Tpi feb 2013
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  • 2. 2Safe Harbor StatementSafe Harbor Statement Under the Private Securities Litigation ReformAct of 1995: Any statements set forth in this presentation that arenot historical facts are forward-looking statements that involve risksand uncertainties that could cause actual results to differ materiallyfrom those in the forward-looking statements, which may include,but are not limited to, such factors as unanticipated changes inproduct demand, increased competition, failure to obtain ormaintain intellectual property protection, fluctuations in theeconomy, results of research and development, failure to obtainregulatory approvals, and other information detailed from time totime in the Tianyin Pharmaceutical Inc.’s filings and future filings withthe United States Securities and Exchange Commission. The forward-looking statements contained in this presentation are made only ofthis date, and Tianyin Pharmaceutical Inc. is under no obligation torevise or update these forward-looking statements.
  • 3. 2003 20123Revenue ($MM) 0.4 69.6Gross profit 0.16 24.3EBIT (0.4) 8.5Net income (0.4) 6.4Products 7 58Employees 80 1,200Facilities 1 3Cash 0.4 35.2TPI, a growth storySource: TPI historical dataTPIChengdu,SichuanProvinceYear Book value ($MM)2005 0.52006 3.32007 12.02008 32.82009 40.92010 62.32011 80.82012 89.20204060802005 2006 2007 2008 2009 2010 2011 2012Book value($MM)
  • 4. - 2006 2007 2008 2009 2010 2011 2012银杏蜜环 (GMOL)阿扑双欣 (APU)清热解毒(QR)阿奇霉素(AZI)雪莲虫草合剂 (XLCC)其他 otherHealthcare reform impactTPI Sales ($MM) by products (2005 – 2012)4
  • 5. Ginkgo Biloba, an introduction5银杏 (Yin Xing) Ginkgo: (silver apricot)3,044 publications up till 10/12/12 on GinkgoIndications:Neurological disorders, cardiovascular diseases, retinaldeteriorationMajor components of the leaf extracts and mechanisms:Flavonoids and terpenoids.Flavonoids: ginkgoflavone glycoside, potent antioxidant,reducing capillary fragilityTerpenoids: ginkgolides and bilobalide, inhibiting plateletactivating factor (PAF).GinkgolidesFlavonoids
  • 6. Science of GingkoEffects of Ginkgo biloba extract on heart and liver mitochondrial functions: mechanism(s) of action.Baliutyte G et al. J Bioenerg Biomembr. 2010 Apr;42(2):165-72. Epub 2010 Mar 19Mild uncoupling activity of Gingko Biloba extracts provides pharmacological protection of cellularfunctions in pathological situations.Bilobalide prevents apoptosis through activation of the PI3K/Akt pathway in SH-SY5Y cells.Shi C et al. Apoptosis. 2010 Mar 24Stabilization of mitochondrial function by Ginkgo biloba extract (EGb 761).Abdel-Kadera R et al. Pharmacological Research 56, 6, Dec 2007, 493-502Fourteen day treatment with EGb 761 on aged mice group showed beneficial effects onmitochondrial complexes I, IV and V.Kaempferol and quercetin, components of Ginkgo biloba extract (EGb 761), induce caspase-3dependent apoptosis in oral cavity cancer cells.Kang JW et al. Phytother Res. 2010 Jan;24 Suppl 1:S77-82Kaempferol and quercetin, two components of EGb 761, effectively induce caspase-3-dependentapoptosis of oral cavity cancer cells and can be considered as anti-oral cavity cancer agents.6
  • 7. Science of MihuanArmillaria mellea7Gastrodia elataAnti-aging, memoryenhancement, insomnia, immunesystem enhancement, lowerblood pressure.Sun, Y (2009) China GeriatricsJournal, 29: 899-901189 articles on Gastrodia elata85 84.6 87.5 85.7 81.557.964.371.463.255Headache Dizziness Hearing loss Memory loss NumbnessGingko Mihuan Gingko> 250 subjects, 5 hospitals, p < 0.02 Source: TPI GMOL new drug application data seriesTreatmentImprovement Index
