Sihuan Pharmaceutical Holdings Group Ltd. 四環醫藥控股集團有限公司

2016 Annual Results Presentation

Stock Code : 0460 0 Disclaimer

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1 Agenda

I Results Overview

II Business Review Financial Review

III Financial Review

IV Future Strategies

V Appendix

2 Section 1 Results Overview

3 Performance Overview in 2016 1 ♦ Revenue increased by 0.6% y-o-y to approximately 3,186 million ♦ Profit attributable to owners decreased by 17.2% y-o-y to 1,708 million; excluding the one-off investment income for the same period of last year, it increased by 11.8% y-o-y

 Maintained market leadership* 2 ♦ 1st in CCV prescription drug market with a market share of 11.86% in terms of hospital purchase; 4th largest pharmaceutical company in China’s hospital market ♦ The Group’s terminal sales growth rate was 8.87%, which was above the industry growth rate of 8.12% in 2016 *Resource: QuintilesIMS data

♦ Phase I clinical trials of innovative patent drug Pirotinib in the US and China progressed 3 smoothly; Phase II clinical trials of innovative patent drug Imigliptin Dihydrochloride have been commenced ♦ Innovative patent drugs Sirotinib and Fadanafil obtained Phase I/II/III clinical trial approvals granted by the CFDA ♦ 47 generic drugs obtained clinical trial approvals issued by the CFDA ♦ Obtained 13 awards for new drug R&D at national, provincial, and municipal levels ♦ Achieved initial success in low-end market penetration while consolidating its business 4 foundation in high-end markets ♦ Established a marketing management center, introduced talents, intensified construction, and further improved marketing & sales capabilities ♦ Directed marketing & sales by academic promotion, identified potential markets in a scientific manner, and achieved efficient market development

♦ 5 After new GMP certification, the production management and quality control system was further optimized ♦ Quality control and production cost control of the manufacturing facilities were further enhanced under the systematic management by the production management & quality control center

♦ Established an audit & compliance center to conduct stricter management over its 6 subsidiaries and to further strengthen compliant operation ♦ Completed a “comprehensive risk management” program, established a risk management system, and achieved standardization of risk management 4 Section 2 Business Review

5 Hospital Market Growth Slows Down but Revived in 2016

Sales in China‘s hospital market / 5 years trend, 2012-2016 100 million/RMB nationwide sales (100 million/RMB) overall growth rate growth rate y-o-y growth rate of Chinese companies growth rate of multinational companies 8000 16.0% 6975 7000 6452 13.4% 6148 6000 5505 11.7% 12.0% 4855 5000 4000 8.1% 8.0% 3000 4.9% 2000 4.0% 1000 0 0.0% 2012 2013 2014 2015 2016

30.0% 27.2% China’s hospital pharmaceutical markets: 2013-2016 moving annual trend (MAT ) ) 25.0% 25.5% 21.6% overall markets Chinese companies multinational companies

20.0% 20.3% 16.7% % (RMB 20.6% 14.0% 14.1% 15.0% 15.7% 13.3% 12.5% 16.5% 13.7% 11.5% rate 13.4% 13.1% 12.8% 10.4% 13.6% 11.7% 8.7% 8.0% 10.0% 12.7% 12.7% 12.8% 12.2% 10.3% 7.0% 11.5% 8.5% 5.1% 5.4% 6.0% 6.1% 8.1% 10.0% 6.6% 6.2% 6.4% 5.0% 7.7% 4.9% 5.5% 7.6% 8.5%

Growth 6.9% 5.5% 4.5% 5.6% 0.0% MAT 13Q2 13Q3 13Q4 MAT 14Q2 14Q3 14Q4 MAT 15Q2 15Q3 15Q4 MAT 16Q2 16Q3 16Q4 13Q1 14Q1 15Q1 16Q1

Resource: QuintilesIMS China’s hospital pharmaceutical market report (>=100 beds), 2016Q4 6 Leading Market Position

Top 5 Players in China’s CCV Prescription Drug Market in 2016

(Market share) 11.86%

5.43% 4.92% 4.65% 3.51%

Sihuan Pfizer SANOFI QILU Shanghai Fosun

Top 10 Corporations in China’s Hospital market in 2016 Shares in hospital market Rank Top 10 Corporations In 2016 (%)

1 PFIZER GROUP 2.47% 2 YANGZIJIANG FTY 2.36%

3 ASTRAZENECA GROUP 2.17% 4 Sihuan Pharmaceutical 2.00% 5 QILU PHARM GROUP 1.86% 6 SHANGHAI FUSUN PH 1.63% 7 JS.L.Y.G. HENGRUIK 1.61% 8 SANOFI GROUP 1.58% 9 E LUN 1.57%

10 C.T-TIANQING GP 1.49%

Resource: QuintilesIMS 7 Leading Market Position of Main Non-exclusive Products Sihuan’s Generic Name Sihuan’s Market Share and its Top 5 Pharmaceutical Companies and Their Market Brand Name （Total revenue） Ranking in 2016 Share in 2016 Ranked No.2 Sihuan 1. Qilu (山东齐鲁), 59.57% Ganglioside M1 10.46% 2. Sihuan (四环医药), 10.46% GM1 (RMB 6,868 mil) 3. Harbin Medical University (黑龙江哈尔滨医大), 10.37% 4. BJ Saisheng Pharm (北京赛升), 8.58% 5. SC.Taiji Xinan PH (西南药业), 7.27%

Ranked No.3 Sihuan 1. BJ Taide (北京泰德), 26.39% 18.30% 2. Hayao Biological (哈药生物), 22.19% Alprostadil Yimaining 3. Sihuan (四环制药), 18.30% (RMB 5,758 mil) 4. Xian Libang Pharm (西安力邦), 14.76% 5. Chongqing Yaoyou (重庆药友), 11.68% Sihuan Ranked No.2 Salviae Miltiorrhizae 23.30% 1. Guizhou Baite (贵州拜特制药),76.70% Danshen and Liguustrazine 2. Sihuan (四环制药), 23.30% Chuanxiongqin Injection (RMB 3,180 mil)

