SPT — Investor Presentation 2013

Jan 30, 2013

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ScinoPharm Management Presentation

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TWSE 1789

January, 2013

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Confidential

Disclaimer

This material has been prepared by ScinoPharm Taiwan, Ltd. (“ScinoPharm”).

Any opinions expressed in this material are subject to change without notice as a result of using different assumptions. ScinoPharm is under no obligation to update or keep current the information contained herein. The information contained in this presentation is ScinoPharm’s confidential information.

Any disclosure, copying, distribution or any action taken or omitted to be taken in reliance on it is prohibited and may be unlawful.

No representation or warranty , express or implied, is or will be made in or in relation to, and no responsibility or liability is or will be accepted by the Company as to , the accuracy or completeness of this material and any liability therefore is hereby expressly disclaimed.

Statements made in this material include forward-looking statements, which include, without limitation, statements about the issues, plans and expectations of ScinoPharm. Without limiting the foregoing, statements including the words “believes”, “anticipates”, “plans”, “expects” and similar expressions are also forward-looking statements. Forward-looking statements reflect, among other things, management’s plans and objectives for future operations, current views with respect to future events and future economic performances and projections of various financial items. These forwardlooking statements involve known and unknown risks , uncertainties and other factors which may cause actual results to differ materially from those implied by such forward-looking statements.

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Table of Content

Overview of ScinoPharm

Financial & Operation Results ScinoPharm’s opportunities and competition in China API Market Business Outlook

Q&A

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Overview of ScinoPharm - An Active Pharmaceutical Ingredient Company

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Confidential

Background

• Established in 1997 in Taiwan by founders from Syntex, current market cap ~ US$1.3 billion

• Major shareholders include Uni-President Group, Government’s Development Fund, Taiwan Sugar, etc.

• Facility & organization built by experienced team from Syntex

• Brand new facility designed & built in Taiwan, received multiple inspections of US FDA and authorities from Australia, EU, Japan, etc.

• Specialized in high potency (steroid & cytotoxic) & injectable APIs

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Confidential

Company Overview

• Maintain dominant position in Specialty APIs for generic market. Established strong presence in US/EU generic market, some channeled through Indian generic companies. Aggressively developing Japanese and Chinese markets

• Developed ~60 generic APIs with 21 launched. Filed 43 DMFs in US (631 DMFs WW), leader in supplying oncology injectable APIs with 20 US DMFs

• 70+ NCE CRAMs projects, with 5 in phase III with NDA filing in 2-3 years & 4 already launched. The only company in Asia supplying API for multiple NCEs for commercial

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World Class Facilities

Taiwan

China

• 6.6 hectares of land, 330K sqft facilities with >200M[3] reactor volume after 2 large product lines expansion

• Eight of our production lines are equipped with the special capability to produce APIs used in high-potency sterile injections

• US FDA approved & >200 GMP audits by customers

• Provides comprehensive contract research services for brand drug companies

 Global market

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• With nearly 250M[3] reactor volume

• The first phase completed in Q1, 2012. The second phase completed in Q1/Q2 2013

• cGMP designed facility for intermediates & high potent API

• Complete capabilities in API development, and manufacturing from small to large scale for global and China generic as well as CRAMs (Contract Research And Mfg Services) markets

• Global market including China

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Recent developments in SPT & SPC

• SPT’s Bay 5 has started production in December 2012, Bay 4 will start production in early 2013

 SPC’s phase I production facilities have obtained pharmaceutical production permits from local authorities

 SPC’s phase I small, mid, and large production lines (total of 4 production lines and 2 clean areas) have completed IQ/OQ and started full production in September

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Confidential

ScinoPharm - Oncological API Leader

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Comparison among Taiwan API peers ScinoPharm is a leader in DMFs and Patents

	ScinoPharm	Other Taiwanese API Co.’s	Other Taiwanese API Co.’s	Other Taiwanese API Co.’s
		A	B	C
# of DMFs	43	14	11	9
# of patents since 1997	38	9	6	5

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CPhI

Convention on Pharmaceutical Ingredients CPhI holds more than 5 major exhibits/year

