boph - investor presentation
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INVESTOR OVERVIEW PRESENTATION
November 2010INVESTOR OVERVIEW PRESENTATION
November 2010
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Disclaimer and Forwar d-Looking StatementsDisclaimer and Forwar d-Looking Statements
Statements in this presentation and of the management or representatives of Bohai Pharmaceuticals Group, Inc. (the ³Company´) in
connection therewith that relate to belief s, plans, objectives, goals, expectations, anticipations, intentions and future f inancial condition,
results of oper ations or business performance constitute ³forwar d-looking statements´ within the meaning of Section 27A of the Secur ities
Act of 1933 and Section 21E of the Secur ities Exchange Act of 1934. These forwar d-looking statements are based on management¶s
current expectations about future events. These statements can be identif ied by the f act that they do not relate str ictly to histor ical or current
f acts, and by wor ds such as ³may,´ ³could,´ ³should,´ ³would,´ ³believe,´ ³expect,´ ³project,´ ³anticipate,´ ³estimate,´ ³intend,´ ³plan´ or other
similar wor ds or expressions.
Any or all of the forwar d-looking statements in this presentation or made by management dur ing this presentation may tur n out to be in
accur ate or wrong. This can occur as a result of inaccur ate assumptions or as a consequence of signif icant known or unknown r isks and
uncertainties. The Company addresses these r isks in the ³Risk Factor s´ section of its f ilings with the SEC. Because of these r isks and
uncertainties, the Company¶s actual results may differ mater ially from those that might be anticipated from its forwar d-looking statements.
Therefore, you are cautioned not to place undue reliance on such forwar d-looking statements. The Company undertakes no obligation to
publicly update any forwar d-looking statements, whether as a result of new information, future events or otherwise, except as required by
applicable law.
Also, in presenting this mater ial and responding to inquir ies in connection with the presentation, management may refer to results,
projections, or performance measures that are not prepared in accor dance with U.S. gener ally accepted accounting pr inciples (³GAAP´) as
reported in the company¶s SEC f ilings. You are advised that these results, projections, or performance measures are non-GAAP measures
and are not intended to replace or as a substitute for results measured under GAAP but r ather as a supplement to the GAAP reported
results.
This presentation does not constitute or form part of an offer to sell or issue or invitation to pur chase or subscr ibe for any shares of the
Company in any jur isdiction, and no part of this presentation shall form the basis of or be relied upon in connection with any contr act or
commitment. Specif ically, this presentation does not constitute a ³prospectus´ within the meaning of the U.S. Secur ities Act of 1933, as
amended.
The contents of this presentation may not be reproduced, redistr ibuted or passed on, directly or indirectly, to any other per son or published,
in whole or in part, for any purpose.
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³Bohai¶s mission is to capitalize on the
extraordinary economic opportunity
generated by the combination of China¶s
burgeoning middle class, the country¶s
increasing demand for pharmaceutical products and the PRC government¶s
mandated insurance coverage of
Traditional Chinese Medicine.´
Hongwei Qu, Chairman and CEO
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The Company The Company
A Growing Producer of Tr aditional Chinese Medicine ± Focused on Domestic
Chinese Market
Approx. 600 Employees,Including 300 in Sales ± 20 Sales Off ices
throughout Mainland China
State-of-the-Art Manuf acturing Facilities
Bohai Pharmaceuticals Group, Inc.
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Vital Statistics Vital Statistics
Stock Symbol: BOPH
Exchange: OTCBB/OTCQB
Recent Price: (1) $2.10
52-Week Range: $0.80 to $2.48
Mar ket Cap: $35 million
Shares Out: 16.5 million
Fully Diluted: (2) 28.85 million
Industry: Pharmaceuticals
Headquarters: Yantai, China
Public Since: Januar y 2010
Financings: $12 million concurrent pr ivate placement
Bohai Pharmaceuticals Group, Inc.
