Lotus Pharmaceuticals, Inc. · OTC:LTUS
Lotus Pharmaceuticals — Investor Presentation (December 2007)
27 slides from Lotus Pharmaceuticals's investor presentation, Dec 5, 2007
Slide 1: Lotus Pharmaceuticals December 2007
Lotus Pharmaceuticals December 2007
Slide 2: Forward-looking statements
This presentation contains "forward-looking statements" within the meaning of the “safe-harbor” provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to d
Slide 3: Company overview
A developer, manufacturer & distributor of pharmaceutical products in the PRC market Operations began in September 1999 Listed on OTCBB through reverse merger in September 2006 Headquartered in Beijing, China Core Strengths: ◦ National sales & distribution channel: hospital sales reps; dis
Slide 4: Investment highlights
o Significant marketing and distribution channels to the hospital systems in China o Established product portfolio o Strong pipeline of branded generics and innovative pharmaceuticals in the leading therapeutic classes o China’s tremendous growth potential in the pharmaceutical industry o High growt
Slide 5: Market Potential
Market Potential
Slide 6: China pharmaceutical market demand and growth
Total Market Demand Growth Key Characteristics 120 Comparison of Global Chinese government 102.7 1• Pharmaceutical Markets spending less on 100 Compound Annual Growth Rate (2000 – 2005) healthcare In Billions of US$ 80 ◦ Individuals forced to 14 shoulder more of cost 60 50.7 12.7 11.8 12 40 10.7 26.
Slide 7: Hospitals and Pharmacies
Hospitals Pharmacies o Distribute 80% of the drugs sold in o Central government is China encouraging development of retail pharmacies o Over 10,000 wholesalers act as middlemen to distribute from o Promotes separation of manufacturers to hospital market prescribing and dispensing while demanding a f
Slide 8: Fragmented Industry, Trend of Consolidation
Fragmented Industry Trend of Consolidation Total pharmaceutical manufacturers: GMP certification reduced the number ◦ ~4,000 of pharmaceutical manufacturers from Average Revenue: 6,000 to less than 4,000 ◦ ~RMB 50M, or ~$7M US Market driven competition may Average R&D: eliminate more small
Slide 9: Competitive Strengths
Competitive Strengths >a
Slide 10: Powerful Sales Network, Extensive Distribution Channels
2007 Wholesale Revenue Geographic Breakdown Powerful Sales Network Others, 7.7% Hubei, 4.1% 100+ salespeople / hospital sales reps Henan, 5.1% Beijing Headquarters + 4 regional sales offices Inner Mongolia, 27.4% Hunan, 6.2% Sichuan, 7.1% Extensive Distribution Channels Guangdong, 13.1% Cover
Slide 11: Store Location of Pharmacies Operated by Lotus
Store Location of Pharmacies Operated by Lotus Beijing International Airport Fifth Fourh Third Ring Second Ring Ring Ring Tiananmen Square City of Beijing 11
Slide 12: Focused Branded Product Development and Marketing Efforts
Focused Branded Product Development and Marketing Efforts in Each Period 2005 – 2006 2001 – 2004 2004 - 2005 2007 and on Mai Xin Mai Xin Mai Xin Mai Xin Mu Xin Mu Xin Mu Xin Jun Xin Jun Xin All four products are included in the National Medical Insurance Catalog Over 8,000 drugs are sold through t
Slide 13: Mai Xin, Mu Xin, Jun Xin, Ni Mai Jiao Lin
Mai Xin Mu Xin Jun Xin Ni Mai Jiao Lin • Valsartan capsule • Brimonidine tartrate • Levoflaxin lactate • Nicergoline for • Hypertension eye drops powder for injection injection • = Diovan (Norvartis) • Open angle glaucoma • Anti-infective • Central Nervous under SFDA • = Alphagan (AMO) System Compli
Slide 14: Sales breakdown by product
