Investor PresentationJanuary 2012

Biostar Pharmaceuticals, Inc.Nasdaq: BSPM

Forward-Looking Statement

This presentation includes statements that are “forward-looking statements.” Whilemanagement has based any forward-looking statements contained in thepresentation on its current expectations, the information on which such expectationswere based may change. These forward-looking statements rely on a number ofassumptions concerning future events and are subject to a number of risks,uncertainties, and other factors, many of which are outside of Biostar’s control, thatcould cause actual results to materially differ from such statements. Such risks,uncertainties, and other factors include, but are not necessarily limited to, those setforth under the caption “Item 1A. Risk Factors” in Biostar’s most recent Form 10-Kfiling, as and to the extent revised and updated to date in its subsequent Form 10-Qfilings. In addition, Biostar operates in a highly competitive and rapidly changingenvironment, and new risks may arise. Accordingly, you should not place any relianceon forward-looking statements as a prediction of actual results. Biostar disclaims anyintention to, and undertakes no obligation to, update or revise any forward-lookingstatement. You are also urged to carefully review and consider the variousdisclosures in Biostar’s most recent Annual Report on Form 10-K, as well as otherpublic filings with the SEC since the filing of Biostar’s Annual Report.

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Introduction

Biostar Pharmaceuticals, Inc. (Nasdaq: BSPM) is a China 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 25 provinces

• 82 acres raw material & herbs plantation

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4

Investment Considerations

• Unique vertically integrated business model- R&D, raw material plantation, processing, manufacturing, distribution and sales

• A history of strong profitable growth- Revenue: 2007-2010 CAGR of 71%.- Net Income: 2007 – 2010 CAGR of 62% - On track to achieve its 2011 guidance: 20%-25% top line growth

• Large product portfolio and a strong pipeline of new products to drive growth- Currently produces and sells 21 products and one medical device- Innovative product pipeline of seven products (OTC and prescription drugs)- Recently acquired permits and approvals for 86 drugs and one health product

• Xin Aoxing - leading market position, strong brand recognition throughout China- Biostar’s main product, Xin Aoxing 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)- Over $53 million in sales in 2010: CAGR of 74% for the period 2007-2010

• Well positioned to take advantage of market opportunities such as: - China’s $124 billion healthcare reform plan which promotes accessibility and affordability- New Rural Medical Care Cooperative Program launched in 2008, as more patients seek cures

through medicines offered in hospitals and healthcare centers

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1 About Biostar2 Financial Highlights

3 Growth Opportunities

Vertically Integrated Business Model

Lab, Processing, Warehouse and Offices in Xianyang

Raw Material Farm

Drug Manufacturing

R&D Lab

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Raw material

plantation

82 acres

Two R&D Laboratories

Two world-class

production facilities

Xianyang & Weinan

Sales network

covering 25 provinces

Covers retail outlets,

hospitals and

pharmacies

Self-farming: Reduces Costs & Controls Quality

• In 2008 acquired 82 acres in Qinling 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 not yet ready for harvest and use yet

– In 2011 - Salvia miltiorrhiza is ready and being used as raw material – In 2012 - Additional herbs to harvest and be ready for use– Goal - increase production and fulfill all its needs for raw material: further reduce costs and

control quality

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Strong R&D Capabilities

• Two R&D laboratories (Xianyang & Weinan)

– 30 internal scientists & researchers

– Average 10 years of experience

• External R&D – Biostar sponsors and owns the Intellectual Property

– Shaanxi College of Traditional Chinese Medicine

– Shaanxi University of Science and Technology

– Northwest University - College of Life Science

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Xianyang lab

Weinan lab

World-class Production Facilities - Xianyang

Xianyang facility

• Four Good Manufacturing Production (GMP) certified production lines producing ten products and one medical device

• Has annual production capacity of over $100 million

• Two new production lines are under construction and waiting for GMP certification:

– Zushima spray line - estimated to generate approximately $10 million in revenues annually

– Health products line - estimated to generate approximately $20 million in revenues annually

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World-class Production Facilities - Weinan

Weinan facility

• In October 2011, acquired Shaanxi Weinan HuarenPharmaceuticals

• Five production lines

• One high-tech laboratory

• Currently produces ten drugs and one health product

• Additional products to be added in 2012

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67.5%5.6%

6.7%

7.3%

4.5%8.4%

Xin Aoxing

Taohuasan

Gan Wang

Tianqi

Danshen

Health Products total

A Diverse Portfolio of Products - Xianyang

Category Name Treatment SFDA

OTC

Xin Aoxing Oleanolic Acid Capsule Acute and chronic hepatitis B (“HBV”) Approved

Ganwang Compound Influenza Approved

Tianqi Dysmenorrhea Capsule Menstrual swelling and cramping Approved

PrescriptionDanshen Granule Alleviates blood stasis and angina Approved

Taohuasan Pediatric Children respiratory tract infection Approved

Health Product

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

Medical Device Hernia Belt Hernia Provincial level approved

9M 2011 Revenue Breakdown

Xin Aoxing Capsule

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A Diverse Portfolio of Products - Weinan

