lotus · in-house r&d capabilities • collaboration with industry leading companies and...

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LOTUS BUILDING A PAN-REGIONAL LEADER

May 2015

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Safe Harbor Statement

Except for historical information contained herein, the matters set forth in this presentation are forward

looking statements that are subject to risks and uncertainties that could cause actual results to differ

materially. These forward looking statements are not based on historical facts but rather on

management’s expectations regarding future growth, results of operations, performance, future capital

and other expenditures, competitive advantages, business prospects and opportunities. Statements in

this presentation about our future plans and intentions, results, level of activities, performance, goals or

achievements or other future events constitute forward looking statements. Wherever possible, words

such as “anticipate”, “believe”, “expect”, “may”, “could”, “will”, “potential”, “intend”, “estimate”, “should”,

“plan”, “predict”, or the negative or other variations of statements reflect management’s current beliefs

and assumptions and are based on the information currently available to our management. Investors

are cautioned not to place undue reliance on these forward looking statements, which are made

as of the date of this presentation and we assume no obligation to update or revise any forward

looking statements.

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COMPANY OVERVIEW

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COMPANY OVERVIEW

• Research-based company focused on innovative development

of difficult to make generic pharmaceuticals

• 63.4% owned by Alvogen, a specialty pharmaceutical company

with global presence, focusing on developing, manufacturing

and marketing of generic and OTC pharmaceuticals, as well as

biosimilars

• #1 in Korea in terms of sales from anti-obesity drug, and strong

presence in Taiwan for oncology and CNS generic drugs

• Current product portfolio comprises 250+ marketed products

• Robust pipeline focusing on oral oncology, high potency, and

soft gel drugs

• Experienced in-house sales team with a strong emphasis on

marketing, covering ~10,000 clinics, hospitals and pharmacies /

drugstores in Asia Pacific

• 1 US FDA, EU EMA, and Japan PMDA approved manufacturing

facility, 2 KGMP approved manufacturing facilities and R&D

centers with 140+ generic drug submissions for past 4 years

Pioneer in the Asia Pacific

Generic Pharmaceutical Industry

• Robust international pipeline:

– 8 products for Japan in pipeline

– 4 products for EU Asia scope in pipeline

– 9 products filed in China

– 10 products in pipeline / filed ANDA for US

Strong Pipeline

Market Leader in the Highly Attractive Asia Pacific Generic Pharmaceutical Industry

Strong Growth and Margin

20141

1,191

(31)

52 %

Gross Profit

Net Profit

Gross Margin

Revenue 2,310

NT$ MM

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39

(1)

52 %

75

US$ MM2

1 Normalized numbers. Please refer to p. 20 for details of normalization

2 Based on USD / TWD FX rate of 30.918.

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COMPANY OVERVIEW

Lotus History and Key Milestones

1966

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Manufacturing

Facility Obtained

Japan PMDA

Approval

Lotus Acquired

Dream Pharma

Founded in 1966

Manufacturing

Facility Obtained

US FDA Approval

First Product

Launch in the

US

Manufacturing Facility

Obtained EU EMA

Approval

First Product

Launch in Japan

US FDA

Compliance

Inspection Passed

Alvogen Became a Majority Shareholder of Lotus

Lotus Acquired Alvogen’s Korea, Taiwan and India Businesses

Aug 11 Dec 19

EU EMA

Compliance

Inspection Passed

Listed in GreTai

Stock Exchange

(1795.TT)

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COMPANY OVERVIEW

Shareholding Structure

Note: as of March 31, 2015 Page I 6

Alvogen Asia Pacific

Holdings Ltd.

63.4%

Lotus Pharmaceutical

Co., Ltd.

(Taiwan)

Alvogen Taiwan

(Taiwan)

100.0% 100.0%

100.0%

100.0%

Lotus Tab, Ltd

(UK)

Lotus Pharmaceutical,

HK Inc.

(HK)

美喬生技有限公司

(Taiwan)

100.0%

Alvogen Korea Ltd.

(Korea)

Kunwha

Pharmaceutical Co.,

Ltd.

(Korea)

Dream Pharmaceutical

Co., Ltd.

(Korea)

100.0%

82.5% 100.0%

98.0%

Alvogen Pharma India

Pvt Ltd.

(India)

Norwich Clinical

Services Pvt Ltd.

(India)

100.0%

100.0%

樂特仕生物科技諮詢

(上海)有限公司

(China)

Lotus International Pte.

Ltd.

