Biostar Pharmaceuticals Inc · OTC:BSPM
Biostar Pharmaceuticals — Investor Presentation (September 2010)
22 slides from Biostar Pharmaceuticals's investor presentation, Sep 13, 2010
Slide 1: Biostar Pharmaceuticals Investor Presentation
BIOSTAR PHARMACEUTICALS NASDAQ GM: BSPM Biostar September 2010 INVESTOR PRESENTATION
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS In accordance with the meaning of “exemption” per 1995 Securities Litigation Reform Act, this statement documents contain ”forward-looking statements”. This statement is related to risks, uncertainties and other factors which may cause the company’s statement not matched b
Slide 3: NASDAQ GM: BSPM
NASDAQ GM: BSPM Price (09/09/10): $2.43 Fully Diluted Shares Outstanding (at 06/30/10): 27.8M Market Cap (09/09/10): $67.6M Q2 2010 Revenue (unaudited): $19.4M Q2 2010 Adjusted Non-GAAP Net Income (unaudited)* $5.8M Q2 2010 Adjusted Non-GAAP EPS (Diluted)* (unaudited) $0.21 2009 Revenue $53.3M 2009
Slide 4: Company Overview
VA COMPANY OVERVIEW Based in Xi’an, China, BSPM develops, manufactures and markets traditional Chinese medicines, generic pharmaceuticals and medical nutrients for a variety of diseases and conditions. Proven market leadership - Xin-Aoxing capsule, a leading SFDA approved OTC capsule treating Hepati
Slide 5: Growth Strategy
GROWTH STRATEGY ¢ Grow rural retail distribution by 60%+ per year ¢ Develop new OTC and prescription products ¢ Increase usage in new and existing markets ¢ Invest 20%-25% of sales in marketing to build brand awareness and drive incremental growth ¢ Vertically integrated model brings quality control
Slide 6: Key Products
KEY PRODU Q2 2010 Retail Gross Margin SFDA Name Revenue _ prices Indications breakdown uspg _—((22 2010) easiest Xin Aoxing Oleanolic Acid 66% $78 35% ‘Acute and chronic hepat ore Capsule Ganwang ™% eu _ Prevents and treats the common cold ore Compound ‘i and influenza. Tiangi ‘An OTC traditional Ch
Slide 7: A Market Opportunity
A MARKET OPPORTUNITY ¢ China pharmaceutical industry projected to grow 20%+ in 2010 to approximately $182 billion.* ¢ Fragmented industry — over 3,600 private pharma companies, many of which are undercapitalized; provides opportunity for BSPM to gain market share.** ¢ Significant potential to sell m
Slide 8: China's New Healthcare Reform Plan
CHINA’S NEW HEALTHCARE REFORM PLAN (C* ¢ Chinese government is investing $124 billion for a national healthcare reform for 2009-2011 ¢ Includes $5.6 billion over 3 years for “New rural medical care cooperative program”, with goal of full medical coverage for all 900 million rural citizens by 2011 ¢
Slide 9: China's Hepatitis Prevalence — Very High
VA CHINA’S HEPATITIS PREVALENCE — VERY HIGH Geographic Distribution of Hepatitis B Virus China has more than 10% prevalence of HBV Source: US CDC.
