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S.C.P.C Interim / Quarterly Report 2018

Nov 27, 2018

51900_rns_2018-11-27_e8d6b8d0-6f2e-443f-904c-a1c0a8966b6f.pdf

Interim / Quarterly Report

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Stock Ticker :1720

Standard Chem. & Pharm. Co., Ltd. (SCP) Investor Conference 2018.11.28

1

免責聲明 Safe Harbor Notice

本次簡報與討論包含特定預測性的說明，而其內容有關於營運結
果、財務狀況，以及對未來事件的預期。因為此等前瞻性說明是有關
於未來事件，而且取決於未來發生時的環境因素，所以必然含有風險
與不確定性。
本公司將不負擔公開更新或修改這些預測性的說明之義務，無論是
出現新資訊、未來發生任何事件，或其他情況。實際結果可能與此等
預測性說明推測的內容有重大差異。

In these presentations and discussions, there are certain forward looking statements regarding the results of operation, financial condition and current expectation about future events. As forward-looking statements relate to events and depend on circumstances in the future, they involve risk and uncertainty.

We do not undertake any obligation to publicly revise or update any forward looking statements for availability of new information, future events or otherwise. Real result probably differ substantially from those expected in these forward-looking statements.

2

Agenda

Introduction to 2018 Corporate Standard Financial ForwardSocial Pharmaceutical Results Responsibility looking Group (CSR) through Q3 (SCP Group)  Historical    Consolidated Actions for Fan Dao Nan Milestones Financial Revenue Growth Foundation  Resource Statements  ForwardIntegration • Status of looking Strategy  Historical Internationalization Financial Performance

3

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Introduction to Standard Pharmaceutical Group (SCP Group)

4

Historical Milestones

1998 2000 2009 2012 2017 SCP is the first Taiwanese SCP is first TW SCP’s API plant SCP passes K-FDA SCP is ranked in the Top 20th Percentile of pharmaceutical company to company to pass passes TGA inspection, and is Taiwanese listed Companies by the Taiwan be ISO9001 US FDA inspection certified GDP by Stock Exchange. certified inspection the T-FDA 2015 SCP passes US-FDA cGMP SCP receives its first inspection with no 483 US-FDA approved ANDA 1967 1990 2000 2010 2020 2018 1967 1995 SCP receives the SCP’s Initial SCP is Public Offering 2014 Badge of Accredited formally SCP receives the Gold Healthy Workplace by established 2008 Award for Outstanding the T-FDA SCP receives Biotechnology Company FDF Plant and API PMDA’s “Certificate of 2016 Plant passed PMDA 2010 Audit Foreign Drug SCP receives the Citizen’s SCP passes TW PIC/S Manufacturer” Award for CSR GMP inspection

5

 Standard Chem.& Pharm.Co.,Ltd  Souriree Biotech.Co.,Ltd.

 (Syn-Tech Chem. & Pharm. Co., Ltd.)

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Western
Pharmaceuticals
- Rx
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 Syngen Biotech Co., Ltd.

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API
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Software/
Hardware
Service

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  • ( CNH)

SCP Group Resource Integration

 Inforight Technology Co., Ltd.

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Biological
Fermentation
Products
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 AdvPharma, Inc.

  • Multipower Enterprise Corp.

  • Syngen Biotech.Co.,Ltd

  • (Your Chance Pharmacy Chain)

  • (Sun You Biotech Pharm.Co.,Ltd)

6

51 Years of Profit (15 years of Profit and Dividend Performance)

Income after Taxes

EPS
come after Taxes
Expressed in thousands of New Taiwan Dollars)
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000		 0.30
0.30
0.70
1.00
1.00
1.20
1.50
1.25
1.20
1.60
0.50
1.00
1.20
2.50
1.00
1.50
1.50
1.60
1.39
1.66
2.09
2.15
1.77
1.81
1.88
1.35
1.47
1.61
1.73
2.09
1.95
1.90
2.03
0.00
0.50
1.00
1.50
2.00
2.50
3.00
Net Income
Cash Dividend
Stock Dividend
EPS