(Singapore)

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COMPANY OVERVIEW

Lotus and Alvogen Joining Forces

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• Well-established market leadership

in Taiwan and Korea, high entry

barriers countries for multinational

firms

• State-of-the-art manufacturing

facility approved by US FDA, EU

EMA, and Japan PMDA, accessible

to highly regulated markets

• Strong pipeline and capabilities in

difficult-to-make generics focusing

on oral oncology, high potency, and

soft gel

• Solid management team with

extensive industry experience as

well as in-depth knowledge from

multinational background

• Strong sales and profit growth

since Company’s inception with

sales and marketing network in

more than 30 countries

• Solid US regulatory and IP

capabilities

• Robust pipeline of more than 300

products globally

• Proven track record in M&A

execution

Asia Pacific Hub with Dominant Market

Leadership for Alvogen

Global platform with unparalleled market

potential for Lotus

The combination of Lotus’ strategically important foothold in Taiwan and Korea markets and its growing US/

Japan/ China product pipeline and Alvogen’s strong geographic coverage in the US, Central and Eastern

Europe and Asia is expected to generate significant opportunities to drive revenue growth, margin

enhancement, and create further value for the two companies

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INVESTMENT HIGHLIGHTS

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Investment Highlights

1 Well-positioned in Highly Attractive and Fast Growth Markets

2 Strong Sales Forces and Distribution Channels in Key Markets

3 High Growth via Organic Growth and Strategic M&As

4 Strong R&D and Solid Manufacturing Capabilities Delivering Top Quality

Drugs

5 Broad Pipeline that Delivers Sustainable Growth

6 Solid Integration Capabilities and Management Team that Extract

Synergies and Generate Value

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Well-positioned in Highly Attractive and Fast Growth Markets in Asia…

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Pharma Market Size

(US$bn)

5yr CAGR

(%)

2.1%

9.9%

11.6%

3.7%

9.2%

7.1%

7.3%

5.2%

13.9%

11.5%

9.2%

8.0%

7.6%

• Well-established presence in key markets of North Asia where

strong growing economies, fast aging populations, high cultural

and other entry barriers for multinational firms

• Strong market leadership in Korea and Taiwan

• #1 in Korea in terms of sales from anti-obesity drug

• Solid track record in Taiwan for oncology and CNS generics

Strong Presence in Korea and Taiwan

• Well-planned strategies for access to Japan and China

• 8 products for Japan in pipeline

• 9 products filed in China

• Leveraging existing production capabilities and commercial

network through Alvogen’s platforms to further penetrate fast

growing markets in South East Asia

• Aiming to tap into complementary markets in terms of product

portfolio where mostly self-pay to fuel future growth

Well-positioned to tap into other Asian markets

Source: BMI Research

0.8

1.6

2.0

2.2

3.3

3.8

4.5

5.5

5.9

15.8

16.7

98.8

107.0

Singapore

Hong Kong

Bangladesh

Malaysia

Vietnam

Philippines

Thailand

Taiwan

Indonesia

Korea

India

China

Japan

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… As Well As US with Strong Sales Forces and Distribution Channels

Solid Market

Position

• Well recognized by clinics, hospitals and pharmacies / drugstores

• Effectively market and sell existing products and new products

• Foundation for cross-selling products targeting fast-growing / core therapeutic areas

Strong Brand

Recognition

Taiwan

South

Korea

UK

Shanghai

Indian

US

- Direct access with strong pipeline leveraging

US FDA approved manufacturing facility

- 10 products in pipeline/ filed ANDA in

the US

- Product launch through Alvogen’s existing

sales forces or partnership

• Covering a network of ~10,000 clinics, hospitals and pharmacies / drugstores with internal sales force in key markets

• Experienced sales force with product expertise

• Strong management team with executives and regional managers who have years of experience in the pharmaceutical industry

Presence Access

Headquarter Branch Offices

Partnership

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• Double digit growth per year

• Aggressive product launches across the APAC region – 26 products selected and roll out started into Korea and other Asian

markets

• Gain further market share in existing and new markets

Organic Growth

High Growth via Organic Growth and Strategic M&As

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M&A Strategies

• Alvogen, Lotus’ majority shareholder with robust M&A track record, is committed to supporting Lotus for

future growth to achieve its target to become leading generic pharmaceutical player in APAC

• Solidify our leadership position in Asia Pacific generic pharmaceutical market and capture opportunities

ahead of industry consolidation in the region

• Strengthen product portfolio in our focused therapeutic areas

– Acquire or invest in companies with generic pharmaceutical products or candidates that complement

our existing product portfolio

Selection

Criteria

• Targets with strong generic drug submission capabilities or attractive products / candidates

