in government regulatory approval processes,
including among other things delays in approval of
new products, may also affect the Company's operations. The effect on
operations of regulatory approval processes cannot be
predicted.

Liquidity and Financial Resources
Cash generated from operations continues to be the Company's
major source of funds to finance working capital, additions to
property, shareholder dividends and common share repurchases.

Cash provided by operating activities totaled $1,458.5 million in
1996, $1,383.3 million in 1995 and $1,270.1 million in 1994.

Capital expenditures amounted to $324.5 million in 1996, $293.8
million in 1995 and $268.2 million in 1994. It is anticipated
that capital expenditures will approximate $350 million in 1997 and
include the cost to complete construction of a bulk chemical plant in
Singapore. Commitments for future capital expenditures totaled $82.9
million at December 31, 1996.

Common shares repurchased in 1996 totaled 5.8 million shares at a
cost of $388.0 million. In 1995, 9.9 million shares were repurchased for
$493.8 million, and in 1994, 17.2 million shares were repurchased at a cost
of $599.4 million.

Dividend payments of $474.0 million were made in 1996, compared
with $416.4 million in 1995 and $379.4 million in 1994. Dividends per
common share were $1.28 in 1996, up from $1.125 in
1995 and $.99 in 1994.

Short-term borrowings and current portion of long-term debt totaled $855.1
million at year-end 1996, $841.3 million in 1995 and $782.3 million in
1994. The 1995 increase was due to the reclassification of $100 million
for current maturities of long-term debt. In 1996, the Company funded the
repayment of current maturities of long-term debt through increased short-
term borrowings.

The Company's ratio of debt to total capital decreased to 30
percent in 1996 from 36 percent in 1995, resulting primarily from an
increase in shareholders' equity. The Company's liquidity and financial
resources continue to be sufficient to meet its operating needs. As of
December 31, 1996, the Company had $1,295 million in unused lines of
credit, including $1 billion from a multi-currency unsecured revolving
credit facility expiring in 2001 considered as support of commercial paper
borrowings. The Company had A-1+ and P-1 ratings for its commercial
paper, and AA and Aa3 general bond ratings from Standard & Poor's
and Moody's, respectively, as of December 31, 1996.

Securities Litigation Reform Act
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995: Certain matters discussed in this Annual
Report are forward-looking statements that involve risks and
uncertainties, including but not limited to economic, litigation,
competitive, regulatory, governmental and technological factors
affecting the Company's operations, markets, products, services
and prices, and other factors discussed in Exhibit 99.1 of the
Company's December 31, 1996 Form 10K filed with the Securities and
Exchange Commission.

Schering-Plough Corporation and Subsidiaries
<TABLE>
Statements of Consolidated Income
(Dollars in millions, except per share figures)

For The Years Ended December 31, 1996 1995 1994
<S> <C> <C> <C>
Sales . . . . . . . . . . . . . . . . . . . . . $5,655.8 $5,104.4 $4,536.6
Costs and expenses:

Cost of sales . . . . . . . . . . . . . . . . 1,077.8 1,004.8 906.8

Selling, general and administrative . . . . . 2,209.1 1,990.4 1,755.5

Research and development. . . . . . . . . . . 722.8 656.9 610.1

Other expense, net. . . . . . . . . . . . . . 39.7 57.6 37.5
Total costs and expenses . . . . . . . . . . 4,049.4 3,709.7 3,309.9

Income before income taxes. . . . . . . . . . . 1,606.4 1,394.7 1,226.7
Income taxes. . . . . . . . . . . . . . . . . 393.6 341.7 300.5

Income from continuing operations . . . . . . . 1,212.8 1,053.0 926.2

Discontinued operations:
Loss from operations . . . . . . . . . . . . . - (10.2) (4.2)
Loss on disposal . . . . . . . . . . . . . . . - (156.2) -
___________________________________________________________________________________
Net income. . . . . . . . . . . . . . . . . . . $1,212.8 $ 886.6 $ 922.0

Earnings per common share:

Continuing operations. . . . . . . . . . . . . $ 3.30 $ 2.85 $ 2.42

Discontinued operations:
Loss from operations . . . . . . . . . . . . - (.03) (.01)
Loss on disposal. . . . . . . . . . . . . . . - (.42) -
___________________________________________________________________________________

Earnings per common share . . . . . . . . . . . $ 3.30 $ 2.40 $ 2.41
</TABLE>

<TABLE>
Statements of Consolidated Retained Earnings
(Dollars in millions, except per share figures)

For The Years Ended December 31, 1996 1995 1994
<S> <C> <C> <C>
Retained Earnings, Beginning of Year. . . . . . $4,341.8 $3,978.2 $3,435.6

Net income. . . . . . . . . . . . . . . . . . 1,212.8 886.6 922.0

Cash dividends on common shares (per share:
1996, $1.28; 1995, $1.125; and 1994, $.99) . (474.0) (416.4) (379.4)

Effect of 2-for-1 stock split . . . . . . . . - (106.6) -
___________________________________________________________________________________

Retained Earnings, End of Year. . . . . . . . . $5,080.6 $4,341.8 $3,978.2

See Notes to Consolidated Financial Statements.
</Table

Schering-Plough Corporation and Subsidiaries

</TABLE>
<TABLE>
Statements of Consolidated Cash Flows
(Dollars in millions)

For The Years Ended December 31, 1996 1995 1994
<S> <C> <C> <C>
Operating Activities:

Income from continuing operations. . . . . . . . . . $1,212.8 $1,053.0 $ 926.2
Depreciation and amortization. . . . . . . . . . . . 173.2 157.1 144.6
Accounts receivable. . . . . . . . . . . . . . . . . 1.6 11.3 75.2
Inventories. . . . . . . . . . . . . . . . . . . . . (111.9) (63.7) (34.1)
Prepaid expenses and other assets. . . . . . . . . . (144.4) (107.9) (122.2)
Accounts payable and other liabilities . . . . . . . 327.2 333.5 280.4

Net cash provided by operating activities. . . . . . 1,458.5 1,383.3 1,270.1

Investing Activities:

Capital expenditures . . . . . . . . . . . . . . . . (324.5) (293.8) (268.2)
Reduction of investments . . . . . . . . . . . . . . .6 45.3 181.0
Purchases of investments . . . . . . . . . . . . . . (77.9) (93.2) (37.1)
Other, net . . . . . . . . . . . . . . . . . . . . . (5.8) (1.8) (8.3)

Net cash used for investing activities (407.6) (343.5) (132.6)

Financing Activities:

Common shares repurchased. . . . . . . . . . . . . . (388.0) (493.8) (599.4)
Cash dividends paid to common shareholders . . . . . (474.0) (416.4) (379.4)
Net change in short-term borrowings. . . . . . . . . 113.0 (46.0) (292.1)
Repayment of long-term debt. . . . . . . . . . . . . (140.2) (1.4) (3.7)
Other equity transactions, net . . . . . . . . . . . 48.1 44.4 33.1
Other, net . . . . . . . . . . . . . . . . . . . . . 4.7 2.7 7.4

Net cash used for financing activities . . . . . . . (836.4) (910.5) (1,234.1)

Effect of exchange rates on cash and cash equivalents. (.8) (3.2) (4.2)
Net Cash Flow from Continuing Operations . . . . . . . 213.7 126.1 (100.8)
Discontinued operations. . . . . . . . . . . . . . . . - 79.7 (5.8)
Net Increase (Decrease) in Cash and Cash Equivalents . 213.7 205.8 (106.6)
Cash and Cash Equivalents, Beginning of Year . . . . . 321.4 115.6 222.2

Cash and Cash Equivalents, End of Year . . . . . . . . $ 535.1 $ 321.4 $ 115.6

See Notes to Consolidated Financial Statements.
(/Table)

Schering-Plough Corporation and Subsidiaries

</TABLE>
<TABLE>
Consolidated Balance Sheets
(Dollars in millions, except per share figures)

At December 31, 1996 1995
<S> <C> <C>
ASSETS
__________________________________________________________________________
Current Assets:

Cash and cash equivalents. . . . . . . . . . . $ 535.1 $ 321.4

Accounts receivable, less allowances:
1996, $73.0; 1995, $69.1 . . . . . . . . . . 542.0 569.3

Inventories. . . . . . . . . . . . . . . . . . 594.1 502.0

Prepaid expenses, deferred income taxes
and other current assets. . . . . . . . . . . 693.4 563.6

Total current assets . . . . . . . . . . . . . 2,364.6 1,956.3

Property, at cost:

Land . . . . . . . . . . . . . . . . . . . . . 41.3 41.4

Buildings and improvements . . . . . . . . . . 1,562.6 1,528.2

Equipment. . . . . . . . . . . . . . . . . . . 1,296.3 1,250.8

Construction in progress . . . . . . . . . . . 462.3 315.6

Total. . . . . . . . . . . . . . . . . . . . . 3,362.5 3,136.0

Less accumulated depreciation. . . . . . . . . 1,116.2 1,037.1

Property, net. . . . . . . . . . . . . . . . . 2,246.3 2,098.9

Other Assets. . . . . . . . . . . . . . . . . . . . 787.2 609.4

$5,398.1 $4,664.6

1996 1995

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:

