Updated from 12:58 p.m. EDT

OKLAHOMA CITY -- The strategy behind Schering-Plough's ( SGP) pricey acquisition of Organon is starting to add up.

When news of the $14.4 billion deal broke a year ago, Schering-Plough seemed to be doing just fine on its own. Thanks to brisk sales of Vytorin and Zetia, two blockbuster cholesterol-lowering drugs it co-marketed with Merck ( MRK), Schering-Plough boasted one of the fastest growth rates in the industry.

By purchasing Organon, a European drug maker viewed as a laggard by some, Schering-Plough appeared to be taking unnecessary risks.

Besides, Schering-Plough still had some unfinished business: Years earlier, the company had set out to prove that Vytorin -- a combination of Zetia and Zocor -- worked better than Zocor alone. The company had already established that Vytorin dramatically lowered cholesterol, but it hoped to show that the drug reduced the plaque that leads to actual heart attacks as well.

ENHANCE, the first clinical trial designed to offer this proof, had formally ended in April 2006. Schering-Plough originally planned to release the study's results at a conference that fall but missed that deadline -- and two others that followed. Ultimately, the devastating results -- indicating that Vytorin reduces plaque no more than Zocor alone -- would remain unknown for almost two full years.

In the meantime, Schering-Plough kept reassuring investors. "We are in the process of working on the data and making good progress, but we want to do it the right way," CEO Fred Hassan explained on a January 2007 conference call. "We're in no rush to get a marketing thing out of this."

Instead, Schering-Plough rushed forward six weeks later with the surprising news of the Organon takeover instead. In the process, the company effectively changed the subject.

Meanwhile, wooed by an estimated $200 million worth of advertisements, consumers went on to buy a record $5 billion worth of Vytorin and stand-alone Zetia that year. Schering-Plough, which splits the proceeds with larger Merck, relied on those two drugs for roughly half its annual profit.

Buying Organon, which offered several established drugs and five more in late-stage trials, promised Schering-Plough a broader product base. But Schering-Plough paid a high price -- surpassing half its current market value -- for that diversity. It also settled for a target that had just been shunned by one of its larger peers.

Skeptics questioned the deal's wisdom from the start. Since the formal release last month of the ENHANCE results -- which indicated that Vytorin reduces plaque no more than Zocor alone -- some have started to dwell on the timing of that deal as well.

Schering-Plough failed to answer questions about whether ENHANCE had influenced its decision to buy Organon. The company stuck with information provided in its formal press releases instead.

Early this year, however, Schering-Plough issued a handy outline that traces the evolution of ENHANCE. That timeline offers an inside view of the challenges that Schering-Plough faced as it purchased Organon and set out to reshape the company.

Big-Ticket Purchase

Originally, Organon planned to sell itself through an initial public offering. The company announced in the middle of 2006 that it would spin itself off from longtime parent Akzo Nobel early the following year. However, with that IPO just weeks away, Schering-Plough came along with a far better offer.

Schering-Plough's CEO apparently worked fast. Indeed, Akzo Nobel told The Wall Street Journal at the time, Hassan managed to ink the deal just 10 days after arriving on the scene.

"I really, really looked hard," Hassan promised the Journal back then. "I also said, 'I'm not going to do it just because I have to do it. I'll do it when the moment is right."

"And the moment is right here."

However, skeptics sensed that something was very wrong instead. Some of them began posting concerns about ENHANCE on Cafepharma.com, a Web site frequented by pharmaceutical sales representatives, right after news of the Organon deal first broke.

Lawmakers have since collected those anonymous posts as evidence for an ongoing investigation of the ENHANCE trial. The first of those messages appeared just one day after Schering-Plough announced plans to buy Organon:

"Have a buddy at Schering-Plough Research Institute . He says that the study is a bust," the message states. "Adding Zetia to maxed-out statin is useless."

By the time that message surfaced, Schering-Plough had spent months reviewing ENHANCE data. Notably, Schering-Plough's timeline shows, the company kept questioning the data even though outside experts found its quality "similar to that in other imaging trials."

Those independent experts rendered their judgment in January 2007. Schering-Plough insiders went on to sell millions of dollars worth of company stock in the months that followed.

Carrie Cox, president of the global pharmaceutical business, pulled off especially well-timed sales. In two options-related transactions, executed just weeks before the stock hit a multi-year peak, Cox sold roughly 900,000 shares of Schering-Plough stock -- or roughly 90% of her stake -- and pocketed $11.5 million in the process.

Schering-Plough has since stated that Cox followed proper procedures and sold the stock with the company's blessings. The company has also stressed that senior executives, including Cox, learned about the "unblinded" results of ENHANCE long after those stock sales.

But Sen. Charles Grassley, who is leading an investigation of Schering-Plough, has since suggested that company insiders may have recognized the bad news in advance.

"It has come to my attention that Schering-Plough and Merck would not need to unblind the data to understand that Vytorin performed no better than generic Zocor ," Grassley wrote in a letter to Hassan earlier this year. "If the drugs performed the same, meaning there is no statistically significant difference in the treatments, then this information is apparent before the study has been unblinded."