• CPhI Madrid, Oct. 9-11, 2012

• CPhI India, Nov. 21-23, 2012

• CPhI California w/ informEx, Feb. 20-22, 2013

• CPhI Japan, Apr. 24-26, 2013

• CPhI China, Jun. 25-27, 2013

• CPhI Germany, Oct. 22-24, 2013

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ScinoPharm at CPhI Madrid

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Convention center

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ScinoPharm at CPhI Madrid

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Convention entrance

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ScinoPharm at CPhI Madrid

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ScinoPharm Booth
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ScinoPharm at CPhI Madrid

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ScinoPharm meeting with clients

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ScinoPharm at CPhI Madrid

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Business meetings

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ScinoPharm at CPhI Madrid

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Business meetings
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ScinoPharm at CPhI Madrid

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Business meetings
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ScinoPharm at CPhI Madrid

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ScinoPharm delegates

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ScinoPharm at CPhI Madrid

During 10/9~11 at CPhI Madrid, ScinoPharm had

 Meetings with more than 100 clients

• Categories of clients ：

• Generic pharma ： 65%

• New drug co.’s ： 20%

• Others ： 15% (incl. agents and starting material suppliers)

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Observations from CPhI on API industry

 Central/Eastern Europe generic market is ScinoPharm has connected to the market fast-growing –  Brazil in South America and Indonesia in South East Asia are two potential markets  India’s strategy to bring global recognition to its quality

 EU’s new regulations on API imports

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Financial & Operation Results

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P&L - Consolidated

NT$MM, except EPS	1~3Q, 2012 (reviewed)	1~3Q, 2011 (reviewed)	YoY
Net Sales	3,168	2,824	12%
Gross Profit	1,601	1,387	15%
Gross margin	50%	49%
OperatingExpense	(735)	(600)	23%
OperatingIncome	866	787	10%
Operating margin	27%	28%
Other Rev.(Exp.)	16	(24)	167%
Net Income after Tax	748	639	17%
Net margin before tax Net margin after tax	28% 24%	27% 23%
EPS(after tax)	1.15	1.02	13%

EPS are calculated based on weighted average number of outstanding shares

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Balance Sheet- Consolidated

**Balance Sheet- Consolidated **	**Balance Sheet- Consolidated **	**Balance Sheet- Consolidated **	**Balance Sheet- Consolidated **	**Balance Sheet- Consolidated **
NT$MM	2012/09/30 (reviewed)		2011/09/30 (reviewed)
Cash and Cash Equivalents	2,303	24%	3,195	36%
Accounts Receivable	959	10%	669	7%
Inventories	1,962	20%	1,403	16%
Long-Term Investments	150	2%	195	2%
Fixed Assets	3,609	38%	3,099	35%
Other Assets	562	6%	404	4%
Total Assets	9,545	100%	8,965	100%
Current Liabilities	853	9%	651	7%
L-T Liabilities and Others	30	0%	27	0%
Stockholders’ Equities	8,662	91%	8,287	93%

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Cash Flows- Consolidated

NT$MM	1~3Q, 2012 (reviewed)	1~3Q, 2011 (reviewed)
Cash and cash equivalents at beginningofperiod	3,294	1,908
Cash flows from operating activities	314	922
CAPEX	(619)	(497)
Cash flows from financing activities	(631)	898
Other Investing activities	(55)	(36)
Cash and cash equivalents at end ofperiod	2,303	3,195

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Sales by Business

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2011 1-9
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2012 1-9

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CRO, 2% [CMO, 9% ]
CMO, 15%
CRO, 3%
Generic, 82%
Generic, 89%
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Sales by Indications

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2011, 1-9
Others,
15%
CNS, 16%
Oncology,
69%
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2012, 1-9
Others,
11%
Oncology,
57%
CNS, 32%
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Confidential Confidential

Sales by Region

2011, 1-9

2012, 1-9

ROW <1%

ROW <1%

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Asia
US & CAN
20%
AU & NZ 38% US & CAN
4% EU 47%
30%
EU
29% Asia
26%
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Asia
US & CAN
26% US & CAN
33%
36%
AU & NZ
EU
5%
32% EU
33% Asia
28%
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Out of the 20% Asia sales in 2012, India was 11%, rest of Asia was 9%