• Targets’ products need to have strong market potential, potential synergies, and minimal overlap with

existing product portfolio or pipeline

• Opportunities with restructuring opportunities (balance sheet management, non core asset disposal

opportunities)

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• In-house R&D capabilities

• Collaboration with industry leading

companies and research institutions

• Systematically acquires and integrates

targets with solid development and

commercialization track record

Strong Development Capability

• Integrated capabilities spanning a wide-

range of therapeutic areas:

– Strategically focus on oral oncology,

high potency, and soft gel drugs

• Solid contract research organization in

India:

– Facilitates oncology studies

– Quick patient enrollment

Integrated R&D Platform

Integrated R&D

Capabilities with a

proven track record

of successful

innovations

• US FDA, EU EMA and Japan PMDA

approved production facilities focusing

on high potency and cytotoxic products

• Provides oncology contract manufacturing

organization services to Japanese

pharmaceutical companies

• Analytic process development for quality

control and assurance

Multiple Manufacturing Platforms

Strong R&D and Solid Manufacturing Capabilities Delivering Top

Quality Drugs

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Broad Pipeline that Delivers Sustainable Growth

Note: As of April 2015

Source of originator’s sales: IMS data Page I 14

Biosimilars

• Lotus and Alvogen/AlvoTech signed distribution agreements for two key biosimilars currently under

development by AlvoTech.

• Lotus will market and distribute these biosimilars in the following APAC markets: Taiwan, China, Vietnam,

South Korea, Thailand, Hong Kong, Philippines, Malaysia, Indonesia, Singapore and Myanmar

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Solid Integration Capabilities and Management Team that Extract Synergies and Generate Value…

Extensive Experience

Senior management team has comprehensive

experience up to 20 years in the pharmaceutical

industries

In-depth Knowledge

Many have worked with leading global

pharmaceutical companies. They bring extensive

M&A and industry experience and in-depth

knowledge

Diversified Exptertise

Experience and expertise range from research

and development to manufacturing, sales,

marketing and distribution

Dr. Jon Valgeirsson, VP of R&D APAC

Dr. Saral Thangam, CEO Norwich Clinical Services (CRO India)

Jade Lee, Regional HR Director

Sunny Chen, Regional Supply Chain Manager

Dr. Chung R. Kim, Regional Quality Director

Renaat Janssen CEO Lotus Previously Executive Director at PPD with more than 20 years experience in pharma industry

Siegfried Gschliesser Deputy CEO Lotus and GM Taiwan Joined Alvogen in 2010 as regional head of Business development and the country manager for Taiwan

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David Young Regional CFO Previously CFO of SemiLEDs Corporation, (NASDAQ: LEDS), VP of sourcing, accounting and finance at Payless Shoesource, formally NYSE company

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… With Strong Support from Board of Directors

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Charles Lin Chairman of BOD • Founder of Lotus and has more than 30

years in pharmaceutical industry • Leads Lotus as a R&D-based Taiwanese

company with manufacturing facilities approved by global FDAs

Robert Wessman Director • Chairman and CEO of Alvogen Group • Has grown Alvogen from a small US

business into an international pharma with commercial operations in 34 countries and with 2,000 employees within 5 years

Independent Directors

Benjamin Ku Partner at Cheng & Ku Law firm

Hui Wen Cheng Professor at Taipei Medical University

Hjorleifur Palsson Previous EVP and CFO at Ossur hf., a listed company at NASDAQ OMX Copenhagen

Directors

Arni Hardarson Chief Legal Counsel, Alvogen

Kevin Bain CFO, Alvogen

Thor Kristjansson EVP M&A, Alvogen

Le Hong VP, Lotus

• Combined efforts from Lotus founding team as well as strong commitment from Alvogen Group with

seamless cooperation

• Nine distinguished members with an exceptional knowledge and experience in the related fields to

guide the Company in all aspects

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GROWTH STRATEGIES

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Unlock Value Through Realizing M&A Synergies

STRATEGIES

Lotus is Committed to Delivering Value-Driven Medicine

Further Develop Asia Pacific and US Generic Pharmaceutical Markets

Expand Product Portfolio through Strategic M&A

Expand Our Network of Sales and Marketing Personnel to

Further Promote Our Products

Strong Support From Majority Shareholder - Alvogen

2

3

5

6

1

4

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FINANCIAL HIGHLIGHTS

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FY2014 Results Update

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Major adjustments include 1) costs related to early retirement programs of Kunwha for integration with Dream Pharma’s

integrations of NT$266 million; 2) post-acquisition special bonus to Lotus’ employees of NT$12 million; 3) M&A-related

costs including professional fees and transaction taxes of NT$39 million; 4) financial costs and losses related to the early

redemption of Alvogen Korea’s CB of NT$113 million

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2015 YTD Monthly Sales Update