  • 8. 8National Drug Serial No. H20013079Product name 银杏蜜环口服溶液English name Yinxingmihuan KoufurongyeCompany Chengdu Tianyin PharmaceuticalSource: 2006 2007 2008 2009 2010 2011 2012银杏蜜环 (GMOL) $MM Sales HealthcarereformImpact
  • 9. 9The Portfolio• 58 products: modernized TCM products and branded genericsLead product portfolio (7 year CAGR: 31%):• Ginkgo Mihuan Oral Liquid (GMOL) – Patented prescription biopharmaceutical;National reimbursement list; Provincial essential drug list (EDL)• Azithromycin (AZI) – Essential Drug Listed highly effective antibiotic• Qing Re Jie Du Oral Liquid (QR) – Legacy anti-viral OTC medicine• Apu Shuangxin Benorylate Granules (APU) – Proprietary branded generic• Xuelian Chongcao Oral Liquid (XLCC) – Proprietary immunity enhancement• 24 products listed in the National Medical Reimbursement List• 7 drugs included in the Essential Drug List (EDL)• Performance: FY2012 (6/30/12)Revenue: $69.6 MMNet income: $6.4 MM• FY2013 guidanceRevenue: $75.0 - $80 MMNet income: $7.5 - $8.0 MM- 2007 2008 2009 2010 2011 2012$MMRevenueNet income
  • 10. 10Manufacturing FacilityGMP certified plants: 3Production lines: 7, oral, liquid, syrup, capsule,granules, tablets and compoundsPreparationRaw materials purification for key ingredientselection, processing.Extraction & ConcentrationMulti-step extraction and concentrationProduction and PackagingFinal products with different formulations: capsules,tablets, syrups, tinctures and granulesPRODUCTON LINES PRE-EXPANSION CAPACITY CURRENT CAPACITYTablets 600 million 1500 millionCapsules 200 million 400 millionGranules 50 million packs 100 million packsLiquid Solution 120 million tubes 120 million tubesNew capacity added in September 2009;Ongoing facility relocation to Qionglai by 2013
  • 11. 11Sales & Marketing• Three-pronged distribution channelscovering over 1,000 hospitalsnationwide in 200 medium to largecitiesBranded Proprietary Products,Prescription Drugs, OTC products• Nationwide distribution networkcoverageSeasoned management and sales teamStrategic classification for each marketsegmentPrioritize resources for products based ontheir market potentialEmphasis on top tier hospitals and toptier cities700 direct and indirect salesrepresentatives targeting differentmarket segmentsExtensive nationwide distributionnetwork covering essentially allgeographical regionsTPI sales & marketing national coverage
  • 12. Jiangchuan Macrolide Facility (JCM) Jiangchuan Pharmaceutical: jointly owned by TPI (87%) and Mingxin Pharmaceutical Co., Ltd.(13%), to produce Active Pharmaceutical Ingredients (API) of macrolide antibiotics. Phase I: API for Azithromycin and other macrolide intermediaries, targeting 240 ton annualcapacity. Construction and GMP certification completed end of 2011. Targeting $15 million macrolide API revenue for the first 12 months of operation1212Phase I completed 2011
  • 13. 13Income Statement (FY2012)Income Statement($ in MM)FY2012(6/30/12)FY2011 FY2010 FY2009 FY2008Sales 69.6 95.2 63.9 42.9 33.5Growth (YOY) -27% 56% 49% 28% 64%Cost of sales 45.3 52.7 30.6 21.5 18.8Gross profit 24.3 42.5 33.3 21.4 14.7Gross margin 35% 28% 52% 50% 44%Operating expenses 15.7 24.4 18.6 11.7 7.1Operating profit 8.5 19.7 14.5 9.7 7.6Operating margin 12% 20% 23% 23% 23%Provision for incometaxes2.4 4.1 2.6 1.6 1.2Net income 6.4 15.7 11.9 7.9 6.0Growth (YOY) -55% 32% 52% 32% 4%
  • 14. 14Income StatementIncome Statement($ in MM)2Q13(12/31/12)2Q12(12/31/11)1Q13(9/30/12)1Q12(9/30/11)Sales 17.6 18.2 16.0 17.5Growth (YOY) -4% -28% -9% -20%Cost of sales 10.8 12.1 9.7 11.7Gross profit 6.8 6.1 6.2 5.9Gross margin 38.7% 33.4% 39% 33%Operating expenses 4.2 4.0 4.1 3.7Operating profit 2.6 2.1 2.1 2.1Operatingmargin15% 11% 13% 12%Provision forincome taxes0.7 0.6 0.6 0.6Net income 1.8 1.7 1.5 1.5Growth (YOY) 7% -61% 1% -58%