Total sales of $36.2M in 2006, of which Lotus’ four existing products accounted for 60.4%, or $21.9M Total sales of $37.6M through 3rd Quarter 2007, of which Lotus’ four existing products account for 65.2%, or $24.5M Other Revenue Sources Other Lotus Branded Drugs Wholesale Drugs, 3.8% , 3.8% Contra
Slide 15: Drugs with pre-clinical studies complete and SFDA application launched
Lotus has 7 drugs on which the pre-clinical studies are complete and the SFDA application has been launched Expected Potential Therapeutic Effects and Product Candidate Disease Indication Category Time of Monitoring Introduction Period 1. Sodium Aescinate- Central Nervous Drug Category 6 2008 N/A In
Slide 16: Drugs under pre-clinical trials
Lotus has 14 drugs under pre-clinical trials as of the end of November 2007 Expected Potential Therapeutic Effects and Product Candidate Disease Indication Category Time of Monitoring Introduction Period Sustained Release Tablets 1. Gliclazide Hormone-Diabetes Drug Category 6 2009 N/A 2. Hawthorn Fl
Slide 17: New product launches and therapeutic focus
3-4 new product launches each year Strategic therapeutic area focus: Cardiovascular & Hormone Branded generics + innovative +Traditional Chinese Medicine (TCM) technology based products Guided by first-hand market research and data collection Future acquisitions 17
Slide 18: Management and Board of Directors
Liu Zhong Yi, Chief Executive Officer and President • Founder and Chairman of Lotus Pharmaceuticals • Established the Research Center of Space Flight Biological Engineering Technology while working for the Chinese Government in 1992 • Entered the private sector four years later by starting his first
Slide 19: Revenue and Net Income
Revenue Net Income 2005-2006 Growth: 9.0 2005-2006 Growth 30.0% Revenue = 97.4% Net Income = 123.9% 50.0 100.0% Gross Profit = 157.5% 8.0 EBIT = 623.4% 7.7 45.0 90.0% 25.0% 7.0 40.0 37.6 80.0% 36.2 6.0 20.5% 35.0 70.0% 6.0 20.0% In Millions of US$ In Millions of US$ 30.0 60.0% 5.0 4.4 15.9% 4.1 15.0
Slide 20: Sources of Capital and Activity Ratios
Sources of Capital Activity Ratios 35.0 12/31/06 Debt / Equity = 75.1% 30.0x 30.2 26.7x 30.0 9/30/07 25.0x Debt / Equity = 49.7% 25.0 In Millions of US$ 20.6 20.2 20.0x 20.0 Ratio 15.0x 15.0 11.8 10.0 10.0x 8.5x 10.0 8.8 6.2x 6.2x 5.0x 5.0x 2.4x 5.0 0.0x 0.0 12/31/2006 9/30/2007 12/31/2006 9/30/2007
Slide 21: Growth Strategy
Growth Strategy
Slide 22: Growth strategy
Pipeline product portfolio consisting of branded generics and innovative products Cardiovascular and hormone agents are identified as the strategic focus Market penetration Penetrating deep into the target geographic markets. Already an important player in Inner Mongolia and Anhui, Lotus will ex
Slide 23: Concluding Remarks
Concluding Remarks >a
Slide 24: Acquisitions, Pipeline of Innovative Products, Distribution Capabilities
Acquisitions Pipeline of Innovative Products Distribution Capabilities for Current Product Portfolio 24
Slide 25: Appendix
Appendix
Slide 26: Corporate structure
Lotus Pharmaceuticals, Inc Outside China 100% Inside China Beijing Lotus Genesis Mr. Liu and Pharmaceutical Co, Senior Ltd Management 100% 100% Beijing Liang Fang Beijing En Ze Jia Shi Contractual Agreement Pharmaceutical Co, Ltd Pharmaceutical Co, Ltd Contractual Agreement 26
Slide 27: Share Ownership Pre-Offering
Share Ownership Pre-Offering % Held Dr. Liu Zhong Yi 18,812,400 45.26% Mrs. Song Zhenghong 6,738,000 16.21% Genesis Technology Group, Inc. 3,200,000 7.70% Mr. Shaohua Tan 3,170,304 7.63% China West, LLC 2,802,400 6.74% Other shareholders (with less than 5%) 6,841,096 16.46% Total Shares Outstanding
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