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2014 2015

49 37 44

52

435 432 429 448

Jan Feb Mar Apr

• Robust January sales as the merger between Lotus and

Alvogen’s key operations in Asia has been completed in

2014 with closing of Kunwha’s acquisition of Dream

Pharma in December

• Contribution from Korean subsidiaries helped Lotus

deliver a solid result in February of maintaining sales at a

similar level with January sales despite both the Chinese

New Year holidays in Taiwan and Korea

• Due to a substantial depreciation in the Korean Won

against the New Taiwan Dollar from February to March,

Lotus March consolidated sales in NT dollars slightly

decreased. Excluding the FX impact however, the March

result would in fact represented an increase with the

integration of Dream Pharma going well

• Contributed by the synergies of co-promotional sales

efforts between Kunwha and Dream Pharma and Lotus’

license fees related to a partnership for product sales into

China, April sales achieved yet another record high with a

solid MoM growth of 4.4%

Key highlights Unit: NT$MM

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2015 OUTLOOK

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2015 OUTLOOK

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Goals in 2015

2015 Outlook

• Successful integration of Dream Pharma and Kunwha in Korea

• Further expand Lotus’ export business by launching more products in the US

• Achieve solid profit and positive EPS

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APPENDIX

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APPENDIX

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Taiwan Pharma Market Overview

Taiwan Market Overview

• Taiwan is a ~US$5.5 billion pharma market. Fast aging

population drives volume demand growth

• Taiwan has a National Health Insurance system covering

96% of the population under a one payer system

• Payer is public; however, health administration is through

private (non-profit) hospitals, clinics, and pharmacies.

Hospitals are the dominate health care provider and are

large behemoths offering both in and outpatient care

• Large concentration of the market in 21 medical centers

which have around 35% of the total healthcare market

• Bad perception of local product quality prevented generic

penetration into large medical centers so far so only

multinational generics are able to get in as of now

• Regulatory approval timelines are between 12 to 18

months for generics products

• Taiwan has joined PIC/S from January 2014. Among the

current 160 local manufacturers, only 70 have completed

accreditation so far

80%

9%

11%

Hospitals G.P. (Clinics) Drug stores

Total Market

~US$5.5bn

Taiwan Market Segmentation

Hospitals

20% 35%

45%

Drug Stores

40%

20%

40%

G.P. (Clinics)

65%

15%

20%

Generic Patented Originator patent expired

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APPENDIX

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Korea Pharma Market Overview

Korea Market Overview

• Korea is a ~US$15.8 billion pharma market and is

expected to continuously grow due to aging population

and increase in chronic diseases followed by growing

demands for medical treatments

• Korea has a government funded health care system with

complete coverage of the Korean population under one

single payer (the NHIC)

• Further promotion of generic usage expected by the

NHIC to reduce health care costs

• Price erosion will be compensated by strong volume

growth due to increased consumption by a fast aging

population and further expansion of the health care

coverage

• Generic regulatory approval times currently are around 6

to 9 months for locally produced products and 9 to 12

months for imported generics. It is expected the bias

favoring local production will remain

• The market is expected to be restructured led by top

pharma companies with R&D and product capabilities

Korea Anti-obesity Drugs Market Outlook

• Korea’s medical diet market (including Korean medicine

clinics, surgery, anti-obesity drugs) is estimated to be

~KRW1.6 trillion at the end of 2013, whereby the anti-

obesity drugs market accounts for ~9%

• With a growing perception that “obesity is an illness,”

there is continued social focus on losing weight not only

from external appearance perspective but also from

pursuing a healthy life

• Anti-obesity drugs possess a clear competitive advantage

over its substitutes, as it maximizes the effect of weight

loss within relatively shorter period of time at a lower cost

(v.s. oriental medicine that requires consistent

consumption and bariatric surgery with potential of high

risk side effects)

• Consequently, overall anti-obesity drugs market is

expected to account for a higher proportion of the

domestic medical diet market

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APPENDIX

• An international privately-owned specialty pharmaceutical

company focused on the development, manufacturing and

marketing of generic pharmaceuticals, biosimilar and OTC

products

• Led by Chairman/CEO Robert Wessman and management

team that previously worked at Delta / Actavis Group

• Robust product portfolio consists of a broad range of molecules

for treating conditions in the fields of oncology, cardiology,

respiratory, neurology and gastroenterology

• Deep experience in generic drug development with an strong

track record of growth through organic growth and acquisitions

• Has manufacturing capabilities in US, Romania, Korea and

Taiwan, and commercial operations in over 30 countries

• Geographic presence across the US, Central and Eastern

Europe as well as Asia (Korea, Taiwan, China, Japan, India,

etc.)