Slide 10: Drug Approved in China for HBV
RUG APPROVED IN CHINA FOR HBV is @ A disease caused by the hepatitis B virus (HBV) which infects and inflames the liver, causing life-long side effects. Approximately 130 million or 10% of the Chinese population has Hepatitis B. Worldwide infection rate has doubled since 2000. The Company estimates
Slide 11: Affordable and Effective Drug for Hepatitis B
Be AFFORDABLE AND EFFECTIVE DRUG FOR HEPATITIS B Xin Aoxing: Compelling value proposition 6-month treatment: $450 for Xin Aoxing vs. $6,000+ for injections Western cp Western roa Prescription $2000+ —_| $6,000to $20,000 Cost/side effects Hi ioe ell Hepatitis B www.zggby.com Source: Decision Resource
Slide 12: Vertically Integrated Model
= Plantation R&Dand Production lan | Covering 30 Provinces 28Sales |) Centers [Currently ‘over 1300 Retail Outlets; Hospitals, Pharmacies Distribution Centers and 10,000 rural | Adding 50 sales outlet 12
Slide 13: Research & Development
SEARCH & DEVELOPMENT External R&D — Biostar sponsors and owns the IP: °Xianyang Medical Material Institute ¢Shaanxi University of Science and Technology *Northwest University - College of Life Science Extended Patent Protection for Xin Aoxing: September 16, 2029 30 internal scientists & researchers:
Slide 14: New Products — Launched in Q2 2010
NEW PRODUCTS — LAUNCHED IN Q2 2010 Qe * Yizi Capsules - Aids fertility and helps in fetal development during pregnancy. * Tangning Capsules - For treatment of type II diabetes. * Shengjing Capsules - Replenishes kidney function with low price and high efficacy. * Aoxing Ointment — For skin treatment
Slide 15: Sales & Marketing Strategy
VA SALES & MARKETING STRATEGY * Weare allowed to do mass media advertising for our SFDA approved OTC drugs, while Western drugs are prohibited from ads * We spent $7.5m in advertising for the past 6 months since January 1, 2010, or 24% of revenue * Working with pharmacies and doctors in 22 provinces
Slide 16: Multi-Faceted Distribution Strategy
Ba MULTI-FACETED DISTRIBUTION STRATEGY City Market * We have penetrated 22 provinces in China * In Q2 2010 alone, we have entered 7 new provincial markets, generating $3.3m revenue Rural market * We have penetrated 7,000 rural clinics out of the estimated total of 730,000 in China * We target 10,000
Slide 17: Modern Production Facility
MODERN PRODUCTION FACILITY BIOSTAR has 4 Good Manufacturing Production (GMP) certified production lines with the potential to expand to an annual production capacity of over $100 million. New line for proprietary Zushima Spray to expand capacity by projected $30 million. Companies must meet GMP stan
Slide 18: Sales and Profit Growth
(US $ inmtions) $600 $600 00 $300 $200 $100 ws. or 180 wo 120 100 ao 60 53.3 2007 2008 20022009 = a22m0 ee Profit (Mar $15.41 Eid 40.0% . | 30.0% OE C = 5 | 20.0% i s00% 0.0% zoo? 208200922009 022010 * Q2 2009 and Q2 2010 numbers are unaudited ALES AND PROFIT ee 400 Net Income (WSS inmtons) 120 OWTH
Slide 19: Financial Highlights
FINANCIAL HIGHLIGHT: 6/: $ million except for margins & DSO 9 fanetaien| Cash and cash equivalents 8.6M 9.7M Working Capital 24.1M 32.2M Accounts Receivable DSO 134 days 145 days Total Stockholders’ Equity 40.9M 49.5M Net cash from operating activities 5.7M. 1.0M Gross Margins 73.2% 74.2% Operating
Slide 20: 2010 Guidance
2010 GUIDANCE $80 - $82 million Net Sales and $18 - $20 million Net Income * Gross margin of 75% * 82% of sales from direct efforts; 18% from distributors * Xin-Aoxing sold in 22 Provinces * At least 10,000 retail points of sale in rural areas * 5 products will reach $6M and account for 8% of total
Slide 21: Management Team
MANAGEMENT TEAM Ronghua Wang - Chairman » Founder and CEO since 1997 » Prior Senior management with Geological Research Institute and Drugs Research Institute > Named “Top Ten Most Important People” in the Shaanxi pharmaceutical industry 2001 > Graduate of China’s Northwest University, with a Bachel
Slide 22: Biostar Pharmaceuticals, Inc.
Biostar Pharmaceuticals, Inc. Bill Chen, CFO Phone: +86-138-161-00700 Email: bchen65@gmail.com HC International, Inc. Ted Haberfield, Executive Vice President Phone: +1-760-755-2160 Email: thaberfield@hcinternational.net 22
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