(Expressed in thousands of New Taiwan Dollars)

7

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2018 Financial Results through Q3

8

Income Statement (Consolidated)

(Expressed in thousands of New Taiwan Dollars)
2018 Q1~Q3
2017 Q1~Q3
+(-)
Growth
Rate
Amount
%
Amount
%
Amount
%
Operating revenue
2,574,307
100
2,942,863
100
(368,556)
(13)
Operating cost
1,452,919
57
1,599,597
54
(146,678)
(9)
Gross profit
1,121,388
43
1,343,266
46
(221,878)
(17)
Operating expense
846,160
33
899,959
31
(53,799)
(6)
Operating profit
275,228
10
443,307
15
(168,079)
(38)
Non-operating income
and expense
98,783
4
30,123
1
68,660
228
Income before tax
374,011
14
473,430
16
(99,419)
(21)
Net income
312,664
12
373,825
13
(61,161)
(16)
EPS (NT$)
1.57
1.76
(0.19)
(11)		 (Expressed in thousands of New Taiwan Dollars)
2018 Q1~Q3
2017 Q1~Q3
+(-)
Growth
Rate
Amount
%
Amount
%
Amount
%
Operating revenue
2,574,307
100
2,942,863
100
(368,556)
(13)
Operating cost
1,452,919
57
1,599,597
54
(146,678)
(9)
Gross profit
1,121,388
43
1,343,266
46
(221,878)
(17)
Operating expense
846,160
33
899,959
31
(53,799)
(6)
Operating profit
275,228
10
443,307
15
(168,079)
(38)
Non-operating income
and expense
98,783
4
30,123
1
68,660
228
Income before tax
374,011
14
473,430
16
(99,419)
(21)
Net income
312,664
12
373,825
13
(61,161)
(16)
EPS (NT$)
1.57
1.76
(0.19)
(11)		 (Expressed in thousands of New Taiwan Dollars)
2018 Q1~Q3
2017 Q1~Q3
+(-)
Growth
Rate
Amount
%
Amount
%
Amount
%
Operating revenue
2,574,307
100
2,942,863
100
(368,556)
(13)
Operating cost
1,452,919
57
1,599,597
54
(146,678)
(9)
Gross profit
1,121,388
43
1,343,266
46
(221,878)
(17)
Operating expense
846,160
33
899,959
31
(53,799)
(6)
Operating profit
275,228
10
443,307
15
(168,079)
(38)
Non-operating income
and expense
98,783
4
30,123
1
68,660
228
Income before tax
374,011
14
473,430
16
(99,419)
(21)
Net income
312,664
12
373,825
13
(61,161)
(16)
EPS (NT$)
1.57
1.76
(0.19)
(11)		 (Expressed in thousands of New Taiwan Dollars)
2018 Q1~Q3
2017 Q1~Q3
+(-)
Growth
Rate
Amount
%
Amount
%
Amount
%
Operating revenue
2,574,307
100
2,942,863
100
(368,556)
(13)
Operating cost
1,452,919
57
1,599,597
54
(146,678)
(9)
Gross profit
1,121,388
43
1,343,266
46
(221,878)
(17)
Operating expense
846,160
33
899,959
31
(53,799)
(6)
Operating profit
275,228
10
443,307
15
(168,079)
(38)
Non-operating income
and expense
98,783
4
30,123
1
68,660
228
Income before tax
374,011
