Transcript Biostar Pharmaceuticals, Inc.

Biostar Pharmaceuticals, Inc.
Nasdaq: BSPM
Investor Presentation
Aug 2014
Forward Looking Statement
Statements contained in this presentation not relating to historical facts are forward-looking statements that are intended to fall
within
the safe harbor rule under the Private Securities Litigation Reform Act of 1995. All forward-looking statements included
herein are based upon information available to the Company as of the date hereof, and the Company assumes no obligation to
update any such forward-looking statements. As a result, readers and potential investors should not place undue reliance on
these forward-looking statements. To the extent that any statements made here are not historical, these statements are
essentially forward-looking. Forward-looking statements can be identified by the use of words such as “expects,” “plans,” “will,”
“may,” “anticipates,” “believes,” “should,” “intends,” “estimates” and other words of similar meaning. These statements are
subject to risks and uncertainties that cannot be predicted or quantified and, consequently, actual results may differ materially
from those expressed or implied by these forward-looking statements. Such risk factors include, without limitation, our ability to
properly execute our business model, to attract and retain management and operational personnel, potential volatility in future
earnings, fluctuations in the Company’s operating results, governmental decisions and regulation, and existing and future
competition that the Company is facing. These forward-looking statements are subject to known and unknown risks and
uncertainties that could cause actual events to differ from the forward-looking statements. More information about some of
these risks and uncertainties maybe found in the Company’s filings with the Securities and Exchange Commission under the
caption "Risk Factors“ in such filings. Information regarding market and industry statistics contained in this presentation is
included based on information available to us that we believe is accurate. It is generally based on industry and other
publications that are not produced for purposes of securities offerings or economic analysis. We have not reviewed or included
data from all sources and cannot assure investors of the accuracy or completeness of any such data included in this
presentation. Forecasts and other forward-looking information obtained from these sources are subject to the same
qualifications and the additional uncertainties accompanying any estimates of future market size, revenues and market
acceptance of products and services.
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Introduction
Biostar Pharmaceuticals, Inc. (Nasdaq: BSPM) is a Chinese based developer,
manufacturer and marketer of pharmaceutical and health supplement products for a
variety of diseases and conditions
•Strong R&D capabilities (two high-tech laboratories)
•Two world-class production facilities
•Diverse portfolio of products
•Extensive and efficient distribution network in 28 provinces
•82 acres of raw material & herb plantations
•Future strategic development
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Investment Considerations
•
Unique vertically integrated business model
- R&D, raw material plantation, processing, manufacturing, distribution and sales
•
Large product portfolio and a strong pipeline of new products to continue to drive growth
-
•
Currently produces and sells 30 products and 1 medical device
Innovative product pipeline with a wide variety of OTC and prescription drugs
In 2011, acquired permits and approvals for 86 drugs and one health product
In March 2013, acquired additional 13 drug approval license numbers
Xin Aoxing - leading market position, strong brand recognition throughout China
- Targets hepatitis B virus (HBV) which affects more than 10% of China’s population
- Strong recognition: OTC drug approved by China’s State Food and Drug Administration (SFDA)
•
Well positioned to take advantage of market opportunities such as:
- China’s $124 billion healthcare reform plan
- New Rural Medical Care Cooperative Program
- Milestones: won a bid to supply hospitals In 1 province with Huangyangning Tablets, 2
