SINPHAR — Investor Presentation 2017

Jul 26, 2017

SINPHAR’s Code：1734 SynCore’s Code：4192

SINPHAR PHARMACEUTICAL CO.,LTD Investor Conference

2017/7/20

Disclaimers

 本簡報是建立於本公司從各項來源所取得之資 訊。有些資訊可能受未來不確定性因素影響， 致使與原先本公司對於未來前景的說明迥異。 未來若有變更或調整時，請以公開資訊觀測站 公告資訊為依據。

 This presentation is based on the information obtained from various sources which the Company believes to be reliable. But at some point in the future, there are a variety of factors which could cause actual results to differ materially from those statements. Therefore, please refer to the information on MOPS website as the main basis if any adjustment has been made. (http://mops.twse.com.tw/mops/web/index)

Agenda

1. Group profile

2. Financial Performance

3. Market outlook

4. Business outlook

5. Corporate Social Responsibility

3

Group profile

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1977

SINPHAR PHARMACEUTICAL CO.,LTD

Yilan (TW)

Generic drugs, Functional food , Cosmetic

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2002

Sinphar TianLi, He-Tian Tianli

Hangzhou (CN)、Xinjiang(CN) Generic drugs, Chinese herbal medicine, Plant extracts

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2012

ZuniMed Biotech

Nantou(TW) Medical Supplies

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1997
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CanCap Pharmaceutical Vancouver(CA) Generic drugs, Functional food

2008

SynCore Biotechnology

Yilan(TW) New drugs development

4

Main Business

• Therapeutic Medicine

Tablet, ointment, liquid (external use), liquid(oral), eye drops, hard capsule, soft capsule, suppository, granule and injections for oncology.

• Functional Foods

tablet, hard capsule, soft capsule, granule and powder, liquid(oral), jelly candy and pastilles.

• Natural Resources and TCM

• Development of natural resources and Traditional Chines ~~e Medicine, cultivation and~~ technical development such as Cistanche Tubulosa and Fuling.

• Medical Supplies

• Eye drop bottle, tablet bottle, syrup bottle and drying bottle.

• Sales and Marketing

Professional business team and a completed services coverage.

• Technical Services

OEM/ODM for pharmaceutical, food supplement and cosmeceutical product, lab testing services (including pharmaceutical, food supplement and cosmetic).

• Professional manufacturing services

• PIC/S GMP certified(Taiwan and CanCap) ： Pharmaceutical plant, Injection plant, Supplement plant, Cosmetic plant; ISO15378 certified medical packaging site(Taiwan); Natural herbs extraction plant(Hangzhou); cultivation ~~plant(Xinjiang).~~

• New Drug Development

New Chemical Entity (SB01 and SB02), Treatment of Genital Warts (SB03), Dry AgeRelated Macular Degeneration (SB04), Positively Charged Liposomal New Drug For Triple Negative Breast Cancer and Pancreatic Cancer (SB05), Botanical New Drug (STA1 and STA2), SPA1.

5

Services Background

• Completed sales channel(Taiwan)

• Have a long term cooperation with Medical Center, Regional Hospital, Teaching Hospital, Local Hospital and Clinics.

• 1300 Sinphar counters.

• Cooperation with chain stores.

• A long term OEM/ODM cooperation with International firms.

• A solid team

• 4 Professors; 20 Doctors; 118 Masters.

• Precise Facilities

• Labs for multi dosages, TCM labs, Microbiology labs, Cell and molecular biology labs, Inspection labs.

• Professional manufacturing

• Obtain PIC/S GMP, ISO 9001, ISO 17025, ISO 14001, ISO 22000 and OHSAS18001 accreditations, also pass Japan PMDA for GMP Inspection.

• ： Pharmaceutical plant From product development, contract manufacturing, registration, patent control to market strategy planning.

• ： Food Supplement plant Provide multi dosages such as tablet, capsule/soft capsule and functional supplement powder in can. From 、 formula and manufacturing design spec ~~setting and active ingredient Assay, offer a~~ package service to meet the market demand. 4. ： Injection Center Produce injections, solid ， dosage, hormone dosage for cancer treatment the film coated dosage site is the only closed cytotoxic site that certified by TFDA in Taiwan ； the second plant is the only cytotoxic injection plant which operate with automatic Isolator in Taiwan.