Ranked No.1 Sihuan 1. Sihuan (四环医药), 32.06% Cerebroprotein 32.06% 2. Shanxi pide (山西普德）16.78% Qu’Ao Hydrolysate 3. Yunnan Mengsheng (云南盟生),15.24% (RMB 1,246mil) 4. GD Longfu Pharm (广东隆赋), 14.93% 5. HN.Tongyong Tongming (海南通用),3.85%

Ranked No.1 1. Sihuan (四环医药),46.93% Sihuan 2. Hefei Pingguang (合肥平光), 46.36% Ligustrazine 46.93% Chuanqing Hydrochloride 3. BJ.Sihuan Kebao PH(北京四环科宝), 3.28% (RMB 415mil) 4. HN. Kelun PH(湖南科伦) 2.31% 5. HN.Fureng huanqingtang PH(河南辅仁怀庆堂), 0.40%

Ranked No.4 Sihuan 1. Simcere Dongyuan (先声东元), 33.06% 10.90% 2. Jilin Boda Pharm (吉林博大),21.91% Edaravone Qingtong 3. Guoyao Guorui Pharm (国药国瑞), 10.96% (RMB 4,219 mil) 4. Sihuan (四环制药), 10.9% 5. YN.Kunming JIDA(昆明积大), 7.65%

Resource: QuintilesIMS 8 Diversified Product Portfolio Product Sales Contribution Breakdown in Terms of Hospital Purchase According to IMS Data

For the 12 months ended 31 December 2016

Oudimei 24.61%

Kelinao+Anjieli 15.94%

Yuanzhijiu 15.45%

Guhong 7.87%

Yimaining 7.54%

Yeduojia 6.06%

Danshen Chuanxiongqin 5.30%

GM1 5.14%

Qu'ao 3.55%

Qingtong 3.29%

Chuanqing 1.39%

Others 3.86%

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00%

2016 2015 Source: Quintiles IMS

9 Sales of Key Products Revenue of CCV Products

For the year ended For the year ended 31 December 2015 31 December 2016 Change in Sales Product Name Year of Launch Other info (RMB ‘000) (RMB ‘000) y-o-y (Restated)

Kelinao/Anjieli 607,401 494,624 -18.6% 2003/2006 Oudimei 729,815 817,239 12.0% 2010 P Yuanzhijiu 452,677 491,600 8.6% 2011 P Yeduojia 116,518 147,644 26.7% 2011 P Yimaining 243,121 247,341 1.7% 2010 P Danshen Chuanxiongqin 218,353 222,414 1.9% 2011 P injection GM1 184,454 189,677 2.8% 2008 Qu’Ao 108,813 124,000 14.0% 2005 Chuanqing 81,985 66,770 -18.6% 2003 Qingtong 71,941 55,805 -22.4% 2008 Guhong 137,419 120,733 -12.1% 2011 P

Scutellarin Glucose injection 3,175 3,291 3.6% 2011 P

Exclusive Products P Promising products

♦ Sales of CCV drugs accounted for 94.4% of the Group’s total revenue, recorded a slight increase of 0.2% y-o-y. ♦ Sales of Kelinao/Oudimei were hindered in high-end markets due to medical insurance expenditure control and their entrance into the key monitored drug lists in several provinces, but the sales decline of Kelinao was narrowed and sales of Oudimei achieved an upturn via efficient execution of low-end market penetration. ♦ Kelinao and Oudimei have entered 6,055 and 4,535 hospitals respectively, among which over 1,000 were newly developed; Yuanzhijiu, Danshen Chuanxiongqin, and Yeduojia have entered 3,438, 2,756, and 1,140 hospitals with 300-1,000 of them were newly developed.

10 Sales of Key Products

Revenue of non-CCV Products

For the year ended For the year ended 31 December 2015 31 December 2016 Change in Year Other info Product Name (RMB ‘000) (RMB ‘000) Sales y-o-y of Launch (Restated)

Bi’Ao 49,374 47,726 -3.3% 2005 Respiratory drug Zhuo’Ao 15,490 15,199 -1.9% 2005 Central nervous Ren’Ao 22,754 28,417 24.9% 2005 P system drug

Anti-infective drug Clindamycin 35,599 19,808 -44.4% 2014 P

Gastrointestinal drug Roxatidine 9,086 21,511 136.7% 2013 P

Hepatitis drug Huineng 2,386 8,054 237.5% 2014 P

Endocrine system drug Nilestriol - 280 - P

Exclusive Products P Promising products

♦ Newly-launched products such as Roxatidine and Huineng achieved sound growth; Ren’Ao maintained stable growth, however, Zhuo’Ao and Bi’ao, etc. did not achieve sales growth due to intensified competition and lowered selling prices. ♦ Roxatidine and Huineng have won tenders in 15 and 12 provinces. Moreover, Huineng has entered 6 provincial reimbursement drug lists, and Roxatidine entered 2; Nilestriol, Metronidazole, etc. have also been progressively launched into the markets via tendering. Along with the tender progress and their entrance into provincial reimbursement drug lists/essential drug lists, the contribution of these new products to the Group’s revenue will steady grow.

