Creating Miracles in Life China Biologic Products, Inc. November - PowerPoint PPT Presentation

Creating Miracles in Life China Biologic Products, Inc. November 2016 (NASDAQ: CBPO)

01 Safe Harbor Statement This presentation contains forward-looking statements, including statements about the business outlook, strategy and market opportunity of China Biologic Products, Inc. (the “Company” or “we”), and statements that may suggest trends for its business. Such forward-looking statements can be identified by the use of forward-looking terminology such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “should,” “will,” “would,” and similar expressions, or the negatives thereof. These statements are individually and collectively forward- looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements are made only as of the date of this presentation and are based on estimates and information available to the Company at the time of this presentation. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict and may be beyond the Company’s control. Therefore, the Company cautions that actual results may differ materially from those set forth in any forward-looking statements herein, and are subject to numerous assumptions, risks, uncertainties and other factors, including those discussed under “Risk Factors” in the Company’s annual report on Form 10-K filed with the SEC for the year ended December 31, 2015. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements made during this presentation will in fact be realized. Any forward-looking statements and projections made by others in this presentation are not adopted by the Company and the Company is not responsible for the forward-looking statements and projections of others. Except as otherwise required by applicable securities laws, the Company disclaims any intention or obligation to publicly update or revise forward-looking statements, whether as a result of new information, future events or otherwise. In evaluating our business, we use certain non-GAAP measures as supplemental measures to review and assess our operating performance. These non-GAAP financial measures have limitations as analytical tools and investors should not consider them in isolation, or as a substitute for net income attributable to Company or other consolidated statement of comprehensive income data prepared in accordance with U.S. GAAP. China Biologic Products, Inc.

02 CBPO: A Leading Plasma Company in China  A fully integrated plasma-based biopharmaceutical company in China  8 categories of plasma-based products Business  Headquartered in Beijing, with 3 production facilities (1 wholly owned (1) ; 1 majority owned; and 1 minority Overview owned)  Founded in 2002 and listed on NASDAQ in 2009 (Ticker: CBPO)  One of top three domestic suppliers in China for the two principal plasma products Market  One of the first plasma companies in China to penetrate into end-user market, directly serving approximately 600 hospitals and clinics Position  Price: $117.99 (11/02/2016)  Market Capitalization: $3.2 billion Capital  52-Week Range: $100.53 - $144.29 Structure  Shares Outstanding: 27.1 mm  Q3’16 Revenue: $86.5 mm, up 9.8% in USD terms or 17.3% in RMB terms (2) y-o-y Selected  Q3’16 Gross Profit: $58.9 mm, up 15.9% y -o-y; Gross Margin: 68.1% Q3’16  Q3’16 Operating Income: $39.7 mm, up 13.4% y -o-y; Operating Margin: 45.9%  Q3’16 Net Income: $28.4 mm, up 24.0% y-o-y; Financials  Q3’16 Non -GAAP Net Income (3) : $34.3 mm, up 30.9% in USD terms or 39.8% in RMB terms y-o-y  Q3’16 Fully diluted EPS: $1.01; Non-GAAP EPS (3) : $1.22 1.We recently acquired the fully equity ownership in Guizhou Taibang through capital withdrawal by its former minority stockholders. 2. We believe providing local currency information on certain key items of our financial results enhances the understanding of our financial results and evaluation of China Biologic Products, Inc. performance in comparison to prior periods. We calculate changes in local currency percentages by comparing financial results denominated in RMB from period to period. 3. Refer to Appendix I for reconciliation of Non-GAAP net income attributable to equity holders

03 CBPO Plasma Product Overview IVIG Hyper- 33.1% immune Products Blood 15.5% CBPO Sales Breakdown P.Polypeptide P.Polype White cells by Product -ptide 9.4% 8.7% ( Q3’16 Sales % ) Others Platelets 5.0% Albumin 37.0% Red cells CBPO 6% (1) Other Plasma CNBG Competitors Others CBPO Shanghai 90% Water 7% Proteins 3% Salt 19% (1) RAAS Foreign Player E Fractionation Foreign CNBG Foreign Player A Player D Foreign Foreign Player B Player C Foreign players Hyper- Clotting lmmuno- 3rd Largest Domestic Player Largest Player Immuno- Albumin factors globulins globulins in China Albumin market in China IVIG market (Based on 2015 Sales) Maintain (Based on 2015 Sales) Hepatitis FVIII Infections, osmotic Rabies PCC immune pressure, Tetanus Fibrinogen deficiencies Source: Company estimates based on the public release of government batch approval data. etc. etc. etc. (IVIG) 1. Includes sales attributable to Xi’an Huitian, in which we hold a 35% non-controlling interest.