Accounts payable . . . . . . . . . . . . . . . $ 560.6 $ 509.5

Short-term borrowings and current portion of
long-term debt . . . . . . . . . . . . . . . 855.1 841.3

U.S., foreign and state income taxes . . . . . 458.7 384.2

Accrued compensation . . . . . . . . . . . . . 205.3 205.1

Other accrued liabilities. . . . . . . . . . . 519.4 422.0

Total current liabilities. . . . . . . . . . . 2,599.1 2,362.1

Long-Term Liabilities:

Long-term debt . . . . . . . . . . . . . . . . 46.4 87.1

Deferred income taxes. . . . . . . . . . . . . 267.4 255.1

Other long-term liabilities. . . . . . . . . . 425.3 337.4

Total long-term liabilities. . . . . . . . . . 739.1 679.6

Shareholders' Equity:

Preferred shares - authorized 50,000,000
shares, $1 par value; issued - none . . . . . - -

Common shares - 600,000,000 authorized shares,
$1 par value; issued - 1996, 507,368,360;
1995, 502,965,382 . . . . . . . . . . . . . . 507.4 503.0

Paid-in capital. . . . . . . . . . . . . . . . 172.3 49.5

Retained earnings. . . . . . . . . . . . . . . 5,080.6 4,341.8

Foreign currency translation adjustment and
other . . . . . . . . . . . . . . . . . . . . (140.6) (103.9)

Total. . . . . . . . . . . . . . . . . . . . . 5,619.7 4,790.4

Less treasury shares, at cost - 1996,
142,001,799 shares; 1995,138,796,653 shares . 3,559.8 3,167.5

Total shareholders' equity . . . . . . . . . . 2,059.9 1,622.9

$5,398.1 $4,664.6

See Notes to Consolidated Financial Statements.
</TABLE>

Notes to Consolidated Financial Statements
(Dollars in millions, except per share figures)

Accounting Policies

Principles of Consolidation

The consolidated financial statements include Schering-Plough Corporation
and its subsidiaries. Intercompany balances and transactions are
eliminated. Certain prior year amounts have been reclassified to conform
to the current year presentation.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
use assumptions that affect certain reported amounts and disclosures;
actual amounts may differ.

Cash and Cash Equivalents

Cash and cash equivalents include operating cash and highly liquid
investments, generally with maturities of three months or less.

Debt and Equity Investments

Investments, included in other non-current assets, consist of debt and
equity securities held primarily in non-qualified trusts to fund benefit
obligations. For purposes of Statement of Financial Accounting Standards
(SFAS) No. 115, all of the Company's investment securities are classified
as available for sale and, accordingly, are carried at fair value. Gains
and losses during 1996, 1995 and 1994, based on the specific identification
method, were not material. Unrealized gains and losses are included in
shareholders' equity until realized.

Inventories

Inventories are valued at the lower of cost or market. Cost is determined
by using the last-in, first-out method for substantially all domestic
inventories. The cost of all other inventories is determined by the first-
in, first-out method.

Depreciation

Depreciation is provided over the estimated useful lives of the properties,
generally by use of the straight-line method. Average useful lives are 50
years for buildings, 25 years for building improvements and 12 years for
equipment. Depreciation expense was $149.2, $142.7, and $134.3 in 1996,
1995 and 1994, respectively.

Intangible Assets

Intangible assets, included in other non-current assets, principally
include goodwill, patents, trademarks, licenses and product rights.
Intangible assets are recorded at cost and amortized over their expected
useful lives on the straight-line method. Intangible assets are
periodically reviewed to determine recoverability by comparing their
carrying values to expected future cash flows.

Foreign Currency Translation

The net assets of most of the Company's foreign subsidiaries are translated
into U.S. dollars using current exchange rates. The U.S. dollar effects
that arise from translating the net assets of these subsidiaries at
changing rates are recorded in the foreign currency translation adjustment
account in shareholders' equity. For the remaining foreign subsidiaries,
non-monetary assets and liabilities are translated using historical rates,
while monetary assets and liabilities are translated at current rates, with
the U.S. dollar effects of rate changes included in income.

Exchange gains and losses arising from hedging foreign net investments and
from translating intercompany balances of a long-term investment nature are
recorded in the foreign currency translation adjustment account. Other
exchange gains and losses are included in income.

Net foreign exchange losses included in income were $10.9, $4.0 and $6.0 in
1996, 1995 and 1994, respectively.

Earnings Per Common Share

Earnings per common share is computed by dividing net income by the
weighted-average number of common shares outstanding. Shares issuable
through the exercise of stock options and warrants and under deferred
delivery agreements are not considered in the calculation, as they are
either not dilutive or do not have a material effect on the determination
of earnings per common share.

Discontinued Operations

On June 28, 1995, the Company sold its contact lens business. In
connection therewith, the Company recorded a loss on disposal of $156.2,
net of a tax benefit of $75.3, ($.42 per share). Proceeds from the sale
were $47.5. Contact lens sales during 1995 through the date of
disposition were $46.2. Sales for the year ended December 31, 1994, were
$120.5. Loss from discontinued operations for the years ended December
31, 1995 and 1994 is net of tax benefits of $7.0 and $9.3, respectively.

Financial Instruments

The table below presents the carrying values and estimated fair values
for the Company's financial instruments, including derivative financial
instruments. Estimated fair values were determined based on market
prices, where available, or dealer quotes.

<TABLE>
December 31, 1996 December 31, 1995
Carrying Estimated Carrying Estimated
Value Fair Value Value Fair Value
<S> <C> <C> <C> <C>
ASSETS:
Cash and cash equivalents $535.1 $535.1 $321.4 $321.4
Debt and equity investments 148.0 148.0 142.6 142.6

LIABILITIES:
Short-term borrowings 855.1 855.1 841.3 842.0
Long-term debt 46.4 46.4 87.1 88.9
Derivative Financial
Instruments:
Interest rate swap contracts - - 1.5 1.5
Foreign currency swap
contracts 47.9 64.5 64.5 81.3
</Table

Credit and Market Risk

Most financial instruments expose the holder to credit risk for non-
performance and to market risk for changes in interest and currency rates.
The Company mitigates credit risk by dealing only with financially sound
counterparties. Accordingly, the Company does not anticipate loss for non-
performance. The Company manages market risk primarily by investing in
short-term, highly liquid investments and, in the case of derivatives, by
limiting the use of derivatives to hedging activities or by limiting
potential exposure to amounts that are not material to results of
operations or cash flow. The Company does not enter into derivative
instruments to generate trading profits.

Derivatives

The Company has not used derivative financial instruments to manage overall
interest rate or exchange rate risk. Further, the Company has not used
derivative financial instruments to speculate. The use of derivative
financial instruments has been limited to:

Hedging selected foreign exchange exposures that arise from
international operations, and

International cash management.

Hedging Selected Foreign Exchange Exposures

The profitability of the Company's foreign operations, as measured in U.S.
dollars, is subject to exchange rate risk. If the U.S. dollar weakens, the
profitability of foreign operations benefits. However, if the U.S. dollar
strengthens, the profitability of foreign operations can be adversely
affected. Historically, the level of pre-tax operating profitability
subject to this kind of exchange risk has been as follows:

1996 1995 1994

Europe, Middle East and Africa $287.9 $264.1 $235.5

Latin America 107.5 104.5 101.8

Canada, Pacific Area and Asia 132.0 128.5 138.8

To date, management has not deemed it cost-effective to engage in a
formula-based program of hedging the profitability of these operations
using derivative financial instruments. Because the Company's foreign
subsidiaries purchase significant quantities of inventory payable in U.S.
dollars, managing the level of inventory and related payables and the rate
of inventory turnover provides a level of protection against adverse
changes in exchange rates.

Net Investment in Foreign Subsidiaries

In the early 1980s, the Company significantly changed its operating
structure in Japan. About the same time, the Company decided to partially
hedge its net investment in Japan. At December 31, 1996, the net
investment in the subsidiary was approximately 17.7 billion yen.

Long-term foreign currency interest rate swap contracts have been used to
hedge this net investment. One contract outstanding at December 31, 1996,
matures in 1997 and provides for the payment of 5 billion yen in exchange
for the receipt of $21.1. A second contract provides for the payment of
4.9 billion yen in exchange for the receipt of $20. This contract, which
matures in 2005, is callable annually by either party. The net liability
under these contracts is included in other accrued liabilities. Under a
third contract, which matures in 2002, the Company will pay 5 billion yen
and will receive $39.2. The net liability under this contract is included
in other long-term liabilities. There have been no purchases, sales or
maturities of foreign currency interest rate swap contracts during 1996 and
1995. In accordance with SFAS No. 52, the foreign currency obligations
under these contracts are recorded using foreign exchange spot rates in
effect at year-end. The Company estimates that a 50 basis point reduction
in interest rates would favorably affect the fair value of these contracts
by approximately $.4 and a 1 percent stronger dollar-to-yen exchange rate
would favorably affect the estimated fair value by approximately $1.9.