11 Innovative Drug R&D

Innovative drug R&D achieved desired progress: Pirotinib: Phase I clinical trials in the US and China progressed smoothly Imigliptin Dihydrochloride: Obtained approval for Phase II/III clinical trials from the CFDA, and has commenced its Phase II clinical trials Anaprazole Sodium: Phase I clinical trial was completed; samples for Phase II/III clinical trials are being prepared for the application of clinical trial approval Tylerdipine and Benapenem: Phase I clinical trials and their summary reports were completed Janagliflozin: Phase I clinical trials have been commenced Sirotinib and Fadanafil: Obtained Phase I/II/III clinical trial approvals granted by the CFDA; Birociclib: Filed application for clinical trial approval and obtained acceptance Collaboration with Japan’s RaQualia Pharma Inc. in the development of novel analgesic patent drugs is proceeding smoothly; 40 new compounds were synthesized and are currently under screening, and among them, monomers that worth further investigation have been identified

12 Innovative Drug Pipeline

IND Clinical Trials Project Progress Pre-clinical NDA Trails Application Phase I Phase II Phase III L-Phencynonate Hydrochloride NeuroSTAT Imigliptin Dihydrochloride Anaprazole Sodium Benapenem *Phase I clinical trials of Pirotinib Tylerdipine Hydrochloride progressed smoothly in the U.S; it Pirotinib * U.S has also been granted approval of Janagliflozin Phase I/II/III clinical trials by the Sirotinib CFDA, and the Phase I clinical Fadanafil trials have been commenced. Birociclib

Project Registration classification Therapeutic areas Expected time to market L-Phencynonate Hydrochloride Category 1.3 innovative drug CCV 2017-2018 (左旋盐酸苯环壬酯) NeuroSTAT® Category 1.6 New drug CCV 2019-2020 Imigliptin Dihydrochloride Category1.1 innovative drug Anti-diabetic 2018-2019 (盐酸依格列汀) Anaprazole Sodium Category 1.1 innovative drug Digestive 2019-2020 (安纳拉唑钠) Benapenem Category 1.1 innovative drug Anti-infective 2019-2020 Innovative (百纳培南) Drugs Tylerdipine Hydrochloride Category 1.1 innovative drug CCV 2019-2020 (泰乐地平) Pirotinib (哌罗替尼) Category 1.1 innovative drug Oncology 2019-2020

Janagliflozin (加格列净) Category 1.1 innovative drug Anti-diabetic 2020

Sirotinib (赛罗替尼) Category 1.1 innovative drug Oncology 2022

Fadanafil (复达那非) Category 1.1 innovative drug BPH-LUTS，ED 2022

13 Generic Drug R&D As of December 31st 2016, generic drug team received 47 clinical approvals, 35 of which were Category 3 new generic drugs; 26 projects have submitted applications for production approvals and are expecting to be progressively launched to the market within 3 years.

Esomeprazole Oxiracetam Caspofungin Acetate (埃索美拉唑) (奥拉西坦) (醋酸卡泊芬净)

Levetiracetam Injection FlurbiprofenAxetil (左乙拉西坦注射液) Vinpocetine (氟比洛芬酯) (长春西汀) Divalproex sodium Tablets Fasudil Hydrochloride (双丙戊酸钠肠溶片) (盐酸法舒地尔)

Ornithine Aspsrtste Esomeprazole Sodium Octreotide Acetate （门冬氨酸鸟氨酸） (埃索美拉唑钠) (醋酸奥曲肽)

♦ The Group has over 70 generic drugs under development, including over 40 Category 3 new generic drugs.

♦ In addition, generic drugs team has started quality consistency evaluation on six oral formulations (including Metformin Hydrochloride, Azithromycin Capsules, Oxcarbazepine Tablets, Simvastatin Tablets, Candesartan Cilexetil Tablets, and Nilestriol tablets).

14 Marketing and Sales ♦ Lead the marketing & sales by academic promotion to fully reveal the clinical value of the Group’s products and to further enhance the Group’s professional brand image

Conducted practical and effective academic Take full advantage of the professional online platform promotion activities and clinical research projects of Sihuan Pharm Online School, which serves as a to further enhance physician’s recognition of the Group’s products new channel for the academic promotion

Organized over 7,705 academic promotion activities, including 7,488 hospital During the period, there were 15,095 new registered members. By the end of departmental seminars, 217 provincial/municipal medium-sized academic December 2016, this platform attracted over 60,000 physicians as registered conferences in 2016. members and over 10 million visits

Conducted 9 clinical research projects on its core products, rendering physicians to have a deeper understanding and better recognition of the Further optimized and enriched its online contents. “Beijing Hospital Neurology efficacy and safety of the Group’s products. In addition, this is critical in Snapshot” was officially launched; a section of interactive activities for 3 key extending the life cycles of these core products products, namely “Cerebroside-kinin Time”, “Cinepazide Time”, and “Troxerutin and cerebroprotein hydrolysate Time” was also launched and implemented smoothly. ♦ Intensified the construction of the marketing & sales system and enhanced its marketing & sales capabilities ♦ In order to adapt to market changes, the Group strengthened its marketing & sales system by enhancing the professionalism and marketing & sales capabilities of its sales staff. In the period, the Group hired several outstanding marketing management personnel who have extensive experience in multinational pharmaceutical companies, and established a marketing management center which comprises departments of medical affairs, academic promotion, pharmacovigilance, etc.

15 Marketing and Sales

♦ Implemented market penetration from high-end to low-end markets; improved marketing efficiency by conducting intensive and effective marketing promotion activities

Mature products Growing products New products

Blank market 1、Seize tendering opportunities first and second-tier first and second-tier 2、Enter into regional reimbursement drug cities cities lists and essential drug lists

Third and fourth-tier Third and fourth-tier Market development in bid- cities/counties cities/counties winning area

introduced the SMART market Allocate resource data analysis system which scientifically and achieve uses analyzed market data to determine a product’s market efficient market potential and sales target development

Obtained initial success in the development of low- end markets while maintained our business foundation in high-end markets

16 Low-end Market development—county-level markets

Ranking of county-level hospital development Growth rate y-o-y 100 million/RMB 50 50.0%