14
473,430
16
(99,419)
(21)
Net income
312,664
12
373,825
13
(61,161)
(16)
EPS (NT$)
1.57
1.76
(0.19)
(11)		 (Expressed in thousands of New Taiwan Dollars)
2018 Q1~Q3
2017 Q1~Q3
+(-)
Growth
Rate
Amount
%
Amount
%
Amount
%
Operating revenue
2,574,307
100
2,942,863
100
(368,556)
(13)
Operating cost
1,452,919
57
1,599,597
54
(146,678)
(9)
Gross profit
1,121,388
43
1,343,266
46
(221,878)
(17)
Operating expense
846,160
33
899,959
31
(53,799)
(6)
Operating profit
275,228
10
443,307
15
(168,079)
(38)
Non-operating income
and expense
98,783
4
30,123
1
68,660
228
Income before tax
374,011
14
473,430
16
(99,419)
(21)
Net income
312,664
12
373,825
13
(61,161)
(16)
EPS (NT$)
1.57
1.76
(0.19)
(11)		 (Expressed in thousands of New Taiwan Dollars)
2018 Q1~Q3
2017 Q1~Q3
+(-)
Growth
Rate
Amount
%
Amount
%
Amount
%
Operating revenue
2,574,307
100
2,942,863
100
(368,556)
(13)
Operating cost
1,452,919
57
1,599,597
54
(146,678)
(9)
Gross profit
1,121,388
43
1,343,266
46
(221,878)
(17)
Operating expense
846,160
33
899,959
31
(53,799)
(6)
Operating profit
275,228
10
443,307
15
(168,079)
(38)
Non-operating income
and expense
98,783
4
30,123
1
68,660
228
Income before tax
374,011
14
473,430
16
(99,419)
(21)
Net income
312,664
12
373,825
13
(61,161)
(16)
EPS (NT$)
1.57
1.76
(0.19)
(11)		 (Expressed in thousands of New Taiwan Dollars)
2018 Q1~Q3
2017 Q1~Q3
+(-)
Growth
Rate
Amount
%
Amount
%
Amount
%
Operating revenue
2,574,307
100
2,942,863
100
(368,556)
(13)
Operating cost
1,452,919
57
1,599,597
54
(146,678)
(9)
Gross profit
1,121,388
43
1,343,266
46
(221,878)
(17)
Operating expense
846,160
33
899,959
31
(53,799)
(6)
Operating profit
275,228
10
443,307
15
(168,079)
(38)
Non-operating income
and expense
98,783
4
30,123
1
68,660
228
Income before tax
374,011
14
473,430
16
(99,419)
(21)
Net income
312,664
12
373,825
13
(61,161)
(16)
EPS (NT$)
1.57
1.76
(0.19)
(11)
2018 Q1~Q3 2017 Q1~Q3 +(-) Growth
Rate
Amount % Amount % Amount %
Operating revenue 2,574,307 100 2,942,863 100 (368,556) (13)
Operating cost 1,452,919 57 1,599,597 54 (146,678) (9)
Gross profit 1,121,388 43 1,343,266 46 (221,878) (17)
Operating expense 846,160 33 899,959 31 (53,799) (6)
Operating profit 275,228 10 443,307 15 (168,079) (38)
Non-operating income
and expense		 98,783 4 30,123
1		 68,660
228
Income before tax 374,011 14 473,430 16 (99,419) (21)
Net income 312,664 12 373,825 13 (61,161) (16)
EPS (NT$) 1.57 1.76 (0.19) (11)