provinces with Wenweishu Capsules, 8 provinces with Hyperthyroidism Capsules
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1 About Biostar
2 Financial Highlights
3 Growth Opportunities
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Vertically Integrated Business Model
Raw Material
Farm
Raw
materials
and
82 acres of
plantation
Lab, Processing, Warehouse and
Offices in Xianyang
Two R&D
Laboratories
Two worldclass
production
Facilities：
Xianyang &
Weinan
R&D Lab
R&D Lab
Sales
network
covering 28
provinces
Drug
Manufacturing
Drug Manufacturing
Covers retail
outlets,
hospitals,
pharmacies
and Clinics
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Self-farming: Reduces Costs & Controls
Quality
In 2008 acquired 82 acres in Tsinling Mountains
Planted and growing 13 herbs including:
•Salvia miltiorrhiza
•Pricklyash peel
•Eucommia bark
•Gingko
•Honeysuckle
•Shizandra berry
•Scutellaeria baicalensis georgi
•Milk veteh
•Radix codonopsitis
To control quality and reduce cost of raw materials
In 2010 - all raw materials were purchased from suppliers; planted herbs were harvested gradually
and the use of this is increasing
In 2011 - Salvia miltiorrhiza is being used as raw material
From 2012-2014 - Additional herbs to harvest and be ready for use
Goal - increase production and fulfill all needs for raw materials or trade for other herbs: further
reduce costs and control quality
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Strong R&D Capabilities
Two R&D laboratories (Xianyang & Weinan)
•30 scientists & researchers
•Average 10 years of experience
External R&D – Biostar sponsors and owns
the Intellectual Property
Xianyang lab
•Shaanxi College of Traditional Chinese Medicine
•Shaanxi University of Science and Technology
•Life Science College of Northwest University
•The Fourth Military Medical University
Weinan lab
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World-class Production Facilities - Xianyang
Xianyang facility
•4 Good Manufacturing Production (GMP)
certified production lines producing 10
products and 1 medical device
•When fully launched, the company anticipates annual
production capacity over $100 million
•Two new production lines are under construction and
waiting for GMP certification:
-Zushima production line -When fully launched, the
company anticipates to generate approximately $30 million
-in revenues annually
-Health products line - When fully launched, the company
anticipates to generate approximately $10 million in
revenues annually
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World-class Production Facilities in Weinan
Weinan facility
•Acquired Shaanxi Weinan Huaren
Pharmaceuticals In October 2011
•Five production lines
•One high-tech laboratory
•Currently, produces 20 drugs and one
healthcare product
•$3.0 million in net sales for the first
quarter of 2014
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Significant Designation for Biostar’s China Subsidiaries
●In January 2014, Biostar's operating subsidiary, Shaanxi Aoxing Pharmaceutical Co.,Ltd, was designated
as the experimental base of the Liver Disease Health Education in Shaanxi province.
●Shaanxi Aoxing Pharmaceutical has been awarded numerous honors of Shaanxi Pharmaceutical and
Health Products Cooperation Association Director Unit.
●The company believes that the above-referenced awards and experimental status will provide a new
platform for product promotion, research and development of Biostar Hepatites B products.
●More efforts will be directed towards the search and development of both current and future products.
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New Partnership with Universities in Shaanxi
• A new liver cancer drug was developed in March 2014 by the company and its partner—the Research
Institute of Pharmaceuticals at Shaanxi University of Chinese Medicine.
• Current cases of cancer on a global scale have been increasing drastically with China holding the larger
percentage of the demographic

According to the World Health Organization (WHO), in 2012 on a global basis, there were
14 million new cancer cases and 8.2 million deaths; China accounted for 3.07 million of the new cases
and 2.2 million of the deaths.

In 2012, China accounted for approximately 50% of the world’s liver cancer cases.