43.6 42.6

40 37.4 40.0%

31.1 29.2 28.7 28.2 30 27.3 26.9 30.0% 28.5% 25.9 25.7 27.2% 23.5 23.3 20.1% 21.2 20.7 20.6 19.1 20 19.0 18.4 18.1 20.0% 15.2% 15.6% 14.2% 16.6% 11.9% 12.1% 10.9% 10.8% 9.5% 10.2% 10 7.8% 10.0% 6.3% 4.6% 5.0% 2.4% 0.7% 0 0.0% QILU KELUN KELUN CSPC PFIZER HAYAO HAYAO PHARM PHARM GROUP GROUP LUOXIN HUABEI GROUP SIHUAN SIHUAN PHARM PHARM - PHARMA FTY GROUP JS.L.Y.G. HENGRUI PHARMA GROUP BUCHANG BUCHANG PHARM Sanjiu FOSUN PH SHANGHAI SHANGHAI SD GROUP TIANGQING GROUP - -10 SINOPHARM -10.0% YANGZIJIANG SD.REYOUNG SD.REYOUNG CY ASTRAZENECA ChinaResources NOVO NORDISK NOVONORDISK SANOFI GROUP

-20 -18.1% -20.0%

hospital purchases (from each company) in 2016 Average growth rate of overall country-level markets in 2016

Average growth rate of domestic companies at country-level markets in 2016 Average growth rate of multinational companies at country-level markets in 2016

Growth rate of each company at country-level market in 2016

Resource: Quintiles IMS China’s hospital pharmaceutical market report (>=100 beds), 2016Q4

17 Production Management and Quality Control

♦ After the new GMP certification, the Group established production quality control center, which implemented systematic management over subsidiary manufacturing facilities. In 2016, the Center conducted 6 quality audits and 2 quality inspections. Under such a strict management, the production management and quality control continued to be optimized. ♦ During the period, the Group’s internal qualification rate was 100%, and no unqualified samples were found during inspections conducted by external institutions. Also, no quality and safety-related incident occurred. ♦ the Center adopted a strict assessment and approval process for the budgets of manufacturing facilities on their energy consumption and “Three Types of Costs”, and conducted seasonal analysis and rectification. Energy consumption and the “Three Types of Costs” were controlled effectively.

Other Production Bases in Beijing Sihuan pharm Langfang Gaobo Jingbang pharm Jilin and Liaoning

♦ Major chemical drug manufacturing ♦ For active pharmaceutical ingredient (“API”) ♦ Other manufacturing bases include base and pharmaceutical intermediates Jilin Sihuan, Changchun Xiangtong, manufacturing Jilin Jingsheng, Benxi Hengkang, etc. ♦ National High and New Technology ♦ Certified by the U.S. FDA Enterprise ♦ Jilin Sihuan was granted “High and ♦ Its collaboration with Canada’s Apotex Inc. New Technology Enterprise” ♦ Beijing “G20” leading enterprises and India’s Dr. Reddy’s Laboratories Ltd., etc. progressed smoothly ♦ All received new GMP certifications

18 Internal Management

♦ Systematic Compliance Management ♦ Comprehensive Risk Management

♦ Established an audit & compliance center to ♦ The management completed “comprehensive risk undertake audits, inspections, and comprehensive management” program with the assistance of Ernst compliance management & Young. ♦ Completed auditing of financial management and ♦ This program identified, assessed, and analyzed internal controls for 9 subsidiary companies, and potential risks the Group may face, provided enforced rectification progress. All subsidiary corresponding strategies, and established a risk companies involved have accomplished the management system. Ultimately, this program rectification during the period. The internal provides a systematic scheme and a system management of the Group was further safeguard for the normalization of risk management strengthened in a stricter and more normative in the future. manner, and thus the compliance operation was guaranteed

19 Section 3 Financial Review

20 Financial Highlights

For the year ended 31 December Key Income Statement Items 2016 2015 (RMB’000) (RMB’000) Change

Revenue 3,185,699 3,167,211 0.6% Gross Profit 2,188,946 2,228,054 -1.8% Operating Profit 2,131,156 2,808,998 -24.1% Profit attributable to owners of the Company 1,708,239 2,062,378 -17.2%

Key Financial Ratios For the year ended 31 December

2016 2015

Gross Profit Margin 68.7% 70.3% Net Profit Margin 53.6% 65.1% Basic EPS (RMB cents) 16.8 19.9 Receivable Turnover (days) 63 60 Inventory Turnover (days) 78 79 Proposed final cash dividend per share (RMB cents) 3.8 4.5 Proposed third special dividend per share (RMB cents） 5.5 -

21 Statistics in Overall Sales Revenue

Revenue 5.6% (RMB million)

2,500.0 CCV Non-CCV 2,000.0 1,500.0 3167.2 3185.7 1,000.0 94.4% 500.0 0.0 2015 2016 Revenue by Segment CCV: RMB3,060.0 million For theFor year the ended year ended 31 December 31 December Non-CCV: RMB179.7 million

♦ Revenue increased by 0.6% to RMB3,185.7 million. The slowdown of the growth was mainly due to the fact that the Group reduced its supply price for Kelinao, one of its core products. Meanwhile, control on medical insurance expenditure also greatly affected sales of the Group. ♦ Sales of CCV drugs increased RMB5.31 million to approximately RMB3,060.0 million

22 Profit Margin

Gross profit Gross profit margin Net profit Net profit margin (RMB million) 2,500.0 100% (RMB million) 2,500.00 100%

80% 2,000.00 80% 70.3% 68.7% 65.1% 60% 1,500.00 53.6% 60%

40% 1,000.00 2,062.4 40% 1,708.2 2,228.1 2,188.9 20% 500.00 20%

2,000.0 0% 0.00 0% 2015 2016 2015 2016 For the year ended 31 December For the year ended 31 December

♦ Gross profit decreased by 1.8% to RMB2,188.9 million ♦ Net profit decreased by 17.2% to RMB1,708.2 million ♦ Excluding RMB535 million of investment gains generated from disposal of equity interest in Jilin Sichang Pharmaceutical Co., Ltd in January 2015, profit attributable to owners of the Company increased by 11.8% compared to 2015.

