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Corporate Presentation (1177.HK) - sinobiopharm.com

3 PRC Pharmaceutical Industry Industry Reforms / Challenges SB’s Strengths/Opportunities Price pressure on generic products Stricter control on …






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Text of Corporate Presentation (1177.HK) - sinobiopharm.com

1 Corporate Presentation ( ) March 2017 Presented by Stephen Tse, Executive Director 2 Corporate Overview Business Profile Share Data Engaged in the R&D, manufacturing and marketing of a wide range of modernized Chinese medicines and chemical medicines Main therapeutic areas include hepatitis, cardio-cerebral diseases, oncology, diabetes, analgesia and respiratory ailments Corporate Awards Recent Developments HKEx Code 1177 Board Lot 4,000 shares Issued Shares 7,412,192,209 (as at 31 December 2016) Market Cap HK$ billion (as at 13 Mar 2017) FY End Date 31 December Major Shareholder Mr. Tse Ping Has become a Constituent Stock of of the MSCI Global Standard Indices - MSCI China Index FY16: profit attributable to the Group (before accounted for unrealized fair value gains and losses of equity investments and financial assets) increased to approximately HK$2,006,088 FY15: profit attributable to the Group (before accounted for unrealized fair value gains and losses of equity investments and financial assets) increased to approximately HK$1,772,695,000 Disposal of CTF to Bausch & Lomb on 26 September 2005 to register a cash proceed of US$200 million CAPITAL Magazine Chinese Outstanding Enterprise Achievement Prize ForbesAsia Best under a Billion in 2005 Economic Digest Hong Kong Outstanding Enterprises 2005 Red Herring Magazine Red Herring Small Cap 100 Institutional Investor Magazine 1st position in the Best IR Company of Healthcare and 15th in the Most Honored Company in 2014 Fobes Magazine Asia's Fab 50 Companies in 2016 3 PRC Pharmaceutical Industry Industry Reforms / Challenges SB s Strengths/Opportunities Price pressure on generic products Stricter control on new product launch Market polarization. Small and domestic companies gradually extinct Government to grant more subsidies to rural areas Government clamp down on generic medicines Sino Biopharmaceutical is a Key Beneficiary of the Latest Industry Reform SB better position to resist price pressure: Majority of SB products are for prescribed medicines Exclusive technology and proprietary drugs SB strong R&D to ensure 2-5 new products launches each year. Far ahead of other industry players Provides SB attractive M&A targets One of SB s long term strategy is to tap this huge mass market SB s patented products face less vicious competition brought by generic medicines 4 Market Leadership No. 1 in Hepatitis & Cadio-cerebral Medicines Significant Market Share Hepatitis Medicines 18% Tianqingganmei Injections Mingzheng Capsules Runzhong Dispersible Tablets Tianqingganping Enteric Capsules Ganlixin injections and capsules Tianqingfuxin Injections & Capsules Cardio-cerebral Medicines Target and sustained release injections 32% Kaishi Injections Sales Growth (Blockbuster products) (HK$ 000) 496,6541,069,2711,669,3342,339,4723,120, 7713,533,7911,353,6881,692,5111,611,0981 ,638,9611,566,6381,424,473295,934423,045 562675562,675748,663845,885220,896365,90 8416,565556,026764,540752,41366,249 252,329 545,527 616,985 672,125 644,833 710,000781,253778,596749,166657,060510,3 23850,6591,366,9421,748,3071,924,9952,25 6,4342,162,880634,209754,706962,9251,191 ,1371,396,0550500,0001,000,0001,500,0002 ,000,0002,500,0003,000,0003,500,00020112 0122013201420152016288,160 