9

Balance Sheet

(Consolidated)

(Expressed in thousands of New Taiwan Dollars) (Expressed in thousands of New Taiwan Dollars) (Expressed in thousands of New Taiwan Dollars) (Expressed in thousands of New Taiwan Dollars) (Expressed in thousands of New Taiwan Dollars)
As of September 30, 2018 As of September 30, 2017
Amount % Amount %
Cash and cash equivalents 893,312 14 1,147,372 18
Accounts receivable 948,891 15 902,094 14
Inventories 831,266 13 784,918 13
Investments 616,374 10 726,108 12
Property, plant, and equipment 2,147,236 34 2,132,750 34
Other current and non-current assets 902,856 14 621,721 9
Total Assets 6,339,935 100 6,314,963 100
Current Liabilities 1,647,545 26 1,586,549 25
Long-term loans 189,799 3 194,830 3
Other liabilities 323,617 5 324,764 5
Total liabilities 2,160,961 34 2,106,143 33
Total shareholder’s equity 4,178,974 66 4,208,820 67
Total liabilities and shareholder’s equity 6,339,935 100 6,314,963 100

10

Global Revenue Ratio of past 5 Years (Consolidated)

(Expressed in thousands of New Taiwan Dollars)

 International Sales of past 5 years

 Ratio of International-to-Domestic Sales of past 5 years Domestic International

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Domestic International
1,000,000
745,705
800,000 644,528 100% 13.5% 13.4% 17.5% 19.4% 17.7%
600,000 444,475 445,642 454,698 80%
60%
400,000 86.5% 86.6% 82.5% 80.6% 82.3%
40%
200,000 20%
- 0%
2014 2015 2016 2017 2018Q3 2014 2015 2016 2017 2018Q3
----- End of picture text -----

 International Revenue (Ex-Taiwan)

2018 Q3 2017 Q3

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

250,000
39%
200,000
35%
150,000 24% 27%
20%
20%
100,000
50,000 5% 4% 5% 6% 4% 3%
2% 2% 1% 1% 0% 0%
0
S.E.A. China Other - Europe U.S.A Other - Africa Japan Other
Asia Americas
----- End of picture text -----

11

R&D Accomplishments (Parent Company)

 SCP – Dossier submissions of past 5 years

2014 2015 2016 2017 2018Q3
Taiwan 10 16 9 9 8
International 23 17 14 10 21
Total 33 33 23 19 29

12

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Forward looking Strategy

13

SCP – Major International Operations of the past 2 years

  • Taiwan China Japan

  •  Contracts signed for  Asthma treatment In-license of Japanese seven products. with continuous

  • Anti-psychotic  Estimated contract

  • Latuda® export to Japan

  • 2019 Revenue Plan in value: over  Anti-inflammatory excess of NT$100MM NT$100MM; Bi-annual Oral Solid Dosage renewals has passed BE;

  • Future Business Model: schedule to launch in Profit Sharing 2020

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14

Future Milestone

Taiwan Generics

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International Better than Generics

15

Revenue Growth Strategy - Taiwan

  • Taiwan as Base of Operations for Global R&D and Pharmaceutical Manufacturing

  • Yearly increase of international operations ratio.

  • Launch new products every year

  • Strengthen Manufacturing Capability

  • Manufacturing line complies with international standards; have passed numerous international audits

  • Production line standardization: plan to merge two lines (last year merged three lines)

  • In-licensing: Psychiatry, Urology

16

Revenue Growth Strategy - China

SCP Competitiveness

 SCP has successful experience with c U.S. and Japan regulatory dossiers  SCP to continue to specialize expertise in BE design and execution

NMPA review of importation

 2 diabetes product

 1 cardiovascular product

Mid-Term Goals

 Increase technology in-flow  Increase revenue from profitsharing

NMPA Consistency Evaluation

 2017: 2 contracts signed

 2018: 5 contracts signed

Collaboration Model

Results

  • Tech-transfer

  • Co-development

  • BE Collaboration

  • Profit-sharing Partnerships

  • Continuous export of Antibiotic injectable

  • A NT$100MM contract signed

17

NMPA Reforms: Consistency Evaluation

  • 289 Items, 17,000 Approvals, 1,800 companies

  • Will need to comply with by end of 2018

  • Non-compliant will not be eligible for registration

  • Limited to first three compliant manufacturers; others will not be eligible for listing.

  • Industr ex enditures for Consistenc Evaluation com liance y p y p

Company Item R&D Cost (CNY) Hisun Pharma Rosuvastatin 9,200,000 Harbin Sanlian Pharma Mirtazapine 7,350,000 Huahai Pharmaceutical Donepezil 9,250,000 Hengrui Pharma Irbesartan 8,860,000

18

NMPA Reforms: Current State of Consistency Evaluation

 2017&2018 Revisions and A rovals pp

No. of Docs Items Entities Revised 553 205 207 A roved 107 60 49 pp

CTTG has 42 submissions, Qilu Pharamceutical has 40 submissions Yangtze River Pharma has 24 submissions Industry CSPC Pharma and Jainsu Heng Rui each have 22 submissions Results Hisun Pharma and Trul Holdin s each have 19 submissions y g There are 15 items that already have 3 compliant companies There are 16 items that alread have 2 com liant com anies y p p