The investment in the Japanese subsidiary is the only net investment that
is hedged at year-end using derivative financial instruments.

International Cash Management

In 1991 and 1992, the Company utilized interest rate swaps as part of its
international cash management strategy. The Company employed the strategy
in 1991 using an interest rate swap arrangement with a notional principal
of $650 and in 1992 using an interest rate swap arrangement with a notional
principal of $950.

The $650 arrangement initially provided for the payment and receipt of
interest based on two floating rates (LIBOR and average federal funds
rates), and the $950 arrangement initially provided for the payment of
interest based upon a floating rate (LIBOR) and the receipt of interest
based upon two-year U.S. treasury rates. Both arrangements have 20-year
terms.

From 1993 to 1995, the Company changed the original market risk of these
arrangements by entering into partially offsetting contracts. At December
31, 1996, the $650 and $950 arrangements provide for the payment of
interest based upon LIBOR and the receipt of interest based upon an annual
election of various floating rates. As a result, the Company remains
subject to a moderate degree of market risk through maturity of the swaps.
At December 31, 1996, the market value of these arrangements was nil. At
December 31, 1995, the market value of these arrangements was a liability
of $1.5. It is estimated that a 50 basis point change in interest rate
structure could change the market value of these arrangements by
approximately $2.8.

The above interest rate swaps are recorded at market value with changes in
market value recorded in earnings. Annual net cash flows for payments and
receipts under the contracts are not material.

Commitments

Total rent expense amounted to $36.5 in 1996, $31.4 in 1995 and $26.1 in
1994. Future minimum rental commitments on non-cancelable operating leases
as of December 31, 1996, range from $21.4 in 1997 to $3.5 in 2001, with
aggregate minimum lease obligations of $7.4 due thereafter.

The Company has commitments related to future capital expenditures totaling
$82.9 as of December 31, 1996.

Borrowings

Short-term borrowings consist of commercial paper issued in the United
States, bank loans and notes payable. Commercial paper outstanding at
December 31, 1996 and 1995 was $784.3 and $689.0, respectively. Bank loans
and notes payable at December 31, 1996 and 1995 totaled $66.0 and $52.1,
respectively. The weighted- average interest rate for short-term
borrowings at December 31, 1996 and 1995 was 5.8 percent and 6.1 percent,
respectively.

As of December 31, 1996, the Company has a $1,000 multi-currency unsecured
revolving credit facility expiring in 2001 from a syndicate of financial
institutions. This facility is available for general corporate purposes
and is considered as support for the Company's commercial paper borrowings.
This line of credit does not require compensating balances; however, a
nominal commitment fee is paid. No amounts were outstanding under this
facility at December 31, 1996. In addition, the Company's foreign
subsidiaries had available $295 in unused lines of credit from various
financial institutions at December 31, 1996. Generally, these credit lines
do not require commitment fees or compensating balances and are cancelable
at the option of the Company or the financial institutions.

Long-term debt, including current maturities, at December 31 consisted of
the following:

</TABLE>
<TABLE>
1996 1995
<S> <C> <C>
Notes, 7.8%, due 1996 . . . . . . . . . . . . $ - $ 100.0
Industrial revenue bonds, due 2013: 1996,
3.8%; 1995, 3.8% - 12.0%. . . . . . . . . . . 40.0 80.0
Other . . . . . . . . . . . . . . . . . . . . 11.2 7.3
51.2 187.3
Current maturities. . . . . . . . . . . . . . (4.8) (100.2)
Total long-term debt. . . . . . . . . . . . . $ 46.4 $ 87.1
</TABLE>

The Company has a shelf registration statement on file with the Securities
and Exchange Commission covering the issuance of up to $200.0 of debt
securities. These securities may be offered from time to time on terms to
be determined at the time of sale. As of December 31, 1996, no debt
securities have been issued pursuant to this registration.

Interest Income and Interest Expense

Interest income for 1996, 1995 and 1994 was $32.8, $22.6 and $17.2,
respectively.

Interest expense, net of amounts capitalized as part of the construction
cost of property, plant and equipment, for 1996, 1995 and 1994 was $45.4,
$57.6 and $56.2, respectively. Interest costs of $10.8, $11.4 and $11.4 in
1996, 1995 and 1994, respectively, have been capitalized and included in
the cost of property, plant and equipment. Total cash payments for
interest, net of amounts capitalized, were $52.0, $56.3 and $54.9 in 1996,
1995 and 1994, respectively.

Interest income and interest expense are included in other expense, net.

Stock Incentive Plans

Under the terms of the Company's 1992 Stock Incentive Plan, 18 million of
the Company's common shares may be granted as stock options or awarded as
deferred stock units to officers and certain employees of the Company
through December 1997. Option exercise prices equal the market price of
the common shares at their grant dates. Options expire not later than 10
years after the date of the grant. Standard options granted generally have
a one-year vesting term. Other options granted vest 20 percent per year
for five years starting in the fifth year after the date of grant.
Deferred stock units are payable in an equivalent number of common shares;
the shares are distributable in a single installment or in up to five equal
annual installments generally commencing one year from the date of the
award.

The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based
Compensation," in October 1995. Under SFAS No. 123, companies can either
continue to account for stock compensation plans pursuant to existing
accounting standards or elect to expense the value derived from using an
option pricing model such as Black-Scholes. The Company will continue to
apply existing accounting standards. However, SFAS No. 123 requires
disclosure of pro forma net income and earnings per share as if the Company
had adopted the expensing provisions of SFAS No. 123. Based on Black-
Scholes values, pro forma net income for 1996 and 1995 would be $1,196.5
and $882.8, respectively;
pro forma earnings per common share for 1996 and 1995 would be $3.25 and
$2.39, respectively.

The following table summarizes stock option activity over the past two
years under the current and prior plans:
<TABLE>
Weighted-
Average
Number Exercise
of Shares Price
<S> <C> <C>
Outstanding at January 1, 1995 9,653,934 $23.83
Granted 1,911,920 $45.90
Exercised (1,743,223) $25.08
Canceled or expired (99,854) $33.44
Outstanding at December 31, 1995 9,722,777 $28.44
Granted 3,097,374 $57.44
Exercised (2,404,461) $22.83
Canceled or expired (276,312) $41.55
Outstanding at December 31, 1996 10,139,378 $38.28

Options exercisable at December 31, 1995 6,346,127 $24.64
Options exercisable at December 31, 1996 5,474,076 $27.83
</TABLE>
In 1996 and 1995, the Company awarded deferred stock units totaling 881,030
and 824,560, respectively. The weighted-average fair value of these
deferred stock units was $56.07 and $39.37 per unit in 1996 and 1995,
respectively. The expense recorded in 1996 and 1995 for deferred stock
units was $26.9 and $23.4, respectively.

The weighted-average Black-Scholes value per option granted in 1996 and
1995 was $12.43 and $11.28, respectively.
The following weighted-average assumptions were used in the Black-Scholes
option pricing model for options granted in 1996 and 1995:

1996 1995

Dividend yield 2.8% 2.8%
Volatility 20% 20%
Risk-free interest rate 5.7% 6.6%
Expected term of options (in years) 5 5

For options outstanding and exercisable at December 31, 1996, the exercise
price ranges and average remaining lives were:

<TABLE>
Options Outstanding Options Exercisable

Weighted- Weighted- Weighted-
Range of Number Average Average Number Average
Exercise Outstanding Remaining Exercise Exercisable Exercise
Prices at 12/31/96 Life Price at 12/31/96 Price
<S> <C> <C> <C> <C> <C>
$12 to $29 3,791,558 4 $22.62 3,027,558 $23.07

$30 to $51 2,586,518 8 $33.72 2,446,518 $33.71

$52 to $68 3,761,302 9 $57.20 - -

10,139,378 7 $38.28 5,474,076 $27.83
</TABLE>

Shareholders' Equity

On April 4, 1995, the Board of Directors voted to increase the number of
authorized shares from 300 million to 600 million and approved a 2-for-1
stock split. Distribution of the split shares was made on June 9, 1995.

The Company has Preferred Share Purchase Rights (the "Rights") outstanding
that are attached to, and presently only trade with, the Company's common
shares and are not exercisable. The Rights will begin to trade separately
from the common shares and become exercisable upon the earlier of (i) 10
days following a public announcement that a person or group has acquired
beneficial ownership of 20 percent or more of the Company's outstanding
common shares, or (ii) 10 business days following a person's or group's
commencement of, or announcement of, an intention to make a tender or
exchange offer, the consummation of which would result in beneficial
ownership of 20 percent or more of the Company's common shares.