Runzhong tablets Kaishi injection New ossified estriol capsules Xinhaineng injections Mingzheng capsules Tianqingganmei injections Kaifen injections Tiance injections 5 Sales of Major Products FY2016 (HK$ 000) FY2015 (HK$ 000) Hepatitis Medicines Runzhong (Entecavir) Dispersible Tablets ( ) 3,533,791 3,120,771 Tianqingganmei (Magnesium Isoglycyrrhizinate) Injections ( ) 2,162,880 2,256,434 Mingzheng (Adefovir Dipivoxil) Capsules ( ) 510,323 657,060 Tianqingganping (Diammonium Glycyrrhizinate) Enteric Capsules ( ) 483,448 501,027 Tianding (Entecavir Maleate) Tablets ( ) 274,937 126,147 Ganlixin (Diammonium Glycyrrhizinate) Injections & Capsules ( ) 130,356 155,702 Cardio-cerebral Medicines Kaishi (Alprostadil) Injections ( ) 1,424,473 1,566,638 Yilunping (Irbesartan/Hydrochlorothiazide) Tablets ( / ) 628,524 546,497 Tuotuo Calcium Tablets ( ) 627,107 479,226 Beraprost Sodium Tablets 340,439 281,358 Tianqingning (Hydroxyethylstarch 130) Injections ( 130) 198,553 184,584 Analgesic Medicines Kaifen (Flurbiprofen Axetil) Injections ( ) 1,396,055 1,191,137 Zepusi Flurbiprofen Cataplasms 318,168 215,214 Anti-infectious Medicines Tiance (Biapenem) Injections ( ) 752,413 764,540 Tianjie (Tigecycline for injections) Tablets ( ) 127,107 84,455 Orthopaedic Medicines New Ossified Estriol Capsules 845,885 748,663 Jiuli (Glucosamine Hydrochloride) Tablets ( ) 209,931 213,418 6 Sales of Major Products (Con t) FY2016 (HK$ 000) FY2015 (HK$ 000) Parenteral Nutritious Medicines Xinhaineng (Carbohydrate and Electrolyte) Injections ( ) 644,833 672,125 Fenghaineng Fructose Injections 239,017 230,406 Oncology Medicines Zhiruo (Palonosetron Hydrochloride) Injections ( ) 391,517 357,071 Saiweijian (Raltitrexed) Injections ( ) 347,206 292,862 Tianqingyitai (Zolebronate Acid) Injections ( ) 238,473 222,434 Shoufu (Capecitabine) Tablets ( ) 179,294 133,271 Qingweike (Decitabine for injections) ( ) 156,086 114,379 Gelike (Dasatinib) Capsules ( ) 155,010 107,341 Yinishu (Dasatinib) Tablets ( ) 86,672 53,296 Respiratory system medicines ( ) Tianqingsule (Tiotropium Bromide) Inhalation Powder ( ) 369,575 297,489 Chia Tai Suke (Cefaclor and Bromhexine Hydrochloride) Tablets ( ) 188,665 147,308 Anorectal Medicines ( Getai (Diosmin) Tablets ( ) 225,871 183,907 7 Sales Mix By Therapeutic Categories Cardio-cerebral Medicines Hepatitis Medicines Anti-infectious Medicines Oncology Medicines Respiratory System Medicines Others Anorectal Medicines Orthopaedic Medicines Parental Nutritious Medicines FY2016 Revenue: HK$15,825,438,000 8 Blockbuster Medicines ( ) Tianqingganping (Diammonium Glycyrrhizinate) Enteric Capsules ( ) Tianqingfuxin (Marine) Injections & Capsules ( ) Ganlixin (Diammonium Glycyrrhizinate) Injections & Capsules ( ) Kaishi (Alprostadil) Injections ( ) Tianqingyitai (Zolebronate Acid) Injections ( ) Kaifen (Flurbiprofen Axetil) Injections ( ) Mingzheng (Adefovir Dipivoxil) Capsules ( ) Tianqingganmei (Magnesium Isoglycyrrhizinate) Injections ( ) Runzhong (Entecavir) Dispersible Tablets 9 R&D Development R&D expenses estimated at 5-10% of annual sales Approximately 5-10 new medicines to be launched in 2 3 years Create strong growth momentum New clinical applications made Production application Production approvals Invention patent approvals New patent applications obtained Clinical approvals obtained Patent licenses received Obtained clinical approval, or were under clinical trial or applying for production approval Total 17 8 5 87 249 198 91 438 Strong Pipeline Commitment in R&D 2-5 new product launches each year (As at 31 December 2016) 10 Distribution Network