• Alvogen’s total revenue grew at a CAGR of 77% from 2009 to

2014 with 59% from organic growth

Alvogen Overview Alvogen Support

Alvogen Today

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• Alvogen is committed to support Lotus for future growth to achieve

its target to become top-5 regional player in the APAC region by

leading industry consolidation

• Alvogen formally became a majority shareholder in Lotus in

August 2014, currently owning approximately 63.4 % of

outstanding shares following a private placement

• As a part of the transaction, Lotus acquired 3 of Alvogen’s

businesses in Asia: Korea, Taiwan and India

• Securing distribution rights for biosimilar products currently under

development by Alvogen’s sister company AlvoTech

• Furthermore, Lotus’ subsidiary Kunwha acquired Dream

Pharma in Korea in December 2014

• Co-development with Lotus with a focus on US difficult-to-make /

high barrier products, i.e. oncology orals, hormones and soft gels

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Key Milestone • Founded in 1958

• Acquired by Alvogen in October, 2012

Business Mix • Prescription, OTC, medical device sales, export, consignment business

• 72 molecules (99 products)

Production • Plant in Gongju: 46,893m2

Sales Network • 14 district sales organizations

Employee / Office • 257 employees in total as at the end of March 2015 – G&A (33). S&M(115), Plant incl. R&D (109)

• Headquartered in Seoul

APPENDIX

Recent Acquisitions

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Kunwha Pharma – Acquired by Lotus in January, 2014

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Dream Pharma – Acquired by Lotus Subsidiary Kunwha in December, 2014

Key Milestone

• Established as the pharmaceutical division of Hanwha Corporation (March 1996)

• Changed the company name to DreamPharma Corporation (January 2005)

• Acquired Meditech Korea Pharm Co., Ltd. (September 2006)

Product Mix

• Anti-obesity drugs (56% of 2013 revenue): unrivalled #1 player in Korea with c.35% M/S

• Prescription (“Rx”) (37% of 2013 revenue): competitive advantages possessed in antibiotics, antifungal drug,

hyperlipidemia treatment

• Possesses two OTC products and a closure of esthetique business completed in 2013

R&D

• Leading R&D personnel: 79% with a postgraduate degree, 34% with a pharmaceutical career experience of at

least 10 years

• Secured Korea’s New Drug Development Technical Award for Bonviva Plus (February 2014)

Production • Production and quality assurance of 106 drug items through in-house production (57 items) and outsourced

production (49 items) compliant with KGMP (Korea Good Manufacturing Practice)

Sales Network • c.3,650 clinics and c.70 general hospitals in Korea

Employee / Office • 365 employees in total as at the end of March 2015 – G&A (34), R&D (39), S&M (179), Plant (113)

• Operates 8 branches and 2 sales offices nationwide

APPENDIX

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Recent Acquisitions (cont’d)

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APPENDIX

Recent corporate action in Korea

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Merger timeline Date

Board resolution for the execution of merger agreement March 17 2015 Completed

Disclosure of Board resolution and relevant filing March 17 2015 Completed

Execution of merger agreement March 18 2015 Completed

Confirm the shareholders on shareholder registry April 1 2015 Completed

Announcement of small scale merger April 1 2015 Completed

Closure of shareholders’ registry April 2 - April 9 2015 Completed

Receipt of notice from dissenting shareholders April 2 – April 16 2015 Completed

Board resolution to approve the merger April 27 2015 Completed

Dissenting creditor notification process April 28 – May 29 2015

Merger date June 1 2015

Merger between Kunwha Pharmaceutical and Dream Pharma Corporation

• Since Dream Pharma is 100% owned by Kunwha Pharmaceutical, the merger can be completed as small-

scale merger to Kunwha / short-form merger to Dream Pharma. Only board meeting of two entities are

required unless 20% of shareholders notified its objection towards to merger between two entities

• Minority shareholders of Kunwha only account for 17.5% - no shareholders’ objection is expected

• Merger ratio – 1:0 (Kunwha/Dream)

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