Upon becoming exercisable, each Right will entitle the holder to purchase
one four-hundredth of a share of Series A Junior Participating Preferred
Stock, par value $1 per share, of the Company at an exercise price of
$62.50. In the event that the Company is acquired pursuant to a merger, or
50 percent or more of its consolidated assets or earning power are sold,
each Right will entitle its holder to purchase shares of the acquiring
company having a market value of $125.00 for $62.50. In the event that any
person or group becomes the beneficial owner of 20 percent or more of the
common shares, each Right will entitle its holder (other than such person or
members of such group) to purchase common shares of the Company having a
market value of twice the exercise price of the Right. The Company may
redeem the Rights at $.0025 per Right at any time prior to the acquisition,
by a person or group, of 20 percent or more of the Company's outstanding
common shares. The Rights will expire on August 9, 1999, unless earlier
redeemed.

A summary of activity in common shares, paid-in capital and treasury shares
follows (number of shares in millions):

<TABLE>
Common Paid-in Treasury Shares
Shares Capital Number Amount
<S> <C> <C> <C> <C>
Balance at January 1, 1994. . . $251.5 $ 80.9 58.0 $2,069.9

Stock incentive plans. . . . . - 52.4 (1.1) 2.3

Purchase of treasury shares. . - - 8.6 599.4
____________________________________________________________________

Balance at December 31, 1994. . 251.5 133.3 65.5 2,671.6

Effect of 2-for-1 stock split. 251.5 (145.0) 65.4 -

Stock incentive plans. . . . . - 61.2 (2.0) 2.1

Purchase of treasury shares. . - - 9.9 493.8
____________________________________________________________________

Balance at December 31, 1995. . 503.0 49.5 138.8 3,167.5

Stock incentive plans. . . . . - 92.4 (2.6) 4.3

Settlement of warrants . . . . 3.4 (23.1) - -

Purchase of treasury shares. . - - 5.8 388.0

Shares issued for purchase of
Canji, Inc. . . . . . . . . 1.0 53.5 - -

Balance at December 31, 1996. . $507.4 $172.3 142.0 $3,559.8
</Table

Inventories

Year-end inventories consisted of the following:
</TABLE>
<TABLE>

1996 1995
<S> <C> <C>

Finished products . . . . . . . . . . . . . . $296.7 $213.2
Goods in process. . . . . . . . . . . . . . . 173.0 179.4
Raw materials and supplies. . . . . . . . . . 124.4 109.4
Total inventories . . . . . . . . . . . . . . $594.1 $502.0
</TABLE>
Inventories valued on a last-in, first-out basis comprised approximately 45
percent and 39 percent of total inventories at December 31, 1996 and 1995,
respectively. The estimated replacement cost of total inventories at
December 31, 1996 and 1995 was $644.5 and $549.7, respectively.

Retirement Plans

The Company and certain of its subsidiaries have defined benefit pension
plans covering eligible employees in the United States and certain foreign
countries. Benefits under these plans are generally based upon the
participants' average final earnings and years of credited service, and
take into account governmental retirement benefits. The Company's funding
policy is to contribute actuarially determined amounts, after taking into
consideration the funded status of each plan and regulatory limitations.

The components of the net pension expense for all Company-sponsored plans
were as follows:
<TABLE>
1996 1995 1994
<S> <C> <C> <C>

Service cost - benefits earned during
the year. . . . . . . . . . . . . . . $ 37.1 $ 29.1 $ 32.2
Interest cost on projected benefit
obligations . . . . . . . . . . . . . 49.6 47.0 42.0
Actual return on plan assets . . . . . (98.8) (152.8) .5
Net amortization and deferral . . . . . 18.5 78.8 (68.4)
Net pension expense . . . . . . . . . . $ 6.4 $ 2.1 $ 6.3
</TABLE>
The year-to-year changes in the net amortization and deferral component of
pension expense are principally attributable to differences between actual
and expected returns on plan assets.

The actuarial present value of benefit obligations and qualified assets of
the plans at December 31 was as follows:

<TABLE>
Over-funded Under-funded
plans plans
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Projected benefit obligations:

Accumulated benefit obligations,
including vested benefits of
$604.5 in 1996 and $571.4 in 1995. . . $519.9 $532.4 $116.3 $ 83.9
Effect of future salary increases. . . 87.9 85.6 30.3 25.8

Total projected benefit obligations . . . 607.8 618.0 146.6 109.7
Plan assets at fair value,
primarily stocks and bonds. . . . . . . 876.9 822.4 36.1 17.3

Plan assets over (under) projected
benefit obligations . . . . . . . . . . 269.1 204.4 (110.5) (92.4)

Unrecognized net transition (asset)
liability . . . . . . . . . . . . . . . (67.2) (77.4) 4.3 6.1
Unrecognized prior service cost . . . . . 5.7 5.6 5.3 7.6
Unrecognized net (gain) loss. . . . . . . (69.9) (9.8) 34.2 20.9
Net pension asset (liability) . . . . . . $137.7 $122.8 $(66.7) $(57.8)
</Table

In addition to the plan assets indicated above, at December 31, 1996 and
1995, securities of $70.8 and $64.5, respectively, were held in non-
qualified trusts designated to provide pension benefits for certain plans
presented as under-funded.

The discount rate used in determining the projected benefit obligation for
the Company's U.S. plans was 7.5 percent at December 31, 1996, and 7.0
percent at December 31, 1995. The weighted-average discount rate for the
Company's non-U.S. plans was 6.7 percent at December 31, 1996, and 7.1
percent at December 31, 1995. The weighted-average rate of increase in
future compensation levels for all plans was 4.2 percent at December 31,
1996 and 1995. The weighted-average expected long-term rate of return on
plan assets was approximately 10 percent for both years.

The 1996 discount rate change reduced the total projected benefit
obligation by approximately $39.1. The remaining change reflects 1996
service and interest costs.

The Company has a defined contribution profit-sharing plan covering
substantially all of its full-time domestic employees who have completed
one year of service. The annual contribution is determined by a formula
based on the Company's income, shareholders' equity and participants'
compensation. Profit-sharing expense totaled $59.9, $57.8, and $56.4 in
1996, 1995 and 1994, respectively.

Other Post-retirement Benefits

The Company provides post-retirement health care and other benefits to its
eligible U.S. retirees and their dependents. Eligibility for benefits
depends upon age and years of service. Retirees share in the cost of the
health care benefits.

Health care benefits for retirees in most countries other than the United
States are provided through local government-sponsored plans. The direct
cost of Company-sponsored, non-U.S. plans is not significant. Accordingly,
these plans are excluded from the following disclosures.

The components of net post-retirement benefit expense (income) were as
follows:

</TABLE>
<TABLE>
1996 1995 1994
<S> <C> <C> <C>
Service cost - benefits earned during the year. . . $ 4.9 $ 3.9 $ 5.7
Interest cost on accumulated post-retirement
benefit obligation . . . . . . . . . . . . . . . . 11.1 10.7 10.3
Actual return on plan assets. . . . . . . . . . . . (21.9) (35.4) 2.0
Net deferral. . . . . . . . . . . . . . . . . . . . 6.8 20.3 (15.5)
Post-retirement benefit expense (income). . . . . . $ .9 $ (.5) $ 2.5
</TABLE>

The year-to-year changes in the net deferral component of post-retirement
benefit expense (income) are principally attributable to differences between
actual and expected returns on plan assets.
<TABLE>
The accumulated post-retirement benefit obligation and funded status at
December 31 were as follows:
1996 1995
<S> <C> <C>

Accumulated post-retirement benefit
obligation attributable to:
Retirees. . . . . . . . . . . . . . . . . . . . . . $ 84.6 $83.4
Fully eligible active plan participants . . . . . . 24.5 30.1
Other active plan participants. . . . . . . . . . . 46.8 50.4
Accumulated post-retirement benefit obligation. . . . . 155.9 163.9
Plan assets at fair value, primarily stocks and bonds . 191.6 179.4
Plan assets in excess of accumulated post-retirement
benefit obligation. . . . . . . . . . . . . . . . . . 35.7 15.5
Unrecognized net gain . . . . . . . . . . . . . . . . . (44.2) (23.1)
Accrued post-retirement benefit liability . . . . . . . $ (8.5) $(7.6)
</TABLE>

The assumed health care cost trend rates used for measurement purposes were
9.0 percent for 1997, trending down to 5.0 percent by 2003. The weighted-
average discount rate used was 7.5 percent at December 31, 1996, and 7.0
percent at December 31, 1995. The weighted-average expected long-term rate
of return on plan assets was 9 percent at December 31, 1996 and 1995.

Earnings on plan assets that have been segregated for tax purposes and
funded through a Voluntary Employee Benefit Association (VEBA) trust are
subject to a tax rate of 39.6 percent. In 1993, the Company fully funded
its initial accumulated benefit obligation. Future funding is at the
discretion of the Company.