23 Distribution Costs

Distribution Costs % of Revenue (RMB million) 1,000.0 8%

4.9% 4.6% 100.0 4%

155.1 10.0 145.8 2%

1.0 1% 2015 2016 Distribution Costs % of Revenue

For the year ended 31 December

♦ Distribution cost decreased by RMB9.3 million to RMB145.8 million in 2016 as compared to 2015

24 Capital Expenditure

(RMB million) 700

594.9 600 77.8

500 107.1

400 364.5 Land use rights 85.1 300 Intangible Assets 38.3

200 410.0 Property, Plant & Equipment

241.1 100

0 2015 2016

For the year ended 31 December

25 Section 4 Future Strategies

26 Future Strategies & Outlook

Growth Strategies  Continual development of the low-end market to fully tap the potential of existing products Strategies  While consolidating its position in high-end markets of first- and second-tier cities, the Group will continue to develop low-end markets  As for products at growth stage, the strategy is to expand markets both horizontally into new regions and vertically into low-end markets.  Further enrichment of product resources portfolio  The Group will progressively launch more new products subsequent to the launch of Roxatidine, Huineng, Nilestriol, etc.  26 generic drugs that have submitted applications for production approvals will be progressively launched into the markets  Making the best efforts on the Group’s transition and adjustments for the “Two-invoice System”  In order to maintain the stability of the marketing & sales system, the Group will continue to adopt its distribution sales model, which, however, requires distributors to register compliant contract service organizations (“CSO”) to provide the Group with terminal sales service as independent third parties via cooperating with the Group’s internal marketing team.  Gather experiences along the progress, which will facilitate the subsequent implementation of the “Two- invoice System” in other provinces. Long-term Development Strategies  Lead the marketing & sales system with academic promotion, and managed it in a scientific, systematic, and digitized manner.  Obtaining high-quality product resources through multiple channels, including both R&D and M&A.  Combination of organic growth and external expansion.

In 2017, the Group will sum up experience from continuous adjustment in accordance with policy and Outlook market changes, avert risks, and maintain operational stability. Meanwhile, the Group will continue to strengthen its internal management and costs control, in order to maintain a firm operational foundation and to achieve a steady growth. On the back of the Group’s leading market position, solid operation foundation, economies of scale, strong capabilities in R&D and sales & marketing, the management believes that the Group can withstand and will overcome the short-term challenges and difficulties. Through continuous adjustments and improvement, the Group will embrace new opportunities for future prosperity.

27 Section 5 Appendix

28 Our History

. Innovative patent drug Imigliptin Dihydrochloride obtained approval for Phase II/III clinical trials granted by the CFDA, and 2016 entered phase II clinical trials . Innovative patent drugs Janagliflozin, Fadanafil, and Sirotinib were granted approvals for Phase I/II/III clinical trials by the CFDA

. Phase I clinical trials of innovative patent drug Pirotinib progressed smoothly in the U.S.; it also obtained approval for Phase I/II/III clinical trials from the CFDA . Phase I clinical trials of innovative patent drug Imigliptin Dihydrochloride were completed, and the application for Phase II/III 2015 clinical trials was submitted . The applications for clinical trials of innovative patent drugs Sirotinib and Fadanafil were filed and got accepted by the CFDA . Entered into a research collaboration agreement with Japan’s RaQualia Pharma Inc. in novel analgesic drugs and ion channel technology development

. First-to-market generic drug Roxatidine was launched 2013-2014 . The application for clinical trials of Janagliflozin was filed and got accepted by the CFDA . Established collaboration with Chongqing Peg-Bio Biotechnology Co., Ltd on the development of five insulin products . Three innovative patent drugs, Tylerdipine Hydrochloride, Anaprazole Sodium and Benapenem, received approvals for clinical trials

. Acquired remaining 40% equity interest of Xuanzhu Pharma to consolidate R&D resources 2011-2012 . Acquired Jilin Sihuan which owns three exclusive CCV drugs and Jilin Sichang which owns 4 TCM CCV products . Acquired 80% interest of Changchun Xiangtong which owns GM1 injection and API manufacturing facilities . Acquired Benxi Leilong, from which the company gained the ownership of Yimaining

. Listed on the Hong Kong Stock Exchange 2010 . Ranked No. 4 in the Forbes 2010 list of the most promising enterprises in the PRC and No. 1 among pharmaceutical companies . Obtained a 30-year exclusive distribution rights of Yimaining

. MSPEA and major shareholders invested and privatized the Company, which then was delisted from the SGXST 2008-2009 . Acquired 60% interest of Xuanzhu Pharma to enhance its R&D capabilities of innovative drugs . Received a 20-year patent protection in the PRC for the invention and production method of non-solvated cinepazide maleate crystal for Kelinao and Anjieli production

2007 . Listed on the main board of the SGX-ST on 23 March 2007 . Commanded the largest share of China’s CCV prescription drug market . Hainan Sihuan CVD Research became a wholly-owned subsidiary of the Group

. Kelinao was granted the “State Torch Programme” by the Science and Technology Ministry of the PRC in 2006 2001-2006 . Acquired the remaining interest of Beijing Sihuan, which then became a wholly-owned subsidiary of the Group in 2006 . Exclusive drug Kelinao was launched in 2003 . Hainan Sihuan was founded in 2001 29 Members of the Group Composed of over ten professional pharmaceutical companies and research institutions, the Group has established a completed industry chain encompassing R&D, manufacturing, and marketing & sales.