  • 15. 15Balance SheetBalance Sheet ($ in MM) 12/31/12 6/30/12AssetsCash and cash equivalents 25.4 38.6Accounts receivable 10.5 11.3Inventory 7.0 5.9Other current assets 5.7 1.0Total current assets 48.7 56.9Property and equipment, net 32.8 26.5Intangibles, net 20.8 21.0Total assets 102.3 104.3Liabilities & Shareholders EquityTotal Current Liabilities 9.3 14.8Long-term liabilities (warrants) - -Total Liabilities 12.1 14.8Total Stockholders’ Equity 92.8 89.2Total Liabilities & Equity 102.3 104.3
  • 16. 16A Year of Consolidation• Plant relocation to Qionglai facility (QLF)– Pre-extraction plant and formulation plant to be relocated to Qionglai of Chengdu– Maintain core product portfolio sale and margin– Focus on higher margin, specialty products• Marketing and sales efforts– Focus on AAA and AA hospitals sales force and distribution channels– Develop current portfolio market penetration– Tianyin Medicine Trading (TMT) Distribution business development• R&D and pipeline– Development of Gingko Mihuan capsule formulation– Partnership and in-licensing• Acquisition Opportunities– Marketing and distribution network with complementary coverage– Manufacturing companies with complementary portfolio and patient population• Macrolide antibiotic project– JCM, targeting $15 million macrolide API revenue for the first 12 months operation
  • 17. Management Team• Dr. Jiang, Guoqing M.D., Chairman & Chief Executive OfficerWell-respected industry veteran with over 15 years of proven track record in pharmaceutical R&D, sales andmodernized TCMs; served as President and CEO of Tianyin since 2003; Former CEO of Kelun PharmaceuticalGroup (from 1996 through 2003) that is the leading producer in I.V. solution products with annual revenueover $700 million and 7,000 employees; Graduated from Jiangsu University Medical School with a• Dr. James J. Tong, MD, Ph.D., Chief Financial Officer, Chief Business Development Officer, DirectorFormer Head of China Healthcare Investment Banking at ROTH Capital Partners; Former equity researchanalyst at ROTH, covering U.S.-listed pharmaceutical, biotech, medical devices, healthcare services and drugretail companies. in China. Former biotechnology analyst at Rodman & Renshaw, New York, covering biotechentities focusing on molecular diagnostics. Before Wall Street, Dr. Tong was Principal Investigator at MarineBiological Laboratory (MBL) sponsored by Grass Foundation at Woods Hole, MA and a Senior Research Fellowat University of California, Irvine (UCI); Awarded Ph.D. in Neurobiology and Behavior from Cold Spring HarborLaboratory/Stony Brook University Neuroscience program; Published three first-authored Nature articles;Holds two patents; Medical degree from Peking University Health Science Center.• You, Xintao, Chief Technology OfficerOversees TPI’s manufacturing, R&D, quality assurance, regulatory approval and operation; Over 20 years ofindustry experience including the successful R&D of GMOL, patent application and SFDA approvals; Formerresearch scientist with the SFDA-affiliated Sichuan Industrial Institute of Antibiotics which is the largestantibiotics research institute in China; Former faculty member of West China School of Pharmacy at SichuanUniversity; Previously served as Director of Quality System at Sichuan Qili Pharmaceutical, the first Sino-USpharmaceutical joint-ventured company in Sichuan; Earned Master’s degree in Pharmacy at ChinaPharmaceutical University and Sichuan University West China Center of Medical Sciences.17