China Biologic Products, Inc. Industry Overview China Biologic Products, Inc.

05 China’s Plasma Protein Market – Early Stage of Growth, Low Penetration, Significant Potential  China is the second largest plasma products market in the world China Plasma Products (1) Market Size  Significant unmet clinical demand provides sustainable growth ($ Billion)  Growth potential driven by aging population and various diseases 8.0 CAGR 6.2  Seller’s market with sustainable pricing 20% 6.0 CAGR 4.0 26% 2.5 2014 Plasma Products Per Capita Usage 2.0 0.8 0.0 (2) (3) Per Capita Usage in 20.0 15.9x 15.8x 2009 2014 2019E US / 15.0 Per Capita Usage in 10.0 China (x) (2) 2015 China Plasma Products (1) Others 2.5x 5.0 9.0% Breakdown 0.0 Albumin IVIG Factor VIII By 2015 Product Sales 2014 Market Size IVIG 1,560 557 45 in China ($ MM) 24.4% China’s 2014 market size is $2.5 billion, but its per capita penetration is still a fraction of that of the U.S. Albumin 62.2% Source: The Marketing Research Bureau, Inc. and Company estimates 1. Excluding recombinant products Albumin and IVIG are the two largest products in China’s 2. Based on 2014 per capita usage (kilogram per MM inhabitant) in U.S. divided by 2014 per capita usage in China plasma products market, accounting for 86.6% of the 3. Based on 2014 per capita usage (international units per capita) in U.S. divided by 2014 per capita market in 2015 usage in China , excluding recombinant products

06 High Barriers to Entry Benefit Established Players China will continue to maintain stringent regulations for the plasma product industry as it is critical to China's public health security  Regulatory framework in China has evolved into one of the most stringent globally due to crises of tainted plasma products over the past decade  Fractionators permitted to process self-collected plasma only as required by law  New plasma collection licenses are difficult to obtain  Plasma fractionation licenses ceased to be granted since 2001; 28 active plasma product manufacturers in China currently  Since 1986, all imported blood products have been banned except for human albumin and recombinant factor VIII products China Biologic Products, Inc.

07 Plasma Collection Regulation Environment – U.S. vs. China United States China Population (million) 319 1,363 Twice per 7 days, Twice per month, Donation Frequency not within 48 hours not within 14 days Volumes by weight Collection Volume 50-68kg / 69-79kg / >79kg, 580 ml donate 690 / 825 / 880 ml Plasma Collection Centers Over 480 Approximately 200 Preapproval Requirement No Yes Plasma Donation Compensation (for one $25-35 $42-50 time donation) Food and Drug Administration (FDA) and County-, Municipal- and Provincial- Level Regulation Agencies Plasma Protein Therapeutics Association Governments (PPTA) Plasma Collected in 2014 (million liters) 32.6 5.4 Source: Broker Report, The Marketing Research Bureau, Inc., Plasma Protein Therapeutics Association (PPTA) and Company estimates China Biologic Products, Inc.

08 Plasma Is An Attractive Sector For Investment In China Pharmaceutical Industry Other Plasma Pharma Commentary Companies Companies Regulatory  China’s plasma -derived products market is highly regulated by the government Control Supply /  Significant supply shortage favors leading plasma players Demand Historical  Prices for most plasma products have remained steady whereas the average price of Pricing many pharma products has been in decline Domestic  28 active plasma product manufacturers in China vs. thousands of pharmaceutical Competition companies Foreign  Currently only albumin and recombinant factor VIII are open to imports Competition  Compared with pharmaceutical companies, the plasma industry in China is a seller’s Sales and Distribution market  Growth among plasma manufacturers is primarily driven by the supply/demand Growth Visibility imbalance China Biologic Products, Inc.