• Signed letter of intent in May 2014 with Northwest University to cooperate and develop a new
Myocardial ischemia medication
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A Diverse Portfolio of Products - Xianyang
Category
Name
Treatment
Aoxing #1 Oleanolic Acid Capsule
OTC
Prescription
Health Product
Medical Device
Xin Aoxing Capsule
SFDA
Acute and chronic hepatitis B (“HBV”)
Approved
Ganwang Compound
Influenza
Ap proved
Tianqi Dysmenorrhea Capsule
Menstrual swelling and cramping
Approved
Danshen Granule
Alleviates blood stasis and angina
Approved
Taohuasan Pediatric
Children respiratory tract infection
Approved
Yizi Capsules
Aids fertility and fetal development
Provincial level approved
Tangning Capsules
Type II diabetes
Provincial level approved
Shengjing Capsules
Replenish kidney function
Provincial level approved
Aoxing Ointment
Psoriasis, vitiligo and dermatitis
Provincial level approved
Aoxing Ganbaodai
Hepatic and liver protection
Provincial level approved
Hernia Belt
Hernia
Provincial level approved
GanWang
Taohuasan
Tianqi Dysmenorrhea Capsule
Danshen Granule
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A Diverse Portfolio of Products- Weinan
Category
OTC
Name
Zhitong TouGu Ointment
Anfengwan Compound tablets
Deafness Tongqiao Pills
Wenweishu Capsules
Chuzhang Zehaifu Tablets
Treatment
Analgesic
Cold
Deafness
Chronic gastritis
Cataract
Prescription
Fosfomycin Calcium Capsules
Huangyangning tablets
Hyperthyroidism Capsules
Qianlietong Capsules
compound Danshen tablets
Piracetam Tablets
Erythromycin Estolate Granules
Jingang Tablets
Aspirin Enteric-coated Tablets
Liganlong Capsules
Longdan Xiegan Pills
Yanlixiao Capsules
Danxiang Rhinitis Tablets
Azithromycin Dispersible Tablets
urinary tract infection
CHD
hyperthyroidism
prostatic hypertrophy
CHD
cerebrovascular disease
antisepsis and anti-inflammation
enchance kidney
cerebrovascular disease
chronic hepatitis
purge pathogenic fire, clear heat
anti-inflammation
Allergic rhinitis, sinusitis
anti-inflammation
Healthcare
Huaren Changweitong Capsules
enhance stomach function
•
•
SFDA
Approved
Approved
Approved
Approved
Approved
Approved
Approved
Approved
Approved
Approved
Approved
Approved
Approved
Approved
Approved
Approved
Approved
Approved
Approved
Approved
Biostar has been the supplier of hospitals in 10 provinces, providing Huangyangning Tablets,
Wenweishu Capsules and Hyperthyroidism Capsules since April 2012.
The penetration of hospital prescription drug has a milestone significance to Biostar.
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Competitive Advantages
Four nationally approved medications：
Zhitong Tougu Plaster , Hyperthyroidism Capsules , Qianlietong Capsules ,
Yinyangsuo Tablets
Two exclusive nationally approved medicines:
Zhitong Tougu Plaster , Amoxicillin Enteric-coated Tablets
Awaiting approval for army licensed drugs, exclusive production:
Zushima Analgesic Spray
OTC medicine updated from the local standards to national standards:
Xin Aoxing Oleanolic Acid
Two national patents
Zhitong Tougu Plaster,Aoxing Ganbao
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Flagship Product –New Aoxing
•
OTC drug for the treatment of HBV
– Approved by SFDA
– Recognized by China Consumer Association
•
Targets a highly contagious disease
–More than 130 million people (10% of China’s
population) are infected with HBV
•
Has high effectiveness rate
– High effectiveness rate in relieving HBV symptoms - (as
per People's Hospital of Shaanxi Province)
•
Nationally branded product and easily accessible
– Sold at local pharmacies since 1998
•
Low cost/high margin
•
Highly affordable
– In most cases covered by personal health insurance
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Innovative Product Pipeline
Category
Name
Zushima
Treatment
Statute
Aerosol pain suppressant
Provided for the PRC military,
OTC
Pending PLA approval
Yinyangsuo Tablets
Tonifying kidney
National new drug, SFDA approved
Working on the paperwork
Prescription
Oleanolic Acid Injection Liver cancer ,Liver cirrhosis
Applied for project approval
Drug
Danshensu Yibingzhi
Myocardial ischemia
In the 12th 5-year plan database
National class-one chemical drug
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Large Sales Network
Beijing
Weinan
Xianyang
•Across 28 provinces
•More than 13,000 in Shaanxi rural
Factories in Xianyang
and Weinan in Shaanxi
Province
Biostar sales
network coverage
area
•Sales team
with 400+ employees
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Current Bid Distribution
Heilongjiang
Liaoning
Beijing
Hebei
Henan
•Bidding for medicines across
10 provinces
•Selling in nearly 30 hospitals
•Planning on a hospital sales
Shanghai
Chongqing
Zhejiang
Huangyangning Tablets
bidding zone
Wenweishu Capsules
bidding zone
Jiangxi
Guangxi
Hyperthyroidism
Capsules bidding zone
team with 200 members.