Consumers or patients Target Hospitals Target Pharmacies Secondary Distributors Non-targeted Hospitals Non-targeted Pharmacies Sino Biopharmaceutical Distribution network spanning over 30 provinces, municipalities & autonomous regions Reinforce third-tier end market ( village and town hospitals, public health hospitals/centers/clinics, private clinics) Sales force comprises 11,007 delegates Hepatitis: 6,533 Cardio-cerebral : 3,037 Others: 1,437 Academic exchange / seminars / promotions Regional Distributor Primary Distributors 11 M&A Track Record Company Initial Investment Current stake Financial Performance Therapeutic Focus Date Amount (RMB) At time of investment (RMB) 31 December 2016 (RMB) Beijing Tide Oct 2003 80,000,000 Sales: 195,000,000 Profit: 94,000,000 Net Sales: 2,998,069,000 Net Profit: 928,343,000 Cardio-cerebral JCTT May 1997 40,800,000 60% Sales: 89,000,000 Profit: 7,000,000 Net Sales: 9,098,879,000* Net Profit: 2,411,002,000* Hepatitis medicines CTF** Oct 1994 6,050,000 N/A Sales: 4,600,000 Profit: 200,000 Net Sales:500,195,000*** Net Profit:138,294,000*** Ophthalmic & osteoarthritis medicines * Based on the consolidated figures of JCTT and its wholly-owned subsidiaries ** The Group completed the disposal of its entire shareholding in CTF to Bausch & Lomb on 26 September 2005 *** For the period ended 30 September 2005 12 M&A Strategy M&A Targets SB s Added Values Uniqueness: Product, Brand, Technology Management Team: Share the same vision with SB s management Pricing: Buy at LOW The Results Technology / product enhancement Financial management and back up Distribution network Sales Strategy Exponential sales & profit growth 3-4 years after the acquisition 13 Partnership Collaboration Program with Johnson & Johnson Innovation and Janssen Pharmaceuticals, Inc. Chia Tai Tianqing Pharmaceutical Group Co., Ltd. (CTTQ), a subsidiary of Sino Biopharma, Ltd. has entered into an exclusive license agreement with Johnson & Johnson innovation and Janssen Pharmaceuticals Inc, aiming to develop, manufacture and commercialize, outside of China, undisclosed immune-modulating agents to treat human diseases, including curative treatment of chronic Hepatitis B virus (HBV) infection Under this agreement, Janssen is granted with the international development license outside the People's Republic of China of a potential new medicine used for the treatment of hepatitis. The Medicine is under pre-clinical development stage Janssen will launch global development, production, registration and commercial promotion of the Medicine outside the PRC CTTQ shall receive one-off payments, including an upfront payment and milestone payments amounting to a maximum of USD253 million in total; and after the medicine is launched into the market, receive royalty payments, representing certain percentage of the annual sales amount of the Medicine, during the royalty term. This collaboration recognizes the strengths and capabilities of CTTQ in the R&D and innovation in the pharmaceutical industry (HK$ 000) FY2016 FY2015 YoY Changes (%) Turnover 15,825,438 14,550,225 + % Attributable Profit to the Group for the year * 2,006,088 1,772,695 + Attributable Profit to the Group for the year ** 1,913,276 1,778,692 + % Basic earnings per share* (HK cents) *** + Basic earnings per share** (HK cents) *** + % Dividend per share (HK cents) 6 + % 14 Financial Highlights YoY Growth (%) Financial Highlights (For the year ended 31 December) * Before accounted for fair value gains and losses of equity investment and financial assets ** After accounted for fair value gains and losses of equity investment