S.C.P.C — Investor Presentation 2018

Apr 19, 2018

Stock Ticker :1720

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

2018.04.19

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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.

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Agenda

	Introduction to Standard Pharmaceutical Group (SCP Group)			2017 Financial Statements		Forward- looking		Corporate Social Responsibility (CSR)
	Historical			Consolidated		Pharmaceutical		Fan Dao Nan
	Milestones			Financial		Industry Forecast		Foundation
	Resource			Statements		Actions for
	Integration					Revenue Growth
	Historical Financial		•	Parent Company Financial Statements		Forward-looking Strategy
	Performance

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Introduction to Standard Pharmaceutical Group (SCP Group)

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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 1967 1995 2018 SCP’s Initial SCP receives the SCP is Public Offering 2014 Badge of Accredited formally SCP receives the Gold established Healthy Workplace by 2008 Award for Outstanding the T-FDA SCP receives Biotechnology Company PMDA’s “Certificate of 2016 2010 Foreign Drug SCP receives the Citizen’s SCP passes TW PIC/S Manufacturer” Award for CSR GMP inspection

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 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)

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50 Years of Profit (Parent Company)

Income after Taxes

1.24 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

(Expressed in thousands of New Taiwan Dollars)

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2017 Financial Statements

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Income Statement (Consolidated)

(Expressed in thousands of New Taiwan Dollars)

	2017			2016			Change
	Amount	%		Amount	%		%
Operating revenue	3,848,684		100	3,673,801		100	5
Operating costs	2,099,686		55	2,097,542		57	0
Gross profit	1,748,998		45	1,576,259		43	11
Operating expenses	1,207,523		31	1,158,123		31	4
Operating profit	541,475		14	418,136		12	29
Non-operating income and expenses	8,737		0	43,619		1	-80
Income before tax	550,212		14	461,755		13	19
Net income	433,339		11	371,808		10	17
EPS (NT$)	2.03			1.90			7

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Balance Sheet (Consolidated)

(Expressed in thousands of New Taiwan Dollars)

	2017	2017	2016	2016
	Amount	%	Amount	%
Cash and cash equivalents	1,192,512	19	876,820	14
Accounts Receivable	936,713	15	975,369	16
Inventories	727,894	11	737,725	12
Investments	650,171	10	798,771	14
Property, plant, and equipment	2,156,720	34	2,090,208	33
Other current and non-current assets	710,207	11	746,947	11
Total Assets	6,374,217	100	6,225,840	100
Current Liabilities	1,646,341	26	1,646,886	27
Long-term loans	187,312	3	47,317	1
Other liabilities	338,379	5	334,973	5
Total liabilities	2,172,032	34	2,029,176	33
Total shareholder’s equity	4,202,185	66	4,196,664	67
Total liabilities and shareholder’s equity	6,374,217	100	6,225,840	100

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Global Revenue Ratio of past 5 Years (Consolidated)

(Expressed in thousands of New Taiwan Dollars)

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 International Sales of past 5 years  Ratio of International-to-Domestic Sales
1,000,000 of past 5 years
745,705
800,000 100% 13.2% 13.5% 13.4% 17.5% 19.4%
644,528
Domestic
80%
600,000
444,475 445,642 International
401,938 60%
400,000
86.8% 86.5% 86.6% 82.5% 80.6%
40%
200,000
20%
- 0%
2013 2014 2015 2016 2017 2013 2014 2015 2016 2017
 International Revenue (Ex-Taiwan)
300,000 37%
250,000 35%
26% 24%
200,000
24%
23% 2017
150,000
2016
100,000
6% 7% 6%
50,000 3% 2% 3% 3% 1% 0% 0%
0
China S.E.A. 亞洲其他 Other - U.S.A. 美洲其他 Other - Europe Japan Other
Asia Americas
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Income Statement (Parent Company)

(Expressed in thousands of New Taiwan Dollars)

Item	2017			2016			Change
	Amount	%		Amount	%		%
Operating revenue	2,410,610		100	2,357,528		100	2
Operating costs	1,290,577		54	1,308,075		56	-1
Gross profit margin	1,120,033		46	1,049,453		44	7
Operating expenses	759,458		31	742,267		31	2
Operating profit	360,575		15	307,186		13	17
Non-operating income and expenses	72,083		3	88,622		4	-19
Income before tax	432,658		18	395,808		17	9
Net income	363,286		15	340,216		14	7
EPS (NT$)	2.03			1.90			7

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Balance Sheet (Parent Company)

(Expressed in thousands of New Taiwan Dollars)

Item	2017	2017	2016	2016
	Amount	%	Amount	%
Cash and cash equivalents	729,506	14	438,306	8
Accounts Receivable	634,621	12	722,095	14
Inventories	520,549	10	448,633	9
Investments	1,922,635	36	2,036,377	39
Property,plant, and equipment	1,193,519	23	1,170,949	23
Other current and non-current assets	306,553	5	332,270	7
Total Assets	5,307,383	100	5,148,630	100
Current Liabilities	1,198,955	23	1,066,585	21
Long-term loans	100,000	2	30,000	1
Other liabilities	336,005	6	332,693	6
Total liabilities	1,634,960	31	1,429,278	28
Total shareholder’s equity	3,672,423	69	3,719,352	72
Total liabilities and shareholder’s equity	5,307,383	100	5,148,630	100

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R&D Accomplishments (Parent Company)