The 1996 discount rate change reduced the accumulated benefit obligation by
approximately $9.6.

At December 31, 1996, a 1 percent increase in the assumed health care cost
trend rate would increase the combined service and interest cost by
approximately 15 percent and the accumulated post-retirement benefit
obligation by approximately 11 percent.

Income Taxes
<TABLE>
U.S. and foreign operations contributed to income before income taxes as
follows:
1996 1995 1994
<S> <C> <C> <C>
United States. . . . . . . . . . . . . $1,090.6 $ 916.7 $ 765.6
Foreign. . . . . . . . . . . . . . . . 515.8 478.0 461.1
Total income before income taxes . . . $1,606.4 $1,394.7 $1,226.7
</TABLE>
<TABLE>
The components of income tax expense were as follows:

1996 1995 1994
<S> <C> <C> <C>
Current:
Federal. . . . . . . . . . . . . . . $296.5 $262.1 $120.6
Foreign. . . . . . . . . . . . . . . 122.0 93.7 119.2
State. . . . . . . . . . . . . . . . 13.7 29.3 19.6
Total current. . . . . . . . . . . . 432.2 385.1 259.4
Deferred:
Federal and state. . . . . . . . . . (24.5) (23.1) 51.3
Foreign. . . . . . . . . . . . . . . (14.1) (20.3) (10.2)
Total deferred . . . . . . . . . . . (38.6) (43.4) 41.1
Total income tax expense . . . . . . . $393.6 $341.7 300.5
</TABLE>

<TABLE>
The difference between the U.S. statutory tax rate and the Company's
effective tax rate was due to the following:

1996 1995 1994
<S> <C> <C> <C>
U.S. statutory tax rate. . . . . . . . . 35.0% 35.0% 35.0%
Increase (decrease) in taxes resulting
from:
Lower rates in other jurisdictions,
net . . . . . . . . . . . . . . . . . (10.3) (10.7) (9.8)
Research tax credit. . . . . . . . . . (.4) (.3) (.6)
All other, net . . . . . . . . . . . . .2 .5 (.1)
Effective tax rate . . . . . . . . . . . 24.5% 24.5% 24.5%
</TABLE>
The lower rates in other jurisdictions are primarily attributable to certain
employment and capital investment actions taken by the Company. As a
result, income from manufacturing activities in these jurisdictions is
subject to lower tax rates for years through 2010.

As of December 31, 1996 and 1995, the Company had total deferred tax assets
of $485.3 and $426.6, respectively, and deferred tax liabilities of $406.7
and $379.5, respectively. Valuation allowances are not significant.
Significant deferred tax assets at December 31, 1996 and 1995 were for
operating costs not currently deductible for tax purposes and totaled $374.2
and $302.7, respectively. Significant deferred tax liabilities at December
31, 1996 and 1995 were for depreciation differences, $219.0 and $207.4,
respectively, and retirement plans, $47.0 and $41.0, respectively. Other
current assets include deferred income taxes of $344.5 and $300.9 at
December 31, 1996 and 1995, respectively.

Deferred taxes are not provided on undistributed earnings of foreign
subsidiaries (considered to be permanent investments), which at December 31,
1996, approximated $2,181.7. Determining the tax liability that would arise
if these earnings were remitted is not practicable.

As of December 31, 1996, the U.S. Internal Revenue Service has completed its
examination of the Company's tax returns for all years through 1988 and
there are no unresolved issues outstanding for those years.

Total income tax payments during 1996, 1995 and 1994 were $306.2, $318.9 and
$173.1, respectively.

Legal and Environmental Matters

The Company has responsibilities for environmental clean-up under various
state, local and federal laws, including the Comprehensive Environmental
Response, Compensation and Liability Act, commonly known as Superfund. At
several Superfund sites (or equivalent sites under state law), the Company
is alleged to be a potentially responsible party (PRP). The Company
estimates its obligations for clean-up costs for Superfund sites based on
information obtained from the federal Environmental Protection Agency, an
equivalent state agency, and/or studies prepared by independent engineers
and on the probable costs to be paid by other PRPs. The Company records a
liability for environmental assessments and/or clean-up when it is probable
a loss has been incurred.

The Company is also involved in various other claims and legal proceedings
of a nature considered normal to its business, including product liability
cases. The estimated costs the Company expects to pay in these cases are
accrued when the liability is considered probable and the amount can
reasonably be estimated.

The recorded liabilities for the above matters at December 31, 1996 and
1995, and the related expenses incurred during the three years ended
December 31, 1996, were not material. Expected insurance recoveries have
not been considered in determining the costs for environmental related
liabilities. Management believes that, except for the matters discussed in
the following paragraphs, it is remote that any material liability in
excess of the amounts accrued will be incurred.

The Company is a defendant in more than 160 antitrust actions commenced in
state and federal courts by independent retail pharmacies, chain retail
pharmacies and consumers. The plaintiffs allege price discrimination
and/or conspiracy between the Company and other defendants to restrain
trade by jointly refusing to sell prescription drugs at discounted prices
to the plaintiffs. One of the federal cases is a class action on behalf of
approximately two-thirds of all retail pharmacies in the United States
alleging a price-fixing conspiracy. The Company has agreed to settle the
federal class action for a total of $22.1 payable over three years. The
settlement provides, among other things, that the Company shall not refuse
to grant discounts on brand-name prescription drugs to a retailer based
solely on its status as a retailer and that, to the extent a retailer can
demonstrate its ability to affect market share of a Company brand name
prescription drug in the same manner as a managed care organization with
which the retailer competes, it will be entitled to negotiate similar
incentives subject to the rights, obligations, exemptions and defenses of
the Robinson-Patman Act and other laws and regulations. The District Court
approved the settlement of the federal class action on June 21, 1996. In
early July, the Seventh Circuit Court of Appeals agreed to review before
trial the District Court's denial of defendant's summary judgment motion
seeking dismissal of all claims by indirect purchasers of pharmaceutical
products in all remaining cases before the District Court. In addition, the
Seventh Circuit Court of Appeals will hear an appeal by the plaintiffs from
the grant of summary judgment to the wholesaler defendants and an appeal by
certain plaintiffs from the approval of the settlement by the District
Court. Four of the state antitrust cases have been certified as class
actions. Two are class actions on behalf of certain retail pharmacies in
California and Wisconsin, and the other two are class actions in California
and the District of Columbia, on behalf of certain consumers of
prescription medicine. Plaintiffs seek treble damages in an unspecified
amount and an injunction against the allegedly unlawful conduct. The
Company believes that all the antitrust actions are without merit and is
defending itself vigorously against all such claims.

On March 13, 1996, the Company was notified that the United States Federal
Trade Commission (FTC) is investigating whether the Company, along with
other pharmaceutical companies, conspired to fix prescription drug prices.
The Company has provided a substantial amount of documentation to the FTC.
The Company vigorously denies that it has engaged in any price-fixing
conspiracy.

The Company is a defendant in a state court action in Texas brought by
Foxmeyer Health Corporation, the parent of a pharmaceutical wholesaler that
filed for bankruptcy in August 1996, against another pharmaceutical
wholesaler and 11 pharmaceutical companies alleging that the defendants
conspired to drive the plaintiff out of business. Plaintiff is seeking
damages in the amount of $400. The Company believes that this action is
without merit and is defending itself vigorously against all claims.

Consistent with trends in the pharmaceutical industry, the Company is self-
insured for certain events

<TABLE>
Quarterly results of operations (Unaudited)

Three Months Ended March 31, June 30, September 30, December 31,

1996 1995 1996 1995 1996 1995 1996 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales. . . . . . $1,382.7 $1,224.2 $1,476.6 $1,332.5 $1,382.2 $1,256.8 $1,414.3 $1,290.9

Cost of sales. . 262.7 235.8 287.0 272.5 257.7 237.8 270.4 258.7

Gross profit . . $1,120.0 $ 988.4 $1,189.6 $1,060.0 $1,124.5 $1,019.0 $1,143.9 $1,032.2

Selling, general
and
administrative . 503.3 455.8 578.6 511.9 562.7 509.7 564.5 513.0
Research and
development . . 162.9 147.2 177.9 162.1 182.0 165.8 200.0 181.8
Other, net . . . 21.2 8.0 13.1 20.4 (6.6) 8.9 12.0 20.3

Income before
income taxes. . 432.6 377.4 420.0 365.6 386.4 334.6 367.4 317.1
Income taxes . . 106.0 92.5 102.9 89.5 94.7 82.0 90.0 77.7
Income from
continuing
operations. . . 326.6 284.9 317.1 276.1 291.7 252.6 277.4 239.4
Discontinued
operations: . . - (6.3) - (160.1) - - - -
Net income . . . $ 326.6 $ 278.6 $ 317.1 $ 116.0 $ 291.7 $ 252.6 $ 277.4 $ 239.4

