Lotus Pharm — Investor Presentation 2017

Aug 31, 2017

==> picture [720 x 422] intentionally omitted <==

LOTUS PHARMACEUTICAL BUILDING A REGIONAL LEADER

Aug 2017

Page I 1

==> picture [89 x 42] intentionally omitted <==

Safe Harbor Statement

Except for historical information contained herein, the matters set forth in this presentation are forward looking statements that are subject to risks and uncertainties that could cause actual results to differ materially. These forward looking statements are not based on historical facts but rather on management’s expectations regarding future growth, results of operations, performance, future capital and other expenditures, competitive advantages, business prospects and opportunities. Statements in this presentation about our future plans and intentions, results, level of activities, performance, goals or achievements or other future events constitute forward looking statements. Wherever possible, words such as “anticipate”, “believe”, “expect”, “may”, “could”, “will”, “potential”, “intend”, “estimate”, “should”, “plan”, “predict”, or the negative or other variations of statements reflect management’s current beliefs and assumptions and are based on the information currently available to our management . Investors are cautioned not to place undue reliance on these forward looking statements, which are made as of the date of this presentation and we assume no obligation to update or revise any forward looking statements.

Page I 2 Page I 2

==> picture [89 x 42] intentionally omitted <==

Table of Contents

 Company Overview

• Profitable Growth

• 1H 2017 Financial Results

Page I 3 Page I 3

COMPANY OVERVIEW

==> picture [379 x 501] intentionally omitted <==

Page I 4 Page I 4

LOTUS PHARMACEUTICAL IS AN APAC GENERICS LEADER

1

2

3

4

==> picture [89 x 42] intentionally omitted <==

Founded in 1966

Lotus Pharmaceutical is among Taiwan’s largest specialty-generic drug developers and one of the early movers to export to the US market since 2011 Its portfolio includes CNS, CVS, oncology, women health, anti-obesity, respiratory and pain relief in forms of tablet, capsule, and soft gel capsule

Capital market milestone

Lotus Pharmaceutical (1795. TWO) has been listed on Taipei Stock Exchange since 2010 and became a Taiwan Market Biotechnology and Medical Care Index stock in July 2017

Extraordinary quality management

Lotus’ R&D and manufacturing facilities in Nantou is the only one in Asia that’s approved by US FDA, EU EMA, Japan PMDA and TFDA PIC/S

The rising generic leader in APAC

Lotus is positioned as a regional platform for Alvogen Group (63.4% holding in Lotus) since Aug 2014 through a reverse merger, and leverages Alvogen Group’s cross-border reach to scale up

The current operation scope of Lotus spans across Lotus Taiwan’s domestic business, Alvogen Korea’s domestic business, Alvogen Pharma India’s CRO business, and export businesses

Page I 5 Page I 5

A FAST GROWING GENERICS & SPECIALTY PHARMACEUTICAL POWERHOUSE

==> picture [89 x 42] intentionally omitted <==

Lotus facts

1000+ Employees

3 Manufacturing and R&D Centers

250+ Marketed products

140+ Submissions since 2012

Lotus Taiwan Employees Total: 365

==> picture [223 x 125] intentionally omitted <==

----- Start of picture text -----

11%
G&A
19% R&D
47%
S&M
Plant
23%
----- End of picture text -----

70+ Generic products in pipeline

2 Biosimilar products in pipeline (mab’s)

8 MAs in the US; 25 MAs in Europe;

8 MAs in Japan; 1 MA in China

Alvogen Korea Employees

Total: 561

==> picture [145 x 136] intentionally omitted <==

----- Start of picture text -----

9%
7%
32%
52%
----- End of picture text -----

G&A R&D S&M Plant

Page I 6Page I 6

THE PAST 2 YEARS WERE TRANSITIONAL

==> picture [89 x 42] intentionally omitted <==

Operating synergy emerging following transitions in portfolio and S&M strategies

==> picture [649 x 352] intentionally omitted <==

----- Start of picture text -----

OPEX % 69% 50% 52% 39% 52% 50% 50% 49% 44% 46% 51% 66% 42% 37%
Total OPEX
(NT$mn) 1,590 2,780 3,084 1,172 675 669 711 725 631 742 729 982 592 580
SM GA RD OPM
6%
15.7%
4%
4% 7% 6%
20% 7% 4% 8.9%
12% 4%
5% 8% 12% 10% 6%
12% 10% 14% 16% 4%
10%
12%
12% 5% 10%
41.7%
10% 36% 34% 34%
30% 30% 28% 29% 26%
22%
43%
11.4% 10.4% [12.9%] 10.6%
33% 32% 6.8% 8.5%
5.4% 5.6% 5.6%
24%
Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17
-13.0%
FY2014 FY2015 FY2016 1H2017
----- End of picture text -----