(1) As of November 10, 2010(2) Includes outstanding convertible
notes and warr ants
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Financial Figures - Annual DataFinancial Figures - Annual Data
Fiscal Years Ending June 30,
2008 2009 2010
Net Revenue $ 37.5 $ 49.3 $ 59.3
Gross Profit 31.6 41.4 49.1
Net Income 6.4 7.9 9.5
EPS
(1)
$ 0.49 $ 0.60 $ 0.64
(2)
(1) EPS represents Basic Ear nings per Share(2) Fully Diluted EPS for FY 2010 was $0.57
All amounts in millions, except EPS
Income Statement
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Financial Figures - Quarter ly DataFinancial Figures - Quarter ly Data
Three Months Ending Sept. 30,
2009 2010
Net Revenue $ 14.0 $ 17.0
Gross Profit 11.7 13.6
Net Income 1.9 3.0
EPS (1) $ 0.15 $ 0.18 (2)
(1) EPS represents Basic Ear nings per Share(2) Fully Diluted EPS for Sept. 30, 2010 was $0.15
All amounts in millions, except EPS
Income Statement
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China Today China Today
Dr amatic Expansion of National Health Insur ance
± PRC Goal of 90% Cover age by 2011
± Tar geted at Chinese Rur al Population of 900 Million
30% Increase in PRC Health Spending (1)
± $96 B illion in 2008
± $125 Billion by 2011
(1) Sour ce: Epsicom Pharma Business Outlook
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China Today (continued)China Today (continued)
Expansion of Elder ly Population
± 170 M illion Elder ly in 2007 (1)
± 230 M illion Elder ly by 2015 (1)
± 5x Medical Spending vs. Younger People (1)
Increase in Tr aditional Chinese Medicine Usage for Wellness
± Growing Concer n Over Pollution and Smoking (2)
± Few Side Effects Compared toWester n Medicines (3)
(1) Sour ce: Euromonitor (2) Sour ce: Wor ld Health Or ganization(3) Sour ce: altMD.com
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Anticipated Growth in China¶s TCM Market Anticipated Growth in China¶s TCM Market
In 2013, the market for TCM in China is forecast to have a value of
$21.9 billion, an increase of 36.0% since 2008.Sour ce: Datamonitor 2/2009
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Manuf actur ing and FacilitiesManuf actur ing and Facilities
18,000 Square Meter Facility
Meets /Exceeds China¶s ³Good Manuf acturing Pr actices´ (GMP)
± Str ingent Chinese Gover nment Standar d
± Rated for Quality, Pur ity and Safety
± Recently Recertif ied for Five Year s
State-of-the-Art Systems
± Processing Herbs
± Manuf actur ing Products
Sever al Product Categories ± Tablets, Capsules, Gr anules,
Extr acts, Syrups, Tinctures
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ProductsProducts
15 Pharmaceuticals Currently Sold
Including 5 Recently Introduced Products
± Prescr iption (Rx)
± Over -the-Counter (OTC)
± Herbal-based
± All-Natur al
Products Exemplify Quality,
Purity and Effectiveness
± National Protected Status issued for
one of Bohai¶s top selling products
± National Patent Approved on productwith second highest sales volume
Rights to Produce 14 Additional Medicines
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³Protected´ Medicines ³Protected´ Medicines
What is ³Protected´ Status?
± Exclusive or Near -Exclusive Manuf actur ing
r ights to TCM formulas
± Initial 7 Year Term with one 7 Year renewal
± Bohai¶s Tongbi Capsules and Anti-Flu Gr anulesbenef it from this Protection Status in China
What is ³Patented´ Status?
