Environmental Prerequisites to Invest Pharmaceutical Sector in Developing Countries

在发展中国家投资药品产业所需要的环境

Helen Yang 杨光

Director, International Business Development

国际业务发展总监

Sinovac Biotech Co. Ltd.

北京科兴生物制品有限公司

June 12, 2012

Environment Expected to Invest in Pharmaceutical Sector in

(less) Developing Countries

1 Sinovac Profile

Sinovac’s Plan to Work with Africa

2

3

Company Overview

Going International

Influenza Vaccine Practices in South Africa and Kenya

What do the manufacturers concern?

-Key Requirements for Pharmaceutical Sector

-Drivers and Determinants

Company Overview

Going International

1 Sinovac Profile

4

• Provide Chinese children with the best vaccines in the world,

• Let children in the developing world being benefited from vaccines at affordable price;

Our mission is to supply vaccines to eliminate human diseases.

Sinovac Biotech Ltd. (NASDAQ GSM: SVA)

5

Supply Vaccine to Eliminate

Human Diseases

R&D

Manufacturing

Sales & Marketing

Post-Sales Services

H5N1

H1N1

6

Five Key Strategic Objectives

.....

.....

.....

New Version of

Chinese Pharmacopeia

• October 2010

• February 2011

• February 2011

New Version of China

GMP Standards

NRA of China pass WHO

Pre qualification

Develop new products to serve unmet medical

needs

Expand production capacity

to meet growing demand from

China and other developing

markets

Maintain high quality to comply with

international standards

Maximize domestic sales

and achieve registration in

overseas markets

Seek international

collaborations to leverage

competitive advantages

and share benefits with

partners

Develop more vaccines against more types of disease

Provide high quality products at affordable prices

Deliver products in China and around the globe

Path to “Go International”

Local Registration & Distribution Through Local

Partner

Local Partnership for Joint

Investment Local Investment

Why: Sufficient Capacity, Efficient Supply, Affordable Price for Developing

Countries?

Current Distributors & Target Markets

Mexico

Venezuela

Peru

Chile

Algeria

Egypt Saudi

Uzbekistan

Mongolia

Nepal

India

Pakistan

Thailand Vietnam

Philippines

Malaysia

Korea

Ukraine

Turkey

Israel

Registration Process x6 Local Distribution x3 Target Markets in 2012 x15

Kenya

Brazil

Columbia

Argentina

Human Vaccines Animal Vaccine

Current Product Portfolio

1st inactivated Hepatitis A vaccine developed, produced, and marketed by a Chinese manufacturer

Better safety profile than the counterpart

Primarily sold in China; start to sell into overseas market

About 30million doses sold in China since the beginning;

1st inactivated hepatitis A and B vaccine produced in China

The only supplier in China

1st locally produced flu vaccine without preservative;

First IVS (Influenza Vaccine Supply) task force member from

developing country

Primarily sold in China; start to sell into overseas market

First and only approved H5N1 vaccine in China

Only qualified H5N1 vaccine (against avian flu) for Chinese government stockpiling program

1st company globally to receive production license for H1N1 vaccine

Inactivated animal rabies vaccine

Locally occurring virus strain, which improves the protective effect

Replicate quality control system for human vaccines to guarantee the quality of animal vaccines

Competitively priced compared with similar products imported

~80 million registered dogs in China

Healive

Bilive

Anflu

Panflu

Panflu.1

RabEnd

Deep Pipeline to Drive Future Growth

Human Vaccines

• EV71 Vaccine (hand, foot

and mouth disease)

• Pneumococcal Conjugate Vaccine

(PCV)

Clinical Trials

Over 1.6 million cases reported in China with 506

fatalities in 2011.

~80M children (children aged 5 and under in China)

Target Population:

~32M children (children aged 2 and under in China)

Over 350 million people over age 50

• Mumps Vaccine

• Rubella Vaccine

• Long-term objective to launch MMR vaccine within 5

years

• In 2011, 26.3 million doses of MMR were approved

and released in China.

• Rotavirus Vaccine

• Pneumococcal Polysaccharides

Vaccine (PPV)

• Chickenpox Vaccine (Varicella) • 14.2 million doses supplied in China in 2011

•Potentially being included in public market

• Rabies Vaccine for Humans • In 2011, 11.55 million doses of rabies vaccines

were approved and released in China

P1 P2 P3 Pipeline Market Potential

Pre-

Clinical

File

IND Clinical Trials Reg.