Page I 7 Page I 7

EXPANDING REVENUE AND GROSS MARGIN ARE OUR TOP PRIORITIES

==> picture [89 x 42] intentionally omitted <==

Revenue (NT$m) Gross margin

663 1294 1337 1417 1473 1425 1594 1404 1479 1436 1557 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17	43% 58% 57% 62% 58% 55% 59% 57% 54% 47% 47%
	Q4'14Q1'15Q2'15Q3'15Q4'15Q1'16Q2'16Q3'16Q4'16Q1'17Q2'17

Page I 8 Page I 8

AFTER 2.5 YEARS OF INTEGRATION, LOTUS IS ENTERING INTO A GROWTH PHASE

==> picture [89 x 42] intentionally omitted <==

==> picture [662 x 120] intentionally omitted <==

----- Start of picture text -----

～
2015-2016 2017-2018 2019
POST MERGER INITIAL EXPLOSIVE
INTEGRATION GROWTH GROWTH
PHASE PHASE PHASE
----- End of picture text -----

• Plant upgrade in Nantou, Taiwan

• Successful management team change

• Portfolio and pipeline reshape

• Sales and marketing strategy adjustment

• Solidify local portfolio through key launches

• Start shipments of ANDA approved drugs

• Continue to increase operational efficiency

• Export revenues to significantly grow from several successful key PIVchallenges

• High value products to drive up gross margin

• • Continue to improve financial structure

Page I 9 Page I 9

PROFITABLE GROWTH

==> picture [379 x 501] intentionally omitted <==

Page I 10 Page I 10

OUR GOAL IN THE NEXT 3 YEARS IS TO DELIVER PROFITABLE GROWTH

==> picture [89 x 42] intentionally omitted <==

Profitable Growth

==> picture [87 x 252] intentionally omitted <==

Back to Basics

Value Differentiation Geared Up For The Future

Page I 11 Page I 11

==> picture [89 x 42] intentionally omitted <==

BACK TO BASICS

• Strongest Portfolio

• Best Service

• Best Quality

Page I 12 Page I 12

STRONGEST PORTFOLIO SURROUNDING 5 SPECIALTY AREAS

==> picture [89 x 42] intentionally omitted <==

2016E to 2020F therapeutic area revenue breakdown

2016A

1H2017

==> picture [40 x 12] intentionally omitted <==

----- Start of picture text -----

2020F
----- End of picture text -----

19% 28% 33% 41% 39% 18% 22% 6% 8% 5% 16% 16% 2% 3% 4%

==> picture [69 x 141] intentionally omitted <==

----- Start of picture text -----

17%
17%
6%
----- End of picture text -----

Anti-obesity/lifestyle & Gastrointestinal products Cardiovascular Central Nervous System Oncology Women healthcare

==> picture [577 x 15] intentionally omitted <==

----- Start of picture text -----

Note: Others include respiratory system, pain killers, nephrology, anti-inflammatory and so on
----- End of picture text -----

Page I 13 Page I 13

STRONGEST LOCAL PORTFOLIO WITH MARKET SHARE LEADER POSITION

==> picture [89 x 42] intentionally omitted <==

	KOREA	TAIWAN
Market Size	• Population: 50mn • Pharmaceutical market: US$15.8bn @ 3.7% YoY growth	• Population: 23mn • Pharmaceutical market: US$5.5bn @ 7.1% YoY growth
Market Position	• Focuses on Incrementally Modified Drug such as Fixed Dosage Combination • Anti-obesity drugs market share leader (20%) in Korea • OTC contraceptive drug market share leader (40%) in Korea • Leading player in CVS, CNS and nephrology drugs	• Top 3 pharma company in Taiwan on consolidated revenue base • Leading player in CNS, oncology and hormonal drugs

Page I 14 Page I 14

LOTUS PHARMACEUTICAL PROVIDES BEST SERVICE IN EVERY ASPECT

2

3

==> picture [89 x 42] intentionally omitted <==

==> picture [41 x 39] intentionally omitted <==

----- Start of picture text -----

1
----- End of picture text -----

Growing key markets sales team

70 in-house sales in Taiwan and 299 in-house sales in Korea, covering drug stores, clinics, general and community hospitals

Achieving vertical integration through CRO capabilities in India Norwich Clinical Service provides biostudy, clinical and pharmacovigilance services to Lotus & Alvogen Group and 3rd party customers, and holds an oncology center in Bangalore, India

The best R&D partner

Partner with new drug companies from formulation development, phase I, or clinical trial, providing critical CDMO or R&D services to new oncology drugs companies targeting advanced markets such as US, EU and JP