• ： Cosmetic plant Shampoo, shower gel, toner, body cream, sun block, serum. 6

6

Recent Events

2016

• SynCore Biotechnology announces the new developing drug, SB05 (EndoTAG® -1), are approved by Taiwan and Australia FDA to conduct phase III clinical trial on TNBC.

• Sinphar expanded plant, cytotoxicity film coated tablet, passes Department of Health PIC/S GMP evaluation. It is the first in Taiwan to use full-pressure system cytotoxic solid agent manufactory system.

• Sinphar expanded plant, injection(sterile), passes Department of Health PIC/S GMP evaluation. It is the first in Taiwan to use Isolator to produce cytotoxicity injection manufactory ~~system.~~

• Sinphar Tian-Li Pharmaceutical plant extracts laboratory completed construction.

• SynCore Biotechnology and Switzerland Y-YBar signed contract to develop diagnose of eye disease precision instruments.

• Sinphar medicine and Yilan County Government’s Food Safety and Inspection Center signed cooperation memorandum.

7

Recent Events

2017

• Sinphar medicine and Kyowa Chemical Industry Co. ( KISUMA) signed registration contract to exclusively introduce sales of Sinphar counters.

• SynCore Biotechnology SB05(EndoTAG® -1) received US FDA approval to conduct phase III clinical trials in pancreatic cancer.

• “

• • SynCore Biotechnology SB01 published A Phase I Dose Escalation Study of SCB01A, a Micro-tubular Inhibitor with Vascular Disrupting Activity, in Patients with Advanced Solid Tumors Refractory to Standard Therapy ” at American Society of Clinical Oncology, ASCO

8

SynCore Biotechnology Co., Ltd

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	SB01	SB02	SB03	SB04	SB05
Status while obtain	Pre-clinical	Pre-clinical	NDA (Germany、 the US)	Complete Ph I (the US)	EMA PhII
Current Status	Ph II Study Permitted in Taiwan and the US	Pre-clinical	Got TFDA certificate, already in the market	Ph II/III Permitted in Taiwan	~~Triple Negative Breast Cancer~~ :Taiwan、Belgium、Australia Ph III permitted
					~~9~~ Pancreatic Cancer: Ph III permitted (the US)

Sinphar TianLi (Hangzhou) Pharm. Develop TCM and natural resources by controlling material source and market the outcome globally.

Net book value

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1,200,000
Paid dividends
1,000,000
N
T
Cistanche
D
800,000 tubulosa
I Can be
N
commercialized
T 600,000
h
o
u
s 400,000
a
n
d
200,000
-
2011 2012 2013 2014 2015 2016
10
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Consolidated revenue

Revenue in Q2 2017 is increased 2.5% than Q2 2016, the dependence of major customers is gradually lower down.

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700000 60% Major customers %
600000
50%
500000
40%
400000
30%
300000
20%
200000
100000 10%
0
0%
2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2
2014 2015 2016 2017Q1
NTD IN Thousand
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Remark ： Data from Q2 2017 is not yet been reviewed by CPA.

11

Consolidated key P&L items

	2017Q1	2016Q1	2016
Revenue	508,089	501,366	2,133,511
Gross Profit	36%	37%	37%
S&M	-73,094	-78,900	-319,519
G&A	-51,414	-60,460	-229,947
R&D	-89,121	-85,620	-382,605
Profit before Tax	-37,071	-39,426	-34,924
Net income (loss) attributable to: shareholders of the parent	-8,826	-16,435	16,545
EPS(Basic)	-0.05	-0.10	0.10

With clear progress directions, control every expenditure reasonably.

12

Consolidated key cash flow items

	nsolidated key cash flow items NTD in Tho	nsolidated key cash flow items NTD in Tho
	2017Q1 2016Q1 2016
Inventories 18,351 (8,516) 85,995 Net cash generated by operating activities 20,634 12,167 87,184 Property, plant and equipment (43,645) (53,187) (210,619) Net cash used in investing activities -55,412 -121,476 -13,199 Net cash generated by (used in) financing activities -11,305 -13,796 130,687 Cash and cash equivalents, end of year 1,033,020 796,401 1,094,920	Inventories 18,351 (8,516) 85,99

With clear progress directions,

control inventories and properties investment reasonably.

13

Earnings, and Dividends Per Share

0.0 0.5 1.0 1.5 2.0 2.5			000 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 E

Despite market condition and whether have New Drug Investment, have earned shares and dividends annually.

