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ASIApharm Group Ltd 亚洲药业集团有限公司 1H2006 RESULTS PRESENTATION MR LIU DIANBO, EXECUTIVE CHAIRMAN August 2006 FINANCIAL Highlights Key Financial Highlights FINANCIAL PERFORMANCE 1H06 1H05 CHANGE (%) REVENUE (RMB’000) 153,079 162,892 (6.0) NET PROFIT TO EQUITY HOLDERS (RMB’000) 41,142 40,025 2.8 EPS (RMB CENTS) 9.58* 9.82* (2.4) NET ASSET VALUE (RMB CENTS) 141.5 84.6** 67.3 NET PROFIT MARGIN (%) 26.7 24.6 - *based on the weighted average number of 429,583,082 and 407,764,900 shares respectively **FY2005 value Revenue Growth Drivers REVENUE GROWTH DRIVERS BY SEGMENT 1H05 TO 1H06 REVENUE GROWTH DRIVERS 1H06 1H05 CHANGE (%) PHARMACEUTICAL DRUGS (OUR PRODUCTS) 134,344 132,228 1.6 R&D 9,571 14,241 (32.8) ACTIVE INGREDIENTS 8,185 14,655 (44.2) PHARMACEUTICAL DRUGS (DISTRIBUTION) 979 1,768 (44.6) TOTAL 153,079 162,892 (6.0) Pharmaceutical Sales RMB(m) 200 132.2 89.3 100 134.3 77.3 65.6 53.2 53.2 30.8 0 2003 2004 For period ending 30 June 2005 2006 2Q 1H Revenue Growth Drivers REVENUE GROWTH DRIVERS BY PRODUCT 1H05 TO 1H06 DRUG 1H06 RMB'000 1H05 RMB'000 CHANGE % MAITONGNA 48,528 57,110 (15.0) LUTINGNUO 53,830 47,207 14.0 NUOSEN 23,047 17,031 35.3 OKAI 2,474 3,597 (31.2) ELCATONIN 2,189 1,241 76.4 OTHERS 4,277 6,042 (28.9) TOTAL 134,344 132,228 1.6 Revenue Segmentation 1H2006 1H2005 9% 9% 1% 6% 81% 5% 1% 88% PHARMACEUTICAL DRUGS (OUR PRODUCTS) R&D PHARMACEUTICAL DRUGS (OUR PRODUCTS) R&D ACTIVE INGREDIENTS PHARMACEUTICAL DRUGS (DISTRIBUTION) ACTIVE INGREDIENTS PHARMACEUTICAL DRUGS (DISTRIBUTION) Net Profit RMB(m) 45 40 35 30 25 20 15 10 5 0 41.1 40.0 26.2 24.5 20.3 16.1 3.6 7.4 2003 2004 For period ending 30 June 2005 2006 2Q 1H BUSINESS OVERVIEW Profile in Brief AsiaPharm Group Ltd: • Leading pharmaceutical group of specialty drugs in China • Focus on research & development, production and sale of natural drugs and Drug Delivery Systems (DDS) • Main operations based in Yantai of Shandong Product Specialisations Orthopaedics 骨科 Neurology 神经科 Gastroenterology 消化科 Hepatology 肝脏科 Oncology 肿瘤科 Business Scope COMPREHENSIVE RANGE OF PRODUCTS & SERVICES MANUFACTURE AND SALE OF PHARMACEUTICAL DRUGS SALE OF R & D RESULTS / PATENTS TRADING OF ACTIVE INGREDIENT & DISTRIBUTION PRESCIPTIVE DRUGS FOR HOSPITAL USAGE NEW PRODUCTS INTRODUCED ANNUALLY EXPORT TO NORTH AMERICA & WESTERN EUROPE Competitive Strengths •Strategically located in Yantai high-tech Industrial Development Zone -Fully integrated, FDA/SFDA compliant production facilities Strong R&D capability -Over 120 research staff -62 products developed or currently under development Significant market penetration -Distribution network encompassing more than 2,000 hospitals -35 sales offices covering 30 provinces and municipals -280 sales staff KEY PRODUCTS OUR KEY PRODUCTS • Maitongna (麦通纳) • Anti-inflammatory and anti-swelling drug used in (Sodium Aescinate the fields of orthopaedics for injection) and neurology • Okai (欧开) (Sodium Aescinate tablet) • Used for vein dysfunction, varix, piles • Used in pain relief and • Olai (欧莱) anti- inflammatory (Compound Sodium purposes Aescinate Gel) KEY PRODUCTS • Nuosen (诺森) (Sodium Pantroprazole for Injection) • Used in gastroenterological ailments • Lutingnuo (绿汀诺) (Reduced Glutathione for Injection) • Used in hepatology (liver ailments) and antioxidants • Sidinuo (斯迪诺) (Elcatonin for Injection) • Used for orthopaedics (osteoporosis) New Products • Ximingting (希明婷) • Used in the treatment of menopausal ailment • Otong (欧通) (Capsaicin Gel) • Used in pain relief for rheumatism and softtissue damage • Sailimai (塞立迈 ) (Encapsulated Smectite powder) • Used in the treatment of acute and chronic diarrhoea PRODUCTS APPROVED UNDER NHI KEY PRODUCTS APPROVED UNDER NHI • • • • Maitongna (麦通纳) Lutingnuo (绿汀诺) Nuosen (诺森) Sidinuo (斯迪诺) PRODUCT PIPELINE Product Pipeline Year 2006 2007 Product Usage Status Capsaicin Gel (Otong) (欧通) Received New Drug Pain relief for rheumatism/softCertification, to be tissue injury launched in 2006 Dioctahedral Smectite Dispersible Tablets (Sailimai) (塞立迈 ) Acute/chronic diarrhoea Received New Drug Certification, to be launched in 2006 Pantoprazole Pellets Capsule Used for Gastric and duodenum ulcers To be launced 2nd half 2006 Arginine