 SCP - R&D Expenditures and Ratio of past 5 years

(Expressed in thousands of New Taiwan Dollars)

	2013	2014	2015	2016	2017
R&D Expenditures	167,533	183,196	174,730	182,911	180,985
% of Total revenue	7%	8%	8%	7%	7%

 SCP – Dossier submissions of ast 5 ears p y

	2013	2014	2015	2016	2017
Taiwan	14	10	16	9	9
International	10	23	17	14	10
Total	24	33	33	23	19

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Global Revenue Ratio of past 5 years (Parent Company)

 International Sales of past 5 years

(Expressed in thousands of New Taiwan Dollars)

 Ratio of International to Domestic Sales of past 5 years

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700,000
593,234
600,000
501,616
500,000
368,522 370,005
400,000 366,671
300,000
200,000
100,000
0
2013 2014 2015 2016 2017
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Domestic International
100%
16.5% 16.5% 16.8%
23.4% 24.6%
80%
60%
83.5% 83.5% 83.2%
40% 76.6% 75.4%
20%
0%
2013 2014 2015 2016 2017
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Historical Dividend Distributions (Parent Company)

(Expressed in thousands of New Taiwan Dollars)

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Cash Dividend Stock Dividend EPS

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3.00
2.50
2.09 2.15
2.09
2.03
1.95
2.00 1.77 1.81 1.88 1.73 1.90
1.61
1.47
1.50 1.35
0.30 0.30
2.50
1.00
0.70
1.60 1.60
1.50 1.50 1.50
1.20 1.25 1.20 1.20
0.50 1.00 1.00
0.50
0.00
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
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Note: 2017 Dividends have not yet been confirmed by shareholder’s meeting.

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Forward looking Strategy

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SCP – Major International Operations of the past 2 years

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Taiwan China Japan
 Established dedicated  Contracts signed for  Contract Development of
three products. Montelukast (Asthma)
CNS Sales Team;
 Estimated contract with continuous export
Initiated sales of
value: NT$30MM to Japan
Japanese CNS NDA  Business Model:
Latuda® Profit Sharing  NT$10MM sponsorship
from Japanese co-
development partner.
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Pharmaceutical Industry Forecast

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Future Milestone

Taiwan Generics

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International Better than Generics

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Revenue Growth Strategy - Taiwan

• Taiwan as Base of Operations for Global

R&D and Pharmaceutical Manufacturing

• International sales contributed 24.6% to revenue in 2017.

• • Our goal is for revenue to be comprised of 50% international sales by 2021.

• Product Internationalization

• Internationalize product lines via international audits

• Internationalization of product specifications to comply with international regulatory requirements

• • Eliminate low-demand, low-margin products

• • ‘Trim-the-fat’ and focus on specialization

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Revenue Growth Strategy - Taiwan

 As a result of deteriorating prices, strive for new products with accelerated timeto-market

• Each year focus on continuous R&D and launch of new products.

• In-licensing and Fully Integrated Products

• In-license CNS products – Latuda®

• Focus on Anti-hypertension, Urology

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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

Under Review

 2 diabetes product

 1 cardiovascular product

Client Prioritization

 SMEs have opportunities over large corporations

Current State

 Substantial revenue growth in 2017

Collaboration Model

 Tech-transfer

 Co-development

 BE Collaboration

Seize business opportunities

 Co-develop 3 products in 2017

 5 products in 2018

• Profit-sharing Partnerships

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Revenue Growth Strategy - Japan

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Collaboration Model

 Japanese Distribution Partner

• Contract Development,

SCP Manufacturing

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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)

• Partner Sponsored Co-Development

• Co-development of Nonsteroidal Antiinflammatory Drug (NSAID)

• Estimated Market Launch is 2020 – increase ratio of international revenues

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Revenue Growth Strategy – U.S.A.

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U.S.A. Market

• Largest Rx Market

• Characterized by lengthy review timelines and high costs.

• Part of SCP’s long term goals

Strategy

• Collaboration with .

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

Current State

• Actively export one diabetic treatment

• One approval, pending patent settlement terms

• Three ANDA’s under review

• API Vertical Integration

• KPI – One submission per year

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Forward-looking Strategy Layout

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Future
2017~2020 2020~2025 2025~2030
International
China Japan U.S.A. - -
Better than Generics
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Increase
International
Revenue Ratio
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Specialized technology and
professional development of
international performance
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Leverage
Competitiveness in
Overseas Markets
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• Increase international business resources

• Recruit international talent

• Develop Taiwan into a

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

• 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

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Corporate Social Responsibility

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Fan Dao Nan Foundation

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Fan Dao Nan Foundation

 Established in 1987

 Endowment Fund: NT$196 Million

 Annual Budget: NT$13 Million

Principal Activities

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 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

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Corporate Social Responsibility

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Scholarships

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Hope After-school Class

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Sunflower Wednesdays

 University (related fields): 4 universities/8 students  Weekday afternoons  Every Wednesday afternoon  High school: 6 schools/118 students  20 schools  4 schools  Middle school: 64 schools/828 students  1,500 students  1,500 students  Elementary school: 221 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 2017, provided 6,142 meals to alliance for sponsorship cultural students during winter and summer and educational advancement holidays. Grant Total – NT$1.8MM Assistance Totals – NT$370KK

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Charity

 SCP Children’s Drawing Competition  SCP National Table Tennis Competition Prize Totals – NT$1.3MM

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

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Q & A

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Thanks for your attention

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