14

Overview of domestic market

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15

Overview of domestic market

• Aging society

In end of February 2017, total population is 23.54 million, population above 65 year old is 3.139 million, it is 13.33% of total population. This is the first time higher than the population under 14 year old (3.133 million), the ratio of elder population is gradually climbing.

• NHI price adjusting

This is the key factor of a rising drug market or not. For example in 2015, National Health Insurance Administration lower down 6,821 items of drug, it caused 5.3% an average reduction therefore minimized the growing.

• PIC/S GMP implementation

Number of firms ~~are decreasing, limit is higher, cost is rising.~~

• Competitive foreign pharmaceutical companies

Before 2015, market share of top 20 manufacturers was 66.2%, there were only three domestic manufacturers.(Before 2014, market share of top 20 manufacturers was 67%, market share in 2014 is 67.4%)

• Exportation is the focus of future development

In 2015 exportation has increased 12%, western medicine will be the main target in manufacturing industry in next five years.

Market outlook (Japan)

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17

Market outlook (Japan)

• Aging society

In 2015, the population is 130 million. Population of 65 year old and above is 33.843 million, stands 26.3% of total population. In that, there are 10.02 million of population of 80 year old and above.

• Cost of medical treatment is huge

In 2015, cost of medical treatment stands 10.2% of the GDP, GDP is 3,419 US dollars. (In Taiwan, cost of medical treatment stands 6.3% of the GDP, GDP is 1,409 US dollars.)

• Government welcome generic drugs

Government keeps lower down the medicine price in order to control the medical treatment cost. Estimate in ~~2020 the control can reach to 80%:20%.~~

• Outsourced medicine R&D and manufacturing

As the production cost is still high to the in-land manufacturers plus the medicine price is getting lower, there are more cases been outsourced to oversea manufacturers.

• In alliance with oversea market

Since the domestic growth is slow and manufacturing cost is high, more cooperate with oversea manufacturers and export to South East Asia.

Business outlook

1. Preventive medicine ： Develop and promote New functional food supplement.

2. Cancer injection ： Cooperation and exportation business with Oncology Center.

3. Plant extracts ： Develop patent extraction into international market.

4. New drugs ： Focus on R&D and investigate different indicat ~~ion to strengthen product differentiation in the~~ market and its profitability.

5. International strategy ： Business cooperation with firms from China, Japan, ASEAN and North America.

6. Resource Integration ： Use current resources to develop step by step, create cooperation in order to expand or optimize total value.

19

Corporate Social Responsibility I

1. Promote social care , medical prevention and health education

• Host health forum, biotechnology camp. Combined medical, academia, and biotechnology community to set up an interaction platform. Also, cultivate talented personnel.

• Continually to sponsor Breast Cancer Foundation, Taiwan Cancer Foundation, Taiwan Alzheimer’s Disease Association, Spinal Cord Injury Foundation, The Diabetes Association of the Republic of China (Taiwan), Taiwan Yilan Association of Diabetes Supporters, and Youngsun Culture & Education Foundation.

• 1,300 Sinphar Counters in Taiwan join Taiwan Alzheimer’s Disease Association’s Dementia Friendly Business.

20

Corporate Social Responsibility II

2. Support education and sports continually.

• Sponsor World Badminton Athlete, Tai Tzu Ying( 戴資穎 ).

• Team up and anticipate in Yilan Toucheng Township’s and Pingtung Hengchung’s Cianggu (The Grappling with Ghosts) Competition.

• Sponsor Yilan High school’s soccer, basketball team.

• Sponsor Yilan Chung Dau High School baseball team.

• Sponsor National Ilan University gymnastics team.

• Sponsor to set up Sinphar Hope Elementary School (China Xinjiang Yutian County).

3. Humani ~~tarian Support~~

• Emergently schedule and produce scald medicine (Siliverzine Cream) to hospitals for Formosa Fun Coast explosion patients overnight.

• Immediately provide resource support to Southern Taiwan earthquake disaster in 2016.

• • Sponsor Chinese Christian Medical Mission’s dentist service group for volunteer medical consultation in Mumbai, India.

21

Q & A

• Business development ： Chang, Chih-Chao 。 (02-27603688 # 2304)

• • Investor Services ： Chen, Shu-Hsia 。 (02-27603688 # 2237)