ANNUAL RESULT 2011

27 March 2012
Annual Report Presentation 2011 20120326P

HKEx Stock Code: 2877

1. 2. 3. 4.

Overview Financial Highlights Business Operation Outlook

HKEx Stock Code: 2877

HKEx Stock Code: 2877

 The Largest Chinese medicine injection and soft capsule manufacturer in China (by sales volume & production capacity) Manufacturing facilities are located in Shijiazhuang, Lang Fang, Zhangjiakou and Pengzhou with 4,063 employees 43 medicines are included in the Essential Drug List
Shijiazhuang, Hebei Zhangjiakou, Hebei

Lang Fang, Hebei

Pengzhou, Sichuan
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HKEx Stock Code: 2877

Financial Overview (2011)

Turnover: Gross profit: RMB 1,984 million, decreased by 2.6 % RMB 1,302 million; , decreased by 9.3 %

Gross Margin:
Profit for the year: Profit after tax: Earnings per share: Proposed Dividend:

65.6 %, reduced by 4.8 percentage point

RMB 756 million; decreased by 8.1 % decreased by 7.4 % if excluding the exchange loss decline from RMB 99 cents to RMB 91 cents RMB 26 cents per share
2011 RMB 11 Cents RMB 12 Cents RMB 14 Cents RMB 37 Cents 2010 RMB 11 Cents RMB 12 Cents RMB 17 Cents RMB 40 Cents
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REMARK: Interim Dividend Proposed Final Dividend Proposed Special Dividend

HKEx Stock Code: 2877

Business Development
Focus on three products: injections, soft capsules and granules
Shineway Modern Chinese Medicine Park (Hebei): Injection Workshop: Extraction Workshop: Final testing stage Late 2012

HKEx Stock Code: 2877

HKEx Stock Code: 2877

RMB (In millions) Turnover Gross Profit

Year 2011 1,984 1,302

Year 2010 2,038 1,435

Change -2.6% -9.3 %

Gross Margin
Profit for the year EPS (RMB Cents) Dividend per Share (RMB Cents)

65.6%
756 91 37 *

70.4%
822 99 40*

-4.8 percentage point

-8.1 %

*Interim Dividend

RMB 11 Cents Proposed Final Dividend RMB 12 Cents Proposed Special Dividend RMB 14 Cents RMB 37 Cents

(2010: RMB 11 Cents) (2010: RMB 12 Cents) (2010: RMB 17 Cents) (2010: RMB 40 Cents)
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HKEx Stock Code: 2877

Balance Sheet Highlights

RMB (In millions) Cash on Hand Trade Receivables Bills Receivables Inventories Year 2011 2,173 13 404 283 Year 2010 2,349 7 264 192

Total Assets
Bank Loan Total Liabilities Shareholders Equity
HKEx Stock Code: 2877

4,377
722 3,654

3,972
743 3,230
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Product Mix
RMB (in millions)

Revenue Yr 2011 1,142 436 340 66 1,984 Yr 2010 1,275 386 328 49 2,038

% of Total Revenue Yr 2011 58% 22% 17% 3% 100% Yr 2010 63% 19% 16% 2% 100%

Products Injections Soft Capsules Granules Others Overall

HKEx Stock Code: 2877

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Gross Margin

Gross Margin reduced by 4.8 percentage point to 65.6 %

Attributable factors Price cut Herb costs increased Slight change in product mix

HKEx Stock Code: 2877

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Major P&L Items

Year 2011
RMB (in millions) Distribution Cost Admin Expenses R&D Expenses 255 229 57 % of Turnover

Year 2010
RMB % of Turnover (in millions)

12.9% 11.6% 2.9%

350 197 22

17.2% 9.7% 1.1%

Exchange (Gain)/Loss

(2)

HKEx Stock Code: 2877

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HKEx Stock Code: 2877

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Product Portfolio

45 medicines in regular production 27 prescription medicines 18 OTC medicines Own over 180 production permits of medicine formula

43 products are included in the Essential Drug List

9 products are designated as State Protected Chinese Medicines 4 products are designated as Good Quality / Good Price

Shineway and Wu Fu are China Famous Trademarks

HKEx Stock Code: 2877

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Core Products (Sales of over RMB 100M)

Qing Kai Ling Injection Largest supplier in China 70% market share A prescription anti-viral medicine Included in the National Reimbursement List and Essential Drug List (2009) A Must-have Chinese medicine in emergency rooms of Chinese hospitals Suggested treatments for human Avian Flu and A-H1-N1 flu by Ministry of Health Recognized as a Good Quality / Good Price product Continue to tap into the large market potential in the rural areas via the EDL program Shen Mai Injection Largest supplier (by volume) in China 35% market share in China A prescription drug for treatment of Cardiovascular diseases Included in the National Reimbursement List and Essential Drug List (2009) Suggested treatments for human Avian Flu by Ministry of Health Leverage the strong brand recognition to penetrate the new geographic areas

Continue to tap into the large market potential in the rural areas via the EDL program

Shu Xie Ning Injection A prescription drug for cardio-cerebrovascular diseases State administrative protection till Jan 2012 Included in the National Reimbursement List Recognized as a Good quality / Good Price product Well received by distributors and hospitals Leverage the strong brand recognition to penetrate the new geographic areas