Page I 15 Page I 15

BEST QUALITY MAKES US THE MOST PREFERRED PARTNER OF OUR CUSTOMERS

==> picture [89 x 42] intentionally omitted <==

Lotus quality record

	Korea – Gongju Plant	Korea – Hyangnam Plant	Taiwan – Nantou Plant
Products	• Tablets • Coated tablets • Hard capsules • Powders, granules	• Tablets • Coated tablets • Hard capsules • Powders, granules	• Tablets • Coated tablets • Softgel capsules • Hard capsules
Capacity	• Max capacity at 500mn units of tablets	• Max capacity at 800mn units of tablets	• Max capacity at 1.5bn units of tablets
Accreditation	• KGMP compliant	• KGMP compliant	• US FDA, EU EMA, Japan PMDA & TFDA PIC/S approved

Page I 16 Page I 16

==> picture [89 x 42] intentionally omitted <==

VALUE DIFFERENTIATION

• Shortest Time to Market

• High Value Pipeline

• • Leader in Special Dosage

Page I 17 Page I 17

LEVERAGE ALVOGEN‘S GLOBAL SALES NETWORK TO CROSS SELL

==> picture [89 x 42] intentionally omitted <==

Capture global generics growth through Alvogen’s 3 regional platforms

IMS “Global Spending On Medicines 2014-2020”

==> picture [594 x 332] intentionally omitted <==

----- Start of picture text -----

30% 37%
7%
Europe 46%
Asia
49% $25-35bn growth
North America $100-130bn growth
44%
$115-145bn growth
15%
AFME 26%
$15-25bn growth
59%
30% 33%
9%
50%
Latin America 30%
$25-35bn growth
13%
61%
35%
52% Global
$305-335bn growth
Brand Generic Other
----- End of picture text -----

Page I 18 Page I 18

THEREFORE, LOTUS CAN ACHIEVE SHORTEST TIME TO MARKET

==> picture [89 x 42] intentionally omitted <==

• Ability to leverage customer demand information across the group

• Robust regional supply chain network

• ✓ Prompt and seamless coordination of complex supply and distribution network

• ✓ Supported by 5 manufacturing sites across the Lotus and Alvogen group

• Ability to deliver 97% order next-day without major stock-outs

Page I 19 Page I 19

HIGH VALUE PIPELINE FUELS REVENUE AND PROFITABILITY GROWTH

==> picture [89 x 42] intentionally omitted <==

Export timeline from now – 2020 approval out-license shipment

INN	Indication	1H’16	2H’16	1H’17	2H’17	2018	2019	2020
Paricalcitol 1/2/4 mcg	Nephrology 慢性腎衰竭
Temozolomide 5/20/100/140/180/ 250 mg	Brain Cancer 腦癌
Levetiracetam ER 500/750mg IR 250/750/1000mg	Anti-epilepsy 抗癲癇
Levonorgestrel 0.75mg	Contraceptive 避孕
Calcium Acetate 667mg	Nephrology 洗腎
Budesonide ER	GI 結腸潰瘍
Buprenorphine/ Naloxone	Addiction 戒毒

Page I 20 Page I 20

==> picture [89 x 42] intentionally omitted <==

Export timeline from now – 2020 approval out-license shipment

INN	Indication	1H’16	2H’16	1H’17	2H’17	2018	2019	2020
Methotrexate	Chemo 癌症
Gefitinib	Non-small-cell lung cancer; Inhibitor 非小細胞肺癌
LP127	Anti-epilepsy 抗癲癇
LP083 (CDMO project / JP)	Women health 女性保健					Strengt
							h extension
Acarbose	Antidiabetic 糖尿病
Vinorelbine softgel capsule	Breast cancer 乳癌
Lenalidomide	Multiple Myeloma 血癌
LP149	Women health 女性保健

Page I 21 Page I 21

LOTUS PHARMACEUTICAL IS THE REGIONAL LEADER IN SPECIAL DOSAGE

==> picture [89 x 42] intentionally omitted <==

Soft Gel Manufacturing

• Investment in dedicated manufacturing area starting 2009 and current capacity at 500mn capsules / year

• State of the Art equipment

• ✓ Closed melting and mixing Tanks

• ✓ PharmaGel GKF-072 filling machine

• ✓ Fully automatic visual inspection

• Extensive soft gel manufacturing experience in

• ✓ BCS class III & class IV new drug

• ✓ Generics low melting point molecules

• ✓ Generics with low stability molecules that are sensitive to light, heat and humidity

==> picture [173 x 116] intentionally omitted <==

==> picture [88 x 131] intentionally omitted <==

==> picture [83 x 131] intentionally omitted <==

==> picture [175 x 117] intentionally omitted <==

Page I 22 Page I 22

==> picture [89 x 42] intentionally omitted <==

GEARED UP FOR THE FUTURE

• Biosimilar Ready

• M&A Mode Always On

• Winning Business Strategies

Page I 23 Page I 23

BIOSIMILAR READY

==> picture [89 x 42] intentionally omitted <==

Lotus’ Biosimilar Play

• Biosimilars have reached an inflection point and we expect very rapid growth from 2017 onwards