Category Name Treatment SFDA

OTC

Zhitong Tougu Plaster Cream Pain reliever Approved

Compound Paracetamol and Amantadine Hydrochloride

Common cold Approved

Prescription

Fosfomycin Calcium Urinary tract infections Approved

Huangyangning Tablets Cardiovascular disease Approved

Jiakangling Capsule Hyperthyroidism Approved

Qianlietong Capsule Prostate disease Approved

Wenweishu Capsules Chronic gastritis Approved

Danshen Tablets Coronary heart disease Approved

Piracetam Tablets Cerebrovascular disease Approved

Erythromycin Estolate Coated ParticlesAnti-bacterial anti-inflammatory

Approved

Health Product Huaren Changweitong Capsule Gastrointestinal function Approved

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Flagship Product – Xin Aoxing

• OTC drug for the treatment of HBV

– Approved by SFDA

– Recognized by China Consumer Association

• Targets a highly contagions disease

– More than 130 million people (10% of China’s

population) are infected with HBV

• Has high effectiveness rate

– 93% 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

– Up to 80% gross margin product

• Highly affordable

– $970/year retail price, in most cases covered by

personal health insurance

Xin Aoxing Capsule

1019

37

5345

2007 2008 2009 2010 9M '11

Revenue Generated by Xin Aoxing ($ Million)

Solid Growth Over a 4-Year Period

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Innovative Product Pipeline

Category Name Treatment Status

OTCKunLingWan Irregular menses Finished clinical testing

Zushima Aerosol pain suppressant Pending SFDA approval

Prescription

Azithromycin Tympanitis, pharyngitis, bronchitis Pending SFDA final testing

Yinyangsuo Kidney disease Finished clinical testing

Zhixuening Uterine Bleeding Finished clinical testing

Xiao’aiping Tumors, esophagus cancer Finished clinical testing

Zhenbao Wan Thrombus & coronary heart disease Finished clinical testing

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Large Distribution Network

- Extensive sales network across China’s 25 provinces

- Over 11,800 rural medical sales outlets in Shaanxi

- Sales team of over 300 members

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SGOCO HQ

Beijing

Beijing

Xianyang

WeinanFactory locations in Xianyang and Weinan –Shaanxi province

Provinces – Biostar’ssales network coverage

Sales and Distribution Strategy

Distribution Strategy

Two-

Dimensional

Sales Strategy

Sales & Marketing Strategy

MASS Advertising:

Broaden

Awareness

RURAL Marketing:

Widen

Coverage

• Mass media advertising for OTC drugs (eg. Xin Aoxing) to increase brand awareness

• Continue to invest in new sales offices and sales-force

• Build closer relationship with pharmacies and doctors

• Increase penetration in 25 existing provincial markets

• Deepen penetration in rural markets by opening additional rural distribution centers

• Invest in village clinics and sales centers

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1 About Biostar

2 Financial Highlights3 Growth Opportunities

Solid Financial Performance

16.0

34.0

53.0

80.0

51.9

66.0

2007 2008 2009 2010 9M '10 9M '11

Revenue ($ Million)

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20

39

60

38.6

46.6

2007 2008 2009 2010 9M'10 9M'11

Gross Profit ($ Million)

4

7

11

17

11.3 11.3

2007 2008 2009 2010 9M'10 9M'11

Net Income ($ Million)

0.19 0.22

0.32

0.63

0.41 0.41

2007 2008 2009 2010 9M'10 9M'11

Earnings per Share ($ )

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73% 72%

83%86% 85% 84%

2007 2008 2009 2010 9M'10 9M'11

Gross Margin

Cost and Gross Margin

5.2

14.1 14.3

20.1

13.3

19.4

2007 2008 2009 2010 9M'10 9M'11

Cost of Total Sales ($ Million)

67%59%*

73% 75% 74% 71%

2007 2008 2009 2010 9M'10 9M'11

Gross Margin

19

2.8

5.36.3

7.7

5.37.1

2007 2008 2009 2010 9M'10 9M'11

Cost of Sales ($ Million)

Xin Aoxing Product All Biostar Products

Healthy Cash Inflow From Operation

1,310 2,093

5,674

12,84111,848

12/31/2007 12/31/2008 12/31/2009 12/31/2010 9/30/2011

Net Cash Provided by Operating Activities ($ Thousand)

2,286 758*

8,578

13,211

24,007

12/31/2007 12/31/2008 12/31/2009 12/31/2010 9/30/2011

Cash & Cash Equivalents ($ Thousand)

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Capital Structure as of 9/30/11

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Common Stock: 100,000,000 shares authorized • 28,196,627 shares of common stock issued

Warrants: total of 587,353 exercisable as follows:• 500,000 warrants were issued in connection with the November 2, 2009 private placement• Exercisable at $3 per share – expiry date November 1, 2014• Redemption price - $0.01/share (if common stock price equals to or exceeds $4.5 on each

trading day for twenty (20) consecutive trading days ending on the trading day prior to November 1, 2014.