BeiJing Siuan Pharm JiLin Sihuan Pharm XuanZhu Pharma HaiNan Sihuan Pharm LangFang Gaobo Pharm BenXi HengKang Pharm AoHe Pharmaceutical Research Institute ShenZhen Sihuan Pharm JiLin SiChang Pharm ChangChun XiangTong Pharm BeiJing Clinical & Registration Center TongHua JiDa Pharm JiLin JinSheng Pharm JiLin Zhen’Ao Pharm

30 Core Management Team Our core management are very professional and highly experienced in Chinese pharmaceutical industry with average of twenty-years experience

 Proven entrepreneurial success  Deep understanding of China's pharmaceutical industry  Expertise in operating high growth companies  Proven R&D and drug acquisition track record  High standard of corporate governance  Extensive clinical experience

Dr. Che Fengsheng Dr. Guo Weicheng Ms. Jia Zhongxin Mr. Choi Yiau Chong Dr. CK Shih Ms. Yuan Tingjun Co-founder, Co-founder, Deputy Chief Operating Chief Financial Head of XUANZHU Head of Production & Quality Management Chairman & Chairman & Chief Officer Officer Executive Director Executive Officer 8 years of clinical 6 years of clinical Over 25 years of Extensive finance and Well-known Pharmacologist Practiced operational experience as a experience as a experience in accounting experience with extensive research managementin many neurologist general surgeon operational gained from a publicly- leadership experiences in companies management of listed company and therapeutic areas of Over 20 years of Over 20 years of Over 20 years of pharmaceutical Deloitte & Touche cardiovascular, immunologica experience in sales experience in sales experience in companies in the PRC l, anti-viral,etc. and marketing of and marketing of Member of the pharmaceutical pharmaceutical pharmaceutical Previously CEO of a Chartered Institute of Over 20 years of innovative production,quality products and products publicly listed Chinese Management R&D experience in control,etc. managing pharmaceutical Accountants (UK) and Boehringer Ingelheim pharmaceutical company the Institute of Certified Pharmaceutical Inc.,led companies Public Accountants of research teams and gained Singapore multipleachievements including Viramune etc.

31 New Drug R&D

♦ We have twoOptimized leading R&D teams thatTemplate focus on innovativefor and Microsoftgeneric drug R&D respectively.PowerPoint These two teams2003 have over 400 personnel, and among them 25 are Ph.D. and over 160 have Master degree. ♦ Our annual R&D investment has accounted for approximately 6% to 10% of the annual revenue since 2007, which is above the average level of domestic pharmaceutical companies. ♦ Currently, we have over 80 projects under development, including 14 innovative patent drugs and around 70 generic drugs. To date, we have submitted IND applications for 10 Category 1.1 innovative drugs, and 8 of them obtained approvals for clinical trials and have entered into different stages of clinical trials. Pirotinib, an innovative patent drug, also filed IND application to the FDA of the US, and its Phase I clinical trials are being conducted in the US ♦ The first-to-market generic drug Kelinao was granted“State Torch Program”by the Science and Technology Ministry, as well as several national and regional awards. ♦ Innovative patent drugs Benapenem, Tylerdipine Hydrochloride, Imigliptin Dihydrochloride, and Pirotinib have been listed as the National Science/Tech Projects-new drug R&D (国家“重大新药创制”科技重大专项) ♦ We have applied for over 600 patents including 36 PCTs, and over 300 were granted. Innovative Drug Generic Drug R&D Team R&D Team ♦ Focuses on the R&D of new chemical entities as novel ♦ Focuses on first-to-market generic drugs therapeutic agents ♦ Dedicated to obtaining intellectual property rights ♦ Principle research scientists have over 10 years of in terms of formulation, production process, improved experience in innovative drug R&D at multinational chemical properties or drug delivery system pharmaceutical companies

32 Unique and Proven Sales and Marketing Model The marketing & sales network operates at high efficiency as a result of specialization and a close cooperation between over 600 professional sales & production managers and 3000 distributors. Rapidly develop and penetrate into hospital markets through close collaboration of over 600 in-house Our Group product & sales managers and over 3,000 distributors

Product managers Sales managers ♦ Sihuan’s in-house marketing & sales team: Over 100 product managers Academic marketing & promotion Selecting and managing distributors – devising marketing strategies – organizing national, provincial and municipal conferences, as well as Distributor Distributor Distributor • • • Distributor hospital departmental seminars – providing product knowledge training for distributors  • • •  Over 500 sales managers – responsible for tendering, provincial RDL, EDL or NRCMSL Hospitals and physicians – screening/selecting distributors, and setting sales targets for them – closely monitoring distributors' performance – providing necessary support and services for distributors ♦ Over 3,000 distributors and their sales forces:

Patients – have deep understanding of the local markets, established sales channels and good relationship with local hospitals

Product/marketing promotional support; distributor – responsible for hospital market development and sales to hospitals screening/selection and management – responsible for the maintenance of the relationship with hospitals Organizing and supporting various types of pharmaceutical academic conferences, visiting senior experts and key opinion leaders

Our unique sales model has been proven to be very successful, highly productive and cost-efficient, and enable us to develop and penetrate the markets rapidly

33 Abundant and Diversified Product Resources

Gastrointestinal Therapeutic areas CCV CNS Anti-infective Others system Number of 39 9 6 15 30+ Products

Main products Kelinao, Oudimei, Ren’ao Roxatidine Clindamyein Huineng Yuanzhijiu, Yeduojia Azithromycin

2003 2004 2005 2006 2007 2008 2009 2010 2011 2013 2014 2015

Salivae Roxatidine Ren’Ao Anjieli Anjiejian GM1 Pojia Oudimei Kelinao Kanglixin Miltiorrhizae Acetate Liguspyragine Huineng Hydrochloride and Hydrochloride Glucose Injection (Monoammonium Glycyrrhizinate and Cysteine and Sodium Qingtong Yuanzhijiu Chuanqing Zhuo’Ao / Chloride Injection) Bi’Ao Nalmefene Danshen Hydrochloride Yeduojia Chuanxiongqin Injection Injection Clindamyein Qu’Ao