Earnings per
common share
from continuing
operations. . . $ .89 $ .77 $ .86 $ .74 $ .79 $ .68 $ .76 $ .66
Discontinued
operations . . - (.02) - (.43) - - - -
Earnings per
common share . $ .89 $ .75 $ .86 $ .31 $ .79 $ .68 $ .76 $ .66
Common shares
outstanding at
period end (in
millions) 368.4 372.1 369.7 372.3 369.4 367.6 365.4 364.2

Discontinued operations includes a loss on disposal of $156.2, net of a tax benefit of $75.3,
($.42 per share), during the second quarter of 1995.
</Table

Business Segment Data
Schering-Plough Corporation is a holding company whose subsidiaries are
engaged in the discovery, development, manufacturing and marketing of
pharmaceutical and health care products worldwide. Pharmaceutical products
include prescription drugs and animal health products. Health care products
include over-the-counter, foot care and sun care products sold primarily in
the United States

</TABLE>
<TABLE>
Sales and Operating Profit by Industry Segment
Sales Profit
1996 1995 1994 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
Pharmaceutical products. . . $5,049.2 $4,471.7 $3,880.2 $1,591.7 $1,380.6 $1,204.4
Health care products . . . . 606.6 632.7 656.4 138.6 153.6 158.9
Total sales and operating
profit. . . . . . . . . . . 5,655.8 5,104.4 4,536.6 1,730.3 1,534.2 1,363.3
General corporate
revenue and expense . . . . (78.5) (81.9) (80.4)
Interest expense . . . . . . (45.4) (57.6) (56.2)
Consolidated sales
and pre-tax profit. . . . . $5,655.8 $5,104.4 $4,536.6 $1,606.4 $1,394.7 $1,226.7
</TABLE>
<TABLE>
Identifiable Assets, Capital Expenditures, Depreciation and Amortization by Industry Segment
Capital Depreciation and
Assets Expenditures Amortization
1996 1995 1994 1996 1995 1994 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Pharmaceutical
products. . . $4,099.4 $3,608.7 $3,544.5 $ 308.1 $ 275.5 $ 243.8 $ 152.0 $ 134.9 $ 121.2
Health care
products. . . 374.5 373.2 395.2 14.0 17.4 21.5 15.9 16.9 18.2
Industry
segment
totals. . . . 4,473.9 3,981.9 3,939.7 322.1 292.9 265.3 167.9 151.8 139.4
Corporate. . . 924.2 682.7 386.0 2.4 .9 2.9 5.3 5.3 5.2
Consolidated
assets,
capital
expenditures,
depreciation
and
amortization. $5,398.1 $4,664.6 $4,325.7 $ 324.5 $ 293.8 $ 268.2 $ 173.2 $ 157.1 $ 144.6
</TABLE>

<TABLE>
Sales, Operating Profit and Identifiable Assets by Geographic Area

Sales Profit Assets
1996 1995 1994 1996 1995 1994 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
United States.$3,283.4 $2,804.9 $2,470.2 $1,202.9 $1,037.1 $ 887.2 $2,472.2$2,234.8 $2,344.2
Europe, Middle
East & Africa 1,375.9 1,277.3 1,045.7 287.9 264.1 235.5 1,159.4 1,058.6 887.5
Latin America. 385.0 373.8 387.0 107.5 104.5 101.8 303.8 278.2 278.4
Canada, Pacific
Area & Asia . 611.5 648.4 633.7 132.0 128.5 138.8 538.5 410.3 429.6
Total sales,
operating profit
& identifiable
assets. . . .$5,655.8 $5,104.4 $4,536.6 $1,730.3 $1,534.2 $1,363.3 $4,473.9 $3,981.9$3,939.7
</TABLE>

Sales, operating profit and identifiable assets as presented are
associated with each geographic area, based on the location of the
ultimate customers. The Company maintains manufacturing facilities in
certain countries for the production of several significant finished and
semi-finished products for distribution to domestic and foreign
subsidiaries. The sales, operating profit and identifiable assets of
these facilities have been included in the geographic area in which the
ultimate customers are located.

Report by Management

The management of Schering-Plough is responsible for the preparation and
the integrity of all information and representations contained in the
financial statements and related data included in this Annual Report. This
information was prepared in accordance with generally accepted accounting
principles and is believed by management to present fairly the Company's
results of operations, financial position and cash flows. It is important
to recognize that the preparation of financial statements requires the use
of estimates and assumptions that affect the reported amounts of assets,
liabilities, sales and expenses.

Schering-Plough maintains, and management relies on, a system of internal
accounting controls that provides reasonable assurance of the integrity and
reliability of the financial statements. The system provides, at
appropriate cost, that assets are safeguarded, transactions are executed in
accordance with management's authorization, and fraudulent financial
reporting practices are prevented or detected. In establishing and
maintaining this system, judgments are required to assess and balance the
relative cost versus the expected benefit of a given control.

The Company's internal accounting control system is clearly documented,
provides for careful selection and training of supervisory and management
personnel, and also requires appropriate segregation of responsibilities
and delegation of authority. Formal policies and procedures are maintained
and systematically disseminated throughout the Company. In addition, the
Company maintains a corporate code of conduct for purposes of determining
possible conflicts of interest, compliance with laws and confidentiality of
proprietary information.

The Company's independent auditors, Deloitte & Touche LLP, audit Schering-
Plough's consolidated financial statements. They evaluate the Company's
internal accounting controls and perform tests of procedures and accounting
records to enable them to render their report. In addition, Schering-
Plough has an internal audit function that assists management in
discharging its responsibilities. The internal audit staff, under the
direction of the staff vice president - corporate audits, regularly
performs audits using programs designed to test compliance with Company
policies and procedures, and to verify the adequacy of internal accounting
controls and other financial policies. The internal auditors also
continually evaluate the effectiveness and accuracy of financial reporting
by the Company's various operations.

Management has considered the internal auditors' and independent auditors'
recommendations concerning the Company's system of internal accounting
controls and has taken appropriate action. Such recommendations are
communicated in accordance with Company policy to the individuals
responsible for implementation.

The Finance and Audit Committee of the Board of Directors consists solely
of non-employee directors. The Committee meets periodically with
management, the internal auditors and the independent auditors to review
audit results, financial reporting, internal accounting controls and other
financial matters. Both the independent auditors and internal auditors
have free access to the Committee, with and without the presence of
management, to discuss the adequacy of Schering-Plough's internal
accounting controls, the quality of financial reporting and other matters
relating to their audits.

It is our opinion that the Company's system of internal accounting controls
in effect as of December 31, 1996, provides reasonable assurance that the
financial statements and related data in this Annual Report are fairly
presented in accordance with generally accepted accounting principles.

/s/Richard Jay Kogan /s/Jack L. Wyszomierski /s/Thomas H. Kelly
President and Executive Vice President Vice President
Chief Executive Officer and Chief Financial and Controller
Officer

INDEPENDENT AUDITORS' REPORT
DELOITTE & TOUCHE LLP

Schering-Plough Corporation, its Directors and Shareholders:

We have audited the accompanying consolidated balance sheets of Schering-
Plough Corporation and subsidiaries as of December 31, 1996 and 1995 and
the related statements of consolidated income, retained earnings and cash
flows for each of the three years in the period ended December 31, 1996.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. 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 examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Schering-Plough
Corporation and subsidiaries at December 31, 1996 and 1995 and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1996, in conformity with generally accepted
accounting principles.

/s/Deloitte & Touche LLP
Parsippany, New Jersey
February 14, 1997

COMMON SHARE DIVIDENDS AND MARKET DATA

During 1996, the Board of Directors increased the quarterly dividend rate
from $.29 per share to $.33 per share, a 14 percent increase. Dividends
paid on common shares in 1996 and 1995 totaled $474.0 million and $416.4
million, respectively. The following table reflects the quarterly
dividends per share paid over the last two years.

<TABLE>
Quarter 1996 1995
<S> <C> <C>
1st $ .29 $ .255
2nd .33 .29
3rd .33 .29
4th .33 .29
$ 1.28 $ 1.125
</TABLE>

The approximate number of holders of record of common shares as of December 31,
1996, was 35,000.

The Company's common shares are listed and principally traded on the New York
Stock Exchange. The following table reflects the reported high and low sale
prices for the common shares in each of the calendar quarters during the past
two years.