  • 18. Management Team (continued)18• Dr. Yang, Tao, Chief Operating OfficerWell-known certified pharmaceutical sale training specialist with more than 18 years experience in sales andmarketing industry; Former sales training specialist and marketing manager for Astra Zeneca and Bayer;managing the training services for 85 many well-known domestic and international pharmaceuticalcompanies during the past ten years, including Grünenthal- San Huan Pharmaceutical (China) Co., Ltd.,Beaufour Ipsen Pharmaceutical Co., Ltd., and Yangtze River Pharmacy Group, etc.; served as BPIPimplementation consultant of CPDF launched by World Bank since 2001, and the executive advisor of apolicy system program in 2007, which is a training system formed by the Chinese and British governmentaiming to support the domestic small to medium size businesses.• Dr. Zhang, Daqiao, Director of SalesSales and marketing expert with over 15 years of experience; Previously served in various senior marketingand sales positions at Simcere Pharmaceutical Group (NYSE: SCR) and Nanjing Medical Company (SHSE:600713); Graduated from Jiangsu University Medical School; Awarded MBA from Macau University ofSciences and Technology.
  • 19. 19Independent Directors• Professor Zhang, Zunjian, Ph.D., Board DirectorFaculty advisor at China Pharmaceutical University, Executive Director at the Center for InstrumentAnalysis and in charge of the National Key Laboratory of Drug Quality Control at the university; memberof the Chinese Pharmacopoeia Commission and a SFDA expert review committee member for new drugsand health food products; Expert review panel member at the National Center for Drug PricingEvaluation and the SFDA, Jiangsu Province; Principal investigator in many national research projects andhas published over 100 peer-reviewed research papers in prestigious journals both in the PRC andinternationally.• Professor Hou, Jianping, Ph.D., Board DirectorFaculty advisor at Shaanxi University of Traditional Chinese Medicine; Principal investigator in more than10 national research projects and has received the scientific achievement award from the StateAdministration of Traditional Chinese Medicine; SFDA expert review committee member for new drugsand health food products and an Executive Director at Shaanxi Pharmacological Society and the ClinicalPharmacology Committee of Shaanxi Pharmaceutical Association; Ph.D. in Pharmacology of TraditionalChinese Medicine from Beijing University; EMBA program for top pharmaceutical executives at BeijingUniversity.• Tan, Bo, CFA, Board Director, Audit Committee Chairman3SBio (NASDAQ: SSRX) Chief Financial Officer since February 2009; Extensive experience within thefinancial and pharmaceutical industries; Former executive Director and a member of InvestmentCommittee for Bohai Industrial Fund Management Company, a private equity fund in China; Chinahealthcare and consumer analyst at Lehman Brothers Asia and Macquarie Securities in Hong Kong; MBAfrom Thunderbird School of International Management, MA degree in economics from the University ofConnecticut and a BA degree in economics from Renmin University of China.
  • 20. 20NYSE Amex: TPIPrice (2/16/13): $0.72 (intraday)Shares Outstanding: 29 MMMarket Cap: $21 MMManagement Ownership: 31%FY2012 Results:Revenue: $70 MM ;Net income: $6.4 MMNet margin: 9%Diluted Shares (2/16/13): 29 MMFY2013 Guidance:Revenue: $75-80 MMNet income: $7.5 - 8 MMAuditor: Patrizio & Zhao, LLCLegal: Hunter Taubman Weiss LLPTianyin Pharmaceutical (TPI)Investors Contact:James J. Tong M.D. Ph.D.Chief Financial 028 8551 6696 (Chengdu)+86 134 36 550011 (China cell)