Yimaining

34 Main Products

Kelinao Oudimei Yuanzhijiu Yeduojia

 Mature key product  Relatively mature exclusive product  Promising exclusive product  Promising exclusive product at  Therapeutic area: CCV earlier stage of development  Therapeutic area: CCV  Therapeutic area: CCV  Entered NRDL  Therapeutic area: nervous system and  Entered 24 provincial RDLs  Entered 24 provincial RDLs metabolism  Provincial EDL and NRCMSL  Provincial EDL and NRCMSL  Provincial EDL and NRCMSL  Entered DRL of 18 provinces  Entered EDL of 5 provinces  Entered EDL of 1 province  Entered EDL of 3 provinces  Provincial EDL and NRCMSL  Entered NRCMSL of 14 provinces  Entered NRCMSL of 11 provinces  Entered NRCMSL of 6 provinces  Entered EDL of 1 province  Entered NRCMSL of 4 provinces

Danshen Chuanxiongqin Roxatidine Huineng Renao

 Promising product  First-to-market generic product  Exclusive product newly  Promising product newly launched to the market launched to the market  Therapeutic area: CCV  Therapeutic area: central nervous  Entered 23 provincial RDLs  Therapeutic area: digestive system  Therapeutic area: hepatitis system, epilepsy   Provincial EDL and NRCMSL  Entered 2 provincial RDL  Entered 7provincial RDLs Entered NRDL   Entered EDL tender of 3provinces  Provincial EDL and NRCMSL  Provincial EDL and NRCMSL Provincial EDL and NRCMSL   Entered NRCMSL of 15 provinces  Entered NRCMSL of 1 province  Entered NRCMSL of 2provinces Entered EDL of 1 province  Entered NRCMSL of 9 provinces

35 Main Products Introduction

Products Characteristics • Generic Name: Cinepazide Maleate Injection Kelinao • Active Ingredients: Cinepazide Maleate injection • Mechanisms of Action: • Ca2+ blocker：dilates vessels and restores blood flow to the ischemic regions 2 mL:80 mg • Stimulation of endogenous adenosine effects: blocks pathological cascades involved in the stroke at various pathways by inhibiting the metabolism and uptake of adenosine, which is an endogenous protector secreted in response to ischemia and hypoxia, thereby, protecting neurons from the ischemic injury • Improvements of hemorheological parameters：enhances the red blood cell deformability and reduces blood viscosity, thereby improving microcirculation Anjieli • Indications: • Cerebrovascular diseases: cerebral arteriosclerosis, transient ischemic attack, cerebral thrombosis, sequelae of injection subarachnoid hemorrhage, intracerebral hemorrhage, and traumatic cerebral injuries 10 mL:320 mg • Cardiovascular diseases: coronary artery diseases, angina pectoris; combination therapies with other medicines are necessary for myocardial infarction • Peripheral vascular diseases: lower extremity arteriosclerosis, thromboangiitis obliterans, arteritis, Raynaud’s disease • Generic Name: Cerebroside-kinin Injection • Active Ingredients: GM1 0.24 mg/mL, polypeptide 3.2 mg/mL、amino acids 1.65 mg/mL、hypoxanthine ≥12 μg • Mechanisms of Action: • Neuroregeneration: stimulates neural stem cell differentiation, axon growth, and synapse formation; modulates activities of enzymes including adenylyl cyclase, ATPases, protein kinases, etc., and therefore preserves neural metabolism and repairs nervous system Oudimei • Neuroprotection: prevents Ca2+ overload, and maintains the integrity of neuron membrane; inhibits lipids injection peroxidation that generates free radicals, and therefore alleviates cerebral edema and neuron damage • Nutrients supplementation：polypeptides, amino acids, etc. are able to cross the blood-brain barrier, and 2 mL stimulate protein synthesis. Also, they supply specific nutrients for neuron metabolism and recovery • Indications: • To treat central nerve injuries caused by stroke, Alzheimer’s disease, hypoxic-ischemic encephalopathy, craniocerebral injury, spinal cord injury, and other relevant conditions • To treat peripheral neuropathies including traumatic peripheral neuropathy, diabetic peripheral neuropathy, and compression neuropathy, etc.

36 Main Products Introduction

Products Characteristics

• Generic Name: Compound Trivitamin B For Injection (II) • Active Ingredients: Vitamin B1, B6, and B12 • Mechanism of Action: protects peripheral nerves via a synergistic action of these three compounds • Promotes aerobic metabolisms of carbohydrates and provide energy for injured nerves • Promotes the synthesis of GABA and the metabolism of homocysteinaemia, and improves the microcirculation Yeduojia around peripheral nerves Lyophilized • Participates in the transition of the methyl group, and maintains the integration of myelin sheath, thereby promoting the recovery of damaged nerves injection • Indications: • Peripheral nerve injury, polyneuritis, trigeminal neuralgia, and sciatica • Prevents vomiting caused by isoniazid poisoning, gestation, radiation, and antineoplastic drugs • pernicious anemia and nutritional anemia; can also be used as nutrition supplements for patients with Vitamin B intake disorders • Generic Name: Troxerutin and Cerebroprotein Hydrolysate Injection • Active Ingredients: Troxerutin 40 mg/mL, polypeptides 1.91 mg/mL, amino acids, and nucleic acids ≥0.8 mg • Mechanisms of Action: • Promotes neural protein synthesis and nucleic acids metabolism, stimulates synapse formation and neuron regeneration • Enhance the glucose utility and improves metabolism, protects the brain from ischemia. • Increases cAMP expressed in platelets, and thus inhibits platelet aggregation and prevents thrombosis Yuanzhijiu • Modifies red blood cell deformability and enhances microcirculation injections • Decreases capillary permeability and alleviates edema • Indications: • Acute and chronic cerebrovascular diseases such as cerebrothrombosis, cerebral hemorrhage, cerebral vasospasm, etc. • Sequelae of traumatic cerebral injury and cerebrovascular diseases (eg. insufficient cerebral blood supply, stroke, and cerebral hemorrhage) • Occlusive peripheral vascular diseases, thrombophlebitis, and edema caused by capillary bleeding and increased vascular permeability