Instead, Grassley suggested, Schering-Plough delayed the study by waiting for data that it didn't need. Urgent messages written last summer by John Kastelein, the lead investigator for ENHANCE, help support that view.

"There is no reason whatsoever to include femorals," Kastelein wrote in a July email exchange uncovered during Grassley's investigation. "You Schering-Plough will be seen as a company that tries to hide something, and I will be perceived as being in bed with you!" By then, those emails show, Kastelein had threatened to end his collaboration with the company. Kastelein ultimately stuck it out, with Schering-Plough later supplying a full email exchange showing its efforts to cooperate well ( Click to view pdf), but other prominent researchers would go on to raise concerns about the study.

Harsh Review

A particular crushing blow was then delivered by Harlan Krumholz, a distinguished cardiology professor at Yale.

Krumholz served on the panel that formally reviewed ENHANCE's results during last month's meeting of the American College of Cardiology. There, before large crowds of his peers, Krumholz dominated the discussion with a harsh attack on Vytorin -- suggesting that it could be no more than "an expensive placebo" -- and left little room for debate.

In Journal Watch Cardiology, where he serves as editor-in-chief, Krumholz outlined his complaints. His criticism extended far beyond Vytorin to include possible shortcomings with the ENHANCE study itself.

"It is clear that the sponsors had a heavy influence on the trial's conduct," Krumholz declared. "What transpired behind closed doors is not yet known, but delay was certainly in the companies' interest. And it is not clear whether publication of the study could have and should have been timelier than it was."

Krumholz has taken a stand against one of the trial's sponsors in the past. He served as a consultant to plaintiffs in Vioxx lawsuits against Merck. Schering-Plough calls that a conflict of interest.

Kastelein, ENHANCE's lead investigator, has seen other drugs fail as well. Just one year before delivering the ENHANCE results, he stood before the ACC as a lead investigator with bad news about Pfizer's ( PFE) torcetrapib.

Pfizer, the maker of Lipitor, had hoped that torcetrapib would become its next blockbuster cholesterol drug. But Pfizer abandoned the drug, which was designed to raise so-called "good" cholesterol, after it was linked to patient deaths.

Damaged Goods?

By then, Pfizer had given up on another opportunity as well.

Just one week before shelving torcetrapib, the company ended a long-term partnership with Organon after studies of asenapine, Organon's new treatment for schizophrenia and bipolar disorder, delivered mixed results.

At the time, one analyst suggested that Pfizer had abandoned Organon because the company didn't think that asenapine was "a good enough product to be competitive in the marketplace." Organon itself admitted that this was "partly the truth."

But Schering-Plough later downplayed Pfizer's move as a "commercial" decision. In fact, when announcing its buyout plans last year, Schering-Plough portrayed asenapine as one of Organon's two most promising drugs.

Schering-Plough also highlighted sugammadex, a new agent that reverses powerful muscle relaxers, as the other likely winner. Experts have heralded sugammadex as a rare breakthrough in the anesthesia world.

Schering-Plough may have welcomed that distraction. After all, the company was supposed to be generating its own headlines with the results of ENHANCE. But the spring ACC meeting passed with the company missing another deadline instead.

This year, Schering-Plough again relied on sugammadex for some well-timed positive news. Last month, as it prepared to deal with the fallout from ENHANCE, Schering-Plough announced that expert advisers had recommended sugammadex for approval on the U.S. market. Analysts now estimate that sugammadex could generate more than $400 million in annual sales.

But Schering-Plough scored that much -- and then some -- from Vytorin and Zetia in its last quarter alone. Therefore, the company has rushed to protect that precious franchise.

Already, Grassley claims, Schering-Plough has invested millions in a so-called "49 Plan" designed to bolster Vytorin sales. For that six-week marketing program, he says, Schering-Plough budgeted $3.5 million so that sales representatives could "wine and dine" physicians who might be swayed to prescribe the popular drug.

Sales of Vytorin and Zetia fell regardless. After five years of soaring popularity -- which pushed their estimated market share from 0.1% to 15% and beyond -- the drugs are now on the decline.

Schering-Plough's stock no longer reflects any value for the cholesterol franchise at all. Down almost 40% so far this year, the stock fetches around the same price that it did when Hassan first arrived in 2003 as the company's turnaround CEO.

Back then, Schering-Plough faced gigantic challenges posed by generic competition to its flagship allergy drug. At the time, Hassan promised to rebuild Schering-Plough and diversify the company "so that we are not reliant on any single large product" again.

But history seems to be repeating itself, anyway. Once again, Schering-Plough is announcing massive layoffs as it grapples with falling sales of its most popular drug. To its credit, however, the company boasts a stronger pipeline this time around.

Clearly, Schering-Plough needed Organon after all.

Know What You Own: SGP operates in the drug manufacturers industry, and some of the other stocks in its field include Abbott Laboratories ( ABT), Bristol-Myers Squibb ( BMY), Sanofi-Aventis ( SNY), Eli Lilly ( LLY) and Pfizer ( PFE). These stocks were recently trading at $53.67, -0.61%, $21.43, -1.88%, $38.18, -0.81%, $51.70, -1.15% and $20.80, -0.98% respectively. For more on the value of knowing what you own, visit TheStreet.com's Investing A-to-Z section.