HKEx Stock Code: 2877

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Core Products (Sales of over RMB 100M)

Xin Nao Qing Soft Capsules Largest supplier in China 90% market share in China A prescription drug for treatment of Cardiovascular diseases A top 10 TCM oral drug for Cardiovascular diseases Competitive pricing lowest cost in terms of daily dosage Currently covered by provincial insurance high potential to be included in the new National Reimbursement List Huo Xiang Zheng Qi Soft Capsule An OTC product for heat stroke, stomachache, nausea and diarrhea Included in the National Reimbursement List Very popular formula name in China Strengthen market promotion to increase brand loyalty

Pediatric Qing Fei Hua Tan Granule An OTC drug for children infected by respiratory related diseases State administrative protection till Jan 2012 Included in the National Reimbursement List Substantial growth potential supported by the enlarged production capacity and promotion

HKEx Stock Code: 2877

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Other Products
Huamoyan Granule Qing Kai Ling Soft Capsule Huang Qi Injection Shujin Tongluo Granule Jiangzhi Tongluo Soft Capsule Xiesaitong Dripping Pills

HKEx Stock Code: 2877

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Revenue by Product
340 436
17% 22%

328 386

16% 19%

Others Granules Soft Capsules Injections

1,142

58%

1,275

63%

Yr 2011

Yr 2010

HKEx Stock Code: 2877

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Revenue by Type
23.9% 28.7% 20.9% 37.4%

47.4% 41.7%

Other Products Anti-viral Cardiovascular

Yr 2011

Yr 2010

HKEx Stock Code: 2877

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Revenue by Distribution
20%
OTC

21%

79%

80%

Prescription

Yr 2011

Yr 2010

HKEx Stock Code: 2877

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Research & Development

10 projects of new products under development, including 3 projects for cardiovascular diseases 2 projects for genitourinary system 1 project for digestive system illness 1 project for gynecological diseases 1 for the treatment of orthopedics 1 for cancer adjuvant illnesses Joint research project with an university in Australia for Alzheimers diseases is progressing as planned

HKEx Stock Code: 2877

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Production Capacity
Current Capacity End of 2012 Annual Capacity
20,000 Tons 3.2 Billion Vials 3.5 Billion Capsules

Extraction Injections Soft Capsules

10,000 Tons 2 Billion Vials 3.5 Billion Capsules

Granules

3.4 Billion Bags

3.4 Billion Bags

HKEx Stock Code: 2877

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Government Policies
Medical Reform Support the Chinese Medicine Industry New GMP Requirements Support Research and Development

Essential Drug List

National Drug Reimbursement List
HKEx Stock Code: 2877
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HKEx Stock Code: 2877

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43 products are included in the Essential Drug List Re-evaluation of Chinese medicine Increase of production capacity: Shineway Modern Chinese Medicine Industrial Park (Hebei) Improve sales network and sales staff Increase the coverage of county-level hospitals and strategic partnership with OTC drug stores Other products: Shujin Tongluo Granule Jiangzhi Tonghuo Soft Capsule Xiesaitong Dripping Pills

HKEx Stock Code: 2877

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Growth Strategies

Target on three high growth market the middle and old aged, anti-viral and children medicines Increase investments in research and development to form a pipeline of broad span innovative products New Injection workshop is now at final testing stage New Extraction workshop to be completed by the end of 2012

HKEx Stock Code: 2877

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Growth Strategies Market Development

Additional sales staff to cover prescription medicines, OTC products at the clinic level (such as mining field hospitals, factory hospitals, community clinics and rural healthcare centers) to strengthen the support at these points of sales Delegation of responsibility to regional management Additional training to support the end user network development Increase promotion to strengthen corporate brands of Shineway, Wu Fu, Shen Miao and Beisi

HKEx Stock Code: 2877

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Growth Strategies Distribution Channels

Work with national and cross regional distributors with strong distribution capabilities Work with distributors with strong network of points of sales to increase the coverage of community clinics and rural healthcare centers Host academic seminars and consumer education program to promote Shineways prescription and OTC products

HKEx Stock Code: 2877

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Distribution Channel
Shineway Sales
Prescription medicine team Commercial team OTC team/Key account team

National and Regional Distributors*

Local Distributors

Hospitals and Clinics

Pharmacies and Other Retail Outlets

Patients and Consumers

HKEx Stock Code: 2877

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ANNUAL RESULT 2011

27 March 2012

THANK YOU
HKEx Stock Code: 2877
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All information contained in this presentation is provided for reference only. Some information relating to forward-looking statements of future events or future financial, business or development of the Company is subject to various risks and uncertainties that could cause actual results to differ materially. Neither the Company nor any of its respective subsidiaries, directors, employees or advisors, directly or indirectly, gives any representation or warranty as to the completeness and accuracy of all the information contained therein (including all the forward-looking statements). The Company expressly disclaims all the liabilities in respect of any loss incurred or sustained by the participants of this presentation, their employers, entities, agents or any of their related parties as a result using the information contained in this presentation.

HKEx Stock Code: 2877

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