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www.dragonpharma.com
Safe Harbor
This presentation contains forward looking statements, including but not limited to,
that the Company will continue to experience growth in sales of its main products,
that it will continue to be able to improve its production technology and efficiency, that
it will continue to achieve continuous growth in business and profitability in the near
future. These statements are subject to certain risks and uncertainties that could
cause actual results to differ materially from those anticipated in the forward looking
statements. Readers should not place undue reliance on forward looking statements,
which only reflect the views of management as of the date hereof. The Company
does not undertake the obligation to publicly revise these forward looking statements
to reflect subsequent events or circumstances. Readers should carefully review the
risk factors and other factors described in its periodical reports filed with the
Securities and Exchange Commission.
About Us
High-quality manufacturer of
generic antibiotic products
Market leader in fast growing Chinese
and emerging markets
Strong customer relationship with CMO
for major global drug companies
OTCBB:DRUG • TSX:DDD
Founded: 1998
Incorporated in Florida, USA
Auditors: Ernst & Young
Tax Advisors: KPMG
Outstanding Shares: 67,066,418
Vancouver
Florida
Datong
Beijing
Strong Growth Track Record
Target markets carry strong drivers for generics
Proven market power for major products in India and China
Manufacturing know-how serves as high entry barrier
Steady revenue growth with 70% CAGR in the past four years
Significant upside potential from vertical integration on product pipelines
Fast-Growing Target Market
Global Manufacturing Trend
Upstream:
China
Major Mfrs. for
Intermediates &
APIs
Big Pharmas’
Contract Mfrs. in
Hub Countries
Downstream:
India etc.
Emerging markets
Sophisticated markets
Emerging markets have stronger demand for
antibiotics due to huge population and more
serious bacterial infection issues
Health Care Reform in China
US$123 billion to provide universal medical coverage to 90% of China’s
population by 2011
Generic drugs have always been the essential consumption due to the
reimbursement principle of National Medical Insurance Plan
All Our Products are on the Chinese National Medical Insurance List
2008
2009
2010
2011
Complete Product Pipeline
& Market Leadership Position
Expanding Product Lines
Leading Core
Products
Cephalosporin
Powder for
Injection
D-7ACA –
Cefuroxime
7-APRA –
Cefprozil
Clavulanic
Acid
7-ACA
Products Under
Development
Early-Stage
Products
In the market
Prolongs effectiveness of antibiotics, such
as Amoxicillin, by breaking the
development of resistance
A key intermediate to produce 50+ types
of cephalosporin antibiotics
12 types of powder for injection in
44 dosages
Best-selling antibiotics in
cephalosporin group with a market
shareof 10% in China
Very safe and effective antibiotics in
treating allergic infections, especially for
children, that creates substantial market
potential
Gross Margin
~40%
~30%
Optimized Industrial Margin
~20%
over 35%
over 35%
Leader in Emerging Market for Clavulanic Acid
First and largest Clavulanic Acid manufacturer in China with capacity of 78 tons
Leading cost-effective supplier to emerging markets
80% market share in China
Exports: India (over 30% market share), Jordan, South Korea, Pakistan, Egypt, Indonesia, etc.
Sales Growth of Dragon Pharma
(Tons)
Rapid Consumption Growth in
China (Tons)
Started production in 2004
Robust Sales Growth of 7-ACA
The world production of 7-ACA is dominated by Chinese manufacturers with total
production capacity of 5,500 tons
Dragon Pharma is the third largest producer and largest exporter in China (49% of total
exports)
641
2005
2006
2007
2008
Sales Growth of Dragon Pharma (Tons)
Efficient Sales & Marketing Strategy
Direct sales model with a selling expense only 3% of the revenue
Sales team totalling 50 people
Big Pharmas’
Contract Mfrs. in
Hub Countries e.g.,
India
Intermediates & Bulk
APIs
Intermediates &
Bulk APIs
Downstream
Pharmaceutical
Companies
Formulations
Hospitals
Distributors
Long-Term Close Relationships with Clients
3 - 6 Months
Send Samples to Clients
Clients Implement Various Tests
Stability Tests
Manufacturing Process
Experiments
Customer Feedbacks
Contract Development
Trial Order Purchasing
Stable Long-Term Cooperation
Harbin pharmaceutical group
Major Clients
Technology-Driven Efficiency
High compatibility from
7-ACA to downstream
manufacturing, minimized
CAPEX
7-ACA: lowest cost due to highest yield
Esterification
Hydrolyzing
Crystallization
Filtration
Leaning Drying
Seed
Cultivation
Fermentation
Membrane
Filtration
Resin Distillation
Cephalosporin
Crystallization
Enzyme
Decomposition
Crystallization
Filtration
Cleaning Drying
7-ACA
Bean Oil etc.
Yield increased by 60%
New biochemical
technology lowered cost
& reduced environmental
impact
Clavulanic Acid:
Increasing capacity without increasing investment
Seed Cultivation
Fermentation
Filtration
Extraction
C03A Crystallization
Centrifuging
Drying
C03A Packaging
Potassium Clavulanate
Crystallization
Filtration
Cleaning
Drying
Potassium Clavulanate Packaging
Key Technologies
Selection and cultivation of bacterial
seeds
Fermentation: reduced impurities,
increased pureness
Growth Delivered
Strategic Repositioning is Paying-off
Other Key Financial Indicators
High turnovers of accounts receivable (A/R) and inventory
2008 A/R aging: < 3 months (89%), between 3-6 months (8%)
Solid operating results and cashflow
Future Growth Strategies
Product Strategy
Vertically extend to high value-added APIs for synergetic product chain
Be the first manufacturer of new generic drugs to substitute imported
products to China
Establish exclusive ownership of innovative manufacturing technology
Crude Bulk API
Sterilized Bulk API
Formulation Drugs
7-ACA
Ceftazidime
Cefotaxime
Cefuroxime
Cefprozil
Others
Ceftazidime
Cefotaxime
Cefuroxime
Cefprozil
Others
Ceftazidime
Cefotaxime
Cefoperazone
Ceftriaxone
Cefuroxime
Cafonicid
Cefminox
Others
Intermediate
China
Further develop downstream products to take advantage of industrial consolidation
Leverage nationwide sales and marketing network to capture the growth driven by
health care reform
Market Strategy
International
Enhance long-term cooperation with global contract manufacturers for leading
pharmaceutical companies
Enhance market leadership position of Clavulanic Acid
Dragon Pharmaceutical Inc.
TSX: DDD • OTCBB: DRUG
Maggie Deng
Chief Operating Officer
1-604-669-8817
mdeng@dragonpharma.com