• 55,000 warrants exercisable at $2 per share – expiry date May 31, 2013• 32,353 warrants exercisable bat $2.74 per share – expiry date June 30, 2014

Stock Options: outstanding 1,086,667 options• 846,667 options exercisable at $2.60 - expiry date October 21, 2014• 100,000 options exercisable at $4.45 - expiry date December 29, 2013• 50,000 options exercisable at $2.80 - expiry date October 26, 2015• 70,000 options exercisable at $1.97 - expiry date April 6, 2016• 20,000 options exercisable at $2.60 - expiry date April 6, 2014

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1 About Biostar

2 Financial Highlights

3 Growth Opportunities

Growth Strategy

Vertically integrated model :

- Controls product quality and cost / increases business efficiency

- Conducts market research to improve new product introductions & market penetration

Increase raw material plant

productivity to:

- Improves quality control of raw materials

- Reduces costs/ increases margins

- Plants herbs for own use and resale to third parties

Enhance R&D capability to:

- Self develop unique leading OTC and prescription products

- Owns intellectual property

Invest in marketing and sales force to:

- Further penetrate existing markets

- Expand into new markets

- Grow rural retail distribution by 30%+ per year

Develop online sales & educational portal

to:

- Focus on patient education

- Encourage lifelong usage of medical products

Pursue additional M&A opportunities

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Market Opportunities – Xin Aoxing

Increase market penetration in China (according to US CDC & World Health Organization)

• One third of 350 million HBV patients globally, reside in China

• 10% of China’s 1.3 billion population is affected by HBV; 70% of patients live in rural areas, representing a target of 91 million patients

• Biostar 2010 sales in rural areas represented only 18% of its total sales

Expand distribution in other Asian countries(according to the Asian Liver Center at Stanford University)

• Asians have the highest rate of HBV infection of all ethnic groups

Competitive / affordable pricing to fuel growth

High Hepatitis Prevalence in China

Ample Opportunities in Other Asian Countries

Manufacturer Type Treatment Cost Side Effects

Biostar OTC $81.2/box, 400 pills None

Gandezhi Prescription $110 / box, 360 pills Yes

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2011 Priorities

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Grow top line

Increase rural penetration

Expand marketing efforts and sales force

• 20-25% top line growth in 2011• 2010 revenue of $80 million: 9 month 2011 revenue of $66 million

• Expand sales and marketing team to 400 members• Over 300 sales people as of October 2011

• Shaanxi province• Targeting 13,000 rural medical sales outlets• Reached more than 11,800 clinics at the end of October 2011

• Expand/deepen penetration and increase market share in all other provinces

508

634

790

1,038

1,245

2006 2007 2008 2009 2010

China Pharmaceutical Market Size (RMB Billion)

Other Market Opportunities

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• Grown at over 16% annually (since 2000)

• Reached $184 billion in 2010

• To grow by another $50 billion in 2011

• To become the world’s third largest prescription drug market in 2011

Mentality of patients living in rural areas is changing

• 70% of China’s 1.3 billion people live in rural areas

• Number of patients seeking cures through “modern” medicines offered in hospitals and healthcare centers is rapidly increasing

China’s medicine and pharmaceutical industry is one of the fastest growing industries of the Chinese economy (according to Data Monitor & IMS Health)

Highly fragmented market and government backed consolidation initiatives provide M&A opportunities

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 to be completed by the end of 2011 aims to increase 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

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• $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 form severe diseases with additional financial assistance

– Shaanxi, Sichuan, Chongqing, Gansu, Henan, Hubei, and Hunan comprised 30% of the $5.6 billion spending

Regulatory Compliances

• Quality Control Related

– Good Manufacturing Practice (“GMP”) Certification, regulated by the State Foods and Drugs Administration (“SFDA”) – All Chinese pharmaceutical manufacturers must be GMP certified to produce medicines of any kind. Biostar received its first GMP certification in 2006 and received another verification in 2011 for a period of five years.

• New drug approval and licensing

– SFDA and China Traditional Medicine Administration Bureau regulate the process of new drug approval and licensing in China. Redwood Capital estimates that only 15% of new-to-market drug applications got approval by SFDA.

• Environmental regulations

– Subject to environmental laws and regulations stipulated by national and local environment protection bureaus in China.

• Intellectual Property Rights and Patents

– Biostar has filed for copyright protection for the various names and brands of products.

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Corporate website:www.biostarpharmaceuticals.com

Contact:

Zack Pan, CFOBiostar PharmaceuticalsT: 405-996-8829E: zpan@aoxing-group.com

Lena CatiThe Equity GroupT: 212 836-9611E: lcati@equityny.com

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How to Contact Us

Investor PresentationJanuary 2012

Biostar Pharmaceuticals, Inc.Nasdaq: BSPM