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ScinoPharm’s opportunities and competition in China API Market

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Confidential

China API market trends

• Government’s 12[th] five-year plan sets a goal for pharmaceutical industry to grow at a CAGR of 20%, and

 Explicitly requires 100% compliant with the latest GMP for nationwide pharma manufacturing. Also encourages pharma co.’s to apply for int’l certifications. China now ranks #3 in terms of number of US DMFs, only next to India and USA

• To cope with the latest GMP requirements, China pharma co.’s face stiff challenges

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Confidential

ScinoPharm aims on China Market

• ScinoPharm exports APIs to China market and has 6 customers

• ScinoPharm Changshu complies with latest GMP standards and will benefit from the reduced competition after 12[th] five-year plan drives out disqualified companies

• ScinoPharm’s specialty in oncology APIs meets China market demands: China oncology drug market ranks #2. Among top 20 oncology drugs, ScinoPharm provides 9 APIs

• ScinoPharm cooperates with its US/EU customers to import drugs that have high unmet needs in China

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Confidential

SPC’s Strategic Goals

Short-term goal: 1 year Expand capacities – To be able to produce intermediates and provides expanded capacities for SPT

Mid-term goal: 3 years

Adopt Double A (API+ANDA) business model – To team up with pharma co.’s to apply for ANDA in US/EU and export final drug products globally. Currently already has APIs working with customers to apply for ANDA Long-term goal: 5 years Penetrate into China domestic market – To develop 1[st] API to be sold domestically in China and 1[st] imported drug in 5 years. Aggressively penetrate into high-margin oncological and specialty API markets

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Confidential

ScinoPharm Vs. Chinese API Peers

ScinoPharm

Chinese API Peers

Focus on high entry-barrier oncological APIs. Less competition, higher margin

Mostly producing lower entrybarrier APIs. Fierce competition, lower margin

Marketing globally, competitive in technology and quality

Has built a stronghold in global API market and started vertical integration

Mostly focusing on domestic market, products and quality are not competitive globally To fulfill 12[th] 5-yr plan, develop internationally and vertically

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“ ” ScinoPharm’s Double A plan

 Strategic Alliance ScinoPharm is in discussion with one of the top 3 Chinese pharma co.’s to develop oncological drugs for China market

 Drug Product Co-development ScinoPharm is partnering with a marketer and a formulation producer to co-develop oncology injectables for China market

 Vertical Integration ScinoPharm will vertically integrate to develop dossiers for difficult-to-make APIs and to increase our value proposition in the supply chain

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Business Outlook

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2013 Product Launch Plan

API	Region	Indications	Brand Marketer	Regional Sales	WW Sales
Azacitidine	US	MDS, Anti-neoplastic	Pharmion	US$331.3MM*	US$729.7MM*
Decitabine	US	MDS, Anti-neoplastic	MGI Pharma	US$238.0MM*	US$249.1MM*
Docetaxel Anhydrous, Trihydrate	JP	Anti-neoplastic	Sanofi Aventis	US$236.9NM**	US$2,051MM*
Modafinil	US	Antinarcolepsy	Cephalon	US$1,219MM*	US$1,319M*
Paclitaxel JP		Anti-neoplastic	Bristol Myers	US$307.1MM**	US$1,654M*
Riluzole US		ALS	Sanofi Aventis	US$55.0MM*	US$237.1MM*
Topiramate	US	Seizures	Customer	NDA ( FDA tentative approval)

Source: * Newport/IMS Data In-house research**

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Outlook

• Sustain Leadership Position in Oncological Injectable APIs Continue developing small molecule oncological injectable APIs and expand into other areas with high technology barriers including Peptides

• Expand Presences in China

Expansion of API business to timely capture the Chinese market facing increasingly stringent GMP requirement

• Japanese Market Penetration

Establishing strategic partnerships with major pharma companies in Japan and expect to market total 6 products in 2012

 Vertical Integration – Double A Strategy Reinforce overall API development and investment return; select difficultto-make APIs to formulate dossiers and provide one-stop services to customers

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Confidential

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Brand Quality with Asian Advantages

www.scinopharm.com

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