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1
About Biostar
2 Financial Highlights
3
Growth Opportunities
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Historical Financial Performance
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Looking Forward
In late July 2012, Xianyang SFDA gave the“green light” of approval to restart sales of gel capsule
products.
Despite the temporary setback, business remains
strong.
Business
Plan:
Steps taken:
•Continue introducing new products.
•Expand the market.
•Broaden channels of distribution.
•Restart the sales of star product Xin Aoxing.
Re-establish customer confidence: Started aggressive advertising campaign in
medical journals and health magazines.
New Business Model：Established a B2C call center for direct sales to
customers;
Established a hospital sales team consisting of
approximate 200 sales representatives
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Balance Sheet Highlights
As of 31/12/2013
Highlights
Cash and Cash Equivalents
31/12/2013
31/12/2012
$80,072
$1,759,078
Total Current Assets
$35,985,502
$41,974,131
Total Assets
$67,564,444
$70,475,300
$4,791,505
$12,702,552
$62,772,939
$57,772,748
$67,564,444
$70,475,300
Total Current Liabilities
Total Shareholders’ Equity
Total Liabilities and Shareholders’
Equity
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1
About Biostar
2
Financial Highlights
3 Growth Opportunities
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Other Growth Opportunities
China’s medicine and pharmaceutical industry is one of the fastest growing industries in the
Chinese economy (According to Data Monitor & IMS Health)
• The world’s third largest prescription drug
market
• Grown at over 16% annually (since 2000)
• Profits ranked 5th highest in China
Mentality of patients living in rural areas is
changing
• 70% of China’s 1.3 billion rural population.
• Number of patients seeking cures through
Modern medicines offered in hospitals and
healthcare centers is rapidly increasing
Highly fragmented market and government backed consolidation initiatives provide M&A
opportunities
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China’s Healthcare Reform
•
China's $124 billion healthcare reform plan was launched in 2009. Two major
guidelines of the plan are accessibility and affordability
– The first phase completed by the end of 2011 increased accessibility
– The second phase to be completed by 2020 aims to increase affordability by
making medicines and medical services affordable to everyone.
• Chinese government increased the number of medicines included in the National
Reimbursement Drug list (fully or partially reimbursable)
• Private health insurance has become more affordable
•
$5.6 billion investment over 3 years has facilitated the
“New rural cooperative medical care program”
– Investment on patient education and encouragement
to use “modern”medicine
– Provides patients suffering from severe diseases with
additional financial assistance
– Shaanxi, Sichuan, Chongqing, Gansu, Henan, Hubei,
and Hunan comprised 30% of the $5.6 billion spending
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Future Strategic Development
Biostar’s Strategies:
•3 strategic moves: based on medication, strength, simultaneous development
•3 innovations: management innovation, operations innovation, technological
innovations
•4 accelerating processes: internet marketing, information modernization,
industrial diversification, service standardization
•1 strategic goal: build up a pharmaceutical mainstay company
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N Cina
Implementation of Development
Strategies
•Seek to acquire smaller, similarly situated pharmaceutical companies and
pharmaceutical distribution companies, utilized to achieve economies of scale
and optimize the scale of production and sales
•Development of technological resources, supplying pipeline for 1-2 new
products a year
•Every 2 years create a new leading product, with targeted sales over RMB 100
Million
•Diversified industrial development strategy pattern implementation of drug
development, medicine cultivation, drug production, drug, pharmaceutical
chain store sales
•Build a pharmaceutical company, create economies of scale, improve yield
per share, return to investors
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How to Contact Us
Corporate website:
www.biostarpharmaceuticals.com
Contact:
Ally Gong
Tel: +86-29-3368-6638
Email: [email protected]
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Biostar Pharmaceuticals, Inc.
Nasdaq: BSPM
Investor Presentation
Aug 2014