37 Main Products Introduction

Products Characteristics

• Generic Name: Salvia Miltiorrhiza and Ligustrazine Hydrochloride Injection • Active Ingredients: Salvia Miltriorrhiza 0.36-0.44 mg/mL、Ligustrazine Hydrochloride 18-22 mg/mL • Mechanisms of Action: inhibits platelet aggregation, dilates coronary arteries, reduce blood viscosity, accelerates Wei’Ao blood flow, improves microcirculation, and also prevents cardiac ischemia and myocardial infarction injection • Indicatiosn: • Treat occlusive cerebrovascular diseases, such as cerebral dysfunction, cerebrothrombosis, and stroke • Treat other ischemic cardiovascular diseases, such as coronary artery diseases, angina pectoris, myocardial infarction, thromboangiitis obliterans, etc.

• Generic Name: Ligustrazine Hydrochloride For Injection • Active Ingredients: Ligustrazine hydrochloride Chuanqing • Mechanisms of Action: lyophilized • Inhibits platelets aggregation, and dissolves existing platelets aggregates, thereby preventing thrombosis and dissolving thrombus injection • Dilates arterioles, increases cerebral blood flow, and improves microcirculation • Indications: • Ischemic cerebrovascular conditions, such as cerebral ischemia, cerebral thrombosis, cerebral embolism • Other ischemic vascular diseases, such as coronary artery disease and angiitis

• Generic Name: Cerebroprotein Hydrolysate • Active Ingredients: multiple essential amino acids and polypeptides Qu’Ao • Mechanisms of Action: as a neurotrophic drug that contains polypeptides specific for brain, it improves central nervous system from various aspects lyophilized • Modulates and enhances neuron metabolisms, promotes synapse formation, and induces neuroregeneration injection • Protects neurons from ischemic injury and neurotoxins • Penetrates the blood-brain barriers and promotes protein synthesis • Modifies the respiratory chain and energy metabolisms of the neurons, and thus protects neurons from ischemia • Indications: to improve memory impairments and concentration problems as sequelae symptoms of craniocerebral trauma and cerebrovascular diseases 38 Main Products Introduction

Products Characteristics

• Generic Name: Edravone • Active Ingredients: Edravone • Mechanisms of Action: Qingtong • Remove hydrogen and oxygen free radicals, prevents the generation of lipid free radicals and the lipid peroxidation reactions injection • Suppresses free radical-induced irreversible damages of proteins and nucleic acids • Reduces the generation of pro-inflammatory factors and inflammatory reactions • Indications: • Improve neurologic symptoms, including disabilities, caused by cerebrovascular diseases such as ischemic stroke, acute intracerebral hemorrhage, and acute severe craniocerebral injuries

• Generic Name: Alprostadil Injection • Active Ingredients: Alprostadil • Mechanisms of Action: • Wrapped and Carried by lipid microspheres, alprostadil is protected from being deactivated, and is selectively distributed to damaged sites of blood vessels. Therefore, it dilates blood vessels, inhibits platelets aggregation, and improves microcirculation in a targeted way, and in turn, protects targeted cells, tissues, and organs. Yimaining • Maintains the integrity of hepatocyte membrane, and improves hepatic function Injection • Indications: • Used to treat limb ulcer caused by chronic arterial occlusion and limb rest pain caused by microvascular circulation disorders; improves CCV microcirculation disorders • Used as antithrombotic therapy after organ transplantation • In duct-dependent congenital heart diseases, it is used to mitigate hypoxemia and maintain blood flow while waiting for surgery • Used as adjuvant therapy for chronic hepatitis

39 Main Products Introduction

Products Characteristics

• Generic Name: Roxatidine Acetate Hydrochloride For Injection • Active Ingredients: Roxatidine Acetate Hydrochloride • Mechanisms of Action: Jie’Ao • As a new generation of H2 receptor antagonist, it suppresses gastric acid secretion, prevents the upper gastrointestinal bleeding, and moreover, protects gastric mucosa Lyophilized • Indications: injection • upper gastrointestinal hemorrhage caused by peptic ulcer, stress ulcer, and hemorrhagic gastritis, especially for patients at low risks • H2 antagonists are recommended for stress ulcer prevention by the American Society of Health-System Pharmacist (ASHP) guidelines with a recommendation degree of A

• Generic Name: Monoammonium Glycyrrhizinate and Cysteine and Sodium Chloride Injection • Active Ingredients: ammonium glycyrrhizinate 0.6 mg/mL, Cysteine and Sodium Chloride 0.3 mg/mL • Mechanisms of Action: Huineng • Preserves hepatocyte membrane integrity, possesses abilities of anti-oxidation, anti-inflammation, and anti- fibrosis; modifies immune function injection • Inhibits virus proliferation and achieves virus inactivation • Indications: chronic persistent hepatitis, chronic active hepatitis, acute hepatitis, hepatotoxicity, early-stage cirrhosis, etc.

• Generic Name: Oxcarbazepine Tablets • Active Ingredients: Oxcarbazepine • Mechanisms of Action: its metabolites monohydroxy derivatives (MHD) are able to block voltage- Ren’Ao sensitive sodium channels, thus leading to the stabilization of hyper excited neural membranes, suppression of repetitive neuronal firing, and diminished propagation of synaptic impulses; furthermore, tablets anticonvulsant effects of these compounds could be attributed to enhanced potassium conductance and modulation of high-voltage activated calcium channels. • Indications: used to treat focal or generalized tonic-clonic seizers of primary epileptic episodes, with or without secondary generalized seizers

40