• 5.8 million doses of vaccines for rotavirus were

approved for sale in China in 2011

Manufacturing Facilities

State-of-the-Art-Facilities

Headquarter- Beijing Beijing

Dalian

Tangshan

Filling & Packaging Plant

Flu Plant

R & D Center

Dalian Site

Tangshan Site-Animal Vaccine

Changping site, Beijing

PUK Bio-city

In China, Sinovac possesses commercial production sites of total 160,000 m2

Environment Expected to Invest in Pharmaceutical Sector in

(less) Developing Countries

2

What do the manufacturers concern?

-Key Requirements for Pharmaceutical Sector

-Drivers and Determinants

What do the manufacturers concern? General preconditions for most

industrial investment

Political Environment Economic Environment

Social, Cultural and Natural Environment Technical Environment

Legal & Regulatory Environment

Political System

-Administration

-Legislation

-Justice

…

Major Parties

-…

-…

-…

Industrial Survey

GDP, GNI, CPI…

Development

Stage

Import & Export

…

Natural Environment

-Geography & Climate

-Energy

-Communication & Transportation

…

Social & Cultural Environment

-Races, language

-Demographics

Education

Colleges &

Institutes

Encouraging

Industries

International

cooperation

…

Special Local Laws

Revenue System

…

Major Laws for Investment

I.P. Laws

Foreign Currency Management

…

Political Stability Investment landscape in Sub-Saharan Africa

What do the manufacturers concern?

Key Requirements for Pharmaceutical Sector

Skilled human resources: pharmacists; graduates in pharmacy, chemistry, biochemistry...; technicians; marketing&sales.

Quality of scientific education…

Local Business management schools and graduates returning of foreign business schools…

Reliable power and clean water;

Special industrial zones…

Capable to encourage foreign investment into the local pharmaceutical industry;

Builds confidence to export to other countries.

Human Resources

Basic Infrastructure

Functioning National Drug Regulatory Authority

What do the manufacturers concern? (Con’t) Drivers and Determinants

Market Size.

Long term plan in the country or in the area.

Flagship or pipeline products, or distribution network driven M&A, JV.

Take advantage of efficiencies and lower costs by consolidation.

Eg. Moving R&D activities to China and India.

Work in R&D with institutes or universities of developing countries.

Registration requirements, pricing.

Intellectual property.

Foreign investment incentive policy.

Market Access

Seeking Efficiency

Policies Facilitation & Incentive

Aside from economic motives, humanitarian concerns only.

Eg. HIV and AIDS local R&D or production.

Humanitarian and Moral Drive

Conclusion - Near-Term Solution

Understand the Culture

Understand the

regulations

Access to the

resources

Gain market access

……

Sinovac’s Plan to Work with Africa 3

Influenza Vaccine Practices in South Africa and Kenya

Sinovac’s Plan to work with Africa - Case sharing

Countries

Flu vaccine

Consumption 2009

(thousand doses)

Immunization

Rate

South Africa 1,103 2.20%

Mauritius 52 4.00%

Kenya 20 0.05%

Cameroon 10 0.05%

Angola 10 0.05%

Namibia 9 0.40%

Burkina Faso 8 0.05%

Mali 8 0.05%

Zambia 7 0.05%

Botswana 6 0.28%

Benin 4 0.05%

Total 1,237

Step 1. Political Stability--South Africa & Kenya

Conclusion:

Possible to launch business.

Step 2. Environment Evaluation Checklist

Political; Economic; Social&& Cultural& Natural;

Technical; Laws& Regulatory.

Step 3. Flu Vaccine Market Research Local production; Size; Pricing; Competitions; Distribution…

Step 4. Launching Plan

FDI? M&A? JV? Distributor?

Suspending for WHO PQ?

Step1 Step2 Step3

Local Production:

A PPP company

is under

establishment to

manufacture flu

vaccine and

others.

Regulatory Gap:

1. EU format

dossier;

2. Local pre-

licencing

clinical trial.

OK

Step4

Suspending

South Africa

Step1 Step2 Step3

Market size is

relative small, but

foresee the future

development

and covering

other African

countries.

OK OK

Step4

Distributor

Kenya

Local

Production

*Provision of seasonal influenza vaccines in 157 countries (2004 – 2009), IFPMA.

Government Organizations

Local Distributors

NGOs Institutions

Local Manufacturers

Vision of our Partnership Intention with Africa

With “going international” as part our corporate strategy, Sinovac intents to collaborate with

various parties of African countries in order to bring high quality vaccine products to people living

there and help them improve health condition.

Thank You