and financial assets *** Restated as to reflect the bonus shares issued in 2015 15 Key Financial Data FY2016 FY2015 Net profit margin (before minority interests) * 21% 20% Net profit margin (before minority interests) ** 20% 20% Net profit margin (after minority interests) * 13% 12% Net profit margin (after minority interests) ** 12% 12% Inventories (Inventories cycle) HK$999 million (107 days) HK$950 million (101 days) Trade receivables (Trade receivables cycle) HK$2,228 million (47 days) HK$1,866 million (46 days) Cash and bank balances HK$4,203 million HK$2,711 million * Before accounted for fair value gains and losses of equity investment and financial assets ** After accounted for fair value gains and losses of equity investment and financial assets For the year ended 31 December 16 Dividend Policy Strong dividend payout policy (HK$ million) Dividend per share (HK cent) FY2016 FY2015 Q1 Q2 Q3 Final Total 6 Investment Highlights Strong financial position for M&A opportunities Proven M&A track record Existing blockbuster products to generate promising returns Strong R&D capability to develop various new patented products Nation-wide distribution network spanning over 30 provinces, municipalities and autonomous regions 18 Appendix 60% Nanjing Chia TaiTianqing Pharmaceutical Co., Ltd. ( NJCTT ) PVC-free soft bags for intravenous injections for the treatment of angiopathy cardio-cerebral Beijing Tide Pharmaceutical Co., Ltd. ( Tide ) Alprostadil intravenous injection a target and sustained release preparation of Lipo-microspheres PGEl, which can be used for angiocardiopathy 51% Tianjin Zhenwutang Food Co., Ltd. Manufacture and sale of healthcare food Sino Biopharmaceutical Shanghai Tongyong Pharmaceutical Co., Ltd. Manufacturer of dermatology and hormonal pharmaceutical products Jiangsu Qingjiang Pharmaceutical Co., Ltd. 5% Chia Tai Qingchunbao Pharmaceutical Co., Ltd. ( Qingchunbao ) Health-care products for the treatment of angiocardiopathy and igestive diseases Chia Tai-Tianqing Pharmaceutical Holdings Co., Ltd. ( CTTQ ) Modernized Chinese medicine for the treatment of hepatitis, chemical medicines and modern health- care products Jiangsu Fenghai Pharmaceutical Co., Ltd. Manufacture of pharmaceutical products for the treatment of bacterial, inflammatory and cardio cerebral diseases and raw materials Research and development of antibiotics, integrated bulk drug, Chinese patent medicine and pharmaceutical products Provides outpatient and hospitalization services Shaoyang Orthopedic Hospital Manufacturer of pharmaceutical products and health food Qingdao Haier Pharmaceutical Co. Ltd. 51% 19 Appendix Cardio-cerebral Modernized Chinese Medicines Chemical Medicines Oncology Runzhong (Entecavir) Dispersible Tablets Tianqingganmei (Magnesium Isoglycyrrhizinate)injections Mingzheng (Adefovir Dipivoxil) capsules Kaishi (Alprostadil) injections Yilunping (Irbesartan/Hydrochlorothiazide) Tablets Tianqingning (Hydroxyethylstarch 130) Injections Zhiruo (Palonosetron Hydrochloride) Injections Tianqingyitai (Zolebronate Acid) Injections Analgesia Zhiruo (Palonosetron Hydrochloride) Injections Saiweijian (Raltitrexed) Injections Tianqingyitai (Zolebronate Acid) Injections Orthopedics Kaifen (Flurbiprofen Axetil) Injections Anti-infectious Xinhaineng (Carbohydrate and Electrolyte) Injections Fenghaineng Fructose Injections Sino Biopharmaceutical is a leading integrated pharmaceutical enterprise in PRC Hepatitis Product Range Product Focus Flagship Products Parenteral Nutrition Tiance (Biapenem) Injections And

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