<TABLE>

1996 1995
Quarter High Low High Low
<S> <C> <C> <C> <C>

1st $ 61 3/8 $ 51 1/2 $ 39 7/16 $ 35 13/16
2nd 62 3/4 53 1/2 45 3/8 36 3/4
3rd 63 1/8 55 52 1/2 43
4th 72 1/4 62 60 5/8 51 3/4
__________________________________________________________
</TABLE>

<TABLE>
Schering-Plough Corporation and Subsidiaries
Six-Year Selected Financial & Statistical Data(Dollars in millions, except per share figures)
1996 1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C> <C>
Operating Results
Sales . . . . . . . . . . . . . $5,655.8 $5,104.4 $4,536.6 $4,229.1 $3,944.6 $3,475.4
Income before income taxes. . . 1,606.4 1,394.7 1,226.7 1,073.1 962.8 847.6
Income from continuing operations
before extraordinary item and
cumulative effect of
accounting changes . . . . . . 1,212.8 1,053.0 926.2 815.6 722.1 635.7
Discontinued operations . . . . - (166.4) (4.2) 9.4 (2.1) 9.9
Extraordinary item. . . . . . . - - - - (26.7) -
Cumulative effect of accounting
changes. . . . . . . . . . . . - - - (94.2) 27.1 -
Net income. . . . . . . . . . . 1,212.8 886.6 922.0 730.8 720.4 645.6
Earnings per common share from
continuing operations before
extraordinary item and cumulative
effect of accounting changes . 3.30 2.85 2.42 2.09 1.80 1.48
Discontinued operations . . . . - (.45) (.01) .02 - .02
Extraordinary item. . . . . . . - - - - (.07) -
Cumulative effect of accounting
changes. . . . . . . . . . . . - - - (.24) .07 -
Earnings per common share . . . 3.30 2.40 2.41 1.87 1.80 1.50
___________________________________________________________________________________________
Investments
Research and development . . . $ 722.8 $ 656.9 $ 610.1 $ 567.3 $ 510.5 $ 416.5
Capital expenditures . . . . . 324.5 293.8 268.2 339.9 372.8 319.2

Financial Condition
Property, net . . . . . . . . . $2,246.3 $2,098.9 $2,082.3 $1,967.7 $1,748.5 $1,490.4
Total assets. . . . . . . . . . 5,398.1 4,664.6 4,325.7 4,316.9 4,156.6 4,013.2
Long-term debt. . . . . . . . . 46.4 87.1 185.8 182.3 184.1 753.6
Shareholders' equity. . . . . . 2,059.9 1,622.9 1,574.4 1,581.9 1,596.9 1,346.1
Net book value per common share 5.64 4.46 4.23 4.09 4.00 3.34

Financial Statistics
Income from continuing operations
before extraordinary item and
cumulative effect of accounting
changes as a percent of sales. 21.4% 20.6% 20.4% 19.3% 18.3% 18.3%
Net income as a percent of sales 21.4% 17.4% 20.3% 17.3% 18.3% 18.6%
Return on average shareholders'
equity . . . . . . . . . . . . 65.9% 55.5% 58.4% 46.0% 49.0% 37.7%
Effective tax rate . . . . . . 24.5% 24.5% 24.5% 24.0% 25.0% 25.0%
Other Data
Cash dividends per common share $ 1.28 $ 1.125 $ .99 $ .87 $ .75 $ .635
Cash dividends on common shares 474.0 416.4 379.4 339.6 300.2 273.6
Depreciation and amortization . 173.2 157.1 144.6 130.9 124.5 118.0
Number of employees . . . . . . 20,600 20,100 20,000 20,300 19,800 19,000
Average common shares outstanding
(in millions) . . . . . . . . . 367.7 369.7 382.5 390.2 400.3 429.0
Common shares outstanding
at year-end (in millions). . . . 365.4 364.2 372.0 387.1 399.0 403.6
</Table

APPENDIX TO EXHIBIT #13
Page 1 OF 2

The page preceding the management's discussion and analysis of operations
and financial condition of the 1996 annual report to shareholders presents
three bar charts. The following three sections provide the information
portrayed in the charts:
_______________________________________________________________

Title: Sales

The vertical axis is in millions of dollars starting at zero, increasing in
$1,000 million increments, ending at $6,000 million. The horizontal axis
is in years starting with 1992, ending with 1996.

The data points are:

1992 $3,944.6
1993 $4,229.1
1994 $4,536.6
1995 $5,104.4
1996 $5,655.8
- ---------------------------------------------------------------
Title: Research and Development

The vertical axis is in millions of dollars starting at zero, increasing in
$125 million increments, ending at $750 million. The horizontal axis is in
years starting with 1992, ending with 1996.

The data points are:

1992 $510.5
1993 $567.3
1994 $610.1
1995 $656.9
1996 $722.8
_______________________________________________________________

APPENDIX TO EXHIBIT #13
Page 2 of 2

_____________________________________________________
Title: Capital Expenditures

The vertical axis is in millions of dollars starting at zero, increasing in
$75 million increments, ending at $450 million. The horizontal axis is in
years starting with 1992, ending with 1996.

The data points are:

1992 $372.8
1993 $339.9
1994 $268.2
1995 $293.8
1996 $324.5

2277430 -36-

</TABLE>

Schering-Plough Corporation and Subsidiaries

Subsidiaries of Registrant

As of December 31, 1996

Exhibit 21

Subsidiaries of Registrant
or Organization
Name/State or Country of Incorporation
AESCA Chemisch Pharmazeutische Fabrik GmbH Austria