• Secured APAC ex. Japan distribution rights of 2 biosimilar products of Alvotech, Alvogen’s sister company

US$Bn

==> picture [630 x 325] intentionally omitted <==

----- Start of picture text -----

20.0
1.9
18.0 1.7
1.5
16.0
1.2
4.8
4.9
1.0
14.0 4.2
3.8
0.8 3.4
12.0
2.8
10.0
0.6
8.0
2.2
6.0 12.1 12.5 12.7
0.4 10.6 11.1
1.5 9.1
4.0
6.5
0.2
2.0 1.1 3.7
0.2
0.1 0.9
- 0.1 0.4 0.1 0.1 0.5 0.1 0.1 0.6 0.2 0.7 0.3 0.6 1.5
2012 2013 2014 2015 2016F 2017F 2018F 2019F 2020F 2021F 2022F 2023F 2024F 2025F
Page I 24
Source : PharmaCloud US Europe ROW
----- End of picture text -----

Page I 24 Page I 24

M&A MODE ALWAYS ON

==> picture [89 x 42] intentionally omitted <==

Constantly looking for companies that complements our S&M strategy or portfolio

==> picture [498 x 411] intentionally omitted <==

----- Start of picture text -----

5yr CAGR (%) Pharmaceutical Market Size (US$bn)
2.1% Japan 107.0
9.9% China 98.8
11.6% India 16.7
3.7% Korea 15.8
9.2% Indonesia 5.9
7.1% Taiwan 5.5
7.3% Thailand 4.5
5.2% Philippines 3.8
13.9% Vietnam 3.3
11.5%
Malaysia 2.2
9.2%
Bangladesh 2.0
8.0% Hong Kong 1.6
7.6% Singapore 0.8
----- End of picture text -----

Page I 25 Page I 25

AS THE EXPERT IN ASIA, LOTUS HAS A SET OF WINNING BUSINESS STRATEGIES

==> picture [89 x 42] intentionally omitted <==

Being the expert in APAC pharmaceutical market

• We address APAC market through both local sales team and distribution network

• We fulfill the neglected generic needs of key local markets to bring down healthcare cost for more people

• We out-license or divest certain portfolio that are better fits of other pharmaceuticals to extract full value of our assets

Page I 26 Page I 26

1H 2017 FINANCIAL RESULTS

==> picture [379 x 501] intentionally omitted <==

Page I 27 Page I 27

HIGHER OPERATIONAL EFFICIENCY LED TO A PROFITABLE QUARTER

==> picture [89 x 42] intentionally omitted <==

Unit: NT$000	2Q 2017	%	2Q 2016	%	1Q 2017	%		YoY			QoQ
REVENUE	$1,577,430	100	$1,594,332	100	$1,436,112	100		-1.1%			9.8%
COGS	829,640	53	647,382	41	763,716	53		28.2%			8.6%
GROSS PROFIT	747,790	47	946,950	59	672,396	47		-21.0%			11.2%
OPEX
S&M	350,393	22	450,149	28	366,801	26		-22.2%			-4.5%
G&A	160,021	10	225,584	14	146,902	10		-29.1%			8.9%
R&D	69,653	4	66,093	4	78,262	6		5.4%			-11.0%
Total OPEX	580,067	37	741,826	47	591,965	42		-21.8%			-2.0%
OPERATING PROFIT (LOSS)	167,723	11	205,124	13	80,431	5		-18.2%			108.5%
NON-OP INCOME & EXP
Finance costs	(63,341)	(4)	(71,021)	(4)	(61,139)	(4)		-10.8%			3.6%
Others	1,774	0	(12,481)	(1)	(87,189)	(6)		-			-
Total non-op expenses, net	(61,567)	(4)	(83,502)	(5)	(148,328)	(10)		-26.3%			-58.5%
INCOME BEFORE TAX	106,156	7	121,622	8	(67,897)	(5)		-12.7%			NA
INCOME TAX EXPENSE (BENEFIT)	48,632	3	67,267	4	(5,806)	-		-27.7%			NA
NET ERANINGS (LOSS)	57,524	4	54,355	3	(73,703)	(5)		5.8%			NA
EPS	$0.15		$0.07		$(0.30)			114.3%			NA
											I 28

Page I 28 Page I 28

BALANCE SHEET AT JUNE-30 2017

==> picture [89 x 42] intentionally omitted <==

==> picture [432 x 489] intentionally omitted <==

Page I 29 Page I 29