19

NMPA Reforms: Consistency Evaluation

 Market Com etition p

Established Name No. of Re istered BE g Metformin 72 com anies p Amlodi ine 50 com anies p p Clo ido rel 28 com anies p g p Atorvastatin 24 com anies p Entecavir 30 com anies p

  • Task for medical reform for 2[nd] half of 2018: Volume Purchasing

  • Exclusivity for Consistency Evaluation compliant products

  • • Goal: Replacement of originator with compliant product and price control

  • Pilot program in 11 cities with 33 products

20

Revenue Growth Strategy - Japan

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Collaboration Model

 Japanese Distribution Partner  Contract Development, SCP Manufacturing

  • License Holder

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Current State

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Raw Material Strategy

 Collaborate with Syn-Tech Chem. & Pharm. Co., Ltd.

  • API Vertical Integration

Under Development

 Obtained marketing license for Montelukast (Asthma), 2[nd] straight year of continuous

export

 Co-development of Nonsteroidal Antiinflammatory Drug (NSAID) – passed BE in 2018

  • Dossier submission in February 2019; Estimated Market Launch is 2020.

21

Revenue Growth Strategy – U.S.A.

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U.S.A. Market

  • Largest Rx Market

  • Characterized by lengthy review

  • timelines.

  • Expensive compilation and filing

  • costs

  • Part of SCP’s long term goals

Strategy

  • Collaboration with

Syn-tech Chem. & Pharm. Co. Ltd.

  • API Vertical Integration via strategic partnerships

Current State

  • Actively export one diabetic treatment

  • One approval, pending patent settlement terms

  • Two ANDA’s under review

  • KPI – One submission per year

22

Forward-looking Strategy Layout

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Future:
2018 2020 2020
International
China Japan U.S.A. - -
Better than Generics
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----- Start of picture text -----

Increase
International
Revenue Ratio
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  • Increase international business resources

  • Recruit international talent

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

Specialized technology and
professional development of
international performance
----- End of picture text -----

  • Develop Taiwan into

  • a base of cutting-edge R&D technology and revenue generation.

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

Leverage
Competitiveness in
Overseas Markets
----- End of picture text -----

  • Stable foundation

  • Rapid revenue creation

  • Step-by-step optimization

  • for minimization of loss

  • Focus on market knowledge

  • and business acumen

  • Establish strategic

partnerships for mid- and long-term goals

23

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Corporate Social Responsibility

24

Fan Dao Nan Foundation

==> picture [158 x 118] intentionally omitted <==

Fan Dao Nan Foundation

 Established in 1987

 Endowment Fund: NT$196 Million

 Annual Budget: NT$13 Million

Principal Activities

==> picture [158 x 114] intentionally omitted <==

 Non-profit education

  • Cultural and educational

development activities

 Sponsor R&D and Innovation

  • Scholarships and Talent Cultivation

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Rewards and Honors Received

  • 2011: Special Recognition Award – Dept. of Education

  • 2012: Tainan City Govt. Grant for Scholarship Program

  • 2013: National Special Selection Award for

After-School Program – Dept. of Education

25

Corporate Social Responsibility

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Hope After-school Class

Sunflower Wednesdays

Scholarships

 University (related fields): 2 universities/5 students  High school: 6 schools/118 students  Middle school: 64 schools/865 students

 Weekday afternoons  Every Wednesday afternoon  High school: 6 schools/118 students  20 schools  4 schools  Middle school: 64 schools/865 students  1,600 students  330 students  Elementary school: 224 schools/2,596 students Scholarship Totals – NT$1.55MM Scholarship Totals – NT$250KK Scholarship Totals – NT$5.6MM

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Other Sponsorships

Meal-Assistance

 Member of 16-corporation  In 2018, provided 6,600 meals to alliance for sponsorship cultural students during winter and summer and educational advancement holidays.

Grant Total – NT$1.8MM Assistance Totals – NT$400KK

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Charity

 SCP Children’s Drawing Competition  SCP National Table Tennis Competition Prize Totals – NT$1.6MM

 Funded or provided assistance to 5,820 students in 2017

26

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Q & A

27

Thank you for your attention

28

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