American Image Productions, Inc. Tennessee

American Scientific Laboratories, Inc. Delaware

Beneficiadora e Industrializadora S.A. de C.V. Mexico

Canji, Inc. Delaware

Chemibiotic (Ireland) Limited Ireland

Dashtag United Kingdom

Desarrollos Farmaceuticos Y Cosmeticos S.A. Spain

DNAX Research Institute of Molecular & Cellular Biology, Inc. California

Douglas Industries, Inc. Delaware

Dr. Scholl's Foot Comfort Shops, Inc. Delaware

Essex Chemie A.G. Switzerland

Essex Farmaceutica S. A. Colombia

Essex Italia S.p.A. Italy

Essex Pharma GmbH Germany

Essexfarm S. A. (Ecuador) Ecuador

Farmaceutica Essex, S. A. Spain

Garden Insurance Co., Ltd. Bermuda

Integrated Disease Management, Inc. Delaware

Integrated Therapeutics Group, Inc. Delaware

Key Pharma, A. G. Switzerland

Key Pharma, S.A. Spain

Key Pharmaceuticals Export Co., Inc. U.S. Virgin Islands

Key Pharmaceuticals, Inc. Florida

Kirby Medical Products Cia Ltda Chile

Kirby-Warrick Pharmaceuticals Limited United Kingdom

Laboratorio Essex, C.A. Venezuela

Laboratorio S.P. White's, C.A. Venezuela

Laboratorios Essex S.A. Argentina

Loftus Bryan Chemicals Limited Ireland

Med-Nim (Proprietary) Limited South Africa

P.T. Schering-Plough Indonesia Indonesia

Pharmaceutical Supply Corporation Delaware

Pharmaco(Canada) Ltd. Canada

Pharmaco, Inc. Delaware

Plough (Australia) Pty. Limited Australia

Plough (UK) Limited United Kingdom

Plough Benelux S.A. Belgium

Plough Broadcasting Co., Inc. Delaware

Plough Consumer Products (Asia) Ltd. Hong Kong

Plough Consumer Products (Philippines) Inc. Philippines

Plough de Venezuela, C.A. Venezuela

Plough Export, Inc. Tennessee

Plough Farma, Lda. Portugal

Plough France S.A. France

Plough Hellas Limited Greece

Plough Laboratories, Inc. Tennessee

Plough S.p.A. Italy

Plough Services AG Switzerland

PPL, Inc. Tennessee

Pro Medica AB Sweden

Professional Pharmaceutical Corporation Delaware

Professional Vaccine Corporation Delaware

S-P RIL Limited United Kingdom

Scheramex S.A. de C.V. Mexico

Scherico, Ltd. Switzerland

Schering Canada Inc. Canada

Schering Corporation New Jersey

Schering Institutional Sales Corporation Delaware

Schering Laboratories Advertising Inc. Delaware

Schering Plough South Korea

Schering Sales Corporation Delaware

Schering Transamerica Corporation New Jersey

Schering-Plough France

Schering-Plough (Grenada) Limited Grenada

Schering-Plough (Proprietary) Limited South Africa

Schering-Plough A/S Denmark

Schering-Plough A/S Norway

Schering-Plough AB Sweden

Schering-Plough Animal-Health Corporation Delaware

Schering-Plough B.V. Netherlands

Schering-Plough C.A. Venezuela

Schering-Plough Central East A.G. Switzerland

Schering-Plough China, Ltd. Bermuda

Schering-Plough Compania Limitada Chile

Schering-Plough Coordination Center N.V./S.A. Belgium

Schering-Plough Corp., U.S.A. Delaware

Schering-Plough Corporation Philippines

Schering-Plough del Caribe, Inc. New Jersey

Schering-Plough del Ecuador, S.A. Ecuador

Schering-Plough Farma Lda. Portugal

Schering-Plough Farmaceutica Ltda. Brazil

Schering-Plough HealthCare Holding Co. Delaware

Schering-Plough HealthCare Products Advertising Corp. Tennessee

Schering-Plough HealthCare Products Canada, Inc. Canada

Schering-Plough HealthCare Products Sales Corporation California

Schering-Plough HealthCare Products, Inc. Delaware

Schering-Plough Holdings Ltd. United Kingdom

Schering-Plough INT Limited United Kingdom

Schering-Plough International, Inc. Delaware

Schering-Plough Investment Company, Inc. Delaware

Schering-Plough Investments Limited Delaware

Schering-Plough Kabushiki Kaisha Japan

Schering-Plough Labo N.V. Belgium

Schering-Plough Limited Iran

Schering-Plough Limited Taiwan

Schering-Plough Limited Thailand

Schering-Plough Limited United Kingdom

Schering-Plough Ltd. Switzerland

Schering-Plough N.V./S.A. Belgium

Schering-Plough Overseas Limited Delaware

Schering-Plough OY Finland

Schering-Plough Pharmaceutical Industrial and Commercial
S.A. Greece

Schering-Plough Products, Inc. Delaware

Schering-Plough Pty. Limited Australia

Schering-Plough Real Estate Company, Inc. Delaware

Schering-Plough Research Institute Delaware

Schering-Plough S.A. Argentina

Schering-Plough S.A. Colombia

Schering-Plough S.A. Panama

Schering-Plough S.A. Spain

Schering-Plough S.A. Uruguay

Schering-Plough S.A. de C.V. Mexico

Schering-Plough S.p.A. Italy

Schering-Plough Sante Animale France

Schering-Plough Sdn. Bhd. Malaysia

Schering-Plough Tibbi Urunler Ticaret, A.S. Turkey

Sentipharm A.G. Switzerland

Sentipharm Hong Kong Ltd. Hong Kong

Shanghai Schering-Plough Pharmaceutical Company, Ltd. China

SOL Limited Bermuda

SP Biotech, S.A. Spain

SP HealthCare Products Corp. Delaware

SP Neurotech, S.A. Spain

Suntan Sensations, Inc. California

Technobiotic Limited Australia

The Coppertone Corporation Florida

W-J Liquidating Corp. Delaware

W-J Manufacturing Corporation Delaware

Warrick Pharmaceuticals Corporation Delaware

Warrick Pharmaceuticals Limited United Kingdom

Werthenstein Chemie A.G. Switzerland

White Laboratories Ltd. United Kingdom

White Laboratories of Canada Limited Canada

White Laboratories, Inc. New Jersey

EXHIBIT 23

INDEPENDENT AUDITORS' CONSENT

We consent to the incorporation by reference in Registration
Statements No. 2-83963, No. 33-19013, and No. 33-50606 on
Form S-8, Registration Statement No. 333-853 on Form S-3,
Post Effective Amendment No. 1 to Registration Statement
No. 2-84723 on Form S-8, Post-Effective Amendment No. 1 to
Registration Statement No. 2-80012 on Form S-3, Post-
Effective Amendment No. 1 to Registration Statement
No. 2-77740 on Form S-3 and Registration Statement
No. 333-12909 on Form S-3 of our reports dated
February 14, 1997, appearing in and incorporated by
reference in this Annual Report on Form 10-K of Schering-
Plough Corporation for the year ended December 31, 1996.

/s/ DELOITTE & TOUCHE, LLP

Parsippany, New Jersey
March 3, 1997
consent.10k

POWER OF ATTORNEY Exhibit 24

KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned
officers and/or directors of Schering-Plough Corporation, a New
Jersey corporation (herein called the "Corporation"), does hereby
constitute and appoint William J. Silbey, Thomas H. Kelly and
Benjamin Croce, or any of them, his or her true and lawful
attorney or attorneys and agent or agents, to do any and all acts
and things and to execute any and all instruments which said
attorney or attorneys and agent or agents may deem necessary or
advisable to enable the Corporation to comply with the Securities
Exchange Act of 1934, as amended, and any rules, regulations,
requirements or requests of the Securities and Exchange
Commission thereunder or in respect thereof in connection with
the filing under said Act of the Annual Report of the Corporation
on Form 10-K for the fiscal year ended December 31, 1996 (herein
called the "Form 10-K"); including specifically, but without
limiting the generality of the foregoing, the power and authority
to sign the respective names of the undersigned officers and/or
directors as indicated below to the Form 10-K and/or to any
amendment of the Form 10-K and each of the undersigned does
hereby ratify and confirm all that said attorney or attorneys and
agent or agents, or any of them, shall do or cause to be done by
virtue hereof.

IN WITNESS WHEREOF, each of the undersigned has subscribed these
presents this 25th day of February, 1997.

/s/Robert P. Luciano /s/Richard Jay Kogan
Robert P. Luciano, Chairman; Richard Jay Kogan, President and
Director Chief Executive Officer; Director

/s/Jack L. Wyszomierski /s/Thomas H. Kelly
Jack L. Wyszomierski, Thomas H. Kelly, Vice President
Executive Vice President and and Controller; Principal
Chief Financial Officer Accounting Officer

/s/Hans W. Becherer /s/Richard de J. Osborne
Hans W. Becherer, Director Richard de J. Osborne, Director

/s/Hugh A. D'Andrade /s/Patricia F. Russo
Hugh A. D'Andrade, Director Patricia F. Russo, Director

/s/David C. Garfield /s/William A. Schreyer
David C. Garfield, Director William A. Schreyer, Director

/s/Regina E. Herzlinger /s/Robert F. W. van Oordt
Regina E. Herzlinger, Robert F. W. van Oordt,
Director Director

/s/H. Barclay Morley /s/R. J. Ventres
H. Barclay Morley, Director R. J. Ventres, Director

/s/Carl E. Mundy, Jr. /s/James Wood
Carl E. Mundy, Jr., Director James Wood, Director

WD022003.FIL

<ARTICLE> 5
<LEGEND>
This schedule contains summary financial data extracted from Schering-Plough
Corporation Consolidated Financial Statements, related 10-K Schedules and
Exhibits for the year ended December 31, 1996, and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 535100
<SECURITIES> 0
<RECEIVABLES> 615000
<ALLOWANCES> 73000
<INVENTORY> 594100
<CURRENT-ASSETS> 2364600
<PP&E> 3362500
<DEPRECIATION> 1116200
<TOTAL-ASSETS> 5398100
<CURRENT-LIABILITIES> 2599100
<BONDS> 46400
0
0
<COMMON> 507400
<OTHER-SE> 1552500
<TOTAL-LIABILITY-AND-EQUITY> 5398100
<SALES> 5655800
<TOTAL-REVENUES> 5655800
<CGS> 1077800
<TOTAL-COSTS> 1077800
<OTHER-EXPENSES> 722800
<LOSS-PROVISION> 2400
<INTEREST-EXPENSE> 45400
<INCOME-PRETAX> 1606400
<INCOME-TAX> 393600
<INCOME-CONTINUING> 1212800
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1212800
<EPS-PRIMARY> 3.30
<EPS-DILUTED> 3.26

</TABLE>

Exhibit 99.1

CAUTIONARY STATEMENTS REGARDING "SAFE HARBOR" PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

The Company is hereby filing a cautionary statement
identifying important factors that could cause the Company's actual
results to differ materially from those projected in forward
looking statements of the Company made by, or on behalf of, the
Company.

Competitive factors including technological advances
attained by competitors; patents granted to competitors; new
products of competitors coming to the market; generic
competition as the Company's products mature.

Increased pricing pressure both in the United States and
abroad from managed care buyers, institutions and government
agencies.

Government laws and regulations affecting domestic and
international operations including, among other laws and
regulations, those resulting from healthcare reform
initiatives at the state and federal level, as well as those
relating to trade, monetary and fiscal policies, taxes,
price controls, and possible nationalization.

Patent positions can be highly uncertain and patent disputes
are not unusual. An adverse result in a patent dispute can
preclude commercialization of products or negatively impact
sales of existing products.

Uncertainties of the FDA approval process and the regulatory
approval processes of foreign countries, including, without
limitation, delays in approval of new products.

Difficulties in product development. Pharmaceutical product
development is highly uncertain. Products that appear
promising in the early phases of development may fail to
reach market for numerous reasons. They may be found to be
ineffective or to have harmful side effects in clinical or
pre-clinical testing, they may fail to receive the necessary
regulatory approvals, they may turn out not to be
economically feasible because of manufacturing costs or
other factors or they may be precluded from
commercialization by the proprietary rights of others.

Recalls of pharmaceutical products as a consequence of
previously unknown side-effects or for other reasons may
occur.

Significant litigation adverse to the Company.

Fluctuations in interest rates and foreign currency exchange
rates.

22533-1

Exhibit 99.2

Company Statements Relating
to Forward Looking Information
(Filed Pursuant to Rule 175)

1. Extract from news release issued by the Company on January 23, 1997:

Mr. Richard Jay Kogan, President and Chief Executive Officer,
commenting on the Company's earnings per share for 1997, stated
that the Company expects good earnings growth in 1997, with the
percentage increase for earnings per share coming in around the
low to mid teens.

26039-1