Aescin for Injection (七叶皂苷精氨酸) Anti-inflammation and antiswelling, increase vein vasodilation Clinical Trials Phase II Lutingnuo Enteric Capsules (绿汀诺肠溶胶囊) Liver aliments such as acute alcoholic hepatitis, alcoholic hepatic fibrosis and liver cirrhosis Approved for Clinical Trials Chlorogenic Acid + Baicalin (炎可清) Respiratory infection caused Application for by both bacteria and virus; flu; Clinical Trials tonsillitis and faucitis Product Pipeline Year 2008 2009 Product Huperzine A Tablet (石杉碱甲缓释片 ) Usage Alzheimer’s disease Status Clinical Trial Approval Huperzine A Depot Injection Alzheimer’s disease (moss Huperzia serrata) ( 石杉碱甲微球) Preclinical MD102 Depot Injection Parkinson’s disease Preclinical Dihydroxy-phenyl lactate (Danshensu) (丹参素) Cerebral vascular disease Preclinical STRATEGIC PARTNERSHIPS Strategic Partnerships NAPO LATEST DEVELOPMENTS Latest Developments 8 May 06 • Placement of 80 million new shares to strategic investors • Attracts significant interest from investment community with entry of several key investors • Raises RMB 322.0 million to fund future growth initiatives 17 May 06 • New product OTONG® obtains SFDA new drug approval • Used in the treatment of Rheumatism and soft-tissue injury • Targets over 100 million Rheumatism patients in PRC Latest Developments 30 May 06 • Acquires remaining stake in trading subsidiary Luye Trading • Strategic restructuring of Yantai Luye Drug Trading to focus on higher margin in-house and imported drugs 30 June 06 • New product SailiMai ® obtains SFDA new drug approval • Used in the treatment of acute and chronic diarrhoea • Targets a market worth approximately RMB 500 million annually Industry Outlook Industry Outlook • Regulatory reviews follows initiative to keep healthcare affordable to the general population • Government to increase expenditure in the healthcare sector • NHI to double total number of participants from 140 million to 300 million by 2010 • Extend basic healthcare into to rural communities • Control percentage of revenue from sales of prescription drugs for hospitals Industry Outlook • Temporary restriction of promotional activities in hospitals and purchase of drugs not under stocklist • SFDA new procedures and guidelines on new drug approvals • Stricter compliance with GMP and GSP standards • Price cutting measures on generic drugs; but will encourage companies to develop new proprietary drugs • These reforms will benefit established pharmaceutical companies like AsiaPharm in the long run FORWARD STRATEGIES Forward Strategies Domestic pharmaceutical sales • Increase in selling efforts of key products Lutingnuo, Nuosen, Sidinuo and Okai to achieve steady growth • Recovery in sales of Maitongna by switching to other dosage • Ximingting, a safe, natural alternative to the chemical drugs used for Hormone Replacement Therapy (“HRT”) will drive future growth Forward Strategies • Capsaicin gel (Otong) and Dioctahedral Smectitie Disperse Tablet (Sailimai), together with Olai will form OTC portfolio of the Group • Pantoprazole Pellets Capsule (oral formulation of Nuosen), targeted for launch in FY2006 • Restructuring of Luye Drugs Trading, to focus on our own drugs and distribute imported drugs with higher margin Forward Strategies International pharmaceutical sales • Sale of drugs to Vietnam, Pakistan and other Asian countries • Attaining GMP approvals by TGA, EMEA and FDA through the collaboration with foreign pharmaceuticals companies • Strategic alliance with foreign partners to manufacture and distribute products overseas Forward Strategies R&D • Devote more resources towards R&D for our future product pipeline • Provide third party contract services and transfer of technology • Co-develop new products with foreign partners (eg. Napo, USA) Forward Strategies Merger & Acquisition • Placement of new shares provides RMB 322.0 million for Asiapharm to fund its M&A strategy • Strategic targets with high-earning potential, similar strategic direction and products • Currently in final negotiations with several M&A targets • Objective finalisation probable by 2006/07 QUESTION & ANSWER ASIApharm Group Ltd For further information, please contact: Tel : (065) 62200119 Fax: (065) 62200282 Website: www.asiapharm.biz