± Cover s the process as well as the formula
± Gr anted for 20 Year s
± Bohai was Recently Awar ded a Patent
for its Lung Nour ishing Cream
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Top Products: Tongbi Capsules | Tongbi TabletsTop Products: Tongbi Capsules | Tongbi Tablets
FY2010 Sales: $24.3 million
Protected Status (Capsules)
Tongbi Capsules Covered by National Health Insur ance
Effective Arthritis Treatment
Capitalizes on Growing Elder ly Population
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Top Products: Bohai Lung Nour ishing CreamTop Products: Bohai Lung Nour ishing Cream
FY2010 Sales: $15.8 million
Patent Application Approved, June 2010
Covered by National Health Insur ance
Treats Multiple Bronchial Conditions
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Bohai Competitive AdvantagesBohai Competitive Advantages
Real Br and Presence
± Recognized quality products and strong
advertising presence
Robust Sales Networ k
Protected Key Products Covered by National Insur ance
Reduced Competition
± 1/3 of Chinese Pharma Companies for ced toconsolidate due to GMP Enfor cement in 2004
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Sales and Distr ibution Sales and Distr ibution
Approx. 300 Sales Personnelin 20 Offices across China
Over 100 Distributors in
20 Provinces
Health Insur ance Reform Opens Rur al Areas
Bohai May Self-Distribute in Some Rur al Areas
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Over the Counter (OTC) SalesOver the Counter (OTC) Sales
Sales Channels
± Retail Drugstores
± Pharmacy Chains
Extensive TV Advertising ± Focus on Lung Cream
± Br and Building
Sales Personnel
± Highly Tr ained in all Product Details
± Developing Strong Ties withPharmacies in Local Areas of China
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Prescr iption SalesPrescr iption Sales
Sold to Hospitals
Advertising Not Permitted
(Medical Jour nal Excepted)
Promoted Via Conferences and Seminars
Only 10% of 11,000Gr ade AA Hospitals Currently
Using Bohai Medicines (1)
(1) Bohai Estimate
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Str ategies for GrowthStr ategies for Growth
Develop Sales For ce and Channels in Rur al Provinces
Expand Hospital Presence in Urban Mar kets
Expand Onsite Tr aining
± Physicians
± Cover s All Bohai Products
± Both Rx and OTC
Aggressive Integr atedAdvertising and Mar keting Efforts
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ManagementManagement
Hongwei Qu, Chairman & CEO
In May 2007, Mr . Qu took pr incipal responsibilities for theacquisition of Bohai
Has been the dr iving for ce behind the company ever since
Signif icant exper ience in the medical and pharmaceutical sector sin China
Founder of Yantai Hongwei Medical Tr ading Co., a Chinesecompany engaged in the wholesale of drugs and medical products
Gene Hsiao, Chief Financial Officer
15+ year s of exper ience in corpor ate f inance and management
Has held positions at var ious public companies, including: J&J
Snack Foods Corpor ation (NASD AQ: JJSF) and RCN Corpor ation (NASD AQ: RCNI)
Pr ior to Bohai, served as CFO for China Advanced Construction Mater ials Group Inc. (NASD AQ: CADC)
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Management (continued)Management (continued)
Ning Tang, VP - Oper ations
Two+ decades management exper ience
Focus on medical, pharmaceutical and environmental sector s
Former Vice Gener al Manager of Yantai Zhongya Medical Company
Hongbin Shan, VP - Sales and Mar keting 10+ year s of exper ience in sales, marketing and management
Former Gener al Manager for the Qingdao Br anch of Shandong Green Leaf Pharmaceutical Co., Ltd.
Chunhong Jiang, Secretary and Treasurer Extensive exper ience as Financial Manager
Former Manager Yantai Garment Company and Yantai Fur aoTr ading Group
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Independent Director sIndependent Director s
Chengde Wang Director and Ph.D./MD Advisor of Bei jing Shuntiande Chinese Medicine Hospital
Director and Secretar y-Gener al at Center of Tr aditional Chinese Medicine Society
Former Professor and Chief Physician at Bei jing Univer sity of Chinese Medicine
Louis A. Bevilacqua, Esq.
Partner at the law f irm of Pillsbur y Winthrop Shaw Pittman LLP Leader of Pillsbur y¶s China Capital Markets pr actice
Signif icant exper ience representing China-based middle market public companies
Adam Wasserman CEO of CFO Oncall, Inc., Flor ida-based provider of consulting/accountingservices
CFO exper ience at numerous public companies including Gold Hor seInter national, Inc. (OTCBB:GHII) & Emer ald Acquisition Corpor ation (PINK:PEAR)
Former Audit Manager at Amer ican Express and worked at Deloitte & Touche
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Investment Highlights Investment Highlights
Well-Positioned to Benefit from Favor able Mar ket Conditions in China
Potential for High Revenue Growthfrom Key Protection Status
Strong Focus on Sales, Mar keting & Distribution
Proceeds of $12 Million January
2010 Private Placement: ± Increased TV Advertising
± Expansion of Sales For ce
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Thank you for your time.Thank you for your time.
Darren Minton | PresidentTr ilogy Capital Partner s